The Odisha government has announced a temporary freeze on conduct of online mineral auctions given the pending case in the Delhi High Court (HC). The court had ordered the government not to go ahead with mine block auctions till the final judgement was pronounced.
A public interest litigation was filed in the Delhi HC in May this year, opposing the participation of Tata Steel in Odisha’s auctions despite Mineral Auctions Rules giving a contrasting picture. As per the norms, a leaseholder with more than 10 square km of area under operations is not eligible to partake in auctions. The next hearing on the matter is scheduled towards the final week of November.
“Auctions in the state are almost stalled due to pending Delhi HC order. Unless we get some clarity, we are constrained to proceed with auctions”, a state government official said.
The court order has dealt a setback as Odisha had already initiated the process to auction two prized iron ore deposits- Chandiposhi and Purheibahal, both in iron ore laden Sundargarh district in the state’s western hinterland. As many as 17 companies had evinced interest in these blocks at the bidding stage.
The Delhi HC has cited non adherence to some provisions contained in Section 6 (1) (b) of the MMDR Act f 1957 in the modalities of auctions. Going by existing Mineral Auction Rules, 2015 based on this section, no bidder can be entitled to a fresh mineral block if has already more than 10 sq km of mineral leasehold area in its possession.
To overcome this restrictive clause, the state government in March this year had written to the Central government to raise the limits to 75 sq km instead of 10 sq km stipulated as of now. The central government, has not yet communicated on any possible change in mineral limits.
Tata Steel stands to gain if the area limits are revised. Earlier, the steel company has made abortive bids at electronic auctions of iron ore blocks in Odisha despite being warned by the state government that it will not be eligible to get a Letter of Intent despite being successful at the auctions. Tata Steel presently has six iron & manganese ores in its kitty which are spread over a lease area of over 50 sq km in the state.
The Mineral Auction Rules supposedly bar the state government to grant the Letter of Intent to any such successful bidder whose current possession of lease exceeds 10 sq km.
In a clear indictment of the state government’s tender documents, the court said the papers lack clarity on the eligibility of a bidder who stands disqualified by Section 6 (1) (b) of the 1957 Act.
The court also sounded sceptical on whether the Odisha government’s recommendation for hiking area limits would be accepted by the central government.
Given that in the light of these circumstances, auctions of the two blocks might lead to confusion, the court has stalled the process for now. It has instructed the Union government to finalise the matter relating to raising the ceiling on maximum area which can be held by a lessee in consultation with the state government.
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