KARNATAKA LOKAYUKTA

No. Compt/LOK/BCD/89/2007/ARE-2 Multi-Storied Building,
Dr. B.R. Ambedkar
Veedhi,
Bangalore 560 001.

18
th
December 2008

REPORT ON THE REFERENCE MADE BY THE
GOVERNMENT OF KARNATAKA UNDER SEC 7(2-A)
OF THE KARNATAKA LOKAYUKTA ACT, 1984

(PART – I)

Ref: (i) Govt. Order No. CI 164 MMM 2006 dated
12/03/2007
(ii) Govt. Order No. CI 164 MMM 2006 (Part), dated
09/09/2008
- - - - -

INTRODUCTION
The Government of Karnataka in exercise of powers
conferred under Section 7(2-A) of the Karnataka Lokayukta Act,
1984 (hereinafter referred to as the ‘Lokayukta Act’), vide Govt.
Orders referred above, has referred the following issues for
investigation and for submission of a report by the Lokayukta to the
Government with specific recommendations. The facts leading to
the reference as well as the terms of reference are as follows:
“(i) The spurt in the international prices of steel and iron
ore during last 3-4 years has made the mining and export of
high quality iron ore from the mining in Bellary, Tumkur
and Chitradurga Districts very lucrative. With the average
2


cost of production of iron ore at around Rs.150 per ton, and
the royalties to be paid to the Government being abysmally
low at Rs.16.25 per ton for different grades there have been
serious systemic distortions due to the high profit margins.
This has led to allegations of large scale corruption and
complaints of profiteering through illegal mining with the
complicity of the authorities in all levels of Government.

(ii) The Government in its orders vide notification No.
CI 16 MMM 2003 and No.CI 33 MMM 1994 both Dated:
15.03.2003, de-reserved for private, mining an area of 11620
square km in the State, meant for State exploitation/ mining
by the public sector and notified the surrender of an area of
6832.48 hectares of prime iron ore bearing lands
respectively, which has paved way for distribution of public
assets to select private individuals,/ entities without regard
to their professional or technical or business background.

(iii) The entire exercise was undertaken in a manner so as
to benefit only a select few individuals/entities. The main
objectives behind de-reservation i.e. to encourage mining
based industries to create more employment opportunities in
private sector, to attract private capital and professional
management for optimal use of state mineral resources were
given a go by and allotments were made to the applicants on
considerations other than merit.

(iv) It has been alleged that in the name of issuing
temporary transportation permits to lift and transport iron
ore in patta lands [which by itself is nor permissible in law],
large scale illegal mining activity was allowed to be carried
3


out for certain period, even in the forest areas, having no link
to the survey numbers of patta lands and for transportation
of the illegally mined ore from the forest areas on the
strength of such forest passes/ transport permits.

(v) It has been reported that the State has been deprived
of its revenues. There have been many complaints from
transporters associations regarding overloading of Transport
vehicles, that illegal gratification was sought for allowing
overloading of iron etc., and the repeated complaints and
representations by transporters associations, it has been
alleged to have not been seriously considered by the
Government. It is also alleged that most of the ore not
accounted for and transported illegally in excess was the out
come of illegal mining activities.

(vi) In the inspection report of the Accountant General of
Karnataka for the years 2003-2004 and 2004-2005 on
Mysore Minerals Limited (MML), a public sector
undertaking, several lapses were pointed out regarding
various Memorandum of Understandings (MOUs), raising
and marketing contracts, joint ventures etc., between
Mysore Minerals Ltd., and Private Companies, wherein the
interest of MML was compromised to deprive the PSU of the
Contractual Entitlements, dividends and profits due to one
sided agreements, non-revision or sub-optimal revision of
prices resulting in losses amounting to crores of rupees at a
time when the mining sector was generating huge profits.

(vii) It has also been noticed that the Iron Ore fines and
mud stocks/ low grade ore far in excess of the quantity were
4


allotted arbitrarily to select individuals through Mysore
Mineral Ltd., much below the prevailing market price and
MMTC price and even below the prices fixed from time to
time by MML itself. There have been complaints of certain
influential individuals who were part of the power structure
within the Government, by manipulating the records and
interfering in the affairs of MML, caused huge loss to the
Corporation and the State, Similarly major and minor
minerals such as granite, manganese and other minerals of
the state, for the past several years, have been misused,
indiscriminately exploited for benefiting a selected few
resulting in loss of revenue to MML and the State.

(viii) This has led to serious allegations and extensive
debate on the floor of both the Houses of Legislature with
references made to large scale illegalities, irregularities
leading to enormous loss to State exchequer and plundering
of state mineral wealth. Allegations have been leveled
against various authorities of Government of complicity in
illegal mining activities, which led the Hon'ble Chief
Minister to give an assurance on the floor of the House that
in order to ensure highest level of fairness and probity, an
impartial inquiry will be ordered in to the illegalities which
have taken place in Bellary, Tumkur and Chitradurga
Districts.

The issues referred for investigation and report are as
follows:
(a) Various alleged illegalities, irregularities, events, issues
and executive and other decisions set out in clause (i) to
5


(viii) and to assess the quantum of losses to the
Government and to suggest remedial measures to undo
such irregularities and illegalities.

(b) To enquire into the affairs so the Mysore Minerals Ltd.,
(MML) and its commercial activities carried out in a
manner to cause losses to the company and the instances
of direct/ indirect political interference/ patronage in the
commercial affairs of the company. To fix responsibility
and initiate suitable action, both, civil and/ or criminal as
may be appropriate, against all persons found
responsible, including private contracting parties.

(c) To fix responsibility and initiate suitable action against
all public servants including ministers whether in office
or otherwise state, its instrumentalities or State owned
Companies/Corporations or other bodies and authorities,
either in collusion with private parties or otherwise for
various acts of omission and commission leading to
various illegalities, irregularities, events and executive
decisions set out in clause (i) to (viii) and also pertaining
to issues such as:

(1) The process and timing of disposal of applications,
both in case of notified areas and free areas, for grant of
Mining Lease, Reconnaissance Permits and Prospecting
Licenses;

(2) the irregularities reported in issue of permits by both
Forest and Mines departments;

6


(3) the irregularities reported in transportation of
minerals such as overloading, the issue of informal "token
systems", transportation without permits etc;

(4) the entire range of the various aspects of illegal
mining ranging from encroachments, mining without
necessary permits and clearances, mining outside the
permitted areas, mining beyond permitted quantities,
illegal transportation of minerals etc.

(5) the mining and transportation of major minerals
from Patta lands without valid mining leases etc;

(6) the legality in transfer of leases from one lease holder
to another. This will include the case wise examination of
legality and validity of grant of mining leases, with
reference to the basic policy/ objectives behind the
decisions taken to de-reserve the areas meant for
exploitation by the public sector held and surrendered
areas and the instances of direct or indirect political
interference.

(d) All instances where the mandatory regulations and
statutory provisions have been given a go-by and not
observed, including environmental and other clearances,
to directly or indirectly facilitate and/ or encourage
illegal and/ or unregulated mining operations and to
suggest remedial measures and suitable action against
persons found responsible for their commissions and
omissions.

7


(e) Any other related issues, event and/ or instance which
the Hon'ble Lokayukta may deem fit and proper to go
into the illegal and un-regulated mining and related
issues, including de-reservation of the areas meant
exclusively for public sector in Karnataka's mining
regions ask mentioned above.

(f) To comprehensively inquire into the charges, allegations,
complaints of misuse and abuse of the office, if any elected
representatives, ministers and officers who held or hold
offices of profit for pecuniary benefit pertaining to illegal/
unregulated mining and incidental issues thereof,
resulting in loss of revenue to the Government of
Karnataka and Public Undertakings under the
Government of Karnataka.

(g) Illegal granite quarrying in Bangalore Rural District
and other Districts.

3. As per the Govt. Order dated 12/03/2007, the scope of the
investigation was from 01/01/2000 to 22/07/2006. Subsequently,
vide Govt. Order dated 9/9/2008, the scope of the investigation is
extended till 9/9/2008. This report, however, will consider some of
the issues referred for investigation, for the period upto 22/07/2006
and the findings relating to the period beyond 22/07/2006 and upto
9/9/2008 will be separately submitted.

4. On receipt of the reference, in view of the fact that the
investigation involved certain technical matters pertaining to
8


various aspects of mining, it was felt necessary to seek assistance of
persons who had the knowledge of mining, Forests and laws
concerned with forest and mining. With this view in mind, the
services of the following officers were utilized under Section 15(3)
of the Karnataka Lokayukta Act, 1984.

Sriyuths:

(1) Sri K.R. Chamayya, Former Secretary to Government,
Department of Law and Parliamentary Affairs.

(2) Dr. U.V. Singh, IFS, Conservator of Forests

(3) Sri R.L. Gaikwad, Retd. Dy. Director of Mines and Geology

(4) Sri A. Basavaraj, Retd. Dy. Director of Mines and Geology
(5) Sri K.C. Subhash Chandra, Retd. Sr. Geologist of Mines and
Geology

(6) Sri H.N. Venkatesh Murthy, Retd. Superintendent, Forest
Department

(7) Sri Udayakumar, Regional Director, Environment,
Department of Forests and Ecology, Belgaum

(8) Dr. M.H. Balakrishnaiah, Director, Karnataka State Remote
Sensing Applications Centre, Bangalore

Apart from the above, the services of the following are also
availed under Section 15(3) of the Lokayukta Act, in the present
investigation.

(1) Sri Rajanna, Retd. FDA, Forest Department
(2) Sri Annappaiah Herale, Retd. FDA, Forest Department
(3) Sri Sreerama Rao, Retd. Gazetted Assistant
9


(4) Sri Veerabhadraiah, Retd. Sr. Judgment Writer
(5) Sri Avilash, Photographer/Videographer
5. It was also felt necessary that a public notice should be issued
calling for information from the persons acquainted with the subject
matter of the investigation. Hence, public notices have been issued
in the leading newspapers both Kannada and English, especially
which had wide circulation in the districts of Bellary, Chitradurga,
Tumkur, Bangalore City and Bangalore Rural Districts.

6. Records relating to the subject matter of investigation have
been secured from the Department of Commerce and Industries,
Department of Forest, Environment and Ecology, Revenue
Department, the Directorate of Mines and Geology, Office of the
Principal Chief Conservator of Forests, Office of the Managing
Director, M/s Mysore Minerals Limited (MML for short), Office of
the Dy. Commissioners of the concerned Districts, besides, the
records of Justice U.L. Bhat Commission of Enquiry, which was
earlier appointed by the Government of Karnataka for holding an
enquiry in regard to part of the reference made now to the
Lokayukta.

7. As part of the investigation, report in respect of evaluation of
cases relating to the issue of permits to lift and transport
manganese/iron ore from patta lands was submitted by Sri R.L.
Gaikwad’s team and on consideration of the same, it was found
that Dr. M. Basappa Reddy, the former Director of the Department
10


of Mines and Geology had committed illegalities in the issuance of
permit for transport of minerals from patta lands, hence his
comments were sought under Section 9(3) of the Lokayukta Act.
This was done out of turn, because, Dr. M. Basappa Reddy had by
then retired and the period of limitation to take action against him
was running out. On receipt of the reply from Dr. M. Basappa
Reddy and scrutiny of the same, since his explanation was found
unsatisfactory, a report dated 6/3/2008 under Section 12(3) of the
Lokayukta Act has been sent to the Government, recommending
initiation of departmental proceedings against Dr. M. Basappa
Reddy. The Government after accepting the said recommendation,
has ordered initiation of departmental enquiry against Dr. M.
Basappa Reddy and entrusted the said enquiry to the Lokayukta
with a request to submit a report to it after the enquiry. The said
enquiry is in progress. In the meantime, Dr. U.V. Singh who was
entrusted with the survey of quarrying areas in the Bangalore Rural
District and mining areas in Bellary was directed to submit his
report in regard to illegal mining and quarrying in the districts
mentioned in the reference Govt. Order. He was authorized to
requisition the services of such officers as he felt necessary. Since
then, Dr. U.V. Singh has submitted his report to which reference
will be made at an appropriate stage in this report. Same is annexed
to this report as ANNEXURE ‘A’.

11


8. The Gaikwad’s team which was examining the issue of grant
of transport permits for transporting illegally mined
iron/manganese ore from the patta lands has submitted an
elaborate report. A copy of which is also annexed to this report as
ANNEXURE ‘B’.

9. The Gaikwad’s team has also examined the issue relating to
lapses pointed out by the Accountant General of Karnataka
regarding MOUs raising, processing and marketing contracts, joint
ventures, etc. entered into by the MML with private companies
resulting in losses amounting to crores of rupees to the company
and submitted a report. On the basis of the same, comments were
called for from the concerned officers and after considering the
comments and other materials on record and in pursuant to the
discussions they had with me, Gaikwad team have submitted their
revised report which is at ANNEXURE-C.

10. The issue relating to de-reservation of mining area of 11,620
Sq. Kms. in the State meant for State exploitation/mining by the
public sector and the related matters referred for investigation has
been examined by the Gaikwad’s team and the report submitted in
that regard is at ANNEXURE-‘D’.

11. The Gaikwad’s team has also gone into the issue relating to
the legality in the transfer of leases from one lease holder to another
12


on case wise examination of the legality and submitted the report,
the copy of which is at ANNEXURE-‘E’.

12. During the preparation of this report, the Government of
Karnataka by its order dated 09/09/2008, has extended the period
of reference to 09/09/2008. But this report will for the present
confine only upto the period of 22/07/2006 and findings upto the
extended period will be submitted separately. The reference has
also asked me to initiate suitable action both civil and criminal but
that is legally not possible because this is a reference under Section
7(2-A) of Lokayukta Act and not an investigation or inquiry
initiated by the Lokayukta. Similarly, investigation as to
irregularity in granting quarrying leases and illegality in quarrying
will be submitted separately. In this report, though I have come to
some conclusions in regard to various irregularities and named the
persons responsible for some such irregularities and illegalities in
respect of the remaining issues, persons responsible for such
irregularities have not been named in this report for want of
information about them, which finding also will be included in the
next report.

13. The other point that is necessary to be mentioned in this
report is, there may be complaint from some sources and persons
that they have not been issued show-cause-notices, but their names
find place in the report while some others have been issued notices
and opportunities have been given to them of showing cause. In
13


law, in a reference like this, no notice is necessary to be given to
people against whom report is being sent [Dr. K. Chowdappa Vs State
of Karnataka and others (ILR 1990 KAR 798)], however, in some cases
where I thought clarifications are necessary at this stage, some
notices have been issued. Such notices seeking clarifications are
legally not mandatory as has been held by the Hon’ble High Court
in the above cited case.

ISSUES CONSIDERED IN THIS REPORT:

In the circumstances referred in the various terms of
reference stated in the G.O. dated 12/03/2007, the following issues
are considered in this report in the first instance.

Various alleged illegalities, irregularities, events, issues
and executive and other decisions set out in clause (i)
to (viii) and assessment of the quantum of losses to the
Government and remedial measures to be suggested to
undo such irregularities and illegalities.

The affairs of Mysore Minerals Ltd., (MML) and its
commercial activities carried out in a manner to cause
losses to the company and the instances of direct/
indirect political interference/ patronage in the
commercial affairs of the company, fixing of
responsibility and initiation of suitable action, both,
civil and/ or criminal as may be appropriate, against
14


all persons found responsible, including private
contracting parties.

Fixing responsibility and initiating suitable action
against all public servants including ministers whether
in office or otherwise state, its instrumentalities or
State owned Companies/Corporations or other bodies
and authorities, either in collusion with private parties
or otherwise for various acts of omission and
commission leading to various illegalities,
irregularities, events and executive decisions set out in
clause (i) to (viii) and also pertaining to issues such as:

The irregularities reported in issue of permits by both
Forest and Mines departments;

The irregularities reported in transportation of
minerals such as overloading, the issue of informal
"token systems", transportation without permits etc;

The entire range of the various aspects of illegal
mining ranging from encroachments, mining without
necessary permits and clearances, mining outside the
permitted areas, mining beyond permitted quantities,
illegal transportation of minerals etc.

The mining and transportation of major minerals from
Patta lands without valid mining leases etc;

15


The legality in transfer of leases from one lease holder
to another including case wise examination of legality
and validity of grant of mining leases, with reference to
the basic policy/ objectives behind the decisions taken
to de-reserve the areas meant for exploitation by the
public sector held and surrendered areas and the
instances of direct or indirect political interference.

All instances where the mandatory regulations and
statutory provisions have been given a go-by and not
observed, including environmental and other
clearances, to directly or indirectly facilitate and/ or
encourage illegal and/ or unregulated mining
operations and suggesting remedial measures and
suitable action against persons found responsible for
their commissions and omissions.

The other related issues, event and/ or instance which
are deemed fit and proper to go into the illegal and un-
regulated mining and related issues, including de-
reservation of the areas meant exclusively for public
sector in Karnataka's mining regions mentioned above.

The charges, allegations, complaints of misuse and
abuse of the office, by any elected representatives,
ministers and officers who held or hold offices of profit
for pecuniary benefit pertaining to illegal/ unregulated
mining and incidental issues thereof, resulting in loss
of revenue to the Government of Karnataka and Public
Undertakings under the Government of Karnataka.
CHAPTER – I
History of Mining

In view of the nature of reference, I consider it appropriate to
make a brief reference to the history of mining in general in the State of
Karnataka, with particular emphasis on iron ore mining.

The State of Karnataka is endowed with vide variety of
minerals. Apart from gold, it has resources of a few other valuable
minerals like iron and manganese which are in considerable deposits.
The above minerals except gold is found in large quantity in the
districts of Bellary, Chitradurga and Tumkur. This State is also rich in
ornamental stones, clay, ochre, quartz, gemstones, copper, Kaolin,
Limestone, magnetite etc. The iron ore in the belt of Sandur is found to
be of high grade with the varying Fe content between 62-68%. What
follows hereinafter is the extract of the report of Dr. U.V. Singh at
Annexure-‘A’, in relation to the history of mining in Bellary District
with which I am in agreement.

Bellary district is fairly well graced with the wide variety of
minerals, out of which iron and manganese are major ones.
Distribution of mineral resources in the District is given below:

Sl.
No.
Name of Minerals Place of occurrence
1 Iron Ore Deposits Hospet, Bellary and Sandur Taluks
2 Manganese Hospet and Sandur Taluks
3 Lead Ore Metri, Devalapura Village in Hospet
Taluk
17


4 Satellite, Talk Soapston North west Swamihalli Village,
Sandur Taluk
5 Graphite and Gold
Deposits
North East of Sandur, Near Talur
Village.
6 Yellow and Red Orches
Deposits
Near Swamihalli in Sandur Taluk.
7 Quarts Near Naduvi of Siruguppa Taluk
8 Moulding sand All along Thungabhadra River
9 Ornamental stones Pink and Grey granite at Siruguppa
Taluk, Black Granite at Hospet Taluk.

(Abstract from NEERI report)

Iron and Steel industry is age-old in Karnataka. The steel
produced from Karnataka was known by the name Wootz. The
Damascus blades known for their strength, flexibility and sharpness
are believed to have been fabricated from Wootz steel. Karnataka
occupies the fourth place in iron ore resources and production, in the
country after Bihar, Orissa and Chattisgarh. Magnetite ore of
metallurgical grade is mainly found in Western Ghats of Karnataka,
while Hematite concentrate of high quality is mainly found in Bellary
District.

The most common iron-bearing minerals are;

Mineral Description Fe-content

Hematite (Fe2O3) 70.0% Red, oxide ore
Magnetite (Fe3O4) 72.4% Black, most common
Pyrite (FeS2) 46% Sulphide ore
Siderite (FeCO3) 48% Carbonate ore
Limonite (Fe2O3.H2O) 59.63% Yellow, hydrated oxide

18


The Bellary, Hospet and Sandur (BHS) region forms a part of the
“Sandur Schist Belt” named as the “Dhawars”, a group of Precambrian
Schistose rocks of Mysore. Structurally, the Sandur Hills form a tightly
folded synclinorium with close repetition of strata due to minor folds.
The strike of the ore bodies is generally parallel to the trend of the hill
ranges. The dips are often steep, being vertical in a number of places.
Opposing dips towards NE and SW are found in the Ramghad and
NEB blocks respectively.

Distribution of the Iron Ore Deposits:
The important iron ore deposits of BHS region for academic and
administrative purposes are grouped into the following main blocks:

1. NEB block (North Eastern Block)
2. Kumaraswamy block
3. Ramghad block
4. Donimalia block
5. Devadari block
6. Thimmappana gudi block
7. Belgal range or Copper mountain block
8. Ettinahatti block

1. North Eastern Block: This block is closest to the existing Railways
and for this reason, the most exploited block is the BHS area. This
block is the least explored range by Government agencies (except MML
at Jambunathanahalli.) and bulk of the area is held under private
leases. NEB block is significant because of persistence of ore body,
consistent grade (both lumps and fines) and high recovery of lumps
19


and fines near to Hospet rail yard. The length of the range is about
27km from Hospet to Sandur and large number of mines are present in
this block. Float ore mines were common during 1950’s and 2000’s.
Presently mining is confined to reef ore deposits. There are more than
34 mining leases pertaining to this block. This block is further divided
into four sub blocks viz. Karadikolla, Dalmia Cement, Central and
Jambunathahalli.

Karadikolla Sub Block: This part of the NEB block is mainly occupied
by Chowgule & Co. and Laxminarayana Mining Co. and
Thimmappanagudi mine of Mysore Minerals Limited. The area of this
sub block extends upto 5 km. There are four iron ore bands running
NW-SE. Dips are found towards NE. The width of ore band varies
from 20 to 50 meters. This part of the block is estimated to have about
28 million tons of high grade iron.

Dalmia Cement Sub Block: Continuation of Karadikolla part of block
towards North Eastern side is Dalmia Cement Sub block. This part of
NEB block is formed to a length of around 3.0km and width varies
from 25 to 50 meters. This sub block is unique in iron ore deposit
unlike all other iron ore deposits in the BHS sector, this area has high
grade (Fe 67-68%) with hard and lumpy ores of steel gray colour. The
reserves are estimated at 30 million tons.

Central Sub Block: This sub block is in continuation of Karadikolla sub
block towards North Western side. This sub block is occupied by
number of mining companies. Till the year 2001, small scale mining
20


was in progress and now due to present “China boom” in iron ore
market most of the companies have increased their production. The ore
deposit has been found over a length of about 10km. with a width of
the bands ranging from 20m to 32 meters. The grade of the ore varies
from 58 to 66% Fe. The main mines in the sub block are S.B. Minerals,
Balaji Mines and Mineral Pvt. Ltd., S.V. Srinivasalu Mines, Muneer
Enterprises, Trident Mining Company and others. The total estimated
reserves of this sub block may be 30 million tons of very high grade
iron ore.

Jambunathanahalli Sub Block: This part of block is having richest
grade of iron ore on this sector and average grade is around 66% Fe
and of high quality. This part of the NEB is running almost 7km length
and ore body also follows the trend of the hill range and to its full
length. Extensive mining is being done in this part of the range by
number of private mine owners since 30 years. The major leases of iron
ore in this part are Mysore Minerals Ltd., R. Pompapathi, R.B.S.S.N.,
K.M.M.I., G.G.Bros. P.V. Shetty, P. Balasubba Shetty, Banashankari
Mines and others. In this sub block ore body depth goes beyond 100
meters. Ore body nature is of homogeneous without much interference
of clay bands. The dips of the ore zone are towards SW. The total
reserves estimated in this part of the range are around 30 million tons
of very high grades. The NEB is under tremendous pressure of
exploitation and requires rationing to keep sustainability for longer
period of very rich high grade ore of this kind which is rare deposit on
the earth.
21


Main mines in NORTH EAST BLOCK - SANDUR.

Sl.
No.
Name of the Lessee
Lease
M.L. No.
Extent
(ha.)
1 Gogga Gurushantaiah and Bros. 2522 42.90
2 Gogga Gurushantaiah and Bros. 2520 18.21
3 P. Balasubbashetty & Sons. 2502 44.11
4 Gogga Gurushantaiah and Bros. 1028 63.13
5 Sri Srinivasa Minerals 1933 16.46
6 M/s R. Pampapathi 1806 182.5
7 M/s Mysore Minerals Ltd. 1659 38.45
8
Mr. R. Charuchandra
M/s Shri Nidhi Iron Ore Mines
2102
2544
45.00
9 Sri. H.N. Premkumar 2538 19.15
10 Sri. K.R. Kaviraj 2561 34.40
11 M/s Auro Minerals 1751 31.00
12 Sri. Allam Basavaraj 1893 56.75
13 Sri. H.P. Manjunath 699 3.03
14 M/s P. Venganna Setty & Bros. 1046 50.00
15 M/s Ashwathnarayan Singh &Co. 2531 129.50
16 S.B. Minerals 2550/1301 44.52
17 Balaji Mines & Minerals 731/2564 22.66
18 S.V. Srinivasalu 1634 149.73
19 M/s Muneer Enterprises 2339 36.42
20 BIOM 1626 80.94
21 M/s Mineral Syndicate 2320 2.12
22 Trident Minerals 2315 32.27
23 Trident Mining Company 1732 5.26
24 Dalmia Cement Ltd. 2010 331.52
25 Manzoor Ahamed 1324 15.97
22


26 Veeyam Pvt. Ltd. 988 20.23
27 M/s Mysore Mineral Ltd. 2002 621.59
28 Sri. H.G. Rangana Gowda 2549(2150) 54.63
29 M/s K.M.M.I 1799/2075 199.43
30 M/s R.B.S.S.N. 2021/2524 76.09
31 M/s R.B.S.S.N. 2022/256 31.56

2. Kumaraswamy Block: In continuation with the Ramghad block
toward south east side the Kumaraswamy block falls. The gorge in
Narihalla stream is the fault zone where it bifurcates the iron ore
deposits in the block. This block is covered by south-eastern limb of the
Sandur hills of 57A/12 and 57B/9 toposheet. This block is a plateau of
20km length and 15 km wide. The area could be approached from
Sandur via Nandihalli and Subbarayanahalli and now many new
mines’ roads are also constructed. Swamyhalli and Yeshwanthnagar
are two railway sidings where iron ore is being loaded in Rail.

The ore deposits in Kumaraswamy block are generally found at
the top of the hill range usually above 900m contour. The ore bands
have been located to a length of about 18 km. with the width of 20m to
30meters. The chief ore is hematite. It is steel-grey in colour and hard
and massive. The ore bodies of this block may be further classified to
sub blocks namely: a) Appenahalli, b) Kummadharuvu, c) Central, d)
Harishankar and e) Sunderbencha sub blocks.

a) Appenahalli Sub block: This sub block is located to the west of
Appenahalli village and runs to a length of about 1200m of a mile in
NNW-SSE direction and dips at an angle of 30
0
to 35
0
NE. The ore is
23


siliceous and limonitic. The approximate reserves in this sub block
would be 20 million tons of high grade. The mines of this area belong
to M/s Narayan Mines and M/s SMIORE.

b) Kummadharuvu sub block: This sub block falls to the south of
Kummadheruvu village and runs in N-S direction over a length of
1.5km with a width of 120m. The ore deposit is mostly hematite. The
road from Sandur to Deogiri passes through the middle of this sub
block. The expected ore reserves in this area are about 38 million tons
of very high grade. The mine located in this area belongs to SMIORE,
NMDC, and M/s Bharath Mines.

c) Central Sub Block: This sub block is one of the major deposits of the
Kumaraswamy block and starts from topo point 3658 and located upto
Kumaraswamy temple. The ore is massive and atleast 8 ore bodies are
found. The estimated ore reserves are of 115 million tons of high
grade. The NMDC is having majority of the area.

d) Harishankar sub block: It is located around Kumaraswamy temple
and forms the extension of central sub block. This area is endowed
with massive ore of high grade with laminated variety of deposit width
35 to 80 meters. This area was mainly occupied by SMIORE and MML.
The estimated reserves in this area are of 90 million tons of high grade.

e) Sunderbencha Sub block: This is another sub block of iron ore
located to the north of Sunderbencha. The ore found here is mostly
hard and laminated. The expected reserves are of 15 million tons of
24


high grade. Total reserves in the Kumaraswamy block is around 260
million tons of high grade.

Main mines in KUMARASWAMY BLOCK

Sl.
No.
Name of the Lessee
Lease
M.L. No.
Extent
(ha.)
1
M/s Hothur Traders
2313 21.11
2
M/s Bharath Mines & Minerals
2245 26.20
3
M/s V.S. Lad & Sons
2290 105.06
4
Smt. Ambika Ghorpade
2354 4.95
5
M/s NMDC
1111 647.50
6
M/s Sugunraj
1779 16.18
7
Smt. Omkaramma
1168 30.75
8
Sri B. Kumaragowda
1611
9
M/s Narayana Mines (P) ltd.
1602 109.27
10 M/s Mysore Minerals Ltd.
MMM 79
dt.5-1-80
80.93
11
M/s Gadagi Mineral Mining Co.
2489 39.63
12
M/s Mysore Mineral Ltd.
1754 6.07
13
M/s SMIORE Ltd.
1179/2580 2837.00
14
M/s H. Hanumatha Rao
2505 40.47

3. Ramghad Block: This block of iron ore spread over an area of 17.00
sq.km is located towards the N.W. of Sandur. The range is accessible
both from Hospet and Sandur. The Hospet railway station of the
Hubli-Hospet-Guntkal section of the S.W.R and S.C.R is about 25km
from the main body. Ramghad is the nearest railway station which
runs parallel to and along the western flanks of the Ramghad block.
The block is figured at Toposheet no.57A/8 and 57A/12.

25


The major ore minerals are hematite and limonite. The total in situ
reserves are estimated at 220 million tons of high Fe grade. Blue dust
reserve is also noticed in this block.

Main mines in RAMGHAD BLOCK - HOSPET
Sl.
No.
Name of the Lessee
Lease
M.L. No.
Extent
(ha.)
1 Rajapura Mines 2190 93.74
2 Sri. V.N.K. Menon 1715 1.610
3
M/s Zeenath Transport
Company
2309 36.42
4
M/s Zeenath Transport
Company
2239 44.13
5 Sri S.A. Thawab 2488 31.60
6 M/s Adarsha Enterprises 2369 2.91
7 J.M. Vrushabendraiah 2173 3.29
8
Ramghad Minerals and Mining
Pvt. Ltd.
2451 24.28
9
Sri. Shanti Priya Minerals Pvt.
Ltd.
2540 80.97
10 M/s Laxmi Minerals 2545 36.42
11 M/s Laxmi Minerals 2551 22.26
12
M/s Associated Mining
Company
2434 10.12
13 M/s S.B. Minerals 2393 40.47
14
Ramghad Minerals and Mining
Pvt. Ltd. (Sri Ily Gurunath)
622 20.23
15 Sri. Kannhailyalal Duderia 2563 30.76
16 M/s SMIORE Ltd. 1952/2581 378.00
17 M/s Mineral Sales (P) Ltd. 2416/1801 347.26
18 Smt. Shantalaxmi Jayaram 2553 (921) 50.47
19 M/s S.B. Minerals Ltd. 2515(2068) 80.92

26


4. Donimalai Block: This block is located East to South East of Sandur
and covers an area of 13.00km. The nearest main railway station is
Toranagallu on the Bellary-Hospet railway sector. It also connects to
the western foot of the Donimalai block near Ranjitpura. The major
part of the block is occupied by NMDC. The ores found in this block is
of high grade i.e. 65% Fe. The total deposit reserve is estimated
approximately at 160 million tons.

Main mines in DONIMALAI BLOCK
Sl.
No.
Name of the Lessee
Lease
M.L. No.
Extent
(ha.)
1
M/s NMDC Ltd., Donimalai Town
ship
2396 608.000
2
M/s Tungabhadra Minerals Ltd.,
Hospet
2365 125.580
3
M/s Tungabhadra Minerals Ltd.,
Hospet
2366 33.970
4 Smt. K.M. Parvathamma, Bellary. 2514 24.910
5
M/s Mysore Minerals Ltd.,
Ubbalagandi
(old)
995
33.600
6 M/s H.R. Gaviappa & Co., Bellary 2483 34.000
7 M/s Nadeem Minerals 2526 283.28

5. Devadari Block: This block is located to the South of Sandur and
forms the western limb of the Sandur schist belt and falls in between
Donimalia and Kumaraswamy hills. The block is about 6.5 km long
and runs NNW-SSE direction. The ore deposition is about 65% Fe
grade which is quite hard and lumpy. The total available reserve from
this block is estimated to the order of 25 million tons of high grade.

6. Thimmappanagudi Block: This block is in continuity of Donimalai
block. The SW side of the Narihalla stream is the Ramghad and
27


Kumaraswamy blocks and towards NE the Donimalai and
Thimmappanagudi blocks. This is approachable from Sandur towards
NE side via Muraripur. The nearest railway station is Toranagallu and
presently the area is being mined by MML raised by Jindal Vijaynagar
Steel Company. About 30 million tons of ore with a grade of 62% to
65%Fe are estimated in the block under mining leases.

7. Belgal (Copper Mountain) Block: This is the block found near to
Bellary and has been known as the Copper mountain block though
there are no indications of Copper deposit. The total length of the
block is 17.5km in NW-SE direction and starts from west of the
Bangalore-Bellary road. There are as many as more than 15 ore bodies
located in this block. Bellary Cantonment is nearest railway station for
ore loading. Distribution of iron ore is erratic and with a grade of 60 to
67%Fe. The recovery of ore is poor and often it is around 50 to 60%.
This block has estimated reserves of 30 million tons of high grade iron
ore.

Main mines in BELGAL BLOCK (COPPER MOUNTAIN BLOCK)
Sl.
No.
Name of the Lessee
Lease
M.L. No.
Extent
(ha.)
1 M/s Mineral Miners & Traders 2185 46.13
2 M/s Gavisiddeswara Enterprises 80 5.67
3 Sri. Allum Prashant 2289 42.90
4 Sri. N. Ratnaiah 670 14.16
5 M/s V.G.M. Pvt. Ltd. 1193/2469 55.00
6 M/s T. Narayan Reddy
7
M/s Sugulamma Gudda Mining
Co.

8 M/s Hind Traders
9 M/s Mahboob Traders
28


8. Ettinahatti Block: The Ettinahatti block falls at the eastern most part
of the Sandur. The Toranagallu and Bannihatti are the nearest railway
stations to this block. The iron ore deposits in this block are found
mainly to hill tops. The width of the ore bodies varies from 25 to 50
meters. The grade is about 66%Fe. The Tungabhadra Minerals Ltd. is
the main mine in this block.

Iron Ore Production and Mining Leases in Karnataka

Iron ore production from Bellary Zone is around 12.4 million
tones during 2001-2002 and around 13.9 million tones during 2002-2003
of all grades of iron ore including the production of public sector
mines. Thus, iron ore production was about 1.2% of the total reserve
i.e. 1000 million tones but it has increased during “China Boom”. The
production of iron ore of all grades have suddenly increased over the
years and it has reached to 41 million tones by the end of the year 2007.
The grade wise production of iron ore from Bellary – Hospet region in
the recent past is in the range of 5.5 to 6 million tones of high grade
lumps and fines (65% Fe and above) and little over 3.4 million tones of
medium grade (62-65%Fe) and rest is low grade ore.

As stated above, the State of Karnataka ranks fourth in the
Indian Union in regard to iron ore resources and production. The
statement enclosed gives a relative status of production and export of
iron ore from the Karnataka State for the period from 2000-2001 to
2005-2006. There is a significant rise in the iron ore production during
the period from the year 2001 to 2006. The total rise in production in
29


the year 2006 is 237% as compared to the production for the year 2001.
The percentage rise in the export value realization and value of ores
domestically consumed is 1014.67 and 1232.97 respectively for the
reference period 2000-2001 to 2005-2006. These values indicate a
radical rise in the iron ore production, export and consumption. When
these values are correlated to the iron ore producing mining leases in
the State of Karnataka, there is no significant rise in the number of
mining leases. As per information available on record, only 11 new
mining leases for iron ore were granted and executed during the
reference period.

IRON ORE PRODUCTION AND EXPORT PARTICULARS
KARNATAKA STATE (2000 to 2006)
Y
e
a
r

P
r
o
d
u
c
t
i
o
n

(
M
i
l
l
i
o
n

M
.
T
)

E
x
p
o
r
t

(
M
i
l
l
i
o
n

M
.
T
)

D
o
m
e
s
t
i
c

U
s
e

(
M
i
l
l
i
o
n

M
.
T
)

E
x
p
o
r
t

p
r
i
c
e

(
U
.
S
.
$
/
D
M
T
)

T
o
t
a
l

E
x
p
o
r
t

V
a
l
u
e


(
I
n

M
i
l
l
i
o
n

$
)

D
o
m
e
s
-
t
i
c

p
r
i
c
e

(
R
s
.
/
D
M
T
)

T
o
t
a
l

v
a
l
u
e

o
f

d
o
m
e
s
t
i
c

c
o
n
s
u
m
p
t
i
o
n

(
i
n

M
i
l
l
i
o
n

R
s
.
)

R
e
v
e
n
u
e

r
e
a
l
i
z
e
d

b
y

t
h
e

S
t
a
t
e

a
s

R
o
y
a
l
t
y

(
i
n

M
i
l
l
i
o
n

R
s
.
)

2000-01 12.09 6.19 5.90 29.74 184.09 274 1616.60 281.09
2001-2002 30.22 12.29 17.93 29.07 357.27 297 5325.21 740.39
2002-2003 25.23 13.64 11.59 31.67 431.98 302 3500.18 618.14
2003-2004 33.95 16.30 17.65 40.38 658.19 651 11490.15 831.78
2004-2005 41.73 21.82 19.91 70.25 1532.86 841 16744.31 1074.54
2005-2006 40.83 20.52 20.31 100.00 2052.00 1061 21548.91 1102.41
Total 184.05

90.76 87.39 -- 5216.39
(Million
$)
-- 60225.36
(Million
Rs.)
4648.39

30


Approximate number of mining lease/licences granted till the year
2000.

The information in this regard as extracted from the
”Administration Report of the Department of Mines and Geology for
the year 2000-2001” (page 5 of the report) is as below:

Sl. No. Mineral No. of
mining leases
Extent
(Hectare)
1 Gold 5 6233.81
2 Iron Ore 196 22500.66
3 Iron and Manganese 88 17397.58
4 Chromate 7 843.56
5 China Clay 60 2918.26
6 Lime stone 175 27872.91
7 Lime shell 42 6338.28
8 Silica Sand 80 4626.83
9 Others 632 7515.22

CHAPTER – II

Visit to Mining Areas

To better understand the ground realities, I visited the three
districts where iron ore mining is predominantly done. On 20
th
May,
2008, a team lead by me proceeded to a village called Shivasandra in
Gubbi Taluk of Tumkur District, which is situated about 25 Kms from
Gubbi. The place visited by me in this village is situated about 6 Kms.
inside from Gubbi Chikkayanayakanalli Road. The road leading to this
place is a kacha road, obviously used by heavy vehicles for
transportation of minerals.



While driving up to the site visited by me, one could see extensive
mining done which also indicates that mining is of recent origin. One
could also see the wheel marks of JCBs used for mining purpose. There
were also iron ore stocks heaped and kept ready for the purpose of
transportation.
32





According to the Dy. Commissioner, Tumkur who accompanied me, no
mining lease has been granted in regard to any area in this village and
that the mining that has been done are wholly illegal. I was also told
that a few days earlier nearly, 4100 metric tones of illegally mined iron
ore was seized and auctioned. One could see that the land beyond the
mined area is full of greenery, but, contains iron ore.


33




If prevailing activity is allowed to continue, this greenery is not likely
to last long. The survey number of the area that has been illegally
mined is stated to be Sy.No. 45 of Shivasandra Village which measures
about 512 acres. The manner in which the road is constructed and the
equipment used for mining indicates even illegal mining in this area
has been done in a systematic manner and the same is not sporadic.


Obviously, large quantity of iron ore has been excavated and
transported causing not only revenue loss to the State, but, also
34


damage to the ecology. If this activity is not stopped forthwith,
damage to ecology will be irreparable.

On the same day, after visiting the site referred above, I visited
another area in the same survey number, where a company by name
Canara Mines Private Limited was involved in mining activities. This
company possesses mining lease No. 2536 originally granted to this
company in the year 1988 and I was told that it has been renewed in
the year 2007. The mining lease was granted for the purpose of mining
manganese ore. But, when I visited the place, it was found that the ore
that has been mined is not manganese, but iron ore, for which there is
no lease granted by the Government. I was also told that there is a
dispute in regard to lessees’ right between the holder of the lease and
some other third party. Without a proper mining lease to mine iron
ore, the mining that has been done in this land by the said company is
unlawful. The area in which the mining is done is about 11.33 hectares
and I was told by the official accompanying me, that the entire area is
being used for the purpose of mining iron ore. The fact that the land in
question is being used for mining iron ore, obviously is within the
knowledge of the officials of the Department of Mines and Geology,
the mining lease has been renewed in February 2007 for mining
manganese. One Mr. Shobachala claiming to be the representative of
the Shivasandra Minerals stated that the Canara Minerals is a part of
the Shivasandra Minerals and the same was purchased about an year
back. He also stated that since the company found iron ore instead of
manganese, the same was mined and necessary application to include
35


iron ore in the lease is pending before the Government. At any rate,
present mining activity of extracting iron ore is illegal and the lease is
liable to be cancelled.

On 20
th
May, 2008 itself, I along with my team visited Sy.No. 61
of Haranehalli Village which is about 30 Kms from Gubbi. Sy.No. 61 of
this village measures 86 acres. Out of this, 43 acres have been granted
to various persons for agricultural activities and no mining lease has
been granted in this area. But, extensive mining was noticed in this
area. The Dy. Commissioner who was accompanying me said that this
place was raided while mining activities were going on and at one
instance 3000 metric tones of iron ore was seized and auctioned for
Rs.20,00,000/-. In another instance, about 1300 metric tones of ore had
been auctioned for Rs.7,20,000/-. According to him, though illegal
mining has been going on for the last about two years, no steps
whatsoever have been taken by the concerned to stop these illegal
activities.

On 20
th
May, 2008, I also visited Sri Hanuman Mines situated in
Sy.No. 195 of Rajathadripura Reserve Forest Area. Originally, the land
was leased by the Government to one Sri B.D. Hanuman Singh and the
same was renewed in the year 1996 for a period of 20 years in the name
of Sri B.D. Hanuman Singh. It is stated that recently one Sri Vinod
Goel got the lease transferred by the Government in his favour and
since about five months, i.e. from 27/11/2007, mine is being operated
by Sri Vinod Goel. The officials of the Forest Department
accompanying me stated that a part of the mined area has not been
36


permitted to be used for mining, being in a reserve forest. It was also
stated that proper sanction has not been obtained for using the land for
non-forest activities. The representatives of the mining company
however, denied this and they also stated that the matter was subjudice
before the Civil Court. The Dy. Commissioner stated that the joint
survey was first conducted on 14/12/2006 for the first time and a
subsequent joint survey in the presence of the lessees was conducted
on 5/7/2007 to which report, the representatives of the lessees have
put their signatures. But, the representatives of the lessees stated that
they have only signed the survey report, since they were present at that
time, but they are not admitting the contents of the report. The Forest
Department officials say that illegal mining has been going on in the
forest area since the year 2005 and once a quantity of 5,079 metric tones
of iron ore has been seized. They also stated that the forest land is
being used apart from mining also for illegal dumping of the mined
dust without proper permission. It was also seen that the Government
of Karnataka by an Order No. CI 71 MMM 2007, dated 22/09/2007,
had transferred lease from Sri B.D.Hanuman Singh to Sri Vinod Goel,
subject to the condition that the transferee agrees to the conditions and
liabilities that were imposed on the transferor. However, it was also
noticed that the bulk permission for transportation is still being issued
in the name of Sri B.D.Hanuman Singh who has ceased to be the lease
holder. This indicates the utter carelessness on the part of the officials
empowered to issue transport permit and failure on the part of the
checking staff enroute transportation.

37


After the visit to the above mines, I took a different route to
Chikkanayakanahalli and could see on the way spots indicating illegal
mining.



On the way, I visited Thirtharampura Village of Chikkayanayanahalli
Taluk, by the side of the road, there is a stone sign indicating that the
area in question is Thirtharampura State Forest.


38


We could also see here certain stacked lumps indicating that iron ore is
being mined and stocked in this forest area. However, I was told that
in regard to this area also, Department of Mines has granted a lease
without reference to the forest authorities or Forest (Conservation) Act
and directions of the Supreme Court. The representatives of the
Karnataka Mining Company, who hold the lease in this area, stated
that they have been holding the lease for a long time and it was last
renewed in 1966 for a period of twenty years. They also stated that in
view of the fact that the forest officials obstructed the mining in this
area, they have approached the Hon’ble High Court in W.P. No.
45401/2004 and the Hon’ble High Court on 20/11/2004, had ordered
an enquiry to be conducted by the Department of Mines and Geology
after giving opportunity to the Petitioner. I was also told that in spite of
the direction of the Hon’ble High Court, the Director of Mines and
Geology has not yet initiated any enquiry in spite of the direction being
of the year 2004. Inspite of this direction given by the Hon’ble High
Court on 20/11/2007 without holding any inquiry the authorities have
allowed the mining to be continued. Can this be anything, but
connivance?

From the visit to the above villages of Tumkur District, it is seen
that extensive mining is going on illegally in Government land and no
action has been taken by the concerned authorities. There are
allegations that in areas where lease has been granted, lessees have
been doing mining beyond the area to which the lease pertains, as also
39


illegal mining is going on in forest area. Authorities have not also
complied with the directions of the Hon’ble High Court.

On 21/05/2008, I along with my team visited Doddabyalekere,
Hosadurga Taluk. The land visited by me is about 40 Kms from
Hiriyur in S.H. No.19.



In this place, it was noticed that sporadic mining activities are going on
by the people who have been granted Government land and the
minerals mined are purchased by people who hold mining lease and
transport the same as if the said minerals have been mined from their
legitimate lease hold land. No action has been taken against the
grantees of the lands for violation of terms of grant.

I, then visited a mine allegedly belonging to one Mr. Thangavelu
of Mari Cements in Tamilnadu who is said to be a Minister in
Tamilnadu. The visit indicates that there is a unit put up for crushing
lime stone but it has become defunct and the area is used for large scale
40


iron ore mining. I was also told that originally the Government of
Karnataka issued mining lease for quarrying lime stone for the purpose
of using it in the manufacturing of cement which was valid till 1979.
During the currency of that lease, the same was converted to multiple
minerals lease and the owner was permitted to mine other minerals
like manganese and iron ore without making the proper verification as
to the activities that were going on prior to the change of the minerals
in the lease. It was also brought to my notice that grant of lease ipso
facto does not give a right to the lessee without first there being an
execution order which can be given only after a survey and no such
survey was conducted and no boundary was fixed and the lessee
continued to operate the area for iron ore mining which was within the
knowledge of the officials of the Mines and Geology Department in the
District of Chitradurga. They made no attempt to stop these mining
operations. Consequently, from 1999, the mining operations are going
on without the execution order. There are tel-e-tel evidence of active
mining going on in this area. We were told that about two months
back, Dy. Commissioner and Supdt. of Police, Chitradurga visited this
area, made an assessment of the illegal mining and seized certain
transport permits which indicated that transport permits were given
without mentioning the vehicle numbers or quantity that is being
transported. These are in contravention of mining rules. By an ocular
measurement, one could see that though the lease is given for 131.57
hectares, the actual mining is being done in lands beyond the leased
area. Another interesting thing to be noticed is that Sri Thimmappa,
claiming to be the Manager of the lessee showed me an order made by
41


the Director of Mines and Geology Dt.11/3/2004 in File No. DMG/190
AML 99/17440, which is a permission purportedly given under Rule
24(6) of the Mineral Concession Rules, 1960 (for short M.C Rules) based
on the Govt. Order No. CI 04 MMM 04 dated 13/2/2004. Here, it is
seen that though this is an order which normally has a life span of only
six months, the wordings of this shows “with reference to the above
subject, as per the orders of the Government of Karnataka vide
reference, working permission as per Rule 24-A(6) of the M.C. Rules,
1960 is accorded until further orders”, which emphasizes that the
Director of Mines and Geology has issued an open ended work order
which is not contemplated under the M&M (D&R) Act and M.C Rules.
Will any action ever be taken against erring officials?

Proceeding further from the above mine, we found a large area
of Government Land (gomala) being used for illegal mining. Number
of pits from where ore is extracted were visible. These lands are
abutting the lease hold lands referred to in the earlier paragraphs. We
were told that illegal mining are done by locals and these ore mined are
purchased by lease holders and transported using their transport
permits. It is relevant to mention here that in regard to this gomala
land, there are some claims by people that they were granted these
lands for cultivation purpose. There was a litigation which has gone
upto to the High Court and the matter was remanded to the Revenue
Authorities and the Deputy Commissioner had cancelled the lease
granted to these parties for mining illegally, but, a stay granted by the
High Court of Karnataka is in existence, what action department is
42


taking to get the stay order? Or this inaction is a part of collusion?
Assuming that lands are granted for cultivation, is illegal mining
permitted? Is this fact brought to the notice of the Govt. or Court?

Moving further from the above land, we found illegal mining
activities in some patta lands. It seems no body in the Government is
bothered about these illegal activities, after all whose loss is it?

Moving further in Hosadurga Taluk, I visited Itigehalli, where
Srinivasa Clays, a mining Company belonging to HRG Group is doing
manganese mining. Originally multiple mining lease was granted to
this company in the year 1999 for mining Clay, Dolomite and
manganese. There is no evidence as to the existence of any clay in the
area as one could see. The total area granted in the lease to this
company is 250 acres. The sketch map attached to the lease deed
indicates that the lease pertains to Sy.No. 100 and 102. Survey No. 102
is in the forest area and there could be no legal sanction to mine in this
area. We were told that in reality the lessee is not mining in Sy.No. 102,
but, is doing mining work in the area which is adjacent to Sy.No. 100
which is not a part of the lease deed as could be seen from the sketch
attached to the lease deed. Here mining activities are confined to the
manganese ore only. The contention of the revenue authorities who
were present here is that the area that is being mined beyond Sy.No.
100 is unauthorized. Therefore, it is contrary to law. Mr. Anand Raj,
the Manager of the Company who was present does not deny the fact
that no mining is carried on in Sy.No. 102. He says that Survey No.100,
which is leased to the company includes this part of the land also. If so,
43


the department should have held a joint survey which is not done. Mr.
Anand Raj produced a Judgment of the Hon’ble High Court of
Karnataka delivered on 2
nd
January 2007. The dispute before the High
Court was in regard to the notice, the respondent mining authorities
had issued to the company to stop mining activities on the ground that
the lease had come to an end, even though the application for renewal
is pending. Court has not considered as to whether actual mining is
being carried out in the area permitted as per the original lease deed.
Of course, there is a finding of the court that the company is not mining
in the forest area which seems to be a fact and that is not an issue now.
The only question that is to be considered is whether the mining is
carried out in the area that is leased out or beyond it. The evidence
which is shown indicates that the sketch attached to the mining lease
does not include the adjacent land which lies next to Sy.No. 100. The
company is relying on another map, since that is not the map attached
to the lease deed, no reliance can be placed on the said map. The
lessee is relying on the order of the court for the purpose of mining
beyond Sy.No. 100 in which event the respondent authorities in the
said Writ Petition should have sought the clarification from the High
Court whether by virtue of the interim order, the lessee can mine
beyond the land lying within the sketch attached to the map. No such
efforts have been made. It seems to be a clear case where the
authorities have failed to bring to the notice of the court that the party
is misusing the above order.
Travelling further from Srinivasa Clays, the mine referred to
hereinabove, about 5 Kms down the hill, we saw a huge stocks of
44


illegally mined manganese ore which are since seized by the
Tahasildar. These stocks have been mined from revenue land without
any permission. The Tahasildar says that these are areas mined by the
local villagers who have made it a profession because of the fact that
there are illegitimate buyers from amongst the leased mine owners
who purchase the same from the locals and transport the same under
the bulk transport permit given to them for transporting legally mined
ore from their leased mine. This illegal transporters who have some
leased area at their disposal indulge in purchasing and transporting
illegally mined ores from poor villagers which practice has converted
the otherwise honest villagers to commit unlawful acts. When I
questioned the Tahasildar for the inaction on her part in not taking
preventive action, she told me that when she interrogated the officials
of Srinivasa Clays supra, they claimed that these minerals are stocked
by them at the Government land which they had mined legitimately
from their leased area for the purpose of convenient transportation.
This explanation even if assumed as true, then Srinivasa Clays are
guilty of using Government land without permission for putting up a
stock yard which is an offence under Mines and Minerals
(Development and Regulation) Act, 1957 (hereinafter referred to as the
‘M&M (D&R) Act’ for short) and relevant Rules. Even otherwise, tel-e-
tel evidence of digging of land nearby is an evidence of illegal mining.

On 21/05/2008 itself, I and my team visited Shivaganga Village
in Holalkere Taluk where we were told that the Dy. Commissioner had
recently seized certain illegally mined iron ore and the same was
45


shifted from the place of mining to Shivaganga Tank bed to prevent
theft and to provide proper security. The iron ore stocked, they are of
the value of 1.61 crores, as told to me.


Proceeding further, we visited Sy.No. 84, 85 and 86 of
Shivaganga Village, Holalkere Taluk. This is an area which has been
under the scrutiny of the Lokayukta for a long time since the
Lokayukta police had raided Sy.No. 9 and 10 of Aralikere village of
Holalkere Taluk in a mid night raid and seized 5 JCBs along with huge
46


quantity of illegally mined mineral. Here, the mining is going on in
huge gomala belonging to the Government and even by a visual
assessment, it could be seen that large quantity of illegally mined ore
are stocked.

The Dy. Commissioner informed me that because of the election
process, the vigilance over illegal mining has slightly loosened and
taking advantage of the same, illegal mining is taking place. Hence, we
could see thousands of metric tons of iron ore stocked. The land, we
were told was originally full of greenery, now greenery is found only
in patches, that too in such places where mining is not possible.

47


The Dy. Commissioner has stated that he has decided to seize the
material and promised me to auction the same. We were also told that
with paucity of staff and most of the people who are indulging in
illegal mining activity being very aggressive, it has become difficult for
local administration to enforce strict vigil over illegal mining.

On 22/05/2008, I and my team visited Kallahalli of Hospet
Taluk. Here, a company by name MSPL, claims that some land here is
leased to them in 1952 by the then Madras Presidency. We are told by
the Government officials that this company is indulging in illegal
mining. The officials of the MSPL told me that no enquiry should be
conducted since it will prejudice the litigation that is pending in High
Court and other Civil Courts. There seems to be a dispute not only
interse between the officials and the MSPL company, but also between
MSPL and one Shantalakshmi Jayaram who has mining lease on the
south west side of the land granted to MSPL and S.B. Minerals who
have their leased land in the north part of the MSPL land. Since the
correctness of the claim can be determined only by a proper survey of
the land, it is in the interest of all concerned, to get a joint survey made,
if necessary after getting the permission of the Court.

From the MSPL mining area, we moved on to the area occupied
by M/s S.B. Minerals. They have a lease for twenty years from
13/01/1997. Allegation here also is that this company has been mining
beyond the area granted to them. This is again an issue which can be
determined only by a joint survey.

48


Moving further on, I and my team visited Rajapur Village in
Hospet Taluk which is on south west part of MSPL and S.B. Minerals in
the same ridge. As per the lease deed, the company has got 231 acres
land in Rajapur Village, which is adjacent to Kallahalli Village. There is
some variation in regard to the end portion shown in the map attached
to the lease deed. According to the company officials, forest map and
revenue map do not tally. Therefore, when objection was raised by the
Forest Department, they stopped operation in the disputed area.
Again, this is a common dispute in regard to mines lying close to forest
area or close to other leased areas. As stated above, the remedy is only
to have a proper survey done but nobody is bothered to move in this
direction, may be because it is to the advantage of all concerned except
the State.

On 23/05/2008, I and my team visited Sandur Taluk. On the
way, on either side of the road, we could see mineral wastes having
been dumped from top of the hill in the forest area on the sides of the
hills, which certainly it is an illegal act since forest land cannot be used
for non-forest activities.

49







50


We could see the enormous damage done to the nature by such
dumping. We also saw small stocks of mined mineral and huts of the
labourers on either side of the road. The living condition of these
labourers is pathetic.



We saw evidence of attempts having been made to clear the stock
anticipating our visit. The volume of illegal mining on either side of
the road is so large that it could have certainly attracted the attention of
the officials both revenue and Mines Department. Most of the labour
indulging in this type of mining are former labour employed in mines
51


now unemployed because of modern machinery. This type of mining
by villagers and labourers are done either in Government Revenue
land or in patta land. Most of the lands granted by the Government are
also used for illegal mining activities, but, no action is taken to cancel
the grant for misuse of the object of grant.

Travelling further, we visited a stock yard owned by Sri Kaviraj
Urs, who is also the owner of firm M/s. Lakshmi Minerals. This
stockyard is situated in patta land and no conversion has been sought.
The representative of the firm showed some application made for grant
of conversion in the month of December 2007. From the nature of
activities that is going on here, it is very obvious that this land has been
used for stock yard for a long number of years, much before December,
2007. According to the officials present, though M/s Larksome
Minerals has the mining lease, the stock found in the stock yard are not
minerals mined from the leased area, but, they are minerals illegally
mined and brought to this place for stocking. We are told that this
area comes within the jurisdiction of Hospet Urban Development
Authority, which seems to be as inactive as any other Government
Department concerned in mining activities.

Travelling further, we visited another stock yard owned by
Muneer Enterprises which is in a area of about 16 acres. We were told
that the firm had obtained the stock yard permission and the same has
expired on March, 2008. Incidentally, this is another case, where the
concerned Dy. Director of Mines and Geology has given an open ended
extension until further orders.
52



Travelling further, we visited Kineta Minerals and Metals
Limited, in Jayasinghpur village. The officials of the firm told us that
an application for the conversion of the land has been made to the Dy.
Commissioner, but no orders have been passed. Still the area is being
used as stock yard. The total extent of the area used is 3.5 acres and we
found huge quantities of the minerals stocked there. No Environmental
Clearance Certificate has been obtained for using the above land as
stock yard, by its owners. When asked, the officials of the firm stated
that there is no need to seek such permission, while the officers of the
department pleaded ignorance about the need to obtain Environmental
Clearance Certificate; more will be recorded hereinafter as to this
requirement.

Moving further, we visited Sri Sai Krishna Minerals Limited,
situated in Sy.No. 44 of Jaisinghpur Village. Here, Environmental
Pollution Control Board has given permission only for crushing and
not for stocking. But from the stock available, it is obvious that it is
used as a major stock yard for which no permission is produced. This
firm does not hold mining lease, but, it is only a trader. In law, a trader
can have a stock yard, but he has to comply with certain conditions to
which reference will be made hereinafter. The attitude of the Revenue
Department and the Mines and Geology Department showed that as
the famous saying goes “the right hand does not know what the left
hand is doing”. The Mines and Geology Department, Pollution
Control Board and the Revenue Department have given certain
permissions within their jurisdiction even without verifying the nature
53


and ownership of land etc. In regard to above said Sri Sai Krishna
Minerals Limited, it is to be noted that the stock yard is situated in an
extent of 9 acres which is carved from a total area of 72 acres in Sy.No.
44. It is said that in the said Sy.No. some people have been allotted
about three acres each for the purpose of agriculture. No agricultural
activities are seen in this land. On the contrary, several stock yards or
crushers could be seen. No attempt has been made to cancel the grant
for not seeking conversion. The land is shown in the revenue records
as agricultural land.

At this point, it is necessary to note the requirement of law for
obtaining a stock yard licence. Before granting the stock yard licence,
the authorities concerned have to inspect the land and see the viability
of granting such permission, if the land is meant for agricultural
purpose, land conversion should be made, I.T. clearance and Pan as
well as VAT registration with ST Clearance Certificate should also be
obtained. The applicant should be registered as an industrial
establishment with the Department of Industries and Commerce.
Clearance Certificate from Karnataka State Pollution Control Board is
also necessary. An affidavit stating that the applicant has not been
convicted in any case of illegal mining/quarrying should also be
executed. This application has to be made to the Dy. Director who
after personal visit will have to report the suitability of allowing the
land to be used as stock yard and the fulfillment of the above
requirements. It is only thereafter the Director of Mines and Geology
can grant a permission for stock yard. But, examination of the
documents in regard to the various stock yards referred to have clearly
54


shown that all the requirements of law are not complied with nor that
the officials concerned have made a visit to the land in question and
have assessed the viability of allowing a stock yard. As stated above
some of the officers do not even know the requirement of law either
deliberately or conveniently.

On 23/05/2008 itself, we visited the mine operated by M/s.
Vrushabendraiah Mining Company. It is necessary here to recapitulate
certain survey history of this area which is in an area called Ramghad.
In the year 1903, only 4 survey numbers were given to the area situated
in this village and at that time, this village was known as Ramanomalai
and the surrounding areas in the same village is not surveyed even
today. The owners of the land stated above had made an application
for grant of mining lease for an extent of 8 acres 13 guntas using the
sketch showing Sy.No. 19. No cross verification in regard to the
existence of this Sy.No. is made nor the boundary shown in the
application for grant of mining lease which is mandatory. Even the
actual location with reference to the topography of the village was not
identifiable. Even then the lease was granted to this company for
mining iron ore for 20 years. The ground reality is that the records
reveal that this area has not even been phoded and sketch given along
with the application for grant of lease are not identifiable. As per the
enquiry conducted by the Lokayukta officials, the area where actual
mining has been done has no reference to the sketch produced along
with the lease. It is not only situated elsewhere, but the land shown in
the sketch attached to the list is non-existing and the survey number
given is not correct. It clearly indicates either the collusion between the
55


department and the lessee and that the lease has been granted without
the concerned officials physically verifying the land. This is not an
isolated case where such lease has been obtained in the non-surveyed
area or non-phoded area. I am told that many other licences have been
similarly granted, which according to the provisions of M&M (D&R)
Act is illegal. According to the officials who are assisting me in this
investigation, the area where mining is done by the lessee was in excess
by about 35.48 acres. I think this issue requires a serious enquiry. If
what is recorded herein above is correct, it is a fit case in which not
only lease should be cancelled, but also other proceedings be initiated
for cheating, fraud and such other related offences, as also steps be
taken to recover the loss suffered by the Government. Since this type
of mischief is not confined to the company referred to hereinabove, the
enquiry should not be confined to this company only. Though I had
given notice to the company representatives about my visit, no
representative of the company was present.

Moving further from the above mine, we reached the mining
area belonging to M/s Zeenath Transport Company. The company
was granted certain land for iron ore mining in the year 1963. After
obtaining clearance under the M&M (D&R) Act, two more leases for
mining in additional land have also been granted. Thus, mining has
been permitted in 277.01 acres. When this area was surveyed by the
officials of the Lokayukta in the presence of the officials of the
Company, it was seen that at four different places, lessee had carried
on mining beyond the demarcated area that is outside the boundary
allotted to them. This land actually is adjacent to the land granted to
56


Vrushabendraiah Mining Company. There are indications to show that
one of the two companies has encroached upon the non granted area,
but the issue can be settled only after a detailed enquiry.

Moving further, I and my team visited the land granted to Sri
H.G. Ranganagowda. Here, we were told that the land has been
divided and apart from the Ranganagowda family, other persons to
whom parts of the leased area are subleased, are working the mine
under what is commonly known as Raising Contract Agreement,
which is a concept not recognized by law. The issue relating to so
called raising contract will be discussed in detail in the later part of this
report. There is also evidence to show that this company has been
doing illegal mining beyond the allotted area of about 55 acres. The
mining here seems to be going on in a very rapid manner. There is a
need for making an assessment as to the loss caused to the Government
in this mining area.

Before proceeding further with this part of the report, I should
place on record certain ground realities which are existing consequent
to the large scale mining that is being done in this area which is part of
the knowledge acquired by me during my visit to above mentioned
three districts. Apart from noticing generally wherever mining is
permitted, the extent of damage done to the neighbouring areas, huge
damage is also caused to the various roads used by mineral carrying
vehicles. During the course of my journey, I noticed that roads in and
out of Hospet and Sandur are practically not motorable by passenger
vehicles, because of the heavy load and frequency of the vehicles
57


carrying minerals and also in view of the fact that these vehicles carry
minerals in open bodied vehicles, on either side of the road, vegetation
has been damaged heavily.




58




While in Sandur, a group of about 50 residents of Sandur met me
at the forest lodge and expressed their difficulty because of the
transportation of iron ore. According to them, they are unable to keep
their doors and windows of their house open even for few minutes
during the day or night and drinking water sources as well as
vegetation have been covered by mineral dust. Consequently, the
population of Sandur have been suffering from various ailments and
the people who are indulging in mining activities have absolutely no
concern for the welfare of the local people. I found a lot of justification
in their complaint.

Having noticed the various aspects of illegal mining during my
visit to the three districts of Bellary, Chitradurga and Tumkur, I also
noticed that damage to the environment and suffering of the people
because of illegal mining is not confined to the people of Bellary
district. If the same is not put an end to, the day is not very far when
59


this suffering will spread to Tumkur and Chitradurga districts, if not
already affected.

I will now discuss the applicable law in regard to mining
activities. Grant of mining licence and various aspects of mining, i.e.
extraction of the mineral, storage, transportation and consumption are
governed by the provisions of M&M (D&R) Act, M.C. Rules and the
standards set by Indian Bureau of Mines. Violation of any of the
provisions of the M&M (D&R) Act or the M.C Rules will be an offence
and are punishable under the provisions of the said Act and M.C Rules.
Mining in various areas are also governed by the provisions of Forest
(Conservation) Act, 1980, as well as various mandatory directions
issued by the Hon’ble Supreme Court of India in W.P. No. 202/1995.

In the above background, I will discuss the report prepared by
Dr. U.V. Singh found at Annexure-‘A’, with which I am in full
agreement. This report has been prepared by Dr. U.V. Singh, in
consultation with me. Hence, the same is incorporated as part of my
report. The summary of the encroachment by the lessees in various
regions enumerated herein afterwards are facts verified by Dr. U.V.
Singh and I am satisfied with the same. Wherever an issue is
subjudice, the same has been noted and I reiterate that whatever
Dr.U.V. Singh has noted are prima facie findings without which this
report will be incomplete. Further parties, companies and leases
mentioned in the report are not the only ones, guilty of illegalities.
Prima facie I am satisfied that there is some sort of irregularity or
illegality in the grant of mining leases or working of the mining in
60


almost all mining leases and activities carried on thereafter. The
examples set out in this report hereinafter are only samples in regard to
which prima facie material is available and the balance of mines will
have to be visited and surveyed and illegality, if any, and the extent of
such illegality will also has to be ascertained. It will be done along
with the other deferred issues including the extended period of
reference in the next report. Further report will follow regarding
irregularities committed by concerned officers.
CHAPTER - III
Procedure followed while granting mining lease/licence with
special reference to prospecting licence.

The ultimate objective of any mining enterprise is to locate,
delineate and assess the economic suitability or otherwise of a
mineral/ore deposit and exploit the mineral/ore on a profitable basis.
This is done in 3 stages namely reconnaissance surveys/operations,
prospecting of mineralized belts and ultimately mining of ore/mineral
in a profitable manner.
(i) Reconnaissance –operations :
It is defined under clause (ha) of Section 3 of M&M
(D&R) Act as any operations undertaken for
preliminary prospecting of mineral through regional,
aerial, geophysical or geo-chemical surveys and
geological mapping, but does not include pitting,
trenching, drilling (except drilling of boreholes on a
grid specified from time to time by the Central
Government) or sub-surface excavation.

(ii) Prospecting operations are defined at clause (h) of
Section 3 of M&M (D&R) Act, as any operations
undertaken for the purpose of exploring, locating or
proving Mineral deposits.

(iii) Mining operations are defined at clause (d) of Section 3
of M&M (D&R) Act, as any operation undertaken for
the purpose of winning any mineral. ‘ [Winning a
mineral’ means getting or extracting the mineral from
the mine.
62


A scientific and systematic approach to acquire economically
profitable mining venture, need be preceded by the processes of
reconnaissance and prospecting. However, the Government
institutions like Geological Survey of India, Mineral Exploration
Corporation of India, State Departments of Mines and Geology etc. are
involved in exploration and identifying of mineral wealth in the
country. Originally, information generated by conduct of such
operations remained as classified. However, with the advent of
democracy and people oriented policies pursued in independent India,
the information that remained classified was made open to the mining
public except in case of strategic minerals, hydrocarbon/energy
minerals and atomic minerals. Thereby, in the present day, fairly well
documented information is available about the occurrence, extension,
chemical quality and potential of many of the ore and mineral
resources. In the said context, a mining entrepreneur prefers to seek a
mining lease directly rather than going through the processes of
reconnaissance and prospecting. It may also be stated here that Acts
and Rules in existence do not make it obligatory for a person applying
for a mining lease of having explored the area by obtaining the
reconnaissance permit or prospecting licence.

Any person who undertakes any reconnaissance, prospecting or
mining operation in any area for ores and minerals, is required to
obtain a permit/licence/lease as per M&M (D&R) Act, 1957 read with
M.C Rules.

63


I Reconnaissance permit: Section 4(1) of M&M (D&R) Act, 1957
prohibits any reconnaissance operation by an individual or a firm in
any area without obtaining a reconnaissance permit. When 2 or more
persons apply for a reconnaissance permit over the same area which is
not notified, the applicant whose application received earlier, shall
have a preferential right. But, in case of the State Government having
invited applications by notification in the official gazette for grant of
Reconnaissance permit, all the applications received during the period
specified in such notification and the applications which had been
received prior to the Notification shall deemed to have been received
on the same day for purpose of assigning the priority. All such
applications are required to be evaluated as per parameters under sub-
section 2 of Section 11 of M&M (D&R)Act, 1957 to select the suitable
applicant for grant.

II Prospecting licence: Section 4(1) of M&M (D&R) Act, 1957
prohibits prospecting operation in any area by any person or a firm
without a prospecting licence where a reconnaissance permit has been
granted in respect of any land, the permit holder shall have a
preferential right for obtaining a prospecting licence.

Subject to the provisions stated above, where the State
Government has not notified in the official gazette the area for grant of
prospecting licence, and 2 or more persons have applied for a
prospecting licence in any land in such area, the applicant whose
application was received earlier shall have preferential right.
64


Where an area is available for grant of prospecting licence and
the State Government have invited application by Notification in the
official gazette, all the applications received during the period specified
in such notification and the applications which had been received prior
to the publication of such notification shall deemed to have been
received on the same day for purposes of assigning priority.

All such applications are required to be evaluated as per
parameters under sub-section 2 of Section 11, M&M (D&R) Act, 1957 to
select the best suitable applicant for grant.

III Mining leases: Section 4(1) of M&M (D&R)Act, 1957 prohibits any
person undertaking mining operation in any area except in accordance
with the terms and conditions of a mining lease granted under the said
Act read with M.C Rules.

An area available for grant of a mining lease fall under 3
categories. The process for granting of mining lease over an area
therefore varies according to the category.

(1) Virgin area: The preferential right to the persons who
make applications on such area is primarily decided according to sub-
section 2 of Section 11 of M&M (D&R) Act, 1957. When 2 or more
persons apply for grant of a mining lease over such land, the applicant
whose application was received earlier shall have preferential right for
grant of mining lease.

65


Where more than one application are received on the same
day, the State Government may grant mining lease to such one of the
applicants as it may deem fit according to the parameters specified
under sub-section (3) of Section 11, M&M (D&R) Act, 1957.

(2) Where reconnaissance permit or prospecting licence has
been granted in respect of any land, the permit or the licence holder
shall have a preferential right for grant of mining lease over any other
person provided that the State Government is satisfied that the permit
holder or the licence is qualified as per norms at clause (a) to (d) of sub-
section (1) of Section 11 of the M&M (D&R) Act. Rule 34 of M.C Rules
further provides that the State Government while granting the mining
lease over the area earlier held under reconnaissance
permit/prospecting licence may for any special reasons to be recorded
in writing may reduce the area or exclude a portion there from.

(3) Where an area that was previously held under a mining
lease and such lease is determined, expired and also such areas de-
reserved for public exploitation is notified in official gazette for grant
by the State Government and applications are invited

All such applications which had been received prior to the
publication of the Notification and had not been disposed, off, shall be
deemed to have been received on the same day for the purpose of
assigning priority.

All such applications along with other applications received
consequent to the Notification during the period specified in the
66


Notification, shall be considered simultaneously as if all such
applications have been received on the same day by the State
Government, according to the parameters specified under sub-section
(3) of section 11 of the M&M (D&R) Act and may grant the mining
lease to such one of the applicants as it may deem fit. While doing so,
the State Government may also consider the end use of the mineral by
the applicant; as provided under rule 35 of M.C Rules.

The Section 11 of M&M (D&R) Act read with Rule 35, 26(1) and
26(3) of M.C Rules provide the provisions and process to select the
most suitable applicant by a just and equitable criteria for grant of
mining lease when multiple applications are received over a single area
that is notified by the State Government. In order to maintain
objectivity and transparency in the process of evaluation and selection
of the best suitable applicant for grant of mining lease, various
executive instructions are issued by the Commerce and Industries
Department of Government of Karnataka which oversees the matters
relating to regulation and development of Minerals in Karnataka. The
procedure generally followed in such a process is:

(i) To prepare a statement showing date-wise receipt of
applications, total area held under mining lease in
different parts of the Indian Union [to verify the limitation
of the areas as under section 6(1))(b) of) M&M (D&R) Act,
1957], any special knowledge or experience of the
applicant, financial resources of the applicant, nature and
quality of the technical staff employed, investment of the
applicant towards development of mines, establishment
67


of mineral based industry etc, end use of the mineral and
such other related matters to enable the processing
authority to arrive at relative merits of the applicants.

(ii) To maintain a reliable document for having
communicated to all the applicants the date for hearing
by the hearing authority;

(iii) Preparation of meticulous record of attendance of
applicants who attend the hearing;

(iv) To prepare a statement of evaluation by the hearing
authority regarding special merits of the applicants

(v) To draw proceedings of the hearing authority giving
relative merits of the various applicants heard and to
record a speaking order on the selection of the applicant
for grant of mining lease.

The process discussed is fairly elaborate and when implemented
in totality, it does provide the objectivity and transparency
contemplated. Unfortunately, the process of evaluation in many of the
cases is ridden with irregularities. Some of the common irregularities
are:

a. the Notification issued by the Government of Karnataka
throwing open the area for grant of mining lease are open
ended. There are instances wherein applications have
been received even after 23 months from the opening day
specified in the Notification.

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b. in such instances, the Department of Mines and Geology
has deferred processing of applications for a long period;

c. also, there are instances wherein applications received
after 23 months of opening day have been considered in
preference to the earlier applications without adducing
proper justification;

d. the hearing authority does not maintain meticulous record
showing that all applicants listed for hearing are
communicated about the date of hearing;

e. the attendance duly signed by the applicants appearing
before the hearing authority is not forthcoming;

f. the comparative evaluation statement of the hearing
authority not forthcoming;

g. proceedings drawn up do not indicate the criteria and
basis for selection of the applicant;

The sanction of mining leases for minerals specified in the First
Schedule are to be made subject to prior approval of the Central
Government.
CHAPTER – IV
Advent of the concept of Raising Contract

Raising Contract is a much used phrase in mining parlance.
Generally, this is an agreement entered into between the holder of a
mining lease/quarrying lease and a contractor providing entrustment
of work for carrying out mining of minerals/quarrying of minor
minerals and to sell them or to use them for self consumption on
payment of premium or consideration to the holder of the mining
lease/quarrying lease.

The term ‘Raising Contract’ is not found in the Indian Contract
Act, 1872 or in the mining regulations viz., M&M (D&R) Act, (Central
Act 67 of 1957), M.C Rules and Karnataka Minor Mineral Concession
Rules, 1994.

The M.C Rules, made by the Government of India in exercise of
powers conferred under Section 13 of M&M (D&R) Act, 1957 and
Karnataka Minor Mineral Concession Rules, 1994, made by the
Government of Karnataka under Section 15 of the M&M (D&R) Act,
stipulate certain conditions prohibiting entrustment of work as relating
to mining/quarrying of minerals/minor minerals by a holder of a
mining lease/quarrying lease to a contractor. The relevant conditions
are:

Rule 31 of M.C Rules,
“31(1) Where, on an application for the grant of a mining lease,
an order has been made for the grant of a such lease, a lease deed
70


in Form K or in a form as near thereto as circumstances of each
case may require, shall be executed within six months of the
order or within such further period as the State Government
may allow in this behalf, and if no such lease deed is executed
within the said period due to any default on the part of the
applicant, the State Government may revoke the order granting
the lease and in that event the application fee shall be forfeited to
the State Government.”

Mining lease Contract:
(Clause 17)

1) The lessee/lessees shall not, without the previous
consent in writing of the State Government, which in the
case of a mining lease in respect of any mineral specified
in the first schedule to the M&M (D&R) Act shall not be
given except after previous approval of the Central
Government –

(a) assign, sublet, mortgage or in any other manner,
transfer the mining lease, or any right, title or interest
therein or

(b) enter into or make any arrangement, contract or
understanding whereby the lessee/lessees will or may be
directly or indirectly financed to a substantial extent by or
under which the lessee’s operations or undertakings will
or may be substantially controlled by any person or body
of persons other than the lessee/lessees.

Provided that the State Government shall not give its
written consent unless-

71


(a) the lessee has furnished an affidavit along with his
application for transfer of the mining lease specifying
therein the amount that he has already taken or
proposes to take as consideration from the
transferee…

(b) the transfer of the mining lease is to be made to a
person or body directly undertaking mining
operations.

(2) Without prejudice to the above provisions, the
lessee/lessees may subject to the conditions specified in
the proviso to Rule 37 of said M.C Rules, transfer this
lease or any right, title or interest therein, to a person who
has filed an affidavit stating that he has filed up-to-date
income tax returns, paid income tax assessed on him and
paid the income tax on the basis of self assessment as
provided in the Income Tax Act, 1961 (43 of 1961) on
payment of five hundred rupees to the State Government.

Provided that the lessee/lessees shall make available to
the transferee the original or certified copies of all plans of
abandoned, workings in the area and in a belt 65 metres
surrounding it.

Provided further that where the mortgagee is an
institution or a Bank or a Corporation specified in
schedule V it shall not be necessary for any such
institution, Bank or Corporation to meet the requirement
relating to income tax.
72


(2) The State Government may by order in writing,
determine the lease at any time if the lessee/lessees
has/have in the opinion of the State Government
committed a breach of any of the above provisions or
has/have transferred the lease or any right, title or interest
otherwise than in accordance with clause (2)

Provided that no such order shall be made without giving
the lessee/lessees a reasonable opportunity stating
his/their case.

Clause 18:

The lease shall not be controlled and the
lessee/lessees shall not allow themselves to be controlled
by any Trust, Syndicate, Corporation, Firm or Person
except with the written consent of the Central
Government. The lessee/lessees shall not enter into or
make any arrangement contract or understanding
whereby the lessee/lessees will or may be directly or
indirectly financed by or under which the lessee/lessees
operations or undertakings will or may be carried on
directly or indirectly by or for the benefit of or subject to
the control of any Trust, Syndicate, Corporation, Firm or
Person unless with the written sanction given prior to
such arrangement contract or understanding being
entered into or made, of the Central Government and any
or every such arrangement contract or understanding as
aforesaid (entered into or made with such sanction as
aforesaid) shall only be entered into or made and shall
always be subject to an express condition binding upon
73


the other party or parties thereto that on the occasion of a
state of emergency of which the President of India in his
discretion shall be the sole judge it shall be terminable if
so required in writing by the State Government and shall
in the event of any such requisition being made be
forthwith thereafter determined by the lessee/lessees
accordingly.

Rule 37. Transfer of Lease (M.C Rules)

(1) The lessee shall not, without the previous consent
in writing of the State Government (and in the case
mining lease in respect of any mineral specified in (Part A
and Part B of) the First schedule to the M&M (D&R) Act,
without the previous approval of Central Government) –

(a) assign, sublet, mortgage or in any other manner,
transfer the mining, lease or any right, title or interest
therein or

(b) enter into or make any (bonafide) arrangement,
contract or understanding whereby the lessee will or may
be directly or indirectly financed to a substantial extent
by, or under which the lessee’s operations or undertakings
will or may be substantially controlled by, any person or
body of persons other than the lessee:

[Provided further that where the mortgagee is an
institution or a Bank or a Corporation specified in
Schedule V, it shall not be necessary for the lessee to
obtain any such consent of the State Government]
74


[(1A) The State Government shall not give its consent to
transfer of mining lease unless the transferee has accepted
all the conditions and liabilities which the transferor was
having in respect of such mining lease.]

(2) Without prejudice to the provisions of sub-rule(1);
the lessee may, transfer his lease or any right, title or
interest therein to person [who has filed an affidavit
stating that he has filed an up-to-date income tax returns,
paid the income tax assessed on him and paid the income
tax on the basis of self-assessment as provided in the
Income Tax Act, 1961, on payment of a fee of Rs.500/-] to
the State Government.

Provided that the lessee shall make available to the
transferee, the original or certified copies of all plans of
abandoned workings in the area and in a belt 65 metres
wide surrounding it: [ Provided further that where the
mortgagee is an Institution or a Bank or a Corporation
specified in Schedule V, it shall not be necessary for any
such Institution or Bank or Corporation (to meet the
requirement relating to Income-Tax) ]

[Provided further that the lessee shall not charge or accept
from the transferee, any premium in addition to the sum
spent by him, in obtaining the lease, and for conducting
all or any of the operations referred to in Rule 30 in or
over the land leased to him].

(3) The State Government may, by order in writing
determine any lease at any time if the lessee has, in the
75


opinion of the State Government, committed a breach of
any of the provisions of sub-rule (1) [or sub-rule (1A)] or
as transferred any lease or any right, title or interest
therein other than in accordance with sub-rule (2).

Provided that no such order shall be made without giving
the lessee, a reasonable opportunity of stating his case.

Rule 37A: Transfer of lease to be executed within three
months:

Where on an application for transfer of mining
lease under Rule- 37, the State Government has given the
consent for transfer of such lease, a transfer lease deed in
Form-O or a Form as near there to, as possible, shall be
executed within 3 months of the date of consent, or within
such further period as the State Government may allow in
this behalf.

Rule 46 : Transfer or Assignment:

(1) No prospecting licence or mining lease or any right,
title or interest in such licence or lease shall be transferred
to a person unless, he has filed an affidavit stating that he
has filed an up-to-date income tax return, paid the income
tax assessed on him and paid the income tax on the basis
of self assessment as provided in the Income Tax Act, 1961
(43 of 1961).

(2) No prospecting licence or mining lease or any right,
title or interest in such licence or lease in respect of any
mineral specified in the First Schedule to the M&M (D&R)
76


Act shall be transferred except with the previous approval
of the Central Government.

Similarly, transfer of leases is prohibited under Karnataka Minor
Mineral Concession Rules, 1994. The related provisions are:

Rule 19-A (1) Prohibition of Transfer of leases; The lessee
shall not,

(a) assign, sub-let, mortgage or in any other manner
transfer the quarrying lease or any right, title or interest
therein, or

(b) enter into any agreement, arrangement or
understanding with any person whereby lessee is directly
or indirectly financed to a substantial extent by such
person and quarrying operation and other activities
connected therewith are substantially controlled by such
person;

Provided that nothing in this rule shall apply to a
corporation or an undertaking owned or controlled by
the State Government or to a mortgage made by a lessee
in favour of the Institutions specified in Schedule VI (i) (a)
or to transfer of lease held by the lessee to the company or
firm in which he is one of the Directors or partners, as the
case may be.”

Provided further that such transfer of lease shall not be
made without a written consent of the Competent
Authority and such consent shall not be given unless:
77


(i) the lessee has furnished an affidavit along with his
application, for transfer of the quarrying lease
specifying therein the amount that he has already
taken or propped to take as consideration from the
transferee;

(ii) the transfer of the quarrying lease is to be made to a
company or firm directly under taking quarrying
operation in which the lessee is one of the directors
or partners as the case may be, in the said company
or firm and the company or firm has filed an
affidavit stating that they have filed an up to-date
Income tax returns, paid the income tax assessed on
them and paid the income tax on the basis of self
assessment as provided in the Income Tax Act,
1961; and

(iii) A processing fee of rupees one thousand is paid in
the form of a Demand Draft drawn in favour of the
Director of Mines and Geology , Bangalore.

Provided also that the lessee shall not charge or accept
from the transferee any premium, in addition to the sum
spent by him in obtaining the lease, and for conducting all
or any of the quarrying operation over the area leased to
him.

(2) The Competent Authority may, by order, in writing
determine any lease at any time, if, the lessee, has, in the
opinion of the Competent Authority, committed a breach
of any of the provisions of sub-rule (1) or has transferred
78


any lease or any right, title or interest therein without the
previous consent in writing of the Competent Authority.

(3) Where the Competent Authority has given consent
for transfer of such lease, a transfer of lease deed in form
“T” shall be executed within three months of the date of
consent, or within such further period not exceeding three
months as the Competent Authority allows thereon.”

The two sample agreements entered into by M/s Mysore
Minerals Limited for quarrying ornamental granites and
for extraction of calibrated – iron ore/minerals from old
dumps under the title of raising contract are discussed
hereinafter (these examples are part of Annexure-‘A’).

M/s Mysore Minerals Limited held a quarrying lease bearing
No. QL 5396 in the limits of Nidugal village of Kanakapura taluk,
Bangalore Rural District for ornamental granites. The Company
entered into an agreement on 30.07.1999 with M/s K. Mark who are
referred to as “Raising cum Sales Agent”. There is an entrustment
clause under the agreement which reads “The Company hereby entrust
to the raising cum sales agent, the work of quarrying and producing
granite blocks and sell them or use them for self consumption on
payment of premium…………………………..” There are other clauses
in the agreement indicating that no interest of what-so- ever nature in
the properties is created in favour of the raising cum sales agents etc.
This matter was subject of contest in the Writ Petition No. 15071 of 2000
(GM/PIL) before the Hon’ble High Court of Karnataka. In the prayer
made before the Court, the petitioner had among other things
79


requested the Court for a direction or writ in the nature of mandamus
to direct M/s Mysore Minerals Limited to cancel the agreement dated
30.07.1999 as it was in contravention to Rule 19-A of Karnataka Minor
Mineral Concession Rules, 1994. Commenting on the said prayer, the
Hon’ble High Court observed “therefore we have no hesitation in
holding that Rule 19A in the light of the judgment of the Supreme
Court, is a Rule in the form of prohibition for regulation of the mine
interest of the State as otherwise a shrewd business magnate may find
an easy way of getting the mining leases through the back door entry
from Government Companies Rule 19-A is introduced only to prevent
such back door entries. The Hon’ble High Court also observed that
“therefore we have no hesitation in holding that the present agreement
has to be set aside for having violated Rule 19-A of the rules.”

[Note: The matter when went before the Hon’ble Supreme Court of
India in Civil Appeal No. 3372 of 2001, the Hon’ble Supreme Court
remanded the matter by observing “we express no opinion with regard
to the correctness of the High Court decision on the applicability of the
rules and the interpretation thereof. It is only because this Writ
Petition should not have been taken out of turn and should have been
heard along with Writ Petition NO. 2458/2000. The impugned orders
are set aside.”]

M/s Mysore Minerals Limited held a mining lease No. 1659 in
Jambunathanahalli of Hospet Taluk. The Company entered into an
agreement under the title “Iron Ore Raising Agreement” with M/s
80


Narayana Mines (P) Ltd. of Hospet on 23.09.1999 for extraction of
calibrated Iron Ore (CIO)/minerals from old dumps.

The contents under clause 1 to 6 and 9 of the agreement and in
particular clause 3 and 4 virtually vest the works of operation of mine
held by M/s Mysore Minerals Limited with M/s Narayana Mines.
This is contrary to the clause 17 and 18 of Part VII of the mining lease
agreement read with Rule 37, 37A and 46 of M.C Rules. The said
clauses are similar to the agreement clauses entered into by M/s
Mysore Minerals Limited with M/s K. Mark in respect of Q.L. No. 5396
of Nidagal village, Kanakapura taluk, Bangalore Rural District, which
had been contested in a Writ Petition, the particulars of which are
discussed in the earlier paragraphs.

During the survey and investigations, on the ground it has been
observed that many of the lessees have given their leases on contract,
popularly known in the field of mining as “Raising Contact”. In this
system the raising contractor carries out all the mining operations. It is
also observed that some of the lessees have transferred their leases to
some other persons/agencies on annual basis and sometimes for
periods more than one year. This type of irregular transfer of mining
operations by the lessees is contrary to the provisions of the M&M
(D&R) Act and the relevant Rules and which also leads to other
irregularities like excess loading, transportation of minerals without
permits and sale of unaccounted iron ore, sale of bulk permits issued
by Mines Department and Way permits in Form No.31 issued by Forest
Department to other parties, which documents are used for illegal
81


transportation of iron ore from patta lands. All these illegal activities
are carried on in the name of the original lessees. As stated above, in
original lease agreements entered into between the Government and
the lessees there is no provision to sell or enter into contract of sub-
lease or to carry out any of the mining operations by persons other than
those in whose favour the mining lease had been executed by the
Government, without the prior sanction of the Government. In reality,
none of the Raising Contract agreements have been entered into with
the prior sanction of the Government and in many cases no document
is forthcoming to show the terms of the agreement between the original
lessee and the Raising Contractor. It is to be mentioned here that at the
time of mining lease, the lessee provides information that he has all
expertise in the mining and has sufficient infrastructure and funds to
carryout mining operations and it is only on considering such
qualifications of the Applicant for grant of lease, the mining leases are
granted by the Government. It is further noticed that the Government
has given lease for extraction of minerals on payment of royalty which
is very minimum and far below the value of the mineral in the open
market. As a matter of fact, the State has not executed a lease bearing
in mind the commercial or profit motive of the lessees. In such
circumstances, giving further lease by the original lessee for extraction
of minerals which is a public property will be against the object and
terms of lease. By this process, the original lessee even without making
any investment and putting any efforts makes a fortune. It also creates
unhealthy competition in the mining trade leading to people applying
for mining lease without making proper prospecting study as to the
82


existence of minerals, which in turn leads the lessees or his agents
indulging in mining activities outside the leased areas. In the districts
like Bellary, Chitradurga and Tumkur, the lessees have entered into
commercial transaction with middlemen who also do not have any
experience in mining, thus leading to unscientific mining. This
arrangement actually makes the original lessee an absentee lessee.

It is pertinent to mention here that the Mines/Forest
Departments are issuing permits in the name of lessees or his agents for
transportation. But in reality, these permits are being used by the
Raising Contractors and other persons to transport ores from areas
totally unconnected with the original lessees. The Department officials
have closed their eyes and are ignoring totally these illegal activities.
Such systems from outside looks as if the lessee himself is doing
mining operations but the facts are otherwise. This is one of the serious
concerns and will have to be stopped forthwith. Further investigation
in this regard is required to be gone in detail by examining the
documents of the original lessee, the raising contractors, the transport
agents and others who are connected with this type of illegal activities,
which can be done only after issuing notice to them and this report,
cannot wait till such detailed enquiry. Though the document in regard
to the Raising Contract between the lessee and their sub-contractors are
not immediately available in spite of enquiry with the various people
connected with mining trade, it is established beyond doubt that such
system of Raising Contracts and other illegal type of sub-leasing, be it
at the stage of lifting the minerals from the earth, transportation or
83


export is prevalent in a large scale. The following list gives the names
of certain lessees who have transferred their mining leases in favour of
others who are either Raising Contractors or Sub-lessees. This list
which not exhaustive, only contains few of many, is prepared on the
basis of reliable material gathered by the investigating agency, which
of course will have to be further enquired into and supported by
documentary evidence and this will be done in due course. The name
of these lessees are mentioned based on prima facie material and since
conclusive material could be produced only after further enquiry, the
initiation of any action in regard to this issue could be taken up after
further report from this agency. The list of lessees provided by Dr.U.V.
Singh in his report at Annexure-‘A’ is as follows.
Sl. No. Name of the Lessee M.L.No.
1 M/s P. Balasubbashetty and Sons 2502
2 M/s Rajapura Mines and Traders 2190
3 M/s Mysore Miners and Traders 2185
4 Sri. B.R. Yogendranath Singh 2186
5 Smt. Shantalaxmi Jayaram 2553
6 M/s Srinidhi Iron Ore Mines 2433
7 M/s Ashwath Narayan Singh & Co. 2531
8 Sri S.V. Srinivasalu 1634
9 Sri. K. Brahmananda, M/s Bananshankari
Iron ore Mines
1626
10 M/s Hind Traders 2548
11 M/s Veerabhadrappa Sangappa Co. 2160
12 M/s Sri Kumaraswamy Mineral Exports 2141
13 M/s Veerabhadrappa Sangappa Co. 2296
14 Sri. V.N.K. Menon 2543
15 Sri H.G. Rangangoud 2148
16 Sri. P. Abubkar 2183
17 Sri. B. Kumar Gowda 2516
84


18 Smt. Ambika Ghorpade 2354
19 Sri. P. Venganna Shetty 1046
20 M/s Mysore Minerals Ltd.,
Thimmappanagudi
2002
21 Smt. K.M. Parvathamma, Rajapura 2514
22 Sri H.R. Gaviappa 2483
23 Smt. K.M. Parvathamma, Ubbalgundi 2433
24
M/s Mysore Minerals Ltd.,
Subrayanahalli
Working
permission
25 M/s Nadeem Minerals 2526
26 M/s Mysore Minerals Ltd., Ubbalgundi 995
27 M/s Narayana Mines 1602
28 M/s S.B. Minerals 2393
29 Smt. Shantalakshmi Jayaram 922
30 Sri. H.G. Rangangoud 2148
31 M/s Sandur Manganese and Iron Ore 2580
32 M/s Sandur Manganese and Iron Ore 2581
33 M/s S.B. Minerals 2550
34 M/s Adarsha Enterprises 2369
35 M/s J.M. Vrushabendraiah Mines 2173
36 M/s Laxmi Minerals 2545
37 M/s Laxmi Minerals 2551
38 M/s Associated Mining Co. 2434
39 M/s Kanhaialal Duheria 2563

Since the arrangement under “Raising Contract” is literally a
transfer of lease without the permission of the Government is opposed
to law, in all such cases, the original leases should be terminated.
Further report will follow regarding irregularities committed by
concerned officers in this regard.
CHAPTER – V
Irregularities in mining like mining beyond the leased area,
trespassing into the forest area for mining, etc.

During the survey, various instances of gross irregularities in
mining like mining beyond the leased area, trespassing into the forest
area for mining, illegal dumping and mining contrary to the
parameters laid down by Indian Bureau of Mines have been noticed in
Bellary, Hospet and Sandur regions. Such irregularities in the mining
sector are rampant and such instances are increasing day by day
unhindered resulting in considerable loss to the State Exchequer.
Different types of encroachments that are commonly prevalent in the
mining sector and commonly resorted to by the mining lease holders to
make unlawful gain at State cost are mentioned by Dr. U.V. Singh in
his report Annexure-A. Different types of encroachments noticed
during the present investigation are as follows:

1. Encroachments due to shifting of location of the notified lease
area.

In Bellary, Hospet & Sandur (BHS) region the majority of
encroachments have taken place due to shifting of the notified leased
area to a different convenient location by the lessees. This has been
done in certain cases by taking the wrong reference point or altering
the original reference point or some times without any such reference
with the connivance of local staff and lessees. Some of the satellite
imageries with respect to notified sketches are enclosed to the report
Annexure-‘A’ at Annexure-‘A1’. The details of such leases along with
extent of encroachments etc are also given in the report at Annexure-A.
86


2. Encroachments due to different lease sketch under two different
Acts.

It has been observed during the survey and on examination of
records that the lease drawings (Sketches) notified under the Forest
(Conservation) Act 1980 are different than the lease sketch notified
under the M&M (D&R) Act. The lessees have not adhered to these
sketches. The sketches along with satellite imaginaries are enclosed to
the report Annexure-‘A’ at Annexure-‘A1’.

3. Extraction of iron ore in the adjoining areas and refilling the pits.

During the survey it has been observed that some of the lessees
have encroached the adjoining forest areas/ government land and
removed the iron ore. After removing the large quantities of iron ores
from such encroached areas, the lessees have re-filled the pits and in
some cases even planting has been done over the refilled area. With the
help of satellite imageries and also with field observation, such
encroachments are identified. Sketches with satellite imageries of some
of the leases of this kind are enclosed to the report Annexure-‘A’ at
Annexure-‘A1’. .

4. Encroachments by extending the lease boundaries and extraction
of iron ore.

In many mining leases, the ore deposition is found at the
periphery of the notified lease boundaries and also at adjoining areas.
The lessees have extracted the iron ores by encroaching such adjoining
areas which are forest/Government land beyond their lease boundary.
Such encroachments are found common in the BHS region. Satellite
87


imageries with respect to the lease boundaries for some of such leases
are enclosed to the report Annexure-‘A’ at Annexure-‘A1’.

5. Encroachments in the form of formation of roads to mining leased
area.

It has been observed that most of the mines are located deep inside the
forest/government land and no right of way have been granted to the
lessees. The lessees have formed the “KACHHA ROADS” from the
PWD / ZP roads to their mines without obtaining prior approval
under the Forest (Conservation) Act 1980 or Karnataka Forest Act 1963.
The roads so formed have damaged the forest to a large extent. It
requires to be mentioned here that formation of roads without
permission/ approval in the forest areas is a violation to the Hon’ble
Supreme Court Order Dated 12. 12. 1996 in WP.202/95.

6. Encroachments due to incorporating more areas in the lease
sketches.

It has been observed that in some leases, the lease sketches are
notified for more lease areas than the extent notified under M&M
(D&R) Act 1957. The sketches are prepared for more areas against the
less notified extent. Due to this, the lessees are enjoying more area
under the lease than the entitlement relying on incorrect sketches.

7. Encroachments due to dumping of waste material.
Such encroachments are very common in the BHS region. The
lessees have taken it for granted that it is thin right to dump the waste
outside the leased area mainly in the adjoining areas.
88


8. Encroachments due to more enjoyment by fixing the wrong
boundaries.

It is found during the survey that the lessees have put the
boundary stones covering more areas than entitled for at their
convenience. The encroachments of this kind are very common. It
appears that such encroachments are mainly done for future expansion
of the mining activities.

9. Encroachments by lessees in the adjoining leased areas.
During the survey it has been observed that some of the lessees
have encroached the adjoining mining lease. In this regard some court
cases are also pending. There are cases wherein the sketches of the two
leases are overlapping at certain points. Because of the overlapping
there are disputes among the lessees regarding areas granted under
lease.

10. Encroachment due to cascading effects.
In consortium of mines such cascading effects have been
observed during the survey. Encroachment by one lessee into the
adjoining mine culminates encroachment in the forest or Government
land. This is very common in BHS region.

SUMMARY OF THE ENCROACHMENTS IN THE BHS REGION
Sl.
No.
(in
Hectares)
1) Approval granted under M&M (D&R), 1957 9,704.66
2) Approval granted under the Forest (Conservation) Act 1980 5,426.35
3 Encroachment in the form of extraction of iron ore (pit) 147.29
4 Encroachment due to waste dumps 306.07
5 Other type of encroachments 504.09
6 Encroachment due to construction of roads to mines 124.90
7 Total encroachments 1,081.40
8 Total length of the mining roads (in k.m.) 180.42
SUMMARY REPORT OF SURVEY AND ENCROACHMENTS

Data Report
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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16
1
M/s Gogga gurushanthaiah
& Brothers, PNo4, Nehru
cooperative colony,
Hospet583203
2522
CI 223
MMM2005
Dated
16/3/2006
FEE20FFM99
Dated1/8/2003
FEE104FFM2004
Dated21/1/2006
42.90
32.38
42.90 45.21 50.29 9.64 1.40 11.04 1.40
10.50
2
M/s Gogga gurushanthaiah
& Brothers, PNo4, Nehru
cooperative colony,
Hospet583203
2520
CI 163
MMM2004
Dated
29/12/2004
FEE16 FFM89
Dated1/8/2003
18.21 15.10 18.21 16.82 13.29
3
M/s Gogga gurushanthaiah
& Brothers, PNo4, Nehru
cooperative colony, Hospet-
583203
1028
CI 63 MMM
2007
Dated
24/3/2008
FEE92 FFM2001
Dated 21/1/2006
15.10 15.10 15.10 15.10 41.66 1.90 1.21 24.41 1.5 29.02 2.5
4
M/s P. Balasubbashetty &
Sons P.B.No 3, Hampi
Road , Hospet583203
2502
CI 73
MMM2005
Dated
29/7/2005
FEE92 FFM2000
Dated 7/02/2005
44.11 44.11 44.11 44.17 42.88 0.18 1.94 1.1 3.22 1.1
5 M/s Rajapura Mines 2190
CI 58
MMM91/P
Dated 3/8/1994
Non forest land 93.74 93.74 88.32 127.88 14.28 4.94 15.82 35.04
6
M/s Mineral Miners and
Traders No.17/5, Patel
Nagar, Bellary583103
2185
CI 63MMM2002
Dated
24/9/2003
Non forest land 46.13 46.13 43.21 57.58 0.67 13.14 3.62 17.43
7
Sri Srinivasa Minerals
Mine owners and Exports,
Main Bazar Hospet583203
1933
CI11 MMM83
Dated
6/09/1983
Non forest land 16.46
8
R.B.Seth Shree Ram Nar
Singh Das,D.No. 14991,
P.O.No.38, Hospet 583201
2022/
2576
CI 66 MMM07
Dt: 08/01/2008
31.56 31.56 31.57

1.90 1.90
9
R.B.Seth Shree Ram Nar
Singh Das,D.No. 14991,
P.O.No.38, Hospet 583201
2021/
2524
CI102 MMM06
Dt: 27/05/2006
76.09 76.09 76.08 76.90 2.00 2.00
90


10
M/s Karigannur Mineral
Mining Industry, Embitee
Complex ,Bellary Road,
Hospet 583201
1799/
2075 CI 108 MMM 86
Dt: 21/7/1988
FEE47 FFM 99
Bangalore
Dt: 30/03/2000
199.43 129.43 199.43 188.00 115.00 0.2 0.20 0.142
11
M/s Vibhutigudda Mines
Pvt. Ltd., No.4 kappagal
Road, Bellary 583103
1193/
2469
CI 120 MMM 04
Dt. 08/10/2004
FEE16 FFM 95
Bangalore
Dt: 17/08/1999
55.00 55.00 55.00 53.00 51.00 6.44 6.02 2.75 15.21 2.75
12
Sri B.R.Yogendranath Singh
No.31/659 Mylara linga
Nilaya Singh Colony, Old
Check Post Hospet 583203
741/
2186
CI15 MMM 92
Dt: 07/11/1994
13.00 13.00 17.40 15.94 2.54 3.96 1.10 2.4 10.00 2.4
13
Smt. Shantha Lakshmi
Jayaram, W/o
V.N.Jayaram, SRR Theatre
Compound, Bellary 583101
922
Idle Mines
14
M/s MML,
Jambhunathanahalli Iron
ore mines, Hospet
1710
Idle Mines
15
M/s Gavisiddeshwara
Enterprises., #36,Kappagal
Road, Gandhinagar, Bellary
District.
80 CI.141.MMM.
2005 Dated:
25/11/2005
FEE.142. FFM.2005
Dated 12/06/2006 5.67 5.67 5.67 6.89 6.40 - 1.55 0.44 4.10 6.09 2.54
16
Smt.R.Mallamma W/o
Late R.Pampapathi,
Rajapaura Nilaya, 22nd
Ward,Bellary Road,
1806 CI.76.MMM.81
Dated
21/01/1982
1) FEE.38.FFM.90
Dated 30/04/1997
2)FEE.205.
FFM.2006
182.45 105.70 182.45 477.50 135.70 3.35 18.76 8.81 2.11 33.03 -
17
M/s Mysore Minerals
Limited., #39,M.G.Road,
Bangalore-01
1659 CI.156.MMM.
2005 Dated
01/03/2006
FEE.63. FFM.99
Dated 05/02/2004 38.45 38.45 38.45 51.72 42.00 0.54 5.07 3.15 - 8.76 1.25
18
Sri.R.Charuchandra,
Dr.Nagangowda Gardens,
Station Road, Hospet-
583201 (M/s Shrinidhi
2544 CI.174.MMM.
2005 Dated
09/11/2007
FEE.91. FFM.2005
Dated 09/03/2007 45.00 45.00 45.00 45.00 45.00 3.25 - 6.55 1.92 11.72 1.92
19
Sri.H.N.Premkumar,
Bharath Villa, #35, 3rd
Main, 3rd Cross, R.M.V II
Stage H.I.G Colony,
2538 CI.154.MMM.
2005 Dated
26/08/2005
FEE.158. FFM.2005
Dated 29/12/2006 19.15 21.97 19.15 19.15 18.70 - 0.82 2.14 - 2.96 3.34
20
Sri.K.R.Kaviraj, #216,
Behind 100 Bed Hospital,
M.J.Nagar, Hospet-583201
2561 CI.34.MMM.200
5 Dated
25/03/2006
FEE.97. FFM.2006
Dated 25/09/2007 34.40 34.40 34.40 34.40 35.61 - - 2.11 - 2.11 -
21
M/s Auro Minerals,
Anegondy House,
N.C.Colony, Hospet-583201
1751 CI.55.MMM.200
3 Dated
26/09/2003
FEE.81. FFM.90
Dated 17/08/1999 31.00 31.00 31.00 32.81 35.62 5.17 5.08 1.89 2.63 14.77 2.24
22
Sri.Allam Basavaraj S/O
Allam Karibasappa, Gadagi
palace, Car Street, Bellary-
583101
1893 CI.124.MMM.
2005 Dated
14/02/2006
- 56.75 - 56.75 56.75 56.75 - - - - - -
91


23
Sri.H.P.Manjunath, Bharath
Villa, #35, 3rd Main, 3rd
Cross, R.M.V II Stage H.I.G
Colony, Bengalore-560094
699 CI.52.MMM.200
5 Dated
14/03/2006
- 3.03 - 3.03 3.03 2.95 - - - - - -
24
M/s.Ashwathanarayana
Singa & co # 54 3rd Main
road Parvathinagar Bellary
2531
CI 161 MMM04
DATED
10/01/2005
FEEE 162 FFM2005
Dated 22/07/2006
129.50 56.50 129.55 129.55 147.91 14.90 6.63 20.36 4.70 46.59 5.23
25
M/s.S.B.Minerals,P.B.no 58
K.R.Road, Hospet.583201
2550
CI 16 MMM06
DATED
22/06/2006
FEE 106 FFM 06
DATED
29/05/2007
44.52 44.52 43.63 44.52 38.28 5.80 5.80 3.11
26
M/s,Balaji Mines &
Minedrals # 322/8
2nd,floor Sri sapthagiri
enalve,Hospet 583201
2564
CI 22 MMM 03
DATED
02/08/03
FEE 84 FFM02
DATED 25112006
22.66 22.66 22.66 22.66 19.09 6.02 2.52 8.54 1.1
27
M/s,Muneer Enterprises.
Majaid E llah compound
Hampi road Hospet 583201
2339
CI72 MMM69
Dated05/08/19
92
FEE36 FFM65
Dated04/03/2005
36.40 36.40 36.42 36.42 36.42 3.03 3.03 2.27 8.33 3.21
28
S.V Srinivasalu retd
collector Bunglow
Gandhinagar Bellary
1634
CI227 MMM07
Dated05/10/20
07
FEE65 FFM00
Dated 4/03/2005
149.73 60.00 149.73 149.73 67.12 7.12 1.82 3.44 4.116 16.50 3.9
29
K.Brahmananda, Legal
K.Chnnabasappa Cowl pet
Hospet
1626
CI 33 MMM79
Dated
24/08/1979
FEE93 FFM2006
Dated 23/03/2007
80.94 56.00 56.50 56.50 4.63 2.75 7.38 2.11
30 M/s Mineral Syndicate 2320
CI111 MMM99
Dated
16/02/2000
FEE48 FFM 95
Dated 31/12/98
2.12 2.12 2.12
31 M/s Trident Minerals 2315
CI127 MMM00
Dated
03/03/2001
32.27
32
M/s Trident Mining
Company Pvt Ltd, 65
M.G Road Bangalore
1732
CI121 MMM82
Dated 24/11/82
5.26
33
M/s Veeyem Pvt Ltd
228/A Cowlpet Hospet
583201
988
CI121 MMM05
Dated
23/11/2005
20.23
34 Sri N.Manzoor Ahmed 1321
CI154
MMM2005
Dated
24.11.2005
15.97
35
M/s Dalmia Cements
(Barath) Pvt Ltd.
2010
CI104
MMM2004
Dated
30/3/2005
331.44
92


36 T.Narayan Reddy 2527
CI36 MMM2005
Dated
16/2/2006
37.84 11.00 37.84 37.84 shift
37 M/s Hind Traders 111
CI222
MMM2005
Dated
16/5/2006
19.63 19.63 19.63 19.63
19.63


shift
38
Sri Allum Prashant Gadigi
Palce Car Street Bellary
2352
CI03 MMM95
Dated
27/5/2005
FEE54 FFM2001
Dated 21/02/2007
72.87 69.60
72.87
69.60

39 M/s Mehaboob Transport
Company, Lalitha Nivas,
Sidarth Nagar,Infantry
Road, Bellary
109 CI107 MMM02
Dated
14/7/2003
FEE3 FFM92
Dated7/12/2001
16.19 16.19 16.19 15.68 19.00 shift
40 M/s Tiffins Barytes
asbestas & Paints Ltd Suit
68,KEN IFS Towers, No.1,
ramakrishna Street, (
2293
CI37 MMM99
Dated7/9/2000
-
191.13 - 191.13 191.13 163.45 - 0.97 - - 0.97 -
41 M/s Laxminarayan Mining
Company, No.33, Sun
Nidhi Road Basavanagudi,
Bangalore 560004
2487 CI104
MMM2004
Dated
3/11/2004
FEE27 FFM2002
Dated 02/09/2003 105.22 105.22 105.22 103.00 102.00 5.90 20.64 5.07 10.32 41.93 12.57
42 M/s Chougale Mining
Company Ltd., Chowgale
House, Mormugao
Harbour, Goa 403803
2546 Ci52 MMM2006
Dated
29/11/2006
FEE145 FFM2003
Dated 09/03/2005 100.00 100.00 100.00 98.00 102.65 4.74 5.78 23.49 4.84 38.85 4.60
43 Sri P.Abubkar PWD Class-1
Contractor/Mine Owner,
Dam Road, Hospet, Bellary
583203
2183 CI54 MMM2006
Dated
9/10/2006
FEE04 FFM2004
Dated 01/03/2006 44.00 14.00 14.00 14.40 12.10 - 6.36 - 2.73 9.09 4.10
44 M/s Veerabhadrappa
Sangappa & Company 2-
138, Bellary Road, Sandur,
Bellary 583119
2296 CI43 MMM2000
Dated
11/12/2000
FEE50 FFM94
Dated 19/02/2000 51.00 51.00 51.00 61.00 63.45 - 0.35 12.10 - 12.45 -
45 M/s Veerabhadrappa
Sangappa & Company 2-
138, Bellary Road, Sandur,
Bellary 583120
2160
CI110 MMM90
Dated 8/7/1992
FEE96 FFM2003
Dated 05/01/2004 18.62 17.65 18.62 18.20 19.21 - 0.36 1.44 1.56 3.36 1.95
46 Sri Kumar Swamy Mineral
Exports , 2nd Cross Link
Road, parvathinagar
Bellary
2141 CI232 MMM88
Dated
29/7/1991
FEE 125 FFM 2003
Dt:06/08/2004 82.55 30.80
60.80 60.80 65.70 - 2.83 2.80 2.44 8.07 3.1
CI 32
MMM2006
Dated
7/11/2006
FEE192 FFM2006
Dated 29/12/2006 60.80 30.80
47 Sri V.N.K Menon 6
KHB Colony Sandur583119
Bellary
2543 CI 35
MMM2004
Dated
12/01/2007
FEE13 FFM2007
Dated 22/03/2007 10.00 10.00 10.00 10.00 10.56 - - 0.64 - 0.64 -
93


48 H.G Ranganagouda, Mine
owner No.15/142 Nehru
colony Hospet, Bellary
2148
CI148 MMM90
Dated
18/06/1992
FEE26 FFM2002
Dated 16/08/2003
60.71
41.16
60.70 60.70 - 2.30 9.92 12.05 - 24.27 4.00
FEE82 FFM2006
Dated 19/12/2006 23.75
49 Sri. B. Kumargouda
125B.L.B Colony
Sandur583119 , Bellary
2516
CI44 MMM2003
Dated
27/2/2006
FEE31 FFM2002
Dated 09/08/2005
54.23 83.62 54.25 54.30 58.90 - 2.33 4.75 - 7.08 4.30
50 M/s Deccan Mining
Syndicate Pvt Ltd N0 31
Kalpatare
Apartment,Madhavanagar,
2525 CI13 MMM2006
Dated13/6/200
6
-
19.00 - 19.00 18.20 18.53 4.74 13.15 0.18 - 18.07 -
51 Sri Onti Channappa
Yeshavanthnagar Village,
Sandur TQ, Bellary
1940 CI116
MMM1982
Dated
01/03/1984
Idle Mines 2.17 - 2.17 2.17 - - - - - - -
52 Sri Onti Channappa
Yeshavanthnagar Village,
Sandur TQ, Bellary
1941 CI156 MMM82
Dated
01/03/1984
Idle Mines 5.44 5.44 5.44 - - - - - - -
53 M/s Zeenath Transport
company Mine Owners &
Exports, Cowl Bazar ,
Bellary-583102
2309
CI 128
MMM1979
Dated 15-04-
1980
FEE14 FFM89
Bangalore Dated
7-7-1997
36.42 36.42 36.42 36.42 47.35 10.56 10.56
54 M/s Zeenath Transport
company Mine Owners &
Exports, Cowl Bazar ,
Bellary-583102
2239
CI 148 MMM81
Dt.14-5-
1984(old)
FEE15 FFM89
Bangalore Dated
14-2-1997
44.13 44.13 44.13 44.13 47.10 2.96 5.4 8.36 5.45
55 Sri.S.A. Thawab
Mine Owners &Exports,
Zeenath House, Cowl
Bazar, Bellary-583102
2488
CI
117MMM2004
Dt.11-10-2004
FEE63 FFM90
Bangalore Dated
27-1-2004
31.60 24.72 24.72 31.60 36.69 8.47 8.47
56 M/s Adarsha Enterprises
Kudligi-Bellary Road,
Sandur-583119
2369
CI 20 MMM
2000 Dated18-7-
2002
- 2.91 - 2.91 2.91 7.73 1.36 0.76 2.98 - 5.10 -
57 J M Vrushabendraih
S/o Maliappaiah, M.J
Nagar, Hospet-583203
2173
CI 147 MMM91
Dt.19-3-1993
- 3.29 - 3.29 3.29 15.86 5.94 8.37 - - 14.31 -
58 Ramghad Minerals and
Mining Pvt. Ltd. Nehru Co-
operative colony, Hospet-
583203
2451
CI 69
MMM2002 Dt.9-
6-2003
FEE84 FFM2006
Bangalore
Dated11-1-2007
24.28 26.36 24.28 24.28 35.00 6.10 8.38 - - 14.48 2.4
59 Sri Shanthi Priya Minerals
Pvt Ltd. No.264, College
Road, Hospet-583201
2540
CI 69
MMM2006
Dt.29-11-2006
FEE33 FFM90
Bangalore Dated
25-8-1999
80.97 80.97 80.97 80.93 82.55 - - 15.3 3.78 19.08 3.86
94


60 M/s Laxmi Minerals
No.216, Near 100 Bed
Hospital,
M.J.Nagar,Hospet-583203
2545
CI 29
MMM2005
Dt.30-8-2005
FEE152 FFM2005
Bangalore Dated
23-3-2007
36.42 36.42 36.42 36.42 39 1.40 - 5.5 - 6.9 -
61 M/s Laxmi Minerals
No.216, Near 100 Bed
Hospital,
M.J.Nagar,Hospet-583203
2551
CI 28
MMM2005
Dt.30-8-2005
FEE151 FFM2005
Bangalore Dated
4-1-2007
22.26 24.51 22.26 22.26 22.95 - - 0.94 - 0.94 2.26
62 M/s Associated Mining
Company Mine Owners,
XVIII/35,Iind Link Road,
Parvathinagar, Bellary-
2434
CI 40
MMM2002 Dt.3-
4-2003
FEE50 FFM97
Bangalore Dated
13-7-2000
10.12 10.12 10.12 10.12 9.75 1.51 0.47 2.32 1.75 6.05 1.79
63 M/s A.M. Minerals
No:4/269, Patel Nagar,
Hospet-583201
2278
CI 35 MMM99
Dt.5-2-2000
FEE66 FFM95
Bangalore Dated
29-8-1997
2.02 2.03 2.02 2.02
64 M/s S.B Minerals
P.Bno:58,K.R.Road, Hospet-
583201
2393
CI 145 MMM98
Dt 6-10-2001
FEE153 FFM93
Bangalore Dated
30-4-1997
40.47 40.47 40.47 40.47 56.25
4.82
3.01
{Forest)
1.81
16.62 - 2.08 23.52 2.49
65 Ramghad Minerals and
Mining Pvt. Ltd.(Sri.Iyli
Gurunath) Nehru
Co-operative colony,
622
CI 66
MMM2006
Dated 21-5-2008
FEE113 FFM99
Bangalore
Dated31-5-2005
20.23 20.23 20.23 20.23 23.30
1.88
0.74
{Forest)
1.14
2.49 1.33 1.62 7.32 1.74
66 Sri. Kannhaiyalal Duderia
Pannaraj Compound, Fort,
Bellary
2563
CI 172
MMM2006 Dt.5-
4-2007
FEE123 FFM2007
Bangalore
Dated18-10-2007
30.76 33.76 30.76 30.76 29.79 - 0.06 3.86 - 3.92 -
67 Sri.Allum Prasant
Palace, Car Street, Bellary-
583101
2289
CI94 MMM99
Dt.23-06-2000
-
42.90
- 42.90 46.24 36.26 - - - - - -
68 Sri. N.Ratnaiah
Mine Owner, Car Street,
Bellary
670
CI90 EMO66
Dated 12-8-1966
(Old)
- 14.16 14.16 13.43 17.63 shift
69 M/s Hothur Traders Mine
Owners & Exporters Plot
No 9A, Laliltha Nivas
Siddarth Nagar ,Infentary
2313
No CI 147 /
MMM/ 98
Dated 20.6.2000
No FEE 45 FFM
/88 B'lore dated
22.3.97
21.11 21.11 21.11 22.65 23.15 6.55 4.25 5.83 16.63 4.78
70 Smt Ambika Gorpade
Shivapura Palace,Kruthika
Nivas Kruthika
Farm,Sandur 584119
2354
No CI 23 /
MMM/ 2001
Dated 13.6.2002
4.95 4.95 4.80 5.09 1.70 1.20 1.65 0.74 5.29
71 M/s V S Lad & Sons,
Prashanth Nivas Krishna
Nagar Sandur 583119 ,
Bellary dist.,
2290
No CI 100 /
MMM /99
Dated 28.4.2000
No FEE 29 FFM/
98 B'lore dated
16.2.1999
105.06 105.06 105.06 101.80 116.68 14.30 6.17 9.37 29.84 7.74
72 M/sBharath Mines &
Minerals, Singhi Sadan
Infantary Road Bellary
2245
No CI 83 /
MMM/ 97
Dated 16.3.1999
No FEE 32 FFM
/2000 B'lore dated
4.4.2001
26.20 26.20 26.20 23.01 31.95 7.50 3.10 5.60 3.46 19.66 3.85
95


73 M/s N M D C , 61, Ring
Road Lajpath Nagar 111
New Delhi
1111
NO CI 35 /
MMM/ 2005
Dated 4.4.2005
647.50 690.00 688.00 40.50 40.50
74
M/s P Venganna Shetty &
Bros Nehru Co Operative
colony Hospet 583203
Bellary
1046
No CI 68 /
MMM /2002
Dated 21.3.2008
No FEE 114 FFM
/2003 B'lore dated
31.5.2005
50.00 50.00 50.00 115.80 62.13 5.10 5.20 1.80 2.68 14.78 3.36
75 Smt Sugunraj 1779
No CI 159/
MMM /80
Dated
05.05.1981

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76 Smt Omkaramma 1168
N
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1
9
8
3



77 Sri B Kumaragowda 1611
No CI 163/
MMM /80
Dated
06.09.1980

N
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78
M/s N.M.D.C. Ltd ,
Donimalai township
2396
CI.33:MMM:98,
Dated:
05/09/2002
FEE:17:FFM:1990
Dated:28/07/1999
608.00 608.00 608.00 609.00 636.24 3.68 3.04 99.14 4.57 110.43 5.72
79
M/s TML. Ltd
Vishwa complex,JM
buildings station road
,Hospet583201
2365
CI.13:MMM:200
2,
Dated:18/03/20
02
FEE:38:FFM:1998
Dated:09/06/1999
125.58 125.58 125.58 133.76 154.40 5.73 51.41 23.88 5.04 81.02 5.04
80
M/s TML. Ltd
Vishwa complex,JM
buildings station road
,Hospet583201
2366
CI.10:MMM:200
2,
Dated:23/03/20
02
FEE:86:FFM:2000
Dated:18/11/2000
33.97 33.97 33.97 34.10 18.68
81
Smt. K.M.Parvathamma,
Mine owner II link
road,parvatinagar,Bellary3
2514
CI.10:MMM:200
6,
Dated:19/01/20
06
FEE:66:FFM:1994
Dated:07/08/2001
24.91 15.24 24.91 30.58 4.31 4.97 9.28
82
M/s M.M.L. Ltd,
40 fair field
road,Bangalore1
995
CI.269:MMM:20
05
Dated:05/09/20
06
FEE:51:FFM:2004
Dated:12/07/2006
33.60 33.60 33.60 37.79 38.14 2.36 2.40 0.977 5.737
96


83
M/s H.R.Gaviappa.& Co.
Mine
owner,Parvatinagar,Bellary
583101
2483
CI.40:MMM:200
4,
Dated:20/10/20
04
FEE:96:FFM:2000
Dated:08/03/2004
34.00 34.00 34.00 30.27 33.55 0.30 1.50 6.40 1.25 8.20 1.25
84
M/s Hanumantha Rao
Teachers colony,Door
No393 sandur583119
2505
CI.45:MMM:200
5,
Dated:09/03/20
05
FEE:20:FFM:2005
Dated:16/03/2006
40.47 17.40 40.47 40.31 18.50 2.21 1.00 1.04 4.25 1.23
85
Sri.J.M.Vrushabendraiah,
Mruthunjay nagar,Hospet.
2292
CI.67:MMM:200
0,
Dated:15/11/20
00
REVENUE LAND 4.85 4.85 3.73 0.38 0.38
86
M/s Nidi Mining Ltd.
Mine ownerII link
road,Parvathinagar,Bellary
583103
2433
CI.45:MMM:200
2,
Dated:26/11/20
02
FEE:26:FFM:1997
Dated:07/12/1998
FEE:194:FFM:2006
Dated:07/12/1998
31.84 31.84 31.84 29.74 28.20 1.50 24.20 2.70 2.34 28.74 2.34
87
Sri. V.N.K.Mennon
PWD
contractor,Sandur583119
1715
STOPPED
MINES
STOPPED MINES 1.61 1.61 `
88
M/s Mysore Minerals
Limited (Timmappanagudi)
#39, M.G.road, Bangalore
2002
CI 25 EMI76
Dated 23/8/79
FEE91 FFM97
Dated 8/6/2001
FEE10 FFM2003
Dated 02/05/2005
621.59
176.72+
10
621.59 582.00 626.98 - - 54.88 - 54.88 8.4
89
M/s Nadeem Minerals ,
Residential Apartment,
Burly Street, Bangalore
2526
CI 27 MMM06
Dated
23/06/2006
FEE33 FFM2003
Dated 08/08/2005
53.20
53.20+
3.00
53.20 53.20 47.30 1.96 5.73 - - 7.69 3.7
90
M/s Mysore Minerals
Limited (Timmappanagudi)
#39, M.G.road, Bangalore
W.P.C
I
16779
Dated
5/1/8
0
CI 70
MMM2006
Dated
27/11/2007
FEE16 FFM 1992
Dated 28/11/2000
1
6
8
.
0
0
(
A
s

p
e
r

W
o
r
k
i
n
g

P
e
r
m
i
s
s
i
o
n
)

8
0
.
9
3

a
s

s
a
n
c
t
i
o
n
e
d

N
o
t
i
f
i
c
a
t
i
o
n

80.93 - - 81.16 - 3.00 3.82 - 6.82 -
91
M/s Gadagi Mineral
Mining Company, gadagi
Palace,Car Street, Bellary
2489
CI 113 EMO 74
Dated
12/9/1977
CI52 MMM2004
FEE55 FFM96
Dated31/3/1998
39.63 39.63 41.92 41.92 42.10 0.64 - - 3.68 4.32 4.60
92
M/s Narayana Mines Pvt
Ltd, Mine Owner 11/70, 1st
Floor, Bus Stand Road,
Hospet, Bellary
1602
CI 151 EMO77
Dated
20/3/1979
Idle Mines 109.27 109.27 106.10 106.10 107.31 3.30 - - - 3.30 -
93
M/s Mysore Minerals
Limited (Timmappanagudi)
#39, M.G.road, Bangalore
1754
CI 33
MMM2006
Dated
16/11/2007
Idle Mines 6.07 6.07 6.07 6.07 - - - - - - -
97


94
H.G Ranganagouda
15/142, Nehru Co-
Operative Colony, Hospet,
Bellary
2549
CI 122
MMM2005
Dated
26/10/2005
FEE123 FFM2005
Dated 03/01/07
54.63 54.63 54.60 44.50 35.10 0.57 - 15.13 1.00 16.70 1.40
95
M.S.P.Ltd,
Nehru Co-Operative
Colony, Hospet, Bellary
2416
CI92 EMI 1981
Dated
15/12/1981
FEE45 FFM96
Dated 30/4/1997
347.22 347.22 347.22

survey
yet to be
com-
pleted

96
Smt. Shantha Lakshmi
Jayaram, W/o
V.N.Jayaram, SRR Theatre
Compound, Bellary 583101
2553
(921)
CI 185
MMM2005
Dated
28/9/2005
FEE171 FFM2005
Dated 23/6/2006
50.47 50.47 50.47

survey
yet to be
com-
pleted

97
M/s S.B.Minerals,
K.R.Road, Hospet,Bellary
2068
CI 84
MMM2003
Dated 04/05/06
FEE39 FFM90
Dated 18/2/1997
80.92 80.94 80.92


survey
yet to be
com-
pleted

98
M/s SMIORE Ltd., 217,
Bellary Road,
Sadashivanagar, Bangalore
1179/
2580
CI 77 MMM
2006
Dt: 27/12/2007
No.FEE 100
FFM 2006
Dt; 19/01/2007
2837 1615.64 1863.02 1848.40 1848.40 14.62 14.62 24.36
99
M/s SMIORE Ltd., 217,
Bellary Road,
Sadashivanagar, Bangalore
1952/
2581
CI 108 MMM
2006
Dt: 27/12/2007
No.FEE 99 FFM
2006
Dt; 19/01/2007
378 142.58 142.58 137.90 137.90 4.68 4.68 7.8
TOTAL 9704.66 5426.35 7220.77 7767.50 7417.32 145.71 306.07 504.09 124.90 1079.17 180.42


98


The figures given in this report for the above said encroachments are
indicative and subject to Court orders if any. Some W.P. are also
pending before the Hon’ble High Court and also in other Courts
regarding disputes etc.

Details relating to some instances of encroachments set out in the
report at Annexure-‘A’ are as hereunder:

Mining Lease of M/s Lakshminarayana Mining Company

The mining lease No. 2487/1876 to an extent of 105.22 ha. under
the M&M (D&R) Act, have been granted in favour of M/s
Lakshminarayana Mining Company in the year 2004 for 20 years, The
lessee also obtained the forest clearance under the Forest
(Conservation) Act 1980 vide the Government Order dated 2.9.2003 to
an extent of 105.22ha. in Northeast block of Sandur taluk, Bellary
district. The lessee has surrendered a part area from his original lease
without rehabilitating the broken up area and mined areas. The
surrendered area is highly fragile and eroded to a large extent. At
present the lessee has fixed his boundary by taking a reference Point A
(Zebra Cement Carriers) which is fixed at the Northeast corner of the
lease. This point has been fixed by leaving 200 meters gap towards the
Northwest side (adjacent to the mining lease of M/s Ashwath Narayan
Singh). This 200 meters gap of Forest land has been encroached by the
ANS. The lessee has also extended his leased area towards the lease of
M/s Chowgule’s Mines. Though the lessee has surrendered the area
towards the southwest of his original lease, but he continued to operate
99


the mining in the middle part of the leased area (marked in the sketch)
which is quite clear from the Satellite imaginaries of 2006. The size of
working pit (outside) has been calculated and it comes out
5.90ha.(falling outside the leased boundary). The lessee also
encroached 20.64 ha. forest area for dumping purpose. Further, the
lessee is enjoying the road passing through the forest to an extent of
12.57 km hence encroached 10.32 ha. in the way of road construction.
Other encroachments outside the lease (stone fixed) are about 5.07 ha.
The total of working pit including encroached pit have been calculated
and it comes total out 41.93 ha. The details regarding total
encroachments for various mining activities are provided in the
sketches annexed to the report Annexure-‘A’ at Annexure-‘A1’.

Mining Lease of M/s Deccan Mining Syndicate Pvt. Ltd.

A mining lease to an extent of 50 Acres has been granted on
20.5.1966 in favour of Motilal J. Boyal for 20 years. Lease was
numbered as ML 636. Subsequently, this lease was transferred in
favour of M/s Deccan Mining Syndicate Pvt. Ltd. in the year 1980 vide
Govt. Order No. CI71MMM80 dt. 30.6.1980. During the renewal, 3
acres of land have been deleted and remaining 47.00 acres have been
notified on 20.5.86 for 10 years at the same original location. In its
second renewal notification dated 20.5.06, the original location of the
leased area has been shifted to the southern side, and new lease No.
was given i.e. 2525. On verification of records it is found that for
shifting of location, the State Government has not taken the approval of
100


Central Government under the M&M (D&R) Act 1957. The lessee has
not properly demarcated his lease boundary as well as no proper
stones have been fixed at the interval of 20 meters. It is required to be
fixed by the lessee as per the agreement. The lessee has also destroyed
the “rock point” which was located at the southeast corner of the lease.
This rock mark is a point where the non forest land is separated from
the Forest. The lessee is working out side the leased area and formed a
pit to an extent of 4.74 ha. Dump waste generated from the mine has
been dumped outside the Mining lease. In total lessee has encroached
about 18.07 ha of forest land as well as non-forest land. The NMDC
has submitted a sketch which surrounds DMPSL leased area. The
lessee is operating in two pits i.e. measuring 11.74 ha as verified from
the satellite imaginaries of 2006. The details regarding total
encroachments for various mining activities are provided in the
sketches annexed to the report Annexure-‘A’ at Annexure-‘A1’.

Mining Lease of M/s Gogga Gurushanthaiah & Brothers,
ML.No.1028.

An area of 63.13ha has been granted in the year of 1971 in favour
of M/s Gogga Gurushanthaiah and Brothers for a period of 30 Years to
extract iron ore and Red ochre under the M&M (D&R) Act 1957.
Subsequently the lease has been renewed for an area of 15.10ha for 20
Years w.e.f 27/05/2001 in Joga Reserve Forest, Hospet Taluk.15.10 ha
has also been diverted under Forest (Conservation) Act 1980 vide
Government order dt: 02/11/2006. The sketch in this regard has been
approved by Mines and Geology and MOEF. During the survey it has
101


been observed that the lessee had operated the mine at different
location i.e. towards the Southern side from the leased area. This has
been further verified with the Satellite imagery. The detailed sketch
with Satellite imagery is enclosed to the report Annexure-‘A’ at
Annexure-‘A1’. The details regarding total encroachments for various
mining activities are provided in the said sketches.


Requirement of a joint survey of Inter-State-Border between
Karnataka and Andhra Pradesh by the Government of India

During the course of this enquiry and my visit to the three
districts referred to hereinabove, it has come to my knowledge that the
Government of Karnataka had given three mining leases to some
private parties in the area abutting Karnataka – Andhra Pradesh
border while Government of Andhra Pradesh had given a mining lease
to one company on the Andhra side of the border. Because of the
proximity of the availability of mineral in this part of the border of two
States, there has been some illegal transportation in and out of
Karnataka and Andhra Pradesh, of minerals illegally mined.
Therefore, during the course of my investigation itself, I had suggested
to the Department of Mines and Geology to establish check points at
routes available for transportation of these ores in and out of these two
States to control such illegal transportation. I have no feed back in
regard to establishment of any such check points. But while this report
was under preparation, newspaper reports showed that serious
disputes have arisen between the people operating these mines both in
Karnataka as well as in Andhra Pradesh, which had lead to various
102


litigations has also created law and order situation. There are
allegations on one side that the company from Andhra is encroaching
the mining area within the Karnataka territory. While the counter
allegation is that the area in which the Andhra company is mining
really belongs to Andhra Pradesh. To have a first hand knowledge of
the happenings in this border area, I directed Dr.U.V. Singh to inspect
that area and submit a report. Dr. Singh has given a detail report
supported by documents. This report is made part of Annexure-‘A’.
He has also given some findings. In this report of mine, I am not
inclined to endorse those findings of Dr. Singh solely because the
dispute is in the nature of inter-state dispute and no conclusion could
be arrived at without hearing the State of Andhra Pradesh. This
dispute does not confine itself to a dispute between a few companies,
but, involves the territorial integrity of two States. I was informed that
there is a litigation pending in the Supreme Court, but in spite of my
best efforts, I have not been able to get the particulars of the same.
Consequently, I am unable to comment on the same. But, I do see an
urgent need that the Government of Karnataka to approach the
Government of India and get a joint survey done to determine the
property of the two States, so that the territorial integrity of two States
are protected. Irrespective of the powers that are, my advice to the
Government of Karnataka is to initiate steps in this regard at the
earliest. At the same time, immediate steps should be taken to stop all
mining work in the disputed area so that no loss is caused to either
State, forgetting the interest of individuals.
CHAPTER – VI

ILLEGALITY IN TRANSPORTATION OF IRON ORE AND SOME
EXAMPLES OF THE SAME

One of the major deficiency in the existing law which has
become very handy for the unscrupulous miners to transport illegally
mined ores, is in regard to transportation of the same. At present, iron
ores mined by the persons who hold mining lease in non-forest land is
being transported under a bulk permit issued by the Dy. Director of
Mines and Geology. These permits are issued for huge quantity of iron
ore as sought for by the lessee or his agent with a duration of thirty
days at a time. In these thirty days, using the same bulk permit, the
owner of the mineral or the transporter can transport large quantities of
iron ore at a time in trucks or by train out of the total bulk quantity
mentioned in the permit. The transporter carries a Xerox copy of the
original bulk permit and transports mineral within the period of thirty
days mentioned therein. There is no method by which an account
could be kept by the department concerned, as to the quantity of ore
transported per trip under one bulk permit. In such bulk permit, the
lessee or the transporter should enter the vehicle number, quantity of
mineral that is being transported in the said vehicle and the name of
the stock yard from where it is being transported, as also the
destination to which it is being transported. Similarly, minerals that
are mined legally from forest area will in addition to the bulk permit
shall carry a permit in form No. 31 issued by the Forest Department
and a transport slip issued by the lessee himself. The normal practice
prevailing as on today is that a booklet of empty form No. 31 having
104


about 50 to 100 numbers are given at a time to the lessee or the
transporter by the forest officials after signing each one of those
permits and putting the seal of the concerned department. Nothing
else is filled in the said form No. 31 by the Forest Department and the
same is filled as and when the lessee or the transporter wishes to
transfer the mineral. This form does not fix any period for
transportation, but that period will have to be under the time allowed
in the bulk permit by the Mines Department. Consequently, even the
Forest Department does not keep the account of the quantity of mineral
transported and rely only on the statements made by the lessee or the
transporter. The period of thirty days allowed for transporting the
stocked iron ore is far beyond the required time for transporting the
iron ore either from the stock yard at the mine head or any other stock
yard to the railway or the ports of Mangalore, Bilakere (Karwar
District) and Goa. Therefore, there is every possibility and actually it
happens in reality that the same permit is used more than once for
transporting different lot or ore. There is no way either the Mines
Department or the Forest Department could keep a check over this
malpractice. There have been instances which is reported to me from
the new Mangalore Port, by the security personnel that they have
found at a particular time more than one vehicle bearing same
registration number carrying similar permits and transporting iron ore.
There are many number of cases where such instances have been
noticed by other departments like the Police, RTO etc. in respect of
duplication of registration numbers. As a matter of fact, a report
prepared by the Centre for Science and Environment, New Delhi and
105


titled as “Rich Lands Poor People – Is sustainable mining possible?” at
page 194, in relation to illegality in mining and transportation of
minerals in Karnataka, it is observed as follows:

“Reports on illegal mining have also found that officials allow
3 to 4 days for transporting ore from Sandur-Hospet and
Bellary Region to Mangalore and Karwar Ports, though the
required period for transportation is only one day. This
unduly long period is granted for facilitating more number of
trips per permit, also, many licensed mine owners have
encroached upon the areas beyond the boundaries of their
mining area and some also carry out mining activities at
different locations – all of this in forest area”

The period of four days mentioned in this report is actually not correct,
it is thirty days so far as bulk permit is concerned. So, one can imagine
how many unofficial trips vehicles carrying iron ore can make carrying
a copy of the bulk permit as also a form No. 31 issued by the Forest
Department which is actually given to the lessee and land owner or
transporter without filling any of the columns or date or destination.
This is a major cause for loss of revenue to the State as also an incentive
to unscrupulous miners to do illegal mining and transport the same
with the aid of these permits. Having noticed this major deficiency in
the system, I recommended a method of one lorry-one permit for one
trip and recommended the same to the Department of Mines and
Geology who brought out a permit with a hologram and a computer
bar-code which would get erased during the first trip itself and the
permit becomes invalid for second/subsequent use. In that system,
106


seven days time was granted for transportation of the ore from the
stock yard to the delivery point. But, the mine owners and transporters
have challenged this change in the system in the High Court and the
introduction of new system has been stayed. Hence, the old system
which gave room for a lot of irregularities is still continuing. Efforts
should be made to get the stay vacated so that this lacunae in transport
permit system is rectified at the earliest. Dr. U.V. Singh has analyzed
the shortcomings of this system in one or two of his case studies and
has reported thus:

Illegal transportation of Iron Ore from the Mining Lease No.2516
of B.Kumar Gowda – (A Report by Dr.U.V. Singh)

A Mining Lease No.2516 of an extent of 134 Acres have been
granted in Kumar Swamy state forest of Sandur range in favour of Sri.
B.Kumar Gowda. As per Section 9 of M&M (D&R) Act 1957 the lessee
has to pay royalty at the rate of Rs.27 per metric ton (MT) for a grade of
65 to the State Government. The State Government through its
department of Mines and Geology has to ascertain the quantity and
issue the bulk permits and trip sheets for the ores to be transported. The
lessee should pay royalty for quantity being transported from his mine
in advance. The Deputy Director (Mines) issues bulk permit for the
royalty paid quantity. He/she has to keep check on the quantity
transported through these bulk permits and shall also ascertain that the
lessee should not transport more quantity than the permitted and
royalty paid. For this purpose Deputy Director of Mines (DD) issue trip
sheets and these trip sheets should be returned back for accounting
purpose. In the trip sheet the lessee is supposed to write the truck
number, quantity and other details. Every loaded truck shall carry the
copy of the concerned bulk permit, the trip sheet and the way permit
107


(Form No.31) issued by the Forest Department and a transport slip
issued by the lessee himself. The Form No.31 are issued by the Forest
Department to lessee in bulk. There are various columns in this Form
and in one of the column the lessee is supposed to maintain the quantity
as being transported by that particular truck along with the truck
registration number etc.

On 27.07.2008, I have inspected the mine of Sri.B.Kumar Gowda in
Kumarswamy Forest Block. Some of the trucks which were carrying the
iron ores from his mine head to Yashwanthnagar railway station were
intercepted and checked. During the checking, it’s found that a truck
bearing No.KA-35/A 1495 was carrying 3 documents. i.e. a X-copy of
Bulk Permit issued by the Mines department, the way permit (Form
No.31) issued by the Forest Department and a transport trip sheet
issued by the lessee himself. The quantity mentioned in the trip sheet
and in the way permits were found different. There was no trip sheet (to
be issued by DD Mines) found with the lorry. The trip sheets are being
issued along with the bulk permit by the Mines Department for a
specific quantity to be carried by the truck.

Subsequently, I have taken the print out from the Computer attached
to the weigh bridge for the day i.e. 27.07.2008 for the iron ore
transported to the Yashwanthnagar Fomento’s Stockyard by the lessee.
As per the record collected from lessee’s computer (the weigh bridge
maintained by Sri.Kumar Gowda’s stockyard) it is found that 408 trips
(lorry loads) have been made for the day (i.e.on 27.7.08). The system
(software) installed in the computer is a auto run system which provides
automatic net weight i.e. the net weight arrived through the system is
actually the loaded quantity in the truck. Based on the computer
printout attached to weighbridge it is found that 7504.88 MTs have
been loaded in trucks and transported. Further, as per the way permits
108


(i.e. Form No.31) issued for the trips (408) the quantity has been
calculated (which is written on the way permits) and it is found that in
total 6,475.34 MT have been transported if the records of Form No.31 is
taken into consideration. Further, as per the “transport trip sheet”
issued by the lessee himself for the 408 trips, the quantity has been
calculated and it is found 5840.80 MT. The lessee has used 5 bulk
permits for these trips (408). The details of the bulk permit are given as
under:

Sl.
No.
Bulk
Permi
t No.
Date Quan-
tity
(MT)
Destination Cate-
gory
Grade Actually
transported
and stocked at
1 2239 18.07.08 2600 Yeswanth-
nagar Railway
Station
Kakinada
Iron Ore
Fines
65 Fomento(KTK)
Mining Co.,
Stockyard near
Yeshwanth-
nagar Railway
Stn.
2 2242 -do- 2600 -do- -do- -do- -do-
3. 2244 -do- 3800 -do- -do- -do- -do-
4. 2249 -do- -do- Yashwanthna
gar Railway
Station,
Sawathwadi,
T.G.T. Goa.
Iron Ore
Lumps
-do- -do-
5. 2253 -do— -do- Yashwanthna
g-ar Railway
Station,
Sawathwadi,
T.G.T.Goa
-do- -do- -do-

On perusal of above bulk permits the following observation are made.
1. The Deputy Director, Mines has issued 18 bulk permits on
dt.18.7.08 for destination via Yashwanthnagar Railway Station
to Kakinada and Sawathwadi T.G.T, Goa. Some permits are
issued for 2600 MT and others for 3800 MT.

109


2. Out of the 18 permits, the lessee has used 5 bulk permits for the
transportation of 5804 MT (as per lessees “transport trip
sheet”) to Yeshwanthnagar stock yard.
3. The Iron Ore transported from B.Kumargowda mines has been
unloaded at Stockyard maintained near to Yashwanthnagar
Railway Station and managed by the M/s. Fomento (Karnataka)
Mining Co., Private Ltd., a raising contractor.

4. The bulk permit are not accounted and recorded in none of the
records used for transportation hence kept open to use it again
and again without any limit. With such arrangement, the (x-
copy) bulk permits can be used for any quantity.

5. No separate stocks for individual bulk permit are maintained
either at mine’s head or at Stockyard near Yashwanthnagar
Railway Station.

6. The iron ore transported by using 5 bulk permits can’t loaded in
five different Goods Trains in a single day.

7. The lessee has used X-copy of 5 bulk permits haphazardly
without having separate identity. There could not be check
whatsoever on the transportation by using the X-copy of bulk
permits in this manner.

8. There are no trip sheets issued for this quantity (quantity to be
transported by using 18 bulk permits) and due to lack of this it
is not possible to arrive at a conclusion for a particular bulk
permit the quantity transported against it.

The Mine Manager Shri Srinivas Rao was present
during the entire course of inspection. The Mines Manager told
me that the Iron Ore is transported to a stockyard near
110


Yashwanthnagar railway station. With this information, I also
inspected the stockyard belonging to Fomento (Karnataka)
Mining Co., Private Ltd., The entire quantity transported
through the 408 trips have been weighed at the weigh bridge of
this stockyard also. A print out from the computer has been
taken and quantity is summed. The quantity comes out 7376.44
MT.

At the weigh bridge of BKG Mines, some printed slips
(through computer) were also found which were printed by
writing the Vehicle Number, Source, Destination, Date, Time,
Gross Weight and Net Weight. These slips are meant for to be
carried along with the lorry loads. The Net weight recorded on
all these trip slips (16 in numbers) ranges from 10.45 MT to 16
MT i.e., quite below to the carrying capacity of the trucks. On
the above observations the following is concluded.

1. The quantity transported in real terms by 408 trips (lorry loads)
to the stockyard maintained by Fomento (KTK) Mining Co.,
Pvt., Ltd., is more than the quantity for which the royalty is
paid. Hence, there is illegal transportation of Iron Ore which
has resulted to huge loss to the State Government.

2. The summary of the transportation and loss to Government for
the iron ore transaction on 27.7.08 is as under.

Sl.
No.
Total
No. of
trips
(Lorry
loads)
Actual
quantity
transport
- ed
(MT)
Total
quantity
recorded in
Form
No.31(MT)
Total
quantity
recorded in
transport
trip sheets
by lessee
(MT)
Difference
(MT)
(3-4)
Difference
(3-5)
Loss to
Govt.
(Rs.lakhs) @
Rs.2400/MT
1 2 3 4 5 6 7 8
408 7504.88 6475.34 5804.80 1029.54 1700 40.80
111



Net loss to State Government for one day transaction from the
said mines is about 40.80 lakhs.

3. Violation of Transit Rule 149 (1) of Karnataka Forest Rules
1969 by making false entries for less quantity of iron ore if
compared with the actual quantity loaded in the trucks.

4. The lessee has given his lease to a raising contractor M/s.
Fomento (Karnataka) Mining Co., Private Ltd., which is
nothing but a Sub-Lease of the Lease without prior approval by
the State / Central Government.

5. Bulk permits are issued for the different destination via Railway
Station but in reality the first destination is stock yard near
Yashwanthnagar Railway Station and ores are transported
through trucks.

6. In fact the adopted system hire in is a totally ambiguous and
non-transparent and require immediate intervention to
safeguard the state resource.

It is further observed that the Fomento (Karnataka) Private Ltd.,
is having a stockyard near the Yashwanthnagar Railway Station.
This stockyard is been used for the stocking of iron ore transported
from three more mines. i.e. SKMV, VNK Menon and VESKO. It is
learnt that the Fomento (Karnataka) Mining Co., Private Ltd., is a
raising contractor for all these mines.

It is also noted that the lessee is transporting the ores to the stock
yard instead to Railway Station as being mentioned in the bulk
permit. By storing at Stockyard and then loading to Goods Train the
iron ores cannot be checked for the permitted quantity. It is evident
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from the quantity actually transported and recorded in various
records. The Mines and Geology Department has facilitated to lessee
to commit such irregularity i.e., by issuing many bulk permits to the
different destination ignoring the transportation to stock yard
through trucks without issue of trip sheets. The bulk permits are not
accounted in any of the records related to transportation. Hence
numbers etc., nothing could be arrived to a conclusion for the
quantity for which a particular bulk permit is used and how much
quantity is yet to be transported for the said bulk permit.

My conclusions in regard to the irregularities and illegalities
are reflected in the concluding chapter of this report. Regarding
irregularities committed by the concerned officers, a further report
will be submitted.
CHAPTER - VII
The Effect of mining on Roads and Environment

As briefly noted herein before in this report, I experienced,
having travelled in NH 17, 48 and 63, as also by my visit to the three
districts named above, that how these roads apart from the other
arterial roads leading to these National Highways have been damaged,
because of the excessive use of over-loaded mineral laden lorries and
consequential loss that has been caused not only to the State but also to
the travelling public. I had requested the Superintending Engineer,
Karnataka Lokayukta to give me a note on the cost of maintenance of
these roads in normal circumstances as well as in the present
circumstances where the mineral laden lorries used these roads. As
stated hereinabove, these lorries carrying mineral specially use NH 17
to reach new Mangalore Port and NH 48 to reach Goa and Karwar.
NH 63 is used to connect NH 17 and NH 48 from Bellary and Hospet.
The report submitted by the Superintending Engineer, Karnataka
Lokayukta states that the National Highway is designed to carry load
as per the recommendations of the Indian Road Congress (IRC). It is
stated in the said report that a normal single rear axle lorry is permitted
to carry 16.2 tones gross vehicular weight and a two rear axle lorry is
permitted to carry 25.00 tones load. Note also specifies that in practice,
these vehicles are found to carry iron ore and granite blocks upto 25
tones in a single axle lorry and upto 35 tones in a double axle lorry and
according to the said note of the Superintending Engineer, the traffic
census of these vehicles in NH 17 alone shows the over-loading lorries
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as to 3 to 4 thousand per day. Whereas Dr.U.V. Singh’s report shows
that from Bellary and Hospet to NH 17, 63 and 48, the volume as 4 to 5
thousand over loaded vehicles ply per day at least. The note of the
Superintending Engineer supra shows that the National Highway
undertakes renewal work of 25 MM - 40 MM thick overlay for which
they fix the life of three years duration and if this quality has to
improve, then the fixing of overlay should be 75 mm and this type of
work cost Rs. 18 lakhs or Rs. 40 lakhs per Km depending upon the
expected life (duration). The said note also points out that as per IRC
guidelines, if commercial vehicles ply more than 1500 per day, damage
factor (VDF) comes to 4.5, but, if as is the traffic load these days, if more
than 3,000 over loaded lorries ply on these roads, damage factor comes
to more than 8. Consequently, these highways develop cracks
prematurely, thus causing huge financial loss. One of the examples
that could be connected here based on the recent newspaper report is
that NH 48 at Shiradighat area which was repaired recently, i.e. about
six months back at a cost of crores of rupees has already damaged so
badly and the passenger transportation has almost come to standstill in
this road. Fate of NH 63 and NH 17 is no better. Neither the lessees
who own the mines nor the transporters have no concern whatsoever
for the condition of these roads and it is relevant to mention at this
stage itself that the officials of the Department of Mines and Geology,
Road Transport, Police are conniving in permitting over loaded lorries
in plying in these roads without any hindrance. It is of common
knowledge that because of number of lorries that are involved in
transportation of the ore and lack of experienced drivers, as also the
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hurry in completing the journey both ways, the rate of accidents in
these roads involving mineral carrying vehicles have become very
high. These vehicles not only cause damage to the roads, are also part
of the system to carry illegally mined unaccounted mineral without
paying any royalty. They cause heavy financial loss to the State. It is
reasonable to presume that if any load of mineral in a lorry consists of
illegally mined non royalty paid mineral, at least about 10 tones in
either type of lorries on a reasonable estimate would cause a loss of Rs.
220/- per lorry i.e. taking the loss of royalty at Rs. 22/- per metric tone.
This would come to Rs. 6,60,000/- per day if the volume of transport is
taken at 3,000 and Rs. 8,80,000/- per day if the number of lorries is
taken as 4,000. This calculation is confined only to over loaded
transportation of non-royalty paid mineral and if the whole load in
the lorry is non-royalty paid, one could imagine the quantity of loss
suffered by the Government, by way of royalty evasion and as also
damage to the roads. No attempt whatsoever has been made by any of
the concerned department, to plug the possible loss of revenue in this
type of illegal transportation of mineral. Apart from the above loss,
right through the route of transportation, the environment is damaged
by flying dust of mineral ore, because the authorities have permitted
transportation of mineral in open bodied lorries. In some cases, for
namesake a mini sheet of plastic is placed on top of the load to hood
wink the people as well as the authorities. A visit from Hospet or
Sandur to Goa, Karwar or Mangalore, by the route taken by these
lorries, would clearly indicate the damage to the environment
including the water bodies. Dr. U.V. Singh has rightly pointed out that
116


how clear water even in the rivers are polluted by these lorries while
cleaning them in the rivers, as could be seen in the photographs
produced.

Commenting on the damage to the environment, the report of
the Centre for Science and Environment referred to herein above has
stated, thus:

“Bearing the brunt: People and the environment
Large expanses of barren land and open, watery pits. Dust-
laden, sooty air, Grim-faced and grimy workers. Busy lines of
trucks, bulldozers, excavators… usually, the abiding image of
mining is one of monochromatic aridity and industry –
indicative of what mining does to the landscape. But under this
image and extending from it lie hundreds of other stories of how
mining affects us: stories of human tragedy, environmental
disaster and policy failures.

Mining requires land – mostly, land belonging to indigenous
and marginalized people – and land appropriation leads to
displacement. Entire villages and communities are uprooted,
their livelihoods and lifestyles destroyed, leaving them
economically “worse of than before” and psychologically
traumatized. Rehabilitation and compensation are distant
dreams at best, and leave out a vast population of landless and
tribals who have no legal claims to land.

The effects on environment are as severe. Miners enjoy almost
unhindered access everywhere: there is no moratorium on
mining anywhere in the country. The results have been
catastrophic: thousands of hectares of forests – including
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protected areas – razed, pristine water sources throttled and
polluted, farmlands turned into barren stretches, the air turned
rank with mineral dust, and human health held hostage to a
variety of mining – induced disorders.

The havoc, of course, doesn’t stop with this. Post-
mining, mountains of waste have completely transformed
landscapes and are slowly poisoning everything they come in
contact with. On the other hand, mineral-based industries like
sponge iron are taking the devastation further a field.

One would argue that mining’s impacts, severe as they
are, are perhaps inevitable and unavoidable. Especially so for a
nation like India, which has consciously accepted displacement
and environmental damage as small prices to pay for the
‘greater good of the country’. But this chosen one-track path to
progress is leading the nation towards the edge of a deadly
precipice, beyond which lurks strife and civil war. Equally
inevitable and unavoidable if we don’t rethink our options”.

Whatever is commented in the above report, aptly applies to the
adverse effect of mining in Karnataka also. Dr. U.V. Singh’s report also
refers to this malady in the mining activities in Karnataka.

The report of Dr. U.V. Singh in this regard is extracted below.

“Impact of mining activities on Biological, Socio-
economic, Air, Noise and Water Environment in Bellary,
Hospet and Sandur (BHS) Region

The geographical area of Bellary district is about 9885
sq.km. out of which 698 sq.km. is forest area and remaining area
is the agricultural and waste lands. 17.6% of the total forest
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area is dense forest mainly found in Sandur and Hospet Taluks.
Maize, Bajara Grams, Onion, Groundnuts and some other
millets and pulses are the major crops grown in the valleys and
hill’s slopes in Sandur and Hospet taluks in patta lands. The
impact of mining on the abiotic factors is quite high. The aboitic
factors are influenced and altered to a great extent due to
mining and related activities. This would result in threat to
change in the composition of natural biota in the ecosystem due
to change in the abiotic factors. This has also been observed in
the study carried out by NEERI in this region wherein it was
noticed that Simpsons Diversity Index (SDI) is quite low near
mining areas (0.062) if compared to the maximum SDI found in
Thimmappanagudi and other forest blocks.

To maintain a sustainable ecosystem there is a need to
maintain the homeostasis of all the environmental factors
(abiotic and biotic) and any change in this would lead to stress
on the ecosystem. Due to direct influence of mining there would
be variation in abiotic factors like air, water, soil, temperature,
humidity etc. and it would lead to change in composition of the
species. Hence in this region, in the near future the composition
of natural species would definitely get altered and slowly some
exotic would replace the natives. The mining activities disturb
the natural settings mainly induced by machinery used in
mining, transportation, blasting, soil and water erosions etc.
Due to increased mining activities the disturbances in natural
settings have already been set in motion and it would be too late
to control the damage if it is not stopped forthwith. The mining
was at a low rate in the last four decades (1960 to 2000) but has
increased many folds due to “China Boom” in recent past and
present.
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Due to increase in the ore production which is
approximately four times in this year if compared to the
production of the year 1999-2000, the impact of mining has also
increased accordingly. It is to be noted here that the recent
sudden increase in ore production in some mines like SKME,
VESCO, VNK and HGR, around the forest rest house valley,
the impact is well noticed. This valley has been declared as
Medicinal Plant Conservation Area (MPCA) having the
maximum numbers of medicine plant species. The movement of
vehicles through the road passing this valley from the mine head
of SKME, VESCO, VNK, HGR and other mines to Railway
stock yards and other places have led to increase in SPM
(Suspended Particulate Matter). Further addition of any mine
in the surroundings of this valley would result to reverse the
ecosystem of the valley. This valley is a paradise of the National
bird, the Peacock. A similar state is also in the offing and being
reflected in many other similar valleys and hillocks of NEB,
Kumaraswamy, Ramanamalai and other forest blocks.

As per the NEERI report of Ballary, Hospet and Sandur
(BHS) region, a total of 194 plant species were recorded, out of
this, 90 are tree species, 36 shrub species and 68 herb species.
There are 61 plant species (28 trees, 23 herbs, 10 shrubs) having
medicinal properties found in this region. This comes out 30%
of total plant species. Conservation and preservation of species
in balancing mode are most important in forest areas because
each and every species is having its own ecological niche and
they are related one or the other way in eco-system through food
chain. Since the ore production has increased more than four
times since 1999-2000, the impact of mining has also increased
accordingly on the forest, agriculture, aquaculture and human
120


life. It has been observed that SDI is reducing in the areas where
the mining activities are more. Continuous serial stretches of
mines on its hill tops in Ramdurga block, NEB block and also in
other blocks have brought a sea change in the surrounding
ecosystem. It is observed that most of the lessees are using exotic
species for planting to rehabilitate the dumps and also other
leased area, thereby creating monoculture and resulting to
change the existing ecosystem in near future. A sizable numbers
of wild animals comprising 16 species of mammals, 145 species
of birds, 9 species of reptiles have been reported by the NEERI in
its study during 2001-02. All these species are now at run due
to noise, air, water and soil pollution generated through mining
and related human disturbances. The continuous mining
activities in nights have further added fuel to the fire to desert
wild animals from the forest area.

The fine dust generated due to mining activities
including transportation, fall on the flowers, fruits, leaves etc.
and inhibit setting of seeds would result to loss of biodiversity of
the region.

The air environment in the BHS region has been highly
affected due to mining activities. The quality of ambient air
depends upon the concentrations of specific contaminants, the
emission sources and meteorological conditions. The mining
activities including heavy loaded truck transportation of iron
ores do make great impact to these factors. In BHS region the
arterial network of roads which is compounded by adding of
181k.m. mined roads and continuous serial stretches of mines in
Ramandurg, NEB and other forest blocks have almost destroyed
the entire fabric of forest ecosystem and agriculture in the area.
The entire area of NEB, Ramandurg, Swamymalai, Donimalai
121


and other forest blocks are affected at highest order. All the
roads leading to mines from PWD roads are “kachcha roads”,
the movement of vehicles on these roads result into generating
fine dust and it spreads and covers the surrounding forest and
agriculture fields upto more than 500 meter all along the roads.
Dust clouds cover the forest tree species, agriculture crops fully.
Due to dust fall the colour of the trees looks reddish-brown
instead green even in the rainy season. The agriculture crops get
affected all along the so called mettled roads. Due to movements
of over loaded trucks the roads are heavily damaged and the
speed of the vehicles doesn’t go beyond10 to 20km per hour.
This leads to further increase in traffic on roads especially at
nights.

As per the study carried out by NEERI the Suspended
Particulate Matter (SPM) and RSPM concentration was found
quite high in the air throughout the year when the production
was 12 Million tones in this region. Now the impact could be
imagined in the region when the production has touched to 42
million tones and more.

Mushrooming of stock yards all along the roads have
further added the impact manifold. Stock yards (legal or illegal)
are formed almost on all the roads in Sandur Taluk and part of
Hospet Taluk. In stock yards all the activities related to mining
are repeated except blasting. The same results in further
aggravated pollution and health hazards. The stock yards near
the vicinity of human habitation have added to the ultimate
pollution of all kinds and the voiceless suffering of the
community are at peak.

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The heavy metals in Suspended Particulate Matter
(SPM) have been reported in this region. The main heavy
metals reported in BHS region are Mn, Fe, Pb, Ni, Cd etc. These
heavy metals affect the health of human being in two ways.

• Penetration of fine particles containing heavy metals
through the respiratory tract and lung tracheoles.

• Heavy metals act as nuclei which may initiate gas-to-
particles conversion reactions, results to increase the
concentration of fine particles in the atmosphere.
The villages and towns having sufferings due to the dust
and other environmental hazards generated by mining and
transportation activities are: Bellary, Hospet, Sandur,
Kalahalli, Sidhapur, Vadrahalli, Moriammahalli, Gollarahalli,
Ramgad, Gundlavaddigeri, Venkatagiri, Sushilanagar,
Somalapuram, Rajapura, Taranagar, Ranjitpura, Bommagatta,
Devgiri, Mutulkunta, Nandihalli, Naganhalli, K.S.Temple,
Swamihalli, Basappa Camp, Haraginadona, Tumti, Vittalpura,
Dharmapuram, Bhujanganagar, Oblagundi, Papinaikanahalli,
Karrignur, Belgallu and all other villages on the road and at the
vicinity to the mines. The impact is also felt even in the villages
of adjoining taluks.

Due to mining activities and allied industries there is a
multifacial development in BHS region. The developmental
factors have brought socio-economic and cultural change in the
region. There may be certain monetary and employment gain to
the locals but the socio-cultural environment in the region has
adversely affected due to immigration of labours from various
States like Assam, Bihar, Orissa, U.P., Rajasthan, Tamil Nadu,
Andhra Pradesh and also from other States. The influx of
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floating population due to migration of labours has put a lot of
pressure on the infrastructural facilities such as water, road,
sanitary, residence and others. There has been shortage of
housing for the weaker section of the society and adhoc slums
have come up in almost all the villages and towns in this region.
The sudden increase in the number of vehicles especially the
trucks in and around the villages have occupied the open spaces
in the villages and created unhygienic living conditions. The
quality of life index (QOI) was around 0.4 during the 2001-02
when the production was around 12 million tones. Since then
approximately four times increase in the production of iron ores
in the same area, the QOI has further degenerated.

The local people of the community are “keen observers”
to the money flow due to mining mainly after “China Boom”.
There have been increases in the social unrest and due to this,
lower class people have resorted to the illegal mining activities
at a large extent in the private holdings (patta lands),
Government land and in forest land. The illegal mining
activities at nights have increased manifold. To operate illegal
mining in the distant places the temporary settlements in the
remote areas have come up by raising poly huts by the
migratory labourers. Their living condition in these huts are
pathetic and beyond imagination. The middlemen ship has
increased due to easy money making. Illegal transaction of
unaccounted money has increased. This is not only causing loss
to the State Exchequer but also creates a lawless society in the
region.

Due to increased mining activities in the region the
community health is shattered i.e., poor sanitation,
intestinal/enteric related disorders, political and social violence,
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working injuries, alcoholism, STDs, prostitution, traumatic
injuries, skin diseases, lung cancer, malaria and other
communicable diseases are prevalent. Because of bad air quality
the decease related to respiration has increased and skin deceases
are at large. Due to Influx of migrated labourers, tremendous
biotic pressures have been caused on the forest. The theft of fuel
would have increased resulting to loss of tree density and
biodiversity. There is social unrest in the region due to
immigration of lobourers, (skilled, unskilled) machinery (trucks,
other machines used in mining) hundreds of iron ore related
trading/transportation Companies (registered and unregistered)
in Hospet, Bellary and Sandur Towns. Detail investigations
into the economic affairs in such Companies should be taken up
independently.

The iron ore production has increased and crossed to 42
million tones in the year 2007-08 in Bellary district.
Accordingly the activity involving in the production of lumps,
fines, calibrated ores and transportation has also increased. The
use of heavy machines has been increased manifolds. The
increase in crushers at mine heads, stock yards and many other
places which are working round the clock, the noise pollution
have crossed all limits. The trucks movement on hilly areas, bad
roads and movement mainly in nights, the peace of the area has
been completely lost. Most of the villages in Sandur, Hospet
and Bellary Taluks and also beyond, which falls on the “iron
route” are highly affected. The impact of the movement of
vehicles is felt up to Sea course in western and eastern part of
the plateau. The roads in Western Ghats have been completely
destroyed due to the movement of iron ore loaded heavy duty
trucks.
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In the BHS region the equivalent noise level (EQL) have
exceeded to CPCB standards in all the residential, commercial
and silence zones. Due to mining activities the traffic density in
the region has been increased. Hours together, traffic jams in the
region is common in towns. Installation of heavy machinery in
the mines use of heavy duty vehicles in transportation, the
occupational hazard due to noise pollution has increased to
alarming stage.

The noise level in human settlements upto 2 km away
from roads and mines has crossed the threshold level. The high
level noise pollution is resulting into deaf and psychological
disorders. The major noise generating sources are Dumpers,
Excavators, Loaders, and Vibrators, Drilling Machine, Trucks
and other machines used in mining activities.

The forest topography of the BHS region is highly
undulating and now traversed with “kachcha mine roads”. The
hill ranges of Sandur are ranging from 900m to 1100m altitude
while the adjoining plain areas are at an elevation ranging from
550 to 690m. The local topography has a significant effect on
the climate of the region. The temperature remains in between
10
0
C to 44
0
C with an annual average 28
0
C. The relative
humidity varies from 35% to 68% with an average of about
50%. An average rainfall is around 700mm per annum. Major
rainfall comes from southwest monsoon while about one-fourth
from northeast monsoon but not regular.
The drainage pattern of Sandur hills of southwest and
northwest terminates into small local ponds and hence do not
confluence with regions bigger surface water bodies. This has
resulted into local water body pollution and localized impact.
126


Part of the run-off from the hilly watershed is carried away
through Narihalla then to Ubbalagundi and Bhimanagundi
gorges and ultimately to end into Daroji tank. The Narihalla
and Daroji tanks receive larger portion of silt generated from the
surrounding hills due to mining. The lives of these tanks are at
high risk. Average annual precipitation is about 700mm, spread
over rainy 40 days of 8 months in a year. Hence, there is direct
impact of mining in the Narihalla tank, Daroji and other surface
water bodies.

Surface water body’s physical qualities get affected by
soil erosion and sedimentation, a specific impact due to over
burden dumps, whereas chemical quality get affected due to
soluble elements and intensive truck washing. Depending on
characteristics of overburden material, especially, where
overburden spoil surface are high in pyrites the mineralized
leachates from these dumps contaminate the water body with
pollutants viz. heavy metals, sulphides, fluoride and other
cations and anions. Excessive concentration of chemicals render
it unsafe and unsuitable for designated uses. Run-off from
graded or ungraded spoil surface also get altered chemically the
water body quality. This happenes due to undesirable
overburden materials are disposed off close to and above the
mined areas.

It is commonly known that factors like surface
hydrology, soil texture and terrestrial vegetation are controlled
by the groundwater regime. Mining explorations if conducted
below the water table, groundwater mine would be intercepted
by the open cut, pumped out or lost by evaporation, and the
water table will be lowered in the adjacent areas. This could
result in dewatering of wells within a radius of few kilometers of
127


the mine depending upon the internal land structure. Frequent
and deep mine in the region would cause a irrecoverable loss to
soil moisture of the hills which are responsible to support the
forest vegetation in this area.

The groundwater quantity would also be affected after
mining is closed and reclamation done, if the mine is located in a
groundwater recharge zone. The recharge characteristics would
get affected by the backfill material, if it differs from the original
characteristics of top soil and overburden of leased area. Hence
the effect of mining is long lasting.

The iron ore mines in the district are of open cast type
and there are no direct discharges of wastewater generated from
the mining activities (washing). Except the mine of National
Mineral Development Corporation (NMDC) at Donimalai, no
other mine involve in washings of ore. Most of the mining
operations involve dry crushing, sizing, sieving, storage,
transport and dumping of overburdens, rejects etc. During
monsoon, the fine material from dump site gets carried away
along the hill slopes through surface run-off and find entry into
the nearby surface water body, viz. dam, irrigation pond,
through small streams. More than 100 mines of
iron/manganese ores are located in BHS region which are
responsible for erosion and transport of sediment to external
drainage systems and become a potential threat. The magnitude
of the problem is governed by the length and stability of this
zone slopes or graded areas. The high frequency and intensity of
rainfall is causing the erodability of spoil surface materials and
the types and density of vegetative cover on reclaimed area.
Groundwater pollution has arisen in this region mainly from
the top soil and overburden material containing soluble
chemical constituents of heavy metals. These chemical
128


constituents are getting leached away by the precipitation and
percolation into the groundwater, thus polluting the nearby
groundwater sources and rendering them unfit for human
consumption. Most of the lessees have not taken up the work to
stabilize the overburden and other piles. The run off from the
mining area and from waste dumps are not arrested by creating
cemented check dams, retaining wall etc.

There are about 4500 to 5000 trucks involved in
transportation of iron ore in BHS region. These trucks are
being regularly washed at tanks, nalha, and other surface water
storage bodies in the forest.




129


In this act of working, the dust, oil and grease
containing heavy metals like lead (Pb) etc. get mixed into the
water. This results in water contamination in nalhas, natural
streams and other water bodies in the forest area and affects the
wild life directly. This is a very dangerous trend and will have
to be stopped forthwith.

My conclusions in regard to the aspects discussed in this chapter
are reflected in the concluding chapter of this report along with my
suggestions and recommendations.
CHAPTER – VIII


ISSUE OF TEMPORARY TRANSPORT PERMITS TO LIFT AND
TRANSPORT ORE, ILLEGALLY MINED FROM PATTA LANDS

Another matter referred to by the Government to the Lokayukta for
investigation is to:-

“fix the responsibility and initiate suitable action against all
public servants including Ministers, whether in office or
otherwise, for having granted mining and transportation
permission of major minerals from Patta Lands without
valid mining lease.”

In regard to the above allegation Sri Gaikwad team has submitted
its report which is marked as ANNEXURE-B.

2. The law pertaining to mining operations including
excavation, storage and transport of minerals requires that all the
above activities are in accordance with the terms and conditions of a
mining lease granted under the M&M (D&R) Act and M.C Rules
framed under the M&M (D&R) Act by the Central Government -
vide Section 4(1) and 4(1A) of the M&M (D&R) Act. According to
Section 4(2) of the M&M (D&R) Act, no mining lease shall be
granted otherwise than in accordance with the provisions of the
M&M (D&R) Act and M.C Rules. The authority to grant mining
lease is vested in the State Government subject to the terms and
conditions specified in the M&M (D&R) Act and the M.C Rules. If
the lease relates to a private patta land, prior consent of the land


131
lord is necessary -vide Pallav Granites V/s. Government of Andhra
Pradesh (AIR 1997 SC 2098). If the mining lease in respect of a
mineral specified in the First Schedule to the M&M (D&R) Act is to
be granted, prior approval of the Government of India is necessary-
vide proviso to Section 5(1) of the M&M (D&R) Act. For preventing
illegal mining, storage and transportation of mineral, Section 23-C
was introduced in the M&M (D&R) Act in 1999, empowering the
State Government to make Rules for establishment of check posts
for checking minerals in transit, regulating transport of minerals
from the area covered by the mining lease, inspection, checking and
storage and search of minerals at places of excavation, storage or
during transit, maintenance of registers, forms, etc. No Rules have
been framed in exercise of this power, till the matter was referred to
Lokayukta for investigation.

3. Rule 27 of the M.C Rules specifies the conditions subject to
which a mining lease shall be granted. Rule 31 of the M.C Rules
provides for execution of a mining lease deed and a pro-forma of
the mining lease deed to be executed by the lessees is annexed to the
M.C Rules – vide Form K of Schedule I to the M.C Rules. It is said
that in exercise of the powers conferred by sub-rule (3) of rule 27
and clause (iii) of rule 45 of the M.C Rules the State Government has
inserted in all mining lease deeds clause 3A in Part V of Form K pro-
forma of mining lease deed providing for issue of transport permits
to lessees which reads thus:-



132
“3A The lessee/lessees shall not remove any ore or mineral
from the leased area except under and in accordance with the
conditions of a permit issued by the Director Mines and
Geology in Karnataka on payment by the lessee/lessees of the
royalty due on the ore or minerals”.

Form K, including aforesaid clause 3A, of Schedule I of the M.C
Rules, being part of the statutory rules, has the force of law. Clause
3A authorizes the Director (now designated as Commissioner) of
Mines and Geology (in short Director) to issue transport permit in
favour of a lessee. The M.C Rules have not specified any form of the
transport permit. Hence the Director is free to adopt a suitable form
which is not inconsistent with the M&M (D&R) Act and M.C Rules.
Clause 3A does not provide for issue of transport permit to a person
other than a lessee to transport ore or mineral extracted without a
mining lease. Whether the permit under clause 3A could be issued
only by the Director or he could direct one of his subordinates to
issue a permit is not free from doubt because there is no provision in
the M&M (D&R) Act or the M.C Rules which authorizes the
Government or the Director to delegate his powers under clause 3A.
Section 26 of the M&M (D&R) Act deals with delegation of powers.
Therefore, it should be held that at present the Director is not
authorized to delegate this power to his subordinates. I think
because of the magnitude of work this power of delegation should
be given to the Director.



133
4. Any person, including the owner of the land, undertaking
mining operation without a mining lease is guilty of an offence
punishable under section 4(1) r/w section 21(1) of the M&M (D&R)
Act. Transportation or storage of ore or mineral or causing it to be
transported, without a transport permit, is an offence punishable
under section 4(1A) R/w section 21(1) of the M&M (D&R) Act.
Granting transport permit in respect of ore or mineral excavated
without a mining lease to a person would be an offence punishable
under section 4(1A) R/w. Section 21(1) of the M&M (D&R) Act.
Failure to prosecute a person who has excavated ore or mineral
without a mining lease and to seize or collect the value of the ore or
mineral so excavated as well as failure to collect rent, royalty or tax
from such person as provided in section 21(4), (4A) and (5) is also a
misconduct punishable in disciplinary proceedings.

5. In 2004 the then Director Dr. M. Basappa Reddy ordered his
subordinates to issue transport permits to 82 applicants who sought
permission to transport floating iron/manganese ores from their
patta land. In those 82 cases, the Director received the applications
from the pattadars or their agents directly and the Director on his
own, decided to issue permits and directed his subordinates to issue
the permits and those subordinates issued permits in 41 cases and
transportation of ore or mineral has taken place in those 41 cases.
Remaining 41 cases were in different stages of process when the said
Director attained superannuation on 31
st
October 2004. After the
retirement of Dr. Basappa Reddy, Sri Yogendra Tripati, IAS took


134
over as Director. He reexamined the position of law in regard to
granting permission either to gather mineral in patta lands or to
transport such minerals from patta lands. He came to the
conclusion that such permission or sanction was in contravention of
the provisions of sections 4(1) and 4(1A) of the M&M (D&R) Act and
Rules 22, 24, 31, 45 and 46 of the M.C Rules. In this background, he
issued memorandum dated 19/20.11.2004 to all the Deputy
Directors and Senior Geologists of Mines & Geology Department
directing them to withdraw the permits so issued and not to issue
any further transport permits. Accordingly, the territorial officers
issued notices withdrawing sanction orders issued by the earlier
Director and called back the permits they have issued. That order of
the Director was challenged by many affected persons. The court
quashed the order on the ground of not following the principles of
natural justice and remanded the matter with a direction to issue a
show cause notice to the applicants and to pass fresh orders within
two weeks after considering the objections, if any, received from the
applicants. In the meantime, one Sri S. Ramesh, a former Minister of
Government of Karnataka, wrote a letter dated 22
nd
November,
2004, and another without date, addressed to the Hon’ble Chief
Minister of the State on the subject of cancellation of transport
permits issued. In the said letter, he stated that in the patta lands
that are lying adjacent to the mining lease areas, iron ore is
accumulated and to render such lands fit for cultivation, the iron ore
lumps are picked and taken out by the pattadars. He further stated


135
that the iron ore lumps and fines so accumulated are to be removed
from the area to facilitate agriculture. Therefore, he requested the
Chief Minister to continue the procedure of sanctioning transport
permits for transport of such iron ore from such patta lands. Sri N.
Dharam Singh, the then Hon’ble Chief Minister, on the basis of the
request made by the said Sri Ramesh, called for the file from the
Commerce & Industries Department. Narrating the facts of the case,
Smt. Latha Krishna Rao, Secretary, Commerce and Industry placed
the file for the perusal of Hon’ble Chief Minister, with the following
note in para 20 n.f.
“20) May please see note from Principal Secretary to CM at
page 10 c/f. Former Director had issued 63 permits for the
transportation of Iron ore in Bellary, Belgaum, Chitradurga,
Chikmagalur and Dharwad districts. Under Rules 22 to 24
and 31 of Chapter IV and Rules 42, 44, 45 and 46 of Chapter
V of Mineral Concession Rules, 1960, no permit can be
issued for transportation without lessee having a valid
mining lease. Since no mining leases have been applied for
nor granted in the case of the above permit holders, the above
permits are cancelled by the Director on 13.01.2005.
(Emphasis supplied) Of the 63 permit holders 23 permit
holders of Bellary district have approached the High Court.
The High Court while upholding the action of the Director
in canceling the permits has directed that an opportunity of
hearing be provided to the petitioners. All the petitioners
were served with notices and only 10 of them appeared before
the Deputy Director, Department of Mines & Geology,
Hospet. The above facts are placed before the Hon’ble CM


136
for information on the action taken by the Department to
curb illegal mining practices. Several of the petitioners have
been requesting for revocation of the cancellation order and
they have been advised to immediately apply for grant of a
mining lease

(Sd)
Secretary C & I Dept”

The Chief Minister made the following note (order) on 2-7-2005 in
paras 21 to 23 n/f of the file.
“21. t ¬ : ¬ . . .¬ c..¬ . . -¬ /:.·c.: .. . ¬ .. .¬:c c
¬o.¬ . t .~¬ -:c. ¬.:. ¬..c.. -c: ¬ ÷: ^ :c.¬¬ cc¬ ,
= .o..c... ¬¬ ·:c.. ¬.:. . - c.... . - c... ·:¬¬:/ ¬..
:¬ t:c ~ c:.¬ . ¬ .. ¬:¬ .·, t .~¬ -:c .. ·:^· .. ¬ c ¬:. ^
¯..c.¬¬. t c¬..c.: ¬ .

!!. ¯c..¬.:..·:c / ~ /:ct /.. / ¬ ¬ ¬., . c: c -:c ..
·:^· .. ¬ c ¬:. ^ ¬ ¬ c...¬ . .- c. ¬:/.¬ ·:¬ : / -c.¬ t:c ~,
: ¬. ....¯. . c.¬ t .~¬ -:c .. ·:^· .. =/:/ c .
:¬ .:·c.¬ c: ¬.. .¬:c c/ : .c/ - t:c:¬ t:: ¯.¬ .¬.¬..
-.c .. : / ¬. ·:^· .. -..¬.. ¯.¬ :¬. , -:c. -c: .c.¬
.o..c... ¬¬ : c.. ¬.:¬ .. ·:¬¬:/ ¬.. :¬ t:c ~, :t t:.¬
t ¬.¬:^ (One time measure) -:c .. ·:^· .. -..¬..
¯.¬ c:^¬ . :o: / :¬ c ./ -. / ~ /.. / ¬ ¬ c.... · t:=c t -.=
¬:-to-.¬¬..

!¯. = ¬.... :¬ .: ¬ c: : t ~¬ . t ¬. t¸/o-.¬¬..


(Sd)
Chief
Minister”


137

In reply thereto the then Secretary Smt. G.Latha Krishna Rao, IAS
made the following note at paras 24 to 28 n/f of the file and sent
back the file to CM on 5-8-2005 requesting him to review the earlier
note made by him as it is not in accordance with law.

“24. In paras 21 to 23, it has been mentioned that to
enable the pattadars to cultivate their land they were allowed
to remove the float ore on their patta lands. Further
permission to remove and transport the available float ore for
a period of 6 months has been ordered by the Chief Minister
as one time measure.

25. All minerals vest solely with the State
Government whether patta or Government lands and a
mining lease has to be granted in respect of such lands. A
pattadar does not have any preferential right to a mining
lease merely by virtue of his being pattadar. Hence, there is
no provision in the M&M(D&R) Act, 1957 or under
Mineral Concession Rules, 1960 to allow the pattadar for
removing the Iron ore even if it is float ore from their patta
land without a valid mining lease, even for a temporary
period. (Emphasis supplied)

26. The High Court of Karnataka in their Order
dated 25-11-2004 has upheld the action of the Commissioner
for Mines, in canceling the earlier permits given for the
removal of float ore and has directed the appellants
(pattadars) to apply for mining lease.



138
27. Given the above facts and the position as
prevalent under the Mines and Mineral (Development and
Regulation) Act, 1957, and Mineral Concession Rules, 1960
there is no provision to accord temporary permission as
indicated in para 22.

28. File is resubmitted for review of the Orders from
paras 22 and 23 and approval of pqara 27.
(Sd)
Secretary C & I Dept”

Thereafter the Chief Minister made the following note at paras 29-32
n/f and sent back the file to the Secretary on 19-9-2005.
“29. I have perused the notings at paras 24 to 28. Having
examined the facts and circumstances of the case it is felt
that, the orders of the Director has prompted several farmers
to mine and stock the ore in their fields. It appears that the
order has been passed in good faith with an intention to help
the farmers. This act done in good faith is covered under
clause 27 of the mining Act, 1957.

30. Prevention of illegal mining of ore requires
widespread monitoring mechanism and personnel. The
Department of Mines is not fully equipped to enforce such
activity in toto. Moreover as indicated in letter No.
DIRECTOR/MLS/GANL/04-05/2662 dt. 13/1/2005 of the
Director, out of 5,06,970 Mts of Iron ore 43,946 Mts has
been transported. Thus, if the remaining huge quantity of
Iron ore mined and stocked by the farmers based on the
previous orders is not permitted to be transported, it would
cause undue hardship to the farmers/Pattadars.

31. I am given to understand that the farmers have
borrowed money from financiers at high rate of interest and
they will be put to a great loss if permission is not granted.


139
Therefore, keeping in view the larger interests of the farmer
community and the fact that a large quantity of ore has been
mined and stocked, it is ordered that the farmers be
permitted to transport only the stocked ore, as recorded in
letter dated 13-01-2005, as a one time measure. The above
transportation should be completed within a period of three
months from the date of issue of G.O. in this regard.

32. Any mining activity on patta lands thereafter
shall be strictly in accordance with the provisions of the
Mines and Mineral (Development and Regulation) Act,
1957 and Mineral Concession Rules 1960.

(Sd)
Chief
Minister”

Thereafter a letter dated 27-9-2005 was issued by the C & I
Department to the Director relevant portion of which reads thus:-
“Please refer to the subject cited above. The
Government have examined the action taken by the
Commissioner of Mines and Geology in his order dated. 19-
11-2004, wherein, he had withdrawn the permission given to
the pattadars to lift the Iron ore stacked in their fields. It has
been decided to direct the Department to issue transport
permits limiting it only to the stocked Iron ore presently on
the fields as recorded in the Commissioner’s letter on 13-01-
2005. This permission is given as a one time measure only.
The above transportation should be completed within 3
months from the date of issue of the order. The transport
permits should be issued after verifying the quantities on the
fields. The Commissioner for Mines may impose any other
suitable conditions in this regard. The transportation should


140
be done under proper supervision by the officers of the
Department. Any mining activity after the expiry of 3
months should be strictly in accordance with the provisions
of the M&M(D&R) Act, 1957 and MCRs 1960.”

In reply thereto the then Director Sri,Gangaram Badariya IAS sent a
reply dated 27/10/2005 requesting the Government to get the
approval of the Government of India to the proposal. Relevant
portion of that letter reads thus:-
“With reference to the above subject, I would like to
invite your kind attention that as per the instructions from
the Government under reference dated: 27-9-2005, the
instructions are given to the field officer to verify the
quantity of Iron ore mined in private/pattaland and stocked.
However it is reiterated that under Section 4(1) & 4(1A) of
MM (D&R) Act, 1957 does not permit mining and
transportation without lawful authority, i.e., without
Mining Lease.

The provisions of sections 4(1) and 4(1A) are
reproduced hereunder.

4(1). No person shall undertake any reconnaissance,
prospecting or mining operations in any are, except under
and in accordance with the terms and conditions of a
reconnaissance permit or of a prospecting licence or, as the
case may be, of a mining lease, granted under this Act and
the rules made thereunder.

4(1A). No person shall transport or store or cause to
be transported or stored any mineral otherwise than in


141
accordance with the provisions of this Acts and Rules made
thereunder.”

In the present case, the major mineral Iron ore mined
from patta land, in contravention of the Act and Rules
framed by Government of India, “Any concession has to be
with the prior approval of the Government of India”.

Earlier a detailed report has already been sent to the
Government for necessary action. The Government in its
letter referred under reference has directed the Department
of Mines and Geology to issue Transport permit as one time
measure only.

“It has been directed to direct the Department to
issue transport permits limiting it only to the stocked iron
ore presently on the fields as recorded in the Commissioner’s
letter on 13-1-2005. This permission is given as a one time
measure only.”

But this relaxation has to be made with the prior
approval of the Government of India. The people in the field
are waiting for this particular clearance from the State
Government and may go in for massive mining operation in
private patta land, which is not only difficult but also
impossible to control, because the are is widely spread and
many parties interests are involved for mining in private/
patta lands.(Emphasis supplied)

It is therefore requested the Government may
examine this proposal afresh by taking appropriate approval
from the Government of India.”


142

The then Secretary to Government Sri.Mahendra Jain, IAS sent the
file with the above letter of the Director to the Chief Minister with
the following note at paras 43 to 46 n/f of the file:

“43) This matter permits to issue of transport permits for
lifting iron ore from patta lands as a one time measure. It
was submitted on two occasions (Para 20 n.f. and 28 n.f)
that there is no provision in the M&M (D&R) Act or
Mineral Concession Rules, 1960 for the same.

44) However, in pursuance of the orders at para 32
n.f. instructions were issued to Commissioner, Mines and
Geology (Please see page 30 n.f.) to take action with
necessary safeguards.

45) The commissioner has now resubmitted the
matter (Page 32) and suggested that since there is no
provision in the Act and Rules, if at all any relaxation has to
be made, may be done only with prior approval of the
Government. He has mentioned today that he is directed by
the office of Hon’ble Chief Minister that the file be
resubmitted to CM’s office.
46) File is resubmitted for orders
Sd/-
Secretary C& I Dept.”

The CM made the following order on the file at 47 N.f and sent back
the file to the Secretary on 8.11.2005.
“It is directed to implement the orders contained in Para 31
and 32 n/f.
Sd/-
Chief Minister”


143

Thereafter the Government sent a letter to the Director dated
19/1/2006 stating that the instructions given in the letter dated
27/9/2005 may be implemented. It is clear from the above
correspondence that the then Chief Minister over ruled the legally
valid dissent note of the Secretary to Government in notes at paras
20 n.f. and 24-28 n.f. and in the letter of the Director at 32cf. of the
file that issuing transport permits in such cases would be in
violation of the provisions of law.

6. After receiving the Government letter dated 19-01-2006 Sri.
Gangaram Baderiya IAS, the then Director convened a meeting of
the officers of Department of Mines and Geology, working in
iron/manganese ore bearing districts of the State on 17
th
February
2006. It was resolved in the meeting that the instructions and
procedure as stipulated by the Government letter No. CI 02 MMM
2005 dated 27
th
September 2005, in regard to issue of one time
transport permit are to be followed and implemented. The
procedure and conditions stipulated are as follows:
“(1) to issue transport permits limiting it only to the
stocked iron ore in the field as per the
Commissioner’s letter dated 13.1.2005.

(2) the permission is given as a one time measure only.

(3) the transportation should be completed within
three months from the date of permission.

(4) the transport permits should be issued after
verifying the quantities on the field.



144
(5) the Director may impose any other suitable
conditions in this regard;

(6) the transportation should be done under proper
supervision of the officers of the Department;

(7) any mining activity after the expiry of three
months should be strictly in accordance with the
provisions of the Act and the Rules.”

7. Interestingly, the said direction also stipulated to levy a
penalty of Rs.25,000/- as fee for compounding of offence in each
case for violating the provisions of Section 4(1) and 4(1A) of M&M
(D&R) Act and to collect royalty as per M.C Rules. Here one may
notice the incongruity in levying a penalty as compounding of
offence, which is akin to fining for violation first and permitting the
violation to be carried out later. The said order also directed that
the minerals stocked and lying in the respective fields to be
transported within a period of 90 days from the date of issue of
permission. It also directed the permission was to be given only to
the stocks found on the date of physical verification by the officers
and limited to the 59 cases only. For all other cases, it was directed
to follow the provisions of the M&M (D&R) Act and the M.C Rules.
Accordingly, sanction for one time permits for transportation of ore
and stocked in the patta lands of 59 applicants were issued.

8. Issue of permits for transport of iron ore from patta lands
could be divided into two groups i.e. 82 permits issued in 2004
when Dr.Basappa Reddy was the Director and 59 permits issued in


145
2006 when Sri Gangaram Baderiya, IAS was the Director. In all these
cases in which permits were issued the applicants are not lessees,
the ore or mineral in respect of which transport permits were issued
were not mined under and in accordance with the terms and
conditions of a mining lease, the persons to whom permits were
granted are not lessees or agents of lessees. By using those transport
permits illegal mining activity, as well as, transportation of mineral
has taken place otherwise than in accordance with the provisions of
the M&M (D&R) Act and the M.C Rules. The quantum of illegal
mining operations or activity could be inferred from the fact that the
total iron ore stocked was estimated by the officers as 5,06,970
metric tons – vide para 30 n.f. of the note of the Chief Minister. It is
impossible to collect that quantity of iron ore without engaging in
large scale mining operations or activity, using heavy machinery.
Hence, in all these cases there is violation of sections 4(1) and 4(1A)
and clause 3A amounting to an offences punishable under section 21
of the M&M (D&R) Act.

9. By directing his subordinate officers to issue such permits, the
then Director Dr. Basappa Reddy has facilitated illegal
transportation of iron ore without even verifying whether really the
mineral was actually collected from the patta land from where it
was sought to be transported. This comment is being made because
there is no material to show that the quantity of mineral sought to
be transported from a particular land is such that the same could
have been excavated from the said land. Therefore, there is every


146
possibility of mineral illegally mined from other area, including
forest land, being brought and stored in the concerned patta land.
In that background, the Director of Mines and Geology who
directed issuance of permits is guilty of offence punishable under
Sections 4(1) and 4(1A) R/w. Sec 21 of the M&M (D&R) Act, because
(i) he directed issuance of transport permit in respect
of mineral excavated without mining lease,

(ii) he facilitated the grant of transport permit to
persons other than lessee or his agent,

(iii) he caused transportation of mineral otherwise
than in accordance with the provisions of the
M&M (D&R) Act and M.C Rules,

(iv) he permitted issuance of transport permit without
directing inspection and estimation of quantity of
alleged mined mineral as also failed to seize the
said mineral, if it was found to be illegally mined
and prosecute the persons who mined them.

(v) He delegated the power of issuance of transport
permit under clause 3A, even though he had no
powers or authority to delegate issuance of
transport permit under clause 3A to his
subordinates,

(vi) He has facilitated illegal mining activity using
those transport permits.

10. Suffice it to mention, before proceeding further, that by the
above grant of permits to the pattadars by the then Director during
the year 2004 i.e., by Dr. M. Basappa Reddy, 56747 MT of ore was
allowed to be illegally transported, the value of which at the
relevant point of time have been estimated at Rs.6,41,32,335/- by the
Gaikwad team in the report at Annexure-B.


147
11. Though in his reply to the Show cause notice, the then
Director has pleaded that he had acted in good faith, the same
cannot be accepted because any act done in good faith means doing
something with due care, caution and attention. The person acting
in contravention of mandatory provisions of law cannot be said to
have acted in good faith. In this connection the Judgment of the
Hon’ble Supreme Court in the case of State of West Bengal V/s.
Shew Mangal Singh (AIR 1981 SC 1917) may be referred to. In the
said case it is observed by the Apex Court that if order of the
superior is justified and is therefore lawful, no further question can
arise as to whether the subordinate servants, who acted in
obedience to that order, believed or did not believe that order to be
lawful. From this observation, it is clear that to fall back on the plea
of bonafide the public servant must establish that the order of
superior was lawful. That apart, the factum whether the act is done
in good faith is a matter which is to be proved in a court of law as
defence to the allegation. In this background, a report under Section
12(3) of the Lokayukta Act was sent against Dr. Basappa Reddy to
initiate Departmental action, since he has already retired and
limitation to initiate Departmental proceedings was expiring. The
Government having accepted that report has instituted
Departmental enquiry and entrusted the enquiry to Lokayukta and
enquiry is being held by a judicial officer and the same is under
progress.



148
12. On the matter being referred to Lokayukta for enquiry,
Lokayukta police were directed to investigate and verify the ground
status of the area and the lands in regard to which 59 permits were
granted. The Lokayukta police investigated 30 cases out of 59 cases
and submitted report. An analysis of 30 cases investigated by the
Lokayukta Police revealed that only in 11 cases pattadars were
beneficiaries of the order of transport permit, that is, about 36
percent of the total cases, and in the remaining 64 percent it were the
agents who worked in the patta lands for raising and transportation
of iron ore on payment of consideration amount to the actual
pattadars. In other words, the report indicates, in these cases the
pattadars never worked to collect the minerals purported to be
found in their lands and stocked by them. This also indicates that
instead of loss of agricultural income they actually received
consideration amount from those agents/ transportation
contractors. Such consideration amount was very substantial.
Further in cases where the mining work was done in patta lands for
extraction of iron ore, they have left the lands under broken
condition with pits and trenches upto a depth of 5’ to 6’ from the
surface and rendering the land unsuitable for further cultivation.
There are also instances wherein the agents who had obtained
transport permits from the Department of Mines and Geology, have
not actually worked in the areas permitted by the Director, but have
transported large quantities of iron ore sourced from other areas.
Such examples are noted in R.S. No. 107/B of Kererampura


149
(applicant N. Srinivasa), in R.S. No. 4 of Gangalapura (applicant N.
Srinivas), in R.S. No. 21 of Ramghad village (applicant C. Mohan
Rao) and in Sy. No. 70 of Dharmapura village (applicant B. Ashok
Kumar) of Sandur Taluk. On the other extreme, there have been
cases where the pattadars who were the applicants for sanction of
temporary transport permits by the Department of Mines and
Geology indulging in large scale extraction of iron/manganese ore,
almost similar in scale to regular mining activities using heavy earth
moving equipment, installation of crushers, etc., as noted in respect
of the cases of R.S. No. 114/3 and 4 of Jambunathanahalli
(applicant/ pattadar Sajjan Khayal), R.S. No. 27/A/2 of
Jambunathanahalli (applicant T. Ravikumar), R.S. No. 118 of
Sankalapura (applicant/ pattadar Mohammad Imam Niyazi) all of
Hospet Taluk, R.S. No. 205 of Laxmipur (applicant/pattadar S.
Narasimha Kumar) and R.S. No. 111/2 of Taranagar (applicant H.
Ibrahim) both of Sandur Taluk. Similar large scale operations are
noted in respect of the patta lands operated by pattadars/agents as
in the cases of R.S. No. 18/1 and 18/2 of Megalahalli (P.A. Assis)
Chitradurga District, R.S. No. 52 and 298 of Bhujanganagar of
Sandur taluk (T. Pushparaj).

13. Having noticed the role of Sri N. Dharam Singh, with
reference to his role in the grant of permits for transport of iron
ore/manganese ore from the patta lands, his comments were called
for wherein he has interalia replied that he was not afforded with a
fair opportunity to examine all documents and hence his comments


150
were offered on the basis of limited material noted down by him
and from his own memory. In this regard, I would like to comment
that he was first given 15 days time and then on his request it was
extended by one week, he was allowed inspection of documents and
thereafter on request he was allowed 3 more days’ time, which
under the circumstances I think is reasonable. He also stated that his
decision to direct the issuance of transport permit was done in
fulfillment of the promise made by him to the people of Karnataka,
wherein he had assured to look after the interest of the farmers and
the poor people in the State. He has also stated that the iron ore
accumulated in the farmer land’s was not as a result of any mining
activity, but was thrown up as a natural phenomenon and the
farmers were compelled to collect these ores from their lands to
make it fit for agricultural operations. He has further stated that it is
with a view to protect their right to carry on agricultural operations;
the farmers had approached the concerned authorities to issue
transport permits. He has also stated that their request was
supported by some of the elected representatives. It is in this
background, he has requested the concerned authority to issue
transport permits to transport minerals, which was lying in their
lands. He also stated that his direction to permit transportation of
iron ore from patta lands was in good faith and to protect the
interest of the poor farmer and was conditional. He also pointed out
that actual permits were issued after he demitted the office and the
subsequent Government which came to power, could have


151
reviewed the same. He has also made an allegation that the
reference itself is motivated by political vendetta, the period
mentioned for enquiry under reference notification has been
deliberately prescribed with a view to tarnish the image of the
Congress party which was headed by him. He has also contended
that, even if the farmers had committed any offence, the same is
compoundable and such compounding under Section 23A of the
M&M (D&R) Act has been done by levying fine of Rs.25,000/-, in
each case in addition to recovery of royalty as per Rules. Therefore,
the question of loss of revenue to the State Government does not
arise. Certain legal arguments with reference to Sec. 21(1) R/w. 23A
of the M&M (D&R) Act have also been raised.

14. As has been noticed in the earlier paragraphs of this report, so
far as the law is concerned it is very clear that no mining activity
could be carried out by anybody without first there being a mining
lease in regard to the land in which mining activities are being
carried on. The law is also clear that under Section 70 of the
Karnataka Land Revenue Act, 1964 all major minerals, be that in any
body’s land, vest with the Government. A perusal of Sections 4(1)
and 4(1A) of the M&M (D&R) Act makes it mandatory and a
condition precedent to have a mining lease before extracting or
transporting minerals and ores. Though the State Government can
recommend a mining lease in favour of a person holding lands
within its territory, under proviso to Section 5(1), if the mining lease
is in respect of the minerals specified in the First Schedule to the


152
M&M (D&R) Act, prior approval of the Government of India is
necessary. Iron ore is specified in the First Schedule. Therefore, it is
a futile to contend that the State Government has any authority to
grant transport permit in regard to the minerals found in the First
Schedule of the M&M (D&R) Act, without there being a mining
lease with the prior approval of Govt. of India. There is no
exception to this mandatory requirement. I have also noticed herein
above, even for storage and transport of mineral, the M&M (D&R)
Act and M.C Rules apply. Thus, it is clear that no authority vests
with the State Government to even permit the transportation of
minerals from a land in regard to which there is no mining lease.
Therefore, when the law mandatorily prohibits issuance of permit to
transport any mineral from a land, which is not covered by a mining
lease, Sri Dharm Singh’s contention that removal of floating mineral
does not amount to mining activity and that the activity of
removing the mineral for carrying on agricultural operations and
issuing permits to transport such mineral which has been already
removed and kept does not amount to mining operations, cannot be
accepted in view of the provisions of the M&M (D&R) Act as
supported by the observation of the Apex Court in the case of
Bhagwan Das V/s. State of Uttar Pradesh and others (AIR 1976 SC
1393), wherein it is held as follows:-
“Further, it could not be contended that the sand and gravel
are deposited on the surface of the land and not under the
surface of the soil and therefore they cannot be called
minerals and equally so, any operation by which they are


153
collected or gathered cannot properly be called a mining
operation. It is in the first place wrong to assume that mines
and minerals must always be sub-soil and that there can be
no minerals on the surface of the earth. Such an assumption
is contrary to informed experience. In any case, the
definition of mining operations and minor minerals in
Section 3(d) and (e) of the Act of 1957 and Rule 2(5) and (7)
of the Rules of 1963 shows that minerals need not be
subterranean and that mining operations cover every
operation undertaken for the purpose of “winning” any
minor mineral “winning” does not imply a hazardous or
perilous activity.”

In the cases referred herein, the minerals have been extracted from
the patta lands and are sought to be transported by certain persons
under the guise of farmers. It is not a case where iron ore was lying
in the open surface superficially. Hence, the permits issued in
relation to transportation of minerals already extracted amounts to
mining operation within the meaning of Section 3(d) of the M&M
(D&R) Act and as such, the contention of Sri N.Dharam Singh
cannot be accepted. His further stand that he had directed the grant
of permission in good faith or interest of the farmers or policy of the
Government or even public interest cannot be a defence, when his
action is per se opposed to law. Such decision of his cannot even be
a bonafide decision, since it is evident from his notings that he knew
the law, but wanted to make one time exception by violating the
law, even when the same is impermissible. Any decision taken
contrary to law, knowingly whatever may be the purpose or object


154
for which such a decision is taken can ever be said to be in good
faith or bonafide. Such action cannot be defended even under
Section 27 of the M&M (D&R) Act, which section protects only such
action of the Government Servant, which is bonafide. As stated
above, the concept of the bonafide does not apply to impermissible
decisions taken with the knowledge of the prohibition in law.
Therefore, the principle defence of Sri N.Dharam Singh i.e. his
action was in good faith or bonafide or taken in public interest or
farmer’s interest or policy of the Government cannot be accepted.
Here it will be useful to remember, in a democracy it is the Law of
the land that is supreme and even a Chief Minister is bound by the
same. It is well said ‘how so high you may be, the law is above
you’.

15. Even the defence taken by Sri N. Dharam Singh that the State
did not loose any money because the applicants were imposed with
compounding fee of Rs.25,000/- cannot be accepted either in law or
on facts. The compounding provision in the M&M (D&R) Act
comes into play, when an offence is detected. In the instant case, the
applicants sought permission to do an illegal act, the same cannot be
compounded by collecting compounding fee when the offence
ought to have been prevented. The compounding provision does
not permit the Government to first collect the compounding fee and
then permit the offence to be committed. My experience gathered
during this investigation shows, compounding provision under the
M&M (D&R) Act is the most misused provision leading to very high


155
corruption, hence sooner it is amended it is better. To these
applicants the excuse of getting the land suitable for cultivation is
only an excuse to do illegal mining.

16. Even factually, the basis for grant of transport permit i.e.
presence of minerals in the patta lands which was preventing the
land owner from cultivating their lands is not true. Assuming there
were minerals in these lands which prevented the land owners from
cultivating the land, then the Government itself could have made
arrangements to clear such materials and auctioned the same
publicly because that mineral was the property of the State and
which would have fetched much more value to the Government, in
view of the prevailing market rate, than what the government
collected by way of royalty and compounding fine. This also would
have solved the problem of the farmers of getting rid of the mineral
from their land and cultivate the same, if really this was the genuine
reason.

17. Even otherwise, the claim of the pattadars that they wanted
to clear the land of minerals to re-cultivate the land is factually
incorrect. The enquiry made at the spot by the Lokayukta police,
supported by photographic evidence clearly shows that the mining
activities in those patta lands were carried out by only a few
pattadars themselves and in many cases by some outsiders claiming
to be the agents of the pattadars by using heavy machinery. The
quantities mentioned in the application for transportation itself is


156
the proof of the fact that such large quantity of mineral could not
have been found in an agricultural land and the same must have
been illegally mined somewhere away from the land and stored in
the patta lands, may be, along with some little mineral gathered
from the said land. In such of those the lands in which mining
operations were carried out, there is evidence to show the very
nature of the land has been changed from lands suitable for
agriculture to the lands which can never be re-cultivated, this is
evident from the telltale marks in the land, which showed deep pits
and trenches. These signs of mining clearly show that the land
owners who sought permission to transport minerals from their
land had no intention of re-cultivating these lands. The fact that they
owned patta lands was only an excuse to obtain transport permits to
remove the minerals illegally mined.

18. Even the stand of Sri N.Dharam Singh that the Applicant land
lords would suffer financial losses if permission is not granted is
also not factually correct. There is evidence to show that the
pattadars have been paid huge considerations by the people who
actually mined for allowing latter to use patta lands for illegal
activities or if land lords themselves mined then got huge
consideration for the same from these non-agricultural activities.

19. It is relevant to note that at this stage the then the Chief
Minister Sri N Dharam Singh in his note made, soon after the
recommendations of former Minister Sri Ramesh was brought to his


157
notice, had given the reason to permit transportation of mineral to
facilitate the pattadars to cultivate the land in question, so as to start
their agricultural operations. But in his 2
nd
noting to which
reference has been already made, the Hon’ble Chief Minister gave a
different reason that the Applicant farmers had borrowed money
from private financiers at high rate of interest hence they would be
put to great loss if permission is not granted, therefore, keeping in
view the larger interest of the farmer community and the fact that
large quantity of iron ore has been mined and stocked, he thought it
fit to grant permission. From the records submitted by the
Department, for my perusal, it is seen that there is no material to
show that any one of the farmers had borrowed any such money,
leave alone at high rate of interest from financiers; on the contrary
discussion made in this report would indicate that the facts are
otherwise.

20. After the directions of the Hon’ble Chief Minister, the file
came to the Director again who citing the provisions under section
4(1) and 4(1A) of the M&M (D&R) Act sent a dissent note dated 27
th

October 2005 to Commerce and Industries Department for re-
examination of the orders issued in the note dated 27
th
September
2005. In the said letter, interalia, he proposed to seek prior
approval of Government of India, for a relaxation to consider
sanction of temporary permits. The Director then was Sri Gangaram
Baderiya, IAS. The contents of the dissent note of the Director were
submitted to the Secretary, C&I for perusal and orders of the


158
Hon’ble Chief Minister. In spite of resubmission of the file, bringing
out the specific provision of the M&M (D&R) Act and M.C Rules
and a proposal to refer the case to Government of India to seek
relaxation on the subject of issuance of temporary transport permits
from patta lands, the Hon’ble Chief Minister did not consider the
proposal and ordered “It is directed to implement the orders
contained in para 31 and 32 N/F”. Thus, C&I Department in their
letter dated 19
th
January 2006 directed the Department of Mines and
Geology to implement the instructions issued in their letter No. CI
02 MMM 2005 dated 27
th
September 2005.

21. If Sri N.Dharam Singh had directed the authorities concerned
to make further investigation as to the genuineness of the
applications made by the so called pattadars or their agents, he
would have come to know that in most of these cases, the applicants
had transferred their land to non-agriculturists for the purpose of
mining which is every evident from the agreement signed by them.
Just for an example, I have herein below extracted the contents of
one such document where by virtue of the directions issued by the
then Chief Minister, transport permit was issued. The contents of
the document clearly indicates that the land in question is leased out
for a consideration of Rs.1,40,000/- for a period of one year for the
purpose of mining, which itself indicates that the pattadar had
permitted the mining to be carried on in his land. Some other
clauses in the said agreement speak for themselves about the
intention of the pattadars as well as those who took the land on


159
lease. The content of that document dated 19
th
August 2004, is
extracted below:-
“co.l,+),)))í- .c¬ . ct . .¬ :. ·:.c co¬::./ -/
....¯. . / ~ /.. / t c:c. ¬ : .

· . !))+. . :.· :/ · .c/ -. ::c.t. lºc .o
.c to- .¬ ¬ c.- :¬ ¬ o/ .c: . ¬: ¬ . ::.o t . . ¬: ¬ . ¬. ~
c c/ ¬ · t =c ¯¬:·c. .:¬ .¬.c... ¬ c ¬./ .:¬ ..¬.¬c::
:¬ c/ ,

.c to¬.¬ ¬ c .- .-:c .c: · c¬oc . ::.o t. . ..c/ . / c
/: ¬.¯¬:·c..:¬ :¬ c/ : ¬.. ¬. ¬ c ¬./ .:¬ ::.=t. ¬.. ¬
:¬ .:.. .. .c :.·to. ....¯. / ~ /.. / t c:c. ¬ :
:. c¬ c ,
=/ ¬ .- /:. · c:.. ¬ t:c ~ .c /:.:c¬ :: c·.. ¬., . -
· cc..:^ . - c.... :/ ¬ . :.c .¬¬ cc¬ . . · c: ¬ t. -: ..
-... ¬ ¬ . c.¬ = t - t:~ ·¬ ..... .. / ~ / .. / to¬.¬¬ .
c...t ¬ c¬. .:.· ¯¬oc:/ .:.. ¬ ¬ = .c¬ t l,+),)))í-
.c¬. .t . .¬ :. ·:.c co¬::./ -/ ..t oc¬. = t - t c¬
t c:c ./ - ¬ t:c ...... / ~ /.. / /:^ t o.c .: .. .
(l) co.l,+),)))í- .c¬ . .t ¬ . .¬ :. ·:.c co¬::./ -. l
.c¬. ¬ ¬ =¬ -¬ : / .
(!) /.. / -¬ : )l.)l.!))¯cc¬ ¯l.l!.!))¯c ¬ c /
(¯) t c:c . .c ¬ .to. :.:ct !).)·.!))+c c¬. c o.!¯,)))í-
:¬: ¸¬. ·:.c c o¬::./ - .. -¬:. to¬ : t¬..
(+) .-¬ ¬o: co.l,l¯,)))í- c ¬¸- . ¬ c. c !))+c -.¸c.
:.:ct ¬ c¬. +¯,)))í- . .¬ : ¸¬. ·:.c to¬ : t ¬.,
:..-¬ co.¯),)))í- .¬ :. ·:.c co¬::./ - . . ¬.:÷=
.c/ -. ¬ o¬ .. . ¬:c !))c c ¬ - /:^ t o¬ : t¬ ..
(¯) !))+. . ·:.. ¬.- /:.¬ . - c... . : / ¬.toc¬ : t ~ · :
..... .. ¯¬. ·:: .. t ...t o¬ .. ..toc.c .: .. .
(:) · : ....¯. · t:=c t t.. .t:¬ : c/ c.... .:. .
t.toc¬ . ¬ o./ .: .. . ¯¬./ t ... c..:¬ : c ¬ ¬:¬ ¬ t.
:.c.¬ :. .


160
(¯) · : ....¯. . ¯.¬ ¯¬. ·c: :.=¯c¬ · c.c¬ ¬.
:c:. :.c¬ ¬ c ¬:¯/ ¬ /¸c: : c¬.t oc¬. t .. , ¬-¬ c,
:¯. ¯¬./ . .t:/.¬ :¯. : / ¬.t o-.. ..c.: .. .
¬:/o ·:/:¬ ¬.:¬ .. ..c.: .. .
(·) ¬:c...¬ ¬..^c...¬ ¬ c /o · : ....¯. ./ c. .:¬¬ .
c..c.. : c. : t c:c./ - . .c¬ . -¬ t .:. . .¬:.:c ¯¬.
. . ·c: :.=¯c¬ ¯¬ . ¬ t.·c ¬ .·t o¬.: .. .
(º) ¬::.¬ ¬..^c...¬ c /o · : ....¯. . ¯.¬:/ .. -¬ ¬:
¯..c¬ ¬ t . ¬ ¬ ¬ ¬ c:/ .. · ¬ c ....¯. . -/ ¬ . :c .
:c, ¬-¬ c, ¯¬./ . .t:¬ :¯./ - .. : / ¬.to-.. . .
c..:¬ -. :: ct / -. ¬:/o . . ¬:c · c -¬ : ¬ / -.
:.c.¬ :. .
(l)) ¬::.¬ ¬..^¬ . c: c · : ...... : /. :./ - . :¬.
-¬ .. ¯¬. ·c: :.=¯c¬ c..:¬¬ . -. :: ct ¬ .- ¬
· c¬ .· . . ·:: .. t ..· : t¬ ..
(ll) ¬::.¬ ¬..^¬ . c: c · : ....¯. . ¯.¬ c..¬ t .·
¬..c¬.¬ c · . .t c¬ . ¯¬ . .¬c¬ ¬.:.t oc¬. . . / · c
.¯·¬ . ¬.. . / .. / t o¬ .. ..c .: .. .
¬ ¬oc
.-:c .c: · c¬ oc. · . . · c¬oc. ::.o t. ...c/ . / c
/: ¬. ¬ c÷::. ¬ :c... c.¬ ...c/ . / c /: ¬.t · .c¬ · ¬ .=
. c.c ¯!í¯í. .· .~= ) .t c ll · c.. : c c co.).)l ¬¸·
.- ¬oc: . c.c ...... ¬.: . ...c/ . / c /: ¬.¬
· .. c.¯!í+ .· .~= ! .t c +¯ · c.. : c c co.).ll ¬¸· .-
¬oc: . c.c ....../ - . ../ c¬. .:.. . . :.¬ .
¬..o.c:.:.c¬ .. .c :.·to. ...... /.. / t c:c. ¬ :
· .

..¬ ./.
::.=t . ¬.. ¬.
·:- / -.
l) ·o.¬ .¬ : c¬ c ::.=t. ¬.. ¬
. ..c/ . / c
!) ::c..¬ : c¬ t c .¬ ~ . ..c/ . / c ”
(Emphasis supplied)



161
22. All the above findings of mine are supported by the material
recorded at page 17 onwards of the report of Gaikwad Team, which
among other things indicates the particulars of the lands where
mining activities are taken up and percentage of outsiders, who
have extracted minerals from patta lands belonging to other
persons. Thus, by giving illegal permits for transportation of
minerals mined illegally Sri N. Dharam Singh has been responsible
for causing loss of Rs.23,22,11,850/- to the State Exchequer, which
act of Sri N. Dharam Singh not only becomes a misconduct,
unbecoming of a public servant and it also establishes that he has
abused his position as Public Servant, which loss should be
recovered as damages from him. My finding that Sri N.Dharam
Singh, as the Chief Minister was a public servant at the relevant
point of time is based on the judgments of the Hon’ble Supreme
Court of India in the case of M.Karunanidhi V/s. Union of India
(AIR 1979 SC 878) and Sri R.S. Nayak V/s. A.R. Antulay (AIR 1984
SC 684). Though there is no material to show that Sri N.Dharam
Singh obtained to himself any valuable thing or pecuniary
advantage, still by overruling the opinion of the then Director Sri.
Yogendra Tripati, IAS; the then Secretary of Commerce and
Industries, Smt. Latha Krishna Rao, IAS; as also the suggestions of
the then Director Sri Gangaram Baderiya, IAS as to the obtaining of
prior approval of Government of India before issuing transport
permits, he has allowed other persons to obtain pecuniary
advantage. The fact that the orders of Sri N.Dharam Singh were


162
given effect after he demitted office is irrelevant because there is no
evidence to show that his orders were ever brought to the notice of
the successor Government.

23. I will now consider the allegations against Sri Gangaram
Baderiya, who was holding the post of Director of Mines and
Geology at some relevant time. Sri Gaikwad team in its Report had
indicated that Sri Gangaram Baderiya was also responsible for the
loss caused to the State by virtue of his having directed the
subordinate officers to give transport permit on the basis of the
orders of the then Chief Minister. This is based on the fact that he as
senior IAS officer ought to have desisted from issuing such
directions to the subordinate officers, because that would amount to
abetting the offence of which, the then Chief Minister Sri N.Dharam
Singh is held to be responsible.

24. I have carefully considered the role played by Sri Gangaram
Baderiya, IAS in directing his subordinates to issue transport
permit, but it should be noted that he did not straight away accept
the orders of the then Chief Minister. On 27
th
October 2005, Sri
Gangaram Baderiya, IAS on receiving a note from the then Chief
Minister having noticed the illegality, proposed that prior approval
of the Government of India by seeking relaxation for grant of
temporary permit be obtained. By this, Sri. Baderiya did try to stop
issuing of directions to the subordinates straight way, but in his


163
effort he failed, in as much as, after perusing the note, the Hon’ble
Chief Minister rejected the same by noting in the file as follows:-

“It is directed to implement the order contained in Para 31
and 32 N/F”

Based on the above note, the Commerce and Industries Department
in their letter dated 19
th
January 2006 directed the Department of
Mines and Geology to implement the instructions issued by the
Government in their letter No. CI 02 MMM 2005 dated 27
th

September 2005. It is only thereafter, Sri Gangaram Baderiya
directed his subordinates to issue permits.

25. In that background, I think Mr. Baderiya, IAS cannot be held
to have committed any act of misconduct because I think the fact
that Sri Baderiya did appraise the Chief Minister of the need to
obtain prior approval of the Govt. of India, should be treated as an
extenuating circumstance for not proceeding against him on this
count.

26. But, this does not exonerate Sri Gangaram Baderiya, from his
act of directing issuance of transport permit in two specific cases i.e.
(1) regarding Sri T. Pushparaj who made an application in regard to
grant of permission in R.S. No.298, Bhujanganagar Village of Sandur
Hobli and Taluk and (2) regarding Sri K.Satish Kumar, who made
an application in regard to grant of permission in R.S. No.23/4 of


164
Bhujanganagar Village of Sandur Hobli and Taluk. The facts
leading to these two cases, are briefly stated as follows:-

27. Sri T. Pushparaj made an application to the then Director of
Mines and Geology on 26
th
August 2004 requesting for issue of
permit for extraction and transportation of iron ore from Survey No.
298 of Bhujanganagar, which measures only 0.65 acres (100 cents
make one acre) in Sandur Hobli and Taluk.




165

The pattadar of the said land is one Sri Dharmapurada Ujjinappa.
T.Pushparaj has stated in his application that he has obtained
consent of the pattadar, but no supporting documents are available
in the file. Even then the Director of Mines and Geology, vide his
letter dated 30
th
August, 2004, granted sanction to the Deputy
Director of Mines & Geology, Hospet, for issue of transport permit
to T. Pushparaj after inspection of ore stock at the site and collection
of royalty. The said Deputy Director of Mines & Geology Hospet’s,
file does not have any correspondence pertaining to this sanction
order of the Director of Mines & Geology. The Deputy Director of
Mines & Geology in his final status report on the permits issued
during 2004-05 has recorded that the said Director of Mines &
Geology’s order was not received in his office and the status report
does not speak about any permit issued during 2004-05. When the
Government of Karnataka opened up the issue of one time permit to
such applicants who had accumulated iron ore during permit
period of 2004, on directions by the Director of Mines and Geology,


166
the subject site was inspected by the Deputy Director of Mines &
Geology Hospet, on 3rd March, 2006 and a stock of 12,500 to 13,000
MT of iron ore in R.S. No.298 of Bhujanganagar was estimated as
being available. The Director of Mines & Geology i.e. Sri Gangaram
Baderiya taking advantage of the earlier order of the Chief Minister
in turn granted permission vide his letter dated 17/18
th
March, 2006
to the Deputy Director of Mines & Geology, Hospet for issuance of
one time permit in favour of T. Pushparaj for transport of the said
estimated quantity of iron ore from the subject area.

28. Under the said directions, the Deputy Director of Mines &
Geology, Hospet, issued various permits which allowed Sri T.
Pushparaj to extract nearly 13498 MT of iron ore. I have used the
word ‘Extract’, because that was one of the permission sought for by
Sri T.Pushparaj i.e. to extract from the subject area, iron ore and the
fact that it was extracted after the directions of the then Hon’ble the
Chief Minister, is also evident from the photographs which are in
the file. They all relate to working of extraction of iron ore in Sy.
No.298 of Bhujanganagar Village. These Photographs were sent to
Director of Mines and Geology by the Deputy Director of Mines and
Geology as evidence of accumulation of iron ore at site for grant of
one time permission. Some other photographs depict the area being
worked at the time of taking the photographs. These photographs
clearly indicate that workings in the subject area are not the
workings to restore the land suitable for cultivation, but clearly
show the regular unauthorized mining, which was being continued


167
right up to the date of inspection i.e. 3rd March 2006, thereby Sri T.
Pushparaj has made an application for grant of permit under
fraudulent pretext of restoring the lands suitable for cultivation,
whereas he continued to work the area unauthorizedly. The spot
inspection clearly shows that the agricultural land consequently got
more degraded and is now made more unsuitable for cultivation. Sri
Gangaram Baderiya ought to have noticed these facts, but did not
notice the fact that the application made by Sri T.Pushparaj was for
extraction and the quantity of 13000 MT of ore could not have been
gathered from an agricultural land measuring only 0.65 acres. He
also did not examine, and failed to see whether really the
application made by Sri T. Pushparaj was genuine one. Since the
photographs were in the file, we have perused the file and noticed
that illegal mining was carried out even in the year 2006. But Sri
Gangaram Baderiya has granted sanction for issue of permits for
that area, which amounts to negligence and misconduct under the
provisions of All India Service (Conduct) Rules, 1969.

29. Sri Gangaram Baderiya, in his reply has stated that as per his
knowledge there was stock of 13498 MT of ore at the site, which
knowledge he bases on the report submitted by the Deputy Director
of Mines and Geology. He also refers to the photographs in support
of his contention. He has then stated, if there was any illegal mining,
it is for the concerned officers to enforce the law and in so far as the
Director is concerned, if there was stock available, then only he
recommends for issue of permits in terms of Government decision.


168
Further steps of issuing of permits is left to other officers, who ought
to do so. He reiterated that there was no mining activities carried on
in this land.

30. Having considered the material found in the Gaikwad team
report, as well as the comments of Sri Gangaram Baderiya, I cannot
accept the explanation given by Sri Gangaram Baderiya. As
mentioned earlier, it is of common knowledge that an area of only
0.65 acres cannot contain floating ore of 12,000 to 13,000 MT, unless
the same is either mined deeply or transported from outside and
stocked in the subject land. The conditions of one time permit does
not entitle the holder of the permit to remove ore, which is dug from
the land in question in a regular mining method or transport the
ore, which is brought to the land in question from outside, since
both acts are illegal. I am sure that Director of Mines and Geology,
Sri Gangaram Baderiya would be aware of this fact. The
photographs which is referred to by Sri Gangaram Baderiya in his
defence itself indicate that the activity of mining was going on in the
land at the time of inspection and some of the photographs also
indicate that the depth to which mining has been done which would
under no circumstances make out a case of gathering floated ores
for making the land cultivable.

31. Therefore, I am of the considered opinion that Sri Gangaram
Baderiya, as Director of Mines and Geology, either knowingly or by
negligence has allowed Sri T. Pushparaj to misuse the one time


169
permit granted to him and also has permitted violation of
conditions of such one time permission. Sri Gangaram Baderiya’s
contention that there should have been full-fledged enquiry by
adducing evidence, at this stage cannot be accepted, because the
findings that is given in this report are basically prima facie findings
to facilitate the Government to take such action as is deemed fit or is
recommended wherein appropriate enquiry will be held.

32. In case of Sri K. Satish Kumar, who is a pattadar made an
application for grant of Transport permit to remove the stocked ore
from his land R.S. No.23/4 measuring 0.54 acres at Bhujanganagar
Village, Sandur Hobli and Taluk. The then Director vide his letter
dated 16
th
August 2004, informed the Deputy Director of Mines and
Geology, Hospet, to inspect and issue permit for movement of iron
ore to render the land fit for cultivation. He also directed that after
inspection if the stock is found in the land, royalty should be
collected. On the said basis one Sri M. Virupaksha Gowda,
Geologist, Office of the Deputy Director of Mines and Geology,
Hospet, visited the land and submitted a report on 19
th
August 2004
that there was no stock available in the subject site. Hence no
permit was issued. The Deputy Director of Mines and Geology,
Hospet vide his Notice dated 19
th
/20
th
November, 2004, cancelled
the sanction letter issued by the Director, in accordance with the
directions issued by Director in Memorandum dated 19
th
/20
th

November, 2004.



170
33. When the Govt. of Karnataka opened up the issue of one time
permit during 2006, the said K.Satish Kumar approached the
Director of Mines and Geology, through one Sri G.I. Venkatesh as
his representative to transact and obtain transport permit on the
basis of reopened decision. Then 2
nd
inspection was conducted by
one Sri. K. Sikandar Pasha, Geologist and T. Dattatreya, on 21
st

February, 2006, who reported that a stock of 1,000 to 1,200 MT of
iron ore was found in the site. This was reported to the Director by
the Deputy Director of Mines and Geology, Hospet, as per his letter
dated 7
th
March, 2006, along with the 2
nd
report of inspection dated
7
th
March 2006. Thereafter the said Sri K.Satish Kumar, made an
application dated 15/4/2006 requesting for permit for
transportation of 1200 MT of iron ore from his Survey No.23/4 of
Bhujanganagar Village. On the basis of which, permit dated
15/4/2006 was issued for the said quantity. This permit was also
issued under the directions of Sri Gangaram Baderiya. As per the
directions dated 7/10
th
April 2006, Sri Gangaram Bandera did not
consider the earlier Report, which clearly stated that there was no
stock of iron ore in the land in question. He took into consideration
only the report of February 2006, while directing issuance of
Transport permit. It stands to reason that if there was no stock of
iron ore existing in the land in the month of November 2004 and if
such stock was found on 21
st
February 2006, then the mining of the
said area has taken place, later than 2004. This finding of mine
further strengthens the fact that Sri K.Satish Kumar who made


171
application in 2004, did not pursue the same, but choose to make
another application in the year 2006, which is also an indicator of
the fact that the iron ore found on 21
st
February 2006, if factually
true, it must have been mined much after the original application
was made. Sri Baderiya did not think it necessary to satisfy himself
on this aspect of the matter.

34. Sri Gangaram Baderiya in his reply to the notice has stated
that he was not in favour of giving any permits to Sri K.Satish
Kumar, but he was bound to carry out the direction of the
Government of Karnataka, when Sri Satish Kumar was found to be
eligible under the conditions laid down for granting of one time
permit. The explanation in my opinion is neither here nor there. Sri
Gangaram Baderiya, further says that the findings recorded against
him in the Show cause notice is the one recorded without giving
him a notice and opportunity of being heard. I do not think at this
stage of investigation, it is necessary for me to hold a full fledged
enquiry. (See – Dr. K.Chowdappa V/s. State of Karnataka and
others – 1989 (3) Kar.L.J. 512) The question for consideration at this
stage for which I sought explanation from Sri Baderiya was, how is
it he had allowed the transportation of iron ore, which was not
found to be there in the year 2004, but was found be in existence in
the year 2006, without satisfying himself whether the said ore was
mined before the issue of directions by the Government as directed
by the then Chief Minister or after. It was the responsibility of Sri
Gangaram Baderiya to satisfy himself as to the compliance of the


172
directions made in one time transportation permit. Since the
material on record indicates that Sri Satish Kumar was not entitled
to the benefit of the directions of Government in this regard,
because on that date, there was no iron ore in the land in question,
Sri Gangaram Baderiya could not have allowed or directed the grant
of transport permit. By this act of his he has committed misconduct
under the Conduct Rules. The Government should take steps to
initiate action for recovery of the amount from this officer to the
extent of financial loss caused to the State by these acts of the officer
concerned.

35. At this stage it is necessary for me to indicate that Dr. M.
Basappa Reddy by his misconduct of issuing permission to
transport iron ore from the lands of various applicants, to whom the
said permission was granted, permitted the removal of 56747 MT of
iron ore, which at the relevant point of time valued at
Rs.6,41,32,335/-. (Refer Statement II of Annexure-B)

36. Sri N. Dharam Singh, the then Hon’ble Chief Minister, by
allowing 44 applications of transportation of iron ore has permitted
transportation of illegal mined ore totally of 238166 MTs, which is
valued at the relevant point of time at Rs.23,22,11,850/-. (Refer
Statement III of Annexure-B)

37. Sri Gangaram Baderiya, IAS by allowing illegal
transportation of iron ore in two cases has permitted the


173
transportation of 14200 MT of ore which was valued at the relevant
point of time atRs.1,38,45,000/-. (Refer Annexure-B)

38. Thus, in these three cases, in which I have found the
concerned public servants have illegally permitted totally 3,09,113
MT of iron ore to be transported from the so called patta lands,
causing a total loss of Rs.31,01,89,185/- to the State Exchequer.

39. The Report of the Gaikwad team has indicated the
involvement of many other officers of Mines and Geology
Department in permitting the transportation of iron ore from the so
called patta lands. Since I have observed in one aspect of the case of
Sri Gangaram Baderiya that orders directly came from the then
Hon’ble Chief Minister after overruling the various senior officers of
the concerned Department and taking into consideration the
sequence of events, I thought it fit not to implicate those officials’,
whose names are not mentioned in this report, but which could be
found in the Report Sri Gaikwad team at Annexure-B. I do not
think it is necessary for initiating any further action. Hence no
action is recommended against those officials.

40. In conclusion of this chapter, I hold that Sri N.Dharam Singh,
the then Chief Minister; Dr.M.Basappa Reddy, the then Director of
Mines and Geology and Sri Gangaram Baderiya, IAS, the then
Director of Mines and Geology, have committed misconduct, which
has caused huge financial loss to the State, which amount should be
recovered from these officers and the public servants by taking


174
suitable actions. Though in the order of reference, the Government
has empowered me to initiate penal and/or departmental action
against the erring officials, it is recommended to the Government to
initiate disciplinary proceedings, as recommended in this report.
Hence, recommendations are made to the Government as stated
above.
CHAPTER IX

LAPSES POINTED OUT BY THE ACCOUNTANT GENERAL
KARNATAKA REGARDING MOUs, RAISING, PROCESSING
AND MARKETING CONTRACTS, JOINT VENTURES ETC.
ENTERED INTO BY THE MYSORE MINERALS LIMITED WITH
PRIVATE COMPANIES RESULTING IN LOSSES AMOUNTING
TO CRORES OF RUPEES TO THE COMPANY.
================

Another matter referred to by the Government under Section
7(2A) of the Lokayukta Act vide Govt. order No. CI 164 MMM 2006
dated 12
th
March 2007 for investigation relates to lapses pointed out by
the Accountant General, Karnataka regarding MoUs, Raising,
Processing and Marketing Contracts, Joint Ventures etc. entered into by
the Mysore Minerals Limited with private companies resulting in
losses amounting to crores of rupees to the company. The concerned
terms of reference and issues are as follows:-

“ xxx xxx xxx xxx
(vi) In the inspection report of the Accountant General of
Karnataka for the years 2003-2004 and 2004-2005 on Mysore
Minerals Limited [MML], a public sector undertaking, several
lapses were pointed out regarding various Memorandum of
Understandings (MOUs), raising and marketing contracts,
joint ventures etc., between Mysore Minerals Ltd. And Private
Companies, wherein the interest of MML was compromised to
deprive the PSU of the contractual entitlements, dividends and
profits due to one sided agreements, non-revision or sub-optimal
revision of prices resulting in losses amounting to crores of
rupees at a time when the mining sector was generating huge
profits.



176
(vii) It has also been noticed that the Iron Ore fines and mud
stocks/low grade ore far in excess of the quantity were allotted
arbitrarily to select individuals through Mysore Mineral Ltd.,
much below the prevailing market price and MMTC price and
even below the prices fixed from time to time by MML itself.
There have been complaints of certain influential individuals
who were part of the power structure within the Government, by
manipulating the records and interfering in the affairs of MML,
caused huge loss to the Corporation and the State. Similarly
major and minor minerals such as granite, manganese and other
minerals of the state, for the past several years, have been
misused, indiscriminately exploited for benefiting a selected few
resulting in loss of revenue to MML and the State.
xxx xxx xxx
To enquire into the affairs of the My sore Minerals Ltd.
(MML) and its commercial activities carried out in a manner to
cause losses to the company and the instances of direct/indirect
political interference/patronage in commercial affairs of the
company. To fix responsibility and initiate suitable action, both
civil and/or criminal as may be appropriate, against all persons
found responsible, including private contracting parties.”

2. The Mysore Minerals Ltd (in short MML) was established by the
Government of Karnataka in the year 1966. It is stated to be a private
company within the meaning of clause (iii) of section 3(1) of the
Companies Act 1956. It is stated that apart from the Memorandum of
Association and Articles of Association the Company has not framed
any rules, bye-laws or regulations. The regulations contained in Table
A in Schedule I to the Companies Act 1956, as applicable to a private
company, are made applicable to it subject to modifications contained


177
in the Articles of Association. The activities of MML are under the
M&M (D&R) Act and connected with it. The main objects of the MML,
among others, are stated thus in the Memorandum of Association.

“1. (a) To acquire and take over as a going concern the
business now carried on by the State Government of Karnataka
under the name and style of ‘Board of Mineral Development’
with all or any of the assets and liabilities of the business.

(b) To search for minerals and precious stones and to
acquire, by acquisition, or grant, mining and other rights and to
win, open and work mines, quarries and minerals and precious
stones, in above and under any other lands over which mining
rights may be acquired by the company, and to raise, sell and
dispose of minerals and precious stones to be procured there
from, and to treat and make marketable, and/or convert such
ores into metal, or otherwise deal with the produce of the mines
and quarries and other produce of the Company.
xxx xxx xxx xxx
3. To act as the agent of the Government of Karnataka in
the exploitation of the mining areas reserved for operation by the
State, subject to such orders as may be passed by the State
Government in this behalf and to appoint sub agents in
furtherance of the same purpose.

4 To carry on trading in minerals for sale or export of
minerals or for purposes which may seem conducive to the
attainment of any of the aforesaid objects of the company.”

N.B:- Though the period of reference is for the period between
01.01.2000 and 22.07.2006 and extended to 9/9/2008 for the purpose of


178
continuity of factual basis at relevant places, even period prior to
1/1/2000 is taken into consideration without which this part of the
report will be incomplete.

3. The Board of Directors of MML, in its 141
st
meeting held on 30
th

November 1987, delegated to the Chairman and Managing Director (in
short CMD) 41 items of its powers, including the power to “fix sale
price and revise them from time to time depending upon market
and/or other conditions” (item 35) and to “enter into contracts for sale
of ores and minerals” (item 37), for disposal of ores or minerals etc.
owned by MML. The scheme envisaged by items 35 and 37 is that the
price of ores or minerals etc. is to be fixed and revised from time to
time as provided in item 35 and thereafter sold at the prices so fixed or
revised to persons who come forward to purchase them. The defect in
this scheme is that if the authority which has power to revise the price
periodically depending upon the market and other conditions fails to
exercise that power periodically whenever there is an increase in price,
the commodity would be sold at the old price resulting in loss to MML.
That is what has happened in the case of MML. Power under items 35
and 37 has considerable financial implications. If the Board had
decided to dispose iron ore, iron ore fines, mud or mineral by auction
or by calling for tenders or by tender cum auction method it would
have been transparent, least objectionable and in the best interest of
MML. It is said that since about June 2007 that is, after the Government
referred the matter to Lokayukta, MML is disposing ores and minerals
by tender cum auction method. According to the Articles of


179
Association, office of Chairman and office of Managing Director of
MML could be held by one person or by two different persons. Hence
the power delegated by the Board in its 141
st
Meeting has to be
exercised by a committee consisting of the Chairman and Managing
Director. When the said offices are held by two different persons, the
Managing Director alone cannot exercise the delegated powers unless
he is also appointed as the Chairman. If both the offices are held by one
person the powers get delegated to a single person. It is stated that
during 2000-2006, except the period from 26/9/2001 to 12/9/2005, the
Managing Director was holding the post of Chairman also. Hence
during same period one person has exercised the powers delegated by
the Board. Instead of giving scope for exercise of such vast financial
powers under items 35 and 37 by a single person, the Board should
have used its discretion to delegate its powers to a body consisting of at
least one more person preferably the Financial Advisor of the
Company who is appointed by the Board with the prior approval of the
Government. Scope for exercise of power in an arbitrary manner is
much more when power is exercised by a single person.

4. MML is a corporation created by the Government and an
instrumentality of the Government. In the exercise of its powers or
discretion it is subject to same constitutional law limitations as
Government. It cannot act arbitrarily and enter into relationship with
any person it likes at its sweet will but its action must be in conformity
with some rational, relevant and non-discriminatory principle. Item 35
of the powers delegated to CMD require the CMD to fix and revise sale


180
price periodically “depending upon market and/or other conditions”.
If the file indicates that the CMD had considered the above aspects i.e.
market and/or other conditions, before fixing or revising the price,
there is little scope to challenge the validity thereof on the ground of
arbitrary exercise of power. However, in regard to item 37 no
guidelines are given by the Board. It is left to the discretion of the CMD
to select the purchasers and to decide about the quantity of ore or
mineral to be sold to a purchaser. The CMD is required to exercise the
discretion on some rational and relevant principles which could be
gathered from the relevant files. Otherwise in a given case it may
become arbitrary exercise of power.

5. A mining lease holder under the M&M (D&R) Act is normally
expected to do the mining operations himself by employing required
workforce. A reading of section 9 of the M&M (D&R) Act and rule 37 of
the M.C Rules made under the M&M (D&R) Act by the Central
Government, indicate that a lease holder may, with the permission of
the Government, get the mining operations done by his agent or
manager or employee or contractor or sub-lessee who work under his
control, supervision and directions and paid by him. The law imposes
certain restrictions for transfer of any activity connected with mining
operation - vide rule 37 of the M.C Rules and conditions 17 and 18 of
Part VII of the pro-forma of the Mining Lease deed at Form K in
Schedule I, (in short conditions 17 and 18) . Every holder of a mining
lease is required to execute a lease deed in Form K of Schedule I of the
M.C Rules. MML holds many mining leases in its favour and it must


181
have executed lease deeds in Form K in all of them and it is bound by
the terms and conditions stated therein. Rule 37 of M.C Rules and
conditions 17 and 18 are substantially similar. Relevant portion of Rule
37 reads thus.-

“37. Transfer of lease,
(1) the lessee shall not, without the previous consent in
writing of the State Government and in the case of mining lease
in respect of any mineral specified in Part A and Part B of the
First Schedule to the Act, without the previous approval of the
Central Government-

(a) assign, sublet, mortgage or in any other manner, transfer
the mining, lease, or any right, title or interest therein, or

(b) enter into or make any bona fide arrangement, contract or
understanding whereby the lessee will or may be directly or
indirectly financed to a substantial extent by, or under which
the lessee’s operations or undertakings will or may be
substantially controlled by, any person or body of persons other
than lessee:

PROVIDED FURTHER that where the mortgagee is an
institution or a Bank or a Corporation specified in Schedule V,
it shall not be necessary for the lessee to obtain any such consent
of the State Government.

(1A) The State Government shall not give its consent to
transfer of mining lease unless the transferee has accepted all
the conditions and liabilities which the transferor was having in
respect of such mining lease.
Xxxx xxxx xxxx


182
(3) The State Government may, by order in writing
determine any lease any time if the lessee has, in the opinion of
the State Government, committed breach of any of the
provisions of sub-rule (1) or sub-rule (1A) or has transferred
any lease or any right , title or interest therein otherwise than in
accordance with sub-rule (2).
xxx xxx xxx”

6. As could be gathered from the records made available, MML has
about 40 mining and 26 ornamental granite leases and as far as iron ore
is concerned, at present, MML is not doing any mining operation.
MML took over the ‘on going business concern’ of the Government of
Karnataka known as ‘Board of Mineral Development’ and as stated in
the Memorandum of Association it was required “to search for minerals
and precious stones and to acquire, by acquisition, or grant, mining and other
rights and to win, open and work mines, quarries and minerals and precious
stones, in, above and under any other lands over which mining rights may be
acquired by the company, and to raise, sell and dispose of minerals and
precious stones to be procured there from, and to treat and make marketable,
and/or convert such ores into metal”, and to act as the agent of the
Government of Karnataka in the exploitation of the mining areas
reserved for exploitation by the State. Even though it holds many rich
mining leases, it is not doing any iron ore mining operation. MML has
outsourced its iron ore mining operation activity. From the records
made available by MML it is disclosed that it has entered into some
raising and / or processing agreements and some marketing
agreements with private parties in addition a MOU with Jindal
Vijayanagara Steels Ltd. This outsourcing is opposed to the purpose for


183
which MML was established – vide para 1(1b) of the Memorandum of
Association extracted in para 2 above. If outsourcing violates legal
provisions like rule 37 of M.C Rules or the conditions in the lease deed
like conditions 17 and 18, the Government has powers to determine the
lease –vide sub-rule (3) of rule 37 of M.C Rules.

7. Rule 37(1)(a) of the M.C Rules and condition 17(1)(a) mandate
that the lessee shall not without the previous consent in writing of the
State/Central Government assign, sublet, mortgage or in any other
manner transfer any right, title or interest in the mining lease. Rule
37(1) (b) of M.C Rules and conditions 17(1) (b) and 18 stipulate that a
lessee shall not, without the previous consent in writing of the Central
Government/State Government, enter into any arrangement or
contract or understanding whereby, (i) the lessee is directly or
indirectly financed to a substantial extent by a person other than the
lessee, or (ii) the lessee’s mining operation is substantially controlled by
a person other than the lessee. None of the raising and/or processing
agreements entered into by MML do not indicate that previous
approval or permission in writing under Rule 37 of M.C Rules has been
obtained before entering into those agreements. The MML was asked
to indicate whether previous permission or approval in writing as
contemplated by Rule 37 of M.C Rules, has been obtained for all these
agreements, if so, to make available copies thereof. In reply thereto
MML has intimated that “MML has not obtained any
consent/permission from Government of India/ Government of
Karnataka under rule 37 of M.C Rules”. In some of the agreements


184
MML has noted the requirement of Rule 37, which indicates that they
were conscious of the said Rule, but still violated the said Rule.

8. According to the raising and/or processing agreements entered
into by MML with private companies, it has assigned or transferred its
right to carry out the mining operation in the leased property to those
companies. The entire expenses or investments relating to or connected
with the mining operation are to be borne by those companies. MML
does not spend anything for the purpose even though it is the mining
lease holder and it is expected to do the mining operation. The
arrangement or understanding made by MML by entering into
agreements with those companies amounts to those companies
‘substantially financing’ the MML for the mining operations. Such an
arrangement, agreement or understanding violates rule 37(1) of M.C
Rules and conditions 17 and 18 of the lease. As required by rule 37 of
M.C Rules, previous consent/approval of the Government in writing
has not been taken or obtained before entering into those agreements.
Hence there is gross violation of rule 37(1) of M.C Rules and conditions
17(1) and 18.

9. I will now consider whether the companies which have entered
into raising or processing agreements with MML could be considered
as agents or managers or employees or contractors of MML and
whether they work under the control, supervision and directions of
MML and whether they are paid by MML? An agent or manager or
employee or contractor of a person always functions under the
instructions, supervision, directions, and control of the master. If we


185
look into the terms of the agreements entered into by MML it is not
possible to say that those companies are ‘agents or managers or
employees or contactors’ of MML as it has not retained ‘substantial
control’ over the mining operations done by those companies. The
mining operations are done and substantially controlled by those
companies and not by MML. By those agreements MML has abdicated
the power of control over the mining operation under the mining lease
and conferred it to those companies.

10. (a) The present evaluation speaks of considerable loss MML has
suffered due to defective agreements and MOU relating to raising,
processing and marketing of iron ore from various lease holds of MML.
The losses are also due to non-enforcement of some of the agreement
clauses. In addition to these losses, MML has also made arbitrary
allotment of iron ore fines/waste dumps to selected individuals/firm
at prices lower than prevailing market prices. The irregularities and
losses suffered in respect of iron ore lease holds of MML are discussed
below.

(b) The audit reports of the Principal Accountant General (in
short AG) relate to the period 2003-04 and 2004-05. The Lokayukta
enquiry covers a larger period i.e., 2000-2006. Hence there is difference
between the figures in AG reports and the report of Sri Gaikwad team
appointed by me to evaluate the loss suffered by MML. The report
given by Gaikwad team is at ANNEXURE-C. The officers who were
found fault with by Gaikwad team were asked to indicate their reaction
to the Report given by Gaikwad team.


186

(c) Some of the officers who were issued notices to indicate their
reactions to the observations made by Sri Gaikwad team, have stated
that loss, if any, caused cannot, as done by Gaikwad team, be
calculated on the basis of the prices declared by the Minerals and
Metals Trading Corporation (in short MMTC), a trading corporation
created by the Government of India. A perusal of the different
agreements entered into by MML indicates that the initial price of ores
specified therein is liable to be revised from 1
st
April of every year
subsequent to the date of expiry of the initial period specified in the
agreement and the revision has to be made having regard to either the
market conditions or MMTC prices. MMTC prices are fixed having
regard to the market conditions. In his audit reports AG adopts the
price fixed by MMTC. It being a Government of India corporation and
a trading corporation it would be fair and just to adopt the prices fixed
by MMTC. Such an action cannot be considered as unreasonable or
unjust or unrelated to market conditions.

(d) Another objection taken by some officers is that Gaikwad
team has no corporate experience and it is not safe to rely on their
observations. Sri.Gaikwad has put in more than 25 years of service and
held different positions including 4½ years of service as Deputy
Director in the department of Mines and Geology of the Government.
Prior to joining State Government service he served as Emergency
Commissioned Officer in the Army for about 4 ½ years. AG audits the
accounts of trading corporations of the Central and State Governments
and it is made by the officers of the office of the Accountant General


187
who have no corporate experience. Hence it cannot be said that Sri
Gaikwad is not able to evaluate the loss suffered by MML. At an
appropriate place in this report, I will refer to the ignorance of the
Heads of MML in regard to their lack of corporate experience,
including those who pointed out this deficiency in Mr. Gaikwad.

(e)(i) Yet another objection taken by the officers is that the
Gaikwad team has treated the difference between MMTC price of ore
and the initial price of ore stated in the agreements as loss to MML. The
agreements entered into by MML provide for revision of prices after a
period specified therein and such revision has to be made thereafter on
1
st
April of every year. While entering into agreements the then
Managing Director and other officers of MML involved in taking such
decisions were obliged to fix the initial price of various ores based on
the MMTC prices or very near to that price. A perusal of most of the
agreements show that the initial price fixed is far below the MMTC
prices. Thereby MML suffered loss during the subsistence of the initial
price fixed in the agreements i.e. till the date fixed in the agreement for
the first review of the price. Therefore the Managing Director and other
officers, who decided the initial price fixed has to be held responsible
for not having exercised proper caution while fixing the initial price in
the agreement and protecting the financial interest of MML. Even if the
price was taken by calling tenders they should have seen that the price
fixed is not far below MMTC price. For the above reason, the officers
concerned are liable for the loss suffered by MML on that count.



188
(ii) The further question that arises is whether the officers who
succeeded the previous Managing Directors, who entered into the
agreement are responsible to revise the prices during the period up to
the date fixed for the first review of the price. Gaikwad team has
assessed the loss on that basis. I do not think that those officers are
responsible to revise the prices before the date fixed in the agreement
for first review of prices because the parties to the agreement are
bound by the terms of the agreement. However if, the agreement
provides for revision of the prices with effect from a date or period
specified therein and if they had failed to revise the price with effect
from that date or period with reference to MMTC prices, they would
become liable for the loss suffered with effect from such date or period.
If the period fixed in the agreement had to come to an end and either
further agreement or renewal of the agreement is ordered they are
bound to revise the price having regard to MMTC prices at the time of
such renewal or further agreement. Accordingly, the Gaikwad team
had to revise the findings and recalculate the loss suffered by MML
and identify the officers responsible for such loss based on the above
principle.

(f) In the Report dated 21
st
May 2008 (Part) of the Gaikwad team,
it was observed that many of the agreements, MoUs and such other
marketing contracts entered into by MML in its effort of outsourcing
the mining activity, may call for close scrutiny by a competent
personnel of commercial audit, which I had then intended to be got
done. Later, it was found that the same is not feasible inspite of our


189
best efforts, for the purpose of this report. I find that the present
computation of the loss suffered by MML as found by Gaikwad team
is based on acceptable materials as well as after consideration of replies
given by officers concerned. After considering all these facts I am of
the opinion that the same can be relied upon to base my conclusions in
this report.

(g) While fixing the responsibility on the officers for having
mismanaged the affairs of MML, I will have to first consider the
primary reason for this type of irregularity in the management of the
affairs of a commercial concern. It is to be noted that the MML as a
company was established among other reasons to exploit the mineral
wealth available in the State. In that process, the MML had to indulge
in mining activities, trading and even exporting. Though the MML had
the advantage of getting the mining leases from the State for areas
which were richly endowed with mineral wealth, it had to compete
with other experienced mining companies and had to develop
commercial contacts with buyers both Indian and foreign. Invariably,
the MDs were people from All India Services, who neither had
corporate or commercial experience, more so in the mining field. This
lack of experience certainly was a handicap for those persons who
headed the MML. Added to it, they did not even have the assistance of
a Company Secretary, which had lead to many, if not, illegal and
improper decisions. I am of the considered opinion that any new
person who took over as Managing Director of a company like MML
would certainly require some time to understand the working of the


190
company. May be the above factor was one of the reasons why the
MML, though primarily established for mining and was allotted rich
mineral bearing lands, did not exploit those lands for mining activities
themselves. On the contrary, even against the law, subleased or
outsourced the mining activities to third parties. It is in this
background, I noticed that during the period 2000 to 2006, 11 officers
had occupied the post of Managing Director of MML, some of them for
periods as short as one month to 4 months. The report of the Gaikwad
team has listed 11 officers as being responsible for the loss suffered by
MML during their respective tenures. In the above background, I think
it would be reasonable for me to think that it would take atleast 6
months period for an official to understand the various affairs of the
company including the financial affairs. For all the above reasons, I
think it will be unfair to attribute deliberate misconduct on the part of
those officers who had served for less than six months as Managing
Director of MML. Technically, it could be said that every officer, who
holds such responsible post should immediately on taking over charge
of the office ought to have taken stock of the business activities,
financial position, amounts due to MML from different sources, profit
and loss of MML etc, but practically, it may not be that easy for a
Managing Director, who has newly joined the MML to get acquainted
with those facts during the first few months as Chairman or Managing
Director. If the strictest possible view is to be taken, then all the officers
named in the said list of Gaikwad team may be liable to answer the
charge of misconduct, but I think it will be very unfair to charge such
officers who held the post of Managing Director for a very short


191
period, which period on facts and circumstances of the case is
considered to be at least 6 months in my opinion. But this qualifying
period of 6 months will not be taken by me as a rule of thumb and will
not apply to those officers, who even during their short stay either had
entered into agreements with third parties or had an occasion to review
earlier agreement, which agreement contained terms contrary to the
interest of MML, but failed to review the same. Applying the above
yardstick, in this report, names of such officers alone are being
mentioned, who had a tenure of 6 or more months as Managing
Director of MML and all those officers who might have held the office
for less than 6 months, but during their tenure had signed agreements
or had an occasion to review earlier agreements, which contained
terms detrimental to the interest of the MML, but failed to rectify the
same. Herein, I must notice in the case of Sri K.S. Manjunath, IAS, he
was holding the office of the Managing Director for period less than six
months. Even then he has to be held responsible for the loss suffered
by MML, since he was the signatory to the agreement dated 4/7/2003,
with M/s. Orient Goa Private Limited, which caused a loss of
Rs.71,25,481/- and an agreement dated 4/7/2003 with M/s. Balabhanu
Enterprises Private Limited, which caused a loss of Rs.56,62,938/-, as
also being a signatory to an Agreement dated 3/5/2003 with M/s.
Kalyani Ferrous Industries Limited, which caused a loss of
Rs.2,76,78,519/- to MML.

11. (i) A group of private companies which have entered into
agreements with MML are M/s. Kalyani Steels, M/s. Kalyani Ferrous


192
and M/S Mukund Limited. On 17-01-2002 MML entered into a raising
agreement with Kalyani Steels in respect of about 80 hectares of area in
Subbarayanahalli mines and entered into a marketing agreement in
respect of the iron ore mined from that area with Kalyani Ferrous. On
03-05-2003 MML entered into a raising agreement with Mukund in
respect of about 52 hectares of area in Jambunathanahalli mines and
entered into a marketing agreement in respect of the iron ore mined
from that area with Kalyani Ferrous. The above agreements relating to
Subbarayanahalli and Jambunathanahalli mines are substantially
similar. Calibrated iron ore produced by Kalyani Steels and Mukund is
to be purchased by Kalyani Ferrous. The terms and conditions of the
agreements with these companies, when compared with the terms and
conditions of the agreements with other companies, contain many
provisions which could be considered as more favourable to those
companies and against the interests of MML.

(ii) Kalyani Steels and Mukund are paid Rs.188/= per Metric Ton
(in short MT) of calibrated iron ore produced, Rs.100/= per MT of
Banded Haematite Quartzite, (BHQ) and Rs. 25/= per MT of iron ore
fines produced. It is said that iron ore fines and BHQ get produced
while calibrated iron ore is produced and no separate or additional
process or effort or expenditure is necessary to produce BHQ and iron
ore fines. They are what is normally called as ‘bye-products’ while
producing calibrated iron ore. Charging separate price for BHQ and
iron ore fines is a favour shown to Kalyani and Mukund at the cost of
MML at the time of entering into those agreements. The quantity of


193
BHQ and iron ore fines produced by Kalyani and Mukund up to date
and the amount paid for it by MML would be the loss incurred by
MML in this regard. Full figures about this is not yet made available
by MML. I will consider this aspect in my next report.

(iii) In addition to the amount paid to the raising/ processing
company, the MML has to incur other incidental expenses like royalty,
welfare cess, sales tax, expenses connected with renewal of lease,
charges connected with aforestation and fencing of safety–zone, NPV
payments, administrative expenses etc. If all these expenses and the
charges paid to Kalyanis’ and Mukund under the raising agreements
are deducted from the amount received by selling the iron ore under
the marketing agreements with Kalyani Ferrous (Rs. 250/= per MT of
iron ore and Rs,150/= per MT of BHQ) what remains is negligible. Is
the MML getting reasonable price for the mineral wealth of the State is
the question? The NPV charges paid to Forest Department in respect of
the mines relating to agreement with Kalyanis’ is to the tune of about
60 lakhs. While entering into the marketing agreement these aspects
appear to have not been properly considered. Charges paid to
raising/processing companies like Kalyani and Mukund is much more
than what is being paid to GSP Projects and Anil Enterprises.

(iv) The price fixed in the marketing agreements dated 17-01-
2002 and 03-05-2003 with Kalyani Ferrous for MT of calibrated iron ore
was Rs.250/= and for BHQ Rs. 150/=per MT. According to the
agreement that rate was firm for a period of two years after
moratorium period of one year. That means there is no provision to


194
revise the price fixed in the agreements for a period of three long years.
Thereafter rates are to be revised every year with effect from 1
st
April
taking into consideration the revision in prices, if any, by MMTC. The
revision became due on 01-04-2005 under agreement dated 17-01-2002.
Accordingly, on the basis of prevailing revised MMTC price of
Rs.1070/= per MT as on 01-04-2005, the price was revised by MML
from Rs. 250/= to Rs. 902/= per MT with effect from 01-04-2005 and it
was intimated to Kalyani on 30-05-2005. Kalyani opposed it. On the
basis of a request made by Kalyani, by order dated 15-07-2005, the
price was reduced to Rs.314/= per MT and it was ordered to retain that
price as valid for a period of two years i.e. up to 31-03-2007. The price
of Rs.314/= was arrived at on the basis of average MMTC price for the
period 01-04-2004 to 31-03-2005. It is surprising that the revised rate for
the year 2005 -2007 was fixed on the basis of average prevailing MMTC
price during the previous year i.e. 2004-2005, even though the MMTC
price in April 2005 was Rs.1,070/= and market price was steeply
increasing day by day. Such a revision is contrary to the terms of the
agreement and it is to the advantage of Kalyani. The loss suffered by
MML in this regard during the year 2005-2006 is estimated by AG at
about Rs. 22.3 crores. MML suffered considerable loss also because of
non-revision of prices from 2002 to 2005. MML in its reply to the report
of AG has not disputed the factual position stated above, except that
the price of Rs. 314/= fixed with effect from 1-4-2005 was firm only for
a period of one year and not two years as stated in the order and it was
a typographical error. It is stated in the reply filed by MML that the
Kalyanis have been told about that mistake but MML has not stated


195
whether Kalyani has agreed that it was a mistake and the prices have
been further revised with effect from 01-04-2006. The reply filed by
MML to the report of AG is silent about this aspect as well as the
propriety of fixing the price at Rs.314/=.

(v) In some marketing agreements entered into by MML the
price stated therein is firm only for a period of one year and in some
others it is firm for two years. The moratorium period of one year is not
found in any agreement except that with Kalyanis’. Thereby revision of
prices gets postponed. This is another condition which is favourable to
Kalyani at the cost of MML because from 2003 onwards the price of
iron ore was increasing very rapidly.

(vi) In agreement dated 17-01-2002 Kalyani Ferrous has paid
sales advance of Rs, 6 crores as security for purchase of iron ore.
Provision for payment of advance or security deposit is found in all
agreements because MML releases iron ore or iron ore fines sold by it
only after full purchase amount is deposited in advance. Agreement
with Kalyani Ferrous requires MML to pay interest on that advance
amount at the rate of 10% per annum. There is no provision for
payment of interest on such advance or security deposit in agreements
entered into with other companies. Interest paid on that amount by
MML to Kalyani up to 2006-2007 comes to about Rs. 2.5 crores. This is
another favour shown to Kalyani at the cost of MML.

(vii) The Managing Directors who entered into the above said
agreements with Kalyani Steels, Kalyani Ferrous and Mukund are


196
guilty of showing favours stated above to those companies and loss to
MML. The Managing Directors and other officers during the relevant
periods who decided to pay those charges are responsible for the loss
occurred on that basis.

12. Another major agreement entered into by MML was with Jindal
Vijayanagara Steels Ltd (in short Jindal), at the desire of the
Government of Karnataka, in the form of MOU dated 17-01-1997. As
agreed therein a joint venture company called Vijayanagar Minerals
Private Ltd (in short VMPL) was registered to provide adequate supply
of iron ore to Jindal steel plant. It relates to Thimmappanagudi mines.
According to AG there are numerous irregularities connected with this
transaction and dealings in pursuance to that MOU which has resulted
in loss of crores of rupees to MML. Some of them are given below.

(i) According to MOU dated 17-01-1997 MML is to place at the
disposal of VMPL Thimmappanagudi mines and Jindal, which had
applied for lease of Kumaraswamy‘s A, D and E blocks, would place at
the disposal of VMPL said A, D and E blocks that may be granted to
them on lease by the Government. In pursuance to the MOU, as
agreed, MML placed Thimmappanagudi mines at the disposal of
VMPL and the VMPL is permitted to do mining operation there since
1999 –vide clause 6 of service agreement dated 2-2-1999, and is
supplying iron ore to Jindal steel plant. It is learnt that Jindal, as on to
this day, has not placed any mines at the disposal of VMPL.
(ii) As per the MoU dated 17.01.1997, MML was to receive
premium on the sale of two grades of iron ore viz., the lumpy ore and


197
the iron ore fines at 10% and 6% of the ruling market price respectively.
Against this understanding, MML has consistently invoiced the premia
claim at the rate of Rs.30/- per MT of lumpy ore and Rs.6/- per MT of
iron ore fines. The premia invoiced are much below the percentage
value calculated on the basis of the prevailing MMTC prices for
different grades of iron ore. This apart, VMPL, have also generated
other grades of iron ore viz., basic ore, low grade lumps and low grade
calibrated ores during the period under report. The supply of these
grades of ore were not foreseen at the time of execution of MOU and
consequently also for purposes of calculation of premia payable by the
VMPL. MML should have taken up the matter with VMPL and claimed
premia thereon. In the absence of any such arrangement, MML has
suffered by not realizing premia on these grades of ores. According to
AG premium amount was not revised from time to time on the basis of
the prevailing market rate and on this count there is short payment of
Rs. 3.22 crores by VMPL upto 2004-05. In its reply to AG report MML
has not stated anything about the merits of the observations of AG. The
only remark made by MML is that a copy of the report of AG has been
sent to VMPL asking it to pay the amount stated by AG and no reply
has been received from VMPL so far. The reply given by MML that it
has asked VMPL to pay the amount stated by AG indicates that MML
agrees with the view expressed by AG. The loss suffered by the MML
consequent to raising invoices for premia at rates below that agreed in
MoU in respect of iron ore lumps and iron ore fines and failure to
collect premia in respect of other grades of iron ore that are not
mentioned in the MOU, but generated and marketed from


198
Thimmappanagudi Mines is reported in table 01 and 01A of the report
of Sri Gaikwad team at Annexure-C. The total loss suffered by MML on
this account is Rs.25,72,74,368/-. The Managing Directors in office
during the period are responsible for the loss.
(iii) The financial mismanagement of MML is evident from the
following facts.
(a)As stated above, MML entered into a MoU with Jindal to
establish VMPL. As per that MoU the equity share of MML in VMPL is
30%. The said equity share was contributed by MML in the form of
infrastructural investment towards development of its
Thimmappanagudi mines which was handed over by MML to VMPL.
MML valued that infrastructural investment at Rs.372 lakhs. That
valuation was not accepted by Jindal, which valued it at Rs.174 lakhs
which is equal to 30% of the equity share of MML. The matter was
referred to a neutral valuer and he fixed the amount at Rs.243.74 lakhs.
MML demanded that the amount in excess of 174 lakhs i.e. Rs.69.74
Lakhs (243.74 – 174) must be returned to MML with interest at 10% or
its equity share should be increased proportionately. After the
revaluation of the infrastructural investment, percentage of share
capital of MML should have been increased since this has not been
done, the excess amount of Rs.69.74 lakhs should have been collected
from Jindal with interest. The profit and loss account of the VMPL for
the period from 2003 to 2007 indicates that VMPL has earned a total net
profit of Rs.8,00,22,746/-. No indication is available in the files of MML
for having received its share of the profit for its share in equity. This


199
aspect could have been settled if the share holders agreement had been
finalized. However very surprisingly, the Accountant General’s audit
report shows that MML’s share capital as only 2.77% of total paid up
capital.
(b) From the facts narrated herein above, it is seen that the MoU
shows the investment of MML in the VMPL is 30% i.e. Rs.174 Lakhs,
the independent valuer’s report shows the said investment as Rs.243.74
lakhs equivalent to 42%, while the Accountant General’s Audit Report
shows it as 2.77%. Inspite of these glaring discrepancies, though the
MoU was signed as far back as in 1997, till date there is no record
which conclusively reflects what is the true investment of MML in
equity. Added to this, though the records of VMPL shows that it has
made a profit of over 8 crores there is no proof of MML having
received its share in the profit. There cannot be a worse example of
financial mismanagement of a company, that too over the years.
Herein, it may be relevant to take note of the comments of the various
Managing Directors who received Show cause notices from the
Lokayukta, wherein they have consistently stated that the company
was suffering huge loss and the financial position of the company was
such that it was not even in a position to pay salary to its staff. With
the above cited financial management, there is no need to go any
further to find out the cause for such loss suffered by MML. For the
reasons stated herein above action should be taken to recover the
amount of Rs.69.74 lakhs with interest due to MML from VMPL on the
basis of neutral valuer’s report apart from other dues.


200
(c) How much MML lost in its J.V. agreement with VMPL can be
assessed by comparing it with another J.V. Jindal agreement with M/s.
Thungabhadra Minerals where MML had made an investment of
Rs.15,60,400/- from which investment the MML has received its
dividend share of Rs.31,32,03,488/- for the period between 1983 and
2007, whereas in the case of VMPL on investment of Rs.243.75 Lakhs no
amount has been received as dividend.

(iv) It is reported by the MML that during the period from
2000-01 to 2006-07, a quantity of 60,93,040 MT of iron ore produced
from Thimmappanagudi Mines was supplied to VMPL. MML has also
sold during the said period, a total of 50,565 MT of iron ore fines to
various other firms. Thus, the total sale of iron ore from
Thimmappanagudi Mines during that period is 6143605MT. This
shows that the quantity of iron ore marketed from Thimmappanagudi
Mines is in excess of the production. This aspect creates some doubt
about the accounts maintained by MML.

(v) Though the MOU entered into in 1997 required the parties
to finalize the shareholders agreement and some other documents, so
far, they are not finalized. This observation is admitted by MML.

(vi) According to clause 4 of MOU, MML had the option to
purchase from VMPL certain quantity of iron ore lumps produced in
Thimmappanagudi mines at transfer price which is lower than the
market price and sell it in open market. MML failed to purchase the
lumps they were entitled to purchase. According to AG, upto 2004-06


201
this has resulted in loss to MML to the extent of Rs. 20.82 crores and
corresponding benefit to VMPL and Jindal. MML has not given any
proper explanation in this regard. Had MML, by virtue of the provision
in the MOU, purchased and sold its share of the ore produced, it would
have gained a profit of Rs.7,64,19,838/-. Therefore, MML has suffered
loss to this extent. It was the responsibility of the respective Managing
Directors of MML to implement the provision of the MOU and
safeguard its interest in such ventures. The concerned Managing
Directors of MML should have raised the demand during the month of
April for the ore produced during the previous financial year. But, they
have failed to act. Hence they are to be held responsible for the loss
suffered. The amount of loss attributed to each managing Director is
furnished below :

Sl.
No.
Year Quantity
produced
(MT)
Loss at the rate
of Rs.94.90/-
per MT *
(Rs.)
Name of the Managing
Director responsible for
the loss Sri/Smt.
1 2000-01 2,785 2,64,296 Company’s Account
2 2001-02 51,203 48,59,165 I.R. Perumal
3 2002-03 51,800 49,15,820 Company’s Account
4 2003-04 1,76,918 1,67,89,518 D.S. Ashwath
5 2004-05 1,52,527 1,44,74,812 Jeeja Madhavan Hari
Singh
6 2005-06 2,29,644 2,17,93,216 -do-
7 2006-07 1,40,390 1,33,23,011 Mahendra Jain
Total: 8,05,267 7,64,19,838
* Price taken into account is a fraction of the then prevailing market
price.



202
(vii) According to para 5 of the MOU the VMPL is responsible to
pay royalty, FDT, taxes, levies, other duties and all obligations
including statutory obligations in connection with the mining
operations like liability to pay compensatory afforestation charges,
lease rent, fencing of safety zone and net present value (NPV) etc. AG
has reported that though it is not liable to pay the following amounts
MML has paid those amounts. That amount was payable by VMPL
and it was an avoidable burden on MML. No action has been taken to
recover that amount from VMPL..

Date On what account Amount (Rs) Remarks.
7-11-2000 Towards compensatory
afforestation and penal
compensatory afforestation
48,63,450 Paid to
Karnataka
Forest
Department
9-3-2002 Towards lease rent 2,79,657 -do-
28-1-2003 Towards Compensatory
afforestation
37,10,749 -do-
27-11-2003 Fencing of Safety Zone 4,21,947 -do-
29-11-2003 Fencing of Safety Zone 7,41,478 -do-
2-4-2004 Towards net Present value 3,56,85,760 -do-
3-4-2004 Towards lease rent 2,84,16,212 -do-
3-4-2004 Towards net Present value 3,70,00,000 -do-
Total 11,51,99,253

(viii) In the service agreement dated 02-02-1999 entered into by
MML with the VMPL it had agreed to pay MML a sum of Rs.350 lakhs
to meet the expenditure towards VRS scheme to be introduced by
MML for the benefit of the employees who have become surplus


203
because of handing over of the Thimmappanagudi mines to VMPL. So
far only 60 lakhs have been paid by VMPL and the balance amount is
due.
(ix) MML has virtually assigned the right of exploitation of
iron ore and physically handed over the Thimmappanagudi Mines to
VMPL to raise iron ore at its cost. Such handling over of the mine for
exploitation by VMPL, the prior approval of the Government and
without retaining the substantial control over mining amounts to
transfer of mining lease which is contrary to Rule 37 of M.C Rules.

(x) Another observation made by AG is about delay in
payment of advance tax, self-assessment tax, sales tax, delay in filing
the income tax returns and delay in crediting TDS deductions and the
resultant liability to pay interest and penalty. According to AG total
liability of interest and penalty on this count comes to about Rs.
2.67crores. This liability occurred mainly during the year 2005-06 and it
could have been avoided by proper administration. Failure to appoint a
whole time Company Secretary as required by section 383A of
Companies Act may be one of the reasons for this situation. The
Managing Director during 2005-06 is responsible for the loss, if any
occurred on this count.

13. On 04-07-2003 MML entered into an agreement with Orient
(GOA) for sale of iron ore fines from Jambunathanahalli mines with a
clause that prices are to be revised with effect from 1
st
April each year
on the basis of market conditions and prevailing MMTC rates.
According to AG during 2004-05 also iron ore fines were sold but


204
without revising the rates. AG has estimated the loss incurred thereby
at about Rs. 3.42 crores as shown in Annexure IV of his report. If the
loss is calculated on the basis of difference between the sale price and
MMTC Price, the loss would be about 10 crores – vide table 9 of
Sri.Gaikwad team report. The Managing Directors in office during the
relevant period are liable for the loss.

14. (a) Another agreement entered into by MML was with M/s
Balabhanu Enterprises (P) Ltd., Jannapura, Bhadravathi, which is one
the beneficiaries, who enjoyed preferential allocation of iron ore fines
from Subbarayanahalli Iron Ore Mine and Jambunathanahalli Iron Ore
Mine. MML entered into agreement with M/s. Balabhanu Enterprises
(P) Ltd., on 4.7.2003 for marketing of iron ore fines of different grades.
The period of contract was for five years from the date of execution -
vide clause 2. Clause 3 read with clause 4 of the agreement specifies
that M/s Balabhanu Enterprises shall undertake to purchase a
minimum quantity of 4 lakh MT of iron ore fines per annum, from
group of Iron Ore Mines leased to MML in Bellary District. The prices
agreed are as follows which are inclusive of royalty, cess, FDT, taxes,
but excluding loading charges.
Rupees.
+66% Fe 110 Per dry MT
+65% to 66% Fe 97 Per dry MT
- 65% Fe 70 Per dry MT

(b) As per clause 8 of the agreement, the rates are for the year
2003-04 and thereafter to be revised and refixed on 1
st
April each year
based on the prevailing market conditions/MMTC prices. The


205
agreement declares, M/s Balabhanu Enterprises were identified as a
beneficiary for allocation of iron ore fines at the instance of M/s
Anudeep Carborates (P) Ltd., and M/s Arun Chemicals, the buyers of
limestone and dolomite from MML. Hence, the statutory requirement
of floating tenders was not complied with as required under the
Karnataka Transparency in Public Procurement Act, 1999 and Rules
made thereunder. As a result, M/s Balabhanu Enterprises walked
away with a higher beneficial arrangement of procuring iron ore fines
at the above prices when MMTC ruling Prices had shown a clear trend
of rise as evident from the values that are herein indicated. Prices for
grade +66% FE 10F were (i) Rs.1424.65 on 5/4/2004; (ii) Rs.907.25 on
6/8/2004; (iii) Rs.1407.25 on 5/11/2004; (iv) Rs.1607.25 on 25/4/2005
and (v) Rs.1501.90 on 8/12/2005.

(c) In the corresponding period, MML’s self declared prices for
the said grade of iron ore fines were: (1) 18.11.2003 – Rs.350/- (2)
28.11.2003 – Rs.400/- (3)03.12.2003 – Rs.425/- (4)05.12.2003 – Rs.475/-
(5)01.01.2004 – Rs.800/- (6)01.04.2004 – Rs.2000 and (7) 01.12.2005 –
Rs.2000/- + Rs.200/-. These particulars, clearly establish that the
agreement with M/s Balabhanu Enterprises for supply of iron ore fines
was detrimental to the interest of MML. The prices agreed are far
below the prevailing MMTC/MML prices. Overlooking this important
market trend, the MML has agreed to supply the iron ore at far below
the prevailing market prices.

(d) Sri K.S. Manjunath, the Managing Director who is the
signatory to the agreement on behalf of MML has failed to safeguard


206
the interest of MML by not considering the prevailing higher MMTC
ruling price at the time of entering into long term agreement on
04.07.2003. The agreed rates were firm for the year 2003-04. The loss
suffered by MML in view of acceptance of lower prices as shown above
is estimated at Rs.56,62,983/- and this loss is attributed to Sri K.S.
Manjunath, Managing Director who signed the agreement.

(e) Sri. D.S. Ashwath and Smt. Jeeja Madhavan Hari Singh
respectively succeeded Sri. K.S. Manjunath. It was their duty to revise
the prices on par with the prevailing MMTC prices on 1
st
April each
year by invoking the provision for revision of prices stipulated in
clause 8 of the agreement. The first revision was due on 01.04.2004 and
second revision on 01.04.2005. No revision was made and they have
failed in their duty. Hence, they are to be held responsible for the loss
suffered by MML during the year 2004-05 and 2005-06. Loss relatable to
Sri D.S.Ashwath is Rs.4,64,41,750/- and relatable to Smt. Jeeja
Madhavan Harisingh is Rs.6,79,14,000/-. The above loss is computed
based on the prices prevailing on 1
st
April 2004 and 2005.

15. Another agreement entered into by MML is with M/S Narayan
Mines Ltd. It is for a period of 13 months in the first instance which is
extendable for another period of 2 years by mutual consent based on
the performance of Narayan Mines. According to the agreement
Narayan Mines has to excavate every month a specified quantity of
iron ore from old dumps and deliver it to MML. If it fails to excavate
and deliver said quantity of ore in any month it is required to pay an
assured monthly premium of Rs.11,74,000/-. The agreement further


207
stipulates that “However he shall excavate and deliver the minimum
assured monthly production and monthly minimum assured premium
on an average on half yearly basis.” Narayan Mines did this work for
about 3 years (2000 to 2003). During that period about 7 officers have
occupied the office of MD. Some of them were there for very short
periods like 1 month, 2 months, 3 months or 4 months etc. Narayan
Mines has failed to excavate and deliver the specified quantity of ore
every month. Hence it has become liable to pay the assured monthly
premium specified in the agreement. It has not been collected by the
officers in charge of administration during that period. Total amount
due on this count comes to Rs.4,81,34,000/-. Narayan Mines is the
beneficiary of inaction on the part of the officers in not collecting the
amounts legitimately due to MML. Recovery proceedings should be
initiated against Narayana Mines by MML to recover this amount due.

16. (a) Another matter considered by AG relates to Vaddarahalli
Granite Quarry. An agreement was entered into by MML with Jemco
Granites on 2
nd
January 2002 for sale of green granite blocks to be
quarried from Vaddarahalli quarry at Hassan, at a rate of Rs. 4000/=
per cubic meter. The agreement was for a period of one year from the
date of actual commencement of quarry operation. Mining lease had
not been obtained by MML at the time of the agreement. Mining lease
was obtained on 09-09-2003 more than one and half years after the
agreement and the sale agreement was revalidated for a period of one
year from 20-10-2003 without revising the price specified therein. On
06-11-2003 MML entered into a raising agreement with Sana Granites


208
suggested by Jemco Granites at a raising cost of Rs.3,000/= per cubic
meter. Supply of granite to Jemco started immediately thereafter.
Revalidated agreement came to an end on 19-11-2004 and the
agreement was extended for another two years and price of granite
was fixed at Rs.4,400/= per cubic meter. AG has taken objection for
extending the agreement at Rs.4,400/= per sq meter stating that at that
time market price was around Rs.5,000/= per sq meter and there were
many companies which were willing to purchase it at that rate.. On this
aspect MML has stated that the extended agreement was continued
only for two months as both Jamco and Sana stopped work after two
months. It has not stated anything else in its reply. AG has further
stated that MML has suffered a loss of about Rs.5.42 lakhs as it became
liable to pay sales tax etc. of about Rs.5.42 lakhs not paid by those
companies. In its reply MML has stated that it has recovered 5.40 lakhs
by selling granite blocks raised and left by those companies at the site.
The amount recovered by selling granite blocks cannot be considered
as the amount recovered from those parties because MML is the owner
of that granite block.

(b) As in the above case, most of the agreements entered into by
MML are in anticipation of either obtaining the mining lease or getting
the expired lease renewed. Actual mining or quarrying operation starts
after mining lease is either granted or renewed. The price of iron ore or
mineral is fixed in the agreement having regard to the price prevailing
at the time of the agreement but the price would be much higher when
lease is granted or renewed and mining operation commences and


209
supply of material starts. If the agreement is entered into after the lease
is granted or renewed the price prevailing at that time would be
quoted in the agreement This non-receiving of proper price has
resulted in loss to MML and benefit to the other party.

17. Another matter dealt with by AG relates to Net Present Value
(NPV) payable to Forest Department as directed by the Supreme Court
in respect of Thimmappanagudi mines, Subbarayanahalli mines and
Jambunathanahalli mines. NPV, as stated by the Supreme Court, is the
amount required to be collected from the agencies using forest land for
non-forest purposes at the rates varying from Rs.5.80 lakhs to 9.20
lakhs per hectare of forest land depending upon the extent and density
of forest land in question. It has to be collected from the agencies using
forest land for non-forest purposes. MML is not required to pay it or to
share it with the lessees.

(i) Thimmappanagudi mines: In pursuance to a MOU entered
into between MML and Jindal a Joint Venture Company called
Vijayanagara Minerals Private Ltd was formed and Thimmappanagudi
mines were placed at the disposal of that Joint Venture Company. It
was also decided that the NPV is to be paid by the Joint Venture
Company. The total amount payable was about Rs.7.26 crores MML
voluntarily by letter dated 03-03-2004 offered to pay 30% of that
amount (2.18 crores) even though there was no commitment or legal
requirement to pay. It was an avoidable expenditure on MML while
the same was an undue gain to Jindal.



210
(ii) Subbarayanahalli mines: Kalyani agreed to share the NPV
liability with MML on 50:50 basis monetary consequence was same as
above.

(iii) Jambunathanahalli mines: The Supreme Court by its order
dated 30
th
October 2002 directed all Governments in the Country to
collect NPV in respect of all forest lands converted into non-forest
purposes like mining. Liability in respect of Jambunathanahalli mines
was about Rs. 2.84 crores. In the agreement dated 03-05-2003 entered
into by MML with Mukund no provision was made for payment of
that amount even though that agreement was entered into more than 6
months after the decision of the Supreme Court. Provision should have
been made in the agreement about payment of that amount. When the
Forest Department started demanding payment of that amount MML
requested Mukund to share the amount equally but Mukund refused
to pay and the entire amount was paid by MML. If proper care had
been taken while entering into the agreement payment of that amount
or at least 50% thereof could have been avoided. As stated above,
Kalyani had agreed to share the liability in respect of Subbarayanahalli
mines on 50:50 basis. Companies like Shivashanker, GSP, Anil etc have
agreed to share the liability. Failure to raise this question while
finalizing the agreement with Mukund has resulted in this liability.

18. There is another set of agreements with five companies i.e. Hajee
Ameer Minerals (Huded Basanna), Sree Om Minerals, Sunny Agencies,
Dhrevdesh, Metasteel and Linga Reddy, all relating to Jambuthimma-
nahalli mines according to which those Companies are authorized to


211
raise, process and purchase the salable iron ore produced. All those
agreements were entered into in 2
nd
half of 2005 and the purchase
price/premium fixed is Rs.200/= per MT. At that time the market price
of iron ore was not less than four times that amount.

19. MML has failed to collect ad-hoc price (as agreed in MOS dated
30-12-2003) of Rs. 84,58,916 from MMTC for the supply of iron ore fines
from the Subbarayanahalli mines to MMTC during October to
December 2003.

RECOMMENDATION BY MINISTERS AND LEGISLATORS

20. The Managing Director has been authorized by the Board to fix
price for sale of iron ore fines and mud etc. and to enter into contracts
for sale. The relevant files made available for perusal indicate that the
Managing Director used to allot iron ore fines and mud to persons who
used to approach him directly or through some others like politicians
(Ministers, former Ministers or MLAs or MLCs or former MLAs or
MLCs etc,), officers, former or present Directors of MML and others. It
is left to the discretion of the Managing Director to select the
purchasers and to decide about the quantity to be sold to each person.
MML being an instrumentality of the Government the Managing
Director is required to exercise the discretionary power of selecting the
applicants and the quantity to be allotted to an applicant on some
rational, relevant and non-discriminatory principles which could be
gathered from the files. Otherwise it will be arbitrary exercise of power.
The files do not disclose the basis on which the persons have been
selected and the quantity allotted to each person has been decided. The


212
files indicate that allotments were made on the basis of request and
recommendations.

21. From the Report of Gaikwad team at Annexure-C, it is seen that
because of the recommendations made by some politicians like
Ministers, MLAs/MLCs, the MML suffered loss of Rs.7,.51,42,647/- as
quantified at table 10A to 10F of Annexure-C. This has happened in
the following background. During the period when there was boom in
the mining trade, some Ministers and other politicians holding public
offices sent recommendatory letters to the then Managing Director of
MML requesting the said officer to allot certain quantities of iron ore
fines, iron ore mud and iron ore waste dumps to the named party in
their letters of recommendation. The MML had fixed its own selling
rates for this type of minerals and in some cases of recommendation
that is in about 5 cases, even though there was no request from the
concerned persons for reduced rates, the Managing Director holding
the office at the relevant point of time, made allotment at a price lower
than the MMTC price. This was done solely because the concerned
officer wanted to please the person who has sent the letter of
recommendation. This is a clear case of an officer crawling when he is
asked to bend. But the question is, for this loss can I hold the persons
who sent the letters of recommendation responsible or is it only officers
who voluntarily allotted it at a lower price causing loss to MML? After
receiving the report of Gaikwad team, I found prima facie material to
call for explanation from such persons who had sent letters of
recommendation for allotment of iron ore fines, iron ore mud or waste


213
dumps on behalf of private parties, to Managing Directors of MML. I
have received their replies. In most of the replies I find a common
stand taken by these public personalities, who were in the power
structure of the Government in some point of time or the other. In
some of the replies, my observation made while issuing of notice was
questioned as findings which are premature and that I have come to a
conclusive opinion already, hence the reply sought for is only a
formality. Here, I would like to point out that the Show cause notices
were issued on the basis of the material found in the Report of the
Gaikwad team and referring to them as prima facie material about
which reply was sought. There is no concept in Administrative Law or
for that matter in any jurisprudence that prior to the issuance of Show
cause notice there should be a notice to the concerned person calling
upon him to show cause why Show cause notice should not be issued.
(See decision of Hon’ble Supreme Court in AIR 1996 SC 2450 – Ch.
Ramarao V/s. Lokayukta and another). As a matter of fact, the
decisions of the Hon’ble High Court of Karnataka has specifically
stated that the Lokayukta, while making enquiry on the basis of a
reference made by the Government under Sec. 7(2A) of the Lokayukta
Act, is not required to issue any notice and can come to a conclusion
without such show cause notice, in his report sent to the Government.
(See Dr. K.Chowdappa V/s. State of Karnataka – (1989) 3 Kar.L.J. 512).
Though it is not my duty to convince these noticees on this legal aspect,
I am compelled to comment on the objections taken in the replies to the
Show cause notice.



214
22. Almost another common feature of the reply to the Show cause
notice is that they are elected representatives, who had obligation to
forward the request of the people of the State to the concerned. In this
context, I would like to extract part of the reply from one of the
noticees, which reads thus:-
“I would like to remind the Hon’ble Lokayukta that I am elected
representative to the Karnataka Legislative Assembly. I have a
constitutional role to play, which is well within the parameters
of the Law. I would like to place on record that, I have never
exceeded in any of my actions as a Minister. All the decisions
are taken in the light of the policy decisions of the Government,
in the light of the good wellbeing of the people who are elected me
and others to govern the State. For such actions, investigations
are made and if such notices are issued, it will be impracticable
or impossible for any legislature to function as a member of the
Legislative Assembly and as Minister. The investigation and
the enquiry report has direct interference with the legislative
functions entrusted to me under the provisions of the
Constitution and it also directly affects the welfare and
wellbeing of the people as the notices and observations of the
Hon’ble Lokayukta amounts to discourage doing welfare to the
public who have elected people like us to the Legislative
Assembly and to become the Minister for management and
administrations of the State. On reading the report, I prima
facie find the Hon’ble Lokayukta formed a finding which directly
interferes with the function of the Legislature and is also direct
intervention of functioning as Minister which is given under the
Constitution……… ……………………………………….”

The language reproduced in the above extract is entirely that of the
signatory of that reply and not mine. I have made efforts to find out
whether the Constitution of India has given the signatory of that letter
a constitutional role to play which is well within the parameters of law,


215
when he sent letters of recommendation to his subordinates, but I
could not find any such duty cast on the elected representative in the
Constitution. I am at loss to understand, whether the policy of the
Govt. of Karnataka that in the light of the good wellbeing of the people
(whatever that may mean) who have elected him to govern the State
has permitted him either as a Member of Legislature or a Minister to
make recommendations in the matters involving commercial interest of
a citizen which has absolutely no public interest. Even for this
proposition, I did not find any support. The noticee has nowhere
pointed out such constitutional provision or a policy of the Govt. of
Karnataka, which empowered him to issue letters of recommendation
in matters pertaining to commercial interest of a person. I also would
like to point out that this is not a suo-moto enquiry initiated by the
Lokayukta, but an enquiry referred under Section 7(2A) of the
Lokayukta Act by the then the Government. The terms of reference are
very wide and I fail to understand how any report I might submit to
the Government after investigation would interfere with the legislative
functions entrusted to the noticee under the provisions of the
Constitution or which would directly affect the welfare and wellbeing
of the people, as contended in the reply. I get a feeling that this part of
the reply is meant to create some sort of fear of breach of privilege
which of course the noticee is free to initiate without putting this threat
in his reply. I can, without any hesitation and about which I will
mention little later in this report, that making recommendations in the
matters pertaining to commercial interest involving the State or its
instrumentality’s finances, can never be a matter of welfare of the


216
public. (See also Ram & Sham referred herein below) I also cannot
understand how seeking a reply in a Governmental reference would
amount to direct intervention in the functioning of a Minister. Since the
noticee of that notice has asked me to consider these aspects, I am
making my observations in regard to the said part of the reply of the
noticee. Here I would like to quote Sophocles’ who said nobody has a
more sacred obligation to obey the laws than those who make the Law.

23. Be that as it may, my experience as a Judge has taught me that
extraneous comments should not come in the way of legalistic analysis
of an issue which is before me. It is on that foundation I will now
consider the legality and the effect of these recommendations.

24. Out of 10 noticees who have sent recommendations to MML as
elected representatives of the people on behalf of private parties for
allotment of certain quantities of various types of mineral ore, in 5
cases, the then Managing Directors have allotted iron ores fines and
mud at rates much lower than the rate fixed by MML itself, as its
minimum selling price. I must observe here that the rate fixed by MML
at the relevant point of time was itself lower than that of the MMTC
rates, which this enquiry has taken as a best minimal rate. Inspite of
the same, these recommendees together by allotment made to them
caused a total loss of Rs.7,51,42,647/- directly to MML and indirectly to
the State of Karnataka, because MML is wholly owned company of the
State of Karnataka. If this is the consequence of the recommendations
made by these 5 noticees can it be said that the same is protected under
the Indian Constitution or by the policies of the Government of


217
Karnataka as has been stated in the reply extracted herein above and if
it should be so. I can only observe how safe the future of the finances
of the State will be in the hands of these representatives of the people.

25. The only part of the replies that I can really say which is relevant
for my consideration for the purpose of this investigation is their
defence that they have not asked the MML to make allotment at any
particular price, much less, the price at which the allotments were
made, which caused huge loss to MML. In case of recommendations
made by 5 of the persons, they have specifically replied that it is an act
of the officials of MML and they had no role to play in fixing the price.
Since there is no contra evidence from the concerned that no other
pressure was brought on them, I will have to hold the concerned
Managing Directors, as officers responsible for the above mentioned
loss suffered by MML on this count, whatever be the effect of the
recommendatory letters, it had on their judgment making process
while making allotment at a cost less than the actual market price, as
mentioned above. The report of the Gaikwad team at table 10A of
Annexure-C clearly mentioned the rate of MMTC on the concerned
date when the allotment was made and the loss that is caused to the
MML. I do not think the MML could have sold any type of mineral ore
at a price lesser than that of MMTC which reflected the lowest market
price. Therefore, on this count, I cannot name those persons who made
recommendations, as persons responsible for the loss caused to MML,
however improper such recommendation may be, by the sale of iron
ore, fines or mud to persons/parties mentioned in the schedule of the


218
Gaikwad report, more so in the background of the fact that there is no
conduct rules governing this category of persons. However, the fact
remains that the MML has suffered loss of Rs.7,51,42,647/-.

26. As part of my recommendation, I would like to state that it is of
common knowledge that it has became a routine affair in the
administration that people holding high public offices make
recommendations in favour of a particular person or party, especially
for favourable consideration of their case. The general justification in
regard to this type of practices is that those persons who make
recommendations are, being elected representatives of the people have
a legal obligation to help people who are in need. But in a democratic
set up, such an act of persons holding high public offices can never be
accepted. In my opinion, in a democracy which proclaims equality to
every body, such practice of recommendations is per-se in violation of
the Constitutional guarantee of equality under Article 14 of the
Constitution of India. By making such a recommendations they are
influencing the officer concerned to take a decision in favour of a
particular party, which invariably affects the rights of another party.
Therefore, such practice is to be deprecated. (See Pancham Chand V/s.
State of Himachala Pradesh in (2008) 7 SCC 117) To prevent such
practice a code of conduct which is enforceable should be put in place.
This does not mean that such person cannot make any
recommendation in a deserving cases, where larger public interest is
involved like in the field of health care if the same is denied to any
person. But certainly such practice of making recommendations in


219
areas which has only commercial interest should be deprecated. I
would also recommend that any public servant, who bases his decision
in the course of his official act on the recommendations of any person
who is not authorized to do so in appointments, commercial
transactions and in cases where there is no public interest is involved
should be held guilty of misconduct. In this background, I take
support from the decision of the Hon’ble Supreme Court of India in the
case of PANCHAM CHAND V/S. STATE OF HIMACHALA
PRADESH (supra), wherein the Hon’ble Supreme Court has imposed a
fine of Rs.1 Lakh for interfering in the functioning of a statutory quasi
judicial authority. The basis of this judgment, certainly in my opinion,
applies equally to all other authorities, be they quasi judicial or not. In
this context, I think it is useful to refer to the observations of the
Hon’ble Supreme Court in another case viz., R.D. Shetty V/s. I.A.
Authority of India (AIR 1979 SC 1628) which reads thus:
“The Government cannot be permitted to say that it will give
jobs or enter into contracts or issue quotas or licences only in
favour of those having grey hair or belonging to a particular
political party or professing a particular religious faith. The
Government is still the Government when it acts in the matter
of granting largess and it cannot act arbitrarily. It is does not
stand in the same position as a private individual.”
27. CONCLUSIONS:-
While concluding my report on the affairs of MML, I would like
to comment that while the MML could have been a goose that could
have laid the golden eggs was converted into white elephant by the top


220
officials of MML throughout its existence, even when there was ample
opportunity to make considerable profit because of the spurt in the
international market, the failure to do so was because of the lack of
business acumen or may be for collateral considerations. It should be
noticed here that while during ‘China Boom’ many individuals became
billionaires, MML which had all the infrastructure continued to loose
money and was allowed to suffer loss even during this prosperous
period by its officials, either by entering into agreements with third
parties without keeping the interest of MML in mind or by not
collecting legitimate dues from 3
rd
parties or by doling out huge sums
by way of NPV which was not due to be paid by MML or by selling
minerals at rates lesser than the MMTC price resulting in huge
financial loss to MML. It is my recommendation that the Government
should immediately appoint an appropriate authority to recover the
loss suffered by MML and those amounts found to be due to MML, not
computed in this report for want of information, and also to initiate
necessary legal proceedings against the 3
rd
parties, from whom
legitimate dues have not been collected by MML. The above loss
caused to the MML should be recovered from the officers responsible
for such loss, besides initiating the Departmental Enquiry. The Report
of Gaikwad team at Annexure A shows the involvement of 3 retired
officers of MML who are also liable to this loss and the steps shall be
taken to recover the loss caused, besides the initiation of Departmental
Enquiry in accordance with the Rules applicable to them.



221
28. From the above facts it is clear that the manner in which the
MML has been entering into various agreements with third parties
shows that the concerned MDs while entering into agreements with
them have not safeguarded the interest of the MML and even at the
later stages like at the stage of renewal, the interest of the company has
been totally ignored, thereby huge loss have been suffered by the
company. The fact that the MML is an instrumentality of the State
being wholly owned by the Government of Karnataka is not in dispute.
Therefore, it had an obligation to look after the commercial interest of
the company, both while entering into agreement with other parties, as
also while selling the ores acquired by it. In these transactions, it ought
to have acted like a prudent businessman and no other factor except
the financial interest of the company could have prevailed upon the
management of the company, while entering into such
agreements/sales. In this context, it is appropriate to rely upon the
observations of the Hon’ble Supreme Court of India in the case of Ram
and Sham Company V/s. State of Haryana and others, the case
reported in AIR 1985 SC 1147, which reads thus:-
“12. Let us put into focus the clearly demarcated approach that
distinguishes the use and disposal of private property and
socialist property. Owner of private property may deal with it in
any manner he likes without causing injury to any one else. But
the socialist or if that word is jarring to some, the community or
further the public property has to be dealt with for public
purpose and in public interest. The marked difference lies in this
that while the owner of private property may have a number of
considerations which may permit him to dispose of his property
for a song. On the other hand, disposal of public property


222
partakes the character of a trust in that in its disposal there
should be nothing hanky panky and that it must be done at the
best price so that larger revenue coming into the coffers of the
State administration would serve public purpose viz. the welfare
State may be able to expand its beneficent activities by the
availability of larger funds. This is subject to one important
limitation that socialist property may be disposed at a price
lower than the market price or even for a token price to achieve
some defined constitutionally recognized public purpose, one
such being to achieve 553 the goals set out in Part IV of the
Constitution. But where disposal is for augmentation of revenue
and nothing else, the State is under an obligation to secure the
best market price available in a market economy. An owner of
private property need not auction it nor is he bound to dispose it
of at a current market price. Factors such as personal
attachment, or affinity kinship, empathy, religious sentiment or
limiting the choice to whom he may be willing to sell, may
permit him to sell the property at a song and without demur. A
welfare State as the owner of the public property has no such
freedom while disposing of the public property. A welfare State
exists for the largest good of the largest number more so when it
proclaims to be a socialist State dedicated to eradication of
poverty. All its attempt must be to obtain the best available price
while disposing of its property because the greater the revenue,
the welfare activities will get a fillip and shot in the arm.
Financial constraint may weaken the tempo of activities. Such
an approach serves the larger public purpose of expanding
welfare activities primarily for which the Constitution envisages
The setting up of a welfare State. In this connection we may
profitably refer to Ramana Dayaram Shetty v. The International
Airport Authority of India and Ors (1979) 3 SCR 1014 (AIR
1979 SC 1628):
……………………………………………………………………..
At one stage, it was observed that the Government is not free
like an ordinary individual, in selecting recipient for its largesse


223
and it cannot choose to deal with any person it pleases in its
absolute and unfettered discretion. The law is now well-settled
that the Government need not/deal with anyone, but if it does
so, it must do so fairly and without discretion and without unfair
procedure. Let it be made distinctly clear that respondent No. 4
was not selected for any special purpose or to satisfy ally
Directive Principles of State Policy. He surreptitiously
ingratiated himself by a back-door entry giving a minor raise in
the bid and in the process usurped the most undeserved benefit
which was exposed to the hilt in the court. Only a blind can
refuse to perceive it.” (Emphasis supplied)
If the people managing the affairs of the MML were to keep in mind
the above principles, then the finances of the company could have been
far better than what it is today. It is high time that the State also takes
notice of this fact and issue suitable directions to the people in
management of the MML to follow the above directions of the Hon’ble
Apex Court, atleast in future dealings of the MML.
Conclusions and recommendations in regard to this Chapter
have been made at appropriate places during my discussion in this
Chapter and same will be reproduced in the concluding chapter.


224
CHAPTER X

ALLEGATION OF IRREGULARITIES AND ILLEGALITIES IN
DE-RESERVATION AND ALLOTMENT OF DE- RESERVED
AREAS TO DIFFERENT APPLICANTS.

Another matter referred by the Government, in Government
order No. CI 164 MMM 2006 dated 12
th
March 2007, under section
7(2A) of the Lokayukta Act, to the Lokayukta for investigation, is as
follows:-
“……………………………………………….
(ii) The Government in its orders vide notifications No.
CI 16 MMM 2003 and No. CI 33 MMM 1994 both dated
15-03-2003, de-reserved for private mining an area of
11,620 square kms in the State, meant for State exploitation
/ mining by the public sector and notified the surrender of
an area of 6,832.48 hectares of prime iron ore bearing lands
respectively, which has paved way for distribution of public
assets to select private individuals/entities without regard to
their professional or technical or business background.

(iii) The entire exercise was undertaken in a manner so
as to benefit only a select few individuals/entities. The main
objectives behind de-reservation i.e. to encourage mining
based industries, to create more employment opportunities
in private sector, to attract private capital and professional
management for optimal use of State mineral resources,
were given a go by and allotments were made to the
applicants on considerations other than merit.
(iv)…………………….
(viii)………………….


225
Now therefore the Government of Karnataka
hereby refers the following issues to the Lokayukta for
thorough investigation and submission of report to the
Government;

(a) Various alleged illegalities, irregularities, events, issues
executive and other decisions set out in clauses (i) to (viii)
and to assess the quantum of losses to the Government
and to suggest remedial measures to undo such
irregularities and illegalities.………………
( b)………………………………………………
(c)……………………………………………….”

2. During 1960s to 1980s public sectors were expected to
play dominant role in the country’s economic development. In
furtherance of that policy by different notifications, the Government
of Karnataka reserved in 42 blocks about 10,340.12 square miles
(26,780.84 square kms) of area for exploitation by the Government
or Government undertakings like Board of Mineral Development of
Karnataka Government etc. Out of them 122.09 square miles (316.16
square kms) of area have been leased for mining. List of those 42
blocks with necessary particulars are given in the Table below:-



226
TABLE
RESERVED AREA

Sl.
No.
Reserved
Block No
Minerals Location
(District)
Extent
of the
blocks
reserved
(SQ.
Miles)
Extent of
the block
reserved
(Sq. Km)
Extent of
Mining
leases
sanctione
d (SQ.
Miles)
Sq.Km
Area
proposed
to retain
under
reservation
(SQ.Miles)
Sq.Km.
Area
proposed for
De-
reservation
SQ.Miles.
Remarks
1 2 3 4 5 6 7 8 9 10
1 Block
No. 1
Manganese
& Iron Ore
North
Kanara
1116 2890.44 (27.16)
70.34
(1088.84)
2820.09
Nil
2 Block
No. 2
Titani
ferrous, Iron
Ore
North
Kanara
154 398.86 Nil
Nil
(154.00)
398.86
Nil
3 Block
No. 3
Iron Ore North
Kanara
51 132.09 (0.15)
0.38
(50.85)
131.70
Nil
4 Block
No. 4
Manganese
& Iron Ore
Shimoga 314 813.26 (4.92)
12.47
(309.08)
800.51
Nil
5 Block
No. 5
Manganese
Ore
Shimoga and
Chickmagalu
r
78.57 203.49 (2.76)
7.14
Nil
Nil
(75.81)
196.34

6 Block
No. 6
Iron Ore Shimoga &
South
Kanara
253 655.27 (0.03)
0.07
(252.97)
655.19
Nil
7 Block
No. 7
Iron Ore Chikkamagal
ur
484 1253.56 (3.43)
8.88
(480.57)
1244.67
Nil
8 Block
No. 7(A)
Iron Ore -do- -do- -do- -do- -do- -do-


227
9 Block
No. 8
Titani
ferrous Iron
Ore and
Chromite
Shimoga 45.00 116.55 (0.31)
0.80
Nil
Nil
(44.69) 115.74
10 Block
No. 9
Titani
ferrous Iron
Ore and
Chromite
Shimoga 129.00 334.11 (3.22)
8.33
Nil
Nil
(125.78)
325.77

11 Block
No. 10
Iron Ore South
Kanara
412.00 1067.08 (17.78)
46.05
(394.22)
1021.02
Nil
12 Block
No. 11
Iron Ore South
Kanara
136.00 352.24 Nil
Nil
(136.00)
352.24
Nil
13 Block
No. 12
Iron Ore South
Kanara
471.00 1219.89 Nil
Nil
(471.00)
1219.89
Nil
14 Block
No. 13,
14, 15, &
17,
Iron Ore Bellary 96.00 248.64 (23.23)
60.16
Nil
Nil
(72.77) 188.47
15 Block
No. 16
Titani
ferrous, Iron
Ore
Hassan 75.00 194.25 (2.67)
6.91
Nil
Nil
(72.33) 187.33
16 Block
No.
18(A)
China Clay Hassan 314 813.26 (1.20)
3.10
Nil
Nil
(312.80)
810.15

17 Block
No. 18(B)
China Clay Shimoga 314 813.26 (0.07)
1.80
(313.93)
813.07

18 Block
No.
18(C)
Fire Clay Bangalore 78.57 203.49 (0.19)
0.49
Nil
Nil
(78.38) 203.00
19 Block
No. 19
Graphite Kolar 78.57 203.49 (0.08)
0.20
Nil
Nil
(78.49) 203.28


228
20 Block
No. 20
Garnet Kolar 78.57 203.49 Nil
Nil
Nil
Nil
(78.57)*203.49
*
*Already
De-
reserved
from the
reservati
on.
21 Block
No. 21
Asbestos Hassan 314.00 813.26 (1.43)
3.70
Nil
Nil
(312.57)
809.55

22 Block
No. 22
Magnesite Mysore 314.00 813.26 (1.77)
4.58
Nil
Nil
(312.23)
808.67

23 Block
No. 23
Feldspar Kolar 78.57 203.49 (0.88)
2.27
Nil
Nil
(77.69) 201.21
24 Block
No. 24
Feldspar Hassan 78.57 203.49 Nil
Nil
Nil
Nil
(78.57) 203.49
25 Block
No. 25
Vermiculite Hassan 78.57 203.49 (0.10)
0.25
Nil
Nil
(78.47) 203.23
26 Block
No. 26
Vermiculite Hassan 78.57 203.49 Nil
Nil
Nil
Nil
(78.57) 203.49
27 Block
No. 27
Pyrite Chitradurga 50.00 129.50 (1.60)
4.14
Nil
Nil
(48.40) 125.35
28 Block
No. 28
Chromite Mysore 48.00 124.32 90.72)
1.86
Nil
Nil
(47.28) 122.45
29 Block
No. 29
Limestone Chitradurga 116.00 300.44 Nil
Nil
Nil
Nil
(116.00)*300.4
4*
*Already
De-
reserved
from the
reservati
on.
30 Block
No.
30,31,32,3
3,34 &
35.
Limestone
And
Dolomite
Bijapur 181.10 469.04 (25.38)
65.73
Nil
Nil
(155.72)
403.31



229
31 Block
No. 36
Bauxite Karnataka
State
- - - - - - Whole
Karnatak
a State
reserved.
32 Block
No. 37
Magnesite Karnataka
State
- - - - - - Whole
Karnatak
a State
reserved.
33 Block
No. 38
Chromite Chitradurga,
Shimoga and
Chickmagalu
r
66 170.94 (1.80)
4.66
Nil
Nil
(64.20)
166.27

34 Block
No. 39
Chromite Mysore 17.8 46.1 Nil
Nil
Nil
Nil
(17.80)
46.10

35 Block
No. 40
Kyanite Mysore 1187.84 3076.5 (0.83)
2.14
Nil
Nil
(1187.01)
3074.35

36 Block
No. 41
Kyanite South
Kanara
2080 5387.2 (0.16)
0.41
(2079.84)
5386.78
Nil
37 Block
No. 42
Kyanite Mandya 972.82 2519.6 (0.20)
0.51
Nil
Nil
(972.62)
2519.08







230
3. In pursuance to the National Mineral Policy, 1993 announced by
the Government of India, as part of continuing exercise of economic
reforms, focus has shifted to provide opportunities and encouragement
to private sector in mining and the Government of India wanted the
State Governments to consider whether any of those reserved areas
could be de-reserved for faster development and thrown open for
exploitation by private parties. After receiving repeated letters from the
Central Government and a letter dated 10-02-1994 from the Director of
Mines and Geology (in short Director) the State Government initiated
action in file No. CI 33 MMM 1994 to consider de-reservation of
reserved lands. In a meeting with the then Minister for Mines Sri
D.A.Chinnappa held on 21-03-1994, among others, it was decided that
mining areas in reserved forest areas may be continued as reserved for
State exploitation and that decision was recorded by the Joint Secretary
in para 22 n.f. of the file. Relevant portion thereof reads thus:-
“2. Mining areas in reserved forest areas may be continued as
reserved for State exploitation wherever such reservations have
been made.
3. The details regarding the nature of the area (reserved forest
lands or revenue lands) proposed for de-reservation may be
furnished by the DMG for record.”
xxx xxx xxx
The above note was approved by Secretary -2 and
Secretary -1 noted as follows in para 24 n.f..-

“ As far as I remember the decision in the meeting was ,
(a) Extents required for public sector may be identified
and kept reserved;


231
(b) Extents covered by reserved forests continue to be kept
reserved;
(c) Other lands could be recommended for de-reservation;
Director for M&G was to furnish details on the basis of the
above after which approval of the Minister and if necessary of
Cabinet may be obtained before recommending to GOI. Minister
may please see before we take action as above.”
Above note was approved by the Minister in para 25 n.f. and the
Director was asked by letter dated 08-04-1994 to send the information
specified in the note of the Secretary-1 at para 24 n.f.

4. In pursuance to that letter the Director sent a reply dated 29-12-
1994. Two statements, one indicating the blocks proposed to be de-
reserved and another indicating the blocks proposed to be retained as
reserved, were enclosed to that reply. That reply states that “it is
decided that mineralized areas atleast in respect of iron, manganese, chromite
and lime-stone (steel grade) should still be kept reserved. Other than the above
reservation, it was felt that there may be need to de-reserve all other areas
except for areas where abundant forest wealth exist to ensure protection of
environment” but the letter does not indicate the nature of the lands in
individual blocks (whether reserved forest or revenue land) mentioned
in the two statements. The Director has, from time to time, sent many
letters to the Government on this subject, In none of them he has given
the nature of the land in individual blocks. He has gone on changing,
from letter to letter, the extent of lands to be reserved and de-reserved.
There was a change of Minister and a meeting was held under the
chairmanship of the new Minister Sri S.D.Jayaram on 19-04-1995 and


232
again on 20-08-1997. No definite decision was taken in the meeting
dated 19-04-1995 except asking the Director to send fresh proposal. In
more than one letter the Director has been asked to send fresh
proposals. Relevant portion of the proceedings of the meeting dated
20-08-1997 signed by the Minister (page 67 c.f.) reads thus.
“.c: c..c. . t .~¬ -:c., ¬.:c/ ¯.·, : .. ¬ .~. , · .~ ¬ t .. ,
t:c...¸., t: . = :::: :¯./ - ¯t .¬ / - . o- /oc¬ ..:c
·.¬.:c . ++,)))í- ÷ ,-... ¬ ¬ .: ¬ .. c:.¬ .¬ c.o./ t:^
...· c:^¬ c:^¬., :¬ c . t .~¬ -:c. ¬.:c/ ¯.· ¬.:. · .c
/ .¬ ·.~ ¬ ¯t .¬ .c.¬ ·.¬.:c. ¯))) ÷ ,-... ¬ ¬ .: ¬ ..
...· ... .-¬ ¬ ¬ .: ¬ .. ..c· ¬= ¬.:¬ .¬.¬ c¬.
..¬.:=¯· c::.: ..”

5. The decision taken in the above said meetings is reflected in the
letters of the Director to Government at pages 40 - 44 c.f. and at pages
104 -106 c.f. The relevant portion of the letter at pages 40-44 c.f. is as
follows;-
“In this connection during deliberations at Government level and
keeping in view the policy of the State Government to promote
industrialization based on mineral resources, especially in steel
sector, it is decided that mineralized areas atleast in respect of
iron, manganese, chromite and lime-stone (steel grade) should
still be kept reserved. Other than the above reservation it was
felt that there may be need to de-reserve all other areas except
for areas where abundant forest wealth exist to ensure
protection of environment.”

Relevant portion in the letter at pages 104-106 c.f. is as follows;-
“The de-reservation is proposed only for non forest areas and
non-mineralized zones keeping the forest areas intact under


233
reservation. Therefore there will not be any ecological imbalance
or environmental degradation due to the proposed de-
reservation.

De-reservation of areas is proposed both mineral and
area-wise. While forest areas have been reserved even in the
non-mineralized areas, strategic mineral bearing areas such as
iron, manganese chromite and lime-stone (steel grade)have been
retained under reserved category.”

After the meeting dated 20-08-1997 the Director was informed by letter
dated 29-11-1997 that his letters are not specific about the extent of the
lands to be de-reserved and to be retained as reserved. He was asked to
clarify the matter immediately, but the Government, in spite of
repeated reminders orally and in writing, could not get a reply till the
end of 2000. On 30-11-2000 the Government of India held a meeting
with State Government and on behalf of the State Government the
Director attended the meeting. Minutes thereof was sent to the State
Government by the Central Government on 04-01-2000. Among others,
relevant portion of the decision taken in the meeting is recorded in the
proceedings as follows.

“03. After detailed discussions, the following were decided:-
1. It was decided that for mineral iron ore and manganese,
there was no scope for de-reservation. Most of the mineral
bearing areas at present under reservation were in thick forest
areas and they are also ecologically fragile areas. The State
Government was not in favour of de-reserving these areas for
exploitation by private sector, since they would like to conserve


234
the minerals in these areas. The list of such areas is appended as
Annexure-1.

2. It was decided that the State Government would send a
detailed proposal for reservation of these areas under section
17A(1) of M&M (DR) Act 1957 to the Central Government;
who would thereafter take further action as per law.

3. The State Government desired to continue the reservation
in respect of 248.6 Sq.Km (96 Sq. Mile) in the Bellary region for
iron ore for exclusive State exploitation.

4. The mineral bearing areas which have been reserved for
titani ferrous iron ore, chromite, fire clay, graphite, garnet,
asbestos, magnesite, feldspar, vermiculite, pyrite, limestone,
dolomite, bauxite, kyamite etc. which are in the non-ecologically
fragile regions of the State are proposed to be de-reserved by the
State Government to enable the Private Entrepreneurs to apply
for mineral concessions in such areas. The list of such areas is
appended at Annexure-II. The State Government will de-reserve
these areas after observance of due process of law. The areas
which were reserved at the reference of the Central Government
or in consultation with the Central Government will be de-
reserved after due consultation with the Central Government.”

The file was sent to the Secretary on 17-04-2001. Secretary sent the file
to the then Minister with a hand written note (178 n.f.) which is almost
illegible or undecipherable. (I am not able to read the note made by the
Secretary). The Minister Sri A.Muniyappa discussed the matter with
the Director and on 19-05-2001 recorded his order, relevant portion of
which reads as follows,-


235
“l·)) ¯¬ .=: t c., / ~ ¬.:. .o.:: . :c:. , :¬ coc:/ ¬..:
:¯./ - ./ ÷ .=· c::.:.. ¯¬ .=: t c ¬ ·: ¬ . ¬.:. ¬....
t c.t / - .. ¬ c:..· c::.:.. ¯¬ .=: t ¬ ·: ¬ . c... ./ . ·c .¬
¬.:/ =·o. ¬.:. t .c¬ · t:=c ¬ .cc. . -: t:c/ -. ¬.: . :c:.:
¯¬ .=: t c. :: c c .o- /oc¬ :.:ct ¯)-ll-!)))c · . c...
: / ¬.t oc¬ ¯~=c../ - ./ ¬ c:..·¬ . -. ¬ -¬ t ./ . ·c .¬
Annexure I ¬.:. Annexure II / - .. ¬ c:..·c.: .. .
¬..:¬:^ MMDR-1957 t:c.. ¬ .:. MCR – 1960 :¬ c .c...
=/:/ c . t .¬ ¬ ¬ .: / - .. t::.c· .¬ ./ · t:=c ¬ ¬.: . IBM
:¬ c ¬ c :/ -. .c¬ . : c ¬ :c.¬ ¬. ¬t ¬:/ .: ¬ . t .c¬ · t:=c ¬
-: t:c/ - oc:/ ÷ .=· .¬ · ¬.c..¬ . =/:/ c . t::.c·.¬
¬ ¬ .: / - . .c .¬ t .~¬ -:c., ¬.:c/ ¯.· :¬/ - .¬:·.
t::.c·.¬ t .¬ -c ~ ¬ ¬ .: / - .. Forest Conservation
t:¬:¬.¬ ¬.:.c¬ -¬/ - .. ¬:/ c. .. t::.c·.¬ ./ ÷ .=·¬.
Annexure I c . .c.¬ t .¬ ¬ ¬ .: / - .. =/:/ c . .¬ c.o./ t
¯..¬., -¬/ - · .: ¬..: .o -c: ¬ -c ~ ¬ ¬ .: / -. :. ¬ :c.¬
¬ ¬ .: / - .. · ¬: .-c· ¬= ¬.:¬ . .t:^c.¬ -c: . . / ¬.. t
.c:¬., = ¬ ¬ .: / - . .c.... ·.¬ . ¬ ¬ .: / -:^c .¬¬ cc¬ =
¬ ¬ .: / - . :o.c·c.¬
l l! .: t
. c.c
l¯,l+,l¯,l¯
t .~¬
-:c.
.-:c º:.)) !+·.:+ (!¯.!¯)
:).l:
¯!.¯¯
! l¯ l:
Titani
ferrous
t .~¬
-:c.
¬:· . ¯¯.)) lº+.!¯ (!.:¯)
:.ºl
¯!.¯¯
¯ l+ l·c ÷¸.: t . ¬:· . ¯l+.)) ·l¯.!: (l.!:)
¯.l)
¯l!.·)
.· .~=¬ .. t:c·.¬ ¬ .:.c¬ -. t c – l cc¬ : / ¬. . –
c· ¬= ¬.:¬.¬ ./ t ¬. : / ¬.to-.. ·o.·¬ . :¬ cc¬ -.
...c.¬ :¯./ - .. .¬ c.o.^· .¬¬ . ¬ -¬ ·.: ¬..: ..
¬ ¯c ¬ .: / - .. -c ~.t c ~/o-·.¬ ./ t ¬ . : / ¬ .t o-.¬ .¬:^¬ .”



236
6. While sending a revised list of blocks to be continued as
reserved in the light of the orders of the Minister, the Director deleted
not only the blocks suggested by the Minister but also block 5
(containing manganese ore) which was not suggested by the Minister.
This aspect was not noticed by the Secretariat. The list prepared and
sent by the Director was placed before the Cabinet for approval. In
para 9(ii) of the cabinet note it is stated as follows:-
“In the instant proposal, it has not been proposed to de-reserve
thick forest areas or the ecologically fragile western ghats.
Annexure –I contains such areas and it is proposed to be
retained as ‘reserved’. The forest area proposed for de-
reservation along with non-forest area is that which bereft of
any forest cover.”
The lists suggested by the Director was approved by the Cabinet on 16-
12-2002 and orders reserving or de-reserving the blocks was issued on
15-03-2003.

7. The decision taken by the Ministers in the meetings held on 21-
03-1994 and 20-08-1997 and in the meeting with the Government of
India held on 30-11-2000 to continue forest areas and strategic mineral
bearing areas such as iron, manganese, chromite and lime stone (steel
grade) as reserved has not been modified subsequently in any meeting.
Even Minister Sri A.Muniyappa has not modified that decision in his
order in paras 179-181 n.f. dated 19-05-2001. In para 180 n.f., after
discussion with Director, the Minister took a decision to exclude blocks
13, 14, 15. 16, 17 and 18A. The excluded blocks 13, 14, 15 and 17 are in
Bellary district and are not only high grade iron ore bearing areas


237
(vide- the statement sent by the Director indicates this) but are also
thick reserve forest areas. The reason given by the Minister to de-
reserve them, in underlined portion of para 180 n.f. that they are not
forest areas and are “bayalu seeme” is totally opposed to facts. Block
No.5 which has been excluded by the Director (without the orders of
either the Government or the Minister) is manganese ore bearing area.
The concerned Minister and the Director who advised him in the
matter are responsible for this irregularity.

8. In the meeting held on 21-03-1994 the Minister wanted the
Director to furnish the details regarding the nature of the area
proposed for de-reservation i.e. whether they are forest lands or
revenue lands. No such details furnished by the Director is found in
the file. The Government also did not pursue the matter with the
Director to get those particulars. Without those particulars the
Government was not in a position to independently satisfy itself
whether any of the lands proposed for de-reservation was forest land
or not. In the statements sent by the Director this information is not
given in respect of any blocks or land. In all the letters he has made a
bald statement that forest areas are excluded from the lands proposed
for de-reservation. On this aspect i.e. nature of the land, the
Government must have been guided by that statements made by the
Director. A perusal of the plans of some of the blocks proposed for de-
reservation indicates that the said statement is opposed to facts as
shown below .-



238
Block proposed Forest areas therein
for de-reservation
`
Block - 5………. Kukwadi Ubrani State forest and
Hadikere East State forest
Block 8………… Jedikatte Reserve forest and
Minor forest.
Block 9……….. Hadikere East State forest and
Kukwadi Ubrani State forest
Blocks-13,14,15 and 17…Ramgad Reserve forest, Joga
Reserve forest, Gunda Reserve
Forest, Hospet Reserve forest
and Donimalai Reserved forest.
Block -18C………………Gullahalli State forest and
Nandagudi State forest.
Block 22……………….. Bolegoudanakatte Tiger Reserve
Reserve forest and Chikkanahalli
Preserve forest.
Block24……………….. Kolalbore State forest
Block 25………………. Gowdanagere State forest.
Block 27………………. Jogimatti State forest.
Block 29 ……………… Kudure Kanive Kaval State forest.
Lakkahalli State forest
Block 40………………. Bolegoudanakatte Tiger Reserve
Reserve forest and Chikkanahalli
Preserve forest.

It is clear from the above particulars that forest lands including
reserve forest has been de-reserved. Approval for de-reserving them
has been obtained without verifying the nature of the land and by
wrongly informing the Cabinet that “it has not been proposed to de-reserve
thick forest areas…………… the forest area proposed for de-reservation along
with non-forest area is that which is bereft of any forest cover”. Correct and
full information about nature of the lands proposed for de-reservation
has not been placed before the Cabinet. Government never intended to
de-reserve reserve forests and strategic mineral bearing lands but such
lands have been de-reserved .


239
9. In the meeting held on 20-08-1997 with the Minister it was
decided not to de-reserve blocks having iron ore, manganese, chromite
and lime stone (steel grade). That decision was reiterated in the
meeting held on 30-11-2000 with the Government of India but the then
Minister, on 19-05-2001, after discussion with the Director ordered de-
reservation of block Nos. 13, 14, 15, 16, 17 and 18A which are very rich
in iron ore, china clay etc. stating as in the underlined portion of para
180 n.f. extracted in para 5 above. That order is contrary to the
decisions taken in the meetings with the then Ministers held on
21/03/1994 and 20-08-1997 and with the Government of India on 30-
11-2000. The Minister did not over rule the decisions taken by the
earlier Ministers and in the meeting with the Government of India.
That order was made without proper verification of the facts and
detailed examination of the matter. Decision was taken after discussion
with the Director and without discussion with the Secretary.

10. The Cabinet Section sent the file to Secretary Forest Department
on 28/09/2002 for remarks on the statement in the Cabinet note that
“de-reservation is proposed in forest areas which have lost vegetative cover”.
Secretary, Forest Department made a note in paras 232 and 233 n.f. and
sent the file to Principal Secretary on 04-10-2002. Para 233 n.f. made by
him reads thus.- “Forest areas may not be included in the proposed de-
reservation of mineral bearing areas. As and when a forest area is considered
absolutely necessary for mining it may be examined on merits for diversion for
non-forest activities under the E.C .Act.” Principal Secretary, Forest
Department sent back the file asking for another file on 10-10-2002 and


240
the Secretary sent the file along with the other file (it does relate to this
subject) to the Principal Secretary on 11-10-2002. In para 236 n.f. he
observed as follows. “The subject matter of this file is a proposal for de-
reservation of mineral bearing areas. As proposed at para 233 pre page, forest
areas may not be included in the proposed de-reservation”. He approved the
note made by the Secretary in para 233 n.f. and sent the file to the
Minister of State and Minister for Forest, who approved the notes made
by the Principal Secretary. The notes made by the officers of the Forest
Department does not clearly indicate whether there is forest in any of
the blocks proposed for de-reservation and if there are forest areas
whether they have lost vegetative cover and whether the averment in
the cabinet note is correct or not. On a perusal of the movement dates
of the file it is clear that the Forest Department has not obtained any
report from the field officers about the nature of the areas proposed for
de-reservation. The information wanted by the Cabinet section was
whether the statement in the Cabinet note that de-reservation is
proposed in forest areas which have lost vegetative cover is factually
correct. That information has not been furnished by the Forest
department. Cabinet section did not pursue that matter further.
Without getting that information the subject was placed before the
Cabinet and the proposal was approved by the Cabinet. The Cabinet
has not been informed all relevant and necessary facts. De-reservation
order as such is not found in the file but a notification dated 15-03-2003
informing the public that those lands are available for allotment to the
public is found in the file It is clear from the above that though the
considered decision of the Government was not to de-reserve forest


241
land and strategic mineral bearing areas like iron ore, manganese,
chromate and lime stone (steel grade), that aspect was not properly
verified and reserve forests and State forests and strategic mineral
bearing areas have been de-reserved. The officers of the C&I
Department, Cabinet section and the Secretary and Principal Secretary
Forest Department who dealt with the file are responsible for it.
Officers and public servants responsible for allowing de-reservation of
the mining areas which fall within the forest area will be identified and
named in the next part of the Report.

11. In notification dated 12
th
March 2007 the Government required
the Lokayukta to investigate illegalities and irregularities in the
distribution of de-reserved lands to persons who have applied for
mining leases. The scope of investigation as per Notification dated
12/3/2007 is for the period from 1/1/2000 to 22/7/2006. It is stated
that no mining lease has been granted till 2006. The scope of
investigation has been extended till 9/9/2008 by the Government and
hence illegalities and irregularities in the distribution of deserved lands
will be investigated and findings in that regard will be given in the
next part of the Report.

12. According to the Government order dated 12-03-2007 de-
reservation of reserved areas was ordered in another file i.e. file No. CI
16 MMM 2003 also. The said file was not available. Hence it is not
possible to examine the same. According to the recent news paper
reports mining leases granted in reserve forests in de-reserved areas
have been quashed by the High Court.
CHAPTER XI

EVALUATION OF CASES RELATING TO ILLEGAL TRANSFER
OF MINING LEASES

One of the matters referred by the Government of Karnataka
in their Order No. CI 164 MMM 2006 dated 12
th
March 2007 for
investigation and Report under Sec. 7(2A) of the Lokayukta Act, is
to fix responsibility and initiate suitable action against all public
servants for various acts of omission and commission leading to
various illegalities in transfer of leases from one lease holder to
another.

2. Transfer of Mining leases are governed by Rules 37, 37A and
46 of the M.C Rules framed under the M&M (D&R) Act. The said
Rules read thus:-

“37. Transfer of lease:- (1) The lessee shall not, without the
previous consent in writing of the State Government and in
the case of mining lease in respect of any mineral specified in
Part A and Part B of the First Schedule to the Act, without
the previous approval of the Central Government –

(a) assign, sublet, mortgage or in any other manner,
transfer the mining lease, or any right, title or interest
therein, or

(b) enter into or make any bonafide arrangement, contract
or understanding whereby the lessee will or may be
directly or indirectly financed to a substantial extent
by, or under which the lessee’s operations or


243
undertakings will or may be substantially controlled by,
any person or body of persons other than the lessee.

Provided further that where the mortgagee is an institution
or a Bank or a Corporation specified in Schedule V, it shall
not be necessary for the lessee to obtain any such consent of
the State Government.

(1A) The State Government shall not give its consent to
transfer of mining lease unless the transferee has accepted all
the conditions and liabilities which the transferor was
having in respect of such mining lease.
(2) Without prejudice to the provisions of sub-rule (1) the
lessee may, transfer his lease or any right, title or interest
therein to a person who has filed an affidavit stating that he
has filed an up-to-date income-tax returns, paid the income
tax assessed on him and paid the income tax on the basis of
self-assessment as provided in the Income Tax Act, 1961(43
of 1961), on payment of a fee of five hundred rupees to the
State Government:
Provided that the lessee shall make available to the transferee
the original or certified copies of all plans of abandoned
workings in the area and in a belt 65 meters wide
surrounding it ;
Provided further that where the mortgagee is an institution
or a Bank or a Corporation specified in Schedule V, it shall
not be necessary for any such institution or Bank or
Corporation to meet with the requirement relating to income
tax ;


244
Provided further that the lessee shall not charge or accept
from the transferee any premium in addition to the sum
spent by him, in obtaining the lease, and for conducting all
or any of the operations referred to in rule 30 in or over the
land leased to him;
(3) The State Government may, by order in writing
determine any lease at any time if the lessee has, in the
opinion of the State Government, committed a breach of any
of the provisions of sub-rule (1) or sub-rule (1A) or has
transferred any lease or any right, title or interest therein
otherwise than in accordance with sub-rule (2);
Provided that no such order shall be made without giving the
lessee a reasonable opportunity of stating his case.
37A. Transfer of lease to be executed within three
months. – Where on an application for transfer of mining
lease under rule 37, the State Government have given
consent for transfer of such lease, a transfer lease deed in
Form O or a form as near thereto, as possible, shall be
executed within three months of the date of the consent, or
within such further period as the State Government may
allow in this behalf.

xxxx xxxx xxxx
xxxx

46. Transfer or assignment. – (1) No prospecting licence
or mining lease or any right, title or interest in such licence
or lease shall be transferred to a person unless he has filed an
affidavit stating that he has filed an up to date income tax


245
return, paid the income tax assessed on him and paid the
income tax on the basis of self-assessment as provided in the
Income Tax Act, 1961( 43 of 1961).
(2) No prospecting licence or mining lease or any right, title
or interest in such licence or lease in respect of any mineral
specified in the First Schedule to the Act shall be transferred
except with the previous approval of the Central
Government.”

3. Records relating to 22 cases were considered. Out of which in
the following 4 cases illegalities were found.

(1) Transfer of Mining Lease No.2370 for White Quartz in
R.S. No.39, Thippenahalli Village, Madhugiri Taluk, Tumkur
District over an extent of 2.02 Hectare.

Transferor : Sri T. Sharat Babu

Transferee : M/s. Maharishi Melthems (P) Limited.

Sri Sharat Babu and M/s. Maharishi Melthems Private
Limited, on 17/1/2004 applied to the Director of Mines and
Geology for transfer of M.L. No.2370 in favour of M/s. Maharishi
Melthems Private Limited. The transfer was approved by the
Government of Karnataka in Order No. CI 30 MMM 2004 dated 17
th

March 2004. Transfer deed was executed on 27/03/2004. The files
do not speak about the registration of the said document. There is
no evidence in the files regarding registration of the transfer deed as


246
required by Rule 37A of the Rules. According to Rule 37A of M.C
Rules, such registration must be done within 3 months of the
execution of the transfer deed. That period has expired long back.
The Director of Mines and Geology has not taken any action in the
matter. The Rules are silent about the consequences of not
registering the transfer deed as required by Rule 37A. To that extent
the transfer deed is defective.

(2) Renewal and Transfer case of Mining Lease No.1742
(New No.2342) for limestone over an extent of 111.30 Hectare in
parts of Kappanayakanahalli and other villages of Hosadurga
Taluk, Chitradurga District.
Transferor : M/s. Mysore Minerals Limited.
Transferee : M/s. Madras Cements Limited.

(a) The Mining Lease No.1742 held by M/s. Mysore
Minerals Limited, a Public Sector undertaking, over an extent of
918.65 hectare for Limestone and dolomite in parts of Mathod,
Kappanayakanahalli, Tarikere, Balenahalli and other villages of
Hosadurga Taluk, was to expire on 7
th
April 2001. The Principal
Secretary to the Government of Karnataka, Department of Forests,
Ecology and Environment advised M/s. Mysore Minerals Limited
to surrender the Forest Area of 813.65 hectare and apply for renewal
for the balance area of 105 hectares. Accordingly, M/s. Mysore
Minerals Limited filed an application for renewal on 3
rd
April 1999
for 105 hectare. The Director of Mines and Geology by Notification


247
No. Director of Mines and Geology/62/MML/ 99/14991-97 dated
31.12.2001/03.01.2002 sanctioned renewal of mining lease over an
extent of 111 hectare. Renewed lease deed No.2342 was executed on
28
th
March 2002.

(b) When the application for renewal was pending the
then Minister for Mines and Geology Sri V. Muniyappa had
reportedly sent a note bearing No. Director of Mines and
Geology/1184/99-2000 dated 7/2/2000 advising M/s. Mysore
Minerals Limited for surrender of M.L. No.1742. Copy of the note is
not forthcoming in the file. The Board of Directors opined that the
cost of development of the mine incurred by M/s. Mysore Minerals
Limited was to be assessed and to be recovered from the Cement
Company before considering surrender of the lease. The Technical
Consultancy Division of M/s. Mysore Minerals Limited evaluated
the development cost at Rs.3,66,95,515/- for the entire area of 918.65
hectares. However, after discussion in a meeting held in the
chambers of the Hon’ble Minister for Mines and Geology on
2/3/2001, it was decided to get the infrastructure cost evaluated
through a neutral assessor agreed to by both the parties. The
neutral assessor evaluated the cost at Rs.46,78,257/- in respect of
111.30 hectares of leased land. The matter was placed before the
232
nd
Board Meeting of M/s. Mysore Minerals Limited held on
10/5/2001. The Board decided that surrender of lease could be
considered after collecting Rs.60 Lakh from M/s. Madras Cements
Limited. The Board further resolved to authorize the Managing


248
Director to move the Government to approve the transfer of lease
No.1742 in favour of M/s. Madras Cements Limited.

(c) In compliance to the said decision, the transferor and
the transferee applied for transfer of M.L. No.2342 (New Number)
held by M/s. Mysore Minerals Limited in favour of M/s. Madras
Cements Limited. The Government of Karnataka in their order No.
CI 127 MMM 2001 dated 7/6/2002 approved the transfer and the
transfer deed was executed on 10/7/2002.

(d) Till the renewal of the lease by the order of the Director
dated 31.12.2001/3.1.2002 the old lease continued in force. The
M&M (D&R) Act and the M.C Rules do not provide for transfer of a
portion of the lease. This aspect is clear from the Model Form of the
deed of transfer at Form ‘O’ of Schedule I to the M.C Rules. Hence
the application for transfer of a portion of the lease made earlier to
the date of renewal is not valid in law. This irregularity is
committed in this case. However, the transfer of the lease was
approved by the Government after the renewal of the lease.

(3) Transfer of Lease M.L. No.1975 for Manganese,
Manganese –dioxide, Dolomite, Limestone, Iron ore, clay and ochre
over an extent of 320 acre in R.S. No.84 of Kondli Village and R.S.
No.89 of Mudalapalya of Gubbi Taluk, Tumkur District.


Transferor : Sri B.R. Amar Singh
Transferee : M/s. Matha Minerals Private Limited.


249

The transferor and transferee filed applications dated 29
th
August
2002 respectively to the Secretary to Govt. of Karnataka, Commerce
and Industries Department through the Director of Mines and
Geology requesting grant of permission for transfer and acceptance
of the subject lease. As on the date of filing the application (29
th

August 2002), M/s. Matha Minerals Private Limited were yet to be
incorporated as a Company. They were incorporated on 2
nd

September 2002 vide CIN No. UO 1429 KA 2002 PTC 03094. Sri B.S.
Puttaraju who filed the letter of request as a Director of the
Company on 29/8/2002 was authorized to discharge the duties as
Director only on 16/10/2002. In the circumstances, the letter of
request filed by Sri S.B. Puttaraju on behalf of M/s. Matha Minerals
Private Limited on 29/8/2002 as a transferee was invalid. In spite
of this infirmity, the Director of Mines and Geology Dr. M. Basappa
Reddy forwarded the applications recommending transfer of M.L.
No.1975 in favour of M/s. Matha Minerals Private Limited.

The Govt. of Karnataka in their letter No. CI 93 MMM 2002
dated 14
th
November 2002 sought clarification from the Director of
Mines and Geology about the amount due to the Government by the
transferor and the action taken by the Department of Mines and
Geology over the report of the Comptroller and Auditor General
(CAG) for the period ending 31
st
March 2000, wherein there was an
observation about the recovery of the value of manganese ore
illegally exploited from M.L No.1975. The Government also opined


250
that the transfer of mining lease be considered only after the
submission of compliance report and its acceptance by CAG of
India.

The Director of Mines and Geology made a counter
recommendation stating that amount of Rs.53,051/- due to the
Government by the lessee would be recovered from the transferee
before the transfer if such an order is made by the Government and
the amount relating to the value of manganese ore illegally
extracted as observed by the CAG would also be recovered form the
transferee. He further requested the Government to accord sanction
for transfer of subject mining lease.

On 24.12.2002, the transferor made a revised request to permit
him to transfer the subject mining lease in favour of a Company by
name M/s. Shivasandra Minerals Private Limited. The Director of
Mines and Geology ignored the revised request and in the
meanwhile, the Govt. of Karnataka vide their order No. CI 93 MMM
2002 dated 28/1/2003 accorded approval for transfer of Mining
Lease No.1975 in favour of M/s. Matha Minerals Private Limited.
Transfer deed was executed in post-haste on 29/01/2003. The
revised application filed by Sri B. Amar Singh and M/s.
Shivasandra Minerals Private Limited dated 12.12.2002 with inward
No.13563 dated 23/12/2002 of the Department of Mines and
Geology was returned on 11.02.2003/ 04.03.2003 by the Director of


251
Mines and Geology along with draft for Rs.500/- paid towards the
transfer fee.

The transferor Sri B.R. Amar Singh died on 25
th
June 2003.
His widow filed W.P No. 15378/2004 before the Hon’ble High Court
of Karnataka questioning the validity of Govt. Order No. CI 93
MMM 2002 dated 28/1/2003. The Writ Petition was dismissed by
the Hon’ble High Court.
The transfer application and the process thereon had several
deficiencies as listed below:-

(a) As on the date of filing the applications for transfer,
(29/08/2002) the transferor firm had not yet been incorporated.

(b) Sri B.S. Puttaraju who signed as the authorized representative of
the transferee was vested with such powers only on 16/10/2002
subsequent to the date of filing the letter of request on
29/8/2002.

(c) In the said context, the notarized affidavit and letters of request
as transferee filed by Sri B.S. Puttaraju on 29/8/2002 are invalid.

(d) While replying to the letter of objection dated 14/11/2002 of the
Govt. of Karnataka, the Director of Mines and Geology mis-
communicated the amount due according to the report of CAG.

(e) When the Government insisted recovery of the amount due
being the value of illegally mined manganese ore by the lessee


252
as observed in the CAG Report, the Director makes a
conditional recommendation for transfer.

(f) The Director of Mines and Geology suppressed to bring it to the
notice of the sanctioning authority the particulars relating to the
revised application dated 24/12/2002 filed by the transferor in
favour of M/s. Shivasandra Minerals Private Limited.

(g) The Govt. of Karnataka while approving the request for transfer
vide No. CI 93 MMM 2002 dated 28/1/2003 mixed up issues
and incorporated Rs.53,051/- as the amount recoverable
towards CAG observation on revenue receipts. CAG
observation/objection relating to a sum of Rs.2507.74 Lakhs
being the value of manganese ore illegally mined by Sri Amar
Singh has been ignored. Provision should have been made in
the transfer deed about recovery of that amount or collection of
that amount before approving the transfer if the objection raised
by CAG is not explained to the satisfaction of CAG.

(h) Without resolving the observation (Audit Objection) of CAG the
Director of Mines and Geology recommended the proposed
transfer, the Government approved the transfer and the Director
permitted the execution of transfer lease deed in post-haste
(Government sanctioned transfer on 28/1/2003, transfer deed
was executed on 29/1/2003). Value of the illegally mined
manganese ore is an amount legally due to the Government.


253
Government letter dated 14/11/2002 mentions about this
amount. It indicates that Government was aware of the CAG
Report, if the objection raised by CAG is not explained to his
satisfaction both the then Director and the officers of the
Government who took part in the approval and execution of the
transfer deed are liable to make good that amount.

CONCLUSION:- Ignoring the CAG observation and permitting
transfer of the lease without explaining the objection of CAG to his
satisfaction or providing for the recovery of the amount objected to
by the CAG is improper on the part of the Director and the Govt. of
Karnataka. Loss suffered thereby must be recovered from the
concerned persons in the Director’s office and in the Government
who are responsible for the approval and execution of the transfer
deed.

(4) Transfer of Mining Lease No.2353 for Manganese, Iron
Ore and China Clay over an extent of 12 Acre (4.86 Hectare) in R.S.
No.37 of Sondenahalli, Chikkanayakanahalli Taluk, Tumkur
District.
Transferor : M/s. Mineral Enterprises (P) Limited
Transferee : M/s. Teja Works.

The M.L. No.1061 was renewed for a period of 20 years with
effect from 3/12/1991 vide Govt. Order No. CI 152 MMM 98 dated
22/8/2000. Renewed lease deed was executed on 10/6/2002 as


254
M.L. No.2353. Registration of the transfer deed was refused by the
Sub-Registrar, Chikkanayakanahalli on technical grounds. Further
status regarding registration of the lease deed is not forthcoming in
the file.

M/s. Mineral Enterprises, the transferor and M/s. Teja
Works, the transferee applied for transfer and acceptance of M.L.
No.2353 on 16/12/2003 along with documents as specified under
Rule 37 of M.C Rules. The transfer request was recommended to the
Govt. of Karnataka by the Director of Mines and Geology. The
Govt. of Karnataka in their order No. CI 130 MMM 2004 dated
15/2/2005 accorded sanction for transfer of ML No.2353. The
transfer deed was executed on 13/6/2005 i.e. after a lapse of 3
months and 29 days. As per Rule 37A of M.C Rules, the transfer
lease is to be executed within 3 months from the date of the order
approving the transfer or within such further period as the
Government may allow in this behalf. The file does not speak of
any extension of the period. Rule 37 A is silent about the effect of
non-execution of the transfer deed within the period specified
therein. In the circumstances, the transfer deed is defective to that
extent.

The responsibilities in regard to the irregularities in the above
cases will be fixed and persons responsible will be named in the
next part of the Report.
CHAPTER XII

CONCLUSIONS, SUGGESTIONS AND RECOMMENDATIONS

From the facts recorded already in this report, I have noted very
many shortcomings, illegalities and irregularities in the mining
activities in the State of Karnataka with specific emphasis on Bellary
District. Though, investigations have been made as to this type of
activities in the districts of Chitradurga and Tumkur also, details in this
regard are not very elaborate. Even in regard to Bellary District, my
team could not inspect and investigate all the mines situated in the said
District. Hence, this report reflects the shortcomings, illegalities and
irregularities with specific reference to some of the mines visited by me
or my team. Therefore, this part of the report will comment on what
has been noticed by me and by my team during inspection of the areas
visited by us. Though the type of shortcomings, illegalities and
irregularities are likely to be common, in other areas also, a more
detailed report in regard to those areas and mines to which no
reference has been made in this report, will be made separately in the
next part of the report, which would also cover the period upto 2008.

(i) Illegality and Irregularity in grant of lease

The illegalities and irregularities in the mining sector starts from
the very beginning, that is at the stage of granting of mining lease itself.
Though the law requires the licensing authority i.e. the State to be
satisfied as to the areas sought to be granted on lease for mining, both
as to its actual area and location, in reality, it does not always happen.


256
I have noticed in most cases where particulars of the area sought for
mining are mentioned in the application for grant of lease, but the same
is factually not correct. The same though has to be cross-checked and
inspected by the concerned officials of the Department of Mines and
Geology, Forest, Revenue, as the case may be, the said exercise is not
properly done. Normally, these reports are prepared not by visiting
the area mentioned in the application and cross-checking the same with
the local records, but, by sitting in their respective offices. Even the
applicants very often do not even do preliminary prospecting to find
out whether mineral sought to be excavated by them is really available
in the area sought for lease by them or whether scientific and
economically viable mining is possible in these areas. There are cases
where mining applications are made without even knowing the
existence of the area sought for mining. Leases are sought only with a
view to hold a mining licence and then to misuse the same by using the
said document for doing illegal mining elsewhere. This type of non-
verified grant of mining lease gives rise to illegal mining in gomala
land, forest land, it also gives rise to disputes between different lease
holders. Therefore, there is a need for a proper verification system
with mandatory spot inspection and demarcation and marking of the
boundaries of the lands sought for mining in conformity with the
survey reports, land records and other relevant documents, available
with the local officials concerned. There should be periodical
inspection by superior officers to keep a check on the mining activities.
Lack of such checking is noted by me in this report earlier, as seen
during my visit to the three districts. Local authorities should also be


257
held responsible for preventing illegal mining, especially the forest
officials who either due to negligence or in collusion, aid and abet
illegal mining activities in the forest area. This procedure could be time
consuming, but, it must be done in the interest of State as well as in the
interest of conducting scientific mining activities. Though most of
these suggestions find place in the statute itself, it is not being adhered
to, so, a mechanism which makes this procedure compulsorily adhered
and failure made punishable should be evolved.

(ii) Protection of forest lands from illegal mining

Wherever the application for grant of mining in forest area is
sought and feasible report is prepared by Forest Department, same
should be cross-verified, because, I have come across very many
instances of applicants producing false certificates, as to the nature of
land, very often in collusion with the concerned officials. In many
cases, where holder of mining lease or even others who do not have
any mining lease, indulge in mining in forest areas, the officials
concerned have not taken any steps to prevent these illegal activities.
Such officials should be taken to task. I have also noticed that apart
from illegal mining activities in the forest area, large extent of forest
land is also used for construction of roads and for dumping mineral
waste. This especially happens when the mining leases are granted
near about the vicinity of the forest area, though, in such areas, the law
requires a buffer zone to be created between the forest boundary and
the land where mining is permitted, these buffer zones in very many


258
cases have disappeared or have been misused. Immediate action
should be taken to inspect all mining activities permitted in all forest
area and clear the buffer zone from any type of activity, except to
prevent the misuse of forest.

(iii) Grant of stock yard licence

During my visit to the three districts, I have noticed many
irregularities in the grant of stock yard licences. Though there are
sufficient laws controlling the grant of such licences, none seems to
have followed the requirement of these laws, while permitting or
granting stock yard licences. In my note made during my visit to the
districts referred to hereinabove, I have specifically referred to a case of
ignorance exhibited by some of the officials as to the applicability of
various laws while granting stock yard licences. (See page 50 – 53 of
this Report). The cases of M/s Lakshmi Minerals, Muneer Enterprises,
Kineta Minerals and Metals Limited and Sri Sai Krishna Minerals
Limited, which are situated in the road connecting Hospet with Sandur
are all examples of such stock yards which are contrary to the law.
There is a need for examining the licence already given to stock yards
and if illegalities such as those noticed by me in my report hereinabove
are found, then, the licence should be revoked and action should be
initiated against the concerned officers.

(iv) Illegality in transportation of mineral
Because of the ‘China boom’, between the period 2004 and 2006,
there is evidence to show that in the district of Bellary alone, four to


259
five thousand lorries carrying mineral are plying to and fro from
mining head to various transportation points like, railway station, sea
port, etc. It is a well established fact that almost all lorries carrying
mineral are carrying load far in excess of the permissible limit.
Consequently, all roads used by these vehicles including National
Highways have been practically rendered unmotorable, mainly
because of the fact of over-loading, and also because of the increase in
density of this type of vehicles. So far as over-loading is concerned, all
concerned authorities like the Motor Vehicle Department officials,
Police officials are hand in glove with the transport operators and mine
owners. The over-loading and the frequency of vehicles not only
damages the road, they are also responsible for large number of fatal
accidents. Therefore, there is a need to provide for check points with
sufficient number of weigh bridges and compulsory fixing of G.P.S.
equipment in these lorries to keep a control over activities of these
vehicles, especially the over-loading. Government should also in
consultation with Central Government consider the possibility of
restricting the number of mineral carrying vehicles that could ply at a
given point of time. The Motor Vehicles Act also requires suitable
amendment to make the offence of over-loading more stringent. The
Competent Authority should also think in terms of amendment to
M&M (D&R) Act to empower the Courts or Tribunals to confiscate the
vehicle or suspend the way permit for a suitable period, so that over-
loading can be discouraged. The present system of compounding of
offences under the M&M (D&R) Act encourages officials as well as
offenders to indulge in more and more illegal acts, because the


260
maximum compounding fee is Rs. 25,000/- only. This is not a
deterrent compared to the value of mineral which is the subject matter
of the offence. The provision for compounding itself should be done
away with. The provisions as is found in the Forest Act for seizure and
impounding of not only materials found in the vehicle, but, also of the
vehicle itself with punishment of imprisonment to the offenders should
be introduced in M&M (D&R) Act. Without such serious consequences,
it would be difficult to control the illegal mining.

(v) Introduction of new transport permit system
At present, transport permits are issued by the Mines and
Geology Department for bulk quantity which are known as bulk
permits, which can be used more than once to transport the total
quantity mentioned in the permit, normally within a period of 30 days.
In regard to minerals mined from forest area, Forest Department also
gives a transport permit in form No. 31 which along with the bulk
permit is the document required to be carried by the transporter. The
normal practice in regard to the forest permit is that a signed and
sealed book-let containing 50 to 100 permits, leaving all the columns
blank are issued in advance to the transporter, without the name of the
mining lease holder, quantity of the mineral being transported and
vehicle number etc. being mentioned. There are various means by
which this permit can be misused and is being misused. Even bulk
permits issued by the Mining Authorities are being misused to carry
much more than permitted bulk quantity and this type of permits are
used for over-loading illegally mined ore along with legally mined ore,


261
thus, depriving the State of the minimal revenue that it gets by way of
royalty. When this was brought to my notice, I had called a meeting of
transporters, mine owners and the concerned officials and discussed
the idea of having one permit for one vehicle for one trip with a
maximum transport duration of seven days which itself was a long
period. After discussion with them, the Mining Department came out
with a permit with a hologram and computer bar-code which permits
would require the name of the transporter, vehicle number, the
quantity being transported and destination to be filled in the said
permit. At the end of that trip, the said permit would be taken
possession by the officials, so that it cannot be reused. Considering the
suggestion made by me, Government had brought this into force, but,
some aggrieved transporters have challenged this system and have
obtained a stay order from the High Court, hence the old system
continues. Therefore, I recommend that necessary steps shall be taken
by the Government to move the Court for vacation of the stay order
and introduce a fool proof permit system.

(vi) Damage done to the environment and water bodies

In the course of this report, I have referred to the damage that is
caused to the environment and water bodies, not only in the
surrounding areas where mining activities are taking place, but also en-
route of transportation. The damage en-route is mainly because the
transportation of ore is done in open bodied vehicles and during
transportation mineral dust fly out and settle down in the vegetation


262
and water bodies, as also on other properties, because of which natural
vegetation and water bodies get polluted. There is material to show
that the district of Bellary which was once famous for many herbal
plants, has now been deprived of such vegetation. Therefore, if
transportation is unavoidable, then, such transportation should be
permitted only in close bodied vehicles.

(vii) Economics of mining in Karnataka
Mineral are not re-generating material. Once an ore is extracted
from earth, it is lost for all times to come. Research done in Karnataka
indicates that the deposit of iron ore in this State is only sufficient to
last in an ordinary situation for about 25 to 30 years. Therefore, if the
need of posterity is to be protected, then there should be a limit on the
quantity of iron ore to be mined at any given time. In this background,
a question arises whether it is prudent for the State to permit the export
of these minerals without thinking of posterity. Even economically
speaking, one can see that State is not a gainer from mining. Taking
iron ore as an example, it fetches an income to the Government of
Karnataka by way of royalty ranging from Rs. 16/- to 27/- per MT
depending upon the quality of the ore. During the peak period
between 2004 and 2006, the export price was even in the range of Rs.
6,000/- to 7,000/- per M.T. Even during the lean period, the export
price was between Rs. 1,500/- to Rs. 2,000/- per M.T. In the reference
that is made to me by the Government, it is mentioned that the
expenditure to extract one M.T. of iron ore is about Rs. 150/-, to which
even Rs. 250/- per M.T. is added as transportation cost and taking the


263
maximum of Rs. 27/- as royalty and Rs. 150/- as the extraction charge,
the total would come to Rs. 427/- per M.T. and even if you take the
minimum export price of Rs. 1,500/-, an exporter makes a clean profit
of Rs. 1,073/- per M.T. While State would get a maximum of Rs. 27/-
only which is pittance compared to what a mine owner gets. This is
not taking into account millions of M.T. of iron ore that is illegally
mined and transported from which Government gets not even the
royalty. On the contrary, if the mineral extracted in this State is used to
produce value added product, State apart from royalty will also gain
through VAT and the Central Government will gain through excise
duty which will be a huge amount. May be if the finished product is
exported after meeting the local demand, the Country could gain by
export duty also.

In the above background, my first suggestion which may look
very extreme, but in my opinion the most apt solution to the existing
problem, is to ban all trading including export of minerals and reserve
this mineral only for domestic consumption as captive mines dedicated
to a given steel plant. This would solve many problems like excessive
mining, illegal mining, because no dedicated plants would extract
minerals more than it could consume and there will be no benefit from
such excessive mining because they cannot sell it to anybody because
of ban on trading of minerals. If the location of the steel plants is to be
confined to the mining areas only, that would solve the consequential
problems arising out of transportation to different parts of the State,
thus protecting environment and if mining is to be confined only to


264
dedicated steel plants, the likelihood of damage to the ecology also will
be far less. If these plants are situated near the mining area, it would
also create huge job potentials for the locals who otherwise in the
present system have no advantage from mining, but are only victims of
the disadvantages arising from mining activities. The title of the
citizens report referred to in this report of mine, which reads “Rich
Lands and Poor People” is very appropriate to describe the fate of the
people who are victims of this type of mining activity. If export is
inevitable because of international agreements, then transportation
should be confined to closed bodied vehicles only which can carry only
maximum permissible load. I have recently read in the newspapers a
demand for nationalization of mining activities, but, my experience of
MML discourages me from agreeing to that suggestion.

When I visited the district of Bellary, I noticed the condition of
people who are living in and around the mining area. The locals there
do not in any manner reap the benefit of this successful industry. I
noticed in and around mining area a large number of youngsters, may
be between the age of 15 to 25, riding brand new motor-cycles which
may not be their own and using cell phones and loitering around. I
was informed that all these equipments are provided to these
youngsters who are all school drop outs by the unscrupulous people in
the mining lobby to keep an eye on the visitors to the mines, so that the
mining activities could be controlled during the visit of inspection staff.
This type of employment of youth is bound to create socio-economic
problems in the years to come. Because of lack of education and


265
acquired habits, a law and order situation is bound to happen. Even
the villagers in and around the mining area do not seriously
concentrate on agriculture and other normal village life activities, but,
are looking for opportunities for illegal mining which is a tempting
proposition. Number of tractors and trailers which were originally
meant for agricultural activities, are now being used for transportation
of illegally mined ore for which there are ready made buyers. Even
this diversion in the occupation of the villagers is likely to cause social
unrest when mining activities get reduced. Government should take
serious note of these possible socio-economic changes. I would even
suggest that a levy on mining activity for betterment of villages around
mining areas which money can be utilized for better health scheme,
education and other job oriented schemes for the locals. In all, the
Government should take a holistic view of development of these areas.

Apart from the above, I would specifically point out certain
irregularities, notice of which should be taken by the Government and
suitable actions initiated, as the facts of each of these may call for;

(a) Cancellation of grants of revenue lands where illegal
mining is being done.

(b) Conducting of joint survey of MSPL and SB Minerals
to identify the lands which are illegally encroached.

(c) Conduct enquiries into all stock yards and stop
functioning of such yards, if they have obtained
permission illegally.



266
(d) Conduct survey of Vrushabhendra Mines and take
suitable action

(e) Conduct survey of HRG Mines.

(f) Conduct survey of Mari Cements referred to at pages
38 and 39 of Chapter – II.

(g) A large number of Court cases pending, are not being
properly attended to and interim orders are allowed
to continue, without making any application for
vacating the same. Therefore, steps should be taken
to attend to all the pending cases where Department
of Mines and Geology is involved.

(h) I have noticed at page 40 of Chapter – II of my report
that some of the officers of the Department of Mines
and Geology have been passing orders “until further
orders” which is contrary to law. All such orders
should be reviewed.

(i) There is an urgent need for increasing the staff
strength of Department of Mines and Geology at
Taluk levels with strict supervisory control from the
higher officers.

(j) Approach the Central Government to get the boarder
between States of Andhra Pradesh and Karnataka,
abutting Bellary District surveyed and boundary
fixed.

(k) Required rules u/s. 23C of the M&M (D&R) Act be
framed at the earliest


267
In my report as to the grant of temporary transport permit to lift
and transport ore illegally mined from patta lands, I have discussed the
law applicable and I have come to the conclusion that there could be no
mining activities, be it a Government land or patta land, without there
being a mining lease granted under the M&M (D&R) Act and M.C
Rules. I have also come to the conclusion that any mineral listed in
schedule I and II of the M&M (D&R) Act and found in any land, be it
Government or Patta land is the property of the State. In that
background, I have come to the conclusion that grant of transport
permit to persons to transport minerals who do not hold the mining
lease is contrary to the provisions of the M&M (D&R) Act and Rules. I
have also discussed the basis of the decisions taken by various public
servants and their role in granting such illegal permission to transport
minerals from the patta lands without there being a mining lease and
with the knowledge that such grant of permission is contrary to the
M&M (D&R) Act. I have also discussed the explanation given by the
concerned public servants and given my reasons for rejecting the same.
According to me, collecting of royalty or a compounding fee from such
transporters does not justify the grant of transport permit. I am also of
the opinion that however high an authority may be, as has been
repeatedly said that the law is above him and his political philosophy
or desire to help the farmers to solve their problem cannot be a
justification to violate the law. I am also of the opinion if really such
public servant had a sincere desire to help the farmers to clear their
lands for the purpose of commencing their agricultural operation, then
the removal of so called minerals lying in their lands could have been


268
done through Governmental agencies. I have also given reasons why
in many cases the prayer of the farmer for grant of transport licence
was only an excuse to indulge in illegal mining. On the above basis, I
had concluded that ;
(1) Sri N. Dharam Singh, the then Chief Minister of
Karnataka

(2) Dr. M. Basappa Reddy, the then Director of
Department of Mines and Geology

(3) Sri Gangaram Baderiya, IAS, the then Director of
Department of Mines and Geology

have committed misconduct and have caused huge financial loss to the
State to an extent of Rs. 31,01,89,185/- to the exchequer by permitting
illegal transportation of 3,09,113 M.T. of iron ore. Hence, these persons
are liable for reimbursement of the loss caused to the State. However,
in respect of Dr. M. Basappa Reddy, a report under Section 12(3) of the
Lokayukta Act has been already sent on 6/3/2008 and acting on the
said report, disciplinary proceedings are ordered to be initiated against
Dr. Basappa Reddy and such enquiry is in progress. He is also liable
for the reimbursement of the loss caused to the State. So far as Sri
Gangaram Baderiya is concerned, Disciplinary and Recovery
proceedings shall be initiated against him.

While considering the next issue referred to me for investigation,
that is in regard to affairs of M/s MML, I have come to the conclusion
that the concept of raising contract is alien to M&M (D&R) Act and
Mineral Concession Rules. But it is very much prevalent in many cases.
In my opinion, since entering into raising contract and such other


269
contracts whereby the lease holder has alienated completely his rights
under the lease is liable to have the mining lease cancelled. Therefore,
steps should be taken to terminate these leases. Even in case of MML, I
have noticed that they have entered into such contracts with different
persons in violation of law. Hence, these leases of MML are also liable
to be cancelled. I have also come to the specific conclusion that by
entering into various joint venture contracts, processing and marketing
contracts, the named officials have not kept the interest of MML in
mind and have even caused loss to MML, for which act of misconduct
and loss caused to MML, I have held the following officers responsible.
Hence, disciplinary proceedings shall be initiated against them under
the Service Rules applicable to them. So also, recovery proceedings
shall be initiated against the above officers for recovery of the loss
caused by them, they are;
(1) Sri V. Umesh, IAS
(2) Sri I.R. Perumal, IAS
(3) Sri D.S. Aswath, IAS
(4) Smt. Jija Madhavan Hari Singh, IPS
(5) Sri Mahendra Jain, IAS
(6) Sri K.S. Manjunath, IAS
(7) Sri H. Srinivas, Deputy General Manager, MML
(8) Sri R. Ramappa, Deputy General Manager, MML
(9) Sri Shankarlingaiah, Deputy General Manager, MML

I have also named the companies or firms which have benefited from
the loss that is caused to M/s MML and the Government should
recover such loss by taking recourse to suitable legal proceedings.

In my report regarding irregularities, illegalities in de-
reservation, I have recorded that though as a matter of policy, the
Government of Karnataka decided not to de-reserve forest lands, some


270
forest lands have been deliberately de-reserved by recording that they
are not in forest area. The names of persons who are guilty of such
misconduct will be mentioned in the next part of my report.

In my report while referring to illegal transfers of mining leases,
I have come to the conclusion that out of the 22 cases that were
considered during the course of investigation, there have been
irregularities in four cases. I have given basis for my conclusions, but,
since I would like to get the explanation from the concerned officials
before making any recommendation, same will also be done in the next
part of my report.

In this Report, I have named the following public servants for
their acts of omissions and commissions.
(1) Sri N. Dharam Singh, the then Chief Minister of
Karnataka

(2) Dr. M. Basappa Reddy, the then Director of Department
of Mines and Geology

(3) Sri Gangaram Baderiya, IAS, the then Director of
Department of Mines and Geology

(4) Sri V. Umesh, IAS
(5) Sri I.R. Perumal, IAS
(6) Sri D.S. Aswath, IAS
(7) Smt. Jija Madhavan Hari Singh, IPS
(8) Sri Mahendra Jain, IAS
(9) Sri K.S. Manjunath, IAS
(10) Sri H. Srinivas, Deputy General Manager, MML

(11) Sri R. Ramappa, Deputy General Manager, MML


271
(12) Sri Shankarlingaiah, Deputy General Manager, MML

Hence, I am recommending initiation of appropriate proceedings for
recovery of the loss caused to the State Exchequer and/or disciplinary
proceedings against the above public servants. In this background,
two questions arise for my consideration, that is;

(a) Whether it is only these named public servants who are liable for
such proceedings or their subordinates are also responsible for the
same. I had given my anxious thought to this issue and wherever I
have found independent and direct involvement of subordinate
officers, whom I thought should be indicted I have named them,
but in many cases, there are subordinate officers who have under
the mandatory directions of the higher authorities have obeyed
their directions and thereby caused loss to the State. In such cases, I
thought it fit that only those officers whose involvement is direct in
various acts of omissions and commissions to be named and it may
not be proper to name their subordinates, who have merely
followed the orders of the superiors.

(b) The next question which is very important that arise is, the huge
loss that is caused to the State exchequer because of the acts of
commissions and omissions of the named officers. The question
therefore, that arise in these circumstance is, are those public
servants also to be recommended for prosecution under the
provisions of Section 13(1)(d) of the Prevention of Corrutpion Act,
1988. The said Section reads thus:-


272
“13. Criminal Misconduct by a public servant.- (1) A public
servant is said to commit the offence of criminal misconduct.-
(a) …………………………………………………………..
(b) ………………………………………………………….
(c) ………………………………………………………….
(d) If he.-

(i) ……………………………………………………………
(ii) ……………………………………………………………
(iii) while holding office as a public servant, obtains for any
person any valuable thing or pecuniary advantage with out any
public interest; or
(e) ……………………………………………………….

If a literal interpretation is to be given to the above provisions of law,
the ingredients necessary for prosecuting the public servant under the
above provision of law are
(a) person concerned should be a public servant;
(b) he should obtain for himself or any other person any valuable
thing or pecuniary advantage;

(c) such obtaining of valuable thing or pecuniary advantage is
without any public interest.

In the facts and circumstances of the various cases discussed herein
above, the fact that the concerned officers are public servants are not in
dispute, but there is no material to show that they have obtained for
themselves any pecuniary advantage. But their acts of omissions and
commissions have certainly conferred valuable pecuniary advantage to
3
rd
parties, which of course will have to be held to be without any
public interest. Therefore, there is material to be satisfied that the above


273
provision of law attracts, but the consequences of such prosecution will
be serious on the administration of the State. Therefore, I leave it to the
State Government in the factual background of each one of the above
cases, to take appropriate decision regarding prosecution of the public
servants concerned.


RECOMMENDATIONS UNDER SECTION 12(3) OF THE
KARNATAKA LOKAYUKTA ACT

The report of investigation submitted by Sri Gaikwad team at
Annexure – ‘B’ reveals that Sri N. Dharam Singh, former Chief Minister
of Karnataka who also held the portfolio of the Department of Mines
and Geology ordered issuance of temporary transport permits for
movement of iron ore and manganese ore from agricultural patta lands
not held under the mining lease, in contravention of Section 4(1) and
Section 4(1A) of M&M (D&R) Act and Mineral Concession Rules, 1960
and acted in a manner unbecoming of a public servant of the class to
which he belongs. The act of Sri N. Dharam Singh has resulted in
revenue loss to the State to the extent of Rs. 23,22,11,850/-. Therefore,
under Section 12(3) of the Lokayukta Act, a separate recommendation
is made to the Competent Authority to initiate appropriate proceedings
against Sri N. Dharam Singh, former Chief Minister of Karnataka, for
recovery of the loss caused by him to the State.

Sri Gangaram Baderia, IAS, during his tenure as Commissioner
and Director of Mines and Geology approved issuance of temporary
transportation permit for movement of iron ore to Sri Satish Kumar


274
from survey number 23/4 of Bhujanganagar village, Sandur Taluk in
contravention of the conditions laid down by the Government of
Karnataka in letter No. CI 02 MMM 2005, dated 27/09/2005 resulting
in movement of illegally mined and stocked ore to the tune of 1,200
M.T., causing a loss of Rs. 11,70,000/- to the State exchequer. Sri
Gangaram Baderia, IAS during his tenure as Commissioner and
Director of Mines and Geology has also accorded permission for
issuance of permit in the case of Sri T. Pushparaj, relating to RS No. 298
of Bhujanganagar village, Sandur Taluk, in contravention of the M&M
(D&R) Act, and Mineral Concession Rules, 1960 resulting in loss of Rs.
1,26,75,000/- to the State exchequer. The above acts of Sri Gangaram
Baderia, IAS amounts to acts unbecoming of a public servant of the
class to which he belongs and hence he has committed misconduct
under Rule 3 of the All India Services (Conduct) Rules, 1968 and hence,
under Section 12(3) of the Lokayukta Act, I recommend initiation of
disciplinary proceedings against him under All India Services
(Disciplinary and Appeal) rules, 1969. Appropriate proceedings shall
also be initiated against Sri Gangaram Baderia, IAS, for recovery of the
loss caused by him to the State exchequer.

The materials collected during investigation also establish that
the commissions and omissions of Dr. M. Basappa Reddy, former
Director of Mines and Geology, has resulted in unauthorized
movement of 56,747 M.T. of iron ore/manganese ore, in the districts of
Belgaum, Bellary, Chitradurga and Chikmagalur resulting in revenue
loss of Rs. 6,41,32,335/- to the State exchequer as detailed in the report


275
at Annexure – ‘B’ regarding which a disciplinary enquiry has been
already initiated in No. LOK/ARE-3/Enq-2/2008, pursuant to
Government Notification No. ·:·.: º :¬ ... !))·, dated 17/04/2008.
In addition to the same, under Section 12(3) of the Lokayukta Act, I
recommend initiation of appropriate proceedings against him for
recovery of the loss caused by him to the State exchequer.

The materials collected during investigation prima facie establish that:

(i) Sri V. Umesh, IAS, former Managing Director, M/s
Mysore Minerals Limited, during his tenure from
24/05/1999 to 08/03/2000, by his acts of commissions
and omissions, has caused a total loss of Rs.
6,90,56,138/- as detailed in Revised Table-11A of the
report of Sri Gaikwad team at Annexure – ‘C’.

(ii) Sri I.R. Perumal, IAS, former Managing Director, M/s
Mysore Minerals Limited, during his tenure from
31/10/2000 to 26/11/2002, by his acts of commissions
and omissions, has caused a total loss of Rs.
5,02,60,312/-, as detailed in Revised Table-11B of the
report of Sri Gaikwad at Annexure – ‘C’.

(iii) Sri K.S. Manjunath, IAS, former Managing Director,
M/s Mysore Minerals Limited, during his tenure from
26/11/2002 to 7/12/2002 and 20/02/2003 to
7/7/2003, by his acts of commissions and omissions,


276
has caused a total loss of Rs. 4,04,66,938/-, as detailed
in Revised Table-11C of the report of Sri Gaikwad at
Annexure – ‘C’.

(iv) Sri D.S. Aswath, IAS, former Managing Director, M/s
Mysore Minerals Limited, during his tenure from
25/08/2003 to 14/04/2004, by his acts of commissions
and omissions, has caused a total loss of Rs.
95,23,82,953/- as detailed in Revised Table-11D of the
report of Sri Gaikwad at Annexure – ‘C’.

(v) Smt. Jija Madhavan Hari Singh, IPS, former Managing
Director, M/s Mysore Minerals Limited, during her
tenure from 15/04/2004 to 14/06/2006, by her acts of
commissions and omissions, caused a total loss of Rs.
299,42,72,022/- as detailed in Revised Table-11E of the
report of Sri Gaikwad at Annexure – ‘C’.

(vi) Sri Mahendra Jain, IAS, former Managing Director,
M/s Mysore Minerals Limited, during his tenure from
15/06/2006 to 09/01/2008, by his acts of commissions
and omissions, has caused a total loss of Rs.
219,56,81,974/- as detailed in Revised Table-11F of the
report of Sri Gaikwad at Annexure – ‘C’.

By their commissions and omissions as detailed above, the above
mentioned public servants have acted in a manner unbecoming of a
Government servant of the class to which they belong and thereby


277
committed misconduct under Rule 3 of the All India Services
(Conduct) Rules, 1968. Therefore, under Section 12(3) of the Lokayukta
Act, I recommend to the Competent Authority to initiate disciplinary
proceedings against the said public servants under the All India
Services (Disciplinary & Appeal) rules, 1969. Appropriate proceedings
shall also be initiated against the above mentioned public servants for
recovery of the loss caused by them due to their omissions and
commissions as detailed above.

The materials collected during investigation prima facie
establish that:

I. Sri K. Srinivas, Dy. General Manager, M/s Mysore
Minerals Limited is jointly and severally responsible
with the respective Managing Directors, during the
years 2000-04 and 2003-05, for causing a loss of Rs.
14,84,31,833/-, by his acts of commissions and
omissions, as detailed in Revised Table-12A of the
report of Sri Gaikwad team at Annexure – ‘C’.

II. Sri M. Ramappa, Dy. General Manager, M/s Mysore
Minerals Limited is jointly responsible with the
respective Managing Directors, during the years 2003-
04, for causing a loss of Rs. 6,10,47,870/-, by his acts of
commissions and omissions, as detailed in Revised
Table-12B of the report of Sri Gaikwad team at
Annexure – ‘C’.


278
III. Sri Shankaralingaiah, Dy. General Manager, M/s
Mysore Minerals Limited is jointly responsible with the
respective Managing Directors, during the years 2004-
07 for causing a loss of Rs. 63,38,13,427/-, by his acts of
commissions and omissions, as detailed in Revised
Table-12C of the report of Sri Gaikwad team at
Annexure – ‘C’.

By their omissions and commissions, the above mentioned
officers of M/s Mysore Minerals Limited have committed misconduct.
Therefore, under Section 12(3) of the Lokayukta Act, I recommend
initiation of disciplinary proceedings under the service rules applicable
to them and so also appropriate proceedings shall be initiated against
the said officers for recovery of the loss caused by them as detailed
above.

Action taken or proposed to be taken on the above
recommendations be intimated to this institution within three months
from the date of receipt of this report as required under Section 12(4) of
the Lokayukta Act.

ACKNOWLEDGEMENT
There has been delay in submission of this Report, which I can
say with all sense of responsibility that it is not due to any slackness on
my part or my team’s part, but due to the desire of our bringing about
this report which should present all the shortcomings in the mining
activities. We have tried to look into the irregularities, illegalities and
problems at different stages of mining activities holistically. In this


279
process all members of my team have worked with dedication and
devotion. I am grateful to Sri K.R. Chamayya, Retired Secretary, Law
Department, Government of Karnataka, who is my principal advisor,
as well as, Sri L.Subramanya and Sri Moosa Kunhi Nayar Moole, both
Registrars in the Karnataka Lokayukta whose cumulative efforts have
helped me in the preparation of this report, without in any manner
compromising with their other duties. The tremendous work put in
both in the filed and office by Dr. U.V. Singh was also responsible for
all the inputs provided in this report to arrive at all types of illegalities
in mining. I also place my deep appreciation of work put in by
Gaikwad team, whose names are mentioned in the beginning of this
report. I also place on record my appreciation of the overtime work
put by Smt. Jayashree and Sri K. Krishnan, officials of Lokayukta, but
for whom this report would not have been possible to be ready even
now. For all the people whose names are not here but who have
helped me in the preparation of this report, I am indebted.


(N.SANTOSH HEGDE)
LOKAYUKTA


280





D.O. No. Compt/LOK/BCD/89/2007/ARE-2 18
th
December, 2008

Encl: Report along with connected records


Dear Sri Sudhakar Rao


Sub: Reference under Section 7(2-A) of the Karnataka
Lokayukta Act made by the Government for
investigation of certain matters relating to illegal
mining activities in Karnataka–reg.

Ref: i) Govt. Order No. CI 164 MMM 2006 dated
12/03/2007

ii) Govt. Order No. CI 164 MMM 2006 (Part), dated
09/09/2008
- - - - -

I am herewith forwarding my Report (Part-I) dated 18/12/2008
along with Annexures, on the reference made by the Government under
Section 7(2-A) of the Karnataka Lokayukta Act, 1984, for investigation of
certain matters relating to illegal mining activities in Karnataka, for
needful action in the matter.

In the said report, I have discussed the various issues relating to
irregularities and illegalities in mining activities carried on in the State of
Karnataka and so also the activities of M/s Mysore Minerals Limited. In
this report, I have made certain recommendations and suggestions.
Certain recommendations are also made under Section 12(3) of the
Karnataka Lokayukta Act, 1984 against the named public servants.


281

The action taken or proposed to be taken on the basis of the said
recommendations be intimated to this authority within three months from
the date of receipt of the report, as provided under Section 12(4) of the
Karnataka Lokayukta Act.

The receipt of the report along with enclosures may please be
acknowledged.

With regards,


Yours sincerely,


(N.SANTOSH HEGDE)


Sri Sudhakar Rao, I.A.S.,
Chief Secretary to Government,
Karnataka Government Secretariat,
Vidhana Soudha,
Bangalore-560 001.














282
REPORT ON THE REFERENCE MADE BY THE GOVERNMENT OF
KARNATAKA UNDER SECTION 7(2-A) OF THE KARNATAKA
LOKAYUKTA ACT, 1984 (PART – I)


I N D E X

Sl.
No.
Contents Page
Nos.

1)

Introduction


1- 14
2) Chapter-I History of Mining

15 – 29
3) Chapter-II Visit to Mining Areas

30 – 59
4) Chapter-III Procedure followed while granting
Mining Lease/ Licence with special
reference to Prospecting Licence.

60 – 67
5) Chapter–IV Advent of the concept of Rising
Contracts.

68 – 83
6) Chapter-V Irregularities in mining like mining
beyond the leased area, trespassing
into the forest area for mining, etc.

84 - 101
7) Chapter-VI Irregularities in mining like mining
beyond the leased area, trespassing
into the forest area for mining, etc.

102 - 111
8) Chapter-VII The Effect of mining on Roads and
Environment

112 - 128
9) Chapter-VIII Issue of temporary transport permits
to lift and transport ore illegally mined
from the patta lands

129 – 170
10) Chapter-IX
Lapses pointed out by the Accountant
General, Karnataka regarding MOUs, Raising,
Processing and Marketing Contracts, Joint
Ventures etc. entered into by M/s MML with
private companies resulting in losses
amounting to crores of rupees to the company

171 – 219


283
11) Chapter-X
Allegation of irregularities and illegalities in
de-reservation and allotment of de-reserved
areas to different applicants

220 - 237
12) Chapter-XI
Evaluation of cases relating to illegal transfer
of mining leases

238 – 249
13) Chapter-XII
Conclusions, suggestions and recom-
mendations

250 – 274
ANNEXURES

1) Annexure-A

Report of Sri U.V. Singh

2) Annexure-B

Report of Gaikwad team the issue of grant
of transport permits for transporting
illegally mined iron/manganese ore from
the patta lands


3) Annexure-C

Report of Gaikwad team relating to lapses
pointed out by the Accountant General
regarding MOUs raising, processing and
marketing contracts, joint ventures, etc.
entered into by the MML with private
companies resulting in losses amounting
to crores of rupees to the company.


4) Annexure-D

Report of Gaikwad team relating to de-
reservation of mining area of 11,620 Sq.
Kms. in the State meant for State
exploitation/mining by the public sector
and the related matters.


5) Annexure-E Report of Gaikwad team relating to legality
in the transfer of leases from one lease



284
holder to another on case wise
examination of the legality






























2

cost of production of iron ore at around Rs.150 per ton, and the royalties to be paid to the Government being abysmally low at Rs.16.25 per ton for different grades there have been serious systemic distortions due to the high profit margins. This has led to allegations of large scale corruption and complaints of profiteering through illegal mining with the complicity of the authorities in all levels of Government. (ii) The Government in its orders vide notification No.

CI 16 MMM 2003 and No.CI 33 MMM 1994 both Dated: 15.03.2003, de-reserved for private, mining an area of 11620 square km in the State, meant for State exploitation/ mining by the public sector and notified the surrender of an area of 6832.48 hectares of prime iron ore bearing lands

respectively, which has paved way for distribution of public assets to select private individuals,/ entities without regard to their professional or technical or business background. (iii) The entire exercise was undertaken in a manner so as

to benefit only a select few individuals/entities. The main objectives behind de-reservation i.e. to encourage mining based industries to create more employment opportunities in private sector, to attract private capital and professional management for optimal use of state mineral resources were given a go by and allotments were made to the applicants on considerations other than merit. (iv) It has been alleged that in the name of issuing

temporary transportation permits to lift and transport iron ore in patta lands [which by itself is nor permissible in law], large scale illegal mining activity was allowed to be carried

3

out for certain period, even in the forest areas, having no link to the survey numbers of patta lands and for transportation of the illegally mined ore from the forest areas on the strength of such forest passes/ transport permits. (v) It has been reported that the State has been deprived

of its revenues. There have been many complaints from transporters associations regarding overloading of Transport vehicles, that illegal gratification was sought for allowing overloading of iron etc., and the repeated complaints and representations by transporters associations, it has been alleged to have not been seriously considered by the Government. It is also alleged that most of the ore not accounted for and transported illegally in excess was the out come of illegal mining activities. (vi) In the inspection report of the Accountant General of

Karnataka for the years 2003-2004 and 2004-2005 on Mysore Minerals Limited (MML), a public sector

undertaking, several lapses were pointed out regarding various Memorandum of Understandings (MOUs), raising and marketing contracts, joint ventures etc., between Mysore Minerals Ltd., and Private Companies, wherein the interest of MML was compromised to deprive the PSU of the Contractual Entitlements, dividends and profits due to one sided agreements, non-revision or sub-optimal revision of prices resulting in losses amounting to crores of rupees at a time when the mining sector was generating huge profits. (vii) It has also been noticed that the Iron Ore fines and

mud stocks/ low grade ore far in excess of the quantity were

4

allotted arbitrarily to select individuals through Mysore Mineral Ltd., much below the prevailing market price and MMTC price and even below the prices fixed from time to time by MML itself. There have been complaints of certain influential individuals who were part of the power structure within the Government, by manipulating the records and interfering in the affairs of MML, caused huge loss to the Corporation and the State, Similarly major and minor minerals such as granite, manganese and other minerals of the state, for the past several years, have been misused, indiscriminately exploited for benefiting a selected few resulting in loss of revenue to MML and the State. (viii) This has led to serious allegations and extensive debate on the floor of both the Houses of Legislature with references made to large scale illegalities, irregularities leading to enormous loss to State exchequer and plundering of state mineral wealth. Allegations have been leveled against various authorities of Government of complicity in illegal mining activities, which led the Hon'ble Chief

Minister to give an assurance on the floor of the House that in order to ensure highest level of fairness and probity, an impartial inquiry will be ordered in to the illegalities which have taken place in Bellary, Tumkur and Chitradurga Districts. The issues referred for investigation and report are as follows: (a) Various alleged illegalities, irregularities, events, issues and executive and other decisions set out in clause (i) to

5

(viii) and to assess the quantum of losses to the Government and to suggest remedial measures to undo such irregularities and illegalities. (b) To enquire into the affairs so the Mysore Minerals Ltd., (MML) and its commercial activities carried out in a manner to cause losses to the company and the instances of direct/ indirect political interference/ patronage in the commercial affairs of the company. To fix responsibility and initiate suitable action, both, civil and/ or criminal as may be appropriate, against all persons found

responsible, including private contracting parties. (c) To fix responsibility and initiate suitable action against all public servants including ministers whether in office or otherwise state, its instrumentalities or State owned Companies/Corporations or other bodies and authorities, either in collusion with private parties or otherwise for various acts of omission and commission leading to various illegalities, irregularities, events and executive decisions set out in clause (i) to (viii) and also pertaining to issues such as: (1) The process and timing of disposal of applications, both in case of notified areas and free areas, for grant of Mining Lease, Reconnaissance Permits and Prospecting Licenses; (2) the irregularities reported in issue of permits by both Forest and Mines departments;

mining beyond permitted quantities. mining without necessary permits and clearances. (d) All instances where the mandatory regulations and statutory provisions have been given a go-by and not observed. (4) the entire range of the various aspects of illegal mining ranging from encroachments. transportation without permits etc.6 (3) the irregularities reported in transportation of minerals such as overloading. with reference to the basic policy/ objectives behind the decisions taken to de-reserve the areas meant for exploitation by the public sector held and surrendered areas and the instances of direct or indirect political interference. mining outside the permitted areas. the issue of informal "token systems". (5) the mining and transportation of major minerals from Patta lands without valid mining leases etc. illegal transportation of minerals etc. This will include the case wise examination of legality and validity of grant of mining leases. (6) the legality in transfer of leases from one lease holder to another. to directly or indirectly facilitate and/ or encourage illegal and/ or unregulated mining operations and to suggest remedial measures and suitable action against persons found responsible for their commissions and omissions. including environmental and other clearances. .

in view of the fact that the investigation involved certain technical matters pertaining to . for the period upto 22/07/2006 and the findings relating to the period beyond 22/07/2006 and upto 9/9/2008 will be separately submitted. however. As per the Govt. complaints of misuse and abuse of the office. ministers and officers who held or hold offices of profit for pecuniary benefit pertaining to illegal/ unregulated mining and incidental issues thereof. allegations. if any elected representatives. the scope of the investigation was from 01/01/2000 to 22/07/2006.7 (e) Any other related issues. including de-reservation of the areas meant exclusively for public sector in Karnataka's mining regions ask mentioned above. (f) To comprehensively inquire into the charges. (g) Illegal granite quarrying in Bangalore Rural District and other Districts. Subsequently. 3. This report. the scope of the investigation is extended till 9/9/2008. resulting in loss of revenue to the Government of Karnataka and Public Undertakings under the Government of Karnataka. will consider some of the issues referred for investigation. 4. event and/ or instance which the Hon'ble Lokayukta may deem fit and proper to go into the illegal and un-regulated mining and related issues. On receipt of the reference. Order dated 9/9/2008. Order dated 12/03/2007. vide Govt.

Former Secretary to Government. Chamayya. Retd. Bangalore Apart from the above. Retd. Subhash Chandra. M. Retd. Geologist of Mines and Geology (6) Sri H.N. the services of the following are also availed under Section 15(3) of the Lokayukta Act. FDA. (2) Dr. Singh. Sriyuths: (1) Sri K. Environment. Karnataka State Remote Sensing Applications Centre. the services of the following officers were utilized under Section 15(3) of the Karnataka Lokayukta Act. FDA. Department of Law and Parliamentary Affairs. Basavaraj. 1984. U. Director.V. Forests and laws concerned with forest and mining.H. Dy.L.C. Director of Mines and Geology (4) Sri A. Retd. Venkatesh Murthy. Sr. Forest Department (3) Sri Sreerama Rao. Retd. IFS. Balakrishnaiah. Conservator of Forests (3) Sri R. Retd. Forest Department (2) Sri Annappaiah Herale. it was felt necessary to seek assistance of persons who had the knowledge of mining. Forest Department (7) Sri Udayakumar.8 various aspects of mining. Belgaum (8) Dr. Superintendent. Department of Forests and Ecology. Retd. With this view in mind. Gaikwad. Regional Director. Gazetted Assistant . in the present investigation.R. (1) Sri Rajanna. Director of Mines and Geology (5) Sri K. Dy.

Hence. Revenue Department. 6.L. Office of the Managing Director. M. Retd.9 (4) Sri Veerabhadraiah. public notices have been issued in the leading newspapers both Kannada and English. Photographer/Videographer 5. the Directorate of Mines and Geology. besides. which was earlier appointed by the Government of Karnataka for holding an enquiry in regard to part of the reference made now to the Lokayukta. Gaikwad’s team and on consideration of the same. As part of the investigation. the records of Justice U. Tumkur. Bangalore City and Bangalore Rural Districts. it was found that Dr. Basappa Reddy. Environment and Ecology. the former Director of the Department . Office of the Dy. Commissioners of the concerned Districts. 7. Bhat Commission of Enquiry. It was also felt necessary that a public notice should be issued calling for information from the persons acquainted with the subject matter of the investigation.L. Department of Forest. M/s Mysore Minerals Limited (MML for short). Chitradurga. Sr. report in respect of evaluation of cases relating to the issue of permits to lift and transport manganese/iron ore from patta lands was submitted by Sri R. especially which had wide circulation in the districts of Bellary. Records relating to the subject matter of investigation have been secured from the Department of Commerce and Industries. Office of the Principal Chief Conservator of Forests. Judgment Writer (5) Sri Avilash.

Basappa Reddy had by then retired and the period of limitation to take action against him was running out.V. Order. since his explanation was found unsatisfactory. M. Same is annexed to this report as ANNEXURE ‘A’. has ordered initiation of departmental enquiry against Dr. M. recommending initiation of departmental proceedings against Dr. This was done out of turn. Dr.V. Singh has submitted his report to which reference will be made at an appropriate stage in this report. then. because. The Government after accepting the said recommendation. He was authorized to Since requisition the services of such officers as he felt necessary. M. hence his comments were sought under Section 9(3) of the Lokayukta Act.10 of Mines and Geology had committed illegalities in the issuance of permit for transport of minerals from patta lands. U. U. Dr. M. a report dated 6/3/2008 under Section 12(3) of the Lokayukta Act has been sent to the Government. In the meantime. Basappa Reddy and scrutiny of the same. Basappa Reddy. The said enquiry is in progress. Basappa Reddy and entrusted the said enquiry to the Lokayukta with a request to submit a report to it after the enquiry. On receipt of the reply from Dr. Dr. . Singh who was entrusted with the survey of quarrying areas in the Bangalore Rural District and mining areas in Bellary was directed to submit his report in regard to illegal mining and quarrying in the districts mentioned in the reference Govt.

11.620 Sq. joint ventures. of The Gaikwad’s team which was examining the issue of grant transport permits for transporting illegally mined iron/manganese ore from the patta lands has submitted an elaborate report. The issue relating to de-reservation of mining area of 11. Gaikwad team have submitted their revised report which is at ANNEXURE-C. 10. 9. The Gaikwad’s team has also gone into the issue relating to the legality in the transfer of leases from one lease holder to another . Kms. entered into by the MML with private companies resulting in losses amounting to crores of rupees to the company and submitted a report. processing and marketing contracts. etc. in the State meant for State exploitation/mining by the public sector and the related matters referred for investigation has been examined by the Gaikwad’s team and the report submitted in that regard is at ANNEXURE-‘D’. comments were called for from the concerned officers and after considering the comments and other materials on record and in pursuant to the discussions they had with me. A copy of which is also annexed to this report as ANNEXURE ‘B’.11 8. On the basis of the same. The Gaikwad’s team has also examined the issue relating to lapses pointed out by the Accountant General of Karnataka regarding MOUs raising.

investigation as to irregularity in granting quarrying leases and illegality in quarrying will be submitted separately. 13. 12. During the preparation of this report. The other point that is necessary to be mentioned in this report is. there may be complaint from some sources and persons that they have not been issued show-cause-notices. Similarly. though I have come to some conclusions in regard to various irregularities and named the persons responsible for some such irregularities and illegalities in respect of the remaining issues. has extended the period of reference to 09/09/2008. the copy of which is at ANNEXURE-‘E’. but their names find place in the report while some others have been issued notices and opportunities have been given to them of showing cause. The reference has also asked me to initiate suitable action both civil and criminal but that is legally not possible because this is a reference under Section 7(2-A) of Lokayukta Act and not an investigation or inquiry initiated by the Lokayukta. persons responsible for such irregularities have not been named in this report for want of information about them. In this report. In . the Government of Karnataka by its order dated 09/09/2008. which finding also will be included in the next report.12 on case wise examination of the legality and submitted the report. But this report will for the present confine only upto the period of 22/07/2006 and findings upto the extended period will be submitted separately.

no notice is necessary to be given to people against whom report is being sent [Dr. in some cases where I thought clarifications are necessary at this stage. ISSUES CONSIDERED IN THIS REPORT: In the circumstances referred in the various terms of reference stated in the G. both.O. fixing of responsibility and initiation of suitable action. (MML) and its commercial activities carried out in a manner to cause losses to the company and the instances of direct/ indirect political interference/ patronage in the commercial affairs of the company. K.. some notices have been issued. irregularities. civil and/ or criminal as may be appropriate. issues and executive and other decisions set out in clause (i) to (viii) and assessment of the quantum of losses to the Government and remedial measures to be suggested to undo such irregularities and illegalities. in a reference like this. Such notices seeking clarifications are legally not mandatory as has been held by the Hon’ble High Court in the above cited case. Chowdappa Vs State of Karnataka and others (ILR 1990 KAR 798)]. Various alleged illegalities. dated 12/03/2007. events. however.13 law. against . the following issues are considered in this report in the first instance. The affairs of Mysore Minerals Ltd.

mining outside the permitted areas. .14 all persons found responsible. The mining and transportation of major minerals from Patta lands without valid mining leases etc. events and executive decisions set out in clause (i) to (viii) and also pertaining to issues such as: The irregularities reported in issue of permits by both Forest and Mines departments. including private contracting parties. The entire range of the various aspects of illegal mining ranging from encroachments. mining beyond permitted quantities. The irregularities reported in transportation of minerals such as overloading. irregularities. the issue of informal "token systems". Fixing responsibility and initiating suitable action against all public servants including ministers whether in office or otherwise state. mining without necessary permits and clearances. illegal transportation of minerals etc. its instrumentalities or State owned Companies/Corporations or other bodies and authorities. either in collusion with private parties or otherwise for various acts of omission and commission leading to various illegalities. transportation without permits etc.

resulting in loss of revenue to the Government of Karnataka and Public Undertakings under the Government of Karnataka. including environmental and other clearances. ministers and officers who held or hold offices of profit for pecuniary benefit pertaining to illegal/ unregulated mining and incidental issues thereof. with reference to the basic policy/ objectives behind the decisions taken to de-reserve the areas meant for exploitation by the public sector held and surrendered areas and the instances of direct or indirect political interference.15 The legality in transfer of leases from one lease holder to another including case wise examination of legality and validity of grant of mining leases. . All instances where the mandatory regulations and statutory provisions have been given a go-by and not observed. The other related issues. complaints of misuse and abuse of the office. by any elected representatives. to directly or indirectly facilitate and/ or encourage illegal and/ or unregulated mining operations and suggesting remedial measures and suitable action against persons found responsible for their commissions and omissions. including dereservation of the areas meant exclusively for public sector in Karnataka's mining regions mentioned above. event and/ or instance which are deemed fit and proper to go into the illegal and unregulated mining and related issues. allegations. The charges.

The above minerals except gold is found in large quantity in the districts of Bellary. Singh at Annexure-‘A’. Apart from gold. copper.CHAPTER – I History of Mining In view of the nature of reference. ochre. Devalapura Village in Hospet Taluk . Bellary and Sandur Taluks Hospet and Sandur Taluks Metri. clay. with particular emphasis on iron ore mining. quartz. out of which iron and manganese are major ones. I consider it appropriate to make a brief reference to the history of mining in general in the State of Karnataka.V. Name of Minerals No. gemstones. in relation to the history of mining in Bellary District with which I am in agreement. Chitradurga and Tumkur. Distribution of mineral resources in the District is given below: Sl. Limestone. This State is also rich in ornamental stones. Bellary district is fairly well graced with the wide variety of minerals. The State of Karnataka is endowed with vide variety of minerals. What follows hereinafter is the extract of the report of Dr. 1 Iron Ore Deposits 2 3 Manganese Lead Ore Place of occurrence Hospet. The iron ore in the belt of Sandur is found to be of high grade with the varying Fe content between 62-68%. Kaolin. magnetite etc. U. it has resources of a few other valuable minerals like iron and manganese which are in considerable deposits.

Yellow and Red Orches Near Swamihalli in Sandur Taluk. oxide ore Black. Satellite. Talk Soapston (Abstract from NEERI report) Iron and Steel industry is age-old in Karnataka. The most common iron-bearing minerals are.17 4 5 6 7 8 9 North west Swamihalli Village. Near Talur Deposits Village. The steel The produced from Karnataka was known by the name Wootz. Deposits Quarts Near Naduvi of Siruguppa Taluk Moulding sand Ornamental stones All along Thungabhadra River Pink and Grey granite at Siruguppa Taluk. in the country after Bihar. Sandur Taluk Graphite and Gold North East of Sandur. most common Sulphide ore Carbonate ore Yellow. while Hematite concentrate of high quality is mainly found in Bellary District. Damascus blades known for their strength. hydrated oxide . Karnataka occupies the fourth place in iron ore resources and production.H2O) Fe-content 70. Orissa and Chattisgarh. flexibility and sharpness are believed to have been fabricated from Wootz steel.63% Red. Mineral Description Hematite (Fe2O3) Magnetite (Fe3O4) Pyrite (FeS2) Siderite (FeCO3) Limonite (Fe2O3. Black Granite at Hospet Taluk.0% 72. Magnetite ore of metallurgical grade is mainly found in Western Ghats of Karnataka.4% 46% 48% 59.

a group of Precambrian Schistose rocks of Mysore.18 The Bellary. the most exploited block is the BHS area. NEB block (North Eastern Block) 2. Opposing dips towards NE and SW are found in the Ramghad and NEB blocks respectively. This block is the least explored range by Government agencies (except MML at Jambunathanahalli. Devadari block 6. NEB block is significant because of persistence of ore body.) and bulk of the area is held under private leases. Ramghad block 4. being vertical in a number of places. Ettinahatti block 1. Kumaraswamy block 3. The strike of the ore bodies is generally parallel to the trend of the hill ranges. The dips are often steep. Hospet and Sandur (BHS) region forms a part of the “Sandur Schist Belt” named as the “Dhawars”. Donimalia block 5. the Sandur Hills form a tightly folded synclinorium with close repetition of strata due to minor folds. consistent grade (both lumps and fines) and high recovery of lumps . Distribution of the Iron Ore Deposits: The important iron ore deposits of BHS region for academic and administrative purposes are grouped into the following main blocks: 1. Belgal range or Copper mountain block 8. Thimmappana gudi block 7. North Eastern Block: This block is closest to the existing Railways and for this reason. Structurally.

This block is further divided into four sub blocks viz. There are more than 34 mining leases pertaining to this block. Central Sub Block: This sub block is in continuation of Karadikolla sub block towards North Western side. The length of the range is about 27km from Hospet to Sandur and large number of mines are present in this block. Presently mining is confined to reef ore deposits.19 and fines near to Hospet rail yard. This part of NEB block is formed to a length of around 3. Karadikolla. this area has high grade (Fe 67-68%) with hard and lumpy ores of steel gray colour. This sub block is unique in iron ore deposit unlike all other iron ore deposits in the BHS sector. Till the year 2001. small scale mining . Central and Jambunathahalli. Dalmia Cement Sub Block: Continuation of Karadikolla part of block towards North Eastern side is Dalmia Cement Sub block. Dips are found towards NE. The reserves are estimated at 30 million tons. Dalmia Cement.0km and width varies from 25 to 50 meters. There are four iron ore bands running NW-SE. and Thimmappanagudi mine of Mysore Minerals Limited. This sub block is occupied by number of mining companies. The area of this sub block extends upto 5 km. Karadikolla Sub Block: This part of the NEB block is mainly occupied by Chowgule & Co. The width of ore band varies from 20 to 50 meters. Float ore mines were common during 1950’s and 2000’s. and Laxminarayana Mining Co. This part of the block is estimated to have about 28 million tons of high grade iron.

The main mines in the sub block are S.. The major leases of iron ore in this part are Mysore Minerals Ltd. P.. Ltd. Jambunathanahalli Sub Block: This part of block is having richest grade of iron ore on this sector and average grade is around 66% Fe and of high quality. Banashankari Mines and others.V. P. Muneer Enterprises.S. R. . R. Shetty.B.Bros. Balaji Mines and Mineral Pvt.S.M. Balasubba Shetty. The grade of the ore varies from 58 to 66% Fe. Extensive mining is being done in this part of the range by number of private mine owners since 30 years. In this sub block ore body depth goes beyond 100 meters. with a width of the bands ranging from 20m to 32 meters.B. Minerals. K. The total reserves estimated in this part of the range are around 30 million tons of very high grades. S.V.20 was in progress and now due to present “China boom” in iron ore market most of the companies have increased their production. G.G. This part of the NEB is running almost 7km length and ore body also follows the trend of the hill range and to its full length.. Ore body nature is of homogeneous without much interference of clay bands. The ore deposit has been found over a length of about 10km. The dips of the ore zone are towards SW.. The total estimated reserves of this sub block may be 30 million tons of very high grade iron ore.I. Srinivasalu Mines. Pompapathi. The NEB is under tremendous pressure of exploitation and requires rationing to keep sustainability for longer period of very rich high grade ore of this kind which is rare deposit on the earth.N. Trident Mining Company and others.M.

21 Main mines in NORTH EAST BLOCK . Manzoor Ahamed .50 44.11 63.B.75 3. Charuchandra M/s Shri Nidhi Iron Ore Mines Sri.15 34. S.12 32. M/s Ashwathnarayan Singh &Co. H.45 45.73 36.42 80.R. Gogga Gurushantaiah and Bros.03 50. K.66 149. P.N.90 18.40 31.27 5. R.SANDUR.00 56. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Lease M. Manjunath M/s P. Gogga Gurushantaiah and Bros.) 42. Sri Srinivasa Minerals M/s R. Venganna Setty & Bros. Premkumar Sri. Srinivasalu M/s Muneer Enterprises BIOM M/s Mineral Syndicate Trident Minerals Trident Mining Company Dalmia Cement Ltd.L. Kaviraj M/s Auro Minerals Sri. Pampapathi M/s Mysore Minerals Ltd. 2522 2520 2502 1028 1933 1806 1659 2102 2544 2538 2561 1751 1893 699 1046 2531 2550/1301 731/2564 1634 2339 1626 2320 2315 1732 2010 1324 Extent (ha. Sl. No. Mr.V.00 19.P. H.13 16.26 331. Balasubbashetty & Sons.94 2. No.52 15.00 129. Allam Basavaraj Sri. Minerals Balaji Mines & Minerals S.97 Name of the Lessee Gogga Gurushantaiah and Bros.21 44.46 182.5 38.52 22.

23 621.G. The chief ore is hematite.56 2.N. Kumaraswamy Block: In continuation with the Ramghad block toward south east side the Kumaraswamy block falls. Rangana Gowda M/s K. M/s Mysore Mineral Ltd.63 199.S. This block is a plateau of 20km length and 15 km wide.B. d) Harishankar and e) Sunderbencha sub blocks. Swamyhalli and Yeshwanthnagar are two railway sidings where iron ore is being loaded in Rail. Ltd. with the width of 20m to 30meters.59 54.N. The ore bodies of this block may be further classified to sub blocks namely: a) Appenahalli. The gorge in Narihalla stream is the fault zone where it bifurcates the iron ore deposits in the block.43 76. M/s R. The ore is . Sri.S.09 31.22 26 27 28 29 30 31 Veeyam Pvt. H.S. c) Central. The ore bands have been located to a length of about 18 km. The ore deposits in Kumaraswamy block are generally found at the top of the hill range usually above 900m contour.S. The area could be approached from Sandur via Nandihalli and Subbarayanahalli and now many new mines’ roads are also constructed.I M/s R.M. It is steel-grey in colour and hard and massive. This block is covered by south-eastern limb of the Sandur hills of 57A/12 and 57B/9 toposheet. 988 2002 2549(2150) 1799/2075 2021/2524 2022/256 20.B.M. a) Appenahalli Sub block: This sub block is located to the west of Appenahalli village and runs to a length of about 1200m of a mile in NNW-SSE direction and dips at an angle of 300 to 350 NE. b) Kummadharuvu.

c) Central Sub Block: This sub block is one of the major deposits of the Kumaraswamy block and starts from topo point 3658 and located upto Kumaraswamy temple. The ore is massive and atleast 8 ore bodies are found. and M/s Bharath Mines. The road from Sandur to Deogiri passes through the middle of this sub block. The estimated reserves in this area are of 90 million tons of high grade. e) Sunderbencha Sub block: This is another sub block of iron ore located to the north of Sunderbencha.23 siliceous and limonitic. The ore found here is mostly hard and laminated. NMDC. The mine located in this area belongs to SMIORE. The estimated ore reserves are of 115 million tons of high grade. This area was mainly occupied by SMIORE and MML. The NMDC is having majority of the area. The expected ore reserves in this area are about 38 million tons of very high grade. The approximate reserves in this sub block would be 20 million tons of high grade. The ore deposit is mostly hematite. This area is endowed with massive ore of high grade with laminated variety of deposit width 35 to 80 meters. The expected reserves are of 15 million tons of .5km with a width of 120m. b) Kummadharuvu sub block: This sub block falls to the south of Kummadheruvu village and runs in N-S direction over a length of 1. d) Harishankar sub block: It is located around Kumaraswamy temple and forms the extension of central sub block. The mines of this area belong to M/s Narayan Mines and M/s SMIORE.

95 647.R and S.18 30.75 3.24 high grade.L.R is about 25km from the main body.S.07 2837. The range is accessible both from Hospet and Sandur. M/s Gadagi Mineral Mining Co. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Name of the Lessee M/s Hothur Traders M/s Bharath Mines & Minerals M/s V.93 39. M/s SMIORE Ltd. 2313 2245 2290 2354 1111 1779 1168 1611 1602 MMM 79 dt. The Hospet railway station of the Hubli-Hospet-Guntkal section of the S.) 21. Main mines in KUMARASWAMY BLOCK Sl.47 Extent (ha. Omkaramma Sri B.W.63 6. Kumaragowda M/s Narayana Mines (P) ltd.C.11 26.50 16. Lad & Sons Smt.06 4. Hanumatha Rao Lease M.20 105.00 sq. of Sandur. Ambika Ghorpade M/s NMDC M/s Sugunraj Smt.27 80. M/s H. No.00 40.57A/8 and 57A/12.W. M/s Mysore Mineral Ltd.5-1-80 2489 1754 1179/2580 2505 109. No. Total reserves in the Kumaraswamy block is around 260 million tons of high grade. Ramghad Block: This block of iron ore spread over an area of 17. The block is figured at Toposheet no. Ramghad is the nearest railway station which runs parallel to and along the western flanks of the Ramghad block. . M/s Mysore Minerals Ltd.km is located towards the N.

Blue dust reserve is also noticed in this block.610 36.47 20.B. Kannhailyalal Duderia M/s SMIORE Ltd. The total in situ reserves are estimated at 220 million tons of high Fe grade. No.47 80.97 36.76 378.26 50. M/s Laxmi Minerals M/s Laxmi Minerals M/s Associated Mining Company M/s S. Smt.92 .HOSPET Sl. Sri.B. M/s Mineral Sales (P) Ltd.L. No.A.00 347.K. 2190 1715 2309 2239 2488 2369 2173 2451 2540 2545 2551 2434 2393 622 2563 1952/2581 2416/1801 2553 (921) 2515(2068) Extent (ha. (Sri Ily Gurunath) Sri.N.13 31. Minerals Ramghad Minerals and Mining Pvt.23 30.M.29 24. Minerals Ltd. Thawab M/s Adarsha Enterprises J. Shanti Priya Minerals Pvt.25 The major ore minerals are hematite and limonite. Lease M.74 1. Menon M/s Zeenath Transport Company M/s Zeenath Transport Company Sri S. Vrushabendraiah Ramghad Minerals and Mining Pvt.) 93.91 3. Shantalaxmi Jayaram M/s S. Ltd. Ltd. Ltd.28 80.42 22. Main mines in RAMGHAD BLOCK . 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 Name of the Lessee Rajapura Mines Sri.12 40. V.26 10.60 2.42 44.

The ore deposition is about 65% Fe grade which is quite hard and lumpy.e. The block is about 6... Ubbalagandi M/s H.M.. The major part of the block is occupied by NMDC. Parvathamma.000 283.910 33. 65% Fe.5 km long and runs NNW-SSE direction. Donimalai Town ship M/s Tungabhadra Minerals Ltd.. Devadari Block: This block is located to the South of Sandur and forms the western limb of the Sandur schist belt and falls in between Donimalia and Kumaraswamy hills. The nearest main railway station is Toranagallu on the Bellary-Hospet railway sector. Main mines in DONIMALAI BLOCK Sl. 2396 2365 2366 2514 (old) 995 2483 2526 Extent (ha. Hospet M/s Tungabhadra Minerals Ltd.000 125. Bellary M/s Nadeem Minerals Lease M. No.R.970 24.) 608. M/s Mysore Minerals Ltd. No.600 34. The ores found in this block is of high grade i. It also connects to the western foot of the Donimalai block near Ranjitpura. The total available reserve from this block is estimated to the order of 25 million tons of high grade. Hospet Smt.L. Donimalai Block: This block is located East to South East of Sandur and covers an area of 13. Bellary. Gaviappa & Co.. The SW side of the Narihalla stream is the Ramghad and .28 5.00km. 1 2 3 4 5 6 7 Name of the Lessee M/s NMDC Ltd.26 4. 6. Thimmappanagudi Block: This block is in continuity of Donimalai block. The total deposit reserve is estimated approximately at 160 million tons. K.580 33.

This is approachable from Sandur towards NE side via Muraripur. This block has estimated reserves of 30 million tons of high grade iron ore.13 5. M/s Hind Traders M/s Mahboob Traders Lease M. 2185 80 2289 670 1193/2469 Extent (ha. Ratnaiah M/s V. The nearest railway station is Toranagallu and presently the area is being mined by MML raised by Jindal Vijaynagar Steel Company.90 14. Main mines in BELGAL BLOCK (COPPER MOUNTAIN BLOCK) Sl. Narayan Reddy M/s Sugulamma Gudda Mining Co. No. There are as many as more than 15 ore bodies located in this block.27 Kumaraswamy blocks and towards NE the Donimalai and Thimmappanagudi blocks. Ltd.16 55.M.L. Bellary Cantonment is nearest railway station for ore loading.G.00 . Allum Prashant Sri. Distribution of iron ore is erratic and with a grade of 60 to 67%Fe.5km in NW-SE direction and starts from west of the Bangalore-Bellary road. N. The total length of the block is 17. The recovery of ore is poor and often it is around 50 to 60%. Belgal (Copper Mountain) Block: This is the block found near to Bellary and has been known as the Copper mountain block though there are no indications of Copper deposit.) 46. 7. No. 1 2 3 4 5 6 7 8 9 Name of the Lessee M/s Mineral Miners & Traders M/s Gavisiddeswara Enterprises Sri. Pvt.67 42. M/s T. About 30 million tons of ore with a grade of 62% to 65%Fe are estimated in the block under mining leases.

The statement enclosed gives a relative status of production and export of iron ore from the Karnataka State for the period from 2000-2001 to 2005-2006. iron ore production was about 1. The width of the ore bodies varies from 25 to 50 meters.4 million tones of medium grade (62-65%Fe) and rest is low grade ore. The Toranagallu and Bannihatti are the nearest railway stations to this block.2% of the total reserve i. Iron Ore Production and Mining Leases in Karnataka Iron ore production from Bellary Zone is around 12. The production of iron ore of all grades have suddenly increased over the years and it has reached to 41 million tones by the end of the year 2007. The grade is about 66%Fe. The Tungabhadra Minerals Ltd.4 million tones during 2001-2002 and around 13. 1000 million tones but it has increased during “China Boom”. The grade wise production of iron ore from Bellary – Hospet region in the recent past is in the range of 5.5 to 6 million tones of high grade lumps and fines (65% Fe and above) and little over 3. the State of Karnataka ranks fourth in the Indian Union in regard to iron ore resources and production. As stated above.9 million tones during 2002-2003 of all grades of iron ore including the production of public sector mines. There is a significant rise in the iron ore production during the period from the year 2001 to 2006. Thus.28 8. The iron ore deposits in this block are found mainly to hill tops. is the main mine in this block. The total rise in production in .e. Ettinahatti Block: The Ettinahatti block falls at the eastern most part of the Sandur.

97 respectively for the reference period 2000-2001 to 2005-2006.91 60225.67 40.67 and 1232.39 618.95 41.83 184.31 87.86 2052.60 5325.05 6.39 (Million $) Domes-tic price (Rs.30 21.38 70.09 357.15 16744.54 1102.T) Production (Million M.29 13.25 100.21 3500.65 19.18 11490./DMT) 274 297 302 651 841 1061 -- Export price (U.52 90.64 16.09 740. The percentage rise in the export value realization and value of ores domestically consumed is 1014.39 Total value of domestic consumption (in Million Rs.19 12. As per information available on record.91 20.31 21548. export and consumption. only 11 new mining leases for iron ore were granted and executed during the reference period.) 281.07 31.98 658.) Domestic Use (Million M.T) Total Export Value (In Million $) 2000-01 2001-2002 2002-2003 2003-2004 2004-2005 2005-2006 Total 12.29 the year 2006 is 237% as compared to the production for the year 2001.74 29.82 20.36 (Million Rs.41 4648.93 11. there is no significant rise in the number of mining leases. When these values are correlated to the iron ore producing mining leases in the State of Karnataka.27 431.39 29.23 33.T) Export (Million M.19 1532.$/DMT) Year . These values indicate a radical rise in the iron ore production.) 1616.76 5.00 5216.90 17.78 1074.09 30.73 40. IRON ORE PRODUCTION AND EXPORT PARTICULARS KARNATAKA STATE (2000 to 2006) Revenue realized by the State as Royalty (in Million Rs.S.59 17.22 25.14 831.00 -- 184.

58 843.28 4626. No.91 6338. of mining leases 5 196 88 7 60 175 42 80 632 Extent (Hectare) 6233.56 2918.66 17397.22 .30 Approximate number of mining lease/licences granted till the year 2000. 1 2 3 4 5 6 7 8 9 Mineral Gold Iron Ore Iron and Manganese Chromate China Clay Lime stone Lime shell Silica Sand Others No. The information in this regard as extracted from the ”Administration Report of the Department of Mines and Geology for the year 2000-2001” (page 5 of the report) is as below: Sl.81 22500.83 7515.26 27872.

a team lead by me proceeded to a village called Shivasandra in Gubbi Taluk of Tumkur District. inside from Gubbi Chikkayanayakanalli Road. I visited the three districts where iron ore mining is predominantly done.CHAPTER – II Visit to Mining Areas To better understand the ground realities. One could also see the wheel marks of JCBs used for mining purpose. which is situated about 25 Kms from Gubbi. 2008. The place visited by me in this village is situated about 6 Kms. obviously used by heavy vehicles for transportation of minerals. While driving up to the site visited by me. one could see extensive mining done which also indicates that mining is of recent origin. On 20th May. . The road leading to this place is a kacha road. There were also iron ore stocks heaped and kept ready for the purpose of transportation.

32 According to the Dy. 4100 metric tones of illegally mined iron ore was seized and auctioned. One could see that the land beyond the mined area is full of greenery. Commissioner. I was also told that a few days earlier nearly. but. contains iron ore. no mining lease has been granted in regard to any area in this village and that the mining that has been done are wholly illegal. Tumkur who accompanied me. .

also . The manner in which the road is constructed and the equipment used for mining indicates even illegal mining in this area has been done in a systematic manner and the same is not sporadic. The survey number of the area that has been illegally mined is stated to be Sy. 45 of Shivasandra Village which measures about 512 acres. Obviously.33 If prevailing activity is allowed to continue. large quantity of iron ore has been excavated and transported causing not only revenue loss to the State. this greenery is not likely to last long.No. but.

2536 originally granted to this company in the year 1988 and I was told that it has been renewed in the year 2007. damage to ecology will be irreparable. I visited another area in the same survey number. the mining that has been done in this land by the said company is unlawful. obviously is within the knowledge of the officials of the Department of Mines and Geology. The mining lease was granted for the purpose of mining manganese ore.34 damage to the ecology. The area in which the mining is done is about 11. after visiting the site referred above. Shobachala claiming to be the representative of the Shivasandra Minerals stated that the Canara Minerals is a part of the Shivasandra Minerals and the same was purchased about an year back. The fact that the land in question is being used for mining iron ore. the mining lease has been renewed in February 2007 for mining manganese. But. This company possesses mining lease No. I was also told that there is a dispute in regard to lessees’ right between the holder of the lease and some other third party. He also stated that since the company found iron ore instead of manganese. where a company by name Canara Mines Private Limited was involved in mining activities.33 hectares and I was told by the official accompanying me. the same was mined and necessary application to include . One Mr. when I visited the place. that the entire area is being used for the purpose of mining iron ore. for which there is no lease granted by the Government. Without a proper mining lease to mine iron ore. If this activity is not stopped forthwith. but iron ore. On the same day. it was found that the ore that has been mined is not manganese.

No. i. 61 of this village measures 86 acres.20.00. In another instance.e. no steps whatsoever have been taken by the concerned to stop these illegal activities.No.35 iron ore in the lease is pending before the Government. about 1300 metric tones of ore had been auctioned for Rs. Hanuman Singh and the same was renewed in the year 1996 for a period of 20 years in the name of Sri B.20. 2008 itself.7. According to him. 2008. On 20th May. the land was leased by the Government to one Sri B. At any rate. mine is being operated by Sri Vinod Goel. It is stated that recently one Sri Vinod Goel got the lease transferred by the Government in his favour and since about five months. Originally. 195 of Rajathadripura Reserve Forest Area.D. Hanuman Singh. I also visited Sri Hanuman Mines situated in Sy. 43 acres have been granted to various persons for agricultural activities and no mining lease has been granted in this area. from 27/11/2007. 61 of Haranehalli Village which is about 30 Kms from Gubbi. Out of this. Sy. extensive mining was noticed in this area. I along with my team visited Sy. On 20th May. The Dy.D.000/-. The officials of the Forest Department accompanying me stated that a part of the mined area has not been . Commissioner who was accompanying me said that this place was raided while mining activities were going on and at one instance 3000 metric tones of iron ore was seized and auctioned for Rs. But.No.000/-. though illegal mining has been going on for the last about two years. present mining activity of extracting iron ore is illegal and the lease is liable to be cancelled.

D.D. It was also seen that the Government of Karnataka by an Order No. the representatives of the lessees have put their signatures. The Forest Department officials say that illegal mining has been going on in the forest area since the year 2005 and once a quantity of 5. dated 22/09/2007. However. It was also stated that proper sanction has not been obtained for using the land for non-forest activities. . the representatives of the lessees stated that they have only signed the survey report. But. since they were present at that time.079 metric tones of iron ore has been seized.36 permitted to be used for mining. but they are not admitting the contents of the report. had transferred lease from Sri B. The representatives of the mining company however. denied this and they also stated that the matter was subjudice before the Civil Court. it was also noticed that the bulk permission for transportation is still being issued in the name of Sri B. subject to the condition that the transferee agrees to the conditions and liabilities that were imposed on the transferor.Hanuman Singh who has ceased to be the lease holder. The Dy. They also stated that the forest land is being used apart from mining also for illegal dumping of the mined dust without proper permission. Commissioner stated that the joint survey was first conducted on 14/12/2006 for the first time and a subsequent joint survey in the presence of the lessees was conducted on 5/7/2007 to which report.Hanuman Singh to Sri Vinod Goel. This indicates the utter carelessness on the part of the officials empowered to issue transport permit and failure on the part of the checking staff enroute transportation. CI 71 MMM 2007. being in a reserve forest.

by the side of the road. I took a different route to Chikkanayakanahalli and could see on the way spots indicating illegal mining. I visited Thirtharampura Village of Chikkayanayanahalli Taluk.37 After the visit to the above mines. On the way. there is a stone sign indicating that the area in question is Thirtharampura State Forest. .

P. the Director of Mines and Geology has not yet initiated any enquiry in spite of the direction being of the year 2004. it is seen that extensive mining is going on illegally in Government land and no action has been taken by the concerned authorities. as also . who hold the lease in this area. but allegations that in areas where lease has been granted. had ordered an enquiry to be conducted by the Department of Mines and Geology after giving opportunity to the Petitioner. No.38 We could also see here certain stacked lumps indicating that iron ore is being mined and stocked in this forest area. stated that they have been holding the lease for a long time and it was last renewed in 1966 for a period of twenty years. The representatives of the Karnataka Mining Company. I was also told that in spite of the direction of the Hon’ble High Court. lessees have been doing mining beyond the area to which the lease pertains. Inspite of this direction given by the Hon’ble High Court on 20/11/2007 without holding any inquiry the authorities have allowed the mining to be continued. 45401/2004 and the Hon’ble High Court on 20/11/2004. I was told that in regard to this area also. They also stated that in view of the fact that the forest officials obstructed the mining in this area. There are Can this be anything. they have approached the Hon’ble High Court in W. However. Department of Mines has granted a lease without reference to the forest authorities or Forest (Conservation) Act and directions of the Supreme Court. connivance? From the visit to the above villages of Tumkur District.

No. Hosadurga Taluk. Thangavelu of Mari Cements in Tamilnadu who is said to be a Minister in Tamilnadu.19. then visited a mine allegedly belonging to one Mr.H. I along with my team visited Doddabyalekere. The land visited by me is about 40 Kms from Hiriyur in S. I.39 illegal mining is going on in forest area. On 21/05/2008. The visit indicates that there is a unit put up for crushing lime stone but it has become defunct and the area is used for large scale . it was noticed that sporadic mining activities are going on by the people who have been granted Government land and the minerals mined are purchased by people who hold mining lease and transport the same as if the said minerals have been mined from their legitimate lease hold land. No action has been taken against the grantees of the lands for violation of terms of grant. In this place. Authorities have not also complied with the directions of the Hon’ble High Court.

40 iron ore mining. These are in contravention of mining rules. made an assessment of the illegal mining and seized certain transport permits which indicated that transport permits were given without mentioning the vehicle numbers or quantity that is being transported. Another interesting thing to be noticed is that Sri Thimmappa.57 hectares. Commissioner and Supdt. They made no attempt to stop these mining operations. claiming to be the Manager of the lessee showed me an order made by . Dy. of Police. the actual mining is being done in lands beyond the leased area. During the currency of that lease. from 1999. one could see that though the lease is given for 131. By an ocular measurement. Consequently. Chitradurga visited this area. the same was converted to multiple minerals lease and the owner was permitted to mine other minerals like manganese and iron ore without making the proper verification as to the activities that were going on prior to the change of the minerals in the lease. There are tel-e-tel evidence of active mining going on in this area. It was also brought to my notice that grant of lease ipso facto does not give a right to the lessee without first there being an execution order which can be given only after a survey and no such survey was conducted and no boundary was fixed and the lessee continued to operate the area for iron ore mining which was within the knowledge of the officials of the Mines and Geology Department in the District of Chitradurga. I was also told that originally the Government of Karnataka issued mining lease for quarrying lime stone for the purpose of using it in the manufacturing of cement which was valid till 1979. the mining operations are going on without the execution order. We were told that about two months back.

C Rules. there are some claims by people that they were granted these lands for cultivation purpose. but. These lands are abutting the lease hold lands referred to in the earlier paragraphs. it is seen that though this is an order which normally has a life span of only six months.11/3/2004 in File No. It is relevant to mention here that in regard to this gomala land. There was a litigation which has gone upto to the High Court and the matter was remanded to the Revenue Authorities and the Deputy Commissioner had cancelled the lease granted to these parties for mining illegally. 1960 is accorded until further orders”. we found a large area of Government Land (gomala) being used for illegal mining. Number of pits from where ore is extracted were visible. Here. Will any action ever be taken against erring officials? Proceeding further from the above mine. Rules. which emphasizes that the Director of Mines and Geology has issued an open ended work order which is not contemplated under the M&M (D&R) Act and M.C Rules) based on the Govt. a stay granted by the High Court of Karnataka is in existence. which is a permission purportedly given under Rule 24(6) of the Mineral Concession Rules. CI 04 MMM 04 dated 13/2/2004. We were told that illegal mining are done by locals and these ore mined are purchased by lease holders and transported using their transport permits.41 the Director of Mines and Geology Dt.C. as per the orders of the Government of Karnataka vide reference. DMG/190 AML 99/17440. Order No. what action department is . working permission as per Rule 24-A(6) of the M. 1960 (for short M. the wordings of this shows “with reference to the above subject.

No. a mining Company belonging to HRG Group is doing manganese mining. Dolomite and manganese. Originally multiple mining lease was granted to this company in the year 1999 for mining Clay. I visited Itigehalli.No. which is leased to the company includes this part of the land also. Therefore. If so. where Srinivasa Clays. we found illegal mining activities in some patta lands. 102. company is 250 acres. 102. Survey No. The total area granted in the lease to this The sketch map attached to the lease deed indicates that the lease pertains to Sy. Here mining activities are confined to the manganese ore only. We were told that in reality the lessee is not mining in Sy. The contention of the revenue authorities who were present here is that the area that is being mined beyond Sy.No. but. Anand Raj. is illegal mining permitted? Is this fact brought to the notice of the Govt. is doing mining work in the area which is adjacent to Sy. 100 and 102. 100 is unauthorized.No. it is contrary to law. He says that Survey No. .No. 102 is in the forest area and there could be no legal sanction to mine in this area. or Court? Moving further from the above land. Mr. 100 which is not a part of the lease deed as could be seen from the sketch attached to the lease deed.100. It seems no body in the Government is bothered about these illegal activities.42 taking to get the stay order? Or this inaction is a part of collusion? Assuming that lands are granted for cultivation. after all whose loss is it? Moving further in Hosadurga Taluk. the Manager of the Company who was present does not deny the fact that no mining is carried on in Sy. There is no evidence as to the existence of any clay in the area as one could see.

Anand Raj produced a Judgment of the Hon’ble High Court of Karnataka delivered on 2nd January 2007. about 5 Kms down the hill. Court has not considered as to whether actual mining is being carried out in the area permitted as per the original lease deed. Travelling further from Srinivasa Clays. we saw a huge stocks of . even though the application for renewal is pending. the mine referred to hereinabove. The only question that is to be considered is whether the mining is carried out in the area that is leased out or beyond it. Mr. The company is relying on another map. The lessee is relying on the order of the court for the purpose of mining beyond Sy. the lessee can mine beyond the land lying within the sketch attached to the map. Of course.43 the department should have held a joint survey which is not done. no reliance can be placed on the said map.No. No such efforts have been made. It seems to be a clear case where the authorities have failed to bring to the notice of the court that the party is misusing the above order. 100. there is a finding of the court that the company is not mining in the forest area which seems to be a fact and that is not an issue now. since that is not the map attached to the lease deed. 100 in which event the respondent authorities in the said Writ Petition should have sought the clarification from the High Court whether by virtue of the interim order.No. The dispute before the High Court was in regard to the notice. The evidence which is shown indicates that the sketch attached to the mining lease does not include the adjacent land which lies next to Sy. the respondent mining authorities had issued to the company to stop mining activities on the ground that the lease had come to an end.

1957 (hereinafter referred to as the ‘M&M (D&R) Act’ for short) and relevant Rules. then Srinivasa Clays are guilty of using Government land without permission for putting up a stock yard which is an offence under Mines and Minerals (Development and Regulation) Act. On 21/05/2008 itself. Even otherwise. The Tahasildar says that these are areas mined by the local villagers who have made it a profession because of the fact that there are illegitimate buyers from amongst the leased mine owners who purchase the same from the locals and transport the same under the bulk transport permit given to them for transporting legally mined ore from their leased mine. I and my team visited Shivaganga Village in Holalkere Taluk where we were told that the Dy. tel-etel evidence of digging of land nearby is an evidence of illegal mining. This illegal transporters who have some leased area at their disposal indulge in purchasing and transporting illegally mined ores from poor villagers which practice has converted the otherwise honest villagers to commit unlawful acts. This explanation even if assumed as true. When I questioned the Tahasildar for the inaction on her part in not taking preventive action. they claimed that these minerals are stocked by them at the Government land which they had mined legitimately from their leased area for the purpose of convenient transportation. Commissioner had recently seized certain illegally mined iron ore and the same was . These stocks have been mined from revenue land without any permission.44 illegally mined manganese ore which are since seized by the Tahasildar. she told me that when she interrogated the officials of Srinivasa Clays supra.

84. Proceeding further.45 shifted from the place of mining to Shivaganga Tank bed to prevent theft and to provide proper security. we visited Sy. This is an area which has been under the scrutiny of the Lokayukta for a long time since the Lokayukta police had raided Sy. they are of the value of 1. 9 and 10 of Aralikere village of Holalkere Taluk in a mid night raid and seized 5 JCBs along with huge . The iron ore stocked.61 crores. 85 and 86 of Shivaganga Village. Holalkere Taluk.No.No. as told to me.

now greenery is found only in patches. the vigilance over illegal mining has slightly loosened and taking advantage of the same. Here. illegal mining is taking place. it could be seen that large quantity of illegally mined ore are stocked. The land. that too in such places where mining is not possible. we could see thousands of metric tons of iron ore stocked. Commissioner informed me that because of the election process.46 quantity of illegally mined mineral. the mining is going on in huge gomala belonging to the Government and even by a visual assessment. . The Dy. we were told was originally full of greenery. Hence.

claims that some land here is leased to them in 1952 by the then Madras Presidency.47 The Dy. On 22/05/2008. We were also told that with paucity of staff and most of the people who are indulging in illegal mining activity being very aggressive.B. Since the correctness of the claim can be determined only by a proper survey of the land. if necessary after getting the permission of the Court. it is in the interest of all concerned. a company by name MSPL. to get a joint survey made. Minerals who have their leased land in the north part of the MSPL land. . This is again an issue which can be determined only by a joint survey. The officials of the MSPL told me that no enquiry should be conducted since it will prejudice the litigation that is pending in High Court and other Civil Courts. There seems to be a dispute not only interse between the officials and the MSPL company. They have a lease for twenty years from 13/01/1997. Allegation here also is that this company has been mining beyond the area granted to them. Here. From the MSPL mining area. Commissioner has stated that he has decided to seize the material and promised me to auction the same. We are told by the Government officials that this company is indulging in illegal mining. I and my team visited Kallahalli of Hospet Taluk. we moved on to the area occupied by M/s S.B. but also between MSPL and one Shantalakshmi Jayaram who has mining lease on the south west side of the land granted to MSPL and S. it has become difficult for local administration to enforce strict vigil over illegal mining. Minerals.

As stated above. As per the lease deed. the company has got 231 acres land in Rajapur Village. the remedy is only to have a proper survey done but nobody is bothered to move in this direction. .48 Moving further on. forest map and revenue map do not tally. On the way. when objection was raised by the Forest Department. we could see mineral wastes having been dumped from top of the hill in the forest area on the sides of the hills. Again. may be because it is to the advantage of all concerned except the State. There is some variation in regard to the end portion shown in the map attached to the lease deed. which certainly it is an illegal act since forest land cannot be used for non-forest activities. they stopped operation in the disputed area. I and my team visited Sandur Taluk. on either side of the road. According to the company officials. Minerals in the same ridge. which is adjacent to Kallahalli Village. On 23/05/2008. this is a common dispute in regard to mines lying close to forest area or close to other leased areas. I and my team visited Rajapur Village in Hospet Taluk which is on south west part of MSPL and S.B. Therefore.

49 .

We saw evidence of attempts having been made to clear the stock anticipating our visit.50 We could see the enormous damage done to the nature by such dumping. We also saw small stocks of mined mineral and huts of the labourers on either side of the road. The volume of illegal mining on either side of the road is so large that it could have certainly attracted the attention of the officials both revenue and Mines Department. The living condition of these labourers is pathetic. Most of the labour indulging in this type of mining are former labour employed in mines .

where the concerned Dy. it is very obvious that this land has been used for stock yard for a long number of years. Lakshmi Minerals. Travelling further. we visited another stock yard owned by Muneer Enterprises which is in a area of about 16 acres. From the nature of activities that is going on here. who is also the owner of firm M/s. According to the officials present. The representative of the firm showed some application made for grant of conversion in the month of December 2007. much before December. this is another case. This type of mining by villagers and labourers are done either in Government Revenue land or in patta land. We were told that the firm had obtained the stock yard permission and the same has expired on March. Incidentally. but. though M/s Larksome Minerals has the mining lease. they are minerals illegally mined and brought to this place for stocking. We are told that this area comes within the jurisdiction of Hospet Urban Development Authority. Travelling further. Most of the lands granted by the Government are also used for illegal mining activities. the stock found in the stock yard are not minerals mined from the leased area. but. which seems to be as inactive as any other Government Department concerned in mining activities. no action is taken to cancel the grant for misuse of the object of grant.51 now unemployed because of modern machinery. 2007. . This stockyard is situated in patta land and no conversion has been sought. Director of Mines and Geology has given an open ended extension until further orders. 2008. we visited a stock yard owned by Sri Kaviraj Urs.

it is obvious that it is used as a major stock yard for which no permission is produced.5 acres and we found huge quantities of the minerals stocked there. but. The total extent of the area used is 3. situated in Sy. But from the stock available. Pollution Control Board and the Revenue Department have given certain permissions within their jurisdiction even without verifying the nature . Environmental Pollution Control Board has given permission only for crushing and not for stocking. a trader can have a stock yard.No. in Jayasinghpur village.52 Travelling further. Commissioner. The officials of the firm told us that an application for the conversion of the land has been made to the Dy. it is only a trader. Still the area is being used as stock yard. Moving further. we visited Sri Sai Krishna Minerals Limited. the officials of the firm stated that there is no need to seek such permission. When asked. In law. The attitude of the Revenue Department and the Mines and Geology Department showed that as the famous saying goes “the right hand does not know what the left hand is doing”. This firm does not hold mining lease. while the officers of the department pleaded ignorance about the need to obtain Environmental Clearance Certificate. we visited Kineta Minerals and Metals Limited. Here. but no orders have been passed. 44 of Jaisinghpur Village. by its owners. more will be recorded hereinafter as to this requirement. The Mines and Geology Department. but he has to comply with certain conditions to which reference will be made hereinafter. No Environmental Clearance Certificate has been obtained for using the above land as stock yard.

if the land is meant for agricultural purpose. At this point. It is only thereafter the Director of Mines and Geology can grant a permission for stock yard. Before granting the stock yard licence. An affidavit stating that the applicant has not been convicted in any case of illegal mining/quarrying should also be executed. The applicant should be registered as an industrial establishment with the Department of Industries and Commerce. On the contrary. Director who after personal visit will have to report the suitability of allowing the land to be used as stock yard and the fulfillment of the above requirements. It is said that in the said Sy. This application has to be made to the Dy. the authorities concerned have to inspect the land and see the viability of granting such permission. Clearance Certificate from Karnataka State Pollution Control Board is also necessary.No. In regard to above said Sri Sai Krishna Minerals Limited. But. some people have been allotted about three acres each for the purpose of agriculture. clearance and Pan as well as VAT registration with ST Clearance Certificate should also be obtained. land conversion should be made. examination of the documents in regard to the various stock yards referred to have clearly . several stock yards or crushers could be seen. it is necessary to note the requirement of law for obtaining a stock yard licence.T. No attempt has been made to cancel the grant for not seeking conversion.53 and ownership of land etc. No agricultural activities are seen in this land. it is to be noted that the stock yard is situated in an extent of 9 acres which is carved from a total area of 72 acres in Sy.No. The land is shown in the revenue records as agricultural land. I. 44.

The owners of the land stated above had made an application for grant of mining lease for an extent of 8 acres 13 guntas using the sketch showing Sy. As per the enquiry conducted by the Lokayukta officials.No. Even then the lease was granted to this company for mining iron ore for 20 years. but the land shown in the sketch attached to the list is non-existing and the survey number given is not correct. The ground reality is that the records reveal that this area has not even been phoded and sketch given along with the application for grant of lease are not identifiable. It clearly indicates either the collusion between the .54 shown that all the requirements of law are not complied with nor that the officials concerned have made a visit to the land in question and have assessed the viability of allowing a stock yard. only 4 survey numbers were given to the area situated in this village and at that time. No cross verification in regard to the the boundary shown in the Even the existence of this Sy. this village was known as Ramanomalai and the surrounding areas in the same village is not surveyed even today. 19. is made nor application for grant of mining lease which is mandatory. It is necessary here to recapitulate certain survey history of this area which is in an area called Ramghad. It is not only situated elsewhere. In the year 1903. the area where actual mining has been done has no reference to the sketch produced along with the lease. As stated above some of the officers do not even know the requirement of law either deliberately or conveniently. Vrushabendraiah Mining Company. On 23/05/2008 itself. actual location with reference to the topography of the village was not identifiable. we visited the mine operated by M/s.No.

The company was granted certain land for iron ore mining in the year 1963. we reached the mining area belonging to M/s Zeenath Transport Company. mining has been permitted in 277. Moving further from the above mine. According to the officials who are assisting me in this investigation. When this area was surveyed by the officials of the Lokayukta in the presence of the officials of the Company. Though I had given notice to the company representatives about my visit. but also other proceedings be initiated for cheating. This land actually is adjacent to the land granted to . two more leases for mining in additional land have also been granted.01 acres. lessee had carried on mining beyond the demarcated area that is outside the boundary allotted to them. Since this type of mischief is not confined to the company referred to hereinabove. After obtaining clearance under the M&M (D&R) Act. This is not an isolated case where such lease has been obtained in the non-surveyed area or non-phoded area. it is a fit case in which not only lease should be cancelled.55 department and the lessee and that the lease has been granted without the concerned officials physically verifying the land. If what is recorded herein above is correct.48 acres. fraud and such other related offences. I am told that many other licences have been similarly granted. as also steps be taken to recover the loss suffered by the Government. Thus. no representative of the company was present. it was seen that at four different places. the area where mining is done by the lessee was in excess by about 35. the enquiry should not be confined to this company only. which according to the provisions of M&M (D&R) Act is illegal. I think this issue requires a serious enquiry.

G. During the course of my journey. huge damage is also caused to the various roads used by mineral carrying vehicles. which is a concept not recognized by law. other persons to whom parts of the leased area are subleased. I noticed that roads in and out of Hospet and Sandur are practically not motorable by passenger vehicles. Ranganagowda. There is a need for making an assessment as to the loss caused to the Government in this mining area. Here. The mining here seems to be going on in a very rapid manner. are working the mine under what is commonly known as Raising Contract Agreement. the extent of damage done to the neighbouring areas. Before proceeding further with this part of the report. I and my team visited the land granted to Sri H. The issue relating to so called raising contract will be discussed in detail in the later part of this report. because of the heavy load and frequency of the vehicles . There is also evidence to show that this company has been doing illegal mining beyond the allotted area of about 55 acres.56 Vrushabendraiah Mining Company. we were told that the land has been divided and apart from the Ranganagowda family. Apart from noticing generally wherever mining is permitted. but the issue can be settled only after a detailed enquiry. Moving further. There are indications to show that one of the two companies has encroached upon the non granted area. I should place on record certain ground realities which are existing consequent to the large scale mining that is being done in this area which is part of the knowledge acquired by me during my visit to above mentioned three districts.

vegetation has been damaged heavily. . on either side of the road.57 carrying minerals and also in view of the fact that these vehicles carry minerals in open bodied vehicles.

a group of about 50 residents of Sandur met me at the forest lodge and expressed their difficulty because of the transportation of iron ore. According to them. If the same is not put an end to. they are unable to keep their doors and windows of their house open even for few minutes during the day or night and drinking water sources as well as vegetation have been covered by mineral dust. the day is not very far when . Having noticed the various aspects of illegal mining during my visit to the three districts of Bellary. I also noticed that damage to the environment and suffering of the people because of illegal mining is not confined to the people of Bellary district. Chitradurga and Tumkur. the population of Sandur have been suffering from various ailments and the people who are indulging in mining activities have absolutely no concern for the welfare of the local people. Consequently.58 While in Sandur. I found a lot of justification in their complaint.

Singh and I am satisfied with the same. guilty of illegalities. 202/1995. extraction of the mineral. i.59 this suffering will spread to Tumkur and Chitradurga districts. if not already affected. I will discuss the report prepared by Dr. as well as various mandatory directions issued by the Hon’ble Supreme Court of India in W. 1980.P. U. Hence. in consultation with me. transportation and consumption are governed by the provisions of M&M (D&R) Act. Singh has noted are prima facie findings without which this report will be incomplete. Mining in various areas are also governed by the provisions of Forest (Conservation) Act.e.V. Grant of mining licence and various aspects of mining. Rules and the standards set by Indian Bureau of Mines. M. with which I am in full This report has been prepared by Dr.U. Singh found at agreement. Further parties. Prima facie I am satisfied that there is some sort of irregularity or illegality in the grant of mining leases or working of the mining in . companies and leases mentioned in the report are not the only ones. U.V.V. U. Violation of any of the provisions of the M&M (D&R) Act or the M.C Rules will be an offence and are punishable under the provisions of the said Act and M.C Rules. The summary of the encroachment by the lessees in various regions enumerated herein afterwards are facts verified by Dr. Singh. the same has been noted and I reiterate that whatever Dr. I will now discuss the applicable law in regard to mining activities. Wherever an issue is subjudice. the same is incorporated as part of my report. No. storage.C.V. In the above background. Annexure-‘A’.

The examples set out in this report hereinafter are only samples in regard to which prima facie material is available and the balance of mines will have to be visited and surveyed and illegality. Further report will follow regarding irregularities committed by concerned officers. if any.60 almost all mining leases and activities carried on thereafter. It will be done along with the other deferred issues including the extended period of reference in the next report. and the extent of such illegality will also has to be ascertained. .

but does not include pitting. trenching. as any operations undertaken for the purpose of exploring. delineate and assess the economic suitability or otherwise of a mineral/ore deposit and exploit the mineral/ore on a profitable basis. aerial. The ultimate objective of any mining enterprise is to locate. (ii) Prospecting operations are defined at clause (h) of Section 3 of M&M (D&R) Act. (iii) Mining operations are defined at clause (d) of Section 3 of M&M (D&R) Act. drilling (except drilling of boreholes on a grid specified from time to time by the Central Government) or sub-surface excavation. geophysical or geo-chemical surveys and geological mapping. ‘ [Winning a mineral’ means getting or extracting the mineral from the mine.III Procedure followed while granting mining lease/licence with special reference to prospecting licence. as any operation undertaken for the purpose of winning any mineral. . locating or proving Mineral deposits. prospecting of mineralized belts and ultimately mining of ore/mineral in a profitable manner. (i) Reconnaissance –operations : It is defined under clause (ha) of Section 3 of M&M (D&R) Act as any operations undertaken for preliminary prospecting of mineral through regional. This is done in 3 stages namely reconnaissance surveys/operations.CHAPTER .

the Government prospecting.62 A scientific and systematic approach to acquire economically profitable mining venture. a mining entrepreneur prefers to seek a mining lease directly rather than going through the processes of reconnaissance and prospecting. are involved in exploration and identifying of mineral wealth in the country. prospecting or mining operation in any area for ores and minerals. extension. Mineral Exploration Corporation of India. in the present day.C Rules. Any person who undertakes any reconnaissance. It may also be stated here that Acts and Rules in existence do not make it obligatory for a person applying for a mining lease of having explored the area by obtaining the reconnaissance permit or prospecting licence. hydrocarbon/energy minerals and atomic minerals. with the advent of democracy and people oriented policies pursued in independent India. reconnaissance and need be preceded by the processes of However. In the said context. institutions like Geological Survey of India. . is required to obtain a permit/licence/lease as per M&M (D&R) Act. Thereby. Originally. information generated by conduct of such operations remained as classified. chemical quality and potential of many of the ore and mineral resources. the information that remained classified was made open to the mining public except in case of strategic minerals. 1957 read with M. fairly well documented information is available about the occurrence. State Departments of Mines and Geology etc. However.

1957 to select the suitable applicant for grant. the applicant whose application received earlier. all the applications received during the period specified in such notification and the applications which had been received prior to the Notification shall deemed to have been received on the same day for purpose of assigning the priority.63 I Reconnaissance permit: Section 4(1) of M&M (D&R) Act. When 2 or more persons apply for a reconnaissance permit over the same area which is not notified. 1957 prohibits prospecting operation in any area by any person or a firm without a prospecting licence where a reconnaissance permit has been granted in respect of any land. the applicant whose application was received earlier shall have preferential right. . But. shall have a preferential right. All such applications are required to be evaluated as per parameters under subsection 2 of Section 11 of M&M (D&R)Act. and 2 or more persons have applied for a prospecting licence in any land in such area. where the State Government has not notified in the official gazette the area for grant of prospecting licence. 1957 prohibits any reconnaissance operation by an individual or a firm in any area without obtaining a reconnaissance permit. the permit holder shall have a preferential right for obtaining a prospecting licence. II Prospecting licence: Section 4(1) of M&M (D&R) Act. Subject to the provisions stated above. in case of the State Government having invited applications by notification in the official gazette for grant of Reconnaissance permit.

All such applications are required to be evaluated as per parameters under sub-section 2 of Section 11. When 2 or more persons apply for grant of a mining lease over such land. M&M (D&R) Act.C Rules.64 Where an area is available for grant of prospecting licence and the State Government have invited application by Notification in the official gazette. 1957. The process for granting of mining lease over an area therefore varies according to the category. III Mining leases: Section 4(1) of M&M (D&R)Act. An area available for grant of a mining lease fall under 3 categories. the applicant whose application was received earlier shall have preferential right for grant of mining lease. 1957 prohibits any person undertaking mining operation in any area except in accordance with the terms and conditions of a mining lease granted under the said Act read with M. all the applications received during the period specified in such notification and the applications which had been received prior to the publication of such notification shall deemed to have been received on the same day for purposes of assigning priority. . (1) Virgin area: The preferential right to the persons who make applications on such area is primarily decided according to subsection 2 of Section 11 of M&M (D&R) Act. 1957 to select the best suitable applicant for grant.

the State Government may grant mining lease to such one of the applicants as it may deem fit according to the parameters specified under sub-section (3) of Section 11. M&M (D&R) Act. All such applications along with other applications received consequent to the Notification during the period specified in the . shall be deemed to have been received on the same day for the purpose of assigning priority. expired and also such areas dereserved for public exploitation is notified in official gazette for grant by the State Government and applications are invited All such applications which had been received prior to the publication of the Notification and had not been disposed. off. 1957.C Rules further provides that the State Government while granting the mining lease over the area earlier held under reconnaissance permit/prospecting licence may for any special reasons to be recorded in writing may reduce the area or exclude a portion there from. (3) Where an area that was previously held under a mining lease and such lease is determined. (2) Where reconnaissance permit or prospecting licence has been granted in respect of any land. Rule 34 of M.65 Where more than one application are received on the same day. the permit or the licence holder shall have a preferential right for grant of mining lease over any other person provided that the State Government is satisfied that the permit holder or the licence is qualified as per norms at clause (a) to (d) of subsection (1) of Section 11 of the M&M (D&R) Act.

While doing so. In order to maintain objectivity and transparency in the process of evaluation and selection of the best suitable applicant executive instructions are issued for grant of mining lease. various by the Commerce and Industries Department of Government of Karnataka which oversees the matters relating to regulation and development of Minerals in Karnataka. investment of the applicant towards development of mines. according to the parameters specified under sub-section (3) of section 11 of the M&M (D&R) Act and may grant the mining lease to such one of the applicants as it may deem fit. establishment .C Rules. total area held under mining lease in different parts of the Indian Union [to verify the limitation of the areas as under section 6(1))(b) of) M&M (D&R) Act. shall be considered simultaneously as if all such applications have been received on the same day by the State Government. nature and quality of the technical staff employed. 1957]. The procedure generally followed in such a process is: (i) To prepare a statement showing date-wise receipt of applications. financial resources of the applicant. any special knowledge or experience of the applicant. as provided under rule 35 of M.C Rules provide the provisions and process to select the most suitable applicant by a just and equitable criteria for grant of mining lease when multiple applications are received over a single area that is notified by the State Government. 26(1) and 26(3) of M.66 Notification. the State Government may also consider the end use of the mineral by the applicant. The Section 11 of M&M (D&R) Act read with Rule 35.

(iv) To prepare a statement of evaluation by the hearing authority regarding special merits of the applicants (v) To draw proceedings of the hearing authority giving relative merits of the various applicants heard and to record a speaking order on the selection of the applicant for grant of mining lease.67 of mineral based industry etc. the process of evaluation in many of the cases is ridden with irregularities. the Notification issued by the Government of Karnataka throwing open the area for grant of mining lease are open ended. end use of the mineral and such other related matters to enable the processing authority to arrive at relative merits of the applicants. Some of the common irregularities are: a. The process discussed is fairly elaborate and when implemented in totality. it does provide the objectivity and transparency contemplated. . There are instances wherein applications have been received even after 23 months from the opening day specified in the Notification. Unfortunately. (ii) To maintain a reliable document for having communicated to all the applicants the date for hearing by the hearing authority. (iii) Preparation of meticulous record of attendance of applicants who attend the hearing.

in such instances. also. the comparative evaluation statement of the hearing authority not forthcoming. .68 b. e. f. there are instances wherein applications received after 23 months of opening day have been considered in preference to the earlier applications without adducing proper justification. the attendance duly signed by the applicants appearing before the hearing authority is not forthcoming. g. c. The sanction of mining leases for minerals specified in the First Schedule are to be made subject to prior approval of the Central Government. the Department of Mines and Geology has deferred processing of applications for a long period. proceedings drawn up do not indicate the criteria and basis for selection of the applicant. d. the hearing authority does not maintain meticulous record showing that all applicants listed for hearing are communicated about the date of hearing.

made by the Government of Karnataka under Section 15 of the M&M (D&R) Act. “31(1) Where. (Central Act 67 of 1957). this is an agreement entered into between the holder of a mining lease/quarrying lease and a contractor providing entrustment of work for carrying out mining of minerals/quarrying of minor minerals and to sell them or to use them for self consumption on payment of premium or consideration to the holder of the mining lease/quarrying lease. a lease deed .. Generally. The M.C Rules. made by the Government of India in exercise of powers conferred under Section 13 of M&M (D&R) Act. 1957 and Karnataka Minor Mineral Concession Rules.CHAPTER – IV Advent of the concept of Raising Contract Raising Contract is a much used phrase in mining parlance. 1994. The relevant conditions are: Rule 31 of M. stipulate certain conditions prohibiting entrustment of work as relating to mining/quarrying of minerals/minor minerals by a holder of a mining lease/quarrying lease to a contractor. M. 1872 or in the mining regulations viz. 1994.C Rules. The term ‘Raising Contract’ is not found in the Indian Contract Act. on an application for the grant of a mining lease.C Rules and Karnataka Minor Mineral Concession Rules. an order has been made for the grant of a such lease. M&M (D&R) Act.

sublet. which in the case of a mining lease in respect of any mineral specified in the first schedule to the M&M (D&R) Act shall not be given except after previous approval of the Central Government – (a) assign.70 in Form K or in a form as near thereto as circumstances of each case may require. without the previous consent in writing of the State Government. transfer the mining lease.” Mining lease Contract: (Clause 17) 1) The lessee/lessees shall not. or any right. shall be executed within six months of the order or within such further period as the State Government may allow in this behalf. and if no such lease deed is executed within the said period due to any default on the part of the applicant. Provided that the State Government shall not give its written consent unless- . contract or understanding whereby the lessee/lessees will or may be directly or indirectly financed to a substantial extent by or under which the lessee’s operations or undertakings will or may be substantially controlled by any person or body of persons other than the lessee/lessees. mortgage or in any other manner. title or interest therein or (b) enter into or make any arrangement. the State Government may revoke the order granting the lease and in that event the application fee shall be forfeited to the State Government.

C Rules. Provided further that where the mortgagee is an institution or a Bank or a Corporation specified in schedule V it shall not be necessary for any such institution. title or interest therein. Provided that the lessee/lessees shall make available to the transferee the original or certified copies of all plans of abandoned. paid income tax assessed on him and paid the income tax on the basis of self assessment as provided in the Income Tax Act. workings in the area and in a belt 65 metres surrounding it. the lessee/lessees may subject to the conditions specified in the proviso to Rule 37 of said M.71 (a) the lessee has furnished an affidavit along with his application for transfer of the mining lease specifying therein the amount that he has already taken or proposes to take as consideration from the transferee… (b) the transfer of the mining lease is to be made to a person or body directly undertaking mining operations. 1961 (43 of 1961) on payment of five hundred rupees to the State Government. to a person who has filed an affidavit stating that he has filed up-to-date income tax returns. Bank or Corporation to meet the requirement relating to income tax. transfer this lease or any right. . (2) Without prejudice to the above provisions.

determine the lease at any time if the lessee/lessees has/have in the opinion of the State Government committed a breach of any of the above provisions or has/have transferred the lease or any right.72 (2) The State Government may by order in writing. Firm or Person unless with the written sanction given prior to such arrangement contract or understanding being entered into or made. Syndicate. Firm or Person except with the written consent of the Central Government. Syndicate. Clause 18: The lease shall not be controlled and the lessee/lessees shall not allow themselves to be controlled by any Trust. title or interest otherwise than in accordance with clause (2) Provided that no such order shall be made without giving the lessee/lessees a reasonable opportunity stating his/their case. The lessee/lessees shall not enter into or make any arrangement contract or understanding whereby the lessee/lessees will or may be directly or indirectly financed by or under which the lessee/lessees operations or undertakings will or may be carried on directly or indirectly by or for the benefit of or subject to the control of any Trust. Corporation. Corporation. of the Central Government and any or every such arrangement contract or understanding as aforesaid (entered into or made with such sanction as aforesaid) shall only be entered into or made and shall always be subject to an express condition binding upon .

73 the other party or parties thereto that on the occasion of a state of emergency of which the President of India in his discretion shall be the sole judge it shall be terminable if so required in writing by the State Government and shall in the event of any such requisition being made be forthwith thereafter determined by the lessee/lessees accordingly. title or interest therein or (b) enter into or make any (bonafide) arrangement. Transfer of Lease (M. any person or body of persons other than the lessee: [Provided further that where the mortgagee is an institution or a Bank or a Corporation specified in Schedule V. transfer the mining. lease or any right. or under which the lessee’s operations or undertakings will or may be substantially controlled by.C Rules) (1) The lessee shall not. without the previous consent in writing of the State Government (and in the case mining lease in respect of any mineral specified in (Part A and Part B of) the First schedule to the M&M (D&R) Act. mortgage or in any other manner. Rule 37. sublet. without the previous approval of Central Government) – (a) assign. it shall not be necessary for the lessee to obtain any such consent of the State Government] . contract or understanding whereby the lessee will or may be directly or indirectly financed to a substantial extent by.

] (2) Without prejudice to the provisions of sub-rule(1).500/-] to the State Government. paid the income tax assessed on him and paid the income tax on the basis of self-assessment as provided in the Income Tax Act. by order in writing determine any lease at any time if the lessee has. the lessee may. and for conducting all or any of the operations referred to in Rule 30 in or over the land leased to him]. (3) The State Government may. Provided that the lessee shall make available to the transferee. any premium in addition to the sum spent by him. on payment of a fee of Rs. it shall not be necessary for any such Institution or Bank or Corporation (to meet the requirement relating to Income-Tax) ] [Provided further that the lessee shall not charge or accept from the transferee. transfer his lease or any right. 1961. in the . the original or certified copies of all plans of abandoned workings in the area and in a belt 65 metres wide surrounding it: [ Provided further that where the mortgagee is an Institution or a Bank or a Corporation specified in Schedule V. in obtaining the lease. title or interest therein to person [who has filed an affidavit stating that he has filed an up-to-date income tax returns.74 [(1A) The State Government shall not give its consent to transfer of mining lease unless the transferee has accepted all the conditions and liabilities which the transferor was having in respect of such mining lease.

a transfer lease deed in Form-O or a Form as near there to.37. shall be executed within 3 months of the date of consent. he has filed an affidavit stating that he has filed an up-to-date income tax return. title or interest in such licence or lease shall be transferred to a person unless. title or interest in such licence or lease in respect of any mineral specified in the First Schedule to the M&M (D&R) . as possible. a reasonable opportunity of stating his case. title or interest therein other than in accordance with sub-rule (2). committed a breach of any of the provisions of sub-rule (1) [or sub-rule (1A)] or as transferred any lease or any right.75 opinion of the State Government. 1961 (43 of 1961). Rule 37A: Transfer of lease to be executed within three months: Where on an application for transfer of mining lease under Rule. or within such further period as the State Government may allow in this behalf. paid the income tax assessed on him and paid the income tax on the basis of self assessment as provided in the Income Tax Act. Rule 46 : Transfer or Assignment: (1) No prospecting licence or mining lease or any right. Provided that no such order shall be made without giving the lessee. (2) No prospecting licence or mining lease or any right. the State Government has given the consent for transfer of such lease.

1994. sub-let. The lessee shall not. (a) assign.” Provided further that such transfer of lease shall not be made without a written consent of the Competent Authority and such consent shall not be given unless: .76 Act shall be transferred except with the previous approval of the Central Government. transfer of leases is prohibited under Karnataka Minor Mineral Concession Rules. as the case may be. The related provisions are: Rule 19-A (1) Prohibition of Transfer of leases. title or interest therein. Similarly. Provided that nothing in this rule shall apply to a corporation or an undertaking owned or controlled by the State Government or to a mortgage made by a lessee in favour of the Institutions specified in Schedule VI (i) (a) or to transfer of lease held by the lessee to the company or firm in which he is one of the Directors or partners. or (b) enter into any agreement. arrangement or understanding with any person whereby lessee is directly or indirectly financed to a substantial extent by such person and quarrying operation and other activities connected therewith are substantially controlled by such person. mortgage or in any other manner transfer the quarrying lease or any right.

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(i)

the lessee has furnished an affidavit along with his application, for transfer of the quarrying lease specifying therein the amount that he has already taken or propped to take as consideration from the transferee;

(ii)

the transfer of the quarrying lease is to be made to a company or firm directly under taking quarrying operation in which the lessee is one of the directors or partners as the case may be, in the said company or firm and the company or firm has filed an affidavit stating that they have filed an up to-date Income tax returns, paid the income tax assessed on them and paid the income tax on the basis of self assessment as provided in the Income Tax Act, 1961; and

(iii)

A processing fee of rupees one thousand is paid in the form of a Demand Draft drawn in favour of the Director of Mines and Geology , Bangalore.

Provided also that the lessee shall not charge or accept from the transferee any premium, in addition to the sum spent by him in obtaining the lease, and for conducting all or any of the quarrying operation over the area leased to him. (2) The Competent Authority may, by order, in writing determine any lease at any time, if, the lessee, has, in the opinion of the Competent Authority, committed a breach of any of the provisions of sub-rule (1) or has transferred

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any lease or any right, title or interest therein without the previous consent in writing of the Competent Authority. (3) Where the Competent Authority has given consent

for transfer of such lease, a transfer of lease deed in form “T” shall be executed within three months of the date of consent, or within such further period not exceeding three months as the Competent Authority allows thereon.” The two sample agreements entered into by M/s Mysore Minerals Limited for quarrying ornamental granites and for extraction of calibrated – iron ore/minerals from old dumps under the title of raising contract are discussed hereinafter (these examples are part of Annexure-‘A’). M/s Mysore Minerals Limited held a quarrying lease bearing No. QL 5396 in the limits of Nidugal village of Kanakapura taluk, Bangalore Rural District for ornamental granites. The Company

entered into an agreement on 30.07.1999 with M/s K. Mark who are referred to as “Raising cum Sales Agent”. There is an entrustment clause under the agreement which reads “The Company hereby entrust to the raising cum sales agent, the work of quarrying and producing granite blocks and sell them or use them for self consumption on payment of premium…………………………..” There are other clauses in the agreement indicating that no interest of what-so- ever nature in the properties is created in favour of the raising cum sales agents etc. This matter was subject of contest in the Writ Petition No. 15071 of 2000 (GM/PIL) before the Hon’ble High Court of Karnataka. In the prayer made before the Court, the petitioner had among other things

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requested the Court for a direction or writ in the nature of mandamus to direct M/s Mysore Minerals Limited to cancel the agreement dated 30.07.1999 as it was in contravention to Rule 19-A of Karnataka Minor Mineral Concession Rules, 1994. Commenting on the said prayer, the Hon’ble High Court observed “therefore we have no hesitation in holding that Rule 19A in the light of the judgment of the Supreme Court, is a Rule in the form of prohibition for regulation of the mine interest of the State as otherwise a shrewd business magnate may find an easy way of getting the mining leases through the back door entry from Government Companies Rule 19-A is introduced only to prevent such back door entries. The Hon’ble High Court also observed that “therefore we have no hesitation in holding that the present agreement has to be set aside for having violated Rule 19-A of the rules.” [Note: The matter when went before the Hon’ble Supreme Court of India in Civil Appeal No. 3372 of 2001, the Hon’ble Supreme Court remanded the matter by observing “we express no opinion with regard to the correctness of the High Court decision on the applicability of the rules and the interpretation thereof. It is only because this Writ

Petition should not have been taken out of turn and should have been heard along with Writ Petition NO. 2458/2000. The impugned orders are set aside.”] M/s Mysore Minerals Limited held a mining lease No. 1659 in Jambunathanahalli of Hospet Taluk. The Company entered into an agreement under the title “Iron Ore Raising Agreement” with M/s

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Narayana Mines (P) Ltd. of Hospet on 23.09.1999 for extraction of calibrated Iron Ore (CIO)/minerals from old dumps. The contents under clause 1 to 6 and 9 of the agreement and in particular clause 3 and 4 virtually vest the works of operation of mine held by M/s Mysore Minerals Limited with M/s Narayana Mines. This is contrary to the clause 17 and 18 of Part VII of the mining lease agreement read with Rule 37, 37A and 46 of M.C Rules. The said clauses are similar to the agreement clauses entered into by M/s Mysore Minerals Limited with M/s K. Mark in respect of Q.L. No. 5396 of Nidagal village, Kanakapura taluk, Bangalore Rural District, which had been contested in a Writ Petition, the particulars of which are discussed in the earlier paragraphs. During the survey and investigations, on the ground it has been observed that many of the lessees have given their leases on contract, popularly known in the field of mining as “Raising Contact”. In this system the raising contractor carries out all the mining operations. It is also observed that some of the lessees have transferred their leases to some other persons/agencies on annual basis and sometimes for periods more than one year. This type of irregular transfer of mining operations by the lessees is contrary to the provisions of the M&M (D&R) Act and the relevant Rules and which also leads to other irregularities like excess loading, transportation of minerals without permits and sale of unaccounted iron ore, sale of bulk permits issued by Mines Department and Way permits in Form No.31 issued by Forest Department to other parties, which documents are used for illegal

81

transportation of iron ore from patta lands. All these illegal activities are carried on in the name of the original lessees. As stated above, in original lease agreements entered into between the Government and the lessees there is no provision to sell or enter into contract of sublease or to carry out any of the mining operations by persons other than those in whose favour the mining lease had been executed by the Government, without the prior sanction of the Government. In reality, none of the Raising Contract agreements have been entered into with the prior sanction of the Government and in many cases no document is forthcoming to show the terms of the agreement between the original lessee and the Raising Contractor. It is to be mentioned here that at the time of mining lease, the lessee provides information that he has all expertise in the mining and has sufficient infrastructure and funds to carryout mining operations and it is only on considering such qualifications of the Applicant for grant of lease, the mining leases are granted by the Government. It is further noticed that the Government has given lease for extraction of minerals on payment of royalty which is very minimum and far below the value of the mineral in the open market. As a matter of fact, the State has not executed a lease bearing in mind the commercial or profit motive of the lessees. In such

circumstances, giving further lease by the original lessee for extraction of minerals which is a public property will be against the object and terms of lease. By this process, the original lessee even without making any investment and putting any efforts makes a fortune. It also creates unhealthy competition in the mining trade leading to people applying for mining lease without making proper prospecting study as to the

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existence of minerals, which in turn leads the lessees or his agents indulging in mining activities outside the leased areas. In the districts like Bellary, Chitradurga and Tumkur, the lessees have entered into commercial transaction with middlemen who also do not have any experience in mining, thus leading to unscientific mining. arrangement actually makes the original lessee an absentee lessee. It is pertinent to mention here that the Mines/Forest Departments are issuing permits in the name of lessees or his agents for transportation. But in reality, these permits are being used by the Raising Contractors and other persons to transport ores from areas totally unconnected with the original lessees. The Department officials have closed their eyes and are ignoring totally these illegal activities. Such systems from outside looks as if the lessee himself is doing mining operations but the facts are otherwise. This is one of the serious concerns and will have to be stopped forthwith. Further investigation in this regard is required to be gone in detail by examining the documents of the original lessee, the raising contractors, the transport agents and others who are connected with this type of illegal activities, which can be done only after issuing notice to them and this report, cannot wait till such detailed enquiry. Though the document in regard to the Raising Contract between the lessee and their sub-contractors are not immediately available in spite of enquiry with the various people connected with mining trade, it is established beyond doubt that such system of Raising Contracts and other illegal type of sub-leasing, be it at the stage of lifting the minerals from the earth, transportation or This

83

export is prevalent in a large scale. The following list gives the names of certain lessees who have transferred their mining leases in favour of others who are either Raising Contractors or Sub-lessees. This list

which not exhaustive, only contains few of many, is prepared on the basis of reliable material gathered by the investigating agency, which of course will have to be further enquired into and supported by documentary evidence and this will be done in due course. The name of these lessees are mentioned based on prima facie material and since conclusive material could be produced only after further enquiry, the initiation of any action in regard to this issue could be taken up after further report from this agency. The list of lessees provided by Dr.U.V. Singh in his report at Annexure-‘A’ is as follows. Sl. No. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 Name of the Lessee M/s P. Balasubbashetty and Sons M/s Rajapura Mines and Traders M/s Mysore Miners and Traders Sri. B.R. Yogendranath Singh Smt. Shantalaxmi Jayaram M/s Srinidhi Iron Ore Mines M/s Ashwath Narayan Singh & Co. Sri S.V. Srinivasalu Sri. K. Brahmananda, M/s Bananshankari Iron ore Mines M/s Hind Traders M/s Veerabhadrappa Sangappa Co. M/s Sri Kumaraswamy Mineral Exports M/s Veerabhadrappa Sangappa Co. Sri. V.N.K. Menon Sri H.G. Rangangoud Sri. P. Abubkar Sri. B. Kumar Gowda 2548 2160 2141 2296 2543 2148 2183 2516 M.L.No. 2502 2190 2185 2186 2553 2433 2531 1634 1626

Ubbalgundi M/s Narayana Mines M/s S. Vrushabendraiah Mines M/s Laxmi Minerals M/s Laxmi Minerals M/s Associated Mining Co. Further report will follow regarding irregularities committed by concerned officers in this regard. Subrayanahalli M/s Nadeem Minerals M/s Mysore Minerals Ltd. Minerals Smt.G. Shantalakshmi Jayaram Sri. Minerals M/s Adarsha Enterprises M/s J.M. K. Venganna Shetty M/s Mysore Minerals Thimmappanagudi Smt.B. Ubbalgundi M/s Mysore Minerals Ltd.B. Rangangoud M/s Sandur Manganese and Iron Ore M/s Sandur Manganese and Iron Ore M/s S. the original leases should be terminated..R. in all such cases.84 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 Smt. Ambika Ghorpade Sri.. Gaviappa Smt. . 2354 1046 2002 2514 2483 2433 Working permission 2526 995 1602 2393 922 2148 2580 2581 2550 2369 2173 2545 2551 2434 2563 Since the arrangement under “Raising Contract” is literally a transfer of lease without the permission of the Government is opposed to law.M. M/s Kanhaialal Duheria Ltd. Parvathamma. H. Rajapura Sri H.M. P.. K. Parvathamma.

Different types of encroachments that are commonly prevalent in the mining sector and commonly resorted to by the mining lease holders to make unlawful gain at State cost are mentioned by Dr. Hospet & Sandur (BHS) region the majority of encroachments have taken place due to shifting of the notified leased area to a different convenient location by the lessees. U. The details of such leases along with extent of encroachments etc are also given in the report at Annexure-A. Some of the satellite imageries with respect to notified sketches are enclosed to the report Annexure-‘A’ at Annexure-‘A1’.CHAPTER – V Irregularities in mining like mining beyond the leased area. . This has been done in certain cases by taking the wrong reference point or altering the original reference point or some times without any such reference with the connivance of local staff and lessees.V. Such irregularities in the mining sector are rampant and such instances are increasing day by day unhindered resulting in considerable loss to the State Exchequer. etc. illegal dumping and mining contrary to the parameters laid down by Indian Bureau of Mines have been noticed in Bellary. Singh in his report Annexure-A. Hospet and Sandur regions. trespassing into the forest area for mining. In Bellary. Encroachments due to shifting of location of the notified lease area. trespassing into the forest area for mining. various instances of gross irregularities in mining like mining beyond the leased area. During the survey. Different types of encroachments noticed during the present investigation are as follows: 1.

Encroachments by extending the lease boundaries and extraction of iron ore. During the survey it has been observed that some of the lessees have encroached the adjoining forest areas/ government land and removed the iron ore. Such encroachments are found common in the BHS region.86 2. The lessees have extracted the iron ores by encroaching such adjoining areas which are forest/Government land beyond their lease boundary. It has been observed during the survey and on examination of records that the lease drawings (Sketches) notified under the Forest (Conservation) Act 1980 are different than the lease sketch notified under the M&M (D&R) Act. Sketches with satellite imageries of some of the leases of this kind are enclosed to the report Annexure-‘A’ at Annexure-‘A1’. Encroachments due to different lease sketch under two different Acts. The sketches along with satellite imaginaries are enclosed to the report Annexure-‘A’ at Annexure-‘A1’. With the help of satellite imageries and also with field observation. the ore deposition is found at the periphery of the notified lease boundaries and also at adjoining areas. In many mining leases. 3. 4. Extraction of iron ore in the adjoining areas and refilling the pits. After removing the large quantities of iron ores from such encroached areas. Satellite . the lessees have re-filled the pits and in some cases even planting has been done over the refilled area. The lessees have not adhered to these sketches. such encroachments are identified. .

It requires to be mentioned here that formation of roads without permission/ approval in the forest areas is a violation to the Hon’ble Supreme Court Order Dated 12. . 1996 in WP. 12. the lessees are enjoying more area under the lease than the entitlement relying on incorrect sketches. The lessees have formed the “KACHHA ROADS” from the PWD / ZP roads to their mines without obtaining prior approval under the Forest (Conservation) Act 1980 or Karnataka Forest Act 1963. The sketches are prepared for more areas against the less notified extent. the lease sketches are notified for more lease areas than the extent notified under M&M (D&R) Act 1957. 7. Encroachments in the form of formation of roads to mining leased area. It has been observed that in some leases. Due to this. 5.202/95. It has been observed that most of the mines are located deep inside the forest/government land and no right of way have been granted to the lessees.87 imageries with respect to the lease boundaries for some of such leases are enclosed to the report Annexure-‘A’ at Annexure-‘A1’. The lessees have taken it for granted that it is thin right to dump the waste outside the leased area mainly in the adjoining areas. The roads so formed have damaged the forest to a large extent. Such encroachments are very common in the BHS region. 6. Encroachments due to incorporating more areas in the lease sketches. Encroachments due to dumping of waste material.

Encroachments due to more enjoyment by fixing the wrong boundaries.) 180.09 6 Encroachment due to construction of roads to mines 124.40 8 Total length of the mining roads (in k.07 5 Other type of encroachments 504. Because of the overlapping there are disputes among the lessees regarding areas granted under lease. It appears that such encroachments are mainly done for future expansion of the mining activities. SUMMARY OF THE ENCROACHMENTS IN THE BHS REGION (in Sl.704. 9.66 2) Approval granted under the Forest (Conservation) Act 1980 5.29 4 Encroachment due to waste dumps 306. 1957 9. 1) Approval granted under M&M (D&R). Encroachment due to cascading effects.90 7 Total encroachments 1. The encroachments of this kind are very common. Encroachments by lessees in the adjoining leased areas.m. Hectares) No. Encroachment by one lessee into the adjoining mine culminates encroachment in the forest or Government land.88 8.426.081. There are cases wherein the sketches of the two leases are overlapping at certain points. It is found during the survey that the lessees have put the boundary stones covering more areas than entitled for at their convenience.35 3 Encroachment in the form of extraction of iron ore (pit) 147. During the survey it has been observed that some of the lessees have encroached the adjoining mining lease. This is very common in BHS region. 10.42 . In consortium of mines such cascading effects have been observed during the survey. In this regard some court cases are also pending.

PNo4.29 3 1028 15.90 2. Nehru cooperative colony.74 88.82 35.11 44.56 31.38 42.21 16.41 Boundary Fixed by Lessee (Ha) 10 Name of the lessee & Address Notification No & Date (MMRDA) Sanctioned Lease Area (Ha) 8 32.32 127.56 31.1 3.02 4 2502 44. 14991.74 93. Patel Nagar.88 14. PNo4.57 1.90 45.90 9 76.38.10 15.28 4.21 50.09 76.46 8 31.21 57.94 15.5 1.62 17. Nehru cooperative colony. No 11 12 14 1 2522 2 2520 18.O.13 46.No. P.50 42.10 15.11 44.1 Others Outside the Lease Area (Ha) 13 9.13 43. Hospet583203 M/s Gogga gurushanthaiah & Brothers.04 6 2185 46.17/5.No.38.29 1. Hospet583203 M/s Rajapura Mines M/s Mineral Miners and Traders No.66 1.64 24. Main Bazar Hospet583203 R.5 29.00 2.21 1. Bellary583103 Sri Srinivasa Minerals Mine owners and Exports.No.00 .B. Nehru cooperative colony.Seth Shree Ram Nar Singh Das.82 13.B.10 15.10 18.43 7 1933 2022/ 2576 2021/ 2524 16. PNo4.90 1. Hospet 583201 3 4 CI 223 MMM2005 Dated 16/3/2006 CI 163 MMM2004 Dated 29/12/2004 CI 63 MMM 2007 Dated 24/3/2008 CI 73 MMM2005 Dated 29/7/2005 CI 58 5 FEE20FFM99 Dated1/8/2003 FEE104FFM2004 Dated21/1/2006 FEE16 FFM89 Dated1/8/2003 FEE92 FFM2001 Dated 21/1/2006 FEE92 FFM2000 Dated 7/02/2005 6 7 Lease Sketch Area (Ha) Lease No. S.No 3.21 15.09 76.14 3.40 2.SUMMARY REPORT OF SURVEY AND ENCROACHMENTS Data Report Waste Dump outside lease area (Ha) Approach Road area (Ha) Working pit outside the lease area (Ha) Total Encroachment area (Ha) 15 11. Hampi Road .40 9 Extent as per FCA (Ha) Notification No & Date (FC) Extent as per MMRDA (Ha) 1 2 M/s Gogga gurushanthaiah & Brothers.11 44.22 5 2190 MMM91/P Non forest land Dated 3/8/1994 CI 63MMM2002 Dated Non forest land 24/9/2003 CI11 MMM83 Dated 6/09/1983 CI 66 MMM07 Dt: 08/01/2008 CI102 MMM06 Dt: 27/05/2006 Non forest land 93.90 1.17 42.08 76.18 1. Hospet583203 Balasubbashetty & M/s P. Sons P.94 1.No.D.04 Length of the Road (Km) 16 1.Seth Shree Ram Nar Singh Das.O.90 10. Hospet 583201 R.D.67 13. P.10 41.B.58 0.88 0. Hospet583203 M/s Gogga gurushanthaiah & Brothers. 14991.

G Colony.76.94 2.00 45.Allam Basavaraj S/O Allam Karibasappa. Jambhunathanahalli Iron ore mines. #36.142 11 1193/ 2469 741/ 2186 922 55. Bellary583101 1751 2544 80 CI.158.MMM.96 3.2006 FEE. Anegondy House.124. W/o V.99 Dated 05/02/2004 38.MMM.R. 2005 Dated 01/03/2006 CI.15 19. Sri.35 18.00 0.00 FEE.Bellary Road. Limited.00 45.08 1.67 5.205.N.15 14 15 5.55 0.44 4.45 477. Car Street. Ltd.62 5.Road.00 55.82 2.156.50 135. FFM.90 Dated 30/04/1997 182.K.Charuchandra.91.75 34. FFM.2005 Dated 12/06/2006 5.40 15.G.25 18 45.25 - 6.63 14. FFM.77 2.MMM.89 2.34.4 13 Idle Mines 1710 Idle Mines FEE.15 - 8.17 5.75 15.4 kappagal Road.40 35. 2005 Dated 09/11/2007 CI.MMM.40 - 1.Kappagal Road.45 38.00 55.00 32.V II Stage H.10 6.45 51.15 18.55 1.Premkumar.54 1806 16 105.00 51. No. Bellary 583103 Sri B.40 5 Dated 25/03/2006 CI. 3rd Cross.81.200 FEE. Hospet M/s Gavisiddeshwara Enterprises.09 2.40 34.34 2561 20 21 CI.81 2.24 1893 22 - 56.43 199.H. Smt. FFM. 2005 Dated: 25/11/2005 CI. Bharath Villa.Nagangowda Gardens.75 - - - - - - .M.00 45.00 6. Gadagi palace. Bellary 583101 M/s MML.MMM. #216.31/659 Mylara linga Nilaya Singh Colony..R. M. Hospet 583201 M/s Vibhutigudda Mines Pvt.00 13.00 31. FFM. Gandhinagar.2005 Dated 29/12/2006 19.21 2.J.81 35.96 1.Jayaram.Yogendranath Singh No. 2005 Dated 26/08/2005 1799/ 2075 FEE47 FFM 99 CI 108 MMM 86 Bangalore Dt: 21/7/1988 Dt: 30/03/2000 FEE16 FFM 95 CI 120 MMM 04 Bangalore Dt.67 1) FEE.75 56.R..81 Dated 21/01/1982 CI.90 Dated 17/08/1999 31.00 17. 3rd Main.92 2538 19 21.43 129. 2005 Dated 14/02/2006 56. Hospet-583201 Sri. Station Road.Pampapathi.2 0.54 3.MMM. Dr.40 34. R.Nagar.00 115.10 2.02 2. Hospet583201 (M/s Shrinidhi Sri.20 0. #39.76 8.Mallamma W/o Late R.FFM.72 42. 08/10/2004 Dt: 17/08/1999 CI15 MMM 92 Dt: 07/11/1994 10 199. 22nd Ward. Embitee Complex .03 - 1659 17 38. Bangalore-01 Sri.89 6. Bellary District.00 0.92 11. FFM.R.142. Behind 100 Bed Hospital.72 1.N.38.75 12 13.70 - 0.Colony.11 33.00 2.43 188.14 - 2.00 3.MMM.154.75 56.90 M/s Karigannur Mineral Mining Industry.00 3 Dated 26/09/2003 CI.200 FEE.BellaryMinerals M/s Mysore Road.11 - 2.07 3.45 FEE.2006 Dated 25/09/2007 34.141.I. #35.45 2)FEE.174. SRR Theatre Compound.76 1. Rajapaura Nilaya.4 10.54 5.44 6.63. N.C.M. Old Check Post Hospet 583203 Smt.MMM.00 53. FFM.11 - 31.67 6.97 19..2005 Dated 09/03/2007 45. Hospet-583201 M/s Auro Minerals.61 - - 2. Shantha Lakshmi Jayaram.55.70 3.97.70 182.Kaviraj.

Hospet.42 3.Road.200 5 Dated 14/03/2006 CI 161 MMM04 DATED 10/01/2005 CI 16 MMM06 DATED 22/06/2006 CI 22 MMM 03 DATED 02/08/03 CI72 MMM69 Dated05/08/19 92 CI227 MMM07 Dated05/10/20 07 CI 33 MMM79 Dated 24/08/1979 CI111 MMM99 Dated 16/02/2000 CI127 MMM00 Dated 03/03/2001 CI121 MMM82 Dated 24/11/82 CI121 MMM05 Dated 23/11/2005 CI154 MMM2005 Dated 24. Bengalore-560094 M/s. 65 M.V Srinivasalu retd collector Bunglow Gandhinagar Bellary K.12 56.02 2.Muneer Enterprises.03 3.Ashwathanarayana Singa & co # 54 3rd Main road Parvathinagar Bellary M/s.P.55 129.95 - 24 2531 FEEE 162 FFM2005 129.26 33 988 20.B.23 25 2550 44.52 56. R.42 36.G Road Bangalore M/s Veeyem Pvt Ltd 228/A Cowlpet Hospet 583201 Sri N.33 3.Chnnabasappa Cowl pet Hospet M/s Mineral Syndicate 699 CI.66 19.03 3.B.54 1.V II Stage H.9 29 1626 FEE93 FFM2006 80.50 Dated 22/07/2006 FEE 106 FFM 06 DATED 29/05/2007 FEE 84 FFM02 DATED 25112006 FEE36 FFM65 Dated04/03/2005 FEE65 FFM00 Dated 4/03/2005 44.11 30 2320 2.75 7.66 22. 2315 32.M.Hospet 583201 M/s. Majaid E llah compound Hampi road Hospet 583201 S.66 22.52 8.63 20.27 8.40 36.63 44.91 23 Sri.94 Dated 23/03/2007 FEE48 FFM 95 Dated 31/12/98 2.2005 CI104 MMM2004 Dated 30/3/2005 3.44 .MMM.21 28 1634 149.P.73 60.27 32 1732 5. Bharath Villa.50 4. #35.Balaji Mines & Minedrals # 322/8 2nd.52 43.116 16.80 5.82 3.97 35 2010 331.91 14.80 3.50 3.66 22.H.G Colony.floor Sri sapthagiri enalve.23 34 1321 15.03 2.40 36.00 149.03 3.Manzoor Ahmed M/s Dalmia Cements (Barath) Pvt Ltd.11 26 2564 22. Legal K.583201 M/s.38 2.Minerals.09 6.59 5.Brahmananda.73 67.50 56.I.11.S.70 46.12 2.52.50 129.Manjunath.73 149. 3rd Cross.R. 3rd Main.12 31 M/s Trident Minerals M/s Trident Mining Company Pvt Ltd.63 2.1 27 2339 36.12 7.42 36.12 1.28 5.52 38.55 147.03 2.00 56.90 6.44 4.36 4.no 58 K.

74 5. Goa 403803 Sri P.00 10.63 shift shift 37 M/s Hind Traders Sri Allum Prashant Gadigi Palce Car Street Bellary M/s Mehaboob Transport Company.00 shift 40 2293 41 2487 105.00 47 Sri V.13 191. Sun Nidhi Road Basavanagudi.70 2.80 30.00 14.22 FEE145 FFM2003 Dated 09/03/2005 100.00 63.00 191.80 2.87 Dated 21/02/2007 FEE3 FFM92 Dated7/12/2001 191.95 46 2141 30. No. Mining M/s Laxminarayan ( Company. No. Sidarth Nagar.92 36 T.87 16.1.83 2.97 16.00 98.36 1.80 60.N.00 10.00 37.64 - .00 61.07 3.65 18.45 - 17.36 1.Abubkar PWD Class-1 Contractor/Mine Owner.60 19.80 65.64 5.00 102.10 - 12.K Menon 6 KHB Colony Sandur583119 Bellary 2543 10.00 100.13 163.22 103.90 20.65 4.00 Dated 11/12/2000 FEE96 FFM2003 CI110 MMM90 Dated 05/01/2004 18.00 102.49 4.33. Bellary M/s Tiffins Barytes asbestas & Paints Ltd Suit 68. ramakrishna Street.80 60.00 51.64 - 0.56 3.21 - 0.62 18.45 - 0.63 19. 2nd Cross Link Road. Bangalore 560004 M/s Chougale Mining Company Ltd.62 Dated 8/7/1992 CI232 MMM88 Dated 29/7/1991 CI 32 MMM2006 Dated 7/11/2006 CI 35 MMM2004 Dated 12/01/2007 FEE 125 FFM 2003 Dt:06/08/2004 82.10 - 6. parvathinagar Bellary 111 38 39 2352 109 69.55 14.32 41.80 FEE13 FFM2007 Dated 22/03/2007 10.56 - - 0.63 19. Bellary Road. Dam Road.63 19. Bellary 583119 M/s Veerabhadrappa Sangappa & Company 2138.00 Dated 9/10/2006 CI43 MMM2000 FEE50 FFM94 Dated 19/02/2000 51.40 12.84 11.60 43 44 2296 45 2160 CI54 MMM2006 FEE04 FFM2004 Dated 01/03/2006 44.57 42 2546 100.35 12.73 9. Lalitha Nivas.00 14.36 - 2.19 15.10 51.45 0. Sandur.22 105.07 10.00 10.KEN IFS Towers.93 12.19 16.Infantry Road. Hospet.19 19.44 1.84 19.20 19.44 8.68 69. Bellary 583203 M/s Veerabhadrappa Sangappa & Company 2138.13 FEE27 FFM2002 Dated 02/09/2003 105.1 FEE192 FFM2006 Dated 29/12/2006 60.78 23.00 5. Sandur.. Bellary 583120 Sri Kumar Swamy Mineral Exports .09 4. Mormugao Harbour. Chowgale House.Narayan Reddy 2527 CI36 MMM2005 Dated 16/2/2006 CI222 MMM2005 Dated 16/5/2006 CI03 MMM95 Dated 27/5/2005 CI107 MMM02 Dated 14/7/2003 CI37 MMM99 Dated7/9/2000 CI104 MMM2004 Dated 3/11/2004 Ci52 MMM2006 Dated 29/11/2006 2183 37.84 37.85 4. Bellary Road.60 72.84 38.63 FEE54 FFM2001 72.97 0.

47 8.90 - 2.44 5.28 24.98 - 5.17 2.264.13 44.08 3.17 - - - - - - - 52 Sri Onti Channappa Yeshavanthnagar Village.44 5.38 - - 14. Hospet583203 Sri Shanthi Priya Minerals Pvt Ltd.36 0.J Nagar. Bellary 2148 CI148 MMM90 Dated 18/06/1992 2516 FEE26 FFM2002 Dated 16/08/2003 FEE82 FFM2006 Dated 19/12/2006 60.42 47.47 56 2369 2.53 4.36 24.29 - 3. Sandur-583119 1941 5.70 60.18 - 18.78 19.72 31.42 36. Sri Onti Channappa Yeshavanthnagar Village. College Road.29 3.3 3.96 5.75 41. Kumargouda 125B.42 36. Cowl Bazar. B.13 47.42 36.Madhavanagar. Bellary-583102 M/s Adarsha Enterprises Kudligi-Bellary Road. Bellary CI44 MMM2003 FEE31 FFM2002 Dated 09/08/2005 54. M.S.A.13 44.97 80.14-51984(old) CI 117MMM2004 Dt.97 80.30 9. Bellary-583102 M/s Zeenath Transport company Mine Owners & Exports.93 48 H.86 .75 - 7. Sandur TQ.73 1. Hospet-583203 Ramghad Minerals and Mining Pvt.60 24.10 2.16 60.19-3-1993 Idle Mines FEE14 FFM89 Bangalore Dated 7-7-1997 FEE15 FFM89 Bangalore Dated 14-2-1997 FEE63 FFM90 Bangalore Dated 27-1-2004 19.L.91 - 2.28 35.33 4.97 80. No.71 23.31 - 2451 CI 69 FEE84 FFM2006 MMM2002 Dt.11-10-2004 CI 20 MMM 2000 Dated18-72002 CI 147 MMM91 Dt.48 2.08 4.15 0.30 50 2525 - 19.74 13.4 8.91 2. Bellary M/s Deccan Mining Syndicate Pvt Ltd N0 31 Kalpatare Apartment.10 - 57 58 59 J M Vrushabendraih S/o Maliappaiah.55 - - 15.29 15. Ltd.9.94 8.00 83.25 54.76 2.56 10.B Colony Sandur583119 . Thawab Mine Owners &Exports.45 55 2488 31.93 82. Cowl Bazar .G Ranganagouda. Bellary-583102 Sri.92 12.62 54. Mine owner No. Cowl Bazar .27 4.4 2540 80.07 - 51 1940 2.56 54 2239 44.15/142 Nehru colony Hospet.60 36.20 18.72 24.05 24.13 44. Sandur TQ.10 8.23 Dated 27/2/2006 CI13 MMM2006 Dated13/6/200 6 CI116 MMM1982 Idle Mines Dated 01/03/1984 CI156 MMM82 Dated 01/03/1984 CI 128 MMM1979 Dated 15-041980 MMM81 CI 148 Dt.29-11-2006 FEE33 FFM90 Bangalore Dated 25-8-1999 24.35 10.17 - 2.86 5.Bangalore 6-2003 Dated11-1-2007 CI 69 MMM2006 Dt.44 - - - - - - - 53 2309 36.70 2.91 7.00 6.00 49 Sri. Zeenath House.37 - - 14.69 8. Nehru Cooperative colony. Bellary M/s Zeenath Transport company Mine Owners & Exports.36 5.00 18. Hospet-583201 2173 - 3.30 58.28 26.

75 1.06 105.216.216.Allum Prasant Palace.02 2.94 2.12 10. Fort.15 6.40 5.85 .70 1.68 14. Bellary583101 Sri.63 shift 69 2313 21. N.5-2-2000 CI 145 MMM98 Dt 6-10-2001 CI 66 MMM2006 Dated 21-5-2008 FEE66 FFM95 Bangalore Dated 29-8-1997 FEE153 FFM93 Bangalore Dated 30-4-1997 FEE113 FFM99 Bangalore Dated31-5-2005 10.80 116.02 2.74 2.(Sri. Car Street.5. Near 100 Bed Hospital.B Minerals P.6.9 - 61 2551 22. M.12 9.01 16.06 105.86 - 3.03 2.01 31.2002 No CI 100 / MMM /99 Dated 28.95 - - 0.11 22.47 40.12 10.79 3.83 16. Patel Nagar.43 17.81 1. Bellary dist. Laliltha Nivas Siddarth Nagar .06 101.Hospet-583203 M/s Associated Mining Company Mine Owners.88 0.11 21.2.Ratnaiah Mine Owner.2000 No CI 83 / MMM/ 97 Dated 16.Nagar.16 14. Hospet-583201 64 M/s S. XVIII/35.26 24.75 6.76 42.2000 No CI 23 / MMM/ 2001 Dated 13. MineralsBellaryNo:4/269.23-06-2000 CI90 EMO66 Dated 12-8-1966 (Old) No CI 147 / MMM/ 98 Dated 20. M/s V S Lad 584119 Prashanth Nivas Krishna Nagar Sandur 583119 .Kruthika Nivas Kruthika Farm.26 - - - - - - 68 670 No FEE 45 FFM /88 B'lore dated 22.5 6.24 36.76 29.Bangalore Dated 4-2003 13-7-2000 CI 35 MMM99 Dt. Kannhaiyalal Duderia Pannaraj Compound.84 7.Iyli Gurunath) Nehru Co-operative colony.3.25 - 2.M.46 19.Sandur & Sons. Car Street.42 36.51 0.30-8-2005 CI 28 MMM2005 Dt.92 - 2289 - 42. Bellary M/s Hothur Traders Mine Owners & Exporters Plot No 9A.90 33.K.42 36.66 3.11 21.74 72 2245 No FEE 32 FFM /2000 B'lore dated 26. Singhi Sadan Infantary Road Bellary 2545 CI 29 MMM2005 Dt.30 6. Bellary 67 Sri.82 3.Infentary Smt Ambika Gorpade Shivapura Palace.74 5.52 2.62 {Forest) 1.95 7.20 4.17 9.08 23.97 14.J.23 23.90 46.30-8-2005 FEE152 FFM2005 Bangalore Dated 23-3-2007 FEE151 FFM2005 Bangalore Dated 4-1-2007 36.25 5.94 - 0.47 40.10 5.60 3.94 60 M/s Laxmi Minerals No.30 1.33 1.23 20.76 30.42 39 1.Bno:58.51 22.63 4.20 23.3.Nagar.78 70 2354 4. Sri. Mines & M/sBharath Minerals.37 29.Hospet-583203 M/s Laxmi Minerals No.06 2393 40.62 7.20 1.6.2001 26.55 4.80 5.16 13.05 1.29 71 2290 105.95 4.26 22.50 3. Parvathinagar.02 4.32 1. M/s A.Iind Link Road.23 20.4.3.14 0.R. Hospet583201 Ramghad Minerals and Mining Pvt.42 36.47 2.47 56.4.65 0.74 66 2563 CI 172 FEE123 FFM2007 MMM2006 Dt..95 4.23 20.09 1.79 63 2278 2.49 65 622 20.26 22.49 {Forest) 1.76 30.12 10. M.32 1. Ltd.J.1999 No FEE 29 FFM/ 98 B'lore dated 16.65 23.1999 - 30.Road.26 62 2434 CI 40 FEE50 FFM97 MMM2002 Dt.Bangalore 4-2007 Dated18-10-2007 CI94 MMM99 Dt. Near 100 Bed Hospital.20 26.47 40.

02 5.68 14. 33.13:MMM:200 2. K.JM buildings station road .95 73 M/s N M D C . 24.2005 690.737 .60 33.L.76 154.97 34.M.58 4.00 40.00 609.20 1.00 31.Parvathamma. Ring Road Lajpath Nagar 111 New Delhi M/s P Venganna Shetty & Bros Nehru Co Operative colony Hospet 583203 Bellary 1111 NO CI 35 / MMM/ 2005 Dated 4.43 5. Ltd Vishwa complex.58 133.24 3.04 81.M.50 74 1046 50.58 Dated:09/06/1999 Not working since 1999 andNot working no boundary since 1983 points 608.2008 647.3.JM buildings station road . Mine owner II link road.Bangalore1 2396 FEE:17:FFM:1990 608.50 No FEE 114 FFM /2003 B'lore dated 50.M.269:MMM:20 FEE:51:FFM:2004 05 33.60 Dated:12/07/2006 Dated:05/09/20 06 33.80 2.00 636.41 23.Hospet583201 Smt.97 Dated:18/11/2000 Dated:23/03/20 02 CI.14 2.00 Dated:28/07/1999 FEE:38:FFM:1998 125.97 9.09. Ltd Vishwa complex.04 80 2366 81 2514 82 995 FEE:86:FFM:2000 2.04 99.13 5.14 4.1981 76 Smt Omkaramma 1168 77 Sri B Kumaragowda 1611 No CI 163/ MMM /80 Dated 06. Ltd .2005 No CI 68 / MMM /2002 Dated 21.78 3.4.00 688.10 5.24 24.40 0.C.36 2. 61.31 4.68 15. Ltd.73 51.D.10:MMM:200 FEE:66:FFM:1994 6. 40 fair field road.00 Not working since 1983 and no boundary points 608.Hospet583201 M/s TML. Donimalai township M/s TML.91 30.00 50.977 5.97 33.80 62.5.05.50 40.40 5. Dated:18/03/20 02 CI.10:MMM:200 78 M/s N.28 33.79 38.00 115.88 5.91 Dated:07/08/2001 Dated:19/01/20 06 CI.60 37.10 18.57 110.68 3.parvatinagar.58 125.72 79 2365 125.1980 CI.36 75 Smt Sugunraj 1779 No CI 159/ MMM /80 Dated 05.33:MMM:98. Dated: 05/09/2002 CI.Bellary3 M/s M.

25 8.64 - - 3.93 - - 81.road.00 626.Bellary 583103 Sri. Burly Street. Mine owner.C I 16779 Dated 5/1/8 0 CI 70 MMM2006 Dated 27/11/2007 FEE16 FFM 1992 Dated 28/11/2000 80.32 4.20 ` 88 2002 582. Mine Owner 11/70.85 Dated:15/11/20 00 CI. Bangalore W.00 34.74 2.31 18.N.63 39.10 0.38 0.23 85 2292 4.88 - 54.50 6. Bangalore 2489 CI 113 EMO 74 FEE55 FFM96 Dated Dated31/3/1998 12/9/1977 CI52 MMM2004 CI 151 EMO77 Dated 20/3/1979 CI 33 MMM2006 Dated 16/11/2007 Idle Mines 39. M/s Nidi Mining Ltd.30 1.92 41.10 107.82 - 91 92 M/s Gadagi Mineral Mining Company.96 83 M/s H.27 33.40:MMM:200 FEE:96:FFM:2000 4.Bellary 583101 M/s Hanumantha Rao Teachers colony.G.M. 1st Floor.30 1.R.00 3.07 - - - - - - - . Bangalore M/s Nadeem Minerals .59 10 53. Bus Stand Road. 40.07 6.34 87 1715 1.20 1.& Co.27 106.34 28. Dated:07/12/1998 31.20 47.00 30.88 8.Hospet.00 53.20 2.74 28. Bellary M/s Mysore Minerals Limited (Timmappanagudi) #39. gadagi Palace.55 0.45:MMM:200 FEE:26:FFM:1997 2.50 2.68 4.Vrushabendraiah.25 84 2505 17. 34.40 40.92 42. Bellary M/s Narayana Mines Pvt Ltd.84 31.98 - - 54.04 4. Bangalore 2483 CI.73 - - 7. M.63 41.J.07 6.31 3.G.Door No393 sandur583119 Sri. V.Car Street.69 3.20 1.50 24. Mine ownerII link road.07 6.Parvatinagar.P.25 1.67:MMM:200 0.00 1. Hospet. Mruthunjay nagar.00(As per Working Permission) 80.60 1602 109.27 109.00 Dated:08/03/2004 Dated:20/10/20 04 CI.G.20+ 3.Parvathinagar.84 Dated:26/11/20 FEE:194:FFM:2006 02 Dated:07/12/1998 STOPPED STOPPED MINES 1.61 MINES CI 25 EMI76 Dated 23/8/79 CI 27 MMM06 Dated 23/06/2006 FEE91 FFM97 Dated 8/6/2001 621.Mennon PWD contractor. Residential Apartment.7 90 M/s Mysore Minerals Limited (Timmappanagudi) #39.59 FEE10 FFM2003 Dated 02/05/2005 FEE33 FFM2003 53.47 40.30 - 93 1754 Idle Mines 6.40 1.road.96 5.30 - - - 3.K.Sandur583119 M/s Mysore Minerals Limited (Timmappanagudi) #39. M.road.61 176.4 89 2526 53.21 1.73 0.82 - 6.45:MMM:200 FEE:20:FFM:2005 5.10 106.47 Dated:16/03/2006 Dated:09/03/20 05 CI.70 2.38 86 2433 31.20 Dated 08/08/2005 168. REVENUE LAND 4.Gaviappa.85 3.93 as sanctioned Notification 34. M.16 - 3.72+ 621.84 29.

62 14. Sadashivanagar.FEE 99 FFM 2006 Dt.42 .B..22 347.90 137.Minerals. Bellary Smt. Nehru CoOperative Colony.32 145. 19/01/2007 No.97 94 H.N.17 180.50 35.P.22 347.58 142.63 54.47 97 FEE39 FFM90 MMM2003 Dated 18/2/1997 Dated 04/05/06 CI 77 MMM 2006 Dt: 27/12/2007 CI 108 MMM 2006 Dt: 27/12/2007 No.68 4.90 4.35 7220.Jayaram.40 99 378 142. Hospet.8 TOTAL 9704.10 0.S.63 54. Bangalore 2549 CI 122 MMM2005 Dated 26/10/2005 CI92 EMI 1981 Dated 15/12/1981 CI 185 MMM2005 Dated 28/9/2005 CI 84 FEE123 FFM2005 Dated 03/01/07 FEE45 FFM96 Dated 30/4/1997 FEE171 FFM2005 Dated 23/6/2006 54.64 1863.94 80.36 1. 217.07 504.02 1848.FEE 100 FFM 2006 Dt. Hospet.70 survey yet to be completed survey yet to be completed survey yet to be completed 1848. W/o V.00 16.09 124.92 80.62 24. Hospet.40 95 2416 2553 (921) 2068 1179/ 2580 1952/ 2581 347.92 98 2837 1615.58 137.. Bangalore M/s SMIORE Ltd.57 15.R.Ltd.47 50.77 7767. Bellary Road.40 14. Bellary Road.13 1. Shantha Lakshmi Jayaram.G Ranganagouda 15/142. Nehru Co-Operative Colony.60 44. K. 19/01/2007 80.47 50.50 7417. SRR Theatre Compound.Bellary M/s SMIORE Ltd.Road.68 7.90 1079.22 96 50.66 5426. Bellary 583101 M/s S. Bellary M. 217.71 306. Sadashivanagar.

under the M&M (D&R) Act. The lessee has also extended his leased area towards the lease of M/s Chowgule’s Mines. This point has been fixed by leaving 200 meters gap towards the Northwest side (adjacent to the mining lease of M/s Ashwath Narayan Singh). The lessee has surrendered a part area from his original lease without rehabilitating the broken up area and mined areas. The surrendered area is highly fragile and eroded to a large extent. Though the lessee has surrendered the area towards the southwest of his original lease. This 200 meters gap of Forest land has been encroached by the ANS.P. but he continued to operate .2003 to an extent of 105. At present the lessee has fixed his boundary by taking a reference Point A (Zebra Cement Carriers) which is fixed at the Northeast corner of the lease. Some W. have been granted in favour of M/s Lakshminarayana Mining Company in the year 2004 for 20 years.9.22 ha. Details relating to some instances of encroachments set out in the report at Annexure-‘A’ are as hereunder: Mining Lease of M/s Lakshminarayana Mining Company The mining lease No.22ha. The lessee also obtained the forest clearance under the Forest (Conservation) Act 1980 vide the Government Order dated 2. 2487/1876 to an extent of 105. are also pending before the Hon’ble High Court and also in other Courts regarding disputes etc.98 The figures given in this report for the above said encroachments are indicative and subject to Court orders if any. Bellary district. in Northeast block of Sandur taluk.

and new lease No.07 ha.99 the mining in the middle part of the leased area (marked in the sketch) which is quite clear from the Satellite imaginaries of 2006. On verification of records it is found that for shifting of location. Order No. Lease was numbered as ML 636. The total of working pit including encroached pit have been calculated and it comes total out 41.57 km hence encroached 10. A mining lease to an extent of 50 Acres has been granted on 20. was given i.6.1980. The details regarding total encroachments for various mining activities are provided in the sketches annexed to the report Annexure-‘A’ at Annexure-‘A1’.5.e. this lease was transferred in favour of M/s Deccan Mining Syndicate Pvt. Further. 30.64 ha.5.5.(falling outside the leased boundary). the original location of the leased area has been shifted to the southern side.32 ha.90ha. Ltd. Other encroachments outside the lease (stone fixed) are about 5. In its second renewal notification dated 20. 3 acres of land have been deleted and remaining 47. in the year 1980 vide Govt. the lessee is enjoying the road passing through the forest to an extent of 12. The lessee also encroached 20. The size of working pit (outside) has been calculated and it comes out 5.1966 in favour of Motilal J. Mining Lease of M/s Deccan Mining Syndicate Pvt. Boyal for 20 years. 2525. During the renewal.06. the State Government has not taken the approval of . Ltd. forest area for dumping purpose. Subsequently. CI71MMM80 dt.93 ha.86 for 10 years at the same original location. in the way of road construction.00 acres have been notified on 20.

74 ha. measuring 11. The details regarding total encroachments for various mining activities are provided in the sketches annexed to the report Annexure-‘A’ at Annexure-‘A1’. Subsequently the lease has been renewed for an area of 15.No. ML. The lessee has not properly demarcated his lease boundary as well as no proper stones have been fixed at the interval of 20 meters. During the survey it has .100 Central Government under the M&M (D&R) Act 1957. The lessee has also destroyed the “rock point” which was located at the southeast corner of the lease. An area of 63.e.f 27/05/2001 in Joga Reserve Forest.74 ha as verified from the satellite imaginaries of 2006.10 ha has also been diverted under Forest (Conservation) Act 1980 vide Government order dt: 02/11/2006. The sketch in this regard has been approved by Mines and Geology and MOEF. Dump waste generated from the mine has been dumped outside the Mining lease. It is required to be fixed by the lessee as per the agreement. The NMDC has submitted a sketch which surrounds DMPSL leased area.07 ha of forest land as well as non-forest land. Hospet Taluk. This rock mark is a point where the non forest land is separated from the Forest. The lessee is working out side the leased area and formed a pit to an extent of 4. Mining Lease of M/s Gogga Gurushanthaiah & Brothers. In total lessee has encroached about 18.10ha for 20 Years w.1028.e.15.13ha has been granted in the year of 1971 in favour of M/s Gogga Gurushanthaiah and Brothers for a period of 30 Years to extract iron ore and Red ochre under the M&M (D&R) Act 1957. The lessee is operating in two pits i.

towards the Southern side from the leased area. Therefore. it has come to my knowledge that the Government of Karnataka had given three mining leases to some private parties in the area abutting Karnataka – Andhra Pradesh border while Government of Andhra Pradesh had given a mining lease to one company on the Andhra side of the border. newspaper reports showed that serious disputes have arisen between the people operating these mines both in Karnataka as well as in Andhra Pradesh. Requirement of a joint survey of Inter-State-Border between Karnataka and Andhra Pradesh by the Government of India During the course of this enquiry and my visit to the three districts referred to hereinabove. which had lead to various . But while this report was under preparation. there has been some illegal transportation in and out of Karnataka and Andhra Pradesh. I have no feed back in regard to establishment of any such check points. Because of the proximity of the availability of mineral in this part of the border of two States. I had suggested to the Department of Mines and Geology to establish check points at routes available for transportation of these ores in and out of these two States to control such illegal transportation. The details regarding total encroachments for various mining activities are provided in the said sketches.e. of minerals illegally mined.101 been observed that the lessee had operated the mine at different location i. The detailed sketch with Satellite imagery is enclosed to the report Annexure-‘A’ at Annexure-‘A1’. during the course of my investigation itself. This has been further verified with the Satellite imagery.

but. I do see an urgent need that the Government of Karnataka to approach the Government of India and get a joint survey done to determine the property of the two States.U. At the same time. But. Singh to inspect that area and submit a report. immediate steps should be taken to stop all mining work in the disputed area so that no loss is caused to either State. He has also given some findings. This report is made part of Annexure-‘A’. I am not inclined to endorse those findings of Dr. Singh has given a detail report supported by documents. I am unable to comment on the same. Irrespective of the powers that are.V. my advice to the Government of Karnataka is to initiate steps in this regard at the earliest. I was informed that there is a litigation pending in the Supreme Court. There are allegations on one side that the company from Andhra is encroaching the mining area within the Karnataka territory. but in spite of my best efforts. This dispute does not confine itself to a dispute between a few companies. I have not been able to get the particulars of the same. Dr. so that the territorial integrity of two States are protected. involves the territorial integrity of two States. Singh solely because the dispute is in the nature of inter-state dispute and no conclusion could be arrived at without hearing the State of Andhra Pradesh. . While the counter allegation is that the area in which the Andhra company is mining really belongs to Andhra Pradesh. I directed Dr. To have a first hand knowledge of the happenings in this border area. forgetting the interest of individuals. In this report of mine.102 litigations has also created law and order situation. Consequently.

31 having . the lessee or the transporter should enter the vehicle number. The transporter carries a Xerox copy of the original bulk permit and transports mineral within the period of thirty days mentioned therein. At present. using the same bulk permit. quantity of mineral that is being transported in the said vehicle and the name of the stock yard from where it is being transported. In these thirty days. as also the destination to which it is being transported. 31 issued by the Forest Department and a transport slip issued by the lessee himself. the owner of the mineral or the transporter can transport large quantities of iron ore at a time in trucks or by train out of the total bulk quantity mentioned in the permit. minerals that are mined legally from forest area will in addition to the bulk permit shall carry a permit in form No. Similarly. The normal practice prevailing as on today is that a booklet of empty form No. In such bulk permit. There is no method by which an account could be kept by the department concerned.CHAPTER – VI ILLEGALITY IN TRANSPORTATION OF IRON ORE AND SOME EXAMPLES OF THE SAME One of the major deficiency in the existing law which has become very handy for the unscrupulous miners to transport illegally mined ores. as to the quantity of ore transported per trip under one bulk permit. iron ores mined by the persons who hold mining lease in non-forest land is being transported under a bulk permit issued by the Dy. is in regard to transportation of the same. Director of Mines and Geology. These permits are issued for huge quantity of iron ore as sought for by the lessee or his agent with a duration of thirty days at a time.

even the Forest Department does not keep the account of the quantity of mineral transported and rely only on the statements made by the lessee or the transporter. RTO etc. New Delhi and . There are many number of cases where such instances have been noticed by other departments like the Police. there is every possibility and actually it happens in reality that the same permit is used more than once for transporting different lot or ore. by the security personnel that they have found at a particular time more than one vehicle bearing same registration number carrying similar permits and transporting iron ore.104 about 50 to 100 numbers are given at a time to the lessee or the transporter by the forest officials after signing each one of those permits and putting the seal of the concerned department. but that period will have to be under the time allowed in the bulk permit by the Mines Department. As a matter of fact. Nothing else is filled in the said form No. There is no way either the Mines Department or the Forest Department could keep a check over this malpractice. This form does not fix any period for transportation. 31 by the Forest Department and the same is filled as and when the lessee or the transporter wishes to transfer the mineral. Therefore. a report prepared by the Centre for Science and Environment. Consequently. The period of thirty days allowed for transporting the stocked iron ore is far beyond the required time for transporting the iron ore either from the stock yard at the mine head or any other stock yard to the railway or the ports of Mangalore. There have been instances which is reported to me from the new Mangalore Port. Bilakere (Karwar District) and Goa. in respect of duplication of registration numbers.

it is thirty days so far as bulk permit is concerned. also. . In that system. many licensed mine owners have encroached upon the areas beyond the boundaries of their mining area and some also carry out mining activities at different locations – all of this in forest area” The period of four days mentioned in this report is actually not correct. 31 issued by the Forest Department which is actually given to the lessee and land owner or transporter without filling any of the columns or date or destination. So. Having noticed this major deficiency in the system. in relation to illegality in mining and transportation of minerals in Karnataka. though the required period for transportation is only one day. it is observed as follows: “Reports on illegal mining have also found that officials allow 3 to 4 days for transporting ore from Sandur-Hospet and Bellary Region to Mangalore and Karwar Ports. I recommended a method of one lorry-one permit for one trip and recommended the same to the Department of Mines and Geology who brought out a permit with a hologram and a computer bar-code which would get erased during the first trip itself and the permit becomes invalid for second/subsequent use.105 titled as “Rich Lands Poor People – Is sustainable mining possible?” at page 194. one can imagine how many unofficial trips vehicles carrying iron ore can make carrying a copy of the bulk permit as also a form No. This unduly long period is granted for facilitating more number of trips per permit. This is a major cause for loss of revenue to the State as also an incentive to unscrupulous miners to do illegal mining and transport the same with the aid of these permits.

quantity and other details. Efforts should be made to get the stay vacated so that this lacunae in transport permit system is rectified at the earliest.V.U. B.2516 of B. the trip sheet and the way permit . The lessee should pay royalty for quantity being transported from his mine in advance.2516 of an extent of 134 Acres have been granted in Kumar Swamy state forest of Sandur range in favour of Sri. But.Kumar Gowda – (A Report by Dr. Singh) A Mining Lease No. Dr. The Deputy Director (Mines) issues bulk permit for the royalty paid quantity. Hence.V. The State Government through its department of Mines and Geology has to ascertain the quantity and issue the bulk permits and trip sheets for the ores to be transported.106 seven days time was granted for transportation of the ore from the stock yard to the delivery point. Every loaded truck shall carry the copy of the concerned bulk permit.27 per metric ton (MT) for a grade of 65 to the State Government. U.Kumar Gowda. the mine owners and transporters have challenged this change in the system in the High Court and the introduction of new system has been stayed. He/she has to keep check on the quantity transported through these bulk permits and shall also ascertain that the lessee should not transport more quantity than the permitted and royalty paid. For this purpose Deputy Director of Mines (DD) issue trip sheets and these trip sheets should be returned back for accounting purpose. the old system which gave room for a lot of irregularities is still continuing. Singh has analyzed the shortcomings of this system in one or two of his case studies and has reported thus: Illegal transportation of Iron Ore from the Mining Lease No. In the trip sheet the lessee is supposed to write the truck number. As per Section 9 of M&M (D&R) Act 1957 the lessee has to pay royalty at the rate of Rs.

107 (Form No. There are various columns in this Form and in one of the column the lessee is supposed to maintain the quantity as being transported by that particular truck along with the truck registration number etc. a X-copy of Bulk Permit issued by the Mines department.07. During the checking.B.e. The system (software) installed in the computer is a auto run system which provides automatic net weight i.KA-35/A 1495 was carrying 3 documents.31 are issued by the Forest Department to lessee in bulk.7. the net weight arrived through the system is actually the loaded quantity in the truck. Some of the trucks which were carrying the iron ores from his mine head to Yashwanthnagar railway station were intercepted and checked. There was no trip sheet (to be issued by DD Mines) found with the lorry. Subsequently. The Form No.Kumar Gowda’s stockyard) it is found that 408 trips (lorry loads) have been made for the day (i.on 27. The quantity mentioned in the trip sheet and in the way permits were found different. Based on the computer printout attached to weighbridge it is found that 7504. As per the record collected from lessee’s computer (the weigh bridge maintained by Sri.31) issued by the Forest Department and a transport slip issued by the lessee himself. The trip sheets are being issued along with the bulk permit by the Mines Department for a specific quantity to be carried by the truck. i. 27. Further.Kumar Gowda in Kumarswamy Forest Block.88 MTs have been loaded in trucks and transported. On 27.08).e.e. the way permit (Form No.e.2008 for the iron ore transported to the Yashwanthnagar Fomento’s Stockyard by the lessee. it’s found that a truck bearing No.07. as per the way permits .2008. I have inspected the mine of Sri. I have taken the print out from the Computer attached to the weigh bridge for the day i.31) issued by the Forest Department and a transport trip sheet issued by the lessee himself.

T. No. the quantity has been calculated and it is found 5840. Mines has issued 18 bulk permits on dt. 2253 -do— -do- -do-doYashwanthna gar Railway Station.Goa -do-do-do-doIron Ore -doLumps -do- -do- -do- On perusal of above bulk permits the following observation are made. . Yashwanthna g-ar Railway Station. The lessee has used 5 bulk permits for these trips (408). -do-do-do- 18.G.31 is taken into consideration.07.18. Goa. Goa.7.e. 2242 2244 2249 -do-do-do- 2600 3800 -do- 5.475. 2239 Date Quantity (MT) 2600 Destination Category Grade Actually transported and stocked at Fomento(KTK) Mining Co. The Deputy Director.08 for destination via Yashwanthnagar Railway Station to Kakinada and Sawathwadi T.34 MT have been transported if the records of Form No. Sawathwadi.T. 4. 1 Bulk Permi t No.G.108 (i.80 MT. T. The details of the bulk permit are given as under: Sl. Form No. as per the “transport trip sheet” issued by the lessee himself for the 408 trips. Sawathwadi.G. Stockyard near Yeshwanthnagar Railway Stn.31) issued for the trips (408) the quantity has been calculated (which is written on the way permits) and it is found that in total 6.. Some permits are issued for 2600 MT and others for 3800 MT. Further.T.T. 1.08 YeswanthIron Ore 65 nagar Railway Fines Station Kakinada 2 3.

The Mines Manager told me that the Iron Ore is transported to a stockyard near . 7. 3.. The bulk permit are not accounted and recorded in none of the records used for transportation hence kept open to use it again and again without any limit. the lessee has used 5 bulk permits for the transportation of 5804 MT (as per lessees “transport trip sheet”) to Yeshwanthnagar stock yard. a raising contractor. The Iron Ore transported from B.. 5. 6. There are no trip sheets issued for this quantity (quantity to be transported by using 18 bulk permits) and due to lack of this it is not possible to arrive at a conclusion for a particular bulk permit the quantity transported against it.109 2. The iron ore transported by using 5 bulk permits can’t loaded in five different Goods Trains in a single day. Out of the 18 permits. No separate stocks for individual bulk permit are maintained either at mine’s head or at Stockyard near Yashwanthnagar Railway Station. 8.Kumargowda mines has been unloaded at Stockyard maintained near to Yashwanthnagar Railway Station and managed by the M/s. Private Ltd. The Mine Manager Shri Srinivas Rao was present during the entire course of inspection. Fomento (Karnataka) Mining Co. With such arrangement. 4. The lessee has used X-copy of 5 bulk permits haphazardly without having separate identity. the (xcopy) bulk permits can be used for any quantity. There could not be check whatsoever on the transportation by using the X-copy of bulk permits in this manner.

31(MT) trip sheets by lessee (MT) 4 5 6 7 8 6475.lakhs) @ Form transport Rs. Ltd.. The quantity comes out 7376. is more than the quantity for which the royalty is paid. Gross Weight and Net Weight. The Net weight recorded on all these trip slips (16 in numbers) ranges from 10.. recorded in recorded in (3-4) (Rs.45 MT to 16 MT i.. 2. On the above observations the following is concluded. Date. Destination. Time. At the weigh bridge of BKG Mines. Sl. there is illegal transportation of Iron Ore which has resulted to huge loss to the State Government.34 5804. The quantity transported in real terms by 408 trips (lorry loads) to the stockyard maintained by Fomento (KTK) Mining Co.ed loads) (MT) Total Total Difference Difference Loss to quantity quantity (MT) (3-5) Govt. Hence.80 1 2 408 3 7504. Pvt. A print out from the computer has been taken and quantity is summed. of quantity trips transport (Lorry .80 1029. Source. Total Actual No. The entire quantity transported through the 408 trips have been weighed at the weigh bridge of this stockyard also. The summary of the transportation and loss to Government for the iron ore transaction on 27. No. I also inspected the stockyard belonging to Fomento (Karnataka) Mining Co. 1. quite below to the carrying capacity of the trucks.110 Yashwanthnagar railway station. Private Ltd.e. some printed slips (through computer) were also found which were printed by writing the Vehicle Number.. With this information.44 MT..54 1700 40. These slips are meant for to be carried along with the lorry loads.7.88 .08 is as under..2400/MT No.

It is also noted that the lessee is transporting the ores to the stock yard instead to Railway Station as being mentioned in the bulk permit. By storing at Stockyard and then loading to Goods Train the iron ores cannot be checked for the permitted quantity. is having a stockyard near the Yashwanthnagar Railway Station. VNK Menon and VESKO. It is evident .. 4.. 5.80 lakhs. SKMV. The lessee has given his lease to a raising contractor M/s. which is nothing but a Sub-Lease of the Lease without prior approval by the State / Central Government. i. In fact the adopted system hire in is a totally ambiguous and non-transparent and require immediate intervention to safeguard the state resource. Violation of Transit Rule 149 (1) of Karnataka Forest Rules 1969 by making false entries for less quantity of iron ore if compared with the actual quantity loaded in the trucks. 6..111 Net loss to State Government for one day transaction from the said mines is about 40.. Private Ltd. Bulk permits are issued for the different destination via Railway Station but in reality the first destination is stock yard near Yashwanthnagar Railway Station and ores are transported through trucks. is a raising contractor for all these mines. It is learnt that the Fomento (Karnataka) Mining Co.. This stockyard is been used for the stocking of iron ore transported from three more mines. Fomento (Karnataka) Mining Co. It is further observed that the Fomento (Karnataka) Private Ltd. 3. Private Ltd.e.

My conclusions in regard to the irregularities and illegalities are reflected in the concluding chapter of this report. a further report will be submitted. The bulk permits are not accounted in any of the records related to transportation.e. .. by issuing many bulk permits to the different destination ignoring the transportation to stock yard through trucks without issue of trip sheets. nothing could be arrived to a conclusion for the quantity for which a particular bulk permit is used and how much quantity is yet to be transported for the said bulk permit. The Mines and Geology Department has facilitated to lessee to commit such irregularity i.112 from the quantity actually transported and recorded in various records. Regarding irregularities committed by the concerned officers. Hence numbers etc..

48 and 63. As stated hereinabove.2 tones gross vehicular weight and a two rear axle lorry is permitted to carry 25. Note also specifies that in practice. having travelled in NH 17. that how these roads apart from the other arterial roads leading to these National Highways have been damaged. Karnataka Lokayukta states that the National Highway is designed to carry load as per the recommendations of the Indian Road Congress (IRC). I experienced. because of the excessive use of over-loaded mineral laden lorries and consequential loss that has been caused not only to the State but also to the travelling public.CHAPTER . The report submitted by the Superintending Engineer. the traffic census of these vehicles in NH 17 alone shows the over-loading lorries . It is stated in the said report that a normal single rear axle lorry is permitted to carry 16.00 tones load. as also by my visit to the three districts named above. these vehicles are found to carry iron ore and granite blocks upto 25 tones in a single axle lorry and upto 35 tones in a double axle lorry and according to the said note of the Superintending Engineer. I had requested the Superintending Engineer.VII The Effect of mining on Roads and Environment As briefly noted herein before in this report. NH 63 is used to connect NH 17 and NH 48 from Bellary and Hospet. Karnataka Lokayukta to give me a note on the cost of maintenance of these roads in normal circumstances as well as in the present circumstances where the mineral laden lorries used these roads. these lorries carrying mineral specially use NH 17 to reach new Mangalore Port and NH 48 to reach Goa and Karwar.

V. 63 and 48. The note of the Superintending Engineer supra shows that the National Highway undertakes renewal work of 25 MM . i. the volume as 4 to 5 thousand over loaded vehicles ply per day at least. Neither the lessees who own the mines nor the transporters have no concern whatsoever for the condition of these roads and it is relevant to mention at this stage itself that the officials of the Department of Mines and Geology. then the fixing of overlay should be 75 mm and this type of work cost Rs.e. as also the . One of the examples that could be connected here based on the recent newspaper report is that NH 48 at Shiradighat area which was repaired recently. Fate of NH 63 and NH 17 is no better. 18 lakhs or Rs.000 over loaded lorries ply on these roads. about six months back at a cost of crores of rupees has already damaged so badly and the passenger transportation has almost come to standstill in this road.5. damage factor comes to more than 8. Whereas Dr.U. The said note also points out that as per IRC guidelines.114 as to 3 to 4 thousand per day. but. these highways develop cracks prematurely. Road Transport. It is of common knowledge that because of number of lorries that are involved in transportation of the ore and lack of experienced drivers. Consequently.40 MM thick overlay for which they fix the life of three years duration and if this quality has to improve. if commercial vehicles ply more than 1500 per day. if more than 3. Singh’s report shows that from Bellary and Hospet to NH 17. damage factor (VDF) comes to 4. 40 lakhs per Km depending upon the expected life (duration). thus causing huge financial loss. Police are conniving in permitting over loaded lorries in plying in these roads without any hindrance. if as is the traffic load these days.

are also part of the system to carry illegally mined unaccounted mineral without paying any royalty. This would come to Rs. taking the loss of royalty at Rs. They cause heavy financial loss to the State. the environment is damaged by flying dust of mineral ore. Singh has rightly pointed out that . This calculation is confined only to over loaded transportation of non-royalty paid mineral and if the whole load in the lorry is non-royalty paid. for namesake a mini sheet of plastic is placed on top of the load to hood wink the people as well as the authorities. Dr.000/.60. one could imagine the quantity of loss suffered by the Government. 6.115 hurry in completing the journey both ways. These vehicles not only cause damage to the roads.per day if the number of lorries is taken as 4.per metric tone.80.per day if the volume of transport is taken at 3.per lorry i. 220/. right through the route of transportation. Apart from the above loss. A visit from Hospet or Sandur to Goa. by the route taken by these lorries.e. It is reasonable to presume that if any load of mineral in a lorry consists of illegally mined non royalty paid mineral.V.000. at least about 10 tones in either type of lorries on a reasonable estimate would cause a loss of Rs. to plug the possible loss of revenue in this type of illegal transportation of mineral. because the authorities have permitted transportation of mineral in open bodied lorries. 8. In some cases.000/.000 and Rs. U. No attempt whatsoever has been made by any of the concerned department. by way of royalty evasion and as also damage to the roads. 22/. the rate of accidents in these roads involving mineral carrying vehicles have become very high. would clearly indicate the damage to the environment including the water bodies. Karwar or Mangalore.

Commenting on the damage to the environment. The effects on environment are as severe. leaving them economically “worse of than before” and psychologically traumatized. environmental disaster and policy failures. the report of the Centre for Science and Environment referred to herein above has stated. Miners enjoy almost unhindered access everywhere: there is no moratorium mining anywhere in the country. as could be seen in the photographs produced. Dustladen. bulldozers. Entire villages and communities are uprooted. Mining requires land – mostly. Grim-faced and grimy workers. and leave out a vast population of landless and tribals who have no legal claims to land. watery pits. their livelihoods and lifestyles destroyed.116 how clear water even in the rivers are polluted by these lorries while cleaning them in the rivers. thus: “Bearing the brunt: People and the environment Large expanses of barren land and open. excavators… usually. land belonging to indigenous and marginalized people – and land appropriation leads to displacement. Busy lines of trucks. Rehabilitation and compensation are distant dreams at best. on The results have been catastrophic: thousands of hectares of forests – including . But under this image and extending from it lie hundreds of other stories of how mining affects us: stories of human tragedy. the abiding image of mining is one of monochromatic aridity and industry – indicative of what mining does to the landscape. sooty air.

severe as they are. Dr. U. and human health held hostage to a variety of mining – induced disorders. U. aptly applies to the adverse effect of mining in Karnataka also. mineral-based industries like sponge iron are taking the devastation further a field. which has consciously accepted displacement and environmental damage as small prices to pay for the ‘greater good of the country’.117 protected areas – razed. beyond which lurks strife and civil war. One would argue that mining’s impacts. pristine water sources throttled and polluted. the air turned rank with mineral dust. Singh in this regard is extracted below. 17. On the other hand. are perhaps inevitable and unavoidable. Socioeconomic.km. out of which 698 sq.km.6% of the total forest . Equally inevitable and unavoidable if we don’t rethink our options”. The report of Dr.V. of course. Noise and Water Environment in Bellary.V. Whatever is commented in the above report. Air. Especially so for a nation like India. farmlands turned into barren stretches. “Impact of mining activities on Biological. Singh’s report also refers to this malady in the mining activities in Karnataka. mountains of waste have completely transformed landscapes and are slowly poisoning everything they come in contact with. doesn’t stop with this. is forest area and remaining area is the agricultural and waste lands. Post- mining. The havoc. Hospet and Sandur (BHS) Region The geographical area of Bellary district is about 9885 sq. But this chosen one-track path to progress is leading the nation towards the edge of a deadly precipice.

The impact of mining on the abiotic factors is quite high. Bajara Grams.118 area is dense forest mainly found in Sandur and Hospet Taluks. humidity etc. soil and water erosions etc. Groundnuts and some other millets and pulses are the major crops grown in the valleys and hill’s slopes in Sandur and Hospet taluks in patta lands. temperature. Due to increased mining activities the disturbances in natural settings have already been set in motion and it would be too late to control the damage if it is not stopped forthwith. and it would lead to change in composition of the species. blasting. Onion. soil. Hence in this region. The mining activities disturb the natural settings mainly induced by machinery used in mining. transportation. This would result in threat to change in the composition of natural biota in the ecosystem due to change in the abiotic factors. Maize. This has also been observed in the study carried out by NEERI in this region wherein it was noticed that Simpsons Diversity Index (SDI) is quite low near mining areas (0. The mining was at a low rate in the last four decades (1960 to 2000) but has increased many folds due to “China Boom” in recent past and present. in the near future the composition of natural species would definitely get altered and slowly some exotic would replace the natives. water. Due to direct influence of mining there would be variation in abiotic factors like air.062) if compared to the maximum SDI found in Thimmappanagudi and other forest blocks. The aboitic factors are influenced and altered to a great extent due to mining and related activities. . To maintain a sustainable ecosystem there is a need to maintain the homeostasis of all the environmental factors (abiotic and biotic) and any change in this would lead to stress on the ecosystem.

the impact of mining has also increased accordingly on the forest. Hospet and Sandur (BHS) region. agriculture. the impact of mining has also increased accordingly. 10 shrubs) having medicinal properties found in this region. VESCO. around the forest rest house valley. 90 are tree species. There are 61 plant species (28 trees. Ramanamalai and other forest blocks. This comes out 30% of total plant species. This valley is a paradise of the National bird. Kumaraswamy.119 Due to increase in the ore production which is approximately four times in this year if compared to the production of the year 1999-2000. aquaculture and human . It is to be noted here that the recent sudden increase in ore production in some mines like SKME. a total of 194 plant species were recorded. the Peacock. Conservation and preservation of species in balancing mode are most important in forest areas because each and every species is having its own ecological niche and they are related one or the other way in eco-system through food chain. Further addition of any mine in the surroundings of this valley would result to reverse the ecosystem of the valley. HGR and other mines to Railway stock yards and other places have led to increase in SPM (Suspended Particulate Matter). VNK and HGR. out of this. This valley has been declared as Medicinal Plant Conservation Area (MPCA) having the maximum numbers of medicine plant species. As per the NEERI report of Ballary. A similar state is also in the offing and being reflected in many other similar valleys and hillocks of NEB. VNK. 23 herbs. Since the ore production has increased more than four times since 1999-2000. 36 shrub species and 68 herb species. VESCO. the impact is well noticed. The movement of vehicles through the road passing this valley from the mine head of SKME.

120 life. NEB and other forest blocks have almost destroyed the entire fabric of forest ecosystem and agriculture in the area. Swamymalai. The entire area of NEB. thereby creating monoculture and resulting to change the existing ecosystem in near future. the emission sources and meteorological conditions. All these species are now at run due to noise. It is observed that most of the lessees are using exotic species for planting to rehabilitate the dumps and also other leased area. The fine dust generated due to mining activities including transportation. The quality of ambient air depends upon the concentrations of specific contaminants. It has been observed that SDI is reducing in the areas where the mining activities are more. In BHS region the arterial network of roads which is compounded by adding of 181k. 145 species of birds. Continuous serial stretches of mines on its hill tops in Ramdurga block. fall on the flowers. A sizable numbers of wild animals comprising 16 species of mammals. mined roads and continuous serial stretches of mines in Ramandurg. air. and inhibit setting of seeds would result to loss of biodiversity of the region. water and soil pollution generated through mining and related human disturbances. leaves etc. The mining activities including heavy loaded truck transportation of iron ores do make great impact to these factors. The air environment in the BHS region has been highly affected due to mining activities. The continuous mining activities in nights have further added fuel to the fire to desert wild animals from the forest area. Ramandurg. Donimalai . fruits. 9 species of reptiles have been reported by the NEERI in its study during 2001-02.m. NEB block and also in other blocks have brought a sea change in the surrounding ecosystem.

As per the study carried out by NEERI the Suspended Particulate Matter (SPM) and RSPM concentration was found quite high in the air throughout the year when the production was 12 Million tones in this region. Mushrooming of stock yards all along the roads have further added the impact manifold. The same results in further aggravated pollution and health hazards. The agriculture crops get affected all along the so called mettled roads.121 and other forest blocks are affected at highest order. Now the impact could be imagined in the region when the production has touched to 42 million tones and more. . the movement of vehicles on these roads result into generating fine dust and it spreads and covers the surrounding forest and agriculture fields upto more than 500 meter all along the roads. Dust clouds cover the forest tree species. The stock yards near the vicinity of human habitation have added to the ultimate pollution of all kinds and the voiceless suffering of the community are at peak. Due to movements of over loaded trucks the roads are heavily damaged and the speed of the vehicles doesn’t go beyond10 to 20km per hour. This leads to further increase in traffic on roads especially at nights. All the roads leading to mines from PWD roads are “kachcha roads”. In stock yards all the activities related to mining are repeated except blasting. Stock yards (legal or illegal) are formed almost on all the roads in Sandur Taluk and part of Hospet Taluk. agriculture crops fully. Due to dust fall the colour of the trees looks reddish-brown instead green even in the rainy season.

There may be certain monetary and employment gain to the locals but the socio-cultural environment in the region has adversely affected due to immigration of labours from various States like Assam. Dharmapuram. Rajasthan. Naganhalli. Devgiri. Vittalpura. Kalahalli. Papinaikanahalli. Bhujanganagar. Venkatagiri. Orissa. Ranjitpura. Moriammahalli. Rajapura. Haraginadona. Due to mining activities and allied industries there is a multifacial development in BHS region. results to increase the concentration of fine particles in the atmosphere. Sandur. Cd etc. Hospet. Pb. The influx of . Gollarahalli. Ramgad. Gundlavaddigeri. The developmental factors have brought socio-economic and cultural change in the region. Karrignur.122 The heavy metals in Suspended Particulate Matter (SPM) have been reported in this region. Basappa Camp. Mutulkunta. These heavy metals affect the health of human being in two ways. The impact is also felt even in the villages of adjoining taluks. Taranagar. Vadrahalli. • Penetration of fine particles containing heavy metals through the respiratory tract and lung tracheoles.P. The villages and towns having sufferings due to the dust and other environmental hazards generated by mining and transportation activities are: Bellary. Tamil Nadu. Swamihalli. Tumti. Sidhapur. Bommagatta. Oblagundi. Nandihalli. Bihar. • Heavy metals act as nuclei which may initiate gas-toparticles conversion reactions.Temple. Somalapuram. Ni. U. Belgallu and all other villages on the road and at the vicinity to the mines. Fe. The main heavy metals reported in BHS region are Mn. K. Sushilanagar.. Andhra Pradesh and also from other States.S.

4 during the 2001-02 when the production was around 12 million tones. Government land and in forest land. Illegal transaction of unaccounted money has increased. lower class people have resorted to the illegal mining activities at a large extent in the private holdings (patta lands). road. The local people of the community are “keen observers” to the money flow due to mining mainly after “China Boom”.. intestinal/enteric related disorders. The quality of life index (QOI) was around 0. . Their living condition in these huts are pathetic and beyond imagination. There have been increases in the social unrest and due to this. To operate illegal mining in the distant places the temporary settlements in the remote areas have come up by raising poly huts by the migratory labourers. poor sanitation. Due to increased mining activities in the region the community health is shattered i. the QOI has further degenerated. There has been shortage of housing for the weaker section of the society and adhoc slums have come up in almost all the villages and towns in this region. The illegal mining activities at nights have increased manifold. political and social violence. sanitary. The sudden increase in the number of vehicles especially the trucks in and around the villages have occupied the open spaces in the villages and created unhygienic living conditions. residence and others.e.123 floating population due to migration of labours has put a lot of pressure on the infrastructural facilities such as water. The middlemen ship has increased due to easy money making. This is not only causing loss to the State Exchequer but also creates a lawless society in the region. Since then approximately four times increase in the production of iron ores in the same area.

. calibrated ores and transportation has also increased. the peace of the area has been completely lost. Due to Influx of migrated labourers. stock yards and many other places which are working round the clock. prostitution. (skilled. skin diseases. Hospet and Bellary Taluks and also beyond. Detail investigations into the economic affairs in such Companies should be taken up independently. The trucks movement on hilly areas. STDs. other machines used in mining) hundreds of iron ore related trading/transportation Companies (registered and unregistered) in Hospet. Accordingly the activity involving in the production of lumps.124 working injuries. There is social unrest in the region due to immigration of lobourers. unskilled) machinery (trucks. traumatic injuries. The iron ore production has increased and crossed to 42 million tones in the year 2007-08 in Bellary district. the noise pollution have crossed all limits. Because of bad air quality the decease related to respiration has increased and skin deceases are at large. alcoholism. malaria and other communicable diseases are prevalent. bad roads and movement mainly in nights. The impact of the movement of vehicles is felt up to Sea course in western and eastern part of the plateau. which falls on the “iron route” are highly affected. lung cancer. Most of the villages in Sandur. fines. The roads in Western Ghats have been completely destroyed due to the movement of iron ore loaded heavy duty trucks. The theft of fuel would have increased resulting to loss of tree density and biodiversity. The increase in crushers at mine heads. tremendous biotic pressures have been caused on the forest. Bellary and Sandur Towns. The use of heavy machines has been increased manifolds.

The forest topography of the BHS region is highly undulating and now traversed with “kachcha mine roads”. Trucks and other machines used in mining activities. Drilling Machine. The temperature remains in between 100C to 440C with an annual average 280C. Major rainfall comes from southwest monsoon while about one-fourth from northeast monsoon but not regular. the occupational hazard due to noise pollution has increased to alarming stage. commercial and silence zones. The high level noise pollution is resulting into deaf and psychological disorders. . The drainage pattern of Sandur hills of southwest and northwest terminates into small local ponds and hence do not confluence with regions bigger surface water bodies. Excavators. traffic jams in the region is common in towns. The local topography has a significant effect on the climate of the region. Due to mining activities the traffic density in the region has been increased. An average rainfall is around 700mm per annum. Loaders. Hours together. This has resulted into local water body pollution and localized impact. The relative humidity varies from 35% to 68% with an average of about 50%. The noise level in human settlements upto 2 km away from roads and mines has crossed the threshold level. The hill ranges of Sandur are ranging from 900m to 1100m altitude while the adjoining plain areas are at an elevation ranging from 550 to 690m. Installation of heavy machinery in the mines use of heavy duty vehicles in transportation. and Vibrators.125 In the BHS region the equivalent noise level (EQL) have exceeded to CPCB standards in all the residential. The major noise generating sources are Dumpers.

whereas chemical quality get affected due to soluble elements and intensive truck washing. fluoride and other cations and anions. Daroji and other surface water bodies. The Narihalla and Daroji tanks receive larger portion of silt generated from the surrounding hills due to mining. a specific impact due to over burden dumps. sulphides. pumped out or lost by evaporation. It is commonly known that factors like surface hydrology. and the water table will be lowered in the adjacent areas. groundwater mine would be intercepted by the open cut. there is direct impact of mining in the Narihalla tank. Hence. This could result in dewatering of wells within a radius of few kilometers of . Run-off from graded or ungraded spoil surface also get altered chemically the water body quality.126 Part of the run-off from the hilly watershed is carried away through Narihalla then to Ubbalagundi and Bhimanagundi gorges and ultimately to end into Daroji tank. where overburden spoil surface are high in pyrites the mineralized leachates from these dumps contaminate the water body with pollutants viz. spread over rainy 40 days of 8 months in a year. Depending on characteristics of overburden material. Mining explorations if conducted below the water table. This happenes due to undesirable overburden materials are disposed off close to and above the mined areas. The lives of these tanks are at high risk. soil texture and terrestrial vegetation are controlled by the groundwater regime. Excessive concentration of chemicals render it unsafe and unsuitable for designated uses. heavy metals. especially. Average annual precipitation is about 700mm. Surface water body’s physical qualities get affected by soil erosion and sedimentation.

dam.127 the mine depending upon the internal land structure. transport and dumping of overburdens. if the mine is located in a groundwater recharge zone. Except the mine of National Mineral Development Corporation (NMDC) at Donimalai. if it differs from the original characteristics of top soil and overburden of leased area. no other mine involve in washings of ore. Groundwater pollution has arisen in this region mainly from the top soil and overburden material containing soluble chemical constituents of heavy metals. Most of the mining operations involve dry crushing. through small streams. The magnitude of the problem is governed by the length and stability of this zone slopes or graded areas. The recharge characteristics would get affected by the backfill material. sizing. More than 100 mines of iron/manganese ores are located in BHS region which are responsible for erosion and transport of sediment to external drainage systems and become a potential threat. Hence the effect of mining is long lasting. storage. sieving. The groundwater quantity would also be affected after mining is closed and reclamation done. rejects etc. These chemical . irrigation pond. The high frequency and intensity of rainfall is causing the erodability of spoil surface materials and the types and density of vegetative cover on reclaimed area. During monsoon. viz. The iron ore mines in the district are of open cast type and there are no direct discharges of wastewater generated from the mining activities (washing). the fine material from dump site gets carried away along the hill slopes through surface run-off and find entry into the nearby surface water body. Frequent and deep mine in the region would cause a irrecoverable loss to soil moisture of the hills which are responsible to support the forest vegetation in this area.

128 constituents are getting leached away by the precipitation and percolation into the groundwater. These trucks are being regularly washed at tanks. . nalha. Most of the lessees have not taken up the work to stabilize the overburden and other piles. thus polluting the nearby groundwater sources and rendering them unfit for human consumption. There are about 4500 to 5000 trucks involved in transportation of iron ore in BHS region. The run off from the mining area and from waste dumps are not arrested by creating cemented check dams. retaining wall etc. and other surface water storage bodies in the forest.

get mixed into the water. oil and grease containing heavy metals like lead (Pb) etc. This is a very dangerous trend and will have to be stopped forthwith. natural streams and other water bodies in the forest area and affects the wild life directly. . This results in water contamination in nalhas.129 In this act of working. the dust. My conclusions in regard to the aspects discussed in this chapter are reflected in the concluding chapter of this report along with my suggestions and recommendations.

ILLEGALLY MINED FROM PATTA LANDS Another matter referred to by the Government to the Lokayukta for investigation is to:“fix the responsibility and initiate suitable action against all public servants including Ministers. no mining lease shall be granted otherwise than in accordance with the provisions of the M&M (D&R) Act and M. According to Section 4(2) of the M&M (D&R) Act. The law pertaining to mining operations including excavation.C Rules. The authority to grant mining lease is vested in the State Government subject to the terms and conditions specified in the M&M (D&R) Act and the M. for having granted mining and transportation permission of major minerals from Patta Lands without valid mining lease.C Rules framed under the M&M (D&R) Act by the Central Government vide Section 4(1) and 4(1A) of the M&M (D&R) Act.” In regard to the above allegation Sri Gaikwad team has submitted its report which is marked as ANNEXURE-B. If the lease relates to a private patta land. storage and transport of minerals requires that all the above activities are in accordance with the terms and conditions of a mining lease granted under the M&M (D&R) Act and M. whether in office or otherwise.CHAPTER – VIII ISSUE OF TEMPORARY TRANSPORT PERMITS TO LIFT AND TRANSPORT ORE. 2. prior consent of the land .C Rules.

etc.C Rules specifies the conditions subject to which a mining lease shall be granted. Rule 27 of the M. It is said that in exercise of the powers conferred by sub-rule (3) of rule 27 and clause (iii) of rule 45 of the M.C Rules.C Rules the State Government has inserted in all mining lease deeds clause 3A in Part V of Form K proforma of mining lease deed providing for issue of transport permits to lessees which reads thus:- . regulating transport of minerals from the area covered by the mining lease. Rule 31 of the M. Government of Andhra Pradesh (AIR 1997 SC 2098). If the mining lease in respect of a mineral specified in the First Schedule to the M&M (D&R) Act is to be granted. No Rules have been framed in exercise of this power. inspection. checking and storage and search of minerals at places of excavation. 3.C Rules provides for execution of a mining lease deed and a pro-forma of the mining lease deed to be executed by the lessees is annexed to the M. maintenance of registers.C Rules – vide Form K of Schedule I to the M. storage or during transit. till the matter was referred to Lokayukta for investigation. Section 23-C was introduced in the M&M (D&R) Act in 1999. For preventing illegal mining. prior approval of the Government of India is necessaryvide proviso to Section 5(1) of the M&M (D&R) Act. storage and transportation of mineral. empowering the State Government to make Rules for establishment of check posts for checking minerals in transit.131 lord is necessary -vide Pallav Granites V/s. forms.

Form K. including aforesaid clause 3A. Clause 3A does not provide for issue of transport permit to a person other than a lessee to transport ore or mineral extracted without a mining lease. being part of the statutory rules. Hence the Director is free to adopt a suitable form which is not inconsistent with the M&M (D&R) Act and M. I think because of the magnitude of work this power of delegation should be given to the Director. of Schedule I of the M. Whether the permit under clause 3A could be issued only by the Director or he could direct one of his subordinates to issue a permit is not free from doubt because there is no provision in the M&M (D&R) Act or the M. The M. Clause 3A authorizes the Director (now designated as Commissioner) of Mines and Geology (in short Director) to issue transport permit in favour of a lessee.C Rules. . Therefore. has the force of law.C Rules have not specified any form of the transport permit.C Rules. it should be held that at present the Director is not authorized to delegate this power to his subordinates. Section 26 of the M&M (D&R) Act deals with delegation of powers.132 “3A The lessee/lessees shall not remove any ore or mineral from the leased area except under and in accordance with the conditions of a permit issued by the Director Mines and Geology in Karnataka on payment by the lessee/lessees of the royalty due on the ore or minerals”.C Rules which authorizes the Government or the Director to delegate his powers under clause 3A.

After the retirement of Dr. Basappa Reddy ordered his subordinates to issue transport permits to 82 applicants who sought permission to transport floating iron/manganese ores from their patta land. is an offence punishable under section 4(1A) R/w section 21(1) of the M&M (D&R) Act. including the owner of the land. (4A) and (5) is also a misconduct punishable in disciplinary proceedings. Failure to prosecute a person who has excavated ore or mineral without a mining lease and to seize or collect the value of the ore or mineral so excavated as well as failure to collect rent. without a transport permit. IAS took . In those 82 cases. royalty or tax from such person as provided in section 21(4). the Director received the applications from the pattadars or their agents directly and the Director on his own. Transportation or storage of ore or mineral or causing it to be transported. Any person. 5. Sri Yogendra Tripati. undertaking mining operation without a mining lease is guilty of an offence punishable under section 4(1) r/w section 21(1) of the M&M (D&R) Act. Basappa Reddy.133 4. Remaining 41 cases were in different stages of process when the said Director attained superannuation on 31st October 2004. decided to issue permits and directed his subordinates to issue the permits and those subordinates issued permits in 41 cases and transportation of ore or mineral has taken place in those 41 cases. In 2004 the then Director Dr. Section 21(1) of the M&M (D&R) Act. M. Granting transport permit in respect of ore or mineral excavated without a mining lease to a person would be an offence punishable under section 4(1A) R/w.

That order of the Director was challenged by many affected persons. he issued memorandum dated 19/20. wrote a letter dated 22nd November. one Sri S. received from the applicants. He reexamined the position of law in regard to granting permission either to gather mineral in patta lands or to transport such minerals from patta lands. and another without date. In the said letter. iron ore is accumulated and to render such lands fit for cultivation. 45 and 46 of the M. In this background. a former Minister of Government of Karnataka. He came to the conclusion that such permission or sanction was in contravention of the provisions of sections 4(1) and 4(1A) of the M&M (D&R) Act and Rules 22.11. the iron ore lumps are picked and taken out by the pattadars. if any. The court quashed the order on the ground of not following the principles of natural justice and remanded the matter with a direction to issue a show cause notice to the applicants and to pass fresh orders within two weeks after considering the objections. In the meantime. the territorial officers issued notices withdrawing sanction orders issued by the earlier Director and called back the permits they have issued. 2004.134 over as Director. Accordingly. he stated that in the patta lands that are lying adjacent to the mining lease areas. 31. He further stated . addressed to the Hon’ble Chief Minister of the State on the subject of cancellation of transport permits issued. 24. Ramesh.C Rules.2004 to all the Deputy Directors and Senior Geologists of Mines & Geology Department directing them to withdraw the permits so issued and not to issue any further transport permits.

01. 1960. Belgaum. Chikmagalur and Dharwad districts. Sri N. Secretary. All the petitioners were served with notices and only 10 of them appeared before the Deputy Director. the then Hon’ble Chief Minister. 45 and 46 of Chapter V of Mineral Concession Rules. The above facts are placed before the Hon’ble CM . the above permits are cancelled by the Director on 13. “20) May please see note from Principal Secretary to CM at page 10 c/f. Hospet. called for the file from the Commerce & Industries Department. The High Court while upholding the action of the Director in canceling the permits has directed that an opportunity of hearing be provided to the petitioners. 44. Latha Krishna Rao. no permit can be issued for transportation without lessee having a valid mining lease. Since no mining leases have been applied for nor granted in the case of the above permit holders. he requested the Chief Minister to continue the procedure of sanctioning transport permits for transport of such iron ore from such patta lands. Department of Mines & Geology. Smt. Former Director had issued 63 permits for the transportation of Iron ore in Bellary.2005.f. (Emphasis supplied) Of the 63 permit holders 23 permit holders of Bellary district have approached the High Court. Narrating the facts of the case. Commerce and Industry placed the file for the perusal of Hon’ble Chief Minister. with the following note in para 20 n. on the basis of the request made by the said Sri Ramesh. Dharam Singh.135 that the iron ore lumps and fines so accumulated are to be removed from the area to facilitate agriculture. Under Rules 22 to 24 and 31 of Chapter IV and Rules 42. Chitradurga. Therefore.

PÀqvz°è£À « AiÀĪÀ£ÀÄß CªÀUÁ»¹gÀÄvÉÛãÉ. F ªÉÄð£À DzÉñÀzAvÉ vÀPÀëtªÉà PÀªÀÄ PÉÊUÉƼÀÄîªÀÅzÀÄ.136 for information on the action taken by the Department to curb illegal mining practices. À DzÀPÁgÀt. PÀ©âtzÀ C¢gÀ£ÀÄß ¸ÁV¸À®Ä ¥ÀgªÁ£ÀV À À À ¤ÃrgÀĪÀÅzÀÄ PÀAqÀħgÀÄvÀÛz.É 22. 23. C¢j£À CA±À«gÀĪÀ É ¨sÀÆ«ÄAiÀÄ°è ªÀåªÀ±AiÀÄ ªÀiÁqÀ®Ä ¸ÁzsÀåªÁUÀzÀÄ. À É À À vÀªÀÄä d«Ää£À°ègÀĪÀ PÀ©âtzÀ C¢gÀ£ÀÄß ¸ÁV¸À®Ä FUÁUÀ¯Ã É DzÉò¹gÀĪÀAvÉ ªÀÄ£À«zÁgÀjUÉ 6 wAUÀ¼À PÁ¯ÁªÀPÁ±À ¤ÃqÀ§ºÀÄzÀÄ. É É DzÀPÁgÀt gÁdzs£ªÀ£ÀÄß ¥ÁªÀw¹. F ¨sÀÆ«ÄAiÀÄ°è ªÀåªÀ¸ÁAiÀÄ ªÀiÁr ¨É¼AiÀÄ£ÀÄß ¨É¼AiÀÄ° ¸ÁzsÀåªÁUÀzÀÄ. Several of the petitioners have been requesting for revocation of the cancellation order and they have been advised to immediately apply for grant of a mining lease (Sd) Secretary C & I Dept” The Chief Minister made the following note (order) on 2-7-2005 in paras 21 to 23 n/f of the file. eÉÆvÉUÉ EªÀgÀÄUÀ¼ÀÄ UÀt UÀÄwÛUÉ ¥ÀqAiÀÄ®Ä ¸ÀPÁðgÀPÉÌ Cfð É ºÁQPÉƼÀÄîªÀÅzÀÄ. KPÀ PÁ®zÀ PÀªÀĪÁV (One time measure) C¢gÀ£ÀÄß ¸ÁV¸À®Ä C£ÀĪÀÄw æ ¤ÃqÀ¯ÁVzÉ. ¤AiÀĪÀiÁ£ÀĸÁgÀ UÀtUÁjPÉ UÀÄwÛUÉ ¥ÀqzÀÄ. £ÀAvÀgÀ C¢gÀ£ÀÄß Â É ¸ÁV¸À®Ä ¥ÀgªÁ£ÀV ¥ÀqAiÀÄĪÀ°è «¼ÀA¨sªÁUÀĪÀ ¸ÁzsÀåvÉU½gÀĪÀ PÁgÀt. CrgÀ£ÀÄß vÉUzÀÄ ¸ÁV¸À®Ä C£ÀĪÀÄw ¤ÃqÀ¢zÀÝ°è. À æ (Sd) Chief Minister” . À À À À ªÀÄ£À«zÁgÀgÀ ºÉÆ®zÀ°è PÀ©âtzÀ C¢gÀÄ ªÀÄvÀÄÛ ¥ÀÄrAiÀÄ CA±À ºÉZÁÑV EgÀĪÀÅzÀjAzÀ. “21.

Latha Krishna Rao. 1957 or under Mineral Concession Rules. it has been mentioned that to enable the pattadars to cultivate their land they were allowed to remove the float ore on their patta lands. IAS made the following note at paras 24 to 28 n/f of the file and sent back the file to CM on 5-8-2005 requesting him to review the earlier note made by him as it is not in accordance with law. The High Court of Karnataka in their Order dated 25-11-2004 has upheld the action of the Commissioner for Mines. “24. Hence. All minerals vest solely with the State Government whether patta or Government lands and a mining lease has to be granted in respect of such lands. there is no provision in the M&M(D&R) Act. 1960 to allow the pattadar for removing the Iron ore even if it is float ore from their patta land without a valid mining lease. even for a temporary period. 25. In paras 21 to 23. Further permission to remove and transport the available float ore for a period of 6 months has been ordered by the Chief Minister as one time measure. A pattadar does not have any preferential right to a mining lease merely by virtue of his being pattadar. G. . in canceling the earlier permits given for the removal of float ore and has directed the appellants (pattadars) to apply for mining lease.137 In reply thereto the then Secretary Smt. (Emphasis supplied) 26.

“29. I am given to understand that the farmers have borrowed money from financiers at high rate of interest and they will be put to a great loss if permission is not granted. 28. Department of Mines is not fully equipped to enforce such Moreover as indicated in letter No. out of 5. 30. Having examined the facts and circumstances of the case it is felt that. . File is resubmitted for review of the Orders from paras 22 and 23 and approval of pqara 27. 13/1/2005 of the Director. 31. Thus. 1960 there is no provision to accord temporary permission as indicated in para 22. it would cause undue hardship to the farmers/Pattadars.946 Mts has been transported. I have perused the notings at paras 24 to 28. activity in toto. (Sd) Secretary C & I Dept” Thereafter the Chief Minister made the following note at paras 29-32 n/f and sent back the file to the Secretary on 19-9-2005. the orders of the Director has prompted several farmers to mine and stock the ore in their fields.06. Prevention of illegal mining of ore requires The widespread monitoring mechanism and personnel. This act done in good faith is covered under clause 27 of the mining Act. 1957. Given the above facts and the position as prevalent under the Mines and Mineral (Development and Regulation) Act. DIRECTOR/MLS/GANL/04-05/2662 dt. It appears that the order has been passed in good faith with an intention to help the farmers. if the remaining huge quantity of Iron ore mined and stocked by the farmers based on the previous orders is not permitted to be transported. 1957. and Mineral Concession Rules.970 Mts of Iron ore 43.138 27.

The Government have examined the action taken by the Commissioner of Mines and Geology in his order dated. 32. Any mining activity on patta lands thereafter shall be strictly in accordance with the provisions of the Mines and Mineral (Development and Regulation) Act. 1911-2004. keeping in view the larger interests of the farmer community and the fact that a large quantity of ore has been mined and stocked. in this regard. The above transportation should be completed within 3 months from the date of issue of the order.O. The transport permits should be issued after verifying the quantities on the fields. The transportation should . as a one time measure. The above transportation should be completed within a period of three months from the date of issue of G. (Sd) Chief Minister” Thereafter a letter dated 27-9-2005 was issued by the C & I Department to the Director relevant portion of which reads thus:“Please refer to the subject cited above.139 Therefore. wherein. he had withdrawn the permission given to the pattadars to lift the Iron ore stacked in their fields. The Commissioner for Mines may impose any other suitable conditions in this regard. as recorded in letter dated 13-01-2005. 1957 and Mineral Concession Rules 1960. This permission is given as a one time measure only. It has been decided to direct the Department to issue transport permits limiting it only to the stocked Iron ore presently on the fields as recorded in the Commissioner’s letter on 13-012005. it is ordered that the farmers be permitted to transport only the stocked ore.

i. I would like to invite your kind attention that as per the instructions from the Government under reference dated: 27-9-2005. without Mining Lease. No person shall transport or store or cause to be transported or stored any mineral otherwise than in . portion of that letter reads thus:- “With reference to the above subject.140 be done under proper supervision by the officers of the Department. 4(1A). of a mining lease. No person shall undertake any reconnaissance. However it is reiterated that under Section 4(1) & 4(1A) of MM (D&R) Act. 1957 does not permit mining and transportation without lawful authority. granted under this Act and the rules made thereunder. Any mining activity after the expiry of 3 months should be strictly in accordance with the provisions of the M&M(D&R) Act..” In reply thereto the then Director Sri. prospecting or mining operations in any are.e. the instructions are given to the field officer to verify the quantity of Iron ore mined in private/pattaland and stocked. 1957 and MCRs 1960. The provisions of sections 4(1) and 4(1A) are reproduced hereunder.Gangaram Badariya IAS sent a reply dated 27/10/2005 requesting the Government to get the Relevant approval of the Government of India to the proposal. as the case may be. 4(1). except under and in accordance with the terms and conditions of a reconnaissance permit or of a prospecting licence or.

in contravention of the Act and Rules framed by Government of India. This permission is given as a one time measure only. “It has been directed to direct the Department to issue transport permits limiting it only to the stocked iron ore presently on the fields as recorded in the Commissioner’s letter on 13-1-2005.” But this relaxation has to be made with the prior approval of the Government of India. which is not only difficult but also impossible to control. Earlier a detailed report has already been sent to the Government for necessary action. The Government in its letter referred under reference has directed the Department of Mines and Geology to issue Transport permit as one time measure only.” In the present case.(Emphasis supplied) It is therefore requested the Government may examine this proposal afresh by taking appropriate approval from the Government of India. “Any concession has to be with the prior approval of the Government of India”. because the are is widely spread and many parties interests are involved for mining in private/ patta lands.” .141 accordance with the provisions of this Acts and Rules made thereunder. the major mineral Iron ore mined from patta land. The people in the field are waiting for this particular clearance from the State Government and may go in for massive mining operation in private patta land.

IAS sent the file with the above letter of the Director to the Chief Minister with the following note at paras 43 to 46 n/f of the file: “43) This matter permits to issue of transport permits for lifting iron ore from patta lands as a one time measure.f. “It is directed to implement the orders contained in Para 31 and 32 n/f. instructions were issued to Commissioner. 44) However.2005.11.) to take action with necessary safeguards.142 The then Secretary to Government Sri. Mines and Geology (Please see page 30 n.f and sent back the file to the Secretary on 8. It was submitted on two occasions (Para 20 n. He has mentioned today that he is directed by the office of Hon’ble Chief Minister that the file be resubmitted to CM’s office.f. 46) File is resubmitted for orders Sd/Secretary C& I Dept. if at all any relaxation has to be made.f. and 28 n. 45) The commissioner has now resubmitted the matter (Page 32) and suggested that since there is no provision in the Act and Rules. 1960 for the same. Sd/Chief Minister” . may be done only with prior approval of the Government.f) that there is no provision in the M&M (D&R) Act or Mineral Concession Rules.” The CM made the following order on the file at 47 N.Mahendra Jain. in pursuance of the orders at para 32 n.

of the file that issuing transport permits in such cases would be in violation of the provisions of law.f. The procedure and conditions stipulated are as follows: “(1) to issue transport permits limiting it only to the stocked iron ore in the field as per the Commissioner’s letter dated 13. in regard to issue of one time transport permit are to be followed and implemented. (4) the transport permits should be issued after verifying the quantities on the field. It was resolved in the meeting that the instructions and procedure as stipulated by the Government letter No. (3) the transportation should be completed within three months from the date of permission. CI 02 MMM 2005 dated 27th September 2005. and in the letter of the Director at 32cf. 6. It is clear from the above correspondence that the then Chief Minister over ruled the legally valid dissent note of the Secretary to Government in notes at paras 20 n.1.f. Gangaram Baderiya IAS. the then Director convened a meeting of the officers of Department of Mines and Geology. and 24-28 n.143 Thereafter the Government sent a letter to the Director dated 19/1/2006 stating that the instructions given in the letter dated 27/9/2005 may be implemented. After receiving the Government letter dated 19-01-2006 Sri. working in iron/manganese ore bearing districts of the State on 17th February 2006. . (2) the permission is given as a one time measure only.2005.

(7) any mining activity after the expiry of three months should be strictly in accordance with the provisions of the Act and the Rules.C Rules. Accordingly.144 (5) the Director may impose any other suitable conditions in this regard. Here one may notice the incongruity in levying a penalty as compounding of offence. The said order also directed that the minerals stocked and lying in the respective fields to be transported within a period of 90 days from the date of issue of permission. sanction for one time permits for transportation of ore and stocked in the patta lands of 59 applicants were issued.Basappa Reddy was the Director and 59 permits issued in . which is akin to fining for violation first and permitting the violation to be carried out later. For all other cases. it was directed to follow the provisions of the M&M (D&R) Act and the M. Interestingly. the said direction also stipulated to levy a penalty of Rs. It also directed the permission was to be given only to the stocks found on the date of physical verification by the officers and limited to the 59 cases only. 82 permits issued in 2004 when Dr. 8.25. Issue of permits for transport of iron ore from patta lands could be divided into two groups i.000/.” 7.C Rules.as fee for compounding of offence in each case for violating the provisions of Section 4(1) and 4(1A) of M&M (D&R) Act and to collect royalty as per M.e. (6) the transportation should be done under proper supervision of the officers of the Department.

of the note of the Chief Minister.06. IAS was the Director. By using those transport permits illegal mining activity. the Director Dr. there is every . transportation of mineral has taken place otherwise than in accordance with the provisions of the M&M (D&R) Act and the M.C Rules. then By directing his subordinate officers to issue such permits.f. It is impossible to collect that quantity of iron ore without engaging in large scale mining operations or activity. In all these cases in which permits were issued the applicants are not lessees. The quantum of illegal mining operations or activity could be inferred from the fact that the total iron ore stocked was estimated by the officers as 5. Hence. using heavy machinery. Basappa Reddy has facilitated illegal transportation of iron ore without even verifying whether really the mineral was actually collected from the patta land from where it was sought to be transported. Therefore.970 metric tons – vide para 30 n. the persons to whom permits were granted are not lessees or agents of lessees. as well as. in all these cases there is violation of sections 4(1) and 4(1A) and clause 3A amounting to an offences punishable under section 21 of the M&M (D&R) Act. 9.145 2006 when Sri Gangaram Baderiya. This comment is being made because there is no material to show that the quantity of mineral sought to be transported from a particular land is such that the same could have been excavated from the said land. the ore or mineral in respect of which transport permits were issued were not mined under and in accordance with the terms and conditions of a mining lease.

.146 possibility of mineral illegally mined from other area. 10.by the Gaikwad team in the report at Annexure-B. (vi) He has facilitated illegal mining activity using those transport permits. In that background. including forest land. by Dr. (v) He delegated the power of issuance of transport permit under clause 3A. Sec 21 of the M&M (D&R) Act. before proceeding further. even though he had no powers or authority to delegate issuance of transport permit under clause 3A to his subordinates. the value of which at the relevant point of time have been estimated at Rs. (iv) he permitted issuance of transport permit without directing inspection and estimation of quantity of alleged mined mineral as also failed to seize the said mineral.6. because (i) he directed issuance of transport permit in respect of mineral excavated without mining lease.. (iii) he caused transportation of mineral otherwise than in accordance with the provisions of the M&M (D&R) Act and M. (ii) he facilitated the grant of transport permit to persons other than lessee or his agent.335/. 56747 MT of ore was allowed to be illegally transported. the Director of Mines and Geology who directed issuance of permits is guilty of offence punishable under Sections 4(1) and 4(1A) R/w. if it was found to be illegally mined and prosecute the persons who mined them. Basappa Reddy. that by the above grant of permits to the pattadars by the then Director during the year 2004 i.32. Suffice it to mention.C Rules. M.41. being brought and stored in the concerned patta land.e.

Shew Mangal Singh (AIR 1981 SC 1917) may be referred to. Basappa Reddy to initiate Departmental action. From this observation. a report under Section 12(3) of the Lokayukta Act was sent against Dr. In this connection the Judgment of the Hon’ble Supreme Court in the case of State of West Bengal V/s. who acted in obedience to that order. . caution and attention.147 11. In the said case it is observed by the Apex Court that if order of the superior is justified and is therefore lawful. the factum whether the act is done in good faith is a matter which is to be proved in a court of law as defence to the allegation. The Government having accepted that report has instituted Departmental enquiry and entrusted the enquiry to Lokayukta and enquiry is being held by a judicial officer and the same is under progress. it is clear that to fall back on the plea of bonafide the public servant must establish that the order of superior was lawful. The person acting in contravention of mandatory provisions of law cannot be said to have acted in good faith. no further question can arise as to whether the subordinate servants. Though in his reply to the Show cause notice. believed or did not believe that order to be lawful. the same cannot be accepted because any act done in good faith means doing something with due care. the then Director has pleaded that he had acted in good faith. since he has already retired and limitation to initiate Departmental proceedings was expiring. That apart. In this background.

have not actually worked in the areas permitted by the Director. they have left the lands under broken condition with pits and trenches upto a depth of 5’ to 6’ from the surface and rendering the land unsuitable for further cultivation. about 36 percent of the total cases. and in the remaining 64 percent it were the agents who worked in the patta lands for raising and transportation of iron ore on payment of consideration amount to the actual pattadars. Further in cases where the mining work was done in patta lands for extraction of iron ore. There are also instances wherein the agents who had obtained transport permits from the Department of Mines and Geology. The Lokayukta police investigated 30 cases out of 59 cases and submitted report. An analysis of 30 cases investigated by the Lokayukta Police revealed that only in 11 cases pattadars were beneficiaries of the order of transport permit. the report indicates. This also indicates that instead of loss of agricultural income they actually received consideration amount from those agents/ transportation contractors. Lokayukta police were directed to investigate and verify the ground status of the area and the lands in regard to which 59 permits were granted. 107/B of Kererampura . in these cases the pattadars never worked to collect the minerals purported to be found in their lands and stocked by them. In other words. that is. No. Such consideration amount was very substantial. but have transported large quantities of iron ore sourced from other areas. Such examples are noted in R. On the matter being referred to Lokayukta for enquiry.S.148 12.

S. Ibrahim) both of Sandur Taluk. 18/1 and 18/2 of Megalahalli (P.S. R. his comments were called for wherein he has interalia replied that he was not afforded with a fair opportunity to examine all documents and hence his comments . No. 205 of Laxmipur (applicant/pattadar S. No. in R. 118 of Sankalapura (applicant/ pattadar Mohammad Imam Niyazi) all of Hospet Taluk. Srinivas).S. in R. Pushparaj).S. Srinivasa). R. 111/2 of Taranagar (applicant H. installation of crushers. No. R. almost similar in scale to regular mining activities using heavy earth moving equipment. No. Having noticed the role of Sri N.S. No. 4 of Gangalapura (applicant N. 114/3 and 4 of Jambunathanahalli (applicant/ pattadar Sajjan Khayal). 21 of Ramghad village (applicant C.S. 52 and 298 of Bhujanganagar of Sandur taluk (T. Dharam Singh. with reference to his role in the grant of permits for transport of iron ore/manganese ore from the patta lands.A.S. Ravikumar). 13. No.149 (applicant N.S. Mohan Rao) and in Sy. etc. R. Assis) Chitradurga District. Similar large scale operations are noted in respect of the patta lands operated by pattadars/agents as in the cases of R. Narasimha Kumar) and R. No. No. as noted in respect of the cases of R. 70 of Dharmapura village (applicant B. Ashok Kumar) of Sandur Taluk. there have been cases where the pattadars who were the applicants for sanction of temporary transport permits by the Department of Mines and Geology indulging in large scale extraction of iron/manganese ore.. No. No. On the other extreme.S. 27/A/2 of Jambunathanahalli (applicant T.

which under the circumstances I think is reasonable. but was thrown up as a natural phenomenon and the farmers were compelled to collect these ores from their lands to make it fit for agricultural operations. He also pointed out that actual permits were issued after he demitted the office and the subsequent Government which came to power. he has requested the concerned authority to issue transport permits to transport minerals. He also stated that his direction to permit transportation of iron ore from patta lands was in good faith and to protect the interest of the poor farmer and was conditional. He also stated that his decision to direct the issuance of transport permit was done in fulfillment of the promise made by him to the people of Karnataka. he was allowed inspection of documents and thereafter on request he was allowed 3 more days’ time. He has further stated that it is with a view to protect their right to carry on agricultural operations. I would like to comment that he was first given 15 days time and then on his request it was extended by one week. the farmers had approached the concerned authorities to issue transport permits. which was lying in their lands. wherein he had assured to look after the interest of the farmers and the poor people in the State. He has also stated that their request was It is in this supported by some of the elected representatives. In this regard.150 were offered on the basis of limited material noted down by him and from his own memory. He has also stated that the iron ore accumulated in the farmer land’s was not as a result of any mining activity. background. could have .

the period mentioned for enquiry under reference notification has been deliberately prescribed with a view to tarnish the image of the Congress party which was headed by him. in each case in addition to recovery of royalty as per Rules. vest with the Government. 1964 all major minerals. 14. the same is compoundable and such compounding under Section 23A of the M&M (D&R) Act has been done by levying fine of Rs. under proviso to Section 5(1). Certain legal arguments with reference to Sec.151 reviewed the same. 23A of the M&M (D&R) Act have also been raised. be that in any body’s land. A perusal of Sections 4(1) and 4(1A) of the M&M (D&R) Act makes it mandatory and a condition precedent to have a mining lease before extracting or transporting minerals and ores. Therefore.000/-. if the mining lease is in respect of the minerals specified in the First Schedule to the . He has also made an allegation that the reference itself is motivated by political vendetta. 21(1) R/w. the question of loss of revenue to the State Government does not arise. The law is also clear that under Section 70 of the Karnataka Land Revenue Act. Though the State Government can recommend a mining lease in favour of a person holding lands within its territory. so far as the law is concerned it is very clear that no mining activity could be carried out by anybody without first there being a mining lease in regard to the land in which mining activities are being carried on. even if the farmers had committed any offence.25. As has been noticed in the earlier paragraphs of this report. He has also contended that.

There is no exception to this mandatory requirement.152 M&M (D&R) Act. Therefore. Iron ore is specified in the First Schedule. even for storage and transport of mineral. it is a futile to contend that the State Government has any authority to grant transport permit in regard to the minerals found in the First Schedule of the M&M (D&R) Act. Sri Dharm Singh’s contention that removal of floating mineral does not amount to mining activity and that the activity of removing the mineral for carrying on agricultural operations and issuing permits to transport such mineral which has been already removed and kept does not amount to mining operations. any operation by which they are . I have also noticed herein above. cannot be accepted in view of the provisions of the M&M (D&R) Act as supported by the observation of the Apex Court in the case of Bhagwan Das V/s. which is not covered by a mining lease. without there being a mining lease with the prior approval of Govt. Thus. the M&M (D&R) Act and M. of India. wherein it is held as follows:“Further. prior approval of the Government of India is necessary. State of Uttar Pradesh and others (AIR 1976 SC 1393).C Rules apply. Therefore. when the law mandatorily prohibits issuance of permit to transport any mineral from a land. it is clear that no authority vests with the State Government to even permit the transportation of minerals from a land in regard to which there is no mining lease. it could not be contended that the sand and gravel are deposited on the surface of the land and not under the surface of the soil and therefore they cannot be called minerals and equally so.

even when the same is impermissible. Hence. since it is evident from his notings that he knew the law. Such decision of his cannot even be a bonafide decision. the definition of mining operations and minor minerals in Section 3(d) and (e) of the Act of 1957 and Rule 2(5) and (7) of the Rules of 1963 shows that minerals need not be subterranean and that mining operations cover every operation undertaken for the purpose of “winning” any minor mineral “winning” does not imply a hazardous or perilous activity. Such an assumption is contrary to informed experience. the permits issued in relation to transportation of minerals already extracted amounts to mining operation within the meaning of Section 3(d) of the M&M (D&R) Act and as such. Any decision taken contrary to law. the contention of Sri N. In any case. the minerals have been extracted from the patta lands and are sought to be transported by certain persons under the guise of farmers.153 collected or gathered cannot properly be called a mining operation. when his action is per se opposed to law. His further stand that he had directed the grant of permission in good faith or interest of the farmers or policy of the Government or even public interest cannot be a defence. It is not a case where iron ore was lying in the open surface superficially. knowingly whatever may be the purpose or object . but wanted to make one time exception by violating the law. It is in the first place wrong to assume that mines and minerals must always be sub-soil and that there can be no minerals on the surface of the earth.” In the cases referred herein.Dharam Singh cannot be accepted.

when an offence is detected. which is bonafide. in a democracy it is the Law of the land that is supreme and even a Chief Minister is bound by the same. Therefore.25. As stated above. the concept of the bonafide does not apply to impermissible decisions taken with the knowledge of the prohibition in law. Here it will be useful to remember. Dharam Singh that the State did not loose any money because the applicants were imposed with compounding fee of Rs.cannot be accepted either in law or on facts. Such action cannot be defended even under Section 27 of the M&M (D&R) Act. It is well said ‘how so high you may be. which section protects only such action of the Government Servant. the applicants sought permission to do an illegal act.154 for which such a decision is taken can ever be said to be in good faith or bonafide. In the instant case. compounding provision under the M&M (D&R) Act is the most misused provision leading to very high . Even the defence taken by Sri N. the law is above you’. The compounding provision does not permit the Government to first collect the compounding fee and then permit the offence to be committed. 15.000/. the same cannot be compounded by collecting compounding fee when the offence ought to have been prevented. The compounding provision in the M&M (D&R) Act comes into play. his action was in good faith or bonafide or taken in public interest or farmer’s interest or policy of the Government cannot be accepted. the principle defence of Sri N.e. My experience gathered during this investigation shows.Dharam Singh i.

Assuming there were minerals in these lands which prevented the land owners from cultivating the land. the basis for grant of transport permit i. Even factually. hence sooner it is amended it is better. supported by photographic evidence clearly shows that the mining activities in those patta lands were carried out by only a few pattadars themselves and in many cases by some outsiders claiming to be the agents of the pattadars by using heavy machinery. Even otherwise. The enquiry made at the spot by the Lokayukta police. than what the government collected by way of royalty and compounding fine.e. in view of the prevailing market rate. if really this was the genuine reason. then the Government itself could have made arrangements to clear such materials and auctioned the same publicly because that mineral was the property of the State and which would have fetched much more value to the Government. the claim of the pattadars that they wanted to clear the land of minerals to re-cultivate the land is factually incorrect. presence of minerals in the patta lands which was preventing the land owner from cultivating their lands is not true.155 corruption. 17. The quantities mentioned in the application for transportation itself is . To these applicants the excuse of getting the land suitable for cultivation is only an excuse to do illegal mining. 16. This also would have solved the problem of the farmers of getting rid of the mineral from their land and cultivate the same.

soon after the recommendations of former Minister Sri Ramesh was brought to his .156 the proof of the fact that such large quantity of mineral could not have been found in an agricultural land and the same must have been illegally mined somewhere away from the land and stored in the patta lands.Dharam Singh that the Applicant land lords would suffer financial losses if permission is not granted is also not factually correct. this is evident from the telltale marks in the land. There is evidence to show that the pattadars have been paid huge considerations by the people who actually mined for allowing latter to use patta lands for illegal activities or if land lords themselves mined then got huge consideration for the same from these non-agricultural activities. These signs of mining clearly show that the land owners who sought permission to transport minerals from their land had no intention of re-cultivating these lands. may be. Even the stand of Sri N. which showed deep pits and trenches. 18. 19. In such of those the lands in which mining operations were carried out. It is relevant to note that at this stage the then the Chief Minister Sri N Dharam Singh in his note made. along with some little mineral gathered from the said land. The fact that they owned patta lands was only an excuse to obtain transport permits to remove the minerals illegally mined. there is evidence to show the very nature of the land has been changed from lands suitable for agriculture to the lands which can never be re-cultivated.

The Director then was Sri Gangaram Baderiya. for a relaxation to consider sanction of temporary permits. 20. the Hon’ble Chief Minister gave a different reason that the Applicant farmers had borrowed money from private financiers at high rate of interest hence they would be put to great loss if permission is not granted. he thought it fit to grant permission. leave alone at high rate of interest from financiers. had given the reason to permit transportation of mineral to facilitate the pattadars to cultivate the land in question. After the directions of the Hon’ble Chief Minister. interalia. on the contrary discussion made in this report would indicate that the facts are otherwise. The contents of the dissent note of the Director were submitted to the Secretary. for my perusal. keeping in view the larger interest of the farmer community and the fact that large quantity of iron ore has been mined and stocked. From the records submitted by the Department. therefore. it is seen that there is no material to show that any one of the farmers had borrowed any such money. C&I for perusal and orders of the . the file came to the Director again who citing the provisions under section 4(1) and 4(1A) of the M&M (D&R) Act sent a dissent note dated 27th October 2005 to Commerce and Industries Department for reexamination of the orders issued in the note dated 27th September 2005. so as to start their agricultural operations. IAS. But in his 2nd noting to which reference has been already made. In the said letter.157 notice. he proposed to seek prior approval of Government of India.

Just for an example. the applicants had transferred their land to non-agriculturists for the purpose of mining which is every evident from the agreement signed by them. which itself indicates that the pattadar had permitted the mining to be carried on in his land. C&I Department in their letter dated 19th January 2006 directed the Department of Mines and Geology to implement the instructions issued in their letter No.000/. In spite of resubmission of the file.158 Hon’ble Chief Minister. bringing out the specific provision of the M&M (D&R) Act and M.40. the Hon’ble Chief Minister did not consider the proposal and ordered “It is directed to implement the orders contained in para 31 and 32 N/F”. If Sri N. Thus. 21.for a period of one year for the purpose of mining. The contents of the document clearly indicates that the land in question is leased out for a consideration of Rs. CI 02 MMM 2005 dated 27th September 2005.Dharam Singh had directed the authorities concerned to make further investigation as to the genuineness of the applications made by the so called pattadars or their agents.1.C Rules and a proposal to refer the case to Government of India to seek relaxation on the subject of issuance of temporary transport permits from patta lands. I have herein below extracted the contents of one such document where by virtue of the directions issued by the then Chief Minister. transport permit was issued. he would have come to know that in most of these cases. Some other clauses in the said agreement speak for themselves about the intention of the pattadars as well as those who took the land on .

2004gÀAzÀÄ gÀÆ.1.¥ÀÄ ÀàgÁeï À À À EªÀjUÉ. À À E£ÀÄß½zÀ gÀÆ.2005gÀªgUÉ (3) PÀgÁgÀÄ §gÉzÀÄPÉÆlÖ ¢£ÁAPÀ 20.MAzÀÄ ®PÀëzÀ £À®ªÀvÀÄÛ ¸Á«gÀ gÀÆ¥Á¬ÄUÀ¼ÀÄ 1 MAzÀÄ ªÀ ðzÀ CªÀ¢U.12. ü (6) ¸À¢æ d«Ää£À ¸ÀPÁðgÀPÉÌ PÀlÖ¨ÃPÁzÀ vÉjUÉAiÀÄ£ÀÄß £Á£ÉÃ É PÀnÖPÉÆAqÀÄ ºÉÆÃUÀÄvÉÛãÉ. .70.1. is extracted below:“gÀÆ.159 lease.000/- MAzÀÄ ¯PÀë £À®ªÀvÀÄÛ d«Ää£À°è UÀt UÀÄwÛUÉ PÀgÁgÀÄ ¥Àv. ¨É¼É ¸ÀjAiÀiÁV ¨É¼AiÀÄ®Ä DUÀzÉà ¬ÄgÀĪÀÅzÀjAzÀ £À£Àß ¸ÀéAvÀ ºÀPÀÄÌ C¢üãÀ É C£ÀĨsªz°ègÀĪÀ F PɼPÁt¹zÀ d«ÄãÀ£ÀÄß UÀt UÀÄwÛUÉ PÉÆqÀĪÀÅzÉà À À À À AiÀÄÄPÀÛªAzÀÄ ¨sÁ«¹ ¤ªÉÆäA¢UÉ £Á£ÀÄ ªÀ ð MAzÀPÉÌ 1.000/.J¥ÀvÀÄÛ ¸Á«gÀ gÀÆ¥Á¬ÄUÀ¼£ÀÄß ªÀiÁZïð À wAUÀ¼ÀÄ ªÉÆzÀ®£Éà ªÁgÀ 200gÀgªÀ¼UÁV PÉÆqÀvPÀÌzÀÄÝ. §jìPÉÆqÀĪÀªgÀÄ:.2005jAzÀ 31.000/.Àæ ¸Á«gÀ gÀÆ¥Á¬ÄUÀ½UÉ ¸À£ï 2004£Éà ¬Ä¹é DUÀ¸ïÖ wAUÀ¼ÀÄ vÁjÃPÀÄ 19gÀ®Æè §jìPÉƼÀÄgÀÄ:. À À À É É (5) 2004£Éà ¸Á°£À ªÀļÉUÁ®zÀ ¨É¼AiÀÄ£ÀÄß vÉUzÀÄPÉÆAqÀ vÀPÀët ¸À¢æ d«ÄãÀ£ÀÄß ¤ªÀÄä ¸Áé¢Ã£ÀPÉÌ ©lÄÖPÉÆqÀ®Ä M¦àPÉÆArgÀÄvÉÛãÉ. æ É (1) gÀÆ.000/.§¼Áîj f¯Áè ¸ÀAqÀÆgÀÄ vÁ®ÆèPÀÄ ¨sÀÄdAUÀ£UgÀ À À À UÁæªÀĤªÁ¹AiÀiÁzÀ ¢ªÀAUÀvÀ ªÀÄ®è¥À࣪gÀ ªÀÄUÀ£ÁzÀ vÁlðPÀmÉÖ ªÀÄ®è¥Àà À À DzÀ £Á£ÀÄ M¦à §gɬĹPÉÆlÖ d«Ää£À UÀtUÀÄwÛUÉ PÀgÁgÀÄ ¥ÀvÀæ  K£ÉAzÀg.²ªÀªÉÆUÀÎ f¯Áè ¨szÁæªw vÁ®ÆèPÀÄ ¨szÁæªw ¥ÀlÖt À À À À À À gÀAUÀ¥Àà ¸ÀPð¯ï ¤ªÁ¹AiÀiÁzÀ wªÀÄäAiÀÄ壪gÀ ªÀÄUÀ£ÁzÀ n.£À®ªÀvÉÛöÊzÀÄ ¸Á«gÀ PÉÆqÀvPÀÌzÀÄÝ. À À É (4) G½zÀ ªÉÆvÀÛ gÀÆ. É FUÀ ªÀļÉUÁ® ¸Àj¬Ä®èzÀ PÁgÀt §gÀUÁ®¢AzÀ vvÀÛj¸ÀÄwÛzÀÄÝ. The content of that document dated 19th August 2004.000/E¥ÀàvÉÛöÊzÀÄ ¸Á«gÀ gÀÆ¥Á¬ÄUÀ¼£ÀÄß CqÁé£ïì PÉÆqÀvPÀÌzÀÄÝ.000/.000/É À MAzÀÄ ®PÀë £À®ªÀvÀÄÛ ¸Á«gÀ gÀÆ¥Á¬ÄUÀ½UÉ M¦àPÉÆAqÀÄ F PɼPAqÀ À À PÀgÁgÀÄUÀ¼À ¥ÀPÁgÀ d«ÄãÀÄ UÀt UÀÄwÛUUÁV PÉÆnÖgÀÄvÉÛãÉ. ¤ªÀÄUÉ PÀlÖ®Ä AiÀiÁªÀ vÀgºÀªÁzÀ ºÀPÀÄÌ À ¬ÄgÀĪÀÅ¢®è.É À ü À É (2) UÀÄwÛUÉ CªÀ¢ü 01.40.40.1.08.01.gÀ ¥ÉÊQ £ÀªA§ gï 2004gÀ CSÉÊgÀÄ ¢£ÁAPÀzAzÀÄ 45.40.15.25.

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Dharam Singh has been responsible for causing loss of Rs. All the above findings of mine are supported by the material recorded at page 17 onwards of the report of Gaikwad Team.850/. who have extracted minerals from patta lands belonging to other persons. IAS. Yogendra Tripati. unbecoming of a public servant and it also establishes that he has abused his position as Public Servant. by giving illegal permits for transportation of minerals mined illegally Sri N. which act of Sri N. Smt. Dharam Singh not only becomes a misconduct.Karunanidhi V/s. as also the suggestions of the then Director Sri Gangaram Baderiya. which among other things indicates the particulars of the lands where mining activities are taken up and percentage of outsiders. Though there is no material to show that Sri N.Dharam Singh. Latha Krishna Rao. The fact that the orders of Sri N.Dharam Singh obtained to himself any valuable thing or pecuniary advantage.161 22. as the Chief Minister was a public servant at the relevant point of time is based on the judgments of the Hon’ble Supreme Court of India in the case of M.11. which loss should be recovered as damages from him. A. IAS. My finding that Sri N.22.23. he has allowed other persons to obtain pecuniary advantage. still by overruling the opinion of the then Director Sri.R. Nayak V/s. Thus.S. Union of India (AIR 1979 SC 878) and Sri R. IAS as to the obtaining of prior approval of Government of India before issuing transport permits. Antulay (AIR 1984 SC 684). the then Secretary of Commerce and Industries.Dharam Singh were .to the State Exchequer.

the then Chief Minister Sri N. but in his . IAS on receiving a note from the then Chief Minister having noticed the illegality. I have carefully considered the role played by Sri Gangaram Baderiya. proposed that prior approval of the Government of India by seeking relaxation for grant of temporary permit be obtained. By this. IAS in directing his subordinates to issue transport permit. 23. who was holding the post of Director of Mines and Geology at some relevant time. On 27th October 2005. because that would amount to abetting the offence of which.162 given effect after he demitted office is irrelevant because there is no evidence to show that his orders were ever brought to the notice of the successor Government. Sri. Sri Gangaram Baderiya. Sri Gaikwad team in its Report had indicated that Sri Gangaram Baderiya was also responsible for the loss caused to the State by virtue of his having directed the subordinate officers to give transport permit on the basis of the orders of the then Chief Minister. This is based on the fact that he as senior IAS officer ought to have desisted from issuing such directions to the subordinate officers. 24. I will now consider the allegations against Sri Gangaram Baderiya.Dharam Singh is held to be responsible. but it should be noted that he did not straight away accept the orders of the then Chief Minister. Baderiya did try to stop issuing of directions to the subordinates straight way.

163 effort he failed.S. I think Mr. Bhujanganagar Village of Sandur Hobli and Taluk and (2) regarding Sri K. 26.Satish Kumar.S. the Hon’ble Chief Minister rejected the same by noting in the file as follows:“It is directed to implement the order contained in Para 31 and 32 N/F” Based on the above note. IAS cannot be held to have committed any act of misconduct because I think the fact that Sri Baderiya did appraise the Chief Minister of the need to obtain prior approval of the Govt. after perusing the note. should be treated as an extenuating circumstance for not proceeding against him on this count. It is only thereafter. from his act of directing issuance of transport permit in two specific cases i. No.e. But. 25. (1) regarding Sri T. Pushparaj who made an application in regard to grant of permission in R. Baderiya. in as much as. of India. In that background. CI 02 MMM 2005 dated 27th September 2005. who made an application in regard to grant of permission in R. No.298.23/4 of . Sri Gangaram Baderiya directed his subordinates to issue permits. this does not exonerate Sri Gangaram Baderiya. the Commerce and Industries Department in their letter dated 19th January 2006 directed the Department of Mines and Geology to implement the instructions issued by the Government in their letter No.

298 of Bhujanganagar. leading to these two cases.164 Bhujanganagar Village of Sandur Hobli and Taluk. Pushparaj made an application to the then Director of Mines and Geology on 26th August 2004 requesting for issue of permit for extraction and transportation of iron ore from Survey No. The facts Sri T. which measures only 0. .65 acres (100 cents make one acre) in Sandur Hobli and Taluk. are briefly stated as follows:27.

on directions by the Director of Mines and Geology. The Deputy Director of Mines & Geology in his final status report on the permits issued during 2004-05 has recorded that the said Director of Mines & Geology’s order was not received in his office and the status report does not speak about any permit issued during 2004-05. Hospet. file does not have any correspondence pertaining to this sanction order of the Director of Mines & Geology. granted sanction to the Deputy Director of Mines & Geology. The said Deputy Director of Mines & Geology Hospet’s. When the Government of Karnataka opened up the issue of one time permit to such applicants who had accumulated iron ore during permit period of 2004. 2004. . Even then the Director of Mines and Geology. Pushparaj after inspection of ore stock at the site and collection of royalty. vide his letter dated 30th August. but no supporting documents are available in the file. T. for issue of transport permit to T.165 The pattadar of the said land is one Sri Dharmapurada Ujjinappa.Pushparaj has stated in his application that he has obtained consent of the pattadar.

2006 and a stock of 12. I have used the word ‘Extract’.500 to 13. on 3rd March.e. which was being continued .298 of Bhujanganagar Village. but clearly show the regular unauthorized mining. The Director of Mines & Geology i. 2006 to the Deputy Director of Mines & Geology. Hospet for issuance of one time permit in favour of T. because that was one of the permission sought for by Sri T. issued various permits which allowed Sri T. Some other photographs depict the area being worked at the time of taking the photographs.Pushparaj i. the Deputy Director of Mines & Geology. is also evident from the photographs which are in the file. They all relate to working of extraction of iron ore in Sy. iron ore and the fact that it was extracted after the directions of the then Hon’ble the Chief Minister. Under the said directions. Pushparaj for transport of the said estimated quantity of iron ore from the subject area. No.166 the subject site was inspected by the Deputy Director of Mines & Geology Hospet. 28.000 MT of iron ore in R.298 of Bhujanganagar was estimated as being available. Pushparaj to extract nearly 13498 MT of iron ore. No. Hospet. Sri Gangaram Baderiya taking advantage of the earlier order of the Chief Minister in turn granted permission vide his letter dated 17/18th March.e. These photographs clearly indicate that workings in the subject area are not the workings to restore the land suitable for cultivation.S. to extract from the subject area. These Photographs were sent to Director of Mines and Geology by the Deputy Director of Mines and Geology as evidence of accumulation of iron ore at site for grant of one time permission.

which knowledge he bases on the report submitted by the Deputy Director of Mines and Geology. whereas he continued to work the area unauthorizedly. . it is for the concerned officers to enforce the law and in so far as the Director is concerned. if there was any illegal mining. Sri Gangaram Baderiya.65 acres. Pushparaj was genuine one. which amounts to negligence and misconduct under the provisions of All India Service (Conduct) Rules. 3rd March 2006. thereby Sri T. Pushparaj has made an application for grant of permit under fraudulent pretext of restoring the lands suitable for cultivation.Pushparaj was for extraction and the quantity of 13000 MT of ore could not have been gathered from an agricultural land measuring only 0. He has then stated. but did not notice the fact that the application made by Sri T. 29. But Sri Gangaram Baderiya has granted sanction for issue of permits for that area. if there was stock available. Sri Gangaram Baderiya ought to have noticed these facts. He also refers to the photographs in support of his contention.167 right up to the date of inspection i. and failed to see whether really the application made by Sri T. 1969. Since the photographs were in the file. He also did not examine. then only he recommends for issue of permits in terms of Government decision.e. we have perused the file and noticed that illegal mining was carried out even in the year 2006. in his reply has stated that as per his knowledge there was stock of 13498 MT of ore at the site. The spot inspection clearly shows that the agricultural land consequently got more degraded and is now made more unsuitable for cultivation.

000 to 13. The conditions of one time permit does not entitle the holder of the permit to remove ore.168 Further steps of issuing of permits is left to other officers. either knowingly or by negligence has allowed Sri T. who ought to do so. unless the same is either mined deeply or transported from outside and stocked in the subject land. I am of the considered opinion that Sri Gangaram Baderiya. as Director of Mines and Geology. I am sure that Director of Mines and Geology. Therefore. which is brought to the land in question from outside. The photographs which is referred to by Sri Gangaram Baderiya in his defence itself indicate that the activity of mining was going on in the land at the time of inspection and some of the photographs also indicate that the depth to which mining has been done which would under no circumstances make out a case of gathering floated ores for making the land cultivable.000 MT. Sri Gangaram Baderiya would be aware of this fact. since both acts are illegal. As mentioned earlier. He reiterated that there was no mining activities carried on in this land. 31.65 acres cannot contain floating ore of 12. 30. I cannot accept the explanation given by Sri Gangaram Baderiya. which is dug from the land in question in a regular mining method or transport the ore. Having considered the material found in the Gaikwad team report. as well as the comments of Sri Gangaram Baderiya. it is of common knowledge that an area of only 0. Pushparaj to misuse the one time .

in accordance with the directions issued by Director in Memorandum dated 19th/20th November. Hospet. at this stage cannot be accepted. 32. Geologist. Virupaksha Gowda.54 acres at Bhujanganagar Village. In case of Sri K.23/4 measuring 0. Hence no permit was issued. He also directed that after inspection if the stock is found in the land.S. informed the Deputy Director of Mines and Geology. No. . Satish Kumar. Hospet. Hospet vide his Notice dated 19th/20th November.169 permit granted to him and also has permitted violation of conditions of such one time permission. because the findings that is given in this report are basically prima facie findings to facilitate the Government to take such action as is deemed fit or is recommended wherein appropriate enquiry will be held. Sandur Hobli and Taluk. to inspect and issue permit for movement of iron ore to render the land fit for cultivation. visited the land and submitted a report on 19th August 2004 that there was no stock available in the subject site. 2004. cancelled the sanction letter issued by the Director. On the said basis one Sri M. The then Director vide his letter dated 16th August 2004. 2004. Sri Gangaram Baderiya’s contention that there should have been full-fledged enquiry by adducing evidence. The Deputy Director of Mines and Geology. Office of the Deputy Director of Mines and Geology. who is a pattadar made an application for grant of Transport permit to remove the stocked ore from his land R. royalty should be collected.

Sri Gangaram Bandera did not consider the earlier Report. who reported that a stock of 1. while directing issuance of Transport permit. permit dated 15/4/2006 was issued for the said quantity. of Karnataka opened up the issue of one time permit during 2006. He took into consideration only the report of February 2006. This finding of mine further strengthens the fact that Sri K. Geologist and T. K. then the mining of the said area has taken place.Satish Kumar approached the Director of Mines and Geology. later than 2004. On the basis of which. This permit was also issued under the directions of Sri Gangaram Baderiya. the said K.170 33. Thereafter the said Sri K.Satish Kumar who made . 2006.000 to 1.23/4 of Bhujanganagar Village. It stands to reason that if there was no stock of iron ore existing in the land in the month of November 2004 and if such stock was found on 21st February 2006. Dattatreya. Venkatesh as his representative to transact and obtain transport permit on the basis of reopened decision. made an application dated 15/4/2006 requesting for permit for transportation of 1200 MT of iron ore from his Survey No. As per the directions dated 7/10th April 2006. Sikandar Pasha.I. This was reported to the Director by the Deputy Director of Mines and Geology. as per his letter dated 7th March. along with the 2nd report of inspection dated 7th March 2006. on 21st February. which clearly stated that there was no stock of iron ore in the land in question.Satish Kumar. through one Sri G. 2006. Then 2nd inspection was conducted by one Sri. Hospet. When the Govt.200 MT of iron ore was found in the site.

State of Karnataka and others – 1989 (3) Kar. it must have been mined much after the original application was made. but was found be in existence in the year 2006. without satisfying himself whether the said ore was mined before the issue of directions by the Government as directed by the then Chief Minister or after. 512) The question for consideration at this stage for which I sought explanation from Sri Baderiya was.Chowdappa V/s. which was not found to be there in the year 2004. It was the responsibility of Sri Gangaram Baderiya to satisfy himself as to the compliance of the . but choose to make another application in the year 2006. Sri Baderiya did not think it necessary to satisfy himself on this aspect of the matter. how is it he had allowed the transportation of iron ore. but he was bound to carry out the direction of the Government of Karnataka. The explanation in my opinion is neither here nor there.J. Sri Gangaram Baderiya in his reply to the notice has stated that he was not in favour of giving any permits to Sri K. K. it is necessary for me to hold a full fledged enquiry. if factually true. when Sri Satish Kumar was found to be eligible under the conditions laid down for granting of one time permit. Sri Gangaram Baderiya. 34. which is also an indicator of the fact that the iron ore found on 21st February 2006. further says that the findings recorded against him in the Show cause notice is the one recorded without giving him a notice and opportunity of being heard.Satish Kumar. I do not think at this stage of investigation. did not pursue the same. (See – Dr.L.171 application in 2004.

to whom the said permission was granted.6. which at the relevant point of time valued at Rs. the then Hon’ble Chief Minister.41. there was no iron ore in the land in question.23. At this stage it is necessary for me to indicate that Dr. Sri N. because on that date. Basappa Reddy by his misconduct of issuing permission to transport iron ore from the lands of various applicants. Sri Gangaram Baderiya. Sri Gangaram Baderiya could not have allowed or directed the grant of transport permit.172 directions made in one time transportation permit. M.32.850/-. 35. (Refer Statement II of Annexure-B) 36. (Refer Statement III of Annexure-B) 37. which is valued at the relevant point of time at Rs.11. Dharam Singh. By this act of his he has committed misconduct under the Conduct Rules.335/-. The Government should take steps to initiate action for recovery of the amount from this officer to the extent of financial loss caused to the State by these acts of the officer concerned. Since the material on record indicates that Sri Satish Kumar was not entitled to the benefit of the directions of Government in this regard. IAS by allowing illegal transportation of iron ore in two cases has permitted the . by allowing 44 applications of transportation of iron ore has permitted transportation of illegal mined ore totally of 238166 MTs. permitted the removal of 56747 MT of iron ore.22.

I hold that Sri N. but which could be found in the Report Sri Gaikwad team at Annexure-B. which has caused huge financial loss to the State. (Refer Annexure-B) 38. in which I have found the concerned public servants have illegally permitted totally 3. Hence no action is recommended against those officials.Basappa Reddy.09.89. the then Chief Minister.45. The Report of the Gaikwad team has indicated the involvement of many other officers of Mines and Geology Department in permitting the transportation of iron ore from the so called patta lands.31.173 transportation of 14200 MT of ore which was valued at the relevant point of time atRs.1. 39.01. in these three cases.to the State Exchequer. the then Director of Mines and Geology. Dr. whose names are not mentioned in this report. I do not think it is necessary for initiating any further action. Since I have observed in one aspect of the case of Sri Gangaram Baderiya that orders directly came from the then Hon’ble Chief Minister after overruling the various senior officers of the concerned Department and taking into consideration the sequence of events.Dharam Singh. I thought it fit not to implicate those officials’.M.113 MT of iron ore to be transported from the so called patta lands. IAS. which amount should be recovered from these officers and the public servants by taking .185/. causing a total loss of Rs.000/-. Thus. In conclusion of this chapter. 40. have committed misconduct. the then Director of Mines and Geology and Sri Gangaram Baderiya.38.

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suitable actions. Though in the order of reference, the Government has empowered me to initiate penal and/or departmental action against the erring officials, it is recommended to the Government to initiate disciplinary proceedings, as recommended in this report. Hence, recommendations are made to the Government as stated above.

CHAPTER IX LAPSES POINTED OUT BY THE ACCOUNTANT GENERAL KARNATAKA REGARDING MOUs, RAISING, PROCESSING AND MARKETING CONTRACTS, JOINT VENTURES ETC. ENTERED INTO BY THE MYSORE MINERALS LIMITED WITH PRIVATE COMPANIES RESULTING IN LOSSES AMOUNTING TO CRORES OF RUPEES TO THE COMPANY. ================ Another matter referred to by the Government under Section 7(2A) of the Lokayukta Act vide Govt. order No. CI 164 MMM 2006 dated 12th March 2007 for investigation relates to lapses pointed out by the Accountant General, Karnataka regarding MoUs, Raising,

Processing and Marketing Contracts, Joint Ventures etc. entered into by the Mysore Minerals Limited with private companies resulting in losses amounting to crores of rupees to the company. The concerned terms of reference and issues are as follows:“ xxx xxx xxx xxx

(vi) In the inspection report of the Accountant General of Karnataka for the years 2003-2004 and 2004-2005 on Mysore Minerals Limited [MML], a public sector undertaking, several lapses were pointed out regarding various Memorandum of Understandings (MOUs), raising and marketing contracts, joint ventures etc., between Mysore Minerals Ltd. And Private Companies, wherein the interest of MML was compromised to deprive the PSU of the contractual entitlements, dividends and profits due to one sided agreements, non-revision or sub-optimal revision of prices resulting in losses amounting to crores of rupees at a time when the mining sector was generating huge profits.

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(vii) It has also been noticed that the Iron Ore fines and mud stocks/low grade ore far in excess of the quantity were allotted arbitrarily to select individuals through Mysore Mineral Ltd., much below the prevailing market price and MMTC price and even below the prices fixed from time to time by MML itself. There have been complaints of certain influential individuals who were part of the power structure within the Government, by manipulating the records and interfering in the affairs of MML, caused huge loss to the Corporation and the State. Similarly major and minor minerals such as granite, manganese and other minerals of the state, for the past several years, have been misused, indiscriminately exploited for benefiting a selected few resulting in loss of revenue to MML and the State. xxx xxx xxx

To enquire into the affairs of the My sore Minerals Ltd. (MML) and its commercial activities carried out in a manner to cause losses to the company and the instances of direct/indirect political interference/patronage in commercial affairs of the company. To fix responsibility and initiate suitable action, both civil and/or criminal as may be appropriate, against all persons found responsible, including private contracting parties.” 2. The Mysore Minerals Ltd (in short MML) was established by the

Government of Karnataka in the year 1966. It is stated to be a private company within the meaning of clause (iii) of section 3(1) of the Companies Act 1956. It is stated that apart from the Memorandum of Association and Articles of Association the Company has not framed any rules, bye-laws or regulations. The regulations contained in Table A in Schedule I to the Companies Act 1956, as applicable to a private company, are made applicable to it subject to modifications contained

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in the Articles of Association. The activities of MML are under the M&M (D&R) Act and connected with it. The main objects of the MML, among others, are stated thus in the Memorandum of Association. “1. (a) To acquire and take over as a going concern the business now carried on by the State Government of Karnataka under the name and style of ‘Board of Mineral Development’ with all or any of the assets and liabilities of the business. (b) To search for minerals and precious stones and to acquire, by acquisition, or grant, mining and other rights and to win, open and work mines, quarries and minerals and precious stones, in above and under any other lands over which mining rights may be acquired by the company, and to raise, sell and dispose of minerals and precious stones to be procured there from, and to treat and make marketable, and/or convert such ores into metal, or otherwise deal with the produce of the mines and quarries and other produce of the Company. xxx xxx xxx xxx

3. To act as the agent of the Government of Karnataka in the exploitation of the mining areas reserved for operation by the State, subject to such orders as may be passed by the State Government in this behalf and to appoint sub agents in furtherance of the same purpose. 4 To carry on trading in minerals for sale or export of

minerals or for purposes which may seem conducive to the attainment of any of the aforesaid objects of the company.” N.B:Though the period of reference is for the period between

01.01.2000 and 22.07.2006 and extended to 9/9/2008 for the purpose of

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continuity of factual basis at relevant places, even period prior to 1/1/2000 is taken into consideration without which this part of the report will be incomplete. 3. The Board of Directors of MML, in its 141st meeting held on 30th

November 1987, delegated to the Chairman and Managing Director (in short CMD) 41 items of its powers, including the power to “fix sale price and revise them from time to time depending upon market and/or other conditions” (item 35) and to “enter into contracts for sale of ores and minerals” (item 37), for disposal of ores or minerals etc. owned by MML. The scheme envisaged by items 35 and 37 is that the price of ores or minerals etc. is to be fixed and revised from time to time as provided in item 35 and thereafter sold at the prices so fixed or revised to persons who come forward to purchase them. The defect in this scheme is that if the authority which has power to revise the price periodically depending upon the market and other conditions fails to exercise that power periodically whenever there is an increase in price, the commodity would be sold at the old price resulting in loss to MML. That is what has happened in the case of MML. Power under items 35 and 37 has considerable financial implications. If the Board had decided to dispose iron ore, iron ore fines, mud or mineral by auction or by calling for tenders or by tender cum auction method it would have been transparent, least objectionable and in the best interest of MML. It is said that since about June 2007 that is, after the Government referred the matter to Lokayukta, MML is disposing ores and minerals by tender cum auction method. According to the Articles of

relevant and non-discriminatory principle. Hence during same period one person has exercised the powers delegated by the Board. When the said offices are held by two different persons. office of Chairman and office of Managing Director of MML could be held by one person or by two different persons. Hence the power delegated by the Board in its 141st Meeting has to be exercised by a committee consisting of the Chairman and Managing Director. MML is a corporation created by the Government and an instrumentality of the Government. Scope for exercise of power in an arbitrary manner is much more when power is exercised by a single person. It is stated that during 2000-2006. If both the offices are held by one person the powers get delegated to a single person. the Managing Director alone cannot exercise the delegated powers unless he is also appointed as the Chairman. Instead of giving scope for exercise of such vast financial powers under items 35 and 37 by a single person.179 Association. 4. the Managing Director was holding the post of Chairman also. Item 35 of the powers delegated to CMD require the CMD to fix and revise sale . It cannot act arbitrarily and enter into relationship with any person it likes at its sweet will but its action must be in conformity with some rational. except the period from 26/9/2001 to 12/9/2005. the Board should have used its discretion to delegate its powers to a body consisting of at least one more person preferably the Financial Advisor of the Company who is appointed by the Board with the prior approval of the Government. In the exercise of its powers or discretion it is subject to same constitutional law limitations as Government.

A mining lease holder under the M&M (D&R) Act is normally expected to do the mining operations himself by employing required workforce. The CMD is required to exercise the discretion on some rational and relevant principles which could be gathered from the relevant files.vide rule 37 of the M. get the mining operations done by his agent or manager or employee or contractor or sub-lessee who work under his control. indicate that a lease holder may. MML holds many mining leases in its favour and it must . in regard to item 37 no guidelines are given by the Board. If the file indicates that the CMD had considered the above aspects i. The law imposes certain restrictions for transfer of any activity connected with mining operation . (in short conditions 17 and 18) . A reading of section 9 of the M&M (D&R) Act and rule 37 of the M.e. before fixing or revising the price. Otherwise in a given case it may become arbitrary exercise of power. there is little scope to challenge the validity thereof on the ground of arbitrary exercise of power.180 price periodically “depending upon market and/or other conditions”. supervision and directions and paid by him.C Rules made under the M&M (D&R) Act by the Central Government.C Rules and conditions 17 and 18 of Part VII of the pro-forma of the Mining Lease deed at Form K in Schedule I. 5. It is left to the discretion of the CMD to select the purchasers and to decide about the quantity of ore or mineral to be sold to a purchaser. Every holder of a mining lease is required to execute a lease deed in Form K of Schedule I of the M. However. market and/or other conditions.C Rules. with the permission of the Government.

lease. or under which the lessee’s operations or undertakings will or may be substantially controlled by. title or interest therein. transfer the mining.C Rules and conditions 17 and 18 are substantially similar.181 have executed lease deeds in Form K in all of them and it is bound by the terms and conditions stated therein. it shall not be necessary for the lessee to obtain any such consent of the State Government. sublet. contract or understanding whereby the lessee will or may be directly or indirectly financed to a substantial extent by. without the previous approval of the Central Government(a) assign. (1) the lessee shall not. Relevant portion of Rule 37 reads thus. mortgage or in any other manner.“37. Rule 37 of M. or any right. any person or body of persons other than lessee: PROVIDED FURTHER that where the mortgagee is an institution or a Bank or a Corporation specified in Schedule V. Xxxx xxxx xxxx . (1A) The State Government shall not give its consent to transfer of mining lease unless the transferee has accepted all the conditions and liabilities which the transferor was having in respect of such mining lease. without the previous consent in writing of the State Government and in the case of mining lease in respect of any mineral specified in Part A and Part B of the First Schedule to the Act. or (b) enter into or make any bona fide arrangement. Transfer of lease.

and/or convert such ores into metal”.182 (3) The State Government may. above and under any other lands over which mining rights may be acquired by the company. in. MML is not doing any mining operation. and to raise. it is not doing any iron ore mining operation. title or interest therein otherwise than in accordance with sub-rule (2). From the records made available by MML it is disclosed that it has entered into some raising and / or processing agreements and some marketing agreements with private parties in addition a MOU with Jindal Vijayanagara Steels Ltd. at present. MML took over the ‘on going business concern’ of the Government of Karnataka known as ‘Board of Mineral Development’ and as stated in the Memorandum of Association it was required “to search for minerals and precious stones and to acquire. open and work mines. and to treat and make marketable. and to act as the agent of the Government of Karnataka in the exploitation of the mining areas reserved for exploitation by the State. MML has about 40 mining and 26 ornamental granite leases and as far as iron ore is concerned. xxx xxx” As could be gathered from the records made available. Even though it holds many rich mining leases. in the opinion of the State Government. sell and dispose of minerals and precious stones to be procured there from. xxx 6. quarries and minerals and precious stones. committed breach of any of the provisions of sub-rule (1) or sub-rule (1A) or has transferred any lease or any right . mining and other rights and to win. by acquisition. by order in writing determine any lease any time if the lessee has. This outsourcing is opposed to the purpose for . or grant. MML has outsourced its iron ore mining operation activity.

title or interest in the mining lease.C Rules and condition 17(1)(a) mandate that the lessee shall not without the previous consent in writing of the State/Central Government assign. (i) the lessee is directly or indirectly financed to a substantial extent by a person other than the lessee. sublet. Rule 37(1) (b) of M.183 which MML was established – vide para 1(1b) of the Memorandum of Association extracted in para 2 above. or (ii) the lessee’s mining operation is substantially controlled by a person other than the lessee. If outsourcing violates legal provisions like rule 37 of M. if so. without the previous consent in writing of the Central Government/State Government. 7. None of the raising and/or processing agreements entered into by MML do not indicate that previous approval or permission in writing under Rule 37 of M. In some of the agreements .C Rules. The MML was asked to indicate whether previous permission or approval in writing as contemplated by Rule 37 of M. In reply thereto MML has intimated that “MML has not obtained any consent/permission from Government of India/ Government of Karnataka under rule 37 of M. mortgage or in any other manner transfer any right.C Rules has been obtained before entering into those agreements. Rule 37(1)(a) of the M. has been obtained for all these agreements.C Rules or the conditions in the lease deed like conditions 17 and 18. the Government has powers to determine the lease –vide sub-rule (3) of rule 37 of M. enter into any arrangement or contract or understanding whereby.C Rules. to make available copies thereof.C Rules and conditions 17(1) (b) and 18 stipulate that a lessee shall not.C Rules”.

9. 8.C Rules. Hence there is gross violation of rule 37(1) of M.C Rules and conditions 17(1) and 18. As required by rule 37 of M. previous consent/approval of the Government in writing has not been taken or obtained before entering into those agreements. which indicates that they were conscious of the said Rule. Such an arrangement.C Rules and conditions 17 and 18 of the lease. I will now consider whether the companies which have entered into raising or processing agreements with MML could be considered as agents or managers or employees or contractors of MML and whether they work under the control. directions. it has assigned or transferred its right to carry out the mining operation in the leased property to those companies. If we . and control of the master.184 MML has noted the requirement of Rule 37. The entire expenses or investments relating to or connected with the mining operation are to be borne by those companies. agreement or understanding violates rule 37(1) of M. supervision. MML does not spend anything for the purpose even though it is the mining lease holder and it is expected to do the mining operation. The arrangement or understanding made by MML by entering into agreements with those companies amounts to those companies ‘substantially financing’ the MML for the mining operations. supervision and directions of MML and whether they are paid by MML? An agent or manager or employee or contractor of a person always functions under the instructions. but still violated the said Rule. According to the raising and/or processing agreements entered into by MML with private companies.

By those agreements MML has abdicated the power of control over the mining operation under the mining lease and conferred it to those companies. 2000-2006. The mining operations are done and substantially controlled by those companies and not by MML. MML has also made arbitrary allotment of iron ore fines/waste dumps to selected individuals/firm at prices lower than prevailing market prices. 10. (a) The present evaluation speaks of considerable loss MML has suffered due to defective agreements and MOU relating to raising.e. The report given by Gaikwad team is at ANNEXURE-C. processing and marketing of iron ore from various lease holds of MML. The officers who were found fault with by Gaikwad team were asked to indicate their reaction to the Report given by Gaikwad team. The irregularities and losses suffered in respect of iron ore lease holds of MML are discussed below.. (b) The audit reports of the Principal Accountant General (in short AG) relate to the period 2003-04 and 2004-05.185 look into the terms of the agreements entered into by MML it is not possible to say that those companies are ‘agents or managers or employees or contactors’ of MML as it has not retained ‘substantial control’ over the mining operations done by those companies. Hence there is difference between the figures in AG reports and the report of Sri Gaikwad team appointed by me to evaluate the loss suffered by MML. The Lokayukta enquiry covers a larger period i. The losses are also due to non-enforcement of some of the agreement clauses. . In addition to these losses.

(d) Another objection taken by some officers is that Gaikwad team has no corporate experience and it is not safe to rely on their observations. Prior to joining State Government service he served as Emergency Commissioned Officer in the Army for about 4 ½ years. In his audit reports AG adopts the price fixed by MMTC. Sri.186 (c) Some of the officers who were issued notices to indicate their reactions to the observations made by Sri Gaikwad team. Such an action cannot be considered as unreasonable or unjust or unrelated to market conditions. if any. have stated that loss. A perusal of the different agreements entered into by MML indicates that the initial price of ores specified therein is liable to be revised from 1st April of every year subsequent to the date of expiry of the initial period specified in the agreement and the revision has to be made having regard to either the market conditions or MMTC prices. caused cannot. It being a Government of India corporation and a trading corporation it would be fair and just to adopt the prices fixed by MMTC. MMTC prices are fixed having regard to the market conditions. AG audits the accounts of trading corporations of the Central and State Governments and it is made by the officers of the office of the Accountant General . a trading corporation created by the Government of India. be calculated on the basis of the prices declared by the Minerals and Metals Trading Corporation (in short MMTC). as done by Gaikwad team.Gaikwad has put in more than 25 years of service and held different positions including 4½ years of service as Deputy Director in the department of Mines and Geology of the Government.

e. Therefore the Managing Director and other officers. who decided the initial price fixed has to be held responsible for not having exercised proper caution while fixing the initial price in the agreement and protecting the financial interest of MML. Hence it cannot be said that Sri Gaikwad is not able to evaluate the loss suffered by MML. At an appropriate place in this report. (e)(i) Yet another objection taken by the officers is that the Gaikwad team has treated the difference between MMTC price of ore and the initial price of ore stated in the agreements as loss to MML. the officers concerned are liable for the loss suffered by MML on that count. Even if the price was taken by calling tenders they should have seen that the price fixed is not far below MMTC price. The agreements entered into by MML provide for revision of prices after a period specified therein and such revision has to be made thereafter on 1st April of every year. A perusal of most of the agreements show that the initial price fixed is far below the MMTC prices. While entering into agreements the then Managing Director and other officers of MML involved in taking such decisions were obliged to fix the initial price of various ores based on the MMTC prices or very near to that price. including those who pointed out this deficiency in Mr. till the date fixed in the agreement for the first review of the price. Gaikwad. .187 who have no corporate experience. Thereby MML suffered loss during the subsistence of the initial price fixed in the agreements i. For the above reason. I will refer to the ignorance of the Heads of MML in regard to their lack of corporate experience.

Accordingly. MoUs and such other marketing contracts entered into by MML in its effort of outsourcing the mining activity.188 (ii) The further question that arises is whether the officers who succeeded the previous Managing Directors. it was observed that many of the agreements. the agreement provides for revision of the prices with effect from a date or period specified therein and if they had failed to revise the price with effect from that date or period with reference to MMTC prices. (f) In the Report dated 21st May 2008 (Part) of the Gaikwad team. Later. If the period fixed in the agreement had to come to an end and either further agreement or renewal of the agreement is ordered they are bound to revise the price having regard to MMTC prices at the time of such renewal or further agreement. who entered into the agreement are responsible to revise the prices during the period up to the date fixed for the first review of the price. it was found that the same is not feasible inspite of our . However if. which I had then intended to be got done. may call for close scrutiny by a competent personnel of commercial audit. Gaikwad team has assessed the loss on that basis. the Gaikwad team had to revise the findings and recalculate the loss suffered by MML and identify the officers responsible for such loss based on the above principle. I do not think that those officers are responsible to revise the prices before the date fixed in the agreement for first review of prices because the parties to the agreement are bound by the terms of the agreement. they would become liable for the loss suffered with effect from such date or period.

189 best efforts. which had lead to many. the MDs were people from All India Services. I will have to first consider the primary reason for this type of irregularity in the management of the affairs of a commercial concern. more so in the mining field. After considering all these facts I am of the opinion that the same can be relied upon to base my conclusions in this report. (g) While fixing the responsibility on the officers for having mismanaged the affairs of MML. This lack of experience certainly was a handicap for those persons who headed the MML. I find that the present computation of the loss suffered by MML as found by Gaikwad team is based on acceptable materials as well as after consideration of replies given by officers concerned. I am of the considered opinion that any new person who took over as Managing Director of a company like MML would certainly require some time to understand the working of the . if not. it had to compete with other experienced mining companies and had to develop commercial contacts with buyers both Indian and foreign. Invariably. illegal and improper decisions. trading and even exporting. In that process. the MML had to indulge in mining activities. for the purpose of this report. they did not even have the assistance of a Company Secretary. Added to it. who neither had corporate or commercial experience. Though the MML had the advantage of getting the mining leases from the State for areas which were richly endowed with mineral wealth. It is to be noted that the MML as a company was established among other reasons to exploit the mineral wealth available in the State.

financial position. even against the law. then all the officers named in the said list of Gaikwad team may be liable to answer the charge of misconduct. In the above background. but I think it will be very unfair to charge such officers who held the post of Managing Director for a very short . but practically. Technically. though primarily established for mining and was allotted rich mineral bearing lands.190 company. The report of the Gaikwad team has listed 11 officers as being responsible for the loss suffered by MML during their respective tenures. background. May be the above factor was one of the reasons why the MML. amounts due to MML from different sources. On the contrary. it could be said that every officer. For all the above reasons. did not exploit those lands for mining activities themselves. who has newly joined the MML to get acquainted with those facts during the first few months as Chairman or Managing Director. who holds such responsible post should immediately on taking over charge of the office ought to have taken stock of the business activities. some of them for periods as short as one month to 4 months. I think it would be reasonable for me to think that it would take atleast 6 months period for an official to understand the various affairs of the company including the financial affairs. it may not be that easy for a Managing Director. I think it will be unfair to attribute deliberate misconduct on the part of those officers who had served for less than six months as Managing Director of MML. I noticed that during the period 2000 to 2006. profit and loss of MML etc. subleased or It is in this outsourced the mining activities to third parties. 11 officers had occupied the post of Managing Director of MML. If the strictest possible view is to be taken.

56. I must notice in the case of Sri K.and an agreement dated 4/7/2003 with M/s.S. but during their tenure had signed agreements or had an occasion to review earlier agreements. Applying the above yardstick. he was holding the office of the Managing Director for period less than six months.25.78. Even then he has to be held responsible for the loss suffered by MML.519/. But this qualifying period of 6 months will not be taken by me as a rule of thumb and will not apply to those officers. which period on facts and circumstances of the case is considered to be at least 6 months in my opinion.481/. names of such officers alone are being mentioned. as also being a signatory to an Agreement dated 3/5/2003 with M/s. who had a tenure of 6 or more months as Managing Director of MML and all those officers who might have held the office for less than 6 months. IAS. Balabhanu Enterprises Private Limited. but failed to rectify the same.to MML.191 period. with M/s. Kalyani Ferrous Industries Limited. Herein. M/s. which caused a loss of Rs. Kalyani Ferrous .938/-. which caused a loss of Rs.2. 11. but failed to review the same. (i) A group of private companies which have entered into agreements with MML are M/s.62. Kalyani Steels. which agreement contained terms contrary to the interest of MML. who even during their short stay either had entered into agreements with third parties or had an occasion to review earlier agreement. Manjunath. since he was the signatory to the agreement dated 4/7/2003.76. which contained terms detrimental to the interest of the MML. Orient Goa Private Limited.71. which caused a loss of Rs. in this report.

Calibrated iron ore produced by Kalyani Steels and Mukund is to be purchased by Kalyani Ferrous.100/= per MT of Banded Haematite Quartzite. They are what is normally called as ‘bye-products’ while producing calibrated iron ore. (ii) Kalyani Steels and Mukund are paid Rs. On 03-05-2003 MML entered into a raising agreement with Mukund in respect of about 52 hectares of area in Jambunathanahalli mines and entered into a marketing agreement in respect of the iron ore mined from that area with Kalyani Ferrous. The terms and conditions of the agreements with these companies. contain many provisions which could be considered as more favourable to those companies and against the interests of MML. On 17-01-2002 MML entered into a raising agreement with Kalyani Steels in respect of about 80 hectares of area in Subbarayanahalli mines and entered into a marketing agreement in respect of the iron ore mined from that area with Kalyani Ferrous. Charging separate price for BHQ and iron ore fines is a favour shown to Kalyani and Mukund at the cost of MML at the time of entering into those agreements. 25/= per MT of iron ore fines produced.188/= per Metric Ton (in short MT) of calibrated iron ore produced.192 and M/S Mukund Limited. The above agreements relating to Subbarayanahalli and Jambunathanahalli mines are substantially similar. The quantity of . Rs. when compared with the terms and conditions of the agreements with other companies. (BHQ) and Rs. It is said that iron ore fines and BHQ get produced while calibrated iron ore is produced and no separate or additional process or effort or expenditure is necessary to produce BHQ and iron ore fines.

150/= per MT of BHQ) what remains is negligible. Is the MML getting reasonable price for the mineral wealth of the State is the question? The NPV charges paid to Forest Department in respect of the mines relating to agreement with Kalyanis’ is to the tune of about 60 lakhs. If all these expenses and the charges paid to Kalyanis’ and Mukund under the raising agreements are deducted from the amount received by selling the iron ore under the marketing agreements with Kalyani Ferrous (Rs. That means there is no provision to . expenses connected with renewal of lease. According to the agreement that rate was firm for a period of two years after moratorium period of one year. Charges paid to raising/processing companies like Kalyani and Mukund is much more than what is being paid to GSP Projects and Anil Enterprises. NPV payments.250/= and for BHQ Rs. (iv) The price fixed in the marketing agreements dated 17-01- 2002 and 03-05-2003 with Kalyani Ferrous for MT of calibrated iron ore was Rs. welfare cess. charges connected with aforestation and fencing of safety–zone. While entering into the marketing agreement these aspects appear to have not been properly considered.193 BHQ and iron ore fines produced by Kalyani and Mukund up to date and the amount paid for it by MML would be the loss incurred by MML in this regard. administrative expenses etc. (iii) In addition to the amount paid to the raising/ processing company. the MML has to incur other incidental expenses like royalty. sales tax. 250/= per MT of iron ore and Rs. Full figures about this is not yet made available by MML. 150/=per MT. I will consider this aspect in my next report.

if any.e. It is stated in the reply filed by MML that the Kalyanis have been told about that mistake but MML has not stated . The price of Rs. 250/= to Rs. by order dated 15-07-2005.070/= and market price was steeply increasing day by day. It is surprising that the revised rate for the year 2005 -2007 was fixed on the basis of average prevailing MMTC price during the previous year i. On the basis of a request made by Kalyani. by MMTC.1070/= per MT as on 01-04-2005. MML suffered considerable loss also because of non-revision of prices from 2002 to 2005. MML in its reply to the report of AG has not disputed the factual position stated above.314/= per MT and it was ordered to retain that price as valid for a period of two years i.1. Kalyani opposed it.e. The loss suffered by MML in this regard during the year 2005-2006 is estimated by AG at about Rs. Such a revision is contrary to the terms of the agreement and it is to the advantage of Kalyani. the price was revised by MML from Rs.3 crores. Accordingly. up to 31-03-2007.314/= was arrived at on the basis of average MMTC price for the period 01-04-2004 to 31-03-2005. 2004-2005. 314/= fixed with effect from 1-4-2005 was firm only for a period of one year and not two years as stated in the order and it was a typographical error. 22. Thereafter rates are to be revised every year with effect from 1st April taking into consideration the revision in prices. even though the MMTC price in April 2005 was Rs. except that the price of Rs.194 revise the price fixed in the agreements for a period of three long years. the price was reduced to Rs. on the basis of prevailing revised MMTC price of Rs. The revision became due on 01-04-2005 under agreement dated 17-01-2002. 902/= per MT with effect from 01-04-2005 and it was intimated to Kalyani on 30-05-2005.

Kalyani Ferrous and Mukund are .195 whether Kalyani has agreed that it was a mistake and the prices have been further revised with effect from 01-04-2006. The moratorium period of one year is not found in any agreement except that with Kalyanis’. 2. Provision for payment of advance or security deposit is found in all agreements because MML releases iron ore or iron ore fines sold by it only after full purchase amount is deposited in advance. This is another favour shown to Kalyani at the cost of MML. The reply filed by MML to the report of AG is silent about this aspect as well as the propriety of fixing the price at Rs. (vi) In agreement dated 17-01-2002 Kalyani Ferrous has paid sales advance of Rs. This is another condition which is favourable to Kalyani at the cost of MML because from 2003 onwards the price of iron ore was increasing very rapidly. 6 crores as security for purchase of iron ore. Interest paid on that amount by MML to Kalyani up to 2006-2007 comes to about Rs. (v) In some marketing agreements entered into by MML the price stated therein is firm only for a period of one year and in some others it is firm for two years. Thereby revision of prices gets postponed. Agreement with Kalyani Ferrous requires MML to pay interest on that advance amount at the rate of 10% per annum.5 crores. There is no provision for payment of interest on such advance or security deposit in agreements entered into with other companies.314/=. (vii) The Managing Directors who entered into the above said agreements with Kalyani Steels.

which had applied for lease of Kumaraswamy‘s A. As agreed therein a joint venture company called Vijayanagar Minerals Private Ltd (in short VMPL) was registered to provide adequate supply of iron ore to Jindal steel plant. It relates to Thimmappanagudi mines. at the desire of the Government of Karnataka. and is supplying iron ore to Jindal steel plant.01. MML placed Thimmappanagudi mines at the disposal of VMPL and the VMPL is permitted to do mining operation there since 1999 –vide clause 6 of service agreement dated 2-2-1999. has not placed any mines at the disposal of VMPL. MML was to receive premium on the sale of two grades of iron ore viz.196 guilty of showing favours stated above to those companies and loss to MML. Some of them are given below. D and E blocks that may be granted to them on lease by the Government. in the form of MOU dated 17-01-1997.1997. According to AG there are numerous irregularities connected with this transaction and dealings in pursuance to that MOU which has resulted in loss of crores of rupees to MML. The Managing Directors and other officers during the relevant periods who decided to pay those charges are responsible for the loss occurred on that basis. as on to this day. would place at the disposal of VMPL said A. (i) According to MOU dated 17-01-1997 MML is to place at the disposal of VMPL Thimmappanagudi mines and Jindal. D and E blocks. In pursuance to the MOU. (ii) As per the MoU dated 17. 12. as agreed. the lumpy ore and . Another major agreement entered into by MML was with Jindal Vijayanagara Steels Ltd (in short Jindal).. It is learnt that Jindal.

The only remark made by MML is that a copy of the report of AG has been sent to VMPL asking it to pay the amount stated by AG and no reply has been received from VMPL so far.197 the iron ore fines at 10% and 6% of the ruling market price respectively. This apart. have also generated other grades of iron ore viz. but generated and marketed from . MML has suffered by not realizing premia on these grades of ores.per MT of lumpy ore and Rs.per MT of iron ore fines. low grade lumps and low grade calibrated ores during the period under report. The loss suffered by the MML consequent to raising invoices for premia at rates below that agreed in MoU in respect of iron ore lumps and iron ore fines and failure to collect premia in respect of other grades of iron ore that are not mentioned in the MOU. According to AG premium amount was not revised from time to time on the basis of the prevailing market rate and on this count there is short payment of Rs. Against this understanding. basic ore.22 crores by VMPL upto 2004-05.30/. The premia invoiced are much below the percentage value calculated on the basis of the prevailing MMTC prices for different grades of iron ore.6/. In its reply to AG report MML has not stated anything about the merits of the observations of AG. 3. MML should have taken up the matter with VMPL and claimed premia thereon. The reply given by MML that it has asked VMPL to pay the amount stated by AG indicates that MML agrees with the view expressed by AG. The supply of these grades of ore were not foreseen at the time of execution of MOU and consequently also for purposes of calculation of premia payable by the VMPL. MML has consistently invoiced the premia claim at the rate of Rs.. In the absence of any such arrangement. VMPL.

After the revaluation of the infrastructural investment. MML demanded that the amount in excess of 174 lakhs i. Rs.368/-.74 – 174) must be returned to MML with interest at 10% or its equity share should be increased proportionately. (iii) The financial mismanagement of MML is evident from the following facts.746/-.74 lakhs.198 Thimmappanagudi Mines is reported in table 01 and 01A of the report of Sri Gaikwad team at Annexure-C. That valuation was not accepted by Jindal. which valued it at Rs. The said equity share was contributed by MML in the form of infrastructural investment towards development of its Thimmappanagudi mines which was handed over by MML to VMPL. percentage of share capital of MML should have been increased since this has not been done.25. The total loss suffered by MML on this account is Rs. The matter was referred to a neutral valuer and he fixed the amount at Rs.174 lakhs which is equal to 30% of the equity share of MML. MML entered into a MoU with Jindal to establish VMPL.22.243. This .72. The Managing Directors in office during the period are responsible for the loss.74.00.74 lakhs should have been collected from Jindal with interest. MML valued that infrastructural investment at Rs.69.8.74 Lakhs (243. (a)As stated above. The profit and loss account of the VMPL for the period from 2003 to 2007 indicates that VMPL has earned a total net profit of Rs. As per that MoU the equity share of MML in VMPL is 30%.e.372 lakhs. the excess amount of Rs. No indication is available in the files of MML for having received its share of the profit for its share in equity.69.

Inspite of these glaring discrepancies. the Accountant General’s audit report shows that MML’s share capital as only 2. For the reasons stated herein above action should be taken to recover the amount of Rs. till date there is no record which conclusively reflects what is the true investment of MML in equity. There cannot be a worse example of financial mismanagement of a company. With the above cited financial management. Added to this. the independent valuer’s report shows the said investment as Rs. it may be relevant to take note of the comments of the various Managing Directors who received Show cause notices from the Lokayukta.77%. while the Accountant General’s Audit Report shows it as 2. (b) From the facts narrated herein above. there is no need to go any further to find out the cause for such loss suffered by MML.e. Rs. . Herein. However very surprisingly.174 Lakhs.69. that too over the years. wherein they have consistently stated that the company was suffering huge loss and the financial position of the company was such that it was not even in a position to pay salary to its staff. it is seen that the MoU shows the investment of MML in the VMPL is 30% i.77% of total paid up capital.199 aspect could have been settled if the share holders agreement had been finalized.74 lakhs equivalent to 42%. though the records of VMPL shows that it has made a profit of over 8 crores there is no proof of MML having received its share in the profit. though the MoU was signed as far back as in 1997.74 lakhs with interest due to MML from VMPL on the basis of neutral valuer’s report apart from other dues.243.

Jindal agreement with M/s. (v) Though the MOU entered into in 1997 required the parties to finalize the shareholders agreement and some other documents. the total sale of iron ore from Thimmappanagudi Mines during that period is 6143605MT. (iv) It is reported by the MML that during the period from 2000-01 to 2006-07.93.32. agreement with VMPL can be assessed by comparing it with another J. This aspect creates some doubt about the accounts maintained by MML. a total of 50.03. upto 2004-06 . Thungabhadra Minerals where MML had made an investment of Rs.V.75 Lakhs no amount has been received as dividend. MML has also sold during the said period. Thus. whereas in the case of VMPL on investment of Rs. so far.V.15. a quantity of 60.243.60.400/.31.for the period between 1983 and 2007. MML failed to purchase the lumps they were entitled to purchase.200 (c) How much MML lost in its J. they are not finalized. According to AG. This observation is admitted by MML.488/.from which investment the MML has received its dividend share of Rs.040 MT of iron ore produced from Thimmappanagudi Mines was supplied to VMPL. (vi) According to clause 4 of MOU. MML had the option to purchase from VMPL certain quantity of iron ore lumps produced in Thimmappanagudi mines at transfer price which is lower than the market price and sell it in open market. This shows that the quantity of iron ore marketed from Thimmappanagudi Mines is in excess of the production.565 MT of iron ore fines to various other firms.

820 Company’s Account 1.R.7.29. Hence they are to be held responsible for the loss suffered.19.64. Had MML.89. 20.918 1.82 crores and corresponding benefit to VMPL and Jindal.64. MML has not given any proper explanation in this regard.23.52. Ashwath 1.17.011 Mahendra Jain 7.05. Year Quantity produced (MT) Loss at the rate Name of the Managing of Rs. (Rs. Therefore.76.296 Company’s Account 48.216 -do- 1 2 3 4 5 2000-01 2001-02 2002-03 2003-04 2004-05 51.267 2. But.203 51. No. The concerned Managing Directors of MML should have raised the demand during the month of April for the ore produced during the previous financial year.) 2.800 1.201 this has resulted in loss to MML to the extent of Rs.33.838 * Price taken into account is a fraction of the then prevailing market price.67. purchased and sold its share of the ore produced.S.64.94. they have failed to act.518 D. Perumal 49.838/-.785 2. It was the responsibility of the respective Managing Directors of MML to implement the provision of the MOU and safeguard its interest in such ventures.15. .74.165 I.59.40. The amount of loss attributed to each managing Director is furnished below : Sl.527 1.19.93.90/Director responsible for per MT * the loss Sri/Smt.812 Jeeja Madhavan Hari Singh 6 7 2005-06 2006-07 Total: 2. it would have gained a profit of Rs.644 1.390 8. by virtue of the provision in the MOU. MML has suffered loss to this extent.44.

478 3.202 (vii) According to para 5 of the MOU the VMPL is responsible to pay royalty.16.10. other duties and all obligations including statutory obligations in connection with the mining operations like liability to pay compensatory afforestation charges.657 37.450 Remarks.350 lakhs to meet the expenditure towards VRS scheme to be introduced by MML for the benefit of the employees who have become surplus . Paid to Karnataka Forest Department -do-do- 9-3-2002 28-1-2003 2. taxes.70.51..21.253 -do-do-do-do-doCompensatory Amount (Rs) 48. levies.760 2. FDT.79.56.212 3. That amount was payable by VMPL and it was an avoidable burden on MML.99.84.749 (viii) In the service agreement dated 02-02-1999 entered into by MML with the VMPL it had agreed to pay MML a sum of Rs.85.947 7. No action has been taken to recover that amount from VMPL. Date 7-11-2000 On what account Towards compensatory afforestation and penal compensatory afforestation Towards lease rent Towards afforestation 27-11-2003 29-11-2003 2-4-2004 3-4-2004 3-4-2004 Fencing of Safety Zone Fencing of Safety Zone Towards net Present value Towards lease rent Towards net Present value Total 4.000 11.00.63. lease rent.41. fencing of safety zone and net present value (NPV) etc. AG has reported that though it is not liable to pay the following amounts MML has paid those amounts.

13. The Managing Director during 2005-06 is responsible for the loss.67crores. According to AG total liability of interest and penalty on this count comes to about Rs. Failure to appoint a whole time Company Secretary as required by section 383A of Companies Act may be one of the reasons for this situation. So far only 60 lakhs have been paid by VMPL and the balance amount is due. 2.203 because of handing over of the Thimmappanagudi mines to VMPL. sales tax. (x) Another observation made by AG is about delay in payment of advance tax. Such handling over of the mine for exploitation by VMPL. the prior approval of the Government and without retaining the substantial control over mining amounts to transfer of mining lease which is contrary to Rule 37 of M. if any occurred on this count. This liability occurred mainly during the year 2005-06 and it could have been avoided by proper administration. According to AG during 2004-05 also iron ore fines were sold but . delay in filing the income tax returns and delay in crediting TDS deductions and the resultant liability to pay interest and penalty.C Rules. self-assessment tax. (ix) MML has virtually assigned the right of exploitation of iron ore and physically handed over the Thimmappanagudi Mines to VMPL to raise iron ore at its cost. On 04-07-2003 MML entered into an agreement with Orient (GOA) for sale of iron ore fines from Jambunathanahalli mines with a clause that prices are to be revised with effect from 1st April each year on the basis of market conditions and prevailing MMTC rates.

2003 for marketing of iron ore fines of different grades. the loss would be about 10 crores – vide table 9 of Sri. The prices agreed are as follows which are inclusive of royalty. taxes. from group of Iron Ore Mines leased to MML in Bellary District. the rates are for the year 2003-04 and thereafter to be revised and refixed on 1st April each year based on the prevailing market conditions/MMTC prices. which is one the beneficiaries. (a) Another agreement entered into by MML was with M/s Balabhanu Enterprises (P) Ltd. FDT. 14. Clause 3 read with clause 4 of the agreement specifies that M/s Balabhanu Enterprises shall undertake to purchase a minimum quantity of 4 lakh MT of iron ore fines per annum.65% Fe Rupees. 3. The period of contract was for five years from the date of execution vide clause 2. MML entered into agreement with M/s.7.42 crores as shown in Annexure IV of his report.Gaikwad team report. The . AG has estimated the loss incurred thereby at about Rs. Balabhanu Enterprises (P) Ltd. cess. on 4. Jannapura.. but excluding loading charges.. who enjoyed preferential allocation of iron ore fines from Subbarayanahalli Iron Ore Mine and Jambunathanahalli Iron Ore Mine.204 without revising the rates. +66% Fe +65% to 66% Fe . 110 Per dry MT 97 Per dry MT 70 Per dry MT (b) As per clause 8 of the agreement. If the loss is calculated on the basis of difference between the sale price and MMTC Price. Bhadravathi. The Managing Directors in office during the relevant period are liable for the loss.

(c) In the corresponding period. MML’s self declared prices for the said grade of iron ore fines were: (1) 18.01.(2) 28.(4)05.12.2003 – Rs.11. (ii) Rs.. Overlooking this important market trend.1501.12.907.2000 and (7) 01.11.425/.2004 – Rs.(3)03. The prices agreed are far below the prevailing MMTC/MML prices.2004 – Rs. M/s Balabhanu Enterprises were identified as a beneficiary for allocation of iron ore fines at the instance of M/s Anudeep Carborates (P) Ltd.400/. the MML has agreed to supply the iron ore at far below the prevailing market prices.200/-.2003 – Rs. As a result.800/.1424.2000/.25 on 6/8/2004. and M/s Arun Chemicals.S.(6)01.1407. M/s Balabhanu Enterprises walked away with a higher beneficial arrangement of procuring iron ore fines at the above prices when MMTC ruling Prices had shown a clear trend of rise as evident from the values that are herein indicated.475/(5)01.2003 – Rs.205 agreement declares. Hence.2005 – Rs.+ Rs.04. Manjunath. Prices for grade +66% FE 10F were (i) Rs. 1999 and Rules made thereunder. clearly establish that the agreement with M/s Balabhanu Enterprises for supply of iron ore fines was detrimental to the interest of MML. the statutory requirement of floating tenders was not complied with as required under the Karnataka Transparency in Public Procurement Act.1607.65 on 5/4/2004.12.90 on 8/12/2005.25 on 5/11/2004. (iii) Rs. These particulars. the Managing Director who is the signatory to the agreement on behalf of MML has failed to safeguard .2003 – Rs.350/. the buyers of limestone and dolomite from MML. (iv) Rs.25 on 25/4/2005 and (v) Rs. (d) Sri K.

The agreed rates were firm for the year 2003-04. If it fails to excavate and deliver said quantity of ore in any month it is required to pay an assured monthly premium of Rs. Another agreement entered into by MML is with M/S Narayan Mines Ltd. Manjunath.206 the interest of MML by not considering the prevailing higher MMTC ruling price at the time of entering into long term agreement on 04.Ashwath is Rs. D.S. they are to be held responsible for the loss suffered by MML during the year 2004-05 and 2005-06.750/.07. Jeeja Madhavan Harisingh is Rs. Jeeja Madhavan Hari Singh respectively succeeded Sri. No revision was made and they have failed in their duty.4. Ashwath and Smt.74. It was their duty to revise the prices on par with the prevailing MMTC prices on 1st April each year by invoking the provision for revision of prices stipulated in clause 8 of the agreement. 15.04.S. Manjunath.and this loss is attributed to Sri K. According to the agreement Narayan Mines has to excavate every month a specified quantity of iron ore from old dumps and deliver it to MML. The first revision was due on 01. The above loss is computed based on the prices prevailing on 1st April 2004 and 2005. The agreement further . K.000/-.04.000/-. Loss relatable to Sri D.79.11. The loss suffered by MML in view of acceptance of lower prices as shown above is estimated at Rs.62.2003.41.983/. It is for a period of 13 months in the first instance which is extendable for another period of 2 years by mutual consent based on the performance of Narayan Mines.2004 and second revision on 01.2005. (e) Sri.6.S.14. Managing Director who signed the agreement. Hence.64.56.and relatable to Smt.S.

(a) Another matter considered by AG relates to Vaddarahalli Granite Quarry. Recovery proceedings should be initiated against Narayana Mines by MML to recover this amount due.81. Total amount due on this count comes to Rs.34.000/-. Some of them were there for very short periods like 1 month. 16. 3 months or 4 months etc. Hence it has become liable to pay the assured monthly premium specified in the agreement. 2 months.207 stipulates that “However he shall excavate and deliver the minimum assured monthly production and monthly minimum assured premium on an average on half yearly basis. During that period about 7 officers have occupied the office of MD. Narayan Mines is the beneficiary of inaction on the part of the officers in not collecting the amounts legitimately due to MML. Mining lease was obtained on 09-09-2003 more than one and half years after the agreement and the sale agreement was revalidated for a period of one year from 20-10-2003 without revising the price specified therein. 4000/= per cubic meter.4. The agreement was for a period of one year from the date of actual commencement of quarry operation. It has not been collected by the officers in charge of administration during that period. Mining lease had not been obtained by MML at the time of the agreement.” Narayan Mines did this work for about 3 years (2000 to 2003). at a rate of Rs. On 06-11-2003 MML entered into a raising agreement with Sana Granites . An agreement was entered into by MML with Jemco Granites on 2nd January 2002 for sale of green granite blocks to be quarried from Vaddarahalli quarry at Hassan. Narayan Mines has failed to excavate and deliver the specified quantity of ore every month.

Supply of granite to Jemco started immediately thereafter. On this aspect MML has stated that the extended agreement was continued only for two months as both Jamco and Sana stopped work after two months. AG has taken objection for extending the agreement at Rs. of about Rs. Revalidated agreement came to an end on 19-11-2004 and the agreement was extended for another two years and price of granite was fixed at Rs.400/= per cubic meter.400/= per sq meter stating that at that time market price was around Rs.000/= per cubic meter.5.40 lakhs by selling granite blocks raised and left by those companies at the site.5. The amount recovered by selling granite blocks cannot be considered as the amount recovered from those parties because MML is the owner of that granite block. In its reply MML has stated that it has recovered 5. (b) As in the above case. most of the agreements entered into by MML are in anticipation of either obtaining the mining lease or getting the expired lease renewed.208 suggested by Jemco Granites at a raising cost of Rs.. The price of iron ore or mineral is fixed in the agreement having regard to the price prevailing at the time of the agreement but the price would be much higher when lease is granted or renewed and mining operation commences and .42 lakhs as it became liable to pay sales tax etc. AG has further stated that MML has suffered a loss of about Rs.5. Actual mining or quarrying operation starts after mining lease is either granted or renewed.3.000/= per sq meter and there were many companies which were willing to purchase it at that rate.42 lakhs not paid by those companies.4. It has not stated anything else in its reply.4.

The total amount payable was about Rs. 17. is the amount required to be collected from the agencies using forest land for non-forest purposes at the rates varying from Rs. . If the agreement is entered into after the lease is granted or renewed the price prevailing at that time would be quoted in the agreement This non-receiving of proper price has resulted in loss to MML and benefit to the other party.80 lakhs to 9. Another matter dealt with by AG relates to Net Present Value (NPV) payable to Forest Department as directed by the Supreme Court in respect of Thimmappanagudi mines.209 supply of material starts.18 crores) even though there was no commitment or legal requirement to pay.26 crores MML voluntarily by letter dated 03-03-2004 offered to pay 30% of that amount (2. (i) Thimmappanagudi mines: In pursuance to a MOU entered into between MML and Jindal a Joint Venture Company called Vijayanagara Minerals Private Ltd was formed and Thimmappanagudi mines were placed at the disposal of that Joint Venture Company. as stated by the Supreme Court. It was also decided that the NPV is to be paid by the Joint Venture Company.5.20 lakhs per hectare of forest land depending upon the extent and density of forest land in question. MML is not required to pay it or to share it with the lessees. Subbarayanahalli mines and Jambunathanahalli mines.7. It has to be collected from the agencies using forest land for non-forest purposes. NPV. It was an avoidable expenditure on MML while the same was an undue gain to Jindal.

2. Companies like Shivashanker. There is another set of agreements with five companies i. Hajee Ameer Minerals (Huded Basanna). Sree Om Minerals. Metasteel and Linga Reddy. 18.210 (ii) Subbarayanahalli mines: Kalyani agreed to share the NPV liability with MML on 50:50 basis monetary consequence was same as above. If proper care had been taken while entering into the agreement payment of that amount or at least 50% thereof could have been avoided. Liability in respect of Jambunathanahalli mines was about Rs.84 crores. When the Forest Department started demanding payment of that amount MML requested Mukund to share the amount equally but Mukund refused to pay and the entire amount was paid by MML. Anil etc have agreed to share the liability. Failure to raise this question while finalizing the agreement with Mukund has resulted in this liability. GSP. all relating to Jambuthimmanahalli mines according to which those Companies are authorized to . As stated above. (iii) Jambunathanahalli mines: The Supreme Court by its order dated 30th October 2002 directed all Governments in the Country to collect NPV in respect of all forest lands converted into non-forest purposes like mining. In the agreement dated 03-05-2003 entered into by MML with Mukund no provision was made for payment of that amount even though that agreement was entered into more than 6 months after the decision of the Supreme Court.e. Dhrevdesh. Sunny Agencies. Kalyani had agreed to share the liability in respect of Subbarayanahalli mines on 50:50 basis. Provision should have been made in the agreement about payment of that amount.

former or present Directors of MML and others. All those agreements were entered into in 2nd half of 2005 and the purchase price/premium fixed is Rs.).58. The Managing Director has been authorized by the Board to fix price for sale of iron ore fines and mud etc. The . former Ministers or MLAs or MLCs or former MLAs or MLCs etc. MML has failed to collect ad-hoc price (as agreed in MOS dated 30-12-2003) of Rs. At that time the market price of iron ore was not less than four times that amount. officers.211 raise. It is left to the discretion of the Managing Director to select the purchasers and to decide about the quantity to be sold to each person. relevant and non-discriminatory principles which could be gathered from the files. process and purchase the salable iron ore produced.200/= per MT.916 from MMTC for the supply of iron ore fines from the Subbarayanahalli mines to MMTC during October to December 2003. 19. The files do not disclose the basis on which the persons have been selected and the quantity allotted to each person has been decided. The relevant files made available for perusal indicate that the Managing Director used to allot iron ore fines and mud to persons who used to approach him directly or through some others like politicians (Ministers. RECOMMENDATION BY MINISTERS AND LEGISLATORS 20. MML being an instrumentality of the Government the Managing Director is required to exercise the discretionary power of selecting the applicants and the quantity to be allotted to an applicant on some rational. and to enter into contracts for sale. 84. Otherwise it will be arbitrary exercise of power.

212 files indicate that allotments were made on the basis of request and recommendations.42.as quantified at table 10A to 10F of Annexure-C.647/. From the Report of Gaikwad team at Annexure-C. made allotment at a price lower than the MMTC price. the Managing Director holding the office at the relevant point of time. This has happened in the following background.. the MML suffered loss of Rs. iron ore mud and iron ore waste dumps to the named party in their letters of recommendation.51. This was done solely because the concerned officer wanted to please the person who has sent the letter of recommendation. The MML had fixed its own selling rates for this type of minerals and in some cases of recommendation that is in about 5 cases. During the period when there was boom in the mining trade. iron ore mud or waste . even though there was no request from the concerned persons for reduced rates. But the question is. MLAs/MLCs. I found prima facie material to call for explanation from such persons who had sent letters of recommendation for allotment of iron ore fines. it is seen that because of the recommendations made by some politicians like Ministers.7. some Ministers and other politicians holding public offices sent recommendatory letters to the then Managing Director of MML requesting the said officer to allot certain quantities of iron ore fines. This is a clear case of an officer crawling when he is asked to bend. for this loss can I hold the persons who sent the letters of recommendation responsible or is it only officers who voluntarily allotted it at a lower price causing loss to MML? After receiving the report of Gaikwad team. 21.

In most of the replies I find a common stand taken by these public personalities. while making enquiry on the basis of a reference made by the Government under Sec. who were in the power structure of the Government in some point of time or the other. State of Karnataka – (1989) 3 Kar.213 dumps on behalf of private parties.L. 7(2A) of the Lokayukta Act. In some of the replies. (See Dr. the decisions of the Hon’ble High Court of Karnataka has specifically stated that the Lokayukta. 512). I would like to point out that the Show cause notices were issued on the basis of the material found in the Report of the Gaikwad team and referring to them as prima facie material about which reply was sought. is not required to issue any notice and can come to a conclusion without such show cause notice. As a matter of fact. Lokayukta and another). to Managing Directors of MML. my observation made while issuing of notice was questioned as findings which are premature and that I have come to a conclusive opinion already. Though it is not my duty to convince these noticees on this legal aspect.Chowdappa V/s. (See decision of Hon’ble Supreme Court in AIR 1996 SC 2450 – Ch. I am compelled to comment on the objections taken in the replies to the Show cause notice. K. Here.J. hence the reply sought for is only a formality. There is no concept in Administrative Law or for that matter in any jurisprudence that prior to the issuance of Show cause notice there should be a notice to the concerned person calling upon him to show cause why Show cause notice should not be issued. in his report sent to the Government. Ramarao V/s. I have received their replies. .

For such actions. The investigation and the enquiry report has direct interference with the legislative functions entrusted to me under the provisions of the Constitution and it also directly affects the welfare and wellbeing of the people as the notices and observations of the Hon’ble Lokayukta amounts to discourage doing welfare to the public who have elected people like us to the Legislative Assembly and to become the Minister for management and administrations of the State. I prima facie find the Hon’ble Lokayukta formed a finding which directly interferes with the function of the Legislature and is also direct intervention of functioning as Minister which is given under the Constitution……… ………………………………………. All the decisions are taken in the light of the policy decisions of the Government.214 22. On reading the report. In this context. in the light of the good wellbeing of the people who are elected me and others to govern the State. I have a constitutional role to play. which is well within the parameters of the Law. I have never exceeded in any of my actions as a Minister. which reads thus:“I would like to remind the Hon’ble Lokayukta that I am elected representative to the Karnataka Legislative Assembly. Almost another common feature of the reply to the Show cause notice is that they are elected representatives. investigations are made and if such notices are issued. it will be impracticable or impossible for any legislature to function as a member of the Legislative Assembly and as Minister. I would like to extract part of the reply from one of the noticees. I have made efforts to find out whether the Constitution of India has given the signatory of that letter a constitutional role to play which is well within the parameters of law.” The language reproduced in the above extract is entirely that of the signatory of that reply and not mine. . I would like to place on record that. who had obligation to forward the request of the people of the State to the concerned.

can never be a matter of welfare of the . which empowered him to issue letters of recommendation in matters pertaining to commercial interest of a person. I also would like to point out that this is not a suo-moto enquiry initiated by the Lokayukta. I am at loss to understand. I did not find any support. of Karnataka that in the light of the good wellbeing of the people (whatever that may mean) who have elected him to govern the State has permitted him either as a Member of Legislature or a Minister to make recommendations in the matters involving commercial interest of a citizen which has absolutely no public interest. as contended in the reply. The noticee has nowhere pointed out such constitutional provision or a policy of the Govt.215 when he sent letters of recommendation to his subordinates. that making recommendations in the matters pertaining to commercial interest involving the State or its instrumentality’s finances. of Karnataka. Even for this proposition. I get a feeling that this part of the reply is meant to create some sort of fear of breach of privilege which of course the noticee is free to initiate without putting this threat in his reply. but I could not find any such duty cast on the elected representative in the Constitution. but an enquiry referred under Section 7(2A) of the Lokayukta Act by the then the Government. I can. without any hesitation and about which I will mention little later in this report. The terms of reference are very wide and I fail to understand how any report I might submit to the Government after investigation would interfere with the legislative functions entrusted to the noticee under the provisions of the Constitution or which would directly affect the welfare and wellbeing of the people. whether the policy of the Govt.

(See also Ram & Sham referred herein below) I also cannot understand how seeking a reply in a Governmental reference would amount to direct intervention in the functioning of a Minister. Be that as it may. Inspite of the same. as its minimum selling price. I am making my observations in regard to the said part of the reply of the noticee. 24. 23. these recommendees together by allotment made to them caused a total loss of Rs.42.51. which this enquiry has taken as a best minimal rate. Out of 10 noticees who have sent recommendations to MML as elected representatives of the people on behalf of private parties for allotment of certain quantities of various types of mineral ore.216 public. Here I would like to quote Sophocles’ who said nobody has a more sacred obligation to obey the laws than those who make the Law. It is on that foundation I will now consider the legality and the effect of these recommendations. because MML is wholly owned company of the State of Karnataka. If this is the consequence of the recommendations made by these 5 noticees can it be said that the same is protected under the Indian Constitution or by the policies of the Government of . my experience as a Judge has taught me that extraneous comments should not come in the way of legalistic analysis of an issue which is before me. Since the noticee of that notice has asked me to consider these aspects.7. in 5 cases. I must observe here that the rate fixed by MML at the relevant point of time was itself lower than that of the MMTC rates.directly to MML and indirectly to the State of Karnataka.647/. the then Managing Directors have allotted iron ores fines and mud at rates much lower than the rate fixed by MML itself.

much less. The report of the Gaikwad team at table 10A of Annexure-C clearly mentioned the rate of MMTC on the concerned date when the allotment was made and the loss that is caused to the MML. Since there is no contra evidence from the concerned that no other pressure was brought on them. as mentioned above. 25. as officers responsible for the above mentioned loss suffered by MML on this count. it had on their judgment making process while making allotment at a cost less than the actual market price. I cannot name those persons who made recommendations. they have specifically replied that it is an act of the officials of MML and they had no role to play in fixing the price. Therefore. by the sale of iron ore. I do not think the MML could have sold any type of mineral ore at a price lesser than that of MMTC which reflected the lowest market price. I can only observe how safe the future of the finances of the State will be in the hands of these representatives of the people. however improper such recommendation may be. on this count. I will have to hold the concerned Managing Directors. the price at which the allotments were made. which caused huge loss to MML. fines or mud to persons/parties mentioned in the schedule of the . The only part of the replies that I can really say which is relevant for my consideration for the purpose of this investigation is their defence that they have not asked the MML to make allotment at any particular price. In case of recommendations made by 5 of the persons.217 Karnataka as has been stated in the reply extracted herein above and if it should be so. as persons responsible for the loss caused to MML. whatever be the effect of the recommendatory letters.

218 Gaikwad report. such practice is to be deprecated.42. State of Himachala Pradesh in (2008) 7 SCC 117) To prevent such practice a code of conduct which is enforceable should be put in place. such an act of persons holding high public offices can never be accepted. the fact remains that the MML has suffered loss of Rs. I would like to state that it is of common knowledge that it has became a routine affair in the administration that people holding high public offices make recommendations in favour of a particular person or party. more so in the background of the fact that there is no conduct rules governing this category of persons. in a democracy which proclaims equality to every body. This does not mean that such person cannot make any recommendation in a deserving cases. But certainly such practice of making recommendations in .7. being elected representatives of the people have a legal obligation to help people who are in need. Therefore. In my opinion. As part of my recommendation.647/-. The general justification in regard to this type of practices is that those persons who make recommendations are.51. especially for favourable consideration of their case. (See Pancham Chand V/s. However. such practice of recommendations is per-se in violation of the Constitutional guarantee of equality under Article 14 of the Constitution of India. which invariably affects the rights of another party. 26. By making such a recommendations they are influencing the officer concerned to take a decision in favour of a particular party. where larger public interest is involved like in the field of health care if the same is denied to any person. But in a democratic set up.

STATE OF HIMACHALA PRADESH (supra). In this background..219 areas which has only commercial interest should be deprecated.1 Lakh for interfering in the functioning of a statutory quasi judicial authority. who bases his decision in the course of his official act on the recommendations of any person who is not authorized to do so in appointments.” 27. It is does not stand in the same position as a private individual. In this context. applies equally to all other authorities. The Government is still the Government when it acts in the matter of granting largess and it cannot act arbitrarily. commercial transactions and in cases where there is no public interest is involved should be held guilty of misconduct. I take support from the decision of the Hon’ble Supreme Court of India in the case of PANCHAM CHAND V/S. certainly in my opinion. I would also recommend that any public servant.A. Authority of India (AIR 1979 SC 1628) which reads thus: “The Government cannot be permitted to say that it will give jobs or enter into contracts or issue quotas or licences only in favour of those having grey hair or belonging to a particular political party or professing a particular religious faith. be they quasi judicial or not. wherein the Hon’ble Supreme Court has imposed a fine of Rs. I think it is useful to refer to the observations of the Hon’ble Supreme Court in another case viz.D. The basis of this judgment. Shetty V/s. I. CONCLUSIONS:While concluding my report on the affairs of MML. I would like to comment that while the MML could have been a goose that could have laid the golden eggs was converted into white elephant by the top . R.

even when there was ample opportunity to make considerable profit because of the spurt in the international market. the failure to do so was because of the lack of business acumen or may be for collateral considerations. The above loss caused to the MML should be recovered from the officers responsible for such loss. . from whom legitimate dues have not been collected by MML.220 officials of MML throughout its existence. MML which had all the infrastructure continued to loose money and was allowed to suffer loss even during this prosperous period by its officials. and also to initiate necessary legal proceedings against the 3rd parties. either by entering into agreements with third parties without keeping the interest of MML in mind or by not collecting legitimate dues from 3rd parties or by doling out huge sums by way of NPV which was not due to be paid by MML or by selling minerals at rates lesser than the MMTC price resulting in huge financial loss to MML. besides initiating the Departmental Enquiry. besides the initiation of Departmental Enquiry in accordance with the Rules applicable to them. The Report of Gaikwad team at Annexure A shows the involvement of 3 retired officers of MML who are also liable to this loss and the steps shall be taken to recover the loss caused. It should be noticed here that while during ‘China Boom’ many individuals became billionaires. not computed in this report for want of information. It is my recommendation that the Government should immediately appoint an appropriate authority to recover the loss suffered by MML and those amounts found to be due to MML.

as also while selling the ores acquired by it. In these transactions. which reads thus:“12. In this context. while entering into such agreements/sales. Therefore.221 28. The marked difference lies in this that while the owner of private property may have a number of considerations which may permit him to dispose of his property for a song. the community or further the public property has to be dealt with for public purpose and in public interest. it is appropriate to rely upon the observations of the Hon’ble Supreme Court of India in the case of Ram and Sham Company V/s. thereby huge loss have been suffered by the company. disposal of public property . State of Haryana and others. The fact that the MML is an instrumentality of the State being wholly owned by the Government of Karnataka is not in dispute. Let us put into focus the clearly demarcated approach that distinguishes the use and disposal of private property and socialist property. both while entering into agreement with other parties. it ought to have acted like a prudent businessman and no other factor except the financial interest of the company could have prevailed upon the management of the company. the case reported in AIR 1985 SC 1147. From the above facts it is clear that the manner in which the MML has been entering into various agreements with third parties shows that the concerned MDs while entering into agreements with them have not safeguarded the interest of the MML and even at the later stages like at the stage of renewal. On the other hand. Owner of private property may deal with it in any manner he likes without causing injury to any one else. it had an obligation to look after the commercial interest of the company. But the socialist or if that word is jarring to some. the interest of the company has been totally ignored.

. At one stage. the State is under an obligation to secure the best market price available in a market economy. or affinity kinship. A welfare State as the owner of the public property has no such freedom while disposing of the public property. one such being to achieve 553 the goals set out in Part IV of the Constitution. in selecting recipient for its largesse . But where disposal is for augmentation of revenue and nothing else. This is subject to one important limitation that socialist property may be disposed at a price lower than the market price or even for a token price to achieve some defined constitutionally recognized public purpose.222 partakes the character of a trust in that in its disposal there should be nothing hanky panky and that it must be done at the best price so that larger revenue coming into the coffers of the State administration would serve public purpose viz. the welfare activities will get a fillip and shot in the arm. A welfare State exists for the largest good of the largest number more so when it proclaims to be a socialist State dedicated to eradication of poverty. empathy. All its attempt must be to obtain the best available price while disposing of its property because the greater the revenue. Such an approach serves the larger public purpose of expanding welfare activities primarily for which the Constitution envisages The setting up of a welfare State. may permit him to sell the property at a song and without demur. Factors such as personal attachment. religious sentiment or limiting the choice to whom he may be willing to sell. The International Airport Authority of India and Ors (1979) 3 SCR 1014 (AIR 1979 SC 1628): ……………………………………………………………………. An owner of private property need not auction it nor is he bound to dispose it of at a current market price. the welfare State may be able to expand its beneficent activities by the availability of larger funds. Financial constraint may weaken the tempo of activities. it was observed that the Government is not free like an ordinary individual. In this connection we may profitably refer to Ramana Dayaram Shetty v.

atleast in future dealings of the MML. Only a blind can refuse to perceive it. . Conclusions and recommendations in regard to this Chapter have been made at appropriate places during my discussion in this Chapter and same will be reproduced in the concluding chapter. Let it be made distinctly clear that respondent No. He surreptitiously ingratiated himself by a back-door entry giving a minor raise in the bid and in the process usurped the most undeserved benefit which was exposed to the hilt in the court. but if it does so. The law is now well-settled that the Government need not/deal with anyone. 4 was not selected for any special purpose or to satisfy ally Directive Principles of State Policy. then the finances of the company could have been far better than what it is today.223 and it cannot choose to deal with any person it pleases in its absolute and unfettered discretion.” (Emphasis supplied) If the people managing the affairs of the MML were to keep in mind the above principles. It is high time that the State also takes notice of this fact and issue suitable directions to the people in management of the MML to follow the above directions of the Hon’ble Apex Court. it must do so fairly and without discretion and without unfair procedure.

48 hectares of prime iron ore bearing lands respectively. were given a go by and allotments were made to the applicants on considerations other than merit.RESERVED AREAS TO DIFFERENT APPLICANTS. de-reserved for private mining an area of 11. (ii) The Government in its orders vide notifications No.832. in Government order No. under section 7(2A) of the Lokayukta Act.620 square kms in the State. to create more employment opportunities in private sector. to attract private capital and professional management for optimal use of State mineral resources. . CI 164 MMM 2006 dated 12th March 2007. which has paved way for distribution of public assets to select private individuals/entities without regard to their professional or technical or business background. The main objectives behind de-reservation i. (viii)…………………. to the Lokayukta for investigation. to encourage mining based industries. is as follows:“………………………………………………. Another matter referred by the Government. CI 33 MMM 1994 both dated 15-03-2003. CI 16 MMM 2003 and No.e. (iii) The entire exercise was undertaken in a manner so as to benefit only a select few individuals/entities. meant for State exploitation / mining by the public sector and notified the surrender of an area of 6. (iv)…………………….224 CHAPTER X ALLEGATION OF IRREGULARITIES AND ILLEGALITIES IN DE-RESERVATION AND ALLOTMENT OF DE.

Out of them 122. irregularities.84 square kms) of area for exploitation by the Government or Government undertakings like Board of Mineral Development of Karnataka Government etc. During 1960s to 1980s public sectors were expected to play dominant role in the country’s economic development.780.09 square miles (316. (a) Various alleged illegalities. List of those 42 blocks with necessary particulars are given in the Table below:- .……………… ( b)……………………………………………… (c)………………………………………………. events.16 square kms) of area have been leased for mining. issues executive and other decisions set out in clauses (i) to (viii) and to assess the quantum of losses to the Government and to suggest remedial measures to undo such irregularities and illegalities. the Government of Karnataka reserved in 42 blocks about 10.225 Now therefore the Government of Karnataka hereby refers the following issues to the Lokayukta for thorough investigation and submission of report to the Government.340.12 square miles (26. In furtherance of that policy by different notifications.” 2.

Km 6 7 2890.84) 2820. 6 Block No. Block No Location (District) Extent of the blocks reserved (SQ.Miles) Sq.34 398.81) 196.26 (4.47 203. 1 Block No.00) 398.09 (0.08) 800.38 813.14 655.15) 0.Km.76) 7.16) 70.07 1253. Reserved Minerals No.67 -doArea proposed for Dereservation SQ. Iron Ore Iron Ore Manganese & Iron Ore Manganese Ore Iron Ore 9 Nil Nil 10 51 314 78.19 (480.85) 131. 3 Block No.57) 1244.86 (50.34 Nil 6 253 7 8 Iron Ore Iron Ore 484 -do- Nil -do- . 5 Block No.44 (27.09 (154.70 (309. 7(A) 3 4 5 3 Manganese & Iron Ore Titani ferrous. 2 Block No.Miles. Miles) Sq. Remarks 1 1 2 2 Block No.57 Nil Nil (75.03) 0.51 Nil Nil (252.86 Nil Nil 132.226 TABLE RESERVED AREA Sl.43) 8. 8 (1088. 7 Block No. 4 Block No. Km) Extent of Mining leases sanctione d (SQ.49 (2.56 (3.97) 655.92) 12.88 -do-doArea proposed to retain under reservation (SQ. Miles) 4 North Kanara North Kanara North Kanara Shimoga Shimoga and Chickmagalu r Shimoga & South Kanara Chikkamagal ur -do5 1116 154 Extent of the block reserved (Sq.27 (0.

24 (471. Block No. Iron Ore China Clay Hassan 75.80 Nil Nil (44.78) 325.08) 0.57 (78.25 (2.15 17 18 China Clay Fire Clay Shimoga Bangalore 314 78.77 11 12 13 14 15 Block No.89 Nil Nil Nil Nil Nil (72.07 Nil Nil Nil Nil (72. 15.20 Nil Nil Nil Nil (313.33 Hassan 314 (312.49 (0. 9 Shimoga 129. 18(B) Block No.08 (17. 10 Block No.07) 1.00 334.91 813.80 203.02 (136.19) 0.23) 60. 16 Block No.00 1067.33 Nil Nil (125. 8 Titani ferrous Iron Ore and Chromite Titani ferrous Iron Ore and Chromite Iron Ore Iron Ore Iron Ore Iron Ore Shimoga 45.64 (23. 14.67) 6.00 471.10 813. 18(C) Block No.57 (78. 19 South Kanara South Kanara South Kanara Bellary 412.11 (3.20) 3.28 .00 19 Graphite Kolar 78.00) 352.89 Nil Nil 248.00 136.24 Nil Nil 1219.00 116. 13.49 (0.93) 813.05 352.227 9 Block No. 12 Block No.26 (1.78) 46.22) 8.00 96.16 (394.31) 0.38) 203.00) 1219. 18(A) Block No.74 10 Block No.47 16 Titani ferrous. 11 Block No. & 17.80) 810.00 194.26 (0.22) 1021.33) 187.49) 203.49 203.69) 115.77) 188.55 (0.

32.10 469.25 203.72) 403. 24 Block No. 20 Garnet Kolar 78.57)*203.60) 4.31.00 116.38) 65. 21 22 23 24 25 26 27 28 29 Block No.86 300.21 (78. 25 Block No. 26 Block No.26 (1.04 (25.57) 809.34 & 35.00 813.72) 1.77) 4.35 (47. 21 Block No.49 (0.57 78.57 203.67 (77.27 203.57 78.14 124.55 (312.40) 125.228 20 Block No.28) 122.3 Dolomite 3.58 203.44 Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil (312.57 50.57) 203.43) 3.73 Nil Nil (155.49 (48. And 30. 23 Block No.23) 808. Bijapur 181.70 813.49 (0.69) 201.49 (78.50 (1.26 (1.49 Nil Nil 203. 27 Block No.57) 203.57 78.47) 203. 28 Block No.10) 0. 29 Asbestos Magnesite Feldspar Feldspar Vermiculite Vermiculite Pyrite Chromite Limestone Hassan Mysore Kolar Hassan Hassan Hassan Chitradurga Mysore Chitradurga 314.23 (78.00 78.31 .4 4* *Already Dereserved from the reservati on.32 90.49 Nil Nil 129. 22 Block No.88) 2.45 (116.00 48.00 314.00)*300. 30 Block Limestone No.49 Nil Nil Nil Nil (78.49 * *Already Dereserved from the reservati on.

Whole Karnatak a State reserved.5 (0.16) 0.10 (1187.2 (0.20) 166.6 (0. 36 Bauxite Karnataka State Whole Karnatak a State reserved. 39 Block No.84 2080 972.83) 2.94 (1. Shimoga and Chickmagalu r Mysore Mysore South Kanara Mandya 66 170. 38 Chromite 34 35 36 37 Block No.08 . 42 Chromite Kyanite Kyanite Kyanite Chitradurga.14 5387.229 31 Block No.66 Nil Nil (64.62) 2519.82 46.84) 5386.80) 46.01) 3074. 41 Block No.1 Nil Nil 3076.35 Nil (972.27 17.8 1187. 40 Block No. 32 Block No.41 2519.80) 4.20) 0. 37 Magnesite Karnataka State - - - - - - 33 Block No.51 Nil Nil Nil Nil (2079.78 Nil Nil (17.

The details regarding the nature of the area (reserved forest lands or revenue lands) proposed for de-reservation may be furnished by the DMG for record. In a meeting with the then Minister for Mines Sri D. . (a) Extents required for public sector may be identified and kept reserved. After receiving repeated letters from the Central Government and a letter dated 10-02-1994 from the Director of Mines and Geology (in short Director) the State Government initiated action in file No. 3. it was decided that mining areas in reserved forest areas may be continued as reserved for State exploitation and that decision was recorded by the Joint Secretary in para 22 n.230 3. 1993 announced by the Government of India.A.Chinnappa held on 21-03-1994. of the file.f.“ As far as I remember the decision in the meeting was . In pursuance to the National Mineral Policy.” xxx xxx xxx and The above note was approved by Secretary -2 Secretary -1 noted as follows in para 24 n. Relevant portion thereof reads thus:“2. among others.. CI 33 MMM 1994 to consider de-reservation of reserved lands. focus has shifted to provide opportunities and encouragement to private sector in mining and the Government of India wanted the State Governments to consider whether any of those reserved areas could be de-reserved for faster development and thrown open for exploitation by private parties. Mining areas in reserved forest areas may be continued as reserved for State exploitation wherever such reservations have been made. as part of continuing exercise of economic reforms.f.

In pursuance to that letter the Director sent a reply dated 29-12- 1994. (c) Other lands could be recommended for de-reservation. manganese. Two statements. from letter to letter.Jayaram on 19-04-1995 and . In none of them he has given the nature of the land in individual blocks.231 (b) Extents covered by reserved forests continue to be kept reserved. Minister may please see before we take action as above. one indicating the blocks proposed to be dereserved and another indicating the blocks proposed to be retained as reserved. were enclosed to that reply. the extent of lands to be reserved and de-reserved.f. from time to time. sent many letters to the Government on this subject. Director for M&G was to furnish details on the basis of the above after which approval of the Minister and if necessary of Cabinet may be obtained before recommending to GOI. chromite and lime-stone (steel grade) should still be kept reserved.” Above note was approved by the Minister in para 25 n. it was felt that there may be need to de-reserve all other areas except for areas where abundant forest wealth exist to ensure protection of environment” but the letter does not indicate the nature of the lands in individual blocks (whether reserved forest or revenue land) mentioned in the two statements. and the Director was asked by letter dated 08-04-1994 to send the information specified in the note of the Secretary-1 at para 24 n.D. Other than the above reservation. 4. The Director has.f. There was a change of Minister and a meeting was held under the chairmanship of the new Minister Sri S. That reply states that “it is decided that mineralized areas atleast in respect of iron. He has gone on changing.

EzÀgÀ°è PÀ©âtzÀ C¢gÀÄ ªÀiÁåAUÀ¤Ã¸ï ªÀÄvÀÄÛ ¹Öïï UÉÃqï æ ¸ÀÄtÚzÀ ¤PÉëÃ¥À«gÀĪÀ G½zÀ ¸ÀĪÀiÁgÀÄ 7000 r. chromite and lime-stone (steel grade) should still be kept reserved. In more than one letter the Director has been asked to send fresh proposals. PÁémïìð EvÁå¢ R¤dUÀ¼À ¤PÉëÃ¥ÀU¼£ÉÆß¼ÀUÉÆAqÀ MmÁÖgÉ À À ¸ÀĪÀiÁgÀÄ 44.) reads thus.j¸Àªïð ZÀ. eÉÃr ªÀÄtÄÚ.f.f. is as follows. it is decided that mineralized areas atleast in respect of iron. manganese.” 5. No definite decision was taken in the meeting dated 19-04-1995 except asking the Director to send fresh proposal. Other than the above reservation it was felt that there may be need to de-reserve all other areas except for areas where abundant forest wealth exist to ensure protection of environment.44 c. and at pages 104 -106 c. ªÀiÁåAUÀ¤Ã¸ï. The relevant portion of the letter at pages 40-44 c.f. ¸ÀÄtÚzÀ PÀ®Äè. is as follows.“The de-reservation is proposed only for non forest areas and non-mineralized zones keeping the forest areas intact under .Q«Äà ¥ÀzñÀª£ÀÄß æ É À «ÄøÀ°lÄÖ ¥ÀzñÀª£ÀÄß æ É À ªÀiÁqÀ§ºÀÄzÉAzÀÄ wêÀiÁð¤¸À¯Á¬ÄvÀÄ.000/ZÀ.“In this connection during deliberations at Government level and keeping in view the policy of the State Government to promote industrialization based on mineral resources. The decision taken in the above said meetings is reflected in the letters of the Director to Government at pages 40 .232 again on 20-08-1997.f.f. “J¯Áè jÃwAiÀÄ PÀ©âtzÀ C¢gÀÄ. PÁåAiÀÄ£ÉÊmï.Q«Äà ¥ÀzñÀª£ÀÄß æ É À gÁdåzÀ G¥ÀAiÉÆÃUÀPÁÌV «ÄøÀ¯ÁVqÀ¯ÁVzÀÄÝ. especially in steel sector.” Relevant portion in the letter at pages 104-106 c. Relevant portion of the proceedings of the meeting dated 20-08-1997 signed by the Minister (page 67 c.

Among others. On 30-11-2000 the Government of India held a meeting with State Government and on behalf of the State Government the Director attended the meeting. He was asked to clarify the matter immediately. the following were decided:1. De-reservation of areas is proposed both mineral and area-wise. relevant portion of the decision taken in the meeting is recorded in the proceedings as follows. After detailed discussions. strategic mineral bearing areas such as iron.233 reservation. It was decided that for mineral iron ore and manganese. but the Government. Most of the mineral bearing areas at present under reservation were in thick forest areas and they are also ecologically fragile areas.” After the meeting dated 20-08-1997 the Director was informed by letter dated 29-11-1997 that his letters are not specific about the extent of the lands to be de-reserved and to be retained as reserved. “03. since they would like to conserve . Minutes thereof was sent to the State Government by the Central Government on 04-01-2000. could not get a reply till the end of 2000. The State Government was not in favour of de-reserving these areas for exploitation by private sector. in spite of repeated reminders orally and in writing. While forest areas have been reserved even in the non-mineralized areas. there was no scope for de-reservation. manganese chromite and lime-stone (steel grade)have been retained under reserved category. Therefore there will not be any ecological imbalance or environmental degradation due to the proposed dereservation.

It was decided that the State Government would send a detailed proposal for reservation of these areas under section 17A(1) of M&M (DR) Act 1957 to the Central Government. 4. chromite. who would thereafter take further action as per law. graphite. dolomite. Mile) in the Bellary region for iron ore for exclusive State exploitation. The mineral bearing areas which have been reserved for titani ferrous iron ore. The list of such areas is appended at Annexure-II. fire clay. The areas which were reserved at the reference of the Central Government or in consultation with the Central Government will be dereserved after due consultation with the Central Government. bauxite. feldspar. kyamite etc.Muniyappa discussed the matter with the Director and on 19-05-2001 recorded his order. magnesite. which are in the non-ecologically fragile regions of the State are proposed to be de-reserved by the State Government to enable the Private Entrepreneurs to apply for mineral concessions in such areas. The State Government will de-reserve these areas after observance of due process of law.f.) which is almost illegible or undecipherable. 2.234 the minerals in these areas.6 Sq.Km (96 Sq. The State Government desired to continue the reservation in respect of 248. asbestos. (I am not able to read the note made by the Secretary). 3. garnet. The list of such areas is appended as Annexure-1. relevant portion of which reads as follows. pyrite.- .” The file was sent to the Secretary on 17-04-2001. Secretary sent the file to the then Minister with a hand written note (178 n. vermiculite. The Minister Sri A. limestone.

80 ºÁ¸À£À 75.15.64 (23.235 “180) ¤zÉÃð±ÀPgÀÄ. CªÀÅUÀ¼À ¸ÀÄvÀÛªÀÄÄvÀÛ®Æ CAvÀºÀ CgÀtå ¥ÀzñÀU¼ÀÄ E®èzÉ EgÀĪÀ æ É À ¥ÀzñÀU¼£ÀÄß ¸ÀºÁ r-j¸Àªïð ªÀiÁqÀ¨ÃPÁVgÀĪÀ CA±À £À£Àß UÀªÀÄ£ÀPÉÌ æ É À À É §A¢zÀÄÝ.91 72.10 «¹ÛÃtðªÀ£ÀÄß PÀå¢j¸ÀĪÀ ¥ÀnÖ¬ÄAzÀ C£ÉPÀë÷gï – 1 jAzÀ vÉUzÀÄ r – Ñ É j¸Àªïð ªÀiÁqÀĪÀ §UÉÎ PÀæªÀÄ vÉUzÀÄPÉƼÀî®Ä ¸ÀÆa¹zÉ.17 2 13 16 Titani ferrous PÀ©âtzÀ C¢gÀÄ 3 14 18A ZÉÊ£Á PÉèà ºÁ¸À£À 314.26 (1. F ¥ÀzñÀU¼ÀÄ §AiÀÄ®Ä ¹ÃªÉÄ ¥ÀzñÀUÀ¼ÁVgÀĪÀÅzÀjAzÀ F æ É À æ É ¥ÀzñÀU¼°è vÉÆÃj¹gÀĪÀ æ É À À 1 12 ¨ÁèPï £ÀA§gï 13.67) 6. Annexure II UÀ¼£ÀÄß À ªÀÄÄRåªÁV MMDR-1957 PÁAiÉÄÝ ªÀÄvÀÄÛ MCR – 1960 EzÀgrAiÀÄ°è À PÉ®ªÀÅ ¥ÀzÉñÀUÀ¼£ÀÄß PÁ¬ÄÝj¸ÀĪÀ §UÉÎ ¸ÀPÁðgÀzÀ ªÀÄvÀÄÛ IBM æ À ZÀað¸ÀĪÀ CgÀtå ¸ÀªÀÄAiÀÄzÀ°è ¥ÀzñÀUÀ¼£ÀÄß æ É À FUÁUÀ¯Ã É PÁ¬ÄÝj¸ÀĪÀ EªÀgÀ ªÀg¢UÀ¼ÀÄ MAzÉà vÀgÀºÀ EgÀĪÀÅzÀÄ ªÀåPÀÛªÁUÀÄvÀÛz. À À ¤zÉÃð±ÀPgÀÄ À EvÀgg£ÉÆß¼ÀUÉÆAqÀ À À ªÀiÁUÀð¸ÀÆa ªÀÄvÀÄÛ PÉÃAzÀæ ¸ÀPÁðgÀzÀ »jAiÀÄ C¢üPÁjUÀ¼ÀÄ ªÀÄvÀÄÛ E¯ÁSÁ vÉUzÀÄPÉÆAqÀ ¤tðAiÀÄUÀ¼À §UÉÎ ¥Àj²Ã°¹zÉ. É ®¨sÀå«gÀĪÀ R¤dUÀ¼£ÀÄß À G¥ÀAiÉÆÃV¸ÀĪÀÅzÀ®èzÉ CzÉ EzÀjAzÀ C°è ¸ÀÄvÀÛªÀÄÄvÀÛ°£À 312.77 ¥À[gÀzñÀUÀ¼£ÀÄß CgÀtÂåÃPÀgÀtUÉƽ¸ÀĪÀ §UÉÎ PÀªÀÄ vÉUzÀÄPÉƼÀÀÄzÁVzÉ.00 194.” É À æ É . É Annexure I ªÀÄvÀÄÛ FUÁUÀ¯Éà C®èzÉ CzÀPÉÌ ®UÀwÛ¹gÀĪÀ ¥Àj²Ã°¹gÀÄvÉÛãÉ.26) 3.16 72. PÀArPÉU¼£ÀÄß ¥Àj²Ã°¸À¯Á¬ÄvÀÄ.14. UÀt ªÀÄvÀÄÛ ¨sÀÆ«eÁÕ£À E¯ÁSÉ.00 248.25 (2.00 813. PÉÃAzÀæ ¸ÀPÁðgÀzÀ À É C¢üPÁjUÀ¼ÉÆA¢UÉ PÁ¬ÄÝj¸ÀĪÀ PÉ®ªÀÅ ¥ÀzñÀU¼°è §gÀĪÀ PÀ©âtzÀ C¢gÀÄ.23) 60. ªÀiÁåAUÀ¤Ã¸ï EªÀÅUÀ¼À r¥Á¹mï æ É À À Forest Conservation PÁ¥ÁqÀĪÀ zÀȶ֬ÄAzÀ CªÀÅUÀ¼£ÀÄß ºÁUÉAiÉÄà PÁ¬ÄÝj¸ÀĪÀ §UÉÎ ZÀað¹zÀÄÝ À Annexure I gÀ°è §gÀĪÀ PÉ®ªÀÅ ¥ÀzñÀU¼£ÀÄß FUÁUÀ¯Ã G¥ÀAiÉÆÃUÀPÉÌ æ É À À É ¤ÃrzÀÄÝ.33 PÀ©âtzÀ C¢gÀÄ §¼Áîj 96. EªÀgÉÆA¢UÉ ªÀÄÄRå À ¤zÉÃð±ÀPgÀ ¥À¸ÁÛª£É ªÀÄvÀÄÛ ªÉÄð£À À æ À ¤zÉÃð±ÀPÀ ¥À¸ÁÛªÀ£AiÀÄ°è ®UÀwÛ¹gÀĪÀ À æ É ¢£ÁAPÀ: 30-11-2000gÀ ¸À¨AiÀÄ°è sÉ R¤dUÀ¼À §UÉÎ ZÀað¸À¯Á¬ÄvÀÄ.

In para 9(ii) of the cabinet note it is stated as follows:“In the instant proposal. Even Minister Sri A. The excluded blocks 13. 15 and 17 are in Bellary district and are not only high grade iron ore bearing areas . the Director deleted not only the blocks suggested by the Minister but also block 5 (containing manganese ore) which was not suggested by the Minister. dated 19-05-2001. In para 180 n.f.” The lists suggested by the Director was approved by the Cabinet on 1612-2002 and orders reserving or de-reserving the blocks was issued on 15-03-2003. The list prepared and sent by the Director was placed before the Cabinet for approval.f. 17 and 18A. chromite and lime stone (steel grade) as reserved has not been modified subsequently in any meeting. The decision taken by the Ministers in the meetings held on 21- 03-1994 and 20-08-1997 and in the meeting with the Government of India held on 30-11-2000 to continue forest areas and strategic mineral bearing areas such as iron. Annexure –I contains such areas and it is proposed to be retained as ‘reserved’. 7. 14. This aspect was not noticed by the Secretariat. While sending a revised list of blocks to be continued as reserved in the light of the orders of the Minister. it has not been proposed to de-reserve thick forest areas or the ecologically fragile western ghats.Muniyappa has not modified that decision in his order in paras 179-181 n. the Minister took a decision to exclude blocks 13. manganese..236 6. 14. 16. The forest area proposed for dereservation along with non-forest area is that which bereft of any forest cover. after discussion with Director. 15.

In the statements sent by the Director this information is not given in respect of any blocks or land. Block No.- . that they are not forest areas and are “bayalu seeme” is totally opposed to facts. the Government must have been guided by that statements made by the Director. No such details furnished by the Director is found in the file. whether they are forest lands or revenue lands. In the meeting held on 21-03-1994 the Minister wanted the Director to furnish the details regarding the nature of the area proposed for de-reservation i. A perusal of the plans of some of the blocks proposed for dereservation indicates that the said statement is opposed to facts as shown below . In all the letters he has made a bald statement that forest areas are excluded from the lands proposed for de-reservation.e. Without those particulars the Government was not in a position to independently satisfy itself whether any of the lands proposed for de-reservation was forest land or not.f. The concerned Minister and the Director who advised him in the matter are responsible for this irregularity.the statement sent by the Director indicates this) but are also thick reserve forest areas.237 (vide. nature of the land. in underlined portion of para 180 n. On this aspect i. The reason given by the Minister to dereserve them. The Government also did not pursue the matter with the Director to get those particulars. 8.5 which has been excluded by the Director (without the orders of either the Government or the Minister) is manganese ore bearing area.e.

. Lakkahalli State forest Block 40………………. Approval for de-reserving them has been obtained without verifying the nature of the land and by wrongly informing the Cabinet that “it has not been proposed to de-reserve thick forest areas…………… the forest area proposed for de-reservation along with non-forest area is that which is bereft of any forest cover”. Gunda Reserve Forest. Block 29 ……………… Kudure Kanive Kaval State forest. Block24………………. Block -18C………………Gullahalli State forest and Nandagudi State forest. . Gowdanagere State forest.. Jogimatti State forest..238 Block proposed for de-reservation ` Block . It is clear from the above particulars that forest lands including reserve forest has been de-reserved. Forest areas therein Kukwadi Ubrani State forest and Hadikere East State forest Block 8………… Jedikatte Reserve forest and Minor forest. Hadikere East State forest and Kukwadi Ubrani State forest Blocks-13. Government never intended to de-reserve reserve forests and strategic mineral bearing lands but such lands have been de-reserved .14. Hospet Reserve forest and Donimalai Reserved forest. Block 9………. Correct and full information about nature of the lands proposed for de-reservation has not been placed before the Cabinet. Block 22………………. Joga Reserve forest.5………. Bolegoudanakatte Tiger Reserve Reserve forest and Chikkanahalli Preserve forest. Bolegoudanakatte Tiger Reserve Reserve forest and Chikkanahalli Preserve forest. Kolalbore State forest Block 25………………. Block 27……………….15 and 17…Ramgad Reserve forest.

after discussion with the Director ordered dereservation of block Nos. That decision was reiterated in the meeting held on 30-11-2000 with the Government of India but the then Minister.“Forest areas may not be included in the proposed dereservation of mineral bearing areas.f. In the meeting held on 20-08-1997 with the Minister it was decided not to de-reserve blocks having iron ore. Forest Department sent back the file asking for another file on 10-10-2002 and . That order was made without proper verification of the facts and detailed examination of the matter. and sent the file to Principal Secretary on 04-10-2002. 16. extracted in para 5 above. china clay etc. 14. made by him reads thus. 10. Secretary. The Minister did not over rule the decisions taken by the earlier Ministers and in the meeting with the Government of India. The Cabinet Section sent the file to Secretary Forest Department on 28/09/2002 for remarks on the statement in the Cabinet note that “de-reservation is proposed in forest areas which have lost vegetative cover”. Para 233 n.C ..” Principal Secretary.Act.f. 17 and 18A which are very rich in iron ore. on 19-05-2001. chromite and lime stone (steel grade).f. Decision was taken after discussion with the Director and without discussion with the Secretary. 13. stating as in the underlined portion of para 180 n. manganese. Forest Department made a note in paras 232 and 233 n.239 9. That order is contrary to the decisions taken in the meetings with the then Ministers held on 21/03/1994 and 20-08-1997 and with the Government of India on 3011-2000. 15. As and when a forest area is considered absolutely necessary for mining it may be examined on merits for diversion for non-forest activities under the E.

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the Secretary sent the file along with the other file (it does relate to this subject) to the Principal Secretary on 11-10-2002. In para 236 n.f. he observed as follows. “The subject matter of this file is a proposal for dereservation of mineral bearing areas. As proposed at para 233 pre page, forest areas may not be included in the proposed de-reservation”. He approved the note made by the Secretary in para 233 n.f. and sent the file to the Minister of State and Minister for Forest, who approved the notes made by the Principal Secretary. The notes made by the officers of the Forest Department does not clearly indicate whether there is forest in any of the blocks proposed for de-reservation and if there are forest areas whether they have lost vegetative cover and whether the averment in the cabinet note is correct or not. On a perusal of the movement dates of the file it is clear that the Forest Department has not obtained any report from the field officers about the nature of the areas proposed for de-reservation. The information wanted by the Cabinet section was whether the statement in the Cabinet note that de-reservation is proposed in forest areas which have lost vegetative cover is factually correct. That information has not been furnished by the Forest department. Cabinet section did not pursue that matter further. Without getting that information the subject was placed before the Cabinet and the proposal was approved by the Cabinet. The Cabinet has not been informed all relevant and necessary facts. De-reservation order as such is not found in the file but a notification dated 15-03-2003 informing the public that those lands are available for allotment to the public is found in the file It is clear from the above that though the considered decision of the Government was not to de-reserve forest

241

land and strategic mineral bearing areas like iron ore, manganese, chromate and lime stone (steel grade), that aspect was not properly verified and reserve forests and State forests and strategic mineral bearing areas have been de-reserved. The officers of the C&I Department, Cabinet section and the Secretary and Principal Secretary Forest Department who dealt with the file are responsible for it. Officers and public servants responsible for allowing de-reservation of the mining areas which fall within the forest area will be identified and named in the next part of the Report. 11. In notification dated 12th March 2007 the Government required

the Lokayukta to investigate illegalities and irregularities in the distribution of de-reserved lands to persons who have applied for mining leases. The scope of investigation as per Notification dated 12/3/2007 is for the period from 1/1/2000 to 22/7/2006. It is stated that no mining lease has been granted till 2006. The scope of

investigation has been extended till 9/9/2008 by the Government and hence illegalities and irregularities in the distribution of deserved lands will be investigated and findings in that regard will be given in the next part of the Report. 12. According to the Government order dated 12-03-2007 de-

reservation of reserved areas was ordered in another file i.e. file No. CI 16 MMM 2003 also. The said file was not available. Hence it is not possible to examine the same. According to the recent news paper reports mining leases granted in reserve forests in de-reserved areas have been quashed by the High Court.

CHAPTER XI EVALUATION OF CASES RELATING TO ILLEGAL TRANSFER OF MINING LEASES One of the matters referred by the Government of Karnataka in their Order No. CI 164 MMM 2006 dated 12th March 2007 for investigation and Report under Sec. 7(2A) of the Lokayukta Act, is to fix responsibility and initiate suitable action against all public servants for various acts of omission and commission leading to various illegalities in transfer of leases from one lease holder to another. 2. Transfer of Mining leases are governed by Rules 37, 37A and

46 of the M.C Rules framed under the M&M (D&R) Act. The said Rules read thus:“37. Transfer of lease:- (1) The lessee shall not, without the previous consent in writing of the State Government and in the case of mining lease in respect of any mineral specified in Part A and Part B of the First Schedule to the Act, without the previous approval of the Central Government – (a) assign, sublet, mortgage or in any other manner, transfer the mining lease, or any right, title or interest therein, or (b) enter into or make any bonafide arrangement, contract or understanding whereby the lessee will or may be directly or indirectly financed to a substantial extent by, or under which the lessee’s operations or

243

undertakings will or may be substantially controlled by, any person or body of persons other than the lessee. Provided further that where the mortgagee is an institution or a Bank or a Corporation specified in Schedule V, it shall not be necessary for the lessee to obtain any such consent of the State Government. (1A) The State Government shall not give its consent to transfer of mining lease unless the transferee has accepted all the conditions and liabilities which the transferor was having in respect of such mining lease. (2) Without prejudice to the provisions of sub-rule (1) the lessee may, transfer his lease or any right, title or interest therein to a person who has filed an affidavit stating that he has filed an up-to-date income-tax returns, paid the income tax assessed on him and paid the income tax on the basis of self-assessment as provided in the Income Tax Act, 1961(43 of 1961), on payment of a fee of five hundred rupees to the State Government: Provided that the lessee shall make available to the transferee the original or certified copies of all plans of abandoned workings in the area and in a belt 65 meters wide surrounding it ; Provided further that where the mortgagee is an institution or a Bank or a Corporation specified in Schedule V, it shall not be necessary for any such institution or Bank or Corporation to meet with the requirement relating to income tax ;

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Provided further that the lessee shall not charge or accept from the transferee any premium in addition to the sum spent by him, in obtaining the lease, and for conducting all or any of the operations referred to in rule 30 in or over the land leased to him; (3) The State Government may, by order in writing determine any lease at any time if the lessee has, in the opinion of the State Government, committed a breach of any of the provisions of sub-rule (1) or sub-rule (1A) or has transferred any lease or any right, title or interest therein otherwise than in accordance with sub-rule (2); Provided that no such order shall be made without giving the lessee a reasonable opportunity of stating his case. 37A. Transfer of lease to be executed within three months. – Where on an application for transfer of mining lease under rule 37, the State Government have given consent for transfer of such lease, a transfer lease deed in Form O or a form as near thereto, as possible, shall be executed within three months of the date of the consent, or within such further period as the State Government may allow in this behalf. xxxx xxxx 46. Transfer or assignment. – (1) No prospecting licence or mining lease or any right, title or interest in such licence or lease shall be transferred to a person unless he has filed an affidavit stating that he has filed an up to date income tax xxxx xxxx

1961( 43 of 1961). (2) No prospecting licence or mining lease or any right. Thippenahalli Village. title or interest in such licence or lease in respect of any mineral specified in the First Schedule to the Act shall be transferred except with the previous approval of the Central Government. Sri Sharat Babu and M/s. Sharat Babu : M/s. The transfer was approved by the Government of Karnataka in Order No. No.245 return. (1) Transfer of Mining Lease No. Maharishi Melthems Private Limited.39.2370 for White Quartz in R. Maharishi Melthems (P) Limited. Madhugiri Taluk. Transferor Transferee : Sri T. on 17/1/2004 applied to the Director of Mines and Geology for transfer of M.” 3.S.02 Hectare. The files do not speak about the registration of the said document. CI 30 MMM 2004 dated 17th March 2004.L. No. Tumkur District over an extent of 2. Out of which in the following 4 cases illegalities were found. paid the income tax assessed on him and paid the income tax on the basis of self-assessment as provided in the Income Tax Act. Records relating to 22 cases were considered. Transfer deed was executed on 27/03/2004. There is no evidence in the files regarding registration of the transfer deed as .2370 in favour of M/s. Maharishi Melthems Private Limited.

According to Rule 37A of M. The Mining Lease No. Tarikere. The Director of Mines and Geology has not taken any action in the matter.30 Hectare in parts of Kappanayakanahalli and other villages of Hosadurga Taluk. Mysore Minerals Limited filed an application for renewal on 3rd April 1999 for 105 hectare. was to expire on 7th April 2001.C Rules.2342) for limestone over an extent of 111. Mysore Minerals Limited to surrender the Forest Area of 813. Department of Forests. a Public Sector undertaking. Kappanayakanahalli. Madras Cements Limited. M/s. Mysore Minerals Limited. : M/s.65 hectare and apply for renewal for the balance area of 105 hectares. Accordingly. The Director of Mines and Geology by Notification . To that extent the transfer deed is defective. Transferor Transferee (a) : M/s.1742 held by M/s. over an extent of 918. Ecology and Environment advised M/s. The Principal Secretary to the Government of Karnataka.1742 (New No. such registration must be done within 3 months of the execution of the transfer deed. That period has expired long back. Balenahalli and other villages of Hosadurga Taluk. The Rules are silent about the consequences of not registering the transfer deed as required by Rule 37A.246 required by Rule 37A of the Rules. (2) Renewal and Transfer case of Mining Lease No. Mysore Minerals Limited. Chitradurga District.65 hectare for Limestone and dolomite in parts of Mathod.

Copy of the note is not forthcoming in the file. Mysore Minerals Limited for surrender of M. Mysore Minerals Limited evaluated the development cost at Rs.65 hectares. The Board decided that surrender of lease could be considered after collecting Rs. The Board of Directors opined that the cost of development of the mine incurred by M/s. The Technical Consultancy Division of M/s. Mysore Minerals Limited held on 10/5/2001.78. Madras Cements Limited. The neutral assessor evaluated the cost at Rs.515/. Mysore Minerals Limited was to be assessed and to be recovered from the Cement Company before considering surrender of the lease.66. Director of Mines and Geology/62/MML/ 99/14991-97 dated 31. it was decided to get the infrastructure cost evaluated through a neutral assessor agreed to by both the parties.2342 was executed on 28th March 2002.12.30 hectares of leased land.1742. The matter was placed before the 232nd Board Meeting of M/s.L.in respect of 111.3.2001/03. Muniyappa had reportedly sent a note bearing No. No.95. Director of Mines and Geology/1184/99-2000 dated 7/2/2000 advising M/s.for the entire area of 918.60 Lakh from M/s. after discussion in a meeting held in the chambers of the Hon’ble Minister for Mines and Geology on 2/3/2001. Renewed lease deed No. The Board further resolved to authorize the Managing .247 No.2002 sanctioned renewal of mining lease over an extent of 111 hectare.46.01. (b) When the application for renewal was pending the then Minister for Mines and Geology Sri V.257/. However.

L. No.1975 for Manganese. the transfer of the lease was approved by the Government after the renewal of the lease.89 of Mudalapalya of Gubbi Taluk.84 of Kondli Village and R. Amar Singh : M/s.C Rules. No.1742 in favour of M/s. (d) Till the renewal of the lease by the order of the Director The dated 31. Dolomite.S. Madras Cements Limited.L. committed in this case. No.1.S. Hence the application for transfer of a portion of the lease made earlier to the date of renewal is not valid in law. Iron ore. . Limestone. Manganese –dioxide. Madras Cements Limited. This irregularity is However.12. Mysore Minerals Limited in favour of M/s. No.R. the transferor and the transferee applied for transfer of M. This aspect is clear from the Model Form of the deed of transfer at Form ‘O’ of Schedule I to the M.2342 (New Number) held by M/s.248 Director to move the Government to approve the transfer of lease No. Matha Minerals Private Limited. Transferor Transferee : Sri B. Tumkur District. clay and ochre over an extent of 320 acre in R. (c) In compliance to the said decision. (3) Transfer of Lease M. M&M (D&R) Act and the M.C Rules do not provide for transfer of a portion of the lease. CI 127 MMM 2001 dated 7/6/2002 approved the transfer and the transfer deed was executed on 10/7/2002.2001/3. The Government of Karnataka in their order No.2002 the old lease continued in force.

Puttaraju who filed the letter of request as a Director of the Company on 29/8/2002 was authorized to discharge the duties as Director only on 16/10/2002. UO 1429 KA 2002 PTC 03094. of Karnataka in their letter No. wherein there was an observation about the recovery of the value of manganese ore illegally exploited from M. No. Matha Minerals Private Limited. CI 93 MMM 2002 dated 14th November 2002 sought clarification from the Director of Mines and Geology about the amount due to the Government by the transferor and the action taken by the Department of Mines and Geology over the report of the Comptroller and Auditor General (CAG) for the period ending 31st March 2000. M. the letter of request filed by Sri S. Basappa Reddy forwarded the applications recommending transfer of M.L. Commerce and Industries Department through the Director of Mines and Geology requesting grant of permission for transfer and acceptance of the subject lease.1975 in favour of M/s. Matha Minerals Private Limited on 29/8/2002 as a transferee was invalid. The Government also opined . Matha Minerals Private Limited were yet to be incorporated as a Company. They were incorporated on 2nd September 2002 vide CIN No. In the circumstances.249 The transferor and transferee filed applications dated 29th August 2002 respectively to the Secretary to Govt. Puttaraju on behalf of M/s.B.L No.S. In spite of this infirmity. M/s. The Govt. As on the date of filing the application (29th August 2002). the Director of Mines and Geology Dr. Sri B. of Karnataka.1975.

12.2002. Transfer deed was executed in post-haste on 29/01/2003.250 that the transfer of mining lease be considered only after the submission of compliance report and its acceptance by CAG of India.2003/ 04.2002 with inward No.2003 by the Director of .53.due to the Government by the lessee would be recovered from the transferee before the transfer if such an order is made by the Government and the amount relating to the value of manganese ore illegally extracted as observed by the CAG would also be recovered form the transferee. The Director of Mines and Geology made a counter recommendation stating that amount of Rs. Shivasandra Minerals Private Limited. of Karnataka vide their order No.12. On 24. He further requested the Government to accord sanction for transfer of subject mining lease.1975 in favour of M/s. the Govt. the transferor made a revised request to permit him to transfer the subject mining lease in favour of a Company by name M/s. The revised application filed by Sri B. Shivasandra Minerals Private Limited dated 12. The Director of Mines and Geology ignored the revised request and in the meanwhile. Amar Singh and M/s.051/. Matha Minerals Private Limited.03. CI 93 MMM 2002 dated 28/1/2003 accorded approval for transfer of Mining Lease No.13563 dated 23/12/2002 of the Department of Mines and Geology was returned on 11.02.

The Writ Petition was dismissed by the Hon’ble High Court. the notarized affidavit and letters of request as transferee filed by Sri B. Puttaraju on 29/8/2002 are invalid. Order No. (b) Sri B.R. (29/08/2002) the transferor firm had not yet been incorporated. (c) In the said context.P No. (e) When the Government insisted recovery of the amount due being the value of illegally mined manganese ore by the lessee . 15378/2004 before the Hon’ble High Court of Karnataka questioning the validity of Govt. the Director of Mines and Geology miscommunicated the amount due according to the report of CAG. The transferor Sri B. Puttaraju who signed as the authorized representative of the transferee was vested with such powers only on 16/10/2002 subsequent to the date of filing the letter of request on 29/8/2002. CI 93 MMM 2002 dated 28/1/2003.paid towards the transfer fee. (d) While replying to the letter of objection dated 14/11/2002 of the Govt.251 Mines and Geology along with draft for Rs. Amar Singh died on 25th June 2003.S. of Karnataka.500/. The transfer application and the process thereon had several deficiencies as listed below:(a) As on the date of filing the applications for transfer.S. His widow filed W.

of Karnataka while approving the request for transfer vide No. Shivasandra Minerals Private Limited. CAG observation/objection relating to a sum of Rs. (g) The Govt.as the amount recoverable towards CAG observation on revenue receipts. . the Government approved the transfer and the Director permitted the execution of transfer lease deed in post-haste (Government sanctioned transfer on 28/1/2003. transfer deed was executed on 29/1/2003). CI 93 MMM 2002 dated 28/1/2003 mixed up issues and incorporated Rs. (h) Without resolving the observation (Audit Objection) of CAG the Director of Mines and Geology recommended the proposed transfer.2507. Value of the illegally mined manganese ore is an amount legally due to the Government. the Director makes a conditional recommendation for transfer. Provision should have been made in the transfer deed about recovery of that amount or collection of that amount before approving the transfer if the objection raised by CAG is not explained to the satisfaction of CAG.74 Lakhs being the value of manganese ore illegally mined by Sri Amar Singh has been ignored. (f) The Director of Mines and Geology suppressed to bring it to the notice of the sanctioning authority the particulars relating to the revised application dated 24/12/2002 filed by the transferor in favour of M/s.53.051/.252 as observed in the CAG Report.

253 Government letter dated 14/11/2002 mentions about this amount.L. Transferor Transferee : M/s. Iron Ore and China Clay over an extent of 12 Acre (4. Renewed lease deed was executed on 10/6/2002 as . CONCLUSION:. Mineral Enterprises (P) Limited : M/s. Loss suffered thereby must be recovered from the concerned persons in the Director’s office and in the Government who are responsible for the approval and execution of the transfer deed. Chikkanayakanahalli Taluk. No. of Karnataka. The M. Order No. if the objection raised by CAG is not explained to his satisfaction both the then Director and the officers of the Government who took part in the approval and execution of the transfer deed are liable to make good that amount. CI 152 MMM 98 dated 22/8/2000.1061 was renewed for a period of 20 years with effect from 3/12/1991 vide Govt. Teja Works.S.86 Hectare) in R. Tumkur District. It indicates that Government was aware of the CAG Report. No.Ignoring the CAG observation and permitting transfer of the lease without explaining the objection of CAG to his satisfaction or providing for the recovery of the amount objected to by the CAG is improper on the part of the Director and the Govt.37 of Sondenahalli. (4) Transfer of Mining Lease No.2353 for Manganese.

Rule 37 A is silent about the effect of non-execution of the transfer deed within the period specified therein.C Rules. Teja Works. The responsibilities in regard to the irregularities in the above cases will be fixed and persons responsible will be named in the next part of the Report. of Karnataka by the Director of Mines and Geology.L. the transferor and M/s. the transferee applied for transfer and acceptance of M. The transfer deed was executed on 13/6/2005 i.L.2353. Chikkanayakanahalli on technical grounds. In the circumstances. M/s. As per Rule 37A of M.2353. Mineral Enterprises.2353 on 16/12/2003 along with documents as specified under Rule 37 of M. The file does not speak of any extension of the period. No. The transfer request was recommended to the Govt.e. CI 130 MMM 2004 dated 15/2/2005 accorded sanction for transfer of ML No. Further status regarding registration of the lease deed is not forthcoming in the file. the transfer lease is to be executed within 3 months from the date of the order approving the transfer or within such further period as the Government may allow in this behalf. Registration of the transfer deed was refused by the Sub-Registrar.C Rules. of Karnataka in their order No. No. after a lapse of 3 months and 29 days. .254 M. The Govt. the transfer deed is defective to that extent.

this report reflects the shortcomings. Though. in other areas also. in reality. Though the type of shortcomings. my team could not inspect and investigate all the mines situated in the said District. will be made separately in the next part of the report. illegalities and irregularities in the mining activities in the State of Karnataka with specific emphasis on Bellary District.e. this part of the report will comment on what has been noticed by me and by my team during inspection of the areas visited by us. both as to its actual area and location. . illegalities and irregularities with specific reference to some of the mines visited by me or my team. that is at the stage of granting of mining lease itself. which would also cover the period upto 2008. details in this regard are not very elaborate. (i) Illegality and Irregularity in grant of lease The illegalities and irregularities in the mining sector starts from the very beginning. Though the law requires the licensing authority i. Therefore. the State to be satisfied as to the areas sought to be granted on lease for mining. SUGGESTIONS AND RECOMMENDATIONS From the facts recorded already in this report. a more detailed report in regard to those areas and mines to which no reference has been made in this report. Even in regard to Bellary District.CHAPTER XII CONCLUSIONS. Hence. illegalities and irregularities are likely to be common. I have noted very many shortcomings. investigations have been made as to this type of activities in the districts of Chitradurga and Tumkur also. it does not always happen.

Forest. these reports are prepared not by visiting the area mentioned in the application and cross-checking the same with the local records. forest land. but. it also gives rise to disputes between different lease holders. there is a need for a proper verification system with mandatory spot inspection and demarcation and marking of the boundaries of the lands sought for mining in conformity with the survey reports. Normally. This type of nonverified grant of mining lease gives rise to illegal mining in gomala land. land records and other relevant documents. There are cases where mining applications are made without even knowing the existence of the area sought for mining. by sitting in their respective offices. Leases are sought only with a view to hold a mining licence and then to misuse the same by using the said document for doing illegal mining elsewhere. Revenue. There should be periodical inspection by superior officers to keep a check on the mining activities.256 I have noticed in most cases where particulars of the area sought for mining are mentioned in the application for grant of lease. but the same is factually not correct. as the case may be. available with the local officials concerned. The same though has to be cross-checked and inspected by the concerned officials of the Department of Mines and Geology. as seen during my visit to the three districts. Lack of such checking is noted by me in this report earlier. the said exercise is not properly done. Therefore. Even the applicants very often do not even do preliminary prospecting to find out whether mineral sought to be excavated by them is really available in the area sought for lease by them or whether scientific and economically viable mining is possible in these areas. Local authorities should also be .

indulge in mining in forest areas. Though most of these suggestions find place in the statute itself. aid and abet illegal mining activities in the forest area. it must be done in the interest of State as well as in the interest of conducting scientific mining activities. it is not being adhered to. these buffer zones in very many . though. as to the nature of land. same should be cross-verified. so. This procedure could be time consuming. large extent of forest land is also used for construction of roads and for dumping mineral waste. in such areas. very often in collusion with the concerned officials. I have also noticed that apart from illegal mining activities in the forest area. where holder of mining lease or even others who do not have any mining lease. the officials concerned have not taken any steps to prevent these illegal activities. Such officials should be taken to task. This especially happens when the mining leases are granted near about the vicinity of the forest area.257 held responsible for preventing illegal mining. but. especially the forest officials who either due to negligence or in collusion. the law requires a buffer zone to be created between the forest boundary and the land where mining is permitted. because. In many cases. (ii) Protection of forest lands from illegal mining Wherever the application for grant of mining in forest area is sought and feasible report is prepared by Forest Department. I have come across very many instances of applicants producing false certificates. a mechanism which makes this procedure compulsorily adhered and failure made punishable should be evolved.

between the period 2004 and 2006. the licence should be revoked and action should be initiated against the concerned officers. (iii) Grant of stock yard licence During my visit to the three districts. while permitting or granting stock yard licences. In my note made during my visit to the districts referred to hereinabove. (See page 50 – 53 of this Report). Muneer Enterprises. there is evidence to show that in the district of Bellary alone. Though there are sufficient laws controlling the grant of such licences. (iv) Illegality in transportation of mineral Because of the ‘China boom’.258 cases have disappeared or have been misused. which are situated in the road connecting Hospet with Sandur are all examples of such stock yards which are contrary to the law. The cases of M/s Lakshmi Minerals. There is a need for examining the licence already given to stock yards and if illegalities such as those noticed by me in my report hereinabove are found. then. Immediate action should be taken to inspect all mining activities permitted in all forest area and clear the buffer zone from any type of activity. I have specifically referred to a case of ignorance exhibited by some of the officials as to the applicability of various laws while granting stock yard licences. I have noticed many irregularities in the grant of stock yard licences. Kineta Minerals and Metals Limited and Sri Sai Krishna Minerals Limited. none seems to have followed the requirement of these laws. four to . except to prevent the misuse of forest.

so that overloading can be discouraged. they are also responsible for large number of fatal accidents. The present system of compounding of offences under the M&M (D&R) Act encourages officials as well as offenders to indulge in more and more illegal acts. Consequently. all roads used by these vehicles including National Highways have been practically rendered unmotorable. railway station. The Competent Authority should also think in terms of amendment to M&M (D&R) Act to empower the Courts or Tribunals to confiscate the vehicle or suspend the way permit for a suitable period.P. So far as over-loading is concerned. sea port.S. Therefore. Police officials are hand in glove with the transport operators and mine owners. because the . The Motor Vehicles Act also requires suitable amendment to make the offence of over-loading more stringent. The over-loading and the frequency of vehicles not only damages the road.259 five thousand lorries carrying mineral are plying to and fro from mining head to various transportation points like. etc. equipment in these lorries to keep a control over activities of these vehicles. Government should also in consultation with Central Government consider the possibility of restricting the number of mineral carrying vehicles that could ply at a given point of time. It is a well established fact that almost all lorries carrying mineral are carrying load far in excess of the permissible limit. especially the over-loading. all concerned authorities like the Motor Vehicle Department officials. and also because of the increase in density of this type of vehicles. there is a need to provide for check points with sufficient number of weigh bridges and compulsory fixing of G. mainly because of the fact of over-loading.

only. The provisions as is found in the Forest Act for seizure and impounding of not only materials found in the vehicle. it would be difficult to control the illegal mining. but. which can be used more than once to transport the total quantity mentioned in the permit. In regard to minerals mined from forest area. being mentioned. .000/. leaving all the columns blank are issued in advance to the transporter. 31 which along with the bulk permit is the document required to be carried by the transporter. There are various means by which this permit can be misused and is being misused. quantity of the mineral being transported and vehicle number etc. also of the vehicle itself with punishment of imprisonment to the offenders should be introduced in M&M (D&R) Act. Even bulk permits issued by the Mining Authorities are being misused to carry much more than permitted bulk quantity and this type of permits are used for over-loading illegally mined ore along with legally mined ore. 25. This is not a deterrent compared to the value of mineral which is the subject matter of the offence. Without such serious consequences. Forest Department also gives a transport permit in form No. (v) Introduction of new transport permit system At present. The provision for compounding itself should be done away with.260 maximum compounding fee is Rs. The normal practice in regard to the forest permit is that a signed and sealed book-let containing 50 to 100 permits. without the name of the mining lease holder. transport permits are issued by the Mines and Geology Department for bulk quantity which are known as bulk permits. normally within a period of 30 days.

mine owners and the concerned officials and discussed the idea of having one permit for one vehicle for one trip with a maximum transport duration of seven days which itself was a long period. hence the old system continues. but.261 thus. When this was brought to my notice. depriving the State of the minimal revenue that it gets by way of royalty. I had called a meeting of transporters. Considering the suggestion made by me. the Mining Department came out with a permit with a hologram and computer bar-code which permits would require the name of the transporter. (vi) Damage done to the environment and water bodies In the course of this report. I have referred to the damage that is caused to the environment and water bodies. some aggrieved transporters have challenged this system and have obtained a stay order from the High Court. At the end of that trip. The damage en-route is mainly because the transportation of ore is done in open bodied vehicles and during transportation mineral dust fly out and settle down in the vegetation . vehicle number. the quantity being transported and destination to be filled in the said permit. After discussion with them. but also enroute of transportation. not only in the surrounding areas where mining activities are taking place. the said permit would be taken possession by the officials. I recommend that necessary steps shall be taken by the Government to move the Court for vacation of the stay order and introduce a fool proof permit system. Government had brought this into force. so that it cannot be reused. Therefore.

then. it fetches an income to the Government of Karnataka by way of royalty ranging from Rs. 250/. the export price was between Rs. it is lost for all times to come. is added as transportation cost and taking the . of iron ore is about Rs.500/.T. There is material to show that the district of Bellary which was once famous for many herbal plants. as also on other properties.000/. Research done in Karnataka indicates that the deposit of iron ore in this State is only sufficient to last in an ordinary situation for about 25 to 30 years. Therefore. During the peak period between 2004 and 2006. In this background. it is mentioned that the expenditure to extract one M. a question arises whether it is prudent for the State to permit the export of these minerals without thinking of posterity. 2.T. (vii) Economics of mining in Karnataka Mineral are not re-generating material.T. Even economically speaking.to Rs.per M. In the reference that is made to me by the Government.to 7.per MT depending upon the quality of the ore. Therefore. Taking iron ore as an example.per M.to 27/. such transportation should be permitted only in close bodied vehicles. then there should be a limit on the quantity of iron ore to be mined at any given time. one can see that State is not a gainer from mining. because of which natural vegetation and water bodies get polluted. Even during the lean period. the export price was even in the range of Rs.T. Once an ore is extracted from earth. 6. 16/.000/. if the need of posterity is to be protected. 1.000/.262 and water bodies.per M. if transportation is unavoidable. 150/-. to which even Rs. has now been deprived of such vegetation.

T. If the location of the steel plants is to be confined to the mining areas only. 427/.T. an exporter makes a clean profit of Rs. that would solve the consequential problems arising out of transportation to different parts of the State. and even if you take the minimum export price of Rs. 27/only which is pittance compared to what a mine owner gets.per M. the Country could gain by export duty also.as the extraction charge.T. State apart from royalty will also gain through VAT and the Central Government will gain through excise duty which will be a huge amount. On the contrary.as royalty and Rs. While State would get a maximum of Rs. of iron ore that is illegally mined and transported from which Government gets not even the royalty. 27/. thus protecting environment and if mining is to be confined only to .073/. illegal mining.500/-. In the above background. This is not taking into account millions of M.263 maximum of Rs. 1. my first suggestion which may look very extreme. This would solve many problems like excessive mining.per M. because no dedicated plants would extract minerals more than it could consume and there will be no benefit from such excessive mining because they cannot sell it to anybody because of ban on trading of minerals. if the mineral extracted in this State is used to produce value added product. the total would come to Rs. 150/. 1. May be if the finished product is exported after meeting the local demand. but in my opinion the most apt solution to the existing problem. is to ban all trading including export of minerals and reserve this mineral only for domestic consumption as captive mines dedicated to a given steel plant.

I was informed that all these equipments are provided to these youngsters who are all school drop outs by the unscrupulous people in the mining lobby to keep an eye on the visitors to the mines. so that the mining activities could be controlled during the visit of inspection staff. but are only victims of the disadvantages arising from mining activities. The title of the citizens report referred to in this report of mine. but. then transportation should be confined to closed bodied vehicles only which can carry only maximum permissible load. the likelihood of damage to the ecology also will be far less. my experience of MML discourages me from agreeing to that suggestion. If these plants are situated near the mining area. The locals there do not in any manner reap the benefit of this successful industry. I noticed in and around mining area a large number of youngsters. I noticed the condition of people who are living in and around the mining area. This type of employment of youth is bound to create socio-economic problems in the years to come. which reads “Rich Lands and Poor People” is very appropriate to describe the fate of the people who are victims of this type of mining activity. may be between the age of 15 to 25. When I visited the district of Bellary.264 dedicated steel plants. it would also create huge job potentials for the locals who otherwise in the present system have no advantage from mining. I have recently read in the newspapers a demand for nationalization of mining activities. riding brand new motor-cycles which may not be their own and using cell phones and loitering around. Because of lack of education and . If export is inevitable because of international agreements.

are now being used for transportation of illegally mined ore for which there are ready made buyers. (b) Conducting of joint survey of MSPL and SB Minerals to identify the lands which are illegally encroached. are looking for opportunities for illegal mining which is a tempting proposition. education and other job oriented schemes for the locals. Even the villagers in and around the mining area do not seriously concentrate on agriculture and other normal village life activities. Government should take serious note of these possible socio-economic changes. Number of tractors and trailers which were originally meant for agricultural activities. if they have obtained permission illegally. . I would specifically point out certain irregularities. as the facts of each of these may call for. the Government should take a holistic view of development of these areas. Even this diversion in the occupation of the villagers is likely to cause social unrest when mining activities get reduced. In all. but. Apart from the above.265 acquired habits. notice of which should be taken by the Government and suitable actions initiated. (c) Conduct enquiries into all stock yards and stop functioning of such yards. a law and order situation is bound to happen. I would even suggest that a levy on mining activity for betterment of villages around mining areas which money can be utilized for better health scheme. (a) Cancellation of grants of revenue lands where illegal mining is being done.

Conduct survey of Mari Cements referred to at pages 38 and 39 of Chapter – II. (h) I have noticed at page 40 of Chapter – II of my report that some of the officers of the Department of Mines and Geology have been passing orders “until further orders” which is contrary to law. abutting Bellary District surveyed and boundary fixed. (k) Required rules u/s. (i) There is an urgent need for increasing the staff strength of Department of Mines and Geology at Taluk levels with strict supervisory control from the higher officers. Therefore. are not being properly attended to and interim orders are allowed to continue. (g) A large number of Court cases pending. (j) Approach the Central Government to get the boarder between States of Andhra Pradesh and Karnataka. 23C of the M&M (D&R) Act be framed at the earliest . without making any application for vacating the same.266 (d) Conduct survey of Vrushabhendra Mines and take suitable action (e) (f) Conduct survey of HRG Mines. steps should be taken to attend to all the pending cases where Department of Mines and Geology is involved. All such orders should be reviewed.

I have also discussed the basis of the decisions taken by various public servants and their role in granting such illegal permission to transport minerals from the patta lands without there being a mining lease and with the knowledge that such grant of permission is contrary to the M&M (D&R) Act. I have also discussed the explanation given by the concerned public servants and given my reasons for rejecting the same. I am also of the opinion if really such public servant had a sincere desire to help the farmers to clear their lands for the purpose of commencing their agricultural operation. I have discussed the law applicable and I have come to the conclusion that there could be no mining activities.C Rules.267 In my report as to the grant of temporary transport permit to lift and transport ore illegally mined from patta lands. I have also come to the conclusion that any mineral listed in schedule I and II of the M&M (D&R) Act and found in any land. I am also of the opinion that however high an authority may be. In that background. I have come to the conclusion that grant of transport permit to persons to transport minerals who do not hold the mining lease is contrary to the provisions of the M&M (D&R) Act and Rules. as has been repeatedly said that the law is above him and his political philosophy or desire to help the farmers to solve their problem cannot be a justification to violate the law. be it Government or Patta land is the property of the State. be it a Government land or patta land. collecting of royalty or a compounding fee from such transporters does not justify the grant of transport permit. then the removal of so called minerals lying in their lands could have been . According to me. without there being a mining lease granted under the M&M (D&R) Act and M.

IAS. I have come to the conclusion that the concept of raising contract is alien to M&M (D&R) Act and Mineral Concession Rules. (1) Sri N. On the above basis. of iron ore.09. that is in regard to affairs of M/s MML. So far as Sri Gangaram Baderiya is concerned. 31. in respect of Dr. Basappa Reddy. disciplinary proceedings are ordered to be initiated against Dr. since entering into raising contract and such other .268 done through Governmental agencies. Basappa Reddy. However. He is also liable for the reimbursement of the loss caused to the State. these persons are liable for reimbursement of the loss caused to the State.113 M.to the exchequer by permitting illegal transportation of 3. I had concluded that .T.89. M. In my opinion. the then Director of Department of Mines and Geology (3) have committed misconduct and have caused huge financial loss to the State to an extent of Rs. Hence.01. But it is very much prevalent in many cases. the then Chief Minister of Karnataka (2) Dr. I have also given reasons why in many cases the prayer of the farmer for grant of transport licence was only an excuse to indulge in illegal mining. a report under Section 12(3) of the Lokayukta Act has been already sent on 6/3/2008 and acting on the said report. Basappa Reddy and such enquiry is in progress. Disciplinary and Recovery proceedings shall be initiated against him. the then Director of Department of Mines and Geology Sri Gangaram Baderiya. While considering the next issue referred to me for investigation.185/. M. Dharam Singh.

Deputy General Manager. MML I have also named the companies or firms which have benefited from the loss that is caused to M/s MML and the Government should recover such loss by taking recourse to suitable legal proceedings. I have also come to the specific conclusion that by entering into various joint venture contracts. MML (8) Sri R. the Government of Karnataka decided not to de-reserve forest lands. steps should be taken to terminate these leases. In my report regarding irregularities. for which act of misconduct and loss caused to MML. (1) Sri V. MML (9) Sri Shankarlingaiah. they are. illegalities in dereservation. Umesh. the named officials have not kept the interest of MML in mind and have even caused loss to MML.R. IAS (6) Sri K. I have recorded that though as a matter of policy. Hence. IAS (4) Smt. Srinivas. Perumal.S. Hence. Even in case of MML. IAS (2) Sri I. Manjunath. recovery proceedings shall be initiated against the above officers for recovery of the loss caused by them. Therefore.269 contracts whereby the lease holder has alienated completely his rights under the lease is liable to have the mining lease cancelled. IPS (5) Sri Mahendra Jain. IAS (3) Sri D. disciplinary proceedings shall be initiated against them under the Service Rules applicable to them. Jija Madhavan Hari Singh. Deputy General Manager. Aswath. some . So also. Deputy General Manager. I have noticed that they have entered into such contracts with different persons in violation of law. Ramappa. these leases of MML are also liable to be cancelled. I have held the following officers responsible.S. IAS (7) Sri H. processing and marketing contracts.

MML (11) Sri R. since I would like to get the explanation from the concerned officials before making any recommendation. In my report while referring to illegal transfers of mining leases. IPS (8) Sri Mahendra Jain. the then Chief Minister of Karnataka (2) Dr. I have come to the conclusion that out of the 22 cases that were considered during the course of investigation. Umesh. Manjunath. IAS (5) Sri I. (1) Sri N. IAS (9) Sri K. there have been irregularities in four cases. I have named the following public servants for their acts of omissions and commissions. IAS (10) Sri H.S. IAS (6) Sri D. same will also be done in the next part of my report. M. Ramappa. Jija Madhavan Hari Singh.S. Srinivas. the then Director of Department of Mines and Geology (4) Sri V.R. The names of persons who are guilty of such misconduct will be mentioned in the next part of my report. Basappa Reddy. the then Director of Department of Mines and Geology (3) Sri Gangaram Baderiya. IAS. Deputy General Manager. Dharam Singh. In this Report. Aswath.270 forest lands have been deliberately de-reserved by recording that they are not in forest area. IAS (7) Smt. Perumal. Deputy General Manager. I have given basis for my conclusions. but. MML .

(a) Whether it is only these named public servants who are liable for such proceedings or their subordinates are also responsible for the same. there are subordinate officers who have under the mandatory directions of the higher authorities have obeyed their directions and thereby caused loss to the State. 1988. In such cases. that arise in these circumstance is. (b) The next question which is very important that arise is. The question therefore. that is. Deputy General Manager. whom I thought should be indicted I have named them. MML Hence.271 (12) Sri Shankarlingaiah. I thought it fit that only those officers whose involvement is direct in various acts of omissions and commissions to be named and it may not be proper to name their subordinates. In this background. I am recommending initiation of appropriate proceedings for recovery of the loss caused to the State Exchequer and/or disciplinary proceedings against the above public servants. are those public servants also to be recommended for prosecution under the provisions of Section 13(1)(d) of the Prevention of Corrutpion Act. I had given my anxious thought to this issue and wherever I have found independent and direct involvement of subordinate officers. The said Section reads thus:- . who have merely followed the orders of the superiors. two questions arise for my consideration. but in many cases. the huge loss that is caused to the State exchequer because of the acts of commissions and omissions of the named officers.

(a) ………………………………………………………….. Criminal Misconduct by a public servant. (c) such obtaining of valuable thing or pecuniary advantage is without any public interest. but there is no material to show that they have obtained for themselves any pecuniary advantage. there is material to be satisfied that the above .(1) A public servant is said to commit the offence of criminal misconduct.(i) …………………………………………………………… (ii) …………………………………………………………… (iii) while holding office as a public servant. the fact that the concerned officers are public servants are not in dispute.272 “13. In the facts and circumstances of the various cases discussed herein above. or (e) ………………………………………………………. (b) he should obtain for himself or any other person any valuable thing or pecuniary advantage. (d) If he. Therefore. But their acts of omissions and commissions have certainly conferred valuable pecuniary advantage to 3rd parties. If a literal interpretation is to be given to the above provisions of law. (c) …………………………………………………………. (b) …………………………………………………………. the ingredients necessary for prosecuting the public servant under the above provision of law are (a) person concerned should be a public servant. which of course will have to be held to be without any public interest. obtains for any person any valuable thing or pecuniary advantage with out any public interest..

850/-. Dharam Singh. Dharam Singh has resulted in revenue loss to the State to the extent of Rs. Therefore. for recovery of the loss caused by him to the State. former Chief Minister of Karnataka. former Chief Minister of Karnataka who also held the portfolio of the Department of Mines and Geology ordered issuance of temporary transport permits for movement of iron ore and manganese ore from agricultural patta lands not held under the mining lease. RECOMMENDATIONS UNDER SECTION 12(3) OF THE KARNATAKA LOKAYUKTA ACT The report of investigation submitted by Sri Gaikwad team at Annexure – ‘B’ reveals that Sri N. a separate recommendation is made to the Competent Authority to initiate appropriate proceedings against Sri N. in contravention of Section 4(1) and Section 4(1A) of M&M (D&R) Act and Mineral Concession Rules.11.273 provision of law attracts. Dharam Singh.22. 1960 and acted in a manner unbecoming of a public servant of the class to which he belongs. to take appropriate decision regarding prosecution of the public servants concerned. Therefore. during his tenure as Commissioner and Director of Mines and Geology approved issuance of temporary transportation permit for movement of iron ore to Sri Satish Kumar . Sri Gangaram Baderia. 23. IAS. The act of Sri N. but the consequences of such prosecution will be serious on the administration of the State. I leave it to the State Government in the factual background of each one of the above cases. under Section 12(3) of the Lokayukta Act.

Chitradurga and Chikmagalur resulting in revenue loss of Rs. 1969. 1968 and hence. The materials collected during investigation also establish that the commissions and omissions of Dr. Appropriate proceedings shall also be initiated against Sri Gangaram Baderia.274 from survey number 23/4 of Bhujanganagar village. Pushparaj.T.to the State exchequer. Sandur Taluk.000/. Basappa Reddy. CI 02 MMM 2005. Bellary. I recommend initiation of disciplinary proceedings against him under All India Services (Disciplinary and Appeal) rules.T. in contravention of the M&M (D&R) Act. former Director of Mines and Geology. and Mineral Concession Rules.to the State exchequer as detailed in the report .70.to the State exchequer. Sandur Taluk in contravention of the conditions laid down by the Government of Karnataka in letter No. 298 of Bhujanganagar village. causing a loss of Rs. dated 27/09/2005 resulting in movement of illegally mined and stocked ore to the tune of 1. under Section 12(3) of the Lokayukta Act. IAS.. has resulted in unauthorized movement of 56. M. for recovery of the loss caused by him to the State exchequer. Sri Gangaram Baderia. relating to RS No. 11. 1. The above acts of Sri Gangaram Baderia. in the districts of Belgaum. IAS during his tenure as Commissioner and Director of Mines and Geology has also accorded permission for issuance of permit in the case of Sri T.747 M.75.26.41.000/. IAS amounts to acts unbecoming of a public servant of the class to which he belongs and hence he has committed misconduct under Rule 3 of the All India Services (Conduct) Rules.32.335/. of iron ore/manganese ore. 1960 resulting in loss of Rs.200 M. 6.

275 at Annexure – ‘B’ regarding which a disciplinary enquiry has been already initiated in No.02. In addition to the same.S. Umesh. during his tenure from 26/11/2002 to 7/12/2002 and 20/02/2003 to 7/7/2003. by his acts of commissions and omissions. The materials collected during investigation prima facie establish that: (i) Sri V.90. by his acts of commissions and omissions. IAS. M/s Mysore Minerals Limited. Perumal. under Section 12(3) of the Lokayukta Act.R. former Managing Director. ¹D¸ÀÄE 9 EªÀÄÄ« 2008.312/-. (iii) Sri K. as detailed in Revised Table-11B of the report of Sri Gaikwad at Annexure – ‘C’. dated 17/04/2008. IAS. during his tenure from 24/05/1999 to 08/03/2000. Manjunath. by his acts of commissions and omissions. M/s Mysore Minerals Limited. pursuant to Government Notification No. IAS. 6. M/s Mysore Minerals Limited. former Managing Director. 5. during his tenure from 31/10/2000 to 26/11/2002. has caused a total loss of Rs. I recommend initiation of appropriate proceedings against him for recovery of the loss caused by him to the State exchequer.138/.60. former Managing Director.as detailed in Revised Table-11A of the report of Sri Gaikwad team at Annexure – ‘C’. (ii) Sri I. LOK/ARE-3/Enq-2/2008. . has caused a total loss of Rs.56.

S. M/s Mysore Minerals Limited.66. (iv) Sri D.81. by his acts of commissions and omissions. Aswath. IAS. has caused a total loss of Rs.72. By their commissions and omissions as detailed above. (v) Smt.276 has caused a total loss of Rs.938/-. has caused a total loss of Rs.04.42. during his tenure from 25/08/2003 to 14/04/2004. during his tenure from 15/06/2006 to 09/01/2008. M/s Mysore Minerals Limited.56.as detailed in Revised Table-11F of the report of Sri Gaikwad at Annexure – ‘C’.as detailed in Revised Table-11E of the report of Sri Gaikwad at Annexure – ‘C’. former Managing Director. former Managing Director. caused a total loss of Rs.022/. Jija Madhavan Hari Singh. by her acts of commissions and omissions. 4. IAS. 219. (vi) Sri Mahendra Jain. M/s Mysore Minerals Limited.23. 95. by his acts of commissions and omissions.as detailed in Revised Table-11D of the report of Sri Gaikwad at Annexure – ‘C’. former Managing Director. as detailed in Revised Table-11C of the report of Sri Gaikwad at Annexure – ‘C’. during her tenure from 15/04/2004 to 14/06/2006. 299.82.953/. IPS. the above mentioned public servants have acted in a manner unbecoming of a Government servant of the class to which they belong and thereby .974/.

under Section 12(3) of the Lokayukta Act. omissions.277 committed misconduct under Rule 3 of the All India Services (Conduct) Rules.31. for causing a loss of Rs.833/-. during the years 200304. 1968. I recommend to the Competent Authority to initiate disciplinary proceedings against the said public servants under the All India Services (Disciplinary & Appeal) rules.84.47. Sri M. Srinivas. by his acts of commissions and as detailed in Revised Table-12A of the report of Sri Gaikwad team at Annexure – ‘C’. during the years 2000-04 and 2003-05. 1969. 14. General Manager. by his acts of commissions and omissions. Appropriate proceedings shall also be initiated against the above mentioned public servants for recovery of the loss caused by them due to their omissions and commissions as detailed above. Dy. General Manager. Therefore. II. for causing a loss of Rs. Dy.10.870/-. . 6. Ramappa. M/s Mysore Minerals Limited is jointly and severally responsible with the respective Managing Directors. The materials collected during investigation prima facie establish that: I. Sri K. as detailed in Revised Table-12B of the report of Sri Gaikwad team at Annexure – ‘C’. M/s Mysore Minerals Limited is jointly responsible with the respective Managing Directors.

278 III. the above mentioned officers of M/s Mysore Minerals Limited have committed misconduct. In this . but due to the desire of our bringing about this report which should present all the shortcomings in the mining activities. by his acts of commissions and omissions.38. I recommend initiation of disciplinary proceedings under the service rules applicable to them and so also appropriate proceedings shall be initiated against the said officers for recovery of the loss caused by them as detailed above. Action taken or proposed to be taken on the above recommendations be intimated to this institution within three months from the date of receipt of this report as required under Section 12(4) of the Lokayukta Act.13. M/s Mysore Minerals Limited is jointly responsible with the respective Managing Directors. during the years 200407 for causing a loss of Rs. ACKNOWLEDGEMENT There has been delay in submission of this Report. which I can say with all sense of responsibility that it is not due to any slackness on my part or my team’s part.427/-. Sri Shankaralingaiah. 63. under Section 12(3) of the Lokayukta Act. as detailed in Revised Table-12C of the report of Sri Gaikwad team at Annexure – ‘C’. illegalities and problems at different stages of mining activities holistically. General Manager. By their omissions and commissions. We have tried to look into the irregularities. Dy. Therefore.

as well as.R. Krishnan. Law Department. U. without in any manner compromising with their other duties. Chamayya. officials of Lokayukta.Subramanya and Sri Moosa Kunhi Nayar Moole.SANTOSH HEGDE) LOKAYUKTA . For all the people whose names are not here but who have helped me in the preparation of this report. I am grateful to Sri K. Sri L. both Registrars in the Karnataka Lokayukta whose cumulative efforts have helped me in the preparation of this report. Singh was also responsible for all the inputs provided in this report to arrive at all types of illegalities in mining. Government of Karnataka. (N. but for whom this report would not have been possible to be ready even now. I also place on record my appreciation of the overtime work put by Smt.279 process all members of my team have worked with dedication and devotion. whose names are mentioned in the beginning of this report. who is my principal advisor. Jayashree and Sri K. Retired Secretary.V. I am indebted. The tremendous work put in both in the filed and office by Dr. I also place my deep appreciation of work put in by Gaikwad team.

No. Order 12/03/2007 No. for investigation of certain matters relating to illegal mining activities in Karnataka. I have made certain recommendations and suggestions. dated 09/09/2008 ----I am herewith forwarding my Report (Part-I) dated 18/12/2008 along with Annexures. 2008 Dear Sri Sudhakar Rao Sub: Reference under Section 7(2-A) of the Karnataka Lokayukta Act made by the Government for investigation of certain matters relating to illegal mining activities in Karnataka–reg. Compt/LOK/BCD/89/2007/ARE-2 Encl: Report along with connected records 18th December. Certain recommendations are also made under Section 12(3) of the Karnataka Lokayukta Act. on the reference made by the Government under Section 7(2-A) of the Karnataka Lokayukta Act. Ref: i) Govt.O. . CI 164 MMM 2006 dated ii) Govt. 1984 against the named public servants. for needful action in the matter. CI 164 MMM 2006 (Part). Order No.280 D. 1984. I have discussed the various issues relating to irregularities and illegalities in mining activities carried on in the State of Karnataka and so also the activities of M/s Mysore Minerals Limited. In this report. In the said report.

Bangalore-560 001.S. Chief Secretary to Government. I. The receipt of the report along with enclosures may please be acknowledged. Yours sincerely.A. as provided under Section 12(4) of the Karnataka Lokayukta Act. ..SANTOSH HEGDE) Sri Sudhakar Rao. Karnataka Government Secretariat. With regards. (N. Vidhana Soudha.281 The action taken or proposed to be taken on the basis of the said recommendations be intimated to this authority within three months from the date of receipt of the report.

trespassing into the forest area for mining. Contents Page Nos. Irregularities in mining like mining beyond the leased area. The Effect of mining on Roads and Environment 1. 1984 (PART – I) INDEX Sl. etc. No. Joint Ventures etc. Advent of the concept of Rising Contracts. trespassing into the forest area for mining. etc. 1) 2) 3) 4) Chapter-I Chapter-II Chapter-III Introduction History of Mining Visit to Mining Areas Procedure followed while granting Mining Lease/ Licence with special reference to Prospecting Licence. Processing and Marketing Contracts.282 REPORT ON THE REFERENCE MADE BY THE GOVERNMENT OF KARNATAKA UNDER SECTION 7(2-A) OF THE KARNATAKA LOKAYUKTA ACT. Irregularities in mining like mining beyond the leased area. Karnataka regarding MOUs.111 8) Chapter-VII 112 . Raising.128 9) Chapter-VIII Issue of temporary transport permits to lift and transport ore illegally mined from the patta lands Lapses pointed out by the Accountant General. entered into by M/s MML with private companies resulting in losses amounting to crores of rupees to the company 129 – 170 10) Chapter-IX 171 – 219 .14 15 – 29 30 – 59 60 – 67 5) Chapter–IV 68 – 83 6) Chapter-V 84 .101 7) Chapter-VI 102 .

in the State meant for State exploitation/mining by the public sector and the related matters. mendations suggestions and recom- 250 – 274 ANNEXURES 1) 2) Annexure-A Report of Sri U.283 11) Chapter-X Allegation of irregularities and illegalities in de-reservation and allotment of de-reserved areas to different applicants 220 . 5) Annexure-E Report of Gaikwad team relating to legality in the transfer of leases from one lease . processing and marketing contracts. 4) Annexure-D Report of Gaikwad team relating to dereservation of mining area of 11.620 Sq. entered into by the MML with private companies resulting in losses amounting to crores of rupees to the company. joint ventures.237 12) Chapter-XI Evaluation of cases relating to illegal transfer of mining leases 238 – 249 13) Chapter-XII Conclusions. Kms. etc.V. Singh Annexure-B Report of Gaikwad team the issue of grant of transport permits for transporting illegally mined iron/manganese ore from the patta lands 3) Annexure-C Report of Gaikwad team relating to lapses pointed out by the Accountant General regarding MOUs raising.

284 holder to another on examination of the legality case wise .