Supreme Court of India
T.N. GODAVARAMAN THIRUMULPADversusUNION OF INDIA AND ORS.
- Citation
- 2007 INSC 1177
- Decided
- 23 November 2007
- Disposal
- Disposed off
Holding
The Court dismissed the application for environmental clearance by Mis. VAL, holding that clearance cannot be granted unless the parent company complies with the specified rehabilitation and safeguard package.
Summary
Vedanta Aluminium Ltd (formerly Vedanta Alumina Ltd) sought judicial clearance to divert 58.943 hectares of reserve forest land in the ecologically sensitive Niyamgiri Hills of Orissa for a one‑million‑tonne alumina refinery. The project required mining of bauxite from the hills, which are a wildlife corridor, a water source for two rivers, and home to tribal communities. While the company had obtained all statutory clearances, the Court examined the conflict between development needs and the constitutional principle of sustainable development, inter‑generational equity, and the rights of forest‑dependent tribals. Relying on the principle of sustainable development and the A.P. Pollution Control Board v. Prof M V Nayudu precedent, the Court declined to grant clearance to Mis. VAL, citing concerns over the credibility of the user agency and inadequate safeguards. However, the Court outlined a detailed rehabilitation package and indicated that if the parent company, Mis. SIIL, complies with those safeguards, a fresh application may be entertained.
Issues considered
- Whether environmental clearance should be granted to Vedanta Aluminium Ltd for diversion of reserve forest land in Niyamgiri Hills.
- Whether the principle of sustainable development requires the Court to balance economic development with environmental protection and tribal rights.
- Whether the credibility of the user agency (Mis. VAL/Mis. SIIL) is sufficient to justify granting the project clearance.
Legislation cited
- Companies Acts. 1956
Subjects
Sustainable developmentEnvironmental clearanceReserve forest diversionMiningAlumina refineryNiyamgiri HillsTribal rightsWildlife protectionRehabilitation packageInter‑generational equity
Judgment
T.N. GODAVARAMAN THIRUMULPAD A
v.
UNION OF INDIA AND ORS.
NOVEMBER 23, 2007
B
(K.G. BALAKRISHNAN, CJ., DR. ARIJIT P ASAY AT AND
S.H. KAPADIA,JJ.]
Environmental Law :
c
Sustainable Development-Balancing ofdevelopment needs with
protection ofenvironment and ecology-Application by Mis VAL for
clearance for use ofreserve forest to set up "Alumina Refinery Project"
in Tribal area involving mining ofbauxite deposits in Niyamgiri Hills
in Orissa-HELD: while applying the principle of Sustainable D
Development one must bear in mind that development which meets
the needs of the present without compromising the ability offuture
generations to meet their own needs is sustainable development-
Therefore, Courts are required to balance development needs with
protection of environment and ecology-It is duty of State to devise E
and implement a coherent and co-coordinated programme to meet its
obligation of sustainable development based on inter-generational
equity-Mining is an important revenue generating industry-
However, national assets cannot be allowed to be placed into the hands
of companies without proper mechanism and without ascertaining F
credibility of User Agency-Keeping in view the totality offactors
mentioned in the order, clearance ofproject declined-However, Mis
SIIL may move the Court ifthey agree to comply with modalities and
Rehabilitation Package as suggested in the order-It is made clear that
such an application will not be entertained if made by MIS VAL or G
Vedanta Resources.
A.P. Pollution Control Boardv. Prof M V Nayudu, (1999] 2 SCC
718, relied on.
447
H
448 SUPREME COURT REPORTS [2007] 12 S.C.R.
A CIVIL ORIGINAL JURISDICTION: I.A. Nos. 1324 & 1474
IN
Writ Petition (Civil) No. 202of1995.
(Under Article 32 of The Constitution oflndia)
B
WITH
I.A. Nos. 2081-2082@ W.P. (C) No. 549/2007.
In W.P. (C) No. 202/1995.
C Goo lam E. Vahanvati, Sol. Genl. of India, Amarendra Sharan,
A.S.G., U.U. Lalit (A.C.), K. Parasaran, K.K. Venugopal, Siddhartha
Chaudhury (A.C.), P.K. Manohar, R.S. Rana, Rishikesh Barna, Haris
Beeran, R.C. Kathia (for D.S. Mahra), Anil Katiyar, Jana Kalyan Das,
Avijeet Bhujabal, Sanjay Parikh, Anitha Shenoy, Jitin Sahni, A.N. Singh,
D Ritwik Dutta, Anuradha Dutt, Vijayalakshmi Menon, Naresh Arora, Ekta
Kapil, Raj Panjwani, Krishnan Venugopal, Susmita Lal, Riku Sanna (for >-
Corporate Law Group) for the appearing parties.
The following Order of the Court was delivered by
E ORDER
Mis. Vedanta Aluminium Ltd. (fonnerly known as "Vedanta Alumina
Ltd.") has filed an allplication before this Court seeking clearance of the
proposal for use of723.343 ha ofland (including 58.943 ha ofreserve
F forest land) in Lanjigarh Tehsil ofKalahandi District for setting up Alumia
Refinery. The matter has been pending since 6.3.04. The Project consists
of setting up of a large integrated aluminium complex in Orissa by Ml
s.Vedanta Aluminium Ltd. (Mis. VAL, for short).
The short question which needs to be answered is :whether Mis.
G VAL should be allowed to set up its Refinery/Project known as "Alumina
Refinery Project". As stated above the Project involves the proposal for
diversion of 58.943 ha of forest land.
As a matter of preface, we may state that adherence to the principle
H of Sustainable Development is now a constitutional requirement. How
T.N. GODAVARAMAN THIRUMULPAD v. 449
UNION OF INDIA
much damage to the environment and ecology has got to be decided on A
the facts of each case. While applying the principle of Sustainable
Development one must bear in mind that development which meets the
needs of the present without compromising the ability of the future
generations to meet their own needs is Sustainable Development.
Therefore, courts are required to balance development needs with the B
protection of the environment and ecology. It is the duty of the State under
our Constitution to devise and implement a coherent and co-ordinated
programme to meet its obligation of Sustainable Development based on
inter-generational equity (See: A.P. Pollution Control Board v. Proof
M V Nayudu, [1999] 2 SCC 718. Mining is an important revenue C
generating industry. However, we cannot allow our national assets to be
placed into the hands of companies without proper mechanism in place
and without ascertaining the credibility of the User Agency.
It is not in dispute that in this case mining of bauxite deposits is
D
required to take place on the top ofNiyamgiri Hills. MOEF has given an
environment clearance for Alumina Refinery Project. All requisite
permissions have been obtained by the said applicant. The Refinery to
be constructed by Mis. VAL is one million ton Alumina Refinery at
Lanjigarh at an estimated cost of Rs. 4000 crores. The mining lease shall
stand in the name of OMC Ltd. (State Undertaking). The agreement E
between OMC Ltd. and Mis. VAL indicates that it is a joint venture in
which Mis. VAL is a contractor. The agreement further indicates that the
material will be sold by the lessee to M/s.VAL.
CEC has objected to the grant of clearance as sought by Mis. VAL F
on the ground inter alia that the Refinery is totally dependent on mining
of bauxite from Niyamgiri Hills, Lanjigarh, which is the only vital wildlife
habitat, part of which constitutes elephant corridor and also on the ground
that the said Project, including the mining area, would obstruct the
proposed wildlife sanctuary and the residence of tribes like Dongaria G
Kandha. According to CEC, Niyamgiri Hills would be vitally affected if
mining is allowed in the above area as Niyamgiri Hills is an important water
source for two rivers. According to CEC, the Project would also destroy
flora and fauna of the entire region and it would result in soil erosion.
According to CEC, use of forest land in an ecologically sensitive area H
450 SUPREME COURT REPORTS [2007] 12 S.C.R.
A like Niyamgiri Hills should riot pennitted.
On the other side, we have a picture of abject poverty in which the
local people are living in Lanjigarh Tehsil including the tribal people. There
is no proper housing. There are no hospitals. There are no schools and
B people are living in extremely poor conditions which is not in dispute.
Indian economy for last couple of years has been growing at the ~
rate of 8 to 9% of GDP. It is a remarkable achievement. However,
accelerated growth rate of GDP does not provide Inclusive Growth.
Keeping in mind the two extremes, this Court thought of balancing
C development vis-a-vis protection of wildlife ecology and environment in
view of the principle of Sustainable Development.
At this stage, we may observe that Mis. VAL has obtained all
necessary clearances. It now seeks clearance of the Project from this
D Court before it is placed before the Central Government.
The matter was heard at length on 26.10.07. At that time, we were
infonned that Mis.VAL is a subsidiary of Mis. Sterlite Industries (India)
Ltd. (M/s. SUL, for short) and that Mis. SIIL shall provide jobs on
pennanent basis to the tribals, particularly, land-losers. Since then we have
E received two affidavits both dated 2.11.07. In the first affidavit, filed by
Mis. VAL, it is stated that plant maintenance, power plant operations,
house keeping, canteen, material handling etc. Will be outsourced. There
is no positive statement as to the number of persons who would get jobs
on permanent basis. The statement refers only to the potentiality to employ.
F There is no study made in that regard. There is no statement as to in which
category they would be fitted. It is important to note that the Project is
funded by Vedanta Resources (a U.K.- based company). According to
the newspaper reports Vedanta Resources has been banned from Norway
for non-compliance oflabour laws and for violation of human rights. We
G quote hereinbelow the extract from the economic daily which is recently
appeared in one of the dailies:
"Norway dumps Vedanta from oil fund
Reuters
H OSLO
T.N. GODAVARAMAN THIRUMULPAD v. 451
__ --("- UNION OF INDIA
NORWAY has dropped British mining and metals group A
Vedanta Resources from its $350 billion oil fund at the
recommendation of the fund's ethics council, which blamed it for
environmental damage and human rights violations, the finance
ministry said.
B
Norway's Government Pension Fund invests Norway's
petroleum wealth in foreign stocks and bonds to save for when
the oil and gas run out. It is one of the world's biggest sovereign
wealth funds. "According to the recommendation (of the council),
the Fund runs and unacceptable risk of complicity in present and C
future severe environmental damage and systematic human rights
violations by continuing to invest in the company", the finance
ministry said.
Vedanta Resources' core business is mining and production of
copper, aluminium and zinc in India. It also has operations in D
Australia, Zambia and Armenia. " Vedanta Resources is accused
of having caused environmental damage and contributed to human
and labour rights violations", the ethics council said. "Vedanta is
accused of having caused environmental damage and contributed
to human and labour rights violations", the ethics council said." E
We do not wish to express any opinion on the correctness of the
said Report. However, we cannot take the risk of handing over an
important asset into the hands of the company unless we are satisfied about
its credibility. As stated above, under the Agreement between OMC Ltd. F
and Mis. VAL,the name of the contractor is Mis.VAL. The Agreement
states that Mis.VAL is the subsidiary of Mis. SIIL. However, the Financial
Statements annexed to the affidavit of Mis. SIIL dated 2.11.07 shows
that Mis. VAL is an associate company and not a subsidiary of Mis. SIIL
(See: page 31 of the affidavit filed by Mis. SIIL). On going through the G
Financial Statements of Mis. SIIL, we find that the operating profits from
·--r aluminium segment is negligible for the years ending on 31.3 .06 and
31.3.07 (See: page 65 of the affidavit filed by Mis. SIIL). However, under
Segment Reporting (in the Audited Financial Statement) the income from
aluminium segment is Rs. 455 crores (See: website of SIIL). We do not H
452 SUPREME COURT REPORTS (2007] 12 S.C.R.
A have the list of assets of Mis.VAL. Lastly, as stated above, Mis. VAL is
a joint venture partner with OMC Ltd. Nothing prevents Mis.VAL from
terminating joint venture agreement. We do not have even the Accounts
of Mis. VAL. In the circumstances keeping in mind the totality of the
above factors, we are not inclined to clear the Project.
B
Suggested Rehabilitation Package:
Liberty is, however, given to Mis. SIIL to move this Court if they
are agree to comply with the following modalities as suggested by this
Court. It is made clear that such an application will not be entertained if
C made by Mis.VAL or by Vedanta Resources.
(i) State ofOrissa shall float a Special Purpose Vehicle (SPV)
for scheduled area development ofLanjigarh Project in which
the stake-holders shall be State of Orissa, OMC Ltd. and Ml
s. SIIL. Such SPV shall be incorporated under the Companies
D Act, 1956. The Accounts of SPC will be prepared by the
Statutory auditors ofOMCLtd. and they shall be audited by
the Auditor General for State ofOrissa every year. Mis. SIIL
will deposit, every year commencing from 1.4.07, 5% of its
annual profits before tax and interest from Lanjigarh Project
E or Rs. 10 crores whichever is higher for Scheduled Area
Development with the said SPV and it shall be the duty of the
said SPV to account for the expenses each year. The annual
report of SPV shall be submitted to CEC every year. If CEC
finds non-utilisation or mis-utilisation of funds the same shall
F be brought to the notice ofthis Court. While calculating annual
profits before tax and interest Mis. SUL shall do so on the
basis of the market value of the material which is sold by OMC
Ltd. Mis. SIIL or its nominee.
G (ii) In addition to what is stated above, Mis. SIIL shall pay NPV
of Rs.55 crores and Rs.50.53 crores towards Wildlife
Management Plan for Conservation and Management of
Wildlife around Lanjigarh bauxite mine and Rs. 12.20 crores
towards tribal development. In addition, Mis. SUL shall also
H bear expenses towards compensatory afforestation.
T.N. GODAVARAMAN THIRUMULPAD v. 453
UNION OF INDIA
'---:--
(lii) A statement shall be filed by Mis. SIIL with CEC within eight A
weeks from today stating number of persons who shall be
observed on permanent basis in M/s. SIIL including land-
losers. They shall give categories in which they would be
permanently absorbed. The list would also show particulars
of persons who would be employed by the contractors ofM/ B
• s. SIIL and the period for which they would be employed.
(iv) The state Government has the following suggestions on this
issue:-
1. The user agency shall undertake demarcation of the lease c
area on the ground using four feet high cement concrete
pillars with serial number, forward and back bearings and
distance from pillar to pillar.
2. The user agency shall make arrangements for mutation and
transfer, of equivalent non-forest land identified for D
compensatory afforestation to the ownership of the State
Forest Department.
3. The State Forest Department will take up compensatory
afforestation at project cost with suitable indigenous species E
and will declare the said area identified for compensatory
afforstation as "protected forest" under the Orissa Forest
Act 1972 for the purpose of management.
4. The user agency shall undertake Rehabilitation of Project
affected families, if any as per the Orissa Rehabilitation and F
Resettlement Policy 2006.
5. The user agency shall undertake Phased reclamation of
mined out area. All overburden should be used for back
filling and reclamation of the mined out areas. G
6. The user agency shall undertake fencing of the safety
zone area and endeavour for protection as well as
regeneration of the said area. It shall deposit funds with
the State Forest Deptt. for the protection and regeneration H
454 SUPREME COURT REPORTS [2007] 12 S.C.R.
·~
A of the safety zone area.
7. Adequate soil conservation measures shall be undertaken
by the Lessee on the overburden dumps to prevent
contaminatinr of steam flow.
B 8. The user agency should undertake comprehensive study
j.
on hydrogeology of the area and the impact of mining on
the surrounding water quality and stream flow at regular
interval and take effective measures so as to maintain the
pre mining water condition as far as possible.
c 9. The user agency should undertake a comprehensive study
of the wild life available in the area in association with
institutes of repute like Wild Life Institute of India,
Dehradun, Forest Research Institute, Dehradun etc. and
shall prepare a site specific comprehensive Wild Life
D
Management plan for conservation and management of A
the wild life in the project impact are under the guidance
of Chief Wild Life Warden of the State.
l 0. The user agency shall deposit the NPV of the forest land
E sought for diversion for undertaking mining operations.
11. The user agency shall prepare a comprehensive plan for
the development of tribals in the project impact area
taking into consideration their requirements for health,
F education, communication, recreation, livelihood and
cultural lifestyle.
12. As per the policy of the State Government, the user
agency shall eaimark 5% ofthe net profit accrued in the
project to be spent for the development of health,
G education, communication, irrigation and agriculture of the
said schedule area within a radius of 50 Kms.
13. Controlled Blasting may be used only in exigencies
wherever needed to minimize the impact of noise on wild
H life of the area.
T.N. GODAVARAMAN THIRUMULPAD v. UNION OF 455
INDIA
14. The User Agency shall undertake development of A
greenery by way of plantation of suitable indigenous
species in all vacant areas within the project.
15. Trees shall be felled from the diverted area only when it
is necessary with the strict supervision of the State Deptt. B
.._
__,(
at the cost Of the project.
16. The forest land diverted shall be non transferable.
Whenever the forest land is not required, the same shall
be surrendered to the State Forest Deptt. under intimation
to Ministry of Environment and Forests, Government of C
India
IfM/s. SIIL, State of Orissa and OMC Ltd. jointly agree to comply
with the above Rehabilitation Package, this Court may consider granting
of clearance to the Project. D
CONCLUSION
IfM/s. SIIL Is agreeable to the aforestated Rehabilitation Package
then they shall be at liberty to move this Court by initiating a proper
application. This Court is not against the Project in principle. It only seeks E
safeguards by which we are able to protect nature and subserve
development. I.As. are disposed of accordingly. However, we once again
reiterate that the applications filed by Mis. stand dismissed.
RP. Interlocutory Application disposed of.
Search Indian case law
Ask in plain English, not just keywords. 25,000 AI words free, no card.
Try "Sustainable development"Sign in to search