Odisha is all agog on the next hearing of the Delhi High Court scheduled on August 7 on the fate of mineral block auctions. The court had stalled the auctions of two iron ore blocks- Chandiposhi and Purheibahal on the lack of clarity on Section 6 (1) of MMDR Act read with Mineral Auctions Rules of 2015. The statutory rules bar a leaseholder to bid for auctions if an area spanning 10 sq km is already under its leasehold.
“We had requested the Centre for relaxation in the ceiling of mineral lease area. Now, we are looking forward to the next hearing of the Delhi High Court to get some clarity on the issue”, said an Odisha government official with direct knowledge of the matter.
After the restraining order of the court, the Odisha government had turned circumspect and put on hold the entire auction process. This was despite the state lining up a few more iron ore and limestone blocks for online auctions. In fact, not a single mineral block in the state could be auctioned since then due to prevailing uncertainty on the implications of the court order.
The court in a restraining order dated May 4 this year, has asked the government not to proceed with the auctions, citing anomalies in the tender documents.
The state government had already initiated the process of auctioning the Chandiposhi and Purheibahal iron ore blocks, both in iron ore-laden Sundargarh district. A total of 17 companies have evinced their interest in the auctions. The state mines department officials refused to divulge their names, citing the sensitivity attached to the auctions process.
The Delhi HC has cited non-adherence to some provisions contained in Section 6 (1) (b) of the MMDR Act f 1957 in the modalities of auctions. Going by existing Mineral Auction Rules, 2015 based on this section, no bidder can be entitled to a fresh mineral block if has already more than 10 sq km of mineral leasehold area in its possession.
To overcome this restrictive clause, the state government in March this year had written to the Central government to raise the limits to 75 sq km instead of 10 sq km stipulated as of now. The central government has not yet communicated on any possible change in mineral limits.
Tata Steel stands to gain if the area limits are revised. Earlier, the steel company has made abortive bids at electronic auctions of iron ore blocks in Odisha despite being warned by the state government that it will not be eligible to get a Letter of Intent despite being successful at the auctions. Tata Steel presently has six iron & manganese ores in its kitty which are spread over a lease area of over 50 sq km in the state.
The Mineral Auction Rules supposedly bar the state government to grant the Letter of Intent to any such successful bidder whose current possession of lease exceeds 10 sq km.
In a clear indictment of the state government’s tender documents, the court said the papers lack clarity on the eligibility of a bidder who stands disqualified by Section 6 (1) (b) of the 1957 Act.
The court also sounded sceptical on whether the Odisha government’s recommendation for hiking area limits would be accepted by the central government.
Given that in the light of these circumstances, auctions of the two blocks might lead to confusion, the court has stalled the process for now. It has instructed the Union government to finalise the matter relating to raising the ceiling on maximum area which can be held by a lessee in consultation with the state government within 15 days of its order.