Supreme Court ruling on Orissa mining case could set precedent

Supreme Court ruling on Orissa mining case could set precedent
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First Published: Tue, Dec 25 2007. 11 54 PM IST

Uncertain future: A file picture of villagers from Orissa protesting in front of the Supreme Court in New Delhi against Vedanta’s activities.
Uncertain future: A file picture of villagers from Orissa protesting in front of the Supreme Court in New Delhi against Vedanta’s activities.
Updated: Tue, Dec 25 2007. 11 54 PM IST
New Delhi: Weeks after it halted Vedanta Alumina Ltd’s mining project in Orissa, the Supreme Court will soon weigh in on the issue in what many see as a possible precedent-setting decision.
Uncertain future: A file picture of villagers from Orissa protesting in front of the Supreme Court in New Delhi against Vedanta’s activities.
Acting on the court’s own directions, Vedanta’s associate company, Sterlite Industries India Ltd, has filed a fresh application. Meanwhile, a review petition has also been filed by Oriya tribal activist Siddarth Nayak, a party to the previous proceedings, seeking a review of the court’s order.
In issuing its previous order over Vedanta’s mining plans in Orissa’s Niyamgiri Hills, the Supreme Court bench suggested Sterlite could file a fresh proposal after forming what is called a special purpose vehicle, or SPV, with the Orissa government, which would set aside 5% of net profits from mining activities, or Rs10 crore, whichever is higher, for tribals in the area. It also suggested other funds for wildlife and tribal development.
Such a public-private partnership was dubbed as a “precarious precedent” by some environmentalists but was seen as a “welcome judgment” by C.V. Krishnan, head of business development at Sterlite.
Now, “abiding by the court’s directions, we have filed an application complying with the rehabilitation package,” said Krishnan. The “court is on vacation and, once it reopens, it will look into our application and pass necessary orders.”
Krishnan, however, declined to comment on Nayak’s petition saying he was unaware of it. The court is set to resume early January.
Nayak’s petition will be decided internally by the judges as per the procedure in review petitions. If it is dismissed, Nayak can file a curative petition that will then come up before a larger bench.
Many industrial and infrastructure projects have stalled in recent years primarily over court battles between environmentalists and companies.
“We talk of climate change and greenhouse gases but, in our country, there is a state of lawlessness in relation to environmental issues,” complains M.C. Mehta, an environmentalist who has filed many legal challenges over implementation of Indian environmental laws.
The Godavarman case was one such case that started back in 1995. Since then, many applications have been filed under the case, challenging different mining projects, dams and other infrastructure projects. The Vedanta mining issue was also heard under this umbrella case that collectively seeks to challenge industrial activity in forest areas that could adversely affect the environment.
In its 1997 Samata judgment, the court allowed mining in Andhra Pradesh and suggested that the state government ensure 20% of mining companies’ net profits be set aside as a permanent fund to facilitate development in the tribal area. “But the government did not accept the suggestion,” says one lawyer who didn’t want to be named. “The polluter pays principle (a concept in environmental law that seeks damages from those who pollute) could become the pollute and pay principle.” This lawyer says the Supreme Court ought to bar mining in eco-sensitive areas.
“Linking net profits to development is a positive step,” says R.C. Swain, a vice-president at JSW Alumina Ltd. “Industrialists investing in projects have a commercial interest, but development of the affected areas must be a part of the business plan. The court’s order sounds logical and workable.”
JSW is building an aluminium refinery project in collaboration with the Andhra Pradesh Mineral Development Corp. in the Vizianagaram district. That project has also been opposed by activist groups though it hasn’t run into any legal disputes. JSW’s business plan has earmarked Rs10-15 crores—0.5% of revenue—for tribal development and Rs.8 crores—20% of the royalty from the bauxite mined—towards building schools, hospitals, roads and other developmental projects in the affected tribal areas. “Every industry stands for development,” says Swain. “But, we feel that if we are exploiting bauxite, we must share benefits with the tribals.”
Another new concept in the Vedanta suggestion is forming of a special purpose vehicle to manage the funds. “There must be some vehicle that monitors where the funds are going and if they are properly utilized,” says Swain.
Some legal experts believe that the Supreme Court could end up setting a precedent with the Vedanta case that will impact several other cases. For instance, they point to a Delhi high court petition challenging the construction of permanent structures on the Yamuna river bed for the Commonwealth Games; a case against the Bangalore Metro Rail project in the Karnataka high court and another so-called umbrella case filed by the Centre for Environment and the World Wildlife Federation (WWF) India over forest management and identification of eco-sensitive areas around sanctuaries and wild life reserves that involves several dams and hydro electric plants.
“The Vedanta issue involves a huge sum of Rs4,000 crore invested by a private enterprise. This will set a precedent for all such large scale projects that will come up before the courts,” claims Raj Panjwani, a lawyer who is handling the Centre for Environment and WWF India case.
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First Published: Tue, Dec 25 2007. 11 54 PM IST