SECOND REPORT ON

ILLEGAL MINING OF
IRON AND MANGANESE ORES
IN THE STATE OF ODISHA

OCTOBER, 2013

VOLUME: I

Justice M. B. Shah
Commission of Enquiry
for
Illegal Mining of Iron Ore & Manganese
INDEX

Volume: I

Individual cases of illegal mining or without lawful authority

Group Particulars Page

No. Nos.

––– Introduction I

1. M/s. Serajuddin & Co. 1

Balda Iron Ore Mines

2. M/s. Ram Bahadur Thakur Limited 115

Kolha Rudukela & Katasahi Manganese Mines

3. Soumendra Nandan Dasmohapatra 134

Kolha – Rudukela Manganese Mines

4. M/s. Sarada Mines (P) Ltd. 155

Thakurani Block–B Iron Ore Mines

5. M/s. Mideast Integrated Steels Ltd. 226

Roida – I Iron Ore Mines

6. Shri M. S. Deb 285

Inganijharan Iron and Manganese Ore Mine

7. M/s. Essel Mining and Industries Ltd. 308

(i) Jhilling Langolota Mine
(ii) Kasia Mines
(iii) Koira Mines
(iv) Unchabali Mines
(v) Surkunda Mines

***
 INTRODUCTION

1. At the outset, it is stated that on 01.07.2013, the

Commission has submitted its First Report for the
State of Odisha in 05 Volumes covering 1,704 pages
on the various issues, mainly as per the terms of
reference of the Commission stated in the
Notification dated 22.11.2010.

2. While dealing with illegalities/irregularities on issue

based for the leases collectively, the same has been
already reported in the First Report exhaustively.

The First Report was submitted on issue based

after having heard all the concerned lessees through
their Ld. Counsel in detail on all the subjects and
also specifics to that lease. The Commission has
given its findings, recommendations, etc. on the
issues and submitted the said First Report.

3. In the First Report, the Commission has dealt with

mainly on the following aspects:––

(i) Forest Clearance under Forest

(Conservation) Act, 1980 and Rules:––

(a) Non–obtaining Forest Clearance by the

lessees but started extraction of iron ore;

I
 (b) Even after obtaining Forest Clearance,
the lessees were not abiding by the
statutory conditions prescribed by the
MoEF. Uptil now, nobody has bothered to
verify whether the said conditions are
complied with or otherwise.

(c) Law established with regard to Forest

Clearance is that in case, renewal is
granted after 25.10.1980, fresh Forest
Clearance is required irrespective of
whether forest land was broken or virgin.
Yet, in number of cases, the same was
not obtained.

Further, it is also settled law that

grant of renewal is a fresh grant and
must be consistent with law.

(ii) Environmental Clearance under EIA

Notification dated 27.01.1994 and
amendments:––

(a) Non–obtaining EC but mining operations

were carried out even during the deemed
extension period.

(b) Extraction of iron ore in excess to the

permission granted at the time of
Environmental Clearance.

II
 (c) In some cases, increase in production is
permitted by the IBM without following
the conditions prescribed under Rule 10
of MCDR, 1988.

(d) Non–compliance of most of the conditions

imposed in EC approvals.

(iii) Encroachment in forest / non–forest land

for various mining activities including
extraction of ore:––

Extraction of iron ore beyond the lease

area, the Commission has taken measurement
on the basis of Satellite Images. In most of the
cases, even after re–verification by a team of
the Revenue, Forest, Mines, ORSAC, etc., the
same was found correct.

(iv) Misuse and violation of Rule 24A (24) of

MCR, 1960:––

(a) Before the Rule 24A(6) came into force

(i.e. on 27.09.1994), the provision was
that if the application for renewal is filed
in time, the same is required to be
decided within stipulated time, provided
in the said Rule. If it was not decided,
then under the deeming provision, the
renewal application stood / stands
rejected.

III
(b) Thereafter, when present Rule 24A(6)
came into force, in most of the cases, the
renewal application has not been decided
continuously for years together. The
lessees are getting undue advantage
because of unexplained, unreasonable
and unjustifiable delay in granting or
refusing renewal application. This has led
to corruption because iron ore prices
have increased since 2001 due to China
Boom.

(c) After finding illegalities in mining

operation, the concerned authorities are
required to take action under MM(DR)
Act, 1957 and all other applicable Acts,
Rules, Notifications and others.

No such action was taken before the

year 2010–11. It is noted that after
constitution of the Commission, action is
taken in some cases.

(d) For illegal ore extraction, it may be an

offence under Indian Penal Code, if it is
unauthorized under the law.

In any case, monetary value of the

illegal extraction is required to be
recovered under Section 21(5) of the
MM(DR) Act, 1957.

IV
 (e) The Commission has also found and
noted the omissions, commissions and
misconduct on the part of the various
officials under the applicable Laws and
also against the lessees. The Commission
has suggested in all cases that action
should be taken against the concerned
officers.

(v) Others.

4. It is further stated that in the State of Orissa, there

are about 192 mining leases of iron and/or
manganese ores. In this Second Report, the
Commission has covered individually, leases
granted to 14 Groups, consisting of 23 mining
leases dealing with illegalities / irregularities,
violations, misuse of laws and powers by them in
mines, forest, environment, taxes and others.
Remaining leases could not be covered due to time
constraint.

5. There is need to complete investigation for all other

remaining leases in the same manner and style and
for that, the concerned Departments have to take
action or the Government of India may find other
ways to complete the inquiry for the left out leases
and others.

V
6. It is stated that the Commission has heard all the
lessees individually through their Ld. Sr. Counsel
who are largely practicing in Hon’ble Supreme Court
or High Courts. At the same time, voluminous
documents have been submitted by the lessees,
concerned Departments, namely, DMG, IBM, Forest,
MoEF and others (in some cases, from Income Tax
Department as well as Vigilance Cell of the State
Government). Information was also collected from
all other available sources and the findings &
recommendations have been made for further
needful action.

7. After having examined various leases of the States

of Goa, Orissa and Jharkhand, it is noted that the
compensatory afforestation (CA) raised / to be
raised against the forest land diverted, in the non
forest land or degraded forest land, the survival
percentage and choice of species are very poor and
below satisfactory. In the State of Orissa, the
Commission has obtained a report from Regional
Office, Bhubaneshwar and observed that the
success rates in almost all the CA plantations are
very poor. Monitoring from the MoEF and all the
State Governments are totally lacking. No separate
exclusive evaluation has been made
comprehensively for success and choice of species
so far since 1980 for the CA rose against the forest

VI
land diverted. In some cases, the areas are
identified in the Nexalites prone zones. The staff is
unable to reach to plant and monitor the CA in
such places and unable to do the justice.

After a thorough discussion with many

connected agencies, it is observed that the mandate
of raising compensatory afforestation should be left
with the user agencies and they should be directed
that afforestation is carried out as per requirement
and their annual progress should be monitored by
the independent agencies. On the failure of the
plantation or non afforestation, the project should
not be commenced or further allowed to continue.
These hard measures are required to be taken to
compensate the fast depleting forest cover in
the country. The plantation so raised should
invariably be declared as RF/PF.

***

VII
 1

M/s. Serajuddin & Co.

Balda Iron Ore Mines
(Area for mining lease – 335.594 ha.)

Findings recorded in this Chapter are based upon

the information supplied by the various Departments of
the State and Central Governments, lessee, MoEF, IBM,
etc. It is for the competent authority to issue appropriate
notices to the concerned party/lessee for taking action in
accordance with law.

On behalf of the lessee, voluminous records have

been submitted before the Commission during various
hearings held on 21.12.2012, 12.01.2013, 16.03.2013,
03.04.2013, etc. at Ahmedabad. From 27.02.2013 to
04.03.2013, hearings were kept at Bhubaneshwar
(Orissa) wherein the lessee was also heard through his
Sr. Counsel, along with other lessees at length.

In the aforesaid hearings, the Commission has also

received records / data / information from various
Departments of the Central and State Governments. The
Commission has also received vigilance inquiry report
from the State Government and information with regard
to search and seizure in May, 2008 from the Income Tax
Department. All the above documents / records /
information and others have been taken into
consideration, while making the following observations to
take further needful action by the concerned competent
authorities to follow the course of law by issuing notices,
etc. It is to be stated that the facts, figures and
comments which are noted hereinafter, are taken from
the Vigilance Inquiry Report of the State Government and
I.T. Assessment Report.
 2

Part: I

1. M/s. Serajuddin & Co., Kolkata, was having mining

lease over 3339.40 Acres in Village: Balada for a
period of 20 years w.e.f. 01.11.1946 for manganese
ore. Subsequently, the said leased area was
reserved for the purpose of industry by the
Government vide letter No.308/Mines, dtd.
13.02.1953 and it was made available for re–grant
vide Government Notification No.846/Mines, dtd.
05.03.1955. The area of 830 Acres out of the
original lease was then granted in favour of M/s.
Serajuddin & Co. for a period of 20 years w.e.f.
03.12.1957.

The firm (S. & Co.) submitted an application

on 26.04.1958 to the Secretary, Mining & Geology
Department, requesting to give permission of mining
of iron ore too. From the letter No.15639, dtd.
02.12.1967 of Director of Mines, Orissa,
Bhubaneswar; it reveals that the Government had
granted M.L. for iron ore vide Order No.8562/MG,
dtd. 15.11.1960 over an area of 830 Acres for iron
ore and a supplementary agreement was executed
on 02.06.1962 in this regard – coterminous with the
lease period of Manganese lease i.e. upto
02.12.1977.
 3

Later on, the lease of manganese ore was

surrendered by the firm w.e.f. 17.08.1974.

Hence, the lessee had the lease for iron ore

only from 17.08.1994 onwards.

The Government, vide its Notification Order

No.III(A)M–136/75–12163, dated 15.11.1975, had
thrown open an area of 150 Acres (60.70 ha.) out of
830 Acres (335.594 ha.) for re–grant w.e.f.
25.01.1976. This matter went into long litigations
and finally, settled through a judgment dated
26.03.2007 of Hon’ble High Court of Orissa in
favour of lessee. Hence, it is not discussed, in detail.

2. Renewal application dated 25.11.1976:––

M/s. Serajuddin & Co. had filed an application

on 25.11.1976 for renewal of mining lease for the
whole area for iron ore which was recommended by
the Collector, Keonjhar vide letter No.296, dtd.
25.03.1977. While recommending for renewal
proposal vide letter No.5223, dtd. 12.06.1978, the
State Government had allowed working permission
upto 04.06.1979 for a period of six months beyond
the lease period, illegally. The said permission was
not in accordance with law.
 4

3. Rejection of renewal application and direction to

stop mining operation:––

The Government of India in Ministry of Steel &

Mines Department intimated vide its letter
No.5/35/78–M5, dtd. 25.05.1979 that the proposal
for renewal of lease is not accepted. Accordingly, the
State Government rejected the renewal application
of lessee vide Government proceeding No.9092/MG,
dtd. 05.07.1979 and passed orders to stop mining
operation with immediate effect, vide letter No.9097
dtd. 05.07.1979. The same was intimated to lessee.

The Collector, Keonjhar was instructed by the

State Government to stop mining operation with
immediate effect vide Order No.9097, dtd.
05.07.1979. But, surprisingly, the then Dy.
Secretary to Government issued letter No.9347, dtd.
13.07.1979 to the Collector, Keonjhar with
instructions to maintain status–quo in view of the
orders of Hon’ble High Court, Kolkata. It is
pertinent to note here that by that time, neither any
order of the Hon’ble High Court was received nor
the party (lessee) had produced the certified copies
of the said Judgment. The fact is that on that date,
there was no such order of the Hon’ble High Court
of Kolkata.
 5

Sri K. B. Patnaik, Government Pleader and

Public Prosecutor (G.P. & P.P.), Keonjhar had
opined on 12.07.1979 that as no authenticated copy
of the said Judgment was received, the Government
was not required to take action in hasty manner.

4. Status–quo Order:––

From the letter No.9806, dtd. 26.09.1979 of

the Sr. Mining Officer, Joda, Keonjhar, it revealed
that the Hon’ble High Court, Kolkata in Civil Rule
No.7894 (W) of 1979 had passed an order on
06.08.1979 to the effect that status–quo of the
Petitioner as on the date i.e. 06.08.1979 for a
fortnight with liberty to apply for extension of the
period on the same application upon notice to the
Respondents. Again, in the order dtd. 20.08.1979,
the Hon’ble High Court extended the status–quo
stating that let the interim order already granted
continued till the disposal of the Rule. The State
Government (Respondent) is at liberty to apply for
variation or vacation of interim order.

The relevant part of the order of Hon’ble High

Court of Kolkata dated 06.08.1979 reads as under:–

“Upon reading a petition of M/s. Serajuddin & Co.

and the affidavit of verification thereof, dated
6.8.1979 and the exhibits or annexures to the said
 6

petition and upon hearing Mr. Roy, Advocate for the

petitioner.

It is ordered that a Rule do issue calling upon

the opposite parties to show cause why a Writ in the
nature of Mandamus should not be issued as
referred to in prayers (a, b and c) of the petition or
why a Writ in the nature of Certiorari should not be
issued in terms of prayer (d) of the petition cancelling,
setting aside or quashing the impugned orders and
they are further commanded at the hearing of this
application to produce in Court or cause to be
forwarded to the Registrar of this Court for being so
produce all relevant records in connection with this
case so that conscionable Justice may be
administered by cancelling, setting aside or quashing
the same or making such further directions as to the
Court may deem fit and proper or why such further
or other order or orders should not be made as to this
Court may deem fit and proper. Status quo of the
petitioner as on today be maintained for a fortnight
from date with liberty to apply for extension of the
period on the same application upon notice to the
respondent along with copies of the writ petition. The
Rule is made returnable two weeks after the long
vacation.

Requisite to be put in within a week in default,

the interim order shall stand vacated.”
 7

Subsequently, on 20.08.1979, the Hon’ble

High Court has further extended the status–quo till
the disposal of the Rule with a liberty to State
Government to apply for variation or vacation of the
interim order. The relevant part of the said order
reads as under:–

“Affidavit of service be kept with the record. Let the

interim order already granted continue till the
disposal of the Rule. Respondents are at liberty to
apply for variation or vacation of the interim order
upon notice to the petitioner.”

5. There is no order for permitting mining

operations:––

On perusal of the order of the Hon’ble Court

dated 06.08.1979, it is clear that status–quo was
maintained for the orders issued so far from the
Central Government or the State Government and
the order of the State Government dated 05.07.1979
was to stop mining operations with immediate effect
and accordingly, directions were issued to the
District Collector and to the lessee. In the written
statement submitted to Commission, the lessee has
admitted the receipt of the said order dated
05.07.1979 of the State Government. It is noted
here that it has been claimed at many times and
 8

places that the status–quo was in respect of

operation of iron ore mining lease by the Hon’ble
High Court vide its order dated 06.08.1979 and
20.08.1979. But on plain reading of the said orders
passed by the Hon’ble High Court, it is apparent
that there were no orders directing the lessee to
continue mining operations.

The Hon’ble High Court, Kolkata in its orders

dtd. 06.08.1979 and 20.08.1979, had passed orders
to maintain status–quo as on 06.08.1979. As
discussed above, the State Government issued
orders to stop mining operation w.e.f. 05.07.1979.
Hence, the status–quo on 06.08.1979 was that the
mining was stopped and first renewal of mining
lease was rejected. The lease period was also over
on 03.12.1977. Even the unauthorized extension
given by the State Government for working
permission of mining till 04.06.1979 was over.
There is no valid mining lease as on 06.08.1979.

Instead under Rule 24A of MCR, 1960; the

lease ceased to exist under the deemed refusal
provisions. No working permission can be given
where the lease does not exist under the relevant
law. Also, there is no provision of such working
permission under the law.
 9

The application for renewal of mining lease

remained under consideration due to the litigations
on the possession of landed properties around 10
Sq. Kms. by the applicant at that time. But M/s.
Serajuddin & Co. was allowed to continue mining
operation for interval periods of six months i.e. till
04.06.1979. While recommending for renewal, the
State Government, in memorandum No.5223, dated
12.06.1978, had allowed six months working
permission w.e.f. 03.06.1978. The State
Government again granted working permission till
03.12.1978 vide letter No.5835, dated 03.07.1978
and recommended the renewal of mining lease w.e.f.
04.12.1977 for a period of 20 years, vide letter
No.5839, dated 03.07.1978 to the Government of
India. Again, a memorandum was submitted for
extending the working permission for a period of six
months beyond 03.12.1978 vide Memo No.403,
dated 09.01.1979. Sri P. C. Nayak, IAS, Dy.
Secretary wrote a letter No.6789, dated 01.06.1979
to the Collector, Keonjhar; stating that the working
permission has been further granted for a period of
six months w.e.f. 04.06.1979.

But it is to be stated that the Government had

issued order on 05.07.1979 for rejection of renewal
of mining lease and stopping operation with
 10

immediate effect. Hence, the last working

permission would end on 05.07.1979.

The mining lease granted with effect from

03.12.1957 in favour of M/s. Serajuddin & Co. for a
period of 20 years came to an end on 02.12.1977.

It is noted that the State Government has

given working permission beyond the mining lease
period (i.e., 03.12.1977) for a period of six months
on each occasion upto 04.06.1979 which was
without jurisdiction and competence.

6. Status quo order of the Hon’ble High Court could

not mean that mining operations which were
stopped could be restarted:––

As discussed above, the Government of India,

Ministry of Steel and Mines Department intimated
the rejection of renewal proposal of the lessee vide
letter No.5/35/78–M5, dated 25.05.1979 and
following the said directions, the State Government
had also rejected the renewal proposal vide its
Government proceeding No.9092/MG, dated
05.07.1979 and also passed orders to stop mining
operations with immediate effect vide letter No.9097
dated 05.07.1979. The State Government had also
issued instructions to the Collector, Keonjhar and
 11

lessee to stop mining operations immediately vide

letter No.9097 dated 05.07.1979.

Subsequently, the then Deputy Secretary to

State Government issued a letter No.9347 dated
13.07.1979 to the Collector, Keonjhar with
instruction to maintain status–quo in view of order
of Hon’ble High Court Kolkata. It is not known how
he had issued such instructions to the Collector,
Keonjhar because the fact remains that the Hon’ble
High Court of Kolkata in Civil Rule No.7894 (W) of
1979 has passed order only on 06.08.1979 (much
after the letter issued by the Deputy Secretary) for
the maintenance of status–quo as on that date for a
fortnight and liberty to apply extension. This action
of the Deputy Secretary is required to be
questioned.

Sri S. C. Mishra, A.L.R., who had given the

opinion on the orders of the Hon’ble High Court of
Kolkata, stated that if there is no valid mining lease
and the authorities have already rejected the mining
lease application before 06.08.1979, then the
status–quo as on 06.08.1979 means the mining
lease holder has got no valid license to carry on
mining operation as on 06.08.1979. Hence, the
status–quo as on 06.08.1979 and 20.08.1979
means that the possession was with the
 12

Government and the Collector, Keonjhar should

have maintained the status–quo and no mining
operation by M/s. Serajuddin & Co. should or
could have been allowed.

There was no reason for not accepting the

aforesaid legal opinion.

Not only, the party in possession, at no time,

applied for modifying order of status–quo.

7. Illegal mining after deemed refusal:––

The concerned authorities and the State

Government allowed the lessee illegally to operate
the mine continuously from 02.12.1977 up to the
renewal, 29.11.1997. It is pertinent to note here
that there was a provision of deemed refusal under
the then Rule 24A(5) of MCR, 1960 during this
period till the year 1994. Hence, the lease was
allowed to operate without any authority, provisions
under the law and completely in illegal manner.

During this period, the M.L holder has

extracted 7,27,341.044 MT and dispatched
7,23,828.830 MT of iron ore.

It is further noted that the State Government

has never applied before the Hon’ble High Court,
 13

Kolkata for vacating the status–quo issued on

06.08.1979 and 20.08.1979. It seems that the
authorities at power were not bothered being a
Trustee of the public property. This matter was also
not listed before the Kolkata High Court till
01.03.1996 almost for 16 years. In fact, the matter
only came up for hearing on the direction of the
Hon’ble Supreme Court’s order dated 13.12.1994 in
Civil Appeal No.9160 of 1994 of State of Orissa.

8. For extraction and dispatch (in MT) of iron ore,

following officers are responsible:––

During this period, the M.L holder has

extracted 7,27,341.044 MT and dispatched
7,23,828.830 MT of iron ore for which following
eight persons, who were the DDMs (Joda) at the
relevant time, were liable for allowing production
and dispatch without any mining lease:––

(i) Sri Pankaj Lochan Rout (Rtd.) from 20.07.1978

to 01.07.1979 and from 20.06.1990 to
31.01.1992;

(ii) Sri Pratap Ku. Rath (Rtd.) from 02.07.1979 to

19.07.1981;

(iii) Satyananda Sahu from 19.07.1981 to

16.07.1982 (now DDM, Jajpur);
 14

(iv) Sri Rama Ch. Samal (Rtd.) from 17.07.1982 to

12.06.1985;

(v) Sri Purna Ch. Patra from 13.08.1985 to

23.06.1985;

(vi) Sri Sudhansu Sekhar Pattanaik, (Rtd.) from

24.06.1985 to 08.06.1990;

(vii) Sh. Bijaya Ku. Nandi 08.06.1990 to

19.06.1990 (now DDM, Rourkela); and

(viii) Sri Sasadhar Sahoo from 31.01.1992 to

22.08.1997.

9. Order of Hon’ble High Court on 27.09.1996:––

The proceedings of Civil Rule No.7894(W) of

1979 in the Hon’ble High Court, Kolkata were
initiated on 01.03.1996. The Hon’ble High Court,
Kolkata passed an order on 27.09.1996, holding
that the Central Government should dispose of the
forwarding memo of State Government by giving an
opportunity of hearing and a fresh order can be
passed by Central Government in the manner, as
indicated hereinabove as early as possible and it
will free to form its own opinion, after giving a fair
hearing to the parties concerned and exercise of
independent judgment in the matter.
 15

The copy of the said order of the Hon’ble Court

was communicated to the Steel & Mines
Department, Orissa by the Solicitor, vide its letter
No.877 dated 20.01.1997 and the same copy was
forwarded to the Government of India by Steel &
Mines Department, Orissa, vide its letter No.842
dated 29.01.1997.

This order would clearly mean that by granting

status–quo, the Hon’ble High Court had not
permitted the party in possession to operate the
mines.

10. Renewals granted with retrospective effect:––

Meantime, M/s. Serajuddin & Co. submitted

an application to the Government of India on
13.07.1997 by intimating that after amendment of
MM(DR) Act, the State Government is empowered to
dispose of the renewal application dated 25.11.1976
and to grant the renewal of the lease from
03.12.1977 to 02.12.1997. Pursuant to the
aforesaid Judgment, the Government of India fixed
for hearing on 22.08.1997. Sri S. D. Panigrahi, IAS,
Joint Secretary to Government, Steel & Mines
Department submitted recommendations to the
Government of India, vide letter No.10113, dated
06.11.1997 by writing that the possession of the
 16

mining leased area was handed over to the mining

lease holder as per the order dated 06.08.1979 of
the High Court, which is not correct.

The first renewal for the period from

03.12.1977 to 02.12.1997 was retrospectively
approved by the Government of India vide letter
No.5/12/97/M–IV dated 10.11.1997 and
accordingly, the State Government granted the first
renewal vide letter No.10812, dated 29.11.1997.
There is no provision under the law for giving
retrospective grant of lease for the period of
lease which was under deemed refusal category
and did not exist legally.

Meantime, M/s. Serajuddin & Co. again filed

an application for renewal of mining lease on
18.06.1996 for a period of 20 years. Sri Sasadhar
Sahu, DDM, Joda has recommended for grant of
lease for a period from 03.12.1997 to 02.12.2017 in
his report vide letter No.4495 dated 27.03.1997.
The report of the DDM reveals that the application
for renewal is pending and no mining lease was
granted since 03.06.1979. The details of
recommendations were dealt in the file by the
Government on 29.09.1997. The details of
recommendations were also dealt in the concerned
file and the Joint Secretary, Addl. Secretary and
 17

Secretary, Steel & Mines Department condoned it

and finally, the renewal w.e.f. 03.12.1997 was
approved by the Government on 29.09.1997. The
recommendations were sent to Government of India
vide letter No.10113, dated 06.11.1997 by Sri S. D.
Panigrahi, IAS, Joint Secretary for approval of the
second renewal period. The Government of India,
vide letter No.6/52/97–M dated 13.05.1998,
approved the same for a period of 20 years subject
to the approval of diversion of forest land under
Forest (Conservation) Act, 1980 [FCA, 1980].

The deed of renewal of mining lease over

335.594 ha. was executed for Balda Block in favour
of M/s. Serajuddin & Co. on 21.06.1999 for a period
of 20 years w.e.f. 03.12.1997 to 02.12.2017.

11. Vigilance Enquiry:––

On the allegations of corruption in the

matter of illegal mining of Balada Block Iron
Mines of M/s. Serajuddin & Co. (a partnership
firm) over an area of 830 Acrs. (335.594 ha.) in
the village Balda under Barbil Tahasil and
alleged role of different officials of Forest,
Mines, Revenue & Pollution Control Board in the
illegal mining, the State Government has
initiated a Vigilance inquiry.
 18

During joint physical verification (JPV) on

10/11.11.2009 and scrutiny of records by a team of
various Departments under the Vigilance criminal
case, it was observed that mining operations during
the period from 03.06.1979 to 27.09.1994 were
illegal, as there was no valid mining lease. During
this period, the lease holder had extracted
7,27,341.044 MT and dispatched 7,23,828,830 MT
quantity of iron ore for the approximate value of
Rs.5,42,87,162.00 (average @ Rs.75/– per MT). But
as observed above, the entire mining operations
were illegal from the year 1979 to 1997. Hence, a
quantity of 14,97,897 MT was produced illegally
from the years 1980 to 1997. It is noted that out of
the said quantity, a quantity of 14,97,743 MT had
been dispatched for a value of approximately
Rs.14,88,74,300=00 (Fourteen Crores Eighty
Eight Lacs Seventy Four Thousand Three
Hundred).

12. Illegal mining from DLC forest:––

During JPV on 10/11.11.2009, the Vigilance

team found that iron ore has been illegally removed
from a newly formed pit from DLC forest. The cost of
illegal excavation of 80,262 MT ore from DLC forest
land comes to Rs.10,43,40,600.00 @ Rs.1,300/–
average per tone. This quantity of iron ore has been
 19

illegally excavated and dispatched by M/s.

Serajuddin & Co. in connivance with the mining
officials. It is a fact that this pit has been excavated
in the recent past who are liable for criminal
misconduct.

The records of DDM reveals that on

19.08.2007, Sri D. K. Mishra, Joint Director Mines–
Cum–CVO, O/o. Director (Mines) had conducted a
surprise site inspection of Balda Mines of M/s.
Serajuddin & Co. Sri Mishra, in his report dated
19.08.2007, stated that the lessee had developed
quarries in between the virgin land eastern side of
Station Nos.13 & 14 of Block No.D and western side
of Station Nos.13 to 16 of Block No.E, leaving a gap
of about fifty feet on the western side of Block No.E.
The lessee has developed benches almost in north
south direction of eastern side of Block No.D and an
area of about 0.8733 ha. within virgin DLC forest in
Plot Nos.1 & 2 of village Nayagarh has been worked,
after crossing the broken land in Block No.D. The
total volume of excavated ore bearing earth was
found to be 92,903.048 CUM from which a quantity
to the extent of 55,429.669 MT iron ore has been
illegally excavated from the DLC virgin forest land
(0.8733 ha.) in addition to the excavation of 80,262
MT detected during JPV. The cost of 55,429.669 MT
 20

of iron ore was calculated approximately to be

Rs.7,02,20,963.00 by the DDM, Joda.

It is established that the lessee has been

carrying on mining operation in DLC forest land and
permission has been accorded to the mine owner by
the officials, DDM, Joda overlooking the forest area.
As per Stack Removal files Nos.60XI–22/09, 36/08
(Vol–I, II, III) 60XI–14/06, 60XI–34/05 of O/o. DD
(Mines), Joda, it is found that:–

(i) Sh. Madan Mohan Biswal, DDM had issued

passing orders for stack removal of
3,19,507.73 MT;

(ii) Sh. Ramesh Ch. Mohalick, MO had given

15,03,991.77 MT;

(iii) Sh. Routray Murmu, MO had permitted

23,30,395.059 MT;

(iv) Sh. M. Hembrum had issued stack removal

permission for 12,50,778 MT; and

(v) Sh. Aswini Ku. Mahalick had issued

permission for 25,04,533.789 MT during the
period after 19.08.2007 till the date of JPV i.e.
on 10.11.2009.

Hence, it is evident that the illegal excavation

has been done in connivance with the aforesaid
 21

mining officials who are liable for their criminal

misconduct.

During JPV by the Vigilance team, it was

found that there was a shortage of 51,043.17 MT of
size iron ore and 1,06,996.000 MT of fines.

13. Evasion of royalty and sales tax:––

The lease holder had sold the size iron ore of

51,043.17 MT without payment of royalty
amounting to Rs.13,78,166/– @ Rs.27/– per MT by
manipulating the records. The cost of 51,043.17 MT
comes to Rs.14,65,95,984/– @ Rs.2,872.00 per
MT prevailing during the 3rd quarter of the year
2009 i.e., the relevant period of JPV. The sales tax
due to be paid for the iron ore comes to
Rs.58,63,839/– @ 4% which has been evaded by
M/s. Serajuddin & Co., by manipulating the records
pertaining to production and dispatch.

The lease holder had sold the iron ore fines of

1,06,996.000 MT without payment of royalty
amounting to Rs.20,32,923.00 @ Rs.19/– per MT
by manipulating the records. The cost of iron ore
1,06,996.000 MT comes to Rs.6,96,54,396/– @
Rs.651/– per MT prevailing during the 3rd quarter
of the year 2009 i.e., the relevant period of JPV. The
 22

sales tax due to be paid for the iron ore fines comes
to Rs.27,86,176.00 @ 4%, which has been evaded
by M/s. Serajuddin & Co., by manipulating the
records pertaining to production and dispatch.

14. Excess production without lawful authority by

deviation from Mining Plan:––

It is found that during the year 1995–96, there

was excess production beyond the permitted
quantity of 1,81,100.00 MT. The approximate cost
thereof comes to Rs.1,81,10,000/–. Also, during
the year 1996–97, there was excess production
2,88,355.00 MT. The approximate cost thereof
comes to Rs.2,88,35,500/–.

Sri Sasadhar Sahoo and Late Srinibas Sethi,

DDMs who have issued dispatch passes, are liable
for allowing such illegal production and dispatch.
So also, Late S.T. Arsan, Dy. Controller of Mines,
IBM, Kolkata has conducted inspection on
07.11.1996 but has not pointed out anything about
the deviation from the mining plan for huge excess
production during the period from the year 1995–96
to 1996–97.

The mining plan for the period from the year

2002–03 to 2006–07 was approved on 11.06.2004.
 23

The excess production, during the year 2004–05,

was 2,72,834 MT and the cost thereof comes to
Rs.57,15,87,230/–. The excess production, during
the year 2005–06, was 2,94,017.500 MT and the
cost thereof comes to Rs.63,69,15,409/–. During
the year 2007–08, the excess production was
8,12,380 MT and the cost thereof comes to
Rs.253,86,87,500/–. During the year 2008–09, the
excess production was 6,21,617 MT and the cost
thereof comes to Rs.245,72,52,001/–.

15. Concerned officers failed to take action:––

Sri Anupam Nandi, the then Sr. Asst.

Controller of Mines, IBM conducted inspections on
07.07.2004 & 20.04.2006 and Sri Chinnappa
Parameswaran, A.C.M, Kolkata conducted
inspection on 09.08.2003 & 09.05.2005. They have
not pointed out the excess production of iron ore as
well as the illegal mining operation without mining
plan during the period from the year 2004–05. Sri
Bijay Kumar Nandi, DDM and Sri Manas Ranjan
Mohanty, DDM who have allowed excess production
without mining plan during from the year 2001–02
to 2004–05; are liable for showing undue official
favour the mining lease holder.
 24

The mining plan for the period from 2007–08

to 2011–12 has been approved on 04.02.2009
retrospectively by Sri Ranjan Sahai, Controller of
Mines, Central Zone, Nagpur covering the excess
production by lessee wherein no such provisions are
available under the MCDR, 1988. It is found that
there was actual production of 19,35,250 MT during
the year 2006–07 against the original approved plan
quantity of 7,09,474.500 MT. However, Sri Debasis
Gouda, Regd. No.RQP/CAL/231/95/A, has
mentioned the production to be 13,73,350 MT
which is not correct. So also, he has calculated the
reserve to be 7,79,43,173.500 MT as on 08.03.2006
against the original estimated reserve of
60,71,328.000 MT calculated initially, and
92,73,600.000 MT during the year 1992. It is
apparent that the reserve mine–able ore quantity
has been shown 7,79,43,173.500 MT which is
1284% higher in order to facilitate excess
production by the mining lease holder in view of the
China boom in the iron ore market during the
period from 2006–07 to 2010–11. In fact, the IBM
Officials have approved very high estimated
production to the tune of 900% (approx.) during the
period from 2007–08 to 2009–10.

Sri Tapan Kumar Rath, Dy. Controller of

Mines, IBM who has conducted inspection on
 25

08.11.2009 just 2 days prior to the JPV by Vigilance

team, has not pointed out the excess production,
illegal mining in forest land by the mining lease
holder and thereby allowed excess production
without taking any legal action under Rules 56 & 58
of MCDR, 1988. Sri Madan Mohan Biswal, DDM,
who has allowed excess production from the year
2005–06 to 2009–10 in violation of the IBM mining
plan, is also liable for his criminal misconduct.
During his review period 2008–09, the mine owner
produced 34,53,500 MT against IBM estimation of
28,31,883 MT, which is excess to the tune of
6,21,617 MT. He had neither pointed out in his
inspection report nor reported any violation. He had
given undue financial advantage to the mine owner
by not issuing any notice to him for excess
production.

16. Action can be taken against following officers:––

From the record, it appears that following

persons are liable for criminal misconduct. Action
can be taken u/s. 13(2) r/w. S. 13(1)(d) of P.C. Act,
1988; u/s. 201, 379, 420 and 120–B of Indian Penal
Code; u/s. 21 of MM(DR) Act, 1957 and u/s. 2 of
Forest (Conservation) Act, 1980 for conniving with
(i) Intekab Allam, Managing Partner and (ii) Md.
Mafazzular Rhaman, Partner in charge of
 26

Management at Joda of M/s. Serajuddin & Co., who

cheated the Government, committed unauthorized,
unlawful extraction of iron ore to the tune of
Rs.31,94,14,970/– and also allowed excess
production amounting to Rs.625,13,87,640/–,
thereby derived pecuniary advantage when there
was China Boom and windfall profits:––

(i) Sri Sasadhar Sahoo, Dy. Directors of Mines;

(ii) Sri Bijay Kumar Nandi, Dy. Directors of Mines;

(iii) Sri Manas Ranjan Mohanty, Dy. Directors of

Mines;

(iv) Sri Madan Mohan Biswal, Dy. Directors of

Mines;

(v) Sri Routray Murmu, Mining Officer;

(vi) Sri Ramesh Chandra Mahalik, Mining Officer;

(vii) Sri Ashwin Kumar Mahanta, Sr. Inspector of

Mines;

(viii) Sri Mangala Charan Hembram, Sr. Inspector

of Mines;

(ix) Sri Chinnappa Parameswaran, Asst. Controller

of Mines, IBM, Kolkata;

(x) Sri Anupam Nandi, Sr. Asst. Controller of

Mines, IBM;
 27

(xi) Sri Tapan Kumar Rath, Dy. Controller of

Mines, IBM;

(xii) Sri Tusharkanti Khatua, CTO, Jajpur Circle;

and

(xiii) All other officers of IBM and other

Departments who are stated in this Chapter of
M/s. Serajuddin & Co.

The Ministry of Environment & Forest,

Government of India, in its letter No.1598, dated
25.01.1999 had approved diversion of 24.446 ha. of
forest land excluding remaining portion of safety
zone over an area of 13.736 ha. An area of 219.951
ha. out of non–forest area was classified as forest
land after the enforcement of DLC vide letter
No.9224, dated 29.08.1998.

From the above facts, it is found that the

mining lease was not granted during the period
from 03.12.1979 to 02.12.1997 when the proposal
of diversion was under the consideration because
the renewal application for the mining lease was
rejected by the Government.

M/s. Serajuddin & Co. has produced

15,15,897 MT quantity of iron ore and dispatched
14,88,74,300.00 MT (approx.) without grant of
 28

mining lease, deemed refused and without

permission from the year 1980 to 1997. The balance
quantity of iron ore in stock comes to 27,154.00 MT
by the end of the year 1997.

The records of the Dy. Director, Mines reveals

that large scale illegal extraction and dispatch has
been detected with reference to the estimation by
IBM. The production dispatch figures from the year
1997 to 2009, as mentioned below, indicates that
the production from the year 2006 onwards was
proportionately very high indicting illegal extraction
and dispatch, as found during JPV as well as from
the records of the Dy. Director, Mines, Joda.

As per the records, from the year 1997 to

September, 2009; a quantity of 1,33,07,714 MT had
been excavated and a quantity of 1,15,26,895 MT
had been dispatched. Further, by adding the
previous balance of 27,154 MT at the end of the
year 1997, the total book balance should come to
18,07,973 MT. During JPV, the actual physical
stock of ore was found 14,81,374.203 MT. Thus, a
quantity of 3,26,598.797 MT iron ore worth
Rs.163,29,93,985/– has been illegally dispatched
from the lease during the above said period without
any permissions.
 29

During JPV, in the presence of the official

witnesses, it was found that digging of iron ore has
been done by excavating pits in the forest land
(virgin). The volume thereof has been calculated as
57,330 CUM. Hence, the corresponding iron ore so
illegally extracted from this virgin forest land, comes
about 1,02,620 MT and the value thereof comes to
Rs.51,31,03,500/– (approx). The mining activities
were continuing by using dumping yards in the
virgin forest land. It is also found that during JPV,
filling was continuously doing in the massive pit
digged in Plot No.606 of Balda Mouza DLC virgin
forest land which has been excavated recently in
order to destroy evidences of the illegal mining. The
physical verification revealed that illegal excavation
in the virgin forest land, has been going on in the
recent past on a massive scale, as a result of which
the production and dispatch was very high since the
year 2006–07. This could not have happened
without connivance of controlling Departments.

From the records, it is found that Sri Aswinin

Kumar Mahanta, Sr. Inspector Mines, Sri Routray
Murmu, Mining Officer and Sri Madan Mohan
Biswal, Dy. Director, Mines have been visiting the
mine and giving reports on the verification of stock
and stack. Hence, it is inferred that they have
allowed dispatch of the iron ore so illegally extracted
 30

from the DLC forest land. On the contrary, the

mining officials have submitted reports during the
year 2008 that there are no illegal mining activities
beyond the permitted area.

It is pertinent to note here that:–

(i) Sri Sasadhar Sahoo was working as Dy.

Director Mines, Joda from 31.01.1992 to
22.08.1997;

(ii) Sri Bijaya ku. Nandi was working as Dy.

Director Mines, Joda from July, 2001 to July,
2003;

(iii) Sri Manas Ranjan Mohanty was working as

Dy. Director Mines, Joda from 07.07.2003 to
04.07.2005;

(iv) Sri Madan Mohan Biswal was posted as

Deputy Director of Mines, Joda from
04.07.2005 to 10.08.2009;

(v) Sh. Routray Murmu was working as Mining

Officers from 22.07.2005 to 05.10.2009;

(vi) Sh. Ramesh Ch. Mahalik was working as

Mining Officer from April, 2005 to 31.10.2008;

(vii) Sri Mangal Charan Hembramh was working as

Senior Inspector of Mines, Joda from October,
 31

2004 to July, 2008 and was in charge of

Balada Iron Ore Mines. Similarly, Sri Aswini
Kumar Mahanta was working as Senior
Inspector of Mines in charge of Balada Iron
Ore Mines, from November, 2008 to
11.11.2009.

(viii) Sri Chinnappa Parameswaran was working as

Asst. Controller of Mines, IBM, Bhubaneswar
from 21.04.1998 to 30.07.2005;

(ix) Sri Anupam Nandi was working as Sr. Asstt.

Controller of Mines, IBM Bhubaneswar from
June, 2003 to September, 2007;

(x) Sri Tapan Kumar Rath was working as Dy.

Controller of Mines, Bhubaneswar from
17.08.2009 to 28.04.2011; and

(xi) Sh. Tusar Kanti Khatua, OFS was working as

Audit Officer, Jajpur Range from April, 2006 to
August, 2010.

17. Second Renewal application dated 27.11.1991

and others:––

Md. Intekhab Alam is the Managing Partner

and Md. Mofazzalur Rahman is the working Partner
of M/s. Serajuddin & Co., a Partnership Firm duly
registered under the Act.
 32

The firm filed an application for second

renewal on 27.11.1991 which was forwarded by the
Collector, Keonjhar to the Director of Mines in letter
No.26, dated 02.01.1992 without any
recommendation. The Steel & Mines Department
wrote to the Director of Mines, vide letter No.12639,
dated 05.11.1992 that in view of the stay order
dated 20.08.1979 of the Hon’ble Court, the
application had to be reviewed before renewal and
instructed to submit a detail report.

The Collector, Keonjhar, on the basis of the

administrative report dated 27.01.1992 of Sri
Pankaj Lochan Rout, Ex–DM, Joda, has submitted
the report to the Director of Mines, vide letter
No.509, dated 12.02.1993 which indicates that the
mining lease holder is carrying on mining without
approval of the appropriate authority since
04.06.1979. In the said letter, an area of 43.325
ha. has been cited as objectionable area as below.

Total area : 882.44 Acres (332.830 ha.)

Objectionable area :––

Gochara : 5.68 Acres
Rasta : 7.03 Acres
Jungle : 15.85 Acres
Gramya Jungle : 78.50 Acres
Total : 107.06 Acres (43.325 ha.)
 33

Thus, the total non–objectionable area comes

to 775.38 Acres (289.505 ha.) only.

The noting, para–wise comments and records

in the file clearly reveal that the mining lease holder
had received the order of cancellation on
19.07.1979 and he had got no right to work over
that area after 15 days from the receipt of letter i.e.
not beyond 03.08.1979. The Hon’ble High Court’s
order was issued on 06.08.1979. It is also revealed
that M/s. Serajuddin & Co. had submitted false
information to the Government about so called stay
order dated 02.07.1979 and there is no reference of
Writ Petition or certified copy of the judgment dated
02.07.1979. Sri P. C. Nayak, the then Dy. Secretary
had issued letter No.9347, dated 13.07.1979
wrongly to the Collector, Keonjhar without having
records and without authority to maintain status–
quo.

As stated earlier, Sri S. C. Mishra, A.L.R. had

given the opinion on the orders of the Hon’ble High
Court of Kolkata, stating that if there is no valid
mining lease and the authorities have already
rejected the mining lease application before
06.08.1979, then the status–quo as on 06.08.1979
means the mining lease holder has got no valid
 34

license to carry on mining operation as on

06.08.1979.

Hence, the status–quo as on 06.08.1979 and

20.08.1979 means that the possession was with the
Government and the Collector, Keonjhar should
have maintained the status–quo and no mining
operation by M/s. Serajuddin & Co. should or could
have been allowed.

M/s. Serajuddin & Co. had submitted a

proposal for diversion of forest land on 26.12.1991
to DDM, Joda. The same has been submitted to
DFO, Keonjhar, vide letter No.1652 dated
31.01.1992 with the details of land which is as
under:–

Total area : 335.594 ha.

Forest area : 38.183 ha.
Surface right within forest area : 5.908 ha.
Broken up area prior to 25.10.1980 : 2.246 ha.

During JPV conducted by Forest and Mines

Department on 16.12.1998, an area of 116.311 ha.
was found as total non–forest land broken and an
area of 5.908 ha. was found as total forest land
broken. The actual broken up area before
25.10.1998 was 1.618 ha.
 35

The new virgin forest land had been broken

from 10.05.1992 to 16.05.1998 which was about
4.290 ha. The proportionate dispatch of iron ore
from 4.290 ha. comes to 4,283.723 MT and the cost
thereof comes to Rs.21,41,861.50 (i.e. @ Rs.500/–
per MT). M/s. Serajuddin & Co. and Sri Sasadhar
Sahoo, DDM, who had allowed mining operation
beyond the broken forest land after knowing the
same since 10.05.1992, are liable for the same.

During the year 1996 only, the mining lease

holder had been allowed dispatch of 2,58,490 MT
against the average dispatch of around 50,000 MT
in the previous years for which Sri Sasadhar Sahoo,
DDM and the IBM Officials are responsible.

From 31.01.1992 to 22.08.1997, Sri Sasadhar

Sahoo was working as DDM, Joda. The mine owner
submitted DRP during the period of Sh. S. D. Sahoo
as DDM, Joda for consideration of second renewal
of mining lease. It is the duty of Sri Sahoo to stop
stack removal, since mine owner had admitted that
he had broken up 5.908 ha. of forest land for
mining activities. Instead of that, Sri Sahoo allowed
mining operation beyond the broken forest land
after fully knowing the same (since submission of
DRP proposal on 10.05.1992). The total dispatch
from this forest land from the year 1980 to
 36

16.12.1998 was 1,22,060.15 MT. M/s. Serajuddin

& Co. and Sri Sasadhar Sahoo, DDM, who has
allowed mining operation beyond the broken forest
land from 10.05.1992 till 22.08.1997, are liable for
their criminal misconduct.

The Forest and Environment Departments,

Government of Orissa recommended DRP of 24.446
ha. to Government of India vide letter No.23936,
dated 28.10.1996. The MoEF, Government of India
granted Stage–I clearance for DRP of 24.446 ha.,
vide letter No.8–119/FC, dated 06.06.1997 and,
subsequently, granted Stage–II clearance, vide letter
No.8–119/96–FC, dated 11.12.1998 for a period of
10 years co–terminus with the lease under the
MM(DR) Act, 1957. Pursuant thereto, the State
Government, vide order No.1131 dated 15.02.1999,
granted the second renewal for a period of 20 years
with retrospective effect from 03.12.1997.

18. DRP for DLC land:––

The total area of 335.594 ha. consists of:–

(i) 38.182 ha. Revenue forest;

(ii) 219.951 ha. DLC forest; and
(iii) 77.461 ha. non–forest land.
 37

The MoEF, vide letter dated 11.12.1998, had

approved diversion of forest land of 24.446 ha.
(revenue forest) under FCA, 1980 for a period of 10
years. However, before that, the lessee had
extracted iron ore in 4.290 ha. of revenue forest, as
stated hereinabove.

Subsequently, the MoEF, vide letter dated

12.03.2012, had allowed the lessee to work in
broken–up area of 112.76 ha. of DLC forest.
However, there was no approval from MoEF for the
said area for the period from 29.08.1998 to
12.03.2012. From Satellite Images, it is found that
the lessee has carried out mining activities in excess
forest area of 30.00 ha. in violation of the FCA,
1980. The actual broken–up area, as on date, is
about 165.00 ha. The lessee was supposed to obtain
FC approval for DLC forest land before signing the
lease deed agreement on 21.06.1999, as directed by
the Central Government. However, no such approval
has been obtained till date. A proposal was
submitted and the same was pending for a long
period on one pretext or other, as discussed
hereinabove.

Meantime, according to the Order passed in

WP No.205/95, dated 12.12.1996 of the Hon’ble
Supreme Court of India, the DFO, Keonjhar took
 38

follow up action to identify the forest area (DLC

Forest). The DFO, Keonjhar, vide letter No.205
dated 06.01.1997, intimated the lessee to stop all
ongoing activities within any forest i.e., DLC forest
land forthwith by citing the aforesaid order of the
Hon’ble Supreme Court. The mining lease holder
submitted an application for grant of surface right
area permission over an area of 48.275 ha. and the
Collector, Keonjhar referred the matter to the DFO,
Keonjhar for verification, vide letter No.9572, dated
30.08.1997. A reminder was sent to the DFO, vide
letter No.1391, dated 15.05.1998. Sri Vikram Singh,
IFS issued a letter No.2429 dated 27.02.1998 for
the working permission in broken forest area which
expired on 01.03.1998 by endorsing copies to the
DDM, Joda.

The District Level Committee of Keonjhar

District had finalized the identification of forest land
vide letter No.2120 dated 03.09.1997 in which the
DFO, Keonjhar was convener member. The DFO,
Keonjhar, vide letter No.9224 dated 29.08.1998
intimated the lessee that an area was 538.88 Acres
(218.07 ha.) is treated as forest land and instructed
to submit DRP by 25.09.1998. The DFO, Keonjhar;
vide letter No.9987 dated 18.09.1998, instructed to
all concern including the DDM, Joda to conduct
JPV on the DLC forest land. M/s. Serajuddin & Co.,
 39

vide letter dated 24.09.1998, submitted a proposal

to the DDM, Joda, for DRP over DLC forest land for
218.000 ha., with a copy to the DFO but the letter
and enclosures are not available in the DDM file.
Again, M/s. Serajuddin & Co. submitted a letter
dated 19.10.1998 for DRP with broken up land to
the DDM, Joda with a copy to the DFO, by
mentioning the total broken up area to be 112.773
ha.

19. Joint Physical Verification by the officers of

connected Departments for DLC:––

A Joint Physical Verification for DLC (map and

report) was conducted on 16.12.1998 by the DM,
DFO, Chief Surveryor & FRO and following was
noted:–

Total forest land within lease hold area (ha.):–

Village Forest : 38.182 ha.
DLC forest : 219.951 ha.
Non forest : 79.708 ha.
Total lease area : 335.890 ha.

Broken forest land within the lease area (ha.):–

Village Forest : 1.618 ha.
DLC forest : 112.773 ha.
Non forest : 3.558 ha.
Total lease area : 117.949 ha.
 40

The above JPV report which is similar and

almost same to that of the Petition of M/s.
Serajuddin & Co., was sent to the DFO, Keonjhar
vide letter No.21198, dated 29.12.1998. M/s.
Serajuddin & Co. submitted Petition to the
Collector, Keonjhar for allotting land against the
diversion of 92.895 ha. of DLC forest land (i.e.
112.773 ha. broken DLC forest minus 12.332 ha.
safety zone). In this regard, the Collector, Keonjhar;
vide letter No.3035 dated 17.12.2003, asked the
DFO to submit the report. The DFO asked the
Forest Range Officer for sample enumeration of the
virgin area and 100% enumeration in the broken up
area and submit enumeration list in his letter dated
06.12.2003.

Meantime, the proposal for diversion of

111.965 ha. of DLC forest land was sent to the
DFO, Keonjhar by the CCF, Nodal Officer, vide letter
No.16042 dated 14.06.2006, for field verification,
site inspection, securitization of the proposal and to
comply Part–II of the application. The FRO
submitted the enumeration list in six copies to the
DFO, vide letter No.319 dated 28.06.2006 but the
enumeration list has been removed from the file of
DFO. The ACF who submitted the note after receipt
of the letter dated 28.06.2006 from the FRO, did not
mention anything about the enumeration list but
 41

submitted a draft, requesting M/s. Serajuddin &

Co. to submit DRP with the plans, etc. which was
approved by the then DFO, Keonjhar on
22.07.2006. All the letters were put up before the
DFO on 03.02.2007 with a request for site
inspection and the DFO also approved the same but
the lessee was asked to submit the plan on broken
up area, vide letter No.5395 dated 28.08.2008. The
lessee, vide letter dated 09.01.2008, had submitted
the broken up area map to the DFO but the said
plan is not available in the file. In response to the
letter No.8928 dated 07.05.2008, Sri Pradip Raj
Karat, IFS, DFO, in his letter No.7549 dated
07.11.2008, reported as below:–

Total DLC area : 219.951 ha.

Broken up DLC area : 112.773 ha.
Virgin area : 107.178 ha.
DRP applied : 111.965 ha.
Safety zone : 000.808 ha.

The DFO, Keonjhar has not submitted the

proposal for diversion of 111.965 ha. of DLC forest
land till the date of JPV, i.e. 11.11.2009. It is found
that on 03.02.2007, the draft proposal was
prepared after JPV by mentioning the NPV of
Rs.6,49,39,700/– and the cost of value of timber of
Rs.11,94,383/–. Sri Pradip Raj Karat, IFS, DFO did
 42

not submit the DRP. M/s. Serajuddin & Co. has

deposited Rs.17,03,75,780/– on 26.07.2010
towards the NPV for the entire forest land as per the
recommendation of CEC. It is to state here that
NPV has to be paid after Stage–I approval.

20. Violations noted by Vigilance Team:––

The violations, noted through JPV by Vigilance

Team, are as under:–

(i) The lessee has crossed the lease boundary to

an extent of 1.5 mtrs. by dumping over burden
in between Pillar Nos.59 to 60.

(ii) The safety zone was encroached by excavating

the land to an extent of 3 mtrs. width and 2
mtrs. length in between Pillar Nos.59 to 60
from Pillar No.59.

(iii) There was old excavation having dense

vegetation from boundary Pillar Nos.46 to 47
and it exceeds 15X6 mtrs. beyond the
boundary lease area and the safety zone
portion in between ML boundary Pillar Nos.8
to 9, as encroachment.

(iv) It is found that major portion of Plot No.606 is

coming under DLC virgin land. The DLC virgin
 43

area of 0.522 ha. at Plot No.606 (Block–B) in

Mouza–Balda, was illegally excavated and the
volume of excavation was 46,980 CUM with
depth of 9 mtrs. The quarry was recently filled
in to cover up the illegal mining and destroyed
the evidence. It is found that the mining lease
holder has started to cover up such illegal
excavation by filling the pit with fresh soil
which amount to criminal misconduct u/s.
201 of IPC. 46,980 CUM was arrived on the
basis of following calculation:–

0.522 ha. comes to 5,220 Sqm. The CUM is

derived by multiplying the height of excavation
(9 mtrs.) which comes to 46,980 CUM (5220
Sqm. X 9 mtrs).

(v) The mine owner had illegally made a dump

yard for the area of 0.868 ha. in DLC area in
Plot No.606.

(vi) Illegal excavation was found in DLC virgin Plot

No.1 in K. No.240 Parabat–II under Mouza–
Nayagarh outside the broken up pillars from
14 to 15. It is found that illegal excavation was
carried out in part of DLC virgin Plot No.1 in
Mouza–Nayagarh outside the broken up pillars
from 14 to 15. On measurement, it is found
 44

that an area of 0.207 ha. has been illegally

excavated. The volume of excavation is 10,350
CUM approximately with average height of 5
mtrs. 10,350 CUM was arrived on the basis of
following calculation:–

0.207 ha. comes to 2,070 Sqm. The CUM is

derived by multiplying the height of excavation
(5 mtrs.) which comes to 10,350 CUM (2,070
Sqm. X 5 mtrs.)

(vii) Near quarry No.4, one screening machine, two

excavators and one loader were deployed in
DLC broken up area. Near quarry No.7, one
screening plant and four excavators had also
been deployed.

21. Unlawful mining operations in DLC Forest:––

It was found that the mine owner was

continuing mining activities in the DLC forest area
of 219.951 ha. without DRP clearance. The lessee
continued mining operation in broken up as well as
in virgin DLC land.

Because of unlawful mining operations and

extraction of minerals, value thereof is required to
be recovered from the lessee. Said amount is
worked out on the basis of the record. The total
 45

extraction of iron ore from the illegally excavated

pits comes as under:––

A. Volume of excavation
in Plot No.606 : 46,980 CUM

Volume of excavation
in Plot No.01 : 10,350 CUM

Total : 57,330 CUM

Recovery of percentage of iron ore from

the total volume of excavation is 40% and the
conversion factor of weight has been calculated
as per the Approved IBM Plan vide No.2008,
dated 04.02.2009 for the period from 2007–08
to 2011–2012. Thus, the total recovery from
57,330 CUM has been calculated as below:–

Recovery of ore : 57,330 CUM X 40%

Weight of ore : 22,932 CUM X 3.5%
= 80,262 MT

The cost of which comes to

Rs.11,23,66,800/– (80,262 MT X Rs.1,400/–
average). This quantity of iron ore has been
illegally excavated and dispatched by M/s.
Serajuddin & Co. in connivance with the
mining officials. It is a fact that this pit has
been excavated in the recent past.
 46

B. On detail scrutiny of the records, the book balance

as on 10.11.2009 i.e., the date of JPV has been
calculated by taking into account of the opening
balance of production and that of dispatch during
the period from 1997 till the date (10.11.2009). The
mine owner has not shown iron ore fines produced
by him in its return from the years 1997 to 2003.
Thus, ore production from the above period (1997 to
2003) was mentioned with closing balance below:–

Year As per verification Closing

Balance
Production Dispatch
OB as on 11,713.30 0.00
01.01.1997
1997 4,30,000.00 4,33,052.72 8,660.58
1998 3,56,000.00 3,54,999.20 9,661.38
1999 1,82,000.00 1,80,523.15 11,138.23
2000 1,71,000.00 1,74,316.18 7,822.05
2001 1,74,000.00 1,73,493.29 8,328.76
2002 2,67,000.00 2,53,822.05 21,506.71
2003 7,05,000.00 7,10,740.39 15,766.32
 47

C. From the year 2004 onwards, the mine owner submitted production and dispatch of iron
ore and fines separately. Accordingly, separate production & dispatch of iron ore and
fines were taken into consideration to find out the closing book balance of both iron c’
ore and fines separately.

The ore closing balance as on 31.12.2003 was found to be 15,766.32 MT. This
figure was carried over as opening balance of the ore production as on 01.01.2004. The
opening balance of fines as on 01.01.2004 was NIL. Details are shown in the table
below:–

C’ ore Fines
Year
Production Dispatch CB Production Dispatch CB
OB 15,766.32
2004 7,95,500.00 793,366.60 17,899.72 91,000.00 79,638.64 11,361.36
2005 522,000.00 520,914.17 18,985.55 501,000.00 451,280.66 61,080.70
2006 1,325,150.00 1,287,139.82 56,995.73 565,800.00 537,317.90 89,562.80
2007 1,249,650.00 1,157,185.42 149,459.58 934,350.00 641,732.95 382,179.05
2008 1,820,850.00 1,473,855.11 496,454.47 1,522,650.00 940,517.47 964,311.58
2009 10,87,550.00 11,33,470.43 4,50,534.04 10,11,624.00 7,87,056.29 11,88,879.29

OB : Opening Balance CB : Closing Balance

 48

D. During the JPV, out of the total physical balance,

size iron ore comes to 3,99,490.867 MT and fines
comes to 10,81,883.336 MT. Thus, the difference of
stock in sized ore and fines is calculated as below:–

Type of ores Closing Physical Difference

Book Balance (MT)
Balance available (MT)
(MT) as on
the date of
JPV i.e.
10.10.2009

Iron ore 4,50,534.04 3,99,490.867 51,043,173

(10–80, 10–30, 5–18, (Less)
30–mm, lump &
ROM)

Fines 11,88,879.29 10,81,883.336 1,06,995.954

(BD fines, crusher (Less)
and screened fines)

From the above table, it is found that there is a

difference of 51,043.173 MT of size iron ore
between book balance and physical balance. The
mining lease holder has sold the size iron ore of
51,043.17 MT without payment of royalty,
amounting to Rs.13,78,166/– @ Rs.27/– per MT
and the cost of which comes to Rs.14,65,95,984/–
@ Rs.2,872.00 per MT prevailing during the third
quarter of the year 2009 i.e. the relevant period of
JPV. The sales tax due to be paid on the difference
quantity of 51,043.173 MT size iron ore comes to
 49

Rs.58,63,839/– @ 4%, which has been evaded by

M/s. Serajuddin & Co., by manipulating the records
pertaining to production and dispatch.

It is also found that there was a difference of

about 1,06,996.000 MT fines between physical
balance and the book balance, as shown in the
above Table. The mining lease holder has sold the
iron ore fines of 1,06,996.000 MT without payment
of royalty, amounting to Rs.20,32,923/– @ Rs.19/–
per MT by manipulating records and the cost of
which comes to Rs.6,96,54,396/– @ Rs.651/– per
MT, prevailing during the 3rd quarter of the year
2009 i.e. the relevant period of JPV. The sales tax
due to be paid on difference quantity of
1,06,996.000 MT iron ore fines comes to
Rs.27,86,176/– @ 4%, which has been evaded by
M/s. Serajuddin & Co., by manipulating the records
pertaining to production and dispatch.

Therefore, the Mining Officials, namely Sri

Madan Mohan Biswal, DDM; Sri Routray Murmu,
M.O. and Sri Aswini Kumar Mahanta, SIM, who had
issued dispatch passes and M/s. Serajuddin & Co.
are liable for their criminal misconduct.
 50

E. The illegal over production without lawful authority, as against the estimated
production of mining plan or without mining plan of IBM is given below:–

Year Production (in Production (in Reference No. and Discrepancy Remarks
MT) as MT) as per DDM Date of IBM Plan
stipulated by office
IBM
1995–96 81,900.000 2,63,000.000 CAL/OS/KJ/FE/MP– Excess No modified
183 dated 03.01.1992 1,81,100.000 plan
for the period from
1991–92 to 1995–96
1996–97 1,41,645.000 4,30,000.000 No plan Excess No approved
2,88,355.000 plan
1997–98 4,69,494.000 4,51,000.00 No plan Less –do–
18,494.000
1998–99 8,30,096.000 2,88,000.00 CAL/OS/KJ/Fe/MS– Less –do–
95 dated 08.06.1998 542096.000
for the period from
1996–97 to 2000–01
1999–2000 9,74,262.000 1,77,000.000 –do– Less –do–
797262.000
2000–01 11,82,501.000 1,73,000.000 –do– Less –do–
10009501.000
2001– 02 12,26,058.000 1,52,000.000 –do– Less –do–
1074058.000
2002–03 7,13,079.500 3,81,000.000 –do– Less –do–
3,32079.500
2003–04 7,17,740.000 7,46,000.000 –do– Excess –do–
28,260.00
 51

Year Production (in Production (in Reference No. and Discrepancy Remarks
MT) as MT) as per DDM Date of IBM Plan
stipulated by office
IBM
2004–05 7,26,166.000 9,99,000.000 BBS/KJ/FE/MS–95 Excess –do–
dated 11.06.2004 for 2,72,834.000
the period from 2002–
03 to 2006–07
2005–06 7,35,682.500 10,29,700.000 –do– Excess Modified 14,62,125
2,94,017.500 Scheme
BBS/KJ/
Fe/MS–95
2006–07 7,09,474.500 19,35,250.000 –do– Excess 14,82,425
dated
12,25,775.5
08.03.2006
for the years
2005–06 and
2006–07
2007–08 19,67,620.000 27,80,000.00 –do– Excess –do–
8m12m
380.000.00
2008–09 28,31,883.00 34,53,500.00 2008 dated Excess –do–
04.02.2009 for the 6,21,617.000
period from 2007–08
to 2011–12
2009–10 37,46,112.000 12,93,174.000 –do– 26,75,614.000 –do–
Up to December,
2009
 52

F. It is found that M/s. Serajuddin & Co. has raised

iron ore by engaging Raising Contractors namely,

(i) M/s. Zafer Hayat;

(ii) M/s. S M Enterprises;
(iii) M/s. D. K. Naik;
(iv) M/s. S. A. Mining (Saroj Aliza Mining);
(v) M/s. Modern Mining (P) Ltd.; and
(vi) M/s. Trinity Commercial (P) Ltd.

Whether the raising contractors are

responsible for the illegal excavation could not be
conclusively substantiated, as there was no record
available in the O/o. the Mine owner nor with the
O/o. DD, Mines. But surprisingly, work orders
were submitted to the Commission by the lessee.
The genuineness of these work orders should be
verified.
 53

G. Sales Tax:––

M/s. Serajuddin & Co. has paid sales tax (VAT), CST to the Assessing Authority of
Commercial Taxes by declaring the sale value of iron ore. According to his declaration, in
the prescribed returns under VAT, the sales tax and CST have been assessed. The
prevailing market value of the iron ore dispatched/sold during the financial year has
been worked out from the records of the DDM, Joda and the market rate of OMC. The
details of information of tax collected and the prevailing market value, as per the records
of the Commercial Tax and DDM, are given below:–

Quantity Export Sale

Balance Value of domestic
Shown as per quantity (as Tax suppressed
Period domestic sale sale as per OMC Tax @ 4 % Tax Paid
DDM per sale (6–7)
quantity (2–3) rate
Records register)

1 2 3 4 5 6 7 8

2005–06 929303.980 353948.980 575355.000 717595160.79 28703806.00 14704736.00 13999070.00

2006–07 1933303.000 392152.250 1541150.750 1982881428.73 79312057.00 44030258.00 35281799.00
2007–08 1988007.200 211912.360 1776094.840 2494288182.00 99771527.00 72590788.00 27180739.00
2008–09 2629273.800 465195.520 2164078.280 3691865899.87 147674636.00 103904600.00 43770036.00
2009–10 1166970.000 367103.290 799866.710 1024486835.89 40979473.00 30560676.00 10418797.00
Total 8646857.980 1790312.400 10437170.380 9911117507.28 396441499.00 265791058.00 130650441.00
 54

From the above records, it is found that M/s.

Serajuddin & Co. has suppressed payment of sales
tax by submitting fabricating statement on quality
and value of the iron ore and thereby has caused a
heavy loss to the Government Exchequer to the
tune of Rs.13,06,50,441/–.

H. Income Tax

The observations are also made by Income

Tax Department in their assessment for under
evaluation.

It is found that the mining lease holder is a

registered dealer under VAT Act and has been
submitting monthly returns to the Circle
Commercial Tax Officer at Barbil, District Keonjhar.
M/s. Serajuddin & Co. has registered as a dealer
jointly for both iron ore produced / dispatched from
Balda Iron Mines and Manganese ore produced /
dispatched from Guruda Manganese Mines. It has
submitted the monthly returns by mentioning the
sale value of both the Iron and Manganese jointly
without segregating individual items in order to
jumble up the matter. The Assessing Officer has
collected the C.T. and CST at the prevailing rate of
4% on the sale value, as it is declared in the returns
submitted by the dealer.
 55

As per the provisions of the VAT Act and

Rules, the tax as per the Self–assessment mode, the
Assessment Officer would collect the tax relying on
the returns filed by the dealer. But the declared
value shall be scrutinized and evaluated during
Audit Assessment and this has been done by Sri
Tusharkanti Khatua, CTO, Jajpur Circle for the
years 2005–06 to 2007–08 who has scrutinized all
the relevant records. However, Sri Khatua, CTO
failed to find out the actual sale value of iron ore on
the basis of the prevailing market rate. He has also
not mentioned about the dispatch quantity in the
Audit Report. Such audit does not have meaningful
assessment. Sri Tusharkanti Khatua, CTO has
misused his official position and has shown undue
favour to M/s. Serajuddin & Co. by suppressing the
actual sale value in the Audit Report and is liable
for action for his omissions, commissions and
misconduct.

Based on records and information, the Sales

Tax Department should reassess the loss to State
and take all the necessary actions under the law.
 56

22. Summary of the loss to the Government:––

The total pecuniary advantage derived by the

mining lease holder by fabricating records in
connivance with the officials of the Mines
Department, IBM and others and loss to the State
Government, have been summarized below:–

A. All mining operations by M/s. Serajuddin &

Co. from 04.06.1979 to 03.12.1997 were ab–
initio illegal. During this period, the mining
lease holder has extracted 15,15,897.00 MT
and dispatched 14,88,743.00 MT quantity of
iron ore and the value thereof comes to
Rs.14,88,74,300/–.

Sri Pankaj Lochan Rout, Sri Pratap

Kumar Rath and others (during this period)
are responsible for allowing mining operation
without valid lease. Sri Sasadhar Sahoo,
during whose period, the RML was
recommended did not stop the illegal mining
immediately, though it was stated in record
that M/s. Serajuddin & Co. had been carrying
on illegal mining operation since 04.06.1979.
Therefore, he is also responsible for criminal
liability by extending undue official favour to
M/s. Serajuddin & Co. There is no provision of
retrospective approval under the law.
 57

B. The lessee was allowed to enter into virgin

forest and was also allowed to do mining
without having approval under FC Act, 1980.
The proportionate dispatch of ore from 4.290
ha. comes about 4,283.723 MT (i.e.
1,22,060.150 MT/122.239 X 4.290). The
approximate cost comes to Rs.21,41,862.00 @
Rs.500/– per MT.

Sri Sasadhar Sahoo, DDM, who has

allowed mining operation beyond the broken
forest land after knowing the same since
10.05.1992, is liable for his misconduct and
undue favour to lessee.

C. The lessee had carried out unauthorized

mining in the DLC forest land without FC
approval. The cost of iron ore in the DLC forest
land comes to Rs.10,43,40,600.00 (80,262
MT X Rs.1,300/– average). The quantity of iron
ore has been illegally removed and dispatched
by M/s. Serajuddin & Co. in connivance with
the mining officials. It is a fact that the pit
from where ore was extracted has been
excavated in the recent past.

Sri M. M. Biswal, DDM; Sri Routray

Murmu, M.O.; Sri Ramesh Chandra Mahalik,
M.O.; Sri Ashwini Kumar Mahanta, SIM and
 58

Sri M. C. Hembram, SIM are liable for criminal

misconduct for conniving and not taking
appropriate action.

D. The records of DDM reveals that on

19.08.2007, Sri D. K. Mishra, Joint Director
Mines–Cum–CVO, O/o. Director (Mines) had
conducted a surprise site inspection of Balda
Mines of M/s. Serajuddin & Co. Sri Mishra, in
his report dated 19.08.2007, stated that the
lessee had developed quarries in between the
virgin land eastern side of Station Nos.13 & 14
of Block No.D and western side of Station
Nos.13 to 16 of Block No.E, leaving a gap of
about fifty feet on the western side of Block
No.E. The lessee has developed benches almost
in north south direction of eastern side of
Block No.D. An area of about 0.8733 ha.
within virgin DLC forest in Plot Nos.1 & 2 of
village Nayagarh has been worked out, after
crossing the broken land in Block No.D. The
total volume of excavated ore was found to be
92,903.048 CUM from which a quantity to the
extent of 55,429.669 MT iron ore has been
illegally excavated from the DLC virgin forest
land (0.8733 ha.) in addition to the excavation
of 80,262 MT detected during JPV. The cost of
55,429.669 MT of iron ore was calculated
 59

approximately to be Rs.7,02,20,963.00 by the

DDM, Joda.

For this, Sri M. M. Biswal, DDM, Sri

Routray Murmu, M.O., Sri Ramesh Chandra
Mahalik, M.O., Sri Ashwini Kumar Mahanta,
SIM, Sri M.C. Hembram, SIM are liable for
criminal misconduct for conniving and not
taking appropriate action.

E. Non payment of royalty and sales tax:––

The M.L holder has sold the iron ore of

51,043.17 MT without payment of royalty
amounting to Rs.13,78,166.00 @ Rs.27/– per
MT by manipulating records as discussed
earlier.

The cost of 51,043.17 MT iron ore comes

to Rs.14,65,95,984/– @ Rs.2,872.00 per MT
prevailing during the 3rd quarter of the year
2009 (i.e. the relevant period of JPV). The sales
tax due to be paid for the iron ore comes to
Rs.58,63,839.00 @ 4 %, which has been
evaded by M/s. Serajuddin & Co. while
manipulating the records pertaining to
production and dispatch.

The Mining Officials, namely, Sri Madan

Mohan Biswal, DDM; Sri Routray Murmu,
 60

M.O. and Sri Aswini Kumar Mahanta, SIM who

have issued passing orders in favour of M/s.
Serajuddin & Co. are liable for their criminal
misconduct for conniving and not taking
appropriate action.

The M.L holder has sold the iron ore fines

of 1,06,996 MT without payment of royalty
amounting to Rs.20,32,923.00 @ Rs.19/– per
MT by manipulating records as discussed
earlier in the present lease summary.

The cost of 1,06,996 MT iron ore comes

to Rs.6,96,54,396/– @ Rs.651/– per MT
prevailing during the 3rd quarter of the year
2009 (i.e. the relevant period of JPV). The sales
tax due to be paid for the iron ore comes to
Rs.27,86,176.00 @ 4%, which has been
evaded by M/s. Serajuddin & Co. by
manipulating the records pertaining to
production and dispatch.

The Mining Officials, namely, Sri Madan

Mohan Biswal, DDM; Sri Routray Murmu,
M.O. and Sri Aswini Kumar Mahanta, SIM who
have issued passing orders in favour of M/s.
Serajuddin & Co. are liable for their criminal
misconduct for conniving and not taking
appropriate action.
 61

In all the aforesaid cases, M/s.

Serajuddin & Co. is also liable for its criminal
misconduct.

F. Excess Production:––

It is found that during the year 1995–96,

there was excess production of 1,81,100 MT
iron ore and the cost of which comes to
Rs.1,81,10,000/–. During the year 1996–97,
there was excess production of 2,88,355 MT
of iron ore and the cost of which comes to
Rs.2,88,35,500/–.

Sri Sasadhar Sahoo and Late Srinibas

Sethi, DDMs who have issued order for
dispatch passes, are liable for allowing such
illegal production and dispatch. So also, Late
Sri S. T. Arsan, Dy. Controller of Mines, IBM,
Kolkata had conducted inspection on
07.11.1996 but had not brought on record
anything about the deviation of mining plan by
having huge excess production during the
years 1995–96 and 1996–97 by lessee.

G. The mining plan for the period from the year

2002–03 to 2006–07 was approved on
11.06.2004. The excess production during the
year 2004–05 was 2,72,834 MT and the cost of
 62

which comes to Rs.57,15,87,230/–. The

excess production during the year 2005–06,
was 2,94,017.500 MT and the cost of which
comes to Rs.63,69,15,409/–. During the year
2007–08, the excess production was 8,12,380
MT and the cost of which comes to
Rs.253,86,87,500/–. During the year 2008–
09, the excess production was 6,21,617 MT
and the cost of which comes to
Rs.245,72,52,001.00. For the details, the
report of Vigilance Department submitted to
the Commission may be referred.

Sri Anupam Nandi, the then Sr. Asst.

Controller of Mines, IBM conducted inspection
on 07.07.2004 and 20.04.2006 and Sri
Chinnappa Parameswaran, A.C.M, Kolkata
conducted inspection on 09.08.2003 and on
09.05.2005. They have not pointed out the
excess production of iron ore as well as the
illegal mining operation without mining plan
during the period 2004–05 at all. Sri Bijay
Kumar Nandi, DDM and Sri Manas Ranjan
Mohanty, DDM who have allowed excess
production without mining plan from the year
2001–02 to 2004–05 are liable for showing
undue official favour to the M.L. holder.
 63

Therefore, action should be taken against

them.

H. Violation and misuse of Rule 10 of MCDR,

1988 for modification of mining plan:––

The mining plan for the period from

2007–08 to 2011–12 have been approved on
04.02.2009 retrospectively by Sri Ranjan
Sahai, Controller of Mines, Central Zone,
Nagpur. It is found that there was actual
production of 19,35,250 MT during the year
2006–07 against the original approved plan
quantity of 7,09,474.500 MT. However, Sri
Debasis Gouda, Regd. No.RQP/CAL/231/
95/A, has mentioned the production as
13,73,350 MT which was not correct. Not only
this, he has calculated the reserve to be
7,79,43,173.500 MT as on 08.03.2006 against
the original estimated reserve of 60,71,328 MT
calculated initially, and 92,73,600 MT during
1992. It is apparent that the reserve mine–able
ore quantity has been shown 7,79,43,173.500
MT which is 1284% higher in order to facilitate
excess production by the M.L. holder in view of
the China boom in the iron ore market during
the period from 2006–07 to 2010–11. In fact,
the IBM Officials have approved very high
 64

estimated production to the tune of 900%

(approx.) during the period from 2007–08 to
2009–10.

Sri Tapan Kumar Rath, Dy. Controller of

Mines, IBM who has conducted inspection on
08.11.2009 just 2 days prior to the JPV by
Vigilance team, has not pointed out the excess
production, illegal mining in forest land by the
M.L. holder and thereby allowed excess
production without taking any legal action
under Rules 56 and 58 of MCDR, 1988. Sri
Madan Mohan Biswal, DDM who has allowed
excess production and issued dispatch passes
during the period from 2005–06 to 2009–10 in
violation of the IBM plan, is also liable for his
criminal misconduct. During the year 2008–
09, the mine owner produced 34,53,500 MT
against IBM estimation of 28,31,883 MT,
which is excess to the tune of 6,21,617 MT. He
did not point out in his inspection report for
this violation. He had given undue financial
advantage to the mine owner by not issuing
any notice to the mine owner for excess
production.

Rather Sri Ranjan Sahai rewarded the

lessee by approving mining plan with
retrospective effect by covering illegal excess
 65

production. There is no such provision in the

law. Hence, action should be taken against all
the officials for their misconduct, omissions
and commissions.

I. As discussed earlier, M/s. Serajuddin & Co.

has also suppressed payment of sales tax by
submitting fabricating statement on quality of
grade and value of the iron ore causing loss to
the Government Exchequer to the tune of
Rs.13,06,50,441/– and thereby cheated the
Government.

In view of the aforesaid discussion,

following persons are liable for criminal
misconduct which could be u/s. 13(2) r/w. S.
13(1)(d) of the P.C. Act, 1988; u/s. 201, 379,
420 and 120–B of Indian Penal Code; u/s. 21
of the MM(DR) Act, 1957 and u/s. 2 of the
Forest (Conservation) Act, 1980 for conniving
with (i) Intekab Allam, Managing Partner and
(ii) Md. Mafazzular Rhaman, Partner in charge
of Management at Joda of M/s. Serajuddin &
Co., who cheated the Government, committed
unauthorized, unlawful extraction of iron ore
to the tune of Rs.31,94,14,970/– and also
allowed excess production amounting to
Rs.625,13,87,640/–, thereby derived
 66

pecuniary advantage when there was China

Boom and windfall profits:––

(i) Sri Sasadhar Sahoo, Dy. Directors of

Mines;

(ii) Sri Bijay Kumar Nandi, Dy. Directors of

Mines;

(iii) Sri Manas Ranjan Mohanty, Dy. Directors

of Mines;

(iv) Sri Madan Mohan Biswal, Dy. Directors

of Mines;

(v) Sri Routray Murmu, Mining Officer;

(vi) Sri Ramesh Chandra Mahalik, Mining

Officer;

(vii) Sri Ashwin Kumar Mahanta, Sr.

Inspector of Mines;

(viii) Sri Mangala Charan Hembram, Sr.

Inspector of Mines;

(ix) Sri Chinnappa Parameswaran, Asst.

Controller of Mines, IBM, Kolkata;

(x) Sri Anupam Nandi, Sr. Asst. Controller of

Mines, IBM;
 67

(xi) Sri Tapan Kumar Rath, Dy. Controller of

Mines, IBM;

(xii) Sri Tusharkanti Khatua, CTO, Jajpur

Circle; and

(xiii) All other officers of IBM and other

Departments who are stated in this
Chapter of M/s. Serajuddin & Co.

J. Having not obtained EC, extraction of iron

ore without lawful authority:––

(i) As discussed hereinabove, the lessee was

doing the mining illegally since the year
1979 onwards without having approval
under the MM(DR) Act, 1957.

(ii) Over and above, there was deemed

refusal provisions during the said period
under the then Rule 24A of the MCR,
1960.

(iii) Be it what may be and notwithstanding to

the aforesaid violations, the lessee was
supposed to obtain Environmental
Clearance after promulgation of EIA
Notification dated 27.01.1994 under the
Environment (Protection) Act from the
year 1994–95 onwards. The lessee failed
 68

to obtain EC approval under EIA

Notification and went on producing huge
quantity of iron ore without any lawful
authority.

(iv) Even after obtaining the approval under

EIA Notification on 21.08.2007 for
extraction of 14,82,300 MT per year, the
lessee exceeded to the upper limits fixed
by MoEF (Table below).

(v) Further, the basis taken by MoEF for

enhancement of production from 2.5 Lacs
MT to 14,82,300 MT per year is without
any justification and records.

K. Unlawful Production of iron ore:––

The compilation for unlawful production

without any authority has been made and
reported in the first report of the
Commission for the State of Odisha,
including this lessee. The abstract of the
same is reproduced below for ready reference.
 69

Statement showing year wise Excess production done

by lessees without EC and in excess of EC without
lawful authority

EC Approval Order, Date, Area and Excess illegal production

EC Limit of MoEF (MT) based on DMG Data for
Iron (MT)
(i) J–11015/319/2006.IA–II(M) 1994–95 : 52,903
dated 21.08.2007 1995–96 : 1,05,700
(25,00,000 to 1482300) 1996–97 : 3,20,500
(ii) J–11015/193/2008.IA–II(M) 1997–98 : 4,51,000
dated 27.04.2012 1998–99 : 2,88,000
(14,82,300 to 45,00,000) 1999–00 : 1,72,000
2000–01 : 1,83,000
2001–02 : 1,52,000
2002–03 : 3,81,000
2003–04 : 7,46,000
2004–05 : 9,99,000
2005–06 : 10,29,700
2006–07 : 18,65,050
2007–08 : 10,51,200
2008–09 : 19,60,750
2009
to
2012 : 00
Total : 97,57,803

As could be seen, the lessee has produced about

9.757 million tons of iron ore either without EC or
excess to the EC limits. It is observed here that the lessee
has involved in various types of illegalities, as discussed
in detail hereinabove with no regard to the law.
 70

Part: II

Trading of Iron Ore

1. Information compiled herein are as per the two IT

Returns, available with the IT Department of
Bhubaneswar, filed for the financial years 2008–09
and 2009–10 along with various Assessment Orders
passed by the said Department after the search and
seizure operation. The Commission collected all the
records and analyzed for further needful action.

M/s. Serajuddin & Co. is a registered

partnership firm with headquarter at P–16, Bentick
Street, 19A, British India Street, Kolkata. The
mine’s quarries are endowed with some of the best
quality iron ore, often reaching a Fe–Grade in excess
of 65%. By virtue of being neither a public limited
nor a private limited company, it is not required to
submit annual financial statements, like Profit and
Loss Account or Balance Sheet to the Ministry of
Corporate Affairs (MCA). Hence, unlike other limited
or private companies, these data are not available
with MCA and, therefore, the same can not be
downloaded from their website.

Since the introduction of electronic filing of

income tax return, the Companies no longer submit
detailed Audited Balance Sheet or Profit & Loss
 71

Account to the Income Tax Department along with

their Annual IT Returns. They simply upload their
Self–assessed Tax Return online and the self–
certified tax liability declared by them is normally
acceptable to the IT Department, except in cases
where the Assessee’s IT Return is picked up for
“special scrutiny” by a computer software utility
maintained by the IT Department called CASS. Only
some salient data, retrieved from Balance Sheet and
Profit & Loss Account, are reproduced in the
electronic Annual IT Return. But more often than
not, it is difficult to get any meaningful quantitative
data about the nature of business, unless a
company is a manufacturing entity whereupon
certain quantitative details of production /
manufacturing are required to be declared in the
Annual IT Return.

M/s. Serajuddin & Co. had never filed its

Annual IT Return till 31.03.2011. It is only on
31.03.2011, it filed an IT Return for the financial
year (FY) 2008–09 with the Income Tax Department
of Odisha region. This was also because of an
income tax search and seizure operation mounted
by the IT Department, Bhubaneswar in May, 2008
which brought out rather shocking details about the
elaborate methods resorted by this Company and its
sister concerns for completely evading payment
 72

of income tax. In the wake of the said search

operation, the partners of the Company first
divulged an undisclosed income of Rs.90 Crores
and paid a sum of Rs.23.6 Crores towards evaded
income tax. But soon after, the Company retracted
its declaration and brazenly defied every attempt of
IT Department to realize the evaded tax which the
Department finally put at a staggering value of
Rs.443 Crores for the FY 2002–03 to 2008–09.

From the aforesaid documents, the following is

revealed about the ownership structure of the
Company:–

Sl. Name % of
No. Share–
holding
(*)
1 Md. Intekhab Alam, Keonjhar, Odisha. 37
2 Sarfraz Alam, Keonjhar, Odisha. 34
3 Md. Mofazzalur Rahman, Keonjhar, Odisha. 26
4 Hamida Khatoon, Kolkata, West Bengal. 26
5 Sarosh Yazdani, Kolkata, West Bengal. 12
6 Meraj Yusha, Keonjhar, Odisha. 12
7 Seraj Yusha, Bhubaneswar, Odisha. 12

* The sum of these percentage shares,

indicated by the Company in its annual
Income Tax Return added would come to
more than 100%. Hence, this requires
further verification.
 73

2. Analysis of documents seized by the IT

Department during its raid in the year 2008.

On 28.05.2008, the IT Department conducted

a search and seizure operation on the premises of
M/s. Serajuddin & Co and its group Companies.
This was the first IT raid on a big mine owner in
Odisha and was justifiably a high profile Operation
in the mining sector. On the next two days,
summons was served at the residence of various
partners, directing for personal appearance at the IT
Department on 31.05.2008. Five of the partners,
namely, Seraj Yusha, Meraj Yusha, Md. M.
Rahman, Sarosh Yazdani and Sarfraz Alam
responded to the said summons issued by the IT
Department and appeared at the IT Office of
Bhubaneswar where a declaration of undisclosed
income generated by the Company and its
appropriation in the hands of the partners, were
submitted. The amount of undisclosed income
declared to the IT Department was Rs.90 Crores.

On 04.06.2008, Seraj Yusha gave a

commitment to the IT Department to furnish year–
wise and head–wise breakup on the admitted
undisclosed income and simultaneously paid an
amount of Rs.23.6 Crores towards evaded tax.
The undisclosed income of Rs.90 Crores was
 74

supposed to have been generated by the

Company for an amount of Rs.75 Crores in FY
2007–08 and Rs.15 Crores in the two months of
the year 2008 till the raid i.e. April & May 2008–
09. The amount of Rs.23.6 Crores was declared to
be towards the evaded tax liability of the Company
for the declared undisclosed income of Rs.90
Crores. The Cheque had been signed by Sri Seraj
Yusha and M. Rahman (partners of the said
Company). It may be noted that whenever IT
Department conducts such a Search & Seizure
Operation, it normally takes into account the
income generated by the Company for the previous
six years. Thus, Search & Seizure operation that
was conducted in May, 2008 by the IT Department
of Odisha, left the financial years 2002–03 to 2008–
09. However, just within a month, the Company
did a sudden turnaround that surprised the IT
Department. A letter, written by Sri Seraj Yusha,
was received by the Director of Investigation
(IT), stating that the Assessee was retracting the
statement given by it earlier about the
disclosure of concealed income.

On going through the records of IT

Department, it is noticed that M/s. Serajuddin &
Co. did not co–operate at all with the IT Department
to find out the facts. However, the IT Department
 75

came up with its own estimate of the Company’s

income for the years under consideration, with the
help of information gathered by it during the search
and seizure operation, Mining Department, Sales
Tax Department, the TDS return of the Company
and Bank statement of group companies and its
raising contractors, etc.

The calculation of the IT Department for the

tax, which should have been paid by the Company
in those years which was not paid, is given below:–

Financial Turnover Turnover Tax Tax paid (in

Year (in (in Crores) evaded Crores)
Crores) as as per IT (in
per IT Depart– Crores)
Return ment’s as per
filed by estimate IT
the Depart–
Company ment’s
calcu–
lation

2009–10 98.56 N.A. NA Tax liability

shown in the
Return as Rs.1.5
Crores. The
Company paid an
advance tax of
Rs.2.35 Crores.

2008–09 328.35 402.89 130.0 The Company’s

tax liability
declared is
Rs.18.67 Crores
but it paid
Rs.45.24 Crores
as advance tax.
 76

Financial Turnover Turnover Tax Tax paid (in

Year (in (in Crores) evaded Crores)
Crores) as as per IT (in
per IT Depart– Crores)
Return ment’s as per
filed by estimate IT
the Depart–
Company ment’s
calcu–
lation
2007–08 No IT 303.14 129.8 Rs.23.6 Crores
Return (Voluntary
was filed Disclosure after
Search &
Seizure)
2006–07 No IT 160.33 66.09 Nil
Return
was filed
2005–06 No IT 71.57 32.93 Nil
Return
was filed
2004–05 No IT 98.54 42.07 Nil
Return
was filed
2003–04 No IT 55.95 24.46 Nil
Return
was filed
2002–03 No IT 16.49 8.52 Nil
Return
was filed
TOTAL 426.91 1,108.91 443.67 71.19 Crores
[for FY [for FY 2007–08
2002– to 2009–10)
03 to
2008–
09]

The aforesaid table is based on various

Assessment Orders submitted by IT Department to
Commission. The data shows that prior to the raid,
for an estimated sale of Rs.1,108.91 Crores, no tax
 77

had been paid. Even now, out of the tax liability of

Rs.443.67 Crores, only Rs.71.19 Crores have been
paid by the Company. The illegalities, pointed out
by the Vigilance Department of the State
Government, are in addition to the official data.

The above data comes from the Assessment

Orders passed by the IT Department after the
Department gave more than reasonable time to the
Company for responding of its repeated summons
under Section 143 (3) / 144 / 153 (A) of the IT Act,
1961.

The findings of the IT Department – pieced

together from the documents seized, books of
accounts, incriminating papers, bank accounts of
the group companies, internal letters, memos,
computer hard drives, e–mails vouchers – depict a
series of irregularities, violation and financial crime
that had been committed by this Company in
course of the period under consideration, with a
view to maximize its wealth by evading its tax
liability. If the only amount that the Government
gets out of mining, royalty and taxes, are evaded
through such devious means then there will be
very little justification for private mining.
 78

3. Suppression of iron ore grade at the time of

sale:––

The IT Department had seized the production

register of this Company which was maintained in
its Balda office and the Department observed that
almost all the iron ore lumps produced by this
Company, are of +65% Fe grade. Even bills of the
Company through which iron ore had been sold to
sister concern like M/s. Aliza International Pvt. Ltd.
record the description of iron ore being +65% Fe
grade. The monthly report, submitted by the
Assessee (M/s. Serajuddin & Co.) to the DDM, Joda,
also shows the iron ore lumps and fines produced in
its mines to be of +65% Fe grade.

The first step for suppressing sale is the

obvious method of under–invoicing – the artificial
lowering of price of iron ore in the sales bills. This
can be done by out–rightly mentioning a lower rate
per MT for the sold ore in the sales bills or by
reducing the %Fe–Content in the mined Ore’s bill
description, say from +65% Fe Grade to –63% Fe
Grade. Ofcourse, the lowering of rate does not mean
that the Company received lower income, in reality.
The billed amount shown is simply Accounted
Money on the deal, while the difference between the
actual market price and the billed price and the
 79

Unaccounted Money is supposed to be returned in

cash to the Company by the entity to which it had
been billed.

The IT Department had seized a computer file

during its search operation which confirms the
aforesaid process. The Resulting Assessment Report
mentions the aforesaid method in the following
words:–

“From the excel document titled transaction.xls, the

description of most of the material has been
mentioned as Fe 63%. But from the production
register, it can be seen that lumps, sized ore as well
as the fines produced are of +65% grades. All the
production registers show production of lumps having
iron ore content 65%+. The information furnished by
DDM (Joda) also shows that the grade of iron ore
lumps dispatched is Fe 65%+ only. Thus, by taking
recourse to lowering the grade, the assesse intended
to increase further the on–money component (buyer’s
cash) in the sales transaction made during the year.
[AO for 2009–10, Page 28, para 4.24 & 4.25]”

It may be noted that as per existing Export–

Import Policy in the country, iron ore with Fe
content exceeding 64% is prohibited from being
exported directly by a private company.
 80

By deliberately downgrading the Fe content of

iron ore from +65% to +63% as has been
documented in the report of the IT Department, the
lessee could have violated the above Policy and
helped in draining high quality ore outside India.

The bills were prepared by the Company

simply at a much lesser rate per MT of the iron ore
than the prevailing market price of the same grade
of iron ore in the same area.

For example, IT Department report states that

OMC’s [Orissa Mining Company] rate for 5–18 MM
+65 Fe grade iron ore in the month of April, 2007
was Rs.2,601/– in Joda/Barbil Sector of Keonjhar
District. M/s. Serajuddin & Co. mine is also located
in the same District and near the same location.
But, in that month, the Company had resorted to
selling same grade of iron ore at Rs.1,600/– which
is Rs.1,001 per ton lesser than OMC’s price.

Similarly, in May, 2008, the Company had

shown a sale rate of Rs.1,001/– per ton for 5–18
MM +65 Fe grade whereas the OMC rate was
Rs.3,000/– in that month.

Even in comparison with other mine owners in

the adjoining area, M/s. Serajuddin & Co. had
resorted to gross under–invoicing, as will be evident
from the following:––
 81

Month Size and Grade Sale rate Sale Rate Difference

of M/s. of M/s. in Rates
Essel Serjauddin per MT
Mining & Co. per
Ltd. per MT
MT
Apr., 5–18 mm. and Rs.3,470/– Rs.1,600/– Rs1,870/–
2007 +65% Fe
Dec., – do – Rs.4,320/– Rs.1,600/– Rs.2,720/–
2007
May, – do – Rs.6,020/– Rs.3,000/– Rs.3,020/–
2008

[Para 4.10, Page 19 of AO for FY 2008–09]

The IT Assessment Report documents an

elaborate system of cash–commission that existed to
collect the balance money from these under–
invoiced bills through cash. A letter written by
Managing Partner of the firm who enclosed an
official rate–chart to the HQ Office at Kolkata,
clearly mentions the exact cash commission to be
collected, in the right margin of the rate table and in
the hand writing of the Company’s own Accountant
[Pages 20 and 21 of IT AO for FY 2008–09].

Many of these sales also have been made to

group companies where one of the Directors of M/s.
Serajuddin & Co. also functions as a Director or
owner of the other Company. Transaction between
such related entities is bound to raise the question,
even in absence of any evidence about the price
being at arm’s length. The financial dealings
between the lessee and the related group
 82

Companies merit a detailed investigation by an

expert agency, since under–invoicing can be easily
done among these inter–related companies through
mutually agreed lower price for a given transaction.
Evidence of the same are clearly documented at
various places in the IT Assessment Orders in the
year 2010 which were passed against this Company
and its associates and copies of which have been
made available to the Commission.

Related Companies who served as conduit

for under–invoicing:––

1. M/s. Serajuddin & Co. (P) Ltd.

2. F. Serajuddin Exports
3. Yajdani International Pvt. Ltd.
4. Sarosh Alizah Mining
5. Alizah International Pvt. Ltd.
6. Fahmida International Pvt. Limited

Companies created by family/relatives/

partners and used for sales suppression:––

Followings are some Companies to whom

extensive sales had been made by M/s. Serajuddin
and Co. The list of the Directors of the Company,
downloaded from the website of Ministry of
Corporate Affairs, clearly shows common directors.
 83

3.1.1 Yazdani International

Through whom most of the exports were channelized.

DIN / Full Name Present residential address Designation Date of Expiry Date
DPIN/ PAN Appointment of DSC

00738844 Mohammed B–245, BDA Duplex, Baramunda, Director 01.06.2008 22.11.2014

Yusha Bhubaneswar: 751003, Aland Islands.

00876038 Meraj Yusha Plot No–N–4/135, IRC Village, Managing 15.11.2006 30.03.2013
Bhubaneswar: 751015, Orissa, India. Director

00887764 Seraj Yusha N–4/135, IRC Village, Nayapalli, Director 15.11.2006 30.03.2013
Bhubaneswar: 751015, Orissa, India.

01324346 Sarosh Flat–35, Mallika Apartments, 6/7A, Director 28.04.2007 30.03.2013

Yazdani A.J.C Bose Road, Park Circus,
Kolkata: 700017, West Bengal, India.
 84

3.1.2 Alizah International Private Limited

DIN / Full Name Present residential address Designation Date of Expiry Date
DPIN/ PAN Appointment of DSC

00192210 Mohammad 6/7A, A.J.C. Bose Road, Director 25.09.2006 20.07.2012

Sarfaraz Alam Kolkata: 700017, West Bengal, India.

00192417 Mohamad Jhumpura, Champua, Director 25.09.2006 18.09.2012

Intekhab Keonjhar: 758001, Orissa, India.
Alam

00706239 Naghma 2E/2, Cantopher Lane, Director 25.09.2006 –

Yazdani Kolkata: 700044, West Bengal, India.
 85

3.1.3 Serajuddin & Co. Private Limited

DIN / Full Name Present residential address Designation Date of Expiry Date
DPIN/ PAN Appointment of DSC

00738844 Mohammed B–245, BDA Duplex, Baramunda, Director 01.02.2012 22.11.2014

Yusha Bhubaneswar: 751003, Aland Islands.

00876038 Meraj Yusha Plot No–N–4/135, IRC Village, Director 08.09.2007 30.03.2013
Bhubaneswar: 751015, Orissa, India.

00887764 Seraj Yusha N–4/135, IRC Village, Nayapalli, Director 08.09.2007 30.03.2013
Bhubaneswar: 751015, Orissa, India.

01324346 Sarosh Flat–35, Mallika Apartments, Director 08.09.2007 30.03.2013

Yazdani 6/7A, A.J.C. Bose Road,
Park Circus, Kolkata: 700017,
West Bengal, India.

For the other companies, details should be collected during further investigation.
 86

4. Inflated expenditure and evasion of Income Tax

The documents and records seized by the IT

Department during its raid bring out the second
part of the financial manipulation done by M/s.
Serajuddin & Co. which is by way of booking huge
bogus expenditure against some mining contractors
in the name of “raising expense”. It is to be noted
that income tax is paid over the profit generated by
a Company which is arrived at by subtracting the
“expenditure” from “sales”. As described in the IT
findings, the Company had already reduced the
reported figure of the “sale” by significant amount
through under–invoicing many of its sale
transactions. Having done so, the Company got
down to increasing the expenditures made to entry–
operators posing as mining contractors so as to
squeeze the “taxable income” to the barest
minimum.

The records, seized by the IT Department,

show that the payment supposed to have been
advanced to these mining contractors, were not for
any real service. The modus operandi was that
these mining contractors would receive the money
and withdraw the money immediately afterwards to
return back the entire amount minus their
commission to the parent Company in cash. Thus,
there was an internal circulation of (black)
unaccounted money worth crores of rupees through
such back–handed cheque–to–cash arrangement.
 87

a. The names of some raising contractors, who first received huge sums in cheque from
M/s. Serajuddin & Co. towards raising service and then returned back most of that in
cash after keeping a nominal “commission’ amount for themselves, are as follows:–

Sr. Name and Status of Raising Contractor Key Person

No.

1 Modern Mining Pvt. Limited, Company 1. Khatibur Rahman

(Son of M. Rahman, Partner of Serajuddin & Co.)
2. Gobardhan Matia

2 Sarosh Aliza Mining, Proprietary Concern Prop.: Sarosh Yazdani (Partner of Serajuddin & Co.)
CEO : Seraj Yousha (Partner of Serajuddin & Co.)

3 S. M. Enterprises, Firm Atikur Rahman, Najib Akhtar & Freroze Akhtar

4 Trinity Commercial Pvt. Limited, Company K. D. Sharma

5 D. K. Naik, Individual Dillip Kumar Nayak

6 Zafar Hayat, Individual Zafar Hayat

7 Gobardhan Matia, Individual G. Matia

 88

b. As can be seen from the aforesaid Table, most of these mine contractors are either
individual or proprietorship entities whose financial dealings largely avoid the
transparency requirement stipulated by Government Regulators like MCA (Ministry of
Corporate Affairs). The director–structure of one of the two Limited Companies is
reproduced below to show that this also is controlled by an ex–employee and relative of
M/s. Serajuddin & Co.’s Partner.

Directors of Modern Mining Pvt. Limited:

a “raising contractor” to M/s. Serajuddin & Co.

DIN / Full Name Present residential address Designation Date of Expiry Date
DPIN/ PAN Appointment of DSC

01925924 Khaliqur Serajuddin Square, Managing 10.01.2008 22.02.2013

Rahman Keonjhargarh: 758001, Orissa, India. Director

01952071 Khatibur Maguragadia, Serajuddin Square, Director 10.01.2008 –

Rahman Keonjhargarh: 758001, Orissa, India.
 89

For this, the IT Report comments the following

about these inter–related raising contractors:–

“It is evident that most of the mining contractors

were not independent entities: either they were ex–
employees of the assesse or partners themselves /
close relative of the partners were engaged in the
mining activity as contractor…”

[Page 51 of the AO for FY 2008–09]

After engaging these “willing” contractors, what

Serajuddin & Co. did, was to show a very high raising
cost for its raising services so that the tax–deductible
amount will be maximum. The narration in the said IT
Report leaves nothing to imagination as stated below:–

“As per seized/impounded material and information

gathered, it is seen that the assesse has claimed that
he has paid Rs.610/Rs.650/Rs.720 Per MT during
2007–08 to the mining contractors for excavation of
lump through cheques; but during the search and
seizure operation conducted by Directorate of
Investigation, Bhubaneswar and residential premises
of the assesse, many incriminating documents were
found and according to those documents, actual
payment was Rs.250/Rs.290/Rs.360 per MT and
not Rs.610/Rs.650/Rs.720, as stated by the
assesse.”

[Page 51 of AO for FY 2008–09]

 90

c. After the search and seizure operation in the year

2008, when IT Authorities asked M/s. Serajuddin &
Co. to make available its iron ore production
register, nothing could be produced.

As late as in the year 2010, the Company was

continued to be asked by the IT Department to
produce the bills of its raising contractors which
also could not be supplied to the IT authorities.

It is indeed surprising that how the entire

business of such a big mine operation was being
carried out without keeping even the most basic
records which are required for any business/
mine operation. Not only that, iron ore
production record is required to be maintained
for payment of royalty and other taxes.

d. During the said IT Search & Seizure operation, the

IT Department had also raided the premises of the
so called “mining contractors” or “raising
contractors” against whom extensive amount of
expenditure had been billed by M/s. Serajuddin &
Co.

Here is one such admission by one raising

contractor – M/s. S. M. Enterprises, Mr. Gobardha
Matia:–
 91

“Q. You had stated that firm received 720 Per Ton
against raising of iron ore and may have
received those payment by cheque. You stated
in answer to question No.9 that you did not
maintain any regular books of accounts. Please
tell us, how your firm computed the total income
as well as what are the basis of expenditure
claim?
Ans. Yes. I have already stated that after the
completion of the year, we use to prepare our
P&L Account, Balance Sheet etc. as per our own
estimation of profit. Then, the same was filed
with the IT Department. Please note that the
expenses claimed have no basis except
expenses incidental to business. We are bound
to do the same as everybody knows that
amount received by us from the mine
owners is not our receipt. Our net receipt is
the Gross receipt less by the amount
returned by us to the party by cash and to
adjust the same in our account, we are
compelled to inflate the expenditure. We
used to return Rs.360/– per ton by cash to
M/s. Serajuddin & Co.”

[Page 120 of AO for FY 2008–09]

It is pertinent to mention here that Gobardhan

Matia was previously an employee of M/s.
Serajuddin & Co. and later, became a Director of
Modern Mining Company where Mr. Khatibur
Rahman, Son of Mr. M. Rahman (Partner of M/s.
 92

Serajuddin & Co.), is also a Director. [See MCA

download cited in the earlier part of this report].

From the admission made by these raising

contractors to IT authorities of Bhubaneswar, it is
revealed that almost, all the raising contractors
were operating in perfect vacuum i.e. they did not
maintain any books of accounts with them. One
such raising contractor, Zafar Hayat, against which
M/s. Serajuddin & Co. has billed considerable
raising expense, told to the IT authorities that he
never maintained any books of account or any
voucher [Page 116 of AO]. But it is seen that this
ghost mining contractor, who operated in financial
vacuum, was still being paid huge amount by
another Company, M/s. Thriveni Earthmovers Pvt.
Limited who is supposed to have been engaged as
raising contractor by M/s. Serajuddin & Co. since
the year 2010–11.

Further, latest data on IT Returns made

available to the Commission by the IT Department,
shows that this Zafar Hayat had filed an IT Return
only once in FY 2006–07 and never filed afterwards
[IT Department’s letter to the Commission on
04.03.2013].
 93

[Page 72 of AO for FY 2008–09, Annexure: A]

 94

The scale of economic offenses committed can

only be gauged, when one considers that it is
against these contractors, who did not observe even
a modicum of financial accounting, that a total
expenditure of Rs.320 Crores had been booked by
M/s. Serajuddin & Co. rendering this huge sum
tax–deductible expense for the period under IT
scrutiny.

4.1 Formula for Cash–Return

A surprise finding, in the above Search &

Seizure operation of the IT Department, is a
document written by one of the Partners containing
a formula. This formula states what proportion of
the amount, advanced to the raising contractor
through cheque, will have to be returned by them in
cash.

The seized document, in the alleged

handwriting of Mr. Sarfraz Alam, a partner of
Serajuddin & Co., writes down that if “X” is the
amount to be given to a Contractor by cheque,
then the Buyer’s cash return will be “X/2”.

[P–84 of AO for FY 2008–09]

 95

[Source Page 85 of AO for FY 2009–10]

This is further corroborated from the entries

made by Sri D. K. Naik who was supposed to be one
of the raising contractors of M/s. Serajuddin & Co.
and against whom Serajuddin & Co. had booked
considerable expense in his diary.
 96

4.2 The diary of D. K. Naik, the Raising Contractor

of M/s. Serajuddin & Co., raising the “Raising
Rates” for tax evasion

Type Raising rate Pre– Actual rate % inflation

of per lump arranged (Rs. per MT) of raising
Ore charged to Cash expenditure
M/s. Return (Rs. per MT)
Serajuddin amount (Rs. made
& Co., per MT)
applicable
from
01.04.2006
and
received by
the
Contractor
by Cheque
(Rs. per MT)

ROM 110 45 65 69%

Fine 205 105 100 105%

Lump 650 380 270 71%

[Page 83 of AO for FY 2008–09]

Thus, the expenditure, claimed by

Serajuddin & Co. as made towards raising service
by various raising contractors, was found by the
IT Department to have been inflated by huge
margin.

This is a very significant manipulation as

the total such raising expenditure booked by
Serajuddin & Co. has been stated to be nearly
Rs.320 Crores for the period under tax scrutiny.
 97

None of the Mining Contractors maintained

books of accounts, even though they received huge
amount in the name of raising charges from M/s.
Serajuddin & Co. This, itself, speaks a lot about
share transactions. They simply received the money
by cheque from M/s. Serajuddin & Co., deposited in
their bank and withdrew the entire amount, except
their own commission on the very next day or in a
short time subsequently. This cash was then given
to the parent Company i.e. M/s. Serajuddin & Co.
in cash. The IT Department has a special name of
such companies. In Income Tax parlance, such
companies are called “Entry–Operators” who
provide “accommodation entry” for booking bogus
expenditure. It means they have a genuine address,
PAN Number and bank account and utilize these
details for channelizing the money of a Company
back to itself in the name providing service and,
thus, helping in tax evasion.

The lessee has submitted some “agreements”

entered into between M/s. Serajuddin & Co. and
contractors without stating any references and
dates. All such documents require further
investigation by the competent Central Agency.
 98

4.3 How money circulates?

M/s. Serajuddin & Co.

Under–invoicing Expense-Inflation
[cheque route] [cheque Route]

Route
Related Companies
Related Raising

Back
Contractor

Cash
Aliza International Ltd.
Modern Mining Ltd.
Yazdani International
Trinity Commercial Ltd.
Sarosh Mining
Zafar Hayat
Serajuddin Export
D. K. Naik
Serajuddin & Co. Pvt. Ltd.

Fahmida International Pvt.

Ltd.
 99

5. What the Income Tax Department’s Report did

not include?

The Income Tax Department, in its Assessment

Order for the year 2008–09 (Para 4.1), has taken
into consideration the dispatches of 18,86,817 MT.
The lessee, in its submission to the Commission,
submitted that the dispatch and sale for that year
(i.e. 2008–09) was actually 26,29,292 MT. This
indicates a difference of nearly 7,42,475 MT
between data assumed by the IT Department for
calculating tax – evasion and data made available to
the Commission by the Company. The difference
works out to be 40% more than what has been
taken into consideration by the IT Department in its
assessment for that year. This could be taken into
consideration during future investigation/
assessment by the IT Department.

As it is noted that the lessee was continuously

having the production and dispatch of iron ore since
the year 1980 onwards, yet till the search and
seizure made by the Income Tax Department in the
year 2008, it had not file any IT return for any
previous year, as revealed from the submission
made by the Income Tax Department to the
Commission. It is also noted that even till today,
M/s. Serajuddin & Co. has not filed Income Tax
returns for the years from 2002–03 to 2007–08.
 100

6. Inconsistencies in the Income Tax returns

submitted to Income Tax Department

The gross receipt for the year 2009–10 has

been shown as Rs.98.56 Crores in the IT return
submitted by the Company on 31.03.2012. The data
for dispatch of iron ore, as per the Mining
Department of Odisha, shows a sale quantity of
6.67 Lakh MT of lumps and approximately 5 Lakh
MT of fines, totaling around 11.67 lakh MT. The
same dispatch figures are also submitted by the
lessee to the Commission. Considering even a
modest average of Rs.2,000/– per MT for lumps
and Rs.1,000/– per MT for fines, the Sales Turn
Over of the Company should have been in the
region of at least Rs.180 Crores. Thus, what has
been declared to the IT Department seems to be
at least half of the figure reflected by the
Company in its latest IT return. This aspect needs
a deeper investigation by the appropriate authority,
as it has immediate financial repercussion on the
public exchequer.

After declaring a gross receipt of just Rs.98.56

Crores, the Company shows a huge expense figure
of nearly Rs.70 Crores which is tax–deductible. The
final Profit before Tax (PBT) declared by the
Company for the year is an abysmally low figure of
 101

just Rs.3.75 Crores or just around 4% of the

Annual Sale. On this, the tax liability of the
Company comes to a paltry amount of Rs.1.5
Crores or less than 2% of its gross sales receipt.

It is to be noted that the mining activity

normally has very high profitability because of the
low cost/expense involved in mechanized ore–
raising. The PBT, as a percentage of turnover,
reaches as high as 75% for even Government
Company like NMDC. The IT Department, after
analyzing the internal documents, ledgers & books
of accounts seized from the very same Company,
had arrived at a consistent 5–years average Profit
figure as 70% of Annual Sale [See Page 124 of AO
for FY 2008–09, Annexure: A]. But what the
Company has shown in its latest return, is a
figure of 4% profit on sale, yielding almost
nothing as Income Tax payable to Government.

The deductions and expenditures, booked in

this Annual return, appear highly suspect. Going by
the modus–operandi adopted by the Company to
achieve maximum tax–evasion in the past which
had been revealed in the IT raid of the year 2008,
such maneuvers are hardly surprising. There is a
need to have further investigation by taking
figures of all years.
 102

6.1 IT return of FY 2008–09 [Annexure: D]

It may be noted that for this year, the IT

Department had estimated a “Turnover” of Rs.402
Crores (which will go up further, if the quantity is
26.54 lakh MT instead of 18.86 lakh MT as has
been taken in IT Department assessment). The
return for the year 2008–09, filed by the lessee on
31.03.2011, still shows a “turnover” or “gross
receipt from business” as Rs.328.35 Crores –
which is Rs.80 Crores less than the IT assessment
figure. But what immediately catches the attention
is again the huge expenditure shown by the
Company which has the effect of reducing the PBT
and the tax liability of the Company to an
abnormally low figure.

Take one such item of expenditure. For

example, “Salary and Wages” for the employees. It is
pegged at Rs.42.80 Crores. The corresponding
expenditure for the previous year 2008–09 was only
Rs.7.84 Crores i.e. one sixth of the next year 2009–
10. This is grossly disproportionate and does not
seem justified by any rational co–relation to the
production or sale of the respective years. An actual
comparison with the H1 Mining Returns, declared
by the Company to DDM where details of manpower
engaged and salary paid are declared, can throw
even more surprises.
 103

6.2 The developments since the year 2010–11 –

Analysis of Contract between M/s. Serajuddin &
Co. and Thriveni Earthmovers Pvt. Ltd. (M/s.
TEMPL)

From the year 2010–11, it is seen that M/s.

Serajuddin & Co. has appointed Thriveni
Earthmovers Pvt. Ltd. as its contractor. The
contract signed between them has several
irregularities and suggests that the mine is
controlled by M/s. TEMPL in clear violation of Rule
37 of MCR, 1960. Detailed analysis is as under:––

The MD of M/s. TEMPL, Mr. B. Prabhakarn,

had submitted to the Commission, various Ore–
raising contracts entered by them with different
Mine Owners for rendering raising services. This
included a contract concluded between M/s.
Serajuddin & Co. and M/s. TEMPL for iron ore
raising activity in June, 2010.

The said contract has been signed by two joint

managing partners of M/s. Serajuddin & Co. and
Sri B. Prabhakaran, MD of M/s. TEMPL. The date
on which the contract has been signed is
22.06.2010 where M/s. Serajuddin & Co. has been
contractually described as “Employer” and M/s.
TEMPL has been described as “Contractor” for the
raising activity in the iron ore mine of M/s.
 104

Serajuddin & Co. situated in Balda, Bada Kalinati

and Nayagarh villages of Keonjhar District. This is
the location of the mine operated by M/s.
Serajuddin & Co. and this contract announces the
appointment of TEMPL for performing activities
related to mining, extraction and processing of
mineral requiring deployment and operation of
selling earth moving and other related
machinery, staff and labour.

The duration of this contract is for a term

of 10 years from the date of the commencement
of commercial production with a condition that
the said contract could be extended for a further
period of unspecified duration on mutual
agreement.

Going by the data, provided by the Mining

Department of Odisha, M/s. Serajuddin & Co. had
dispatched the following quantities of iron ore in the
year 2010–11.

2010–11 Size Ore Fine Ore Total

Dispatch 5,68,610 8,71,412 14,40,022

It is evident from the quantum of iron ore

raising and dispatch undertaken by M/s.
Serajuddin & Co. that the raising contract, entered
into by M/s. Serajuddin & Co. & M/s. TEMPL being
 105

for 10 years’ duration, is for a very high contractual

value. (just for one year of 2010–11, the dispatch
quantity was 1.44 Million Ton whose value will
run into nearly Rs.500 Crores and the share of
M/s. TEMPL being 42% in it every year). It is,
therefore, surprising that in such a high value
contract even the name of both the Joint Managing
Partners of M/s. Serajuddin & Co., are not
mentioned except their signature. Even a cursory
glance, at the casual manner, in which the contract
has been signed, gives rise to doubt about the
authenticity of such a high value contract.

Even if it is assumed to be a valid contract

between M/s. Serajuddin & Co. and M/s. TEMPL,
then certain other terms and conditions of this
contract are so ambiguous that they are required to
be discussed in detail as given below:–

The condition for payment to be made to M/s.

TEMPL for its service is covered under Clause 5.2 of
the aforesaid contract. The ambiguous nature of
this Clause, which deals with the most crucial part
of the contract, will be evident only when quoted
fully and hence, reproduced below:–

“5.2 As the cost is like to vary, keeping in mind the

scope of work mentioned in this work order, on
account of factors which cannot be visualized
and predicted before hand, such as nature of
 106

geological formation of deposit encountered

during actual operation, quantum of overburden
and waste rock actually handled and also the
quantity of iron ore reprocessed to achieve
committed quality and quantity targets and the
estimation would not only be extremely difficult
and cumbersome, but also difficult to arrive at a
pre–estimated cost. Thus, keeping this in view
and also in order to avoid any cumbersome
negotiations with regard to escalation in
contract charges from time to time due to price
increase in cost of variable inputs like diesel,
labour, etc., the Employer has proposed and the
Contractor has agreed to accept approx. 42% of
Net sale value of the ore produced excluding
royalty & taxes as contract charges.”

It can be seen that raising charges, to be given

to M/s. TEMPL by the lessee, is shown as 42% of
Net Sale Value of the ore produced excluding royalty
and tax as contract charges. The aforesaid Clause
suffers from an inherent contradiction, since the
question of “Net sale Value excluding royalty and
taxes” arises at the time of “sale” and not at the
time of “production”. The quantum of actual sale by
the employee might be different from the production
made by the raising contractor. In fact, the contract
of M/s. TEMPL with other mine owners like Indrani
Patnaik, D. R. Patnaik have the payment clause
 107

linked to a certain percentage of sale value of

“dispatched iron ore” and “not produced iron ore”.

Further, proper raising contracts (as the one

entered by the same contractor, i.e. M/s. TEMPL
with Tata Steel) are not linked up with “sale value”
realized by the mine owner and are decided at a
predetermined price per ton of a particular type of
ore (of different sizes/grades). The parameters
adopted by M/s. TEMPL with different lessees
for payment require further investigation by the
experts in the field.

Clause 5.3 of the “work order” is quoted

below:–

“5.3 Since the net sale value of ore produced may

vary from time to time depending upon quality,
quantity and the prevailing market
condition, the same will be decided by the
Employer and communicated to the
Contractor for the purpose of his billing
from time to time and the advances shall be
adjusted against such contract charges.”

It appears that such arrangements, as

expressed in “work order”, can be conveniently used
as a tool for sale–suppression, under–invoicing and
tax evasion of various types. Such arrangements
 108

between M/s. Serajuddin & Co. & M/s. TEMPL get

further clarified by analyzing the few Income Tax
statements of M/s. TEMPL.

7. The Contractor paying to the Employer:––

On close scrutiny of the TDS statement of M/s.

TEMPL, it appears that considerable payment has
been made by it to other mining contractors
including to the associated group companies of
M/s. Serajuddin & Co.

If M/s. TEMPL is the raising contractor and

M/s. Serajuddin & Co. has been described as its
(TEMPL’s) Employer in the Contractual
Agreement, then why considerable payment has
been made by M/s. TEMPL to the group
companies of M/s. Serajuddin & Co.?
 109

A. The contractual payment made by M/s. TEMPL

to M/s. Serajuddin & Co. and other companies
controlled by it (2010–11), as revealed from the
TDS deduction made by it (M/s. TEMPL) in the
year 2010–11:––

Sr. Name of the Company (*) Amount (in

No. lakhs)

1. M/s. Serajuddin & Co. (P) Ltd. 98.68

2. F. Serajuddin Exports 105.09

3. Yajdani International Pvt. Ltd. 398.56

4. Sarosh Alizah Mining 574.65

5. Alizah International Pvt. Ltd. 71.75

* The existence of such huge amount of

payments being made by the Contractor to the
Employer or to the Employer’s group
companies is indicative of the fact that M/s.
TEMPL may not merely be a raising
contractor but actually an entity who
controls the entire Mine by proxy.
 110

B. Contractual payment made by M/s. TEMPL to other Raising Contractors for whom
TDS has been deducted by it (M/s. TEMPL) in the year 2010–11:––

Sr. Name of the Company/ Key Person/s Payment

No. Proprietorship/ made by
concerned individual M/s. TEMPL
(in Lakhs)

1. Zafar Hayat Zafar Hayat 500.62

2. Saroj Alizah Mining Sarosh Yazdani, Proprietor 574.65

(also the partner of M/s. Serajuddin & Co.); and

Seraj Yousha, CEO

(also the partner in M/s. Serajuddin & Co.)

3. Modern Mining Pvt. Ltd Khatibur Rahman, son of M. Rahman 417.54

(partner in M/s. Serajuddin & Co.); and

Gobardhan Matia

4. D. K. Nayak Dilip Kr. Nayak 178.12

 111

That the above companies were raising

contractors of M/s. Serajuddin & Co. which is
evident from Page 47 of the relevant Assessment
Report passed by the Income Tax Department of
Bhubaneshwar Circle.

Thus, even in the year 2010–11, the significant

payment made by M/s. TEMPL had been made to
Zafar Hayat who had been described as an “entry
operator” providing “accommodation entry” and had
admitted to the IT Authorities to be operating in
complete financial vacuum.

8. The working manner of lessee as could be seen

from the reports of Vigilance and Income Tax
Departments; it reflect on the poor
administration of the State Government and
disregard with impunity to the law. The
implementing and controlling agencies of the
State seemed to be either acting in connivance
or were helpless and silent spectators.

The report of the Vigilance Department and

these assessment reports of the IT Department
are clear pointers to how the lessee gained
tremendously from nation’s scarce natural
resources, while providing minimal benefits to
the Society by toying with every Rule and
 112

Regulation on its way to make supernormal

profits and most of which are yet to be
accounted.

There is a large difference between the

trading of general goods and the trading of
natural resource i.e. iron ore. Iron ore is a public
property and is not hereditary property of the
lessee. It is the State who is the owner of these
natural resources and holds the same as trusty
of the people of this country. Mining of ore is a
privilege extended to the lease holder out of the
public resource owned by the lessor i.e., the
State, based on the presumption that he has the
necessary technical know–how and capability to
develop these resources in a manner beneficial
to the public at large. It is proven logic that it is
the Society who should get maximum share in
the transaction of its own property so that
maximum welfare can be ensured to its citizens.

The circumstances prevailing before the

last decade, when there were not many takers
for the mining sector, got completely changed
after new millennium. The dynamics of global
trade in mineral resources especially, that in
iron ore, underwent a sea change during first
decade of this century. The last decade has seen
 113

unprecedented rise in iron ore prices. The every

national policy and the regulatory ecosystem of
the country should, therefore, be attuned and
strengthened in such a manner that it shall
make the benefits out of this once–in–a–half–
century resource boom accruable to the State
and not the windfall profit to a private mine
owners. Shared resources must ensure shared
benefits to the Society and skewed in favour of
the fortunate few.

9. Under the facts and circumstances, as discussed

earlier in the present lease summary, there are
various illegalities committed by the lessee since the
year 1979 onwards.

The State Government has initiated vigilance

inquiry in the matter in the year 2009. There is
hardly any progress and the matter is pending.
From the Vigilance Report and Income Tax
assessment of Income Tax Department, there is
prima–facie involvement of officials of the State as
well as Central Governments with the active
connivance of the lessee.

The State Government should also initiate

actions under Section 21(5) of the MM(DR) Act,
 114

1957 to recover the cost of iron ore which has been

illegally removed by lessee.

The Vigilance Department of the State

Government has filed FIR No.54, dated 18.11.2009
under the P.C. Act, Forest (Conservation) Act,
MM(DR) Act, Indian Penal Code and others. The
enquiry has been conducted by the DCP, Vigilance
Cell, Cuttack of the Vigilance Department for
Guruda Manganese Mines of M/s. Serajuddin Co. of
Kolkata.

Due to constraints of time, the said report has

not been fully analyzed. Therefore, it is
recommended to take into consideration the said
report as part and parcel of this lease summary
report and action should be taken, as recommended
in the said report.

As seen from the facts and circumstances,

in the entire matter, the Commission
recommends for inquiry as per law by the
Central Bureau of Investigation.

***
 115

M/s. Ram Bahadur Thakur Limited

Kolha Rudukela & Katasahi Manganese Mines

Findings recorded in this Chapter are based upon

the information supplied by the various Departments of
the State and Central Governments, lessee, MoEF, IBM,
etc. It is for the competent authority to issue appropriate
notices to the concerned party/lessee for taking action in
accordance with law.

The Commission has also taken into consideration

the Vigilance Enquiry Report of the State Government. It
is to be stated that the facts, figures and comments
which are noted hereinafter, are taken from the Vigilance
Enquiry Report.

1. For the aforesaid mining lease, after enquiry by the

State Government, it is found that the M/s. Ram
Bahadur Thakur Limited (RBTL) has indulged in
illegal mining activities for extraction of manganese
ore in the proposed area which is yet not notified for
manganese lease.

2. Winding up order of RBTL has been passed by the

Hon’ble High Court of Patna in Company Petition
No.6 of 2006 on 31.07.2008.

3. The mining lease was originally held by Late Shri S.

N. Sen for a period of 20 years with effect from
15.03.1953. After expiry of lease term, the area was
 116

thrown open for re–grant w.e.f. 25.09.1975 vide

Government Notification No.7737, dated
06.08.1975. As a result of this, the area was
granted in favour of Hindustan Steels Limited
(Steel Authority of India) by Mining and Geology
Department vide Proceeding No.10240/MG, dated
04.08.1979 for manganese ore w.e.f. 16.01.1980 for
a period of 20 years. The said area was again
thrown open for re–grant by Department of Steel &
Mines, vide Notification No.8737/SM, dated
25.07.1991. The reason for throwing open in the
mid of the lease period is not known and, therefore,
it requires further inquiry.

The mining lease area of 96.5680 ha. consists

of:–

(i) 36.588 ha. village forest land;

(ii) 58.827 ha. non–forest land; and
(iii) 01.153 ha. private land.

The mining lease area is geographically located

between longitude 85° 19’ 30” to 85° 19’ 56” E
and Latitude 21° 58’ 01” to 21° 58’ 53” N as per
Survey of India Toposheet No.73 G/5.

4. RBTL had filed an application No.6, dated

25.09.1991 for manganese ore over an area of
96.568 ha. in the villages of Rudukela and Katasahi
 117

of Keonjhar District. The said application was

recommended to Government of India, seeking prior
approval vide State Government’s letter No.2559,
dated 08.03.1994. The Government of India,
Ministry of Mines conveyed its approval in grant of
mining lease vide its letter No.5/63/99–MIV, dated
11.03.1996 with certain terms and conditions.
Accordingly, RBTL was intimated by the State
Government, vide letter dated 09.04.1996 to submit
the mining plan, approval of MoEF, Government of
India for the forest land, etc. within six months. It is
stated by the State Government that no such
clearances has been obtained by RBTL till date.

RBTL was incorporated as a Company in the

year 1974 under the Companies Act, 1956 with a
registered office at Jitwarpur Kothi, District:
Samastipur, Bihar and was originally promoted by
late Shri Madan Mohan Sharma who was the
Chairman and Managing Director of the Company
till his death in the year 1992. Subsequently, his
cousin, late Shri Chaturbhuj Sharma became the
Chairman of the said Company. The said Company
comprised of two groups of shareholders, namely,

(i) MMS Group (the family and companies

associated with late Shri Madan Mohan
Sharma); and
 118

(ii) CBS Group (the family and companies

associated with late Shri Chaturbhuj Sharma)

holding 50% paid up capital of each.

An agreement was executed between MMS

Group and CBS Group. As per Memorandum of
Family Agreement (MoFA) and Transfer Documents
(TDs), the rights to this Katasahi Mines have been
given to MMS Group. This has been challenged
before different Courts and the disputes are yet not
conclusively decided. Further, in the case of M/s. J.
Thomas & Co. Pvt. Limited V/s. M/s. Ram
Bahadur Thakur Limited, in Company Petition
No.6 of 2006, the Hon’ble High Court of Patna
passed an order on 31.07.2008, winding up the
Respondent Company. The further status of its
liquidation is not known.

5. Out of 36.588 ha. forest land; 36.219 ha. of forest

land has been sought for diversion under the Forest
(Conservation) Act, 1980 (FCA, 1980) by M/s. RBTL
which was entered at State Sr. No.260/80, dated
24.05.2008. The proposal was sent for further
process to the District Forest Officer (DFO),
Kendujhar on 24.05.2008 by the Chief Conservator
of Forest (Nodal Officer).
 119

After receiving the proposal to process it

further to submit to Conservator of Forest, the DFO
had inspected the site on 28.07.2008.

Para: 18 of the said inspection report of the

DFO, Kendujhar Division, reads as under:–

“18. Violation of There is no violation by the

Forest applicant over the area
(Conser– applied.
vation) Act,
1980 if any However it is noticed that,
and action some illegal mining activity
taken was done over the plot No.365
thereon. bearing Khata No.38 jungle
kissam land and the same
was noticed & reported by the
applicant during the time of
demarcation of the Lease hold
area. This encroachment was
reportedly done by an
adjacent lessee having M. L.
over non forest land, Mr. S. N.
Dasmohapatra over an area of
5.09 ha. in this lease hold
against which Mining Officer,
Office of the Deputy Director
Mines, Joda has seized
Manganese Ore lumps and
fines from the lease–hold of
Mr. S. N. Dasmohapatra.”
 120

6. On careful examination of the aforesaid site

inspection report, it is observed that the report of
the then DFO is factually incorrect and very casual
in nature. The satellite images during that period
for the said area clearly show that the area has
been broken up and minerals have been
extracted. This is also proved by various reports
submitted for this area by various agencies.

The DFO failed to take note of the

encroachment in this lease area with best reasons
known to him. The DFO should have taken
immediate action to stop the illegal mining in the
area and also should have filed criminal case, after
investigation, as the area in question is part of
protected forest, as defined by Section 81(4) of the
Orissa Forest Act, 1972.

It is to state here that the area in question

where the illegal mining had taken place, is a
protected forest under Secton 81(4) of the Orissa
Forest Act, 1972. The provisions of Sub–sections
(2) and (3) of the said Section shall be applicable
mutatis mutandis. Hence, by the plain reading of
the aforesaid Section 81, it is clear that the forest
department have all powers to take action for illegal
breaking of area, theft of the mineral in the form of
illegal mining from the protected forest. Further, the
 121

mineral is defined as forest produce under Section 2

of the Orissa Forest Act, 1972.

Section 81 of the Orissa Forest Act, 1972 reads

as under:–

“81. Special provision for reserved forests in

the merged territories–

(1) Notwithstanding anything contained in

this Act or in any other law for the time
being in force, any forest land or
wasteland in the merged territories, which
has been recognized by the Ruler of any
merged State immediately before the date
of merger as a reserved forest in
pursuance of any law, custom, rule,
regulation, order or notification for time
being in force or which has been dealt
with such in any administration report or
in accordance with any working plan, or
register maintained and acted upon
immediately before the said date and has
been continued to do so dealt with
thereafter, shall be deemed to be reserved
forests for the purposes of this Act.

(2) In the absence of any rule, order or

notification under this Act, applicable to
the area in question, any law, custom,
rule, regulation order and notification
mentioned in Sub section–(1) shall,
anything in any law to the contrary
 122

notwithstanding , be deemed to be validly

in force as if the same had the force and
effect or rules, orders and notifications
made under the provisions of the Act and
shall continue to so remain in force until
superseded, altered or modified in
accordance there with.

(3) No report, working plan or register as

aforesaid or any entry there in shall be
questioned in any Court of law; provided
that the State Government have duly
certified that such report, working plan or
register had been prepared under the
authority of the said Ruler before the date
of merger and has been under the
authority of the State Government
continued to be recognized, maintained or
acted upon thereafter.

(4) Forest recognized in the merged territories,

as Khesra forests, village forests,
protected forest or forests other than
reserved forests by what ever name
designated or locally known, shall be
deemed to be protected forests within the
meaning of this Act and provisions of Sub–
sections (2) and (3) shall mutatis mutandis
apply.

Explanation I:

“Working plan” includes any plan,

scheme, project, maps, drawing and lay–
 123

outs prepared for the purpose of carrying

out the operation in course of the working
and management of forests.

Explanation II:

“Ruler” includes the Darbar administration

prior to the date of the merger and “State
Government” includes the successor
Government after the said date.”

The offences provided under Section 27 of the

Orissa Forest Act, 1972 includes quarries stone,
burns lime or charcoal or collects, subjects to
manufacturing process or removes any forest
produce. The said Section reads as under:–

“27. Offences:–

(1) Any person who –

(a) makes any fresh clearing or causes

breaking of land which is prohibited
under Section 5;

(b) sets fire to a reserved forest or to a

forest land in respect of which a
notification under Section 4 has been
issued or in contravention of any rule
made by the State Government in
this behalf, kindles any fire in such
forest or leaves any fire burning in
 124

such manner as to endanger such

forest or forest land; or

(c) in a reserved forest kindles, keeps,

or carries any fine except at such
season as the Forest Officer may
notify in this behalf,

shall be punishable with imprisonment for

a term which may extend to six months
and with fine which may extend to five
hundred rupees.

(2) Any person who in a reserved forest–

(a) trespasses or pastures cattle or

permits cattle to trespass; or

(b) … … … …

(3) Any person, who in a reserved forest–

(a) fells, girdles, lops, taps or burns any

tree or plant or strips off the bark or
leaves from or otherwise damages
the same or causes damage to any
forest–produce;

(b) quarries stone, burns lime or

charcoal or collects, subjects to
manufacturing process or removes
any forest produce.

(c) clears or breaks up any land for

cultivation or for any other
 125

purpose, or cultivates or attempts to

cultivate any land in any manner or
puts up any sheds or other structure;
or

(d) in contravention of any rule made in

this behalf by the State Government
huts, shoots, fishes, poisons water or
sets traps or snares;

shall be punishable with imprisonment for

a term which may extend to two years
and with fine which may extend to five
thousand rupees)

(4) When a person is convicted for an offence

under Clause (a) of Sub–section (1) or
clause (c) of Sub–section (3), the Court
shall order eviction of the offender from
the land in relation to which the offence
has been committed and, on such order
being made, all sheds or structures on
such land shall be demolished and if the
Court so orders, the crop, if any, standing
on the land shall be seized and
confiscated to the State Government.

(5) Order passed and actions to be taken

under sub–section (4) may be executed by
a Police Officer not below the rank of a
Sub–Inspector or a Forest Officer not below
the rank of a Range Officer as the Court
may direct.
 126

(6) Nothing in this section shall be deemed to

prohibit

(a) … … … …

(b) … … … …”

Hence, the forest officials have all the powers

under Section 27 read with Section 81(4) to file the
criminal case against the person who has removed
the mineral from the protected forest.

It is to be stated that the Principal Chief

Conservator of Forest has not taken any action in
the matter, even after submission of the detailed
report by the DFO vide his Memos dated
15.05.2009, 15.07.2009 and 12.08.2009, as
revealed from letter No.86/C/1F (FU&FP) FP–44/
2009, dated 24.08.2009 of the Principal Chief
Conservator of Forest written to the Commissioner–
cum–Secretary to Government, Forest and
Environment Department, Bhubaneshwar.

This indicates the lethargy on the part of the

Department and the State Government together, in
implementing the Forest Act.

This should be taken as a part of inquiry to be

conducted at any point of time together with
 127

flagrant illegal mining wherein the quantity of about

52,376 MT of manganese ore of a market value of
Rs.54,37,67,632/– is involved.

7. The State Government, Vigilance Wing filed a case

which is reproduced as under (for details, vigilance
records may be seen):–

Case No. and Brief facts and present status

Sections of the case

BLS Vig. It was alleged in the FIR that

PS Case No.35, undue official favour has been
dated 10.08.2009 shown to Sri S.N. Das
U/s. 13(2) Mohapatra and Sri Shakti
r/w. 13(1)(d) Ranjan Das of M/s. RBT Ltd. in
P.C. Act, 1988/ the matter of illegal mining in
120–B IPC. the forest land and beyond
mining lease area causing loss
Name of the of Rs.110 crores to Government.
Mines:
M/s. Ram During investigation it is found
Bahadur Thakur that 52,376 MT quantity of
Limited & S.N. manganese ore amounting to
Das Mohapartra. Rs.54,37,67,632/– has been
excavated illegally from the
Spot: proposed mining area of RBT
Kolha Rudukela, Ltd., forest land Government
Bhuyan land.
Rudukela and
Katasahi Mines, Charge Sheet has been
Joda, submitted vide No.46 dated
 128

Dist.: Keonjhar, 01.12.2010 U/s. 13(2) r/w.

JPV held on 13(1)(d) P.C. Act, 1988/120–
16.07.2009 to B/379/420 IPC/21 MMRD Act,
21.07.2009. 1957 against:–

(1) Sri M. M. Biswal,

DDM, Joda,

(2) Sri Ganeshwar Mohanty,

Jt. Director, Mines,

(3) Sri D. K. Mishra,

Jt. Director, Mines,

(4) Sri Sasadhar Sahu,

Ex. DDM, Joda,

(5) Sri Routray Murmu,

Mining Officer,

(6) Sri Ramesh Ch. Mahalik,

Ex–Mining Officer, Joda,

(7) Shri Suresh Ch. Sahoo,

Ex–Mining Officer, Joda,

(8) Shri Shirish Kumar

Mohanty,
Ex–Forest Range Officer,
Barbil,

(9) Sri Dilip Kumar Beura,

Ex–Forest Range Officer,
Barbil,

(10) Sri Kamalakanta Pradhan,

Ex–Forester, Gauli,
 129

(11) Sri Rabindra Narayan

Sahoo,
Ex–Director of Mines,

(12) Sri Manish Mohan Sharma,

(13) Sri Birendra Mohan

Sharma,

(14) Sri Shakti Ranjan Das of

M/s. Ram Bahadur
Thakur Ltd.,

(15) Sri S. N. Das Mohapatra,

the Power of Attorney
holder Proprietor of
S. N. Das Mohapatra,

(16) Sri Srijoy Nandan Das

Mohapatra, Director of
JM Mining & Trading
Pvt. Ltd.

The case is now sub–judice

in the Hon’ble Court of Spl.
Judge Vigilance, Balasore vide
TR No.45/2010.

8. The State Government, after giving full opportunity

to the M/s. RBTL, has refused to grant the mining
lease in favour of M/s. RBTL under the Rule 26(1) of
MCR, 1960 vide proceeding No.4630, dated
20.07.2010. Application No.6, dated 25.09.1991
 130

filed by the applicant lessee came to refusal on the

following main grounds among others:–

(i) M/s. RBTL, Directors representing both the

groups namely MMS and CBS has been
engaged in illegal mining for the applied area;

(ii) Shri S. N. Dasmohapatra and Shri Shakti

Ranjan Das, the two Power of Attorney
holders/representatives of M/s. RBTL, were
also engaged in illegal mining at various points
of time.

(iii) The Committee, appointed by the Department

of Steel and Mines, inspected the area and
established in clear terms that there has been
illegal mining in the proposed leased area.

(iv) The Vigilance Department who has

investigated the matter, has found that Shri S.
N. Dasmohapatra and Shri Shakti Ranjan Das
are responsible for illegal mining and were
raising mineral illegally in the area. It is
further found that Shri S. N. Dasmohapatra
was an employee of M/s. RBTL till the year
2008.

(v) Shri S. N. Dasmohapatra and Shri Shakti

Ranjan Das were closely associated with the
 131

affairs of M/s. RBTL. It is also observed that

protracted share holders dispute between the
MMS and CBS Groups of M/s. RBTL was the
basic reason for undue delay in obtaining
statutory clearances and resulted into illegal
mining.

9. Against the proceedings No.4630, dated 20.07.2010

of State Government, M/s. RBTL has filed Revision
Application under Rule 54 of MCR, 1960 before
Government of India, Ministry of Mines on
24.08.2010. Shri Suresh Kishnani, Director,
Ministry of Mines has conducted the proceedings
and issued an order under Section 30 of the
MM(DR) Act, 1957 on 26.09.2011. Shri Suresh
Kishnani has set aside the impugned order dated
20.07.2010 of the State Government of Orissa and
allowed the Revision Application with consequential
benefits.

The Revisional Order appears to have been

passed by ignoring hard facts and legal provisions.
Glaring features are as under:–

(i) It is not known whether State Government has

challenged the aforesaid order before
appropriate Forum.
 132

(ii) The land being the forest land, the forest

authorities ought to have been heard in the
matter for illegal mining which is completely
ignored.

(iii) The satellite images of that period should have

been observed.

(iv) It is further stated that no prudent lease

holder would allow illegal mining in his lease
area. Hence, the role of RBTL can not be ruled
out.

(v) The circulation of money should also have

been tracked through a proper agency to find
out who was the actual beneficiary out of
illegal mining.

(vi) The admitted fact of illegal mining in this lease

area was completely ignored by Shri Suresh
Kishnani, the Director, Ministry of Mines,
Government of India, while setting aside the
State Government’s order dated 20.07.2010.
Instead, he has pointed out only the technical
loose ends of the order (20.07.2010). He
should have directed the State Government to
get further probe made on certain points to
find out the facts, if any, left out so far.
 133

As a whole, the aforesaid order requires

re–consideration either by Review or by Appeal
before the Jurisdictional Forum.

10. Recommendation:––

A. Large numbers of complaints have been received by

the Commission in this particular case of illegal
mining. Based on records, reports, satellite images
and others, it is prima–facie established that there
had been illegal mining taken place by full
involvement of M/s. RBTL, Shri S. N.
Dasmahapatra, with the connivance of Mining,
Forest, Revenue officials at field level as well as at
State level. The political shelter cannot be rulled out
in such a large scale illegal mining for a long period.

B. Hence, the Commission recommends to hand over

this matter to Central Bureau of Investigation for
further investigation as per law.

Further, the State Government should initiate

action to recover the value of the illegally extracted
manganese ore.

***
 134

Soumendra Nandan Dasmohapatra

(S. N. Dasmohapatra)
Kolha – Rudukela Manganese Mines

(i) Lease area of 40.185 ha. from 21.05.2001;

(ii) Land of tribals and notified within Schedule V of the

Constitution of India; and

(iii) Surface right only for 6.714 ha.

Findings recorded in this Chapter are based upon

the information supplied by the various Departments of
the State and Central Governments, lessee, MoEF, IBM,
etc. It is for the competent authority to issue appropriate
notices to the concerned party/lessee for taking action in
accordance with law.

The Commission has also taken into consideration

the Vigilance Enquiry Report of the State Government. It
is to be stated that the facts, figures and comments
which are noted hereinafter, are taken from the Vigilance
Enquiry Report.

The Commission has heard the matter on

04.03.2013 at Bhubaneshwar. The lessee was present
during hearing and the case of the lessee has been
represented through his Counsel, Shri Jayant Das, Sr.
Advocate; Shri Ashwini Patnaik, Advocates & associate &
made voluminous submission before the Commission.
 135

The records and submissions made by the State

Government of various Departments including the
Vigilance Report, FIRs, etc. have been taken into
consideration for making the following observations for
needed action.

1. As per the submission made by the lessee, he had

applied for an area of 94.580 ha. (233.546 acres) in
the villages of Bhuyana–Rudukela, Kolha–Rudukela
and Katasahi in Barbil P.S. in Keonjhar District
through an application (Form “I”) dated 20.08.1996.
Though the lessee claimed in Form “I” that he has
obtained consent from land owners for undertaking
mining, no records is submitted, in this regard and
burden lies on him to prove it.

The State Government, Department of Steel

and Mines, vide its letter No.13120/SN/
Bhubaneshwar, dated 28.10.2000 intimated to the
Applicant that after considering the original
applications dated 20/26.08.1996 and 04.10.1996,
excluding the forest area and others, an area of
40.185 ha. out of applied area of 94.580 ha. is
available to grant as mining lease. In that context,
the State of Orissa had submitted precise area map
of 40.185 ha. to the Government of India,
recommending for grant of mining lease.
 136

The Government of India, vide letter No.5/30/

2000–MIV dated 04.10.2000, conveyed its approval
for 40.185 ha. of available area. The Government of
Orissa, vide its letter No.13120/SN/Bhubaneshwar,
dated 28.10.2000, directed the lessee to accept
terms and conditions. Having accepted all the terms
and conditions, the Government of Orissa has
granted the lease, through Proceedings No.6647,
dated 21.05.2001, for a period of 20 years, subject
to the conditions laid down in the aforesaid letter
dated 28.10.2000. A mining plan had been
sanctioned by the IBM, vide letter dated
11.05.2001, i.e. before the grant of mining lease by
the State Government. At that point of time, there
was no survey sketch available with the IBM for the
reduced area. Hence, mining plan was sanctioned
for 40.185 ha.

It is to state here that the entire leased area is

comprised of blocks with Khata numbers and,
hence, the lessee cannot go beyond these blocks in
any circumstances at field. The lease boundary for
the said lease would be the outer boundary of the
blocks. But on verification, it is noted that some
blocks fall outside the lease boundary also.

The lease area, in question, is the land of the

tribals and notified within Schedule V of the
 137

Constitution of India. It is not known how the

scheduled land has been granted to the lessee for
mining purpose, though there are various Supreme
Court orders, stating that the transfer of lease from
the tribals to any other person in the scheduled
area is prohibited and void and of no effect.

As per the submission of the lessee, the

Collector has accorded approval vide letter No.2386
for surface right over an area of 6.714 ha. only
(16.590 acres) on 23.08.2002. The lessee has taken
possession for the said area of 6.714 ha. on
09.09.2002. For the remaining area, the lessee has
not been given the surface right by the competent
authority till date and he cannot enjoy the rights
and privileges of the lease for the remaining area.
Any area beyond 6.714 ha. can not be worked for
mining activities. All the mining activities beyond
the blocks for which the surface rights are not
given, are illegal (Annexure: 1). The satellite images
of the lease area shows that the lessee has carried
out various mining activities beyond 6.714 ha.
illegally. Hence, action should be taken, in this
regard.

After the grant of mining lease by the State

Government vide Proceedings No.6647 dated
21.05.2001, a lease deed indenture was executed on
 138

03.05.2002 (Form “K”, under Rule 31 of MCR, 1960)

between the Governor of Orissa (lessor), through
Mrs. Chitra Arumugum, Collector, Keonjhar District
on one part and Shri Soumendra Nandan
Dasmohapatra S/o. Late Sri Janaki Nandan
Dasmohapatra, aged about 53 years of
Madhusudan Avenue, Tulsipur, P.S. Bidanasi,
District Cuttack “lessee” on the other part for a
period of 20 years over an area of 90.13 acres or
36.474 ha. in the villages of Bhuyanarudukela
No.50, Kolharudukela No.51 and Katasahi No.53,
Barpada No.52 and Loidapada No.49 in Barbil
Tahsil in Keonjhar District, as per the Schedule
stated in Part II. It is pertinent to state here that
the lessee has accepted and not raised any objection
for the reduction of the area from 40.185 ha. to
36.474 ha. Hence, the lessee cannot raise the
dispute, now. It has reached to its finality by all
legal means. However, the surface area to an extent
of 6.714 ha. has only been given by a competent
authority (i.e. Collector) to the lessee and he is
entitled for working in that limited area. Working in
the other leased area, as could be seen from satellite
images, is patently illegal.

Though the leased area is mostly tenant land,

it was well wooded, as could be noted from the Term
and Condition No.VII which reads as under:–
 139

“The grantee shall not cut any tree or clear the forest
during the mining operation without prior approval of
the Central Government. He shall not also damage
any objectionable land during mining operation.”

The aforesaid condition was accepted by the

lessee, vide his letter dated 30.10.2000. The area is
well wooded, as can be judged through satellite
images of the year 2005, 2006, etc.

2. Environmental Clearance (EC):––

The lessee was supposed to obtain EC under

the EIA Notification dated 27.01.1994 and the
amendments therein. The lessee was required to
take the consent to establish and consent to operate
the mining project under the Water and Air Acts
from the Pollution Control Board.

The lessee has not submitted any documents

regarding the approval under the aforesaid
provisions. It is also verified from the Government
records and found that no such approval has been
obtained by the lessee. Since the year 2002–03, the
lessee has claimed to extract the manganese ore, as
given in the table below:––
 140

Year Production (MT)

(As per Lessee)
2002–03 921
2003–04 1,681
2004–05 2,306
2005–06 4,525
2006–07 9,549
2007–08 8,655
2008–09 2,351
2009–10 1,924
2010–11 1,019
2011–12 NIL
2012–13 NIL
Total 32,930

Further, there are all possibilities that the

extraction could have been done much more from
outside the leased area, as alleged in the criminal
cases filed against him. Be it as that may be, the
lessee has indisputably extracted 32,930 MT of
manganese ore without having approval under the
E.P. Act, 1986 (EIA Notification dated 27.01.1994)
and without approvals under Water and Air Acts.
Hence, it is considered as the illegal extraction of
ore without lawful authority and attracts Section
21(5) of the MM(DR) Act, 1957. Therefore, action
should be taken to recover the market value with
penalties along with the other penal punishments.
 141

3. Forest area:––

During the hearing, the Forest Department has

submitted that out of 36.474 ha., there is an area of
15.01 ha. of forest land. The lessee denies this claim
of the Forest Department. Hence, the District
Collector with the Forest Department should verify
the records and take action accordingly on the
outcome of the verification.

4. Encroachments outside the leased area:––

The Commission had issued a notice dated

16.02.2013 to lessee to explain the encroachment
due to the extended working in the form of
extraction of manganese ore beyond his lease
towards the eastern side as per Annexure: D with a
satellite image among others. The lessee made his
submission on 02.04.2013 stating that Government
and M/s. RBT Ltd. to answer. The Commission
ordered for resurvey during the hearing on
04.03.2013 through his Senior Counsel. The lessee
did not agree to pay the cost of survey. Hence, no
survey has been carried out. The records and
survey, in this matter, is very straight and clear and
for this reason, the expert team of this Commission,
in survey matters, has finalized the encroachments
based on the available records submitted by lessee,
 142

Government and others which are found sufficient

to fix the encroachment. Accordingly, it is confirmed
that there is clear encroachment to an extent of
11.40 ha. beyond the lease of lessee at the location
in the map sent to lessee.

The lessee has entered into an agreement with

State Government on 03.05.2002 wherein the lease
boundary has been defined as per Part II of the
agreement for an area of 36.474 ha. in the stated
villages for the blocks and khata numbers.
Accordingly, the lease boundary has been translated
on the field by taking into consideration of all the
ground features, the location of blocks of various
tribal peoples (those who own the land within the
lease, as given and admitted by lessee). The
encroachment is calculated by taking this lease map
plan. Lessee did not object about the location as
sent to him at Annexure: D of the aforesaid notice.

The surface rights, as granted by the Collector

for 6.714 ha., falls within the leased area (except
one block) and the outer boundary of their blocks
are completely coincides and match with the lease
boundary.

Hence, the location of the lease boundary at

the field (by taking into consideration all records
 143

and material in hand) is found correct. The area

calculated comes out to be 40.00 ha. which is more
than that of the area agreed by the lessee in the
lease deed agreement (i.e. 36.474 ha.) and also
boundary surveyed and fixed on 19.11.2001 in the
presence of lessee where the lessee himself is a
signatory of the lease map plan (Annexure: 1).

The Google Images of the lease area and the

surrounding area taken for measurements of
encroachments and cross verification are shown at
Annexures: 2 and 3 respectively. From the images,
the working inside the lease (pits) has been
observed at the blocks numbers for 6.714 ha.
(Annexure: 1). It is also clear that there is an
encroachment by extension of mining pits towards
the eastern side against the blocks 237, 338, 339
and 340 in the reserve forest area to an extent of
11.40 ha. which is taken as encroachment.

The encroached area is calculated about 11.4

ha. The working pit, inside the lease area, is very
less, while it is more outside the lease boundary.
Also, the quality of the manganese ore is found
inferior in the leased area than available outside in
the forest land.
 144

The encroachment is also confirmed by the

inspections of various Committees and officials who
visited the lease area from time to time. It is
admitted fact regarding the encroachment through
extension of continuous working pits from inside of
the lease to outside the leased area in the forest
land.

Only the dispute which remains unresolved is

that who has carried out illegal extraction of
manganese ore by way of illegal mining in this
encroached area which is quite extensive and for
large quantum of manganese ore. On comparison of
satellite images dated 06.12.2005 and 22.03.2012,
it is clear that illegal mining took place mainly from
the year 2005 to 2010.

The State Government has taken a note on

the encroachments and handed over this matter
to the Vigilance Wing of the State Government.
Accordingly, some FIRs and criminal cases have
been filed against the officials of Mines
Department and others. The details are given as
under (for full details, the Vigilance Report may
be perused):–
 145

Sr. Name of the Case No. Main Charges

No. official and and
the then Sections
working as

1 Sri Rabindra Balasore (1) Sri Sahoo did not

Narayan Sahoo Vigilance PS take the approval of
was posted as Case the Government
Director of No.35/2009 and passed orders
Mines, u/s. 13(2) for allowing M/s.
Bhubaneshwar r/w. S. RBT Ltd to engage
from 2005 to 13(1)(d) of security guards
26.09.2009 P.C. Act, knowing that M/s.
1988 and S. RBT and SN
120–B of IPC Dasmohapatra
were indulging in
illegal mining, in no
men's land, forest
land, etc.

(2) That Sri Sahoo has

given false
information to the
Government
regarding the
antecedent of M/s.
RBT Ltd that the
company is
engaged in
exploration of
Manganese ore in
Balaghat (MP).
 146

2 Sri Ganesh Ch. Balasore (1) Sri Mohanty had

Mohanty, Joint Vigilance PS processed the
Director, Level II Case Mining lease file of
was posted in No.35/2009 Sri S.N.
the office of u/s. 13(2) Dasmohapatra and
Director, Mines r/w. S. suppressed facts
Odisha, 13(1)(d) of regarding his
Bhubaneshwar P.C. Act, financial status
from 06.05.1998 1988 and S. and recommended
to 10.08.2009. 120–B of IPC for grant of lease.
(2) Sri Mohanty on
17.09.2008 had
conducted
inspection of the
Rudukela and
Katasahi
Manganese Mines
and gave a false
and misleading
report.

3 Sri Debendra Balasore (1) Sri Mishra on

Kumar Mishra, Vigilance PS 25.04.2008,
Joint Director, Case 17.09.2008,
Level II (u/s.) No.35/2009 25.04.2009,
was posted in u/s. 13(2) 29.04.2009,
the office of r/w. S. 03.06.2009 to
Director, Mines, 13(1)(d) of 05.06.2009 and
Odisha, P.C. Act, 04.07.2009 had
Bhubaneshwar 1988 and S. conducted
from 06.05.1998 120–B of IPC inspection of the
to 10.08.2009. Rudukela and
Katasahi
Manganese Mines
and gave a false
and misleading
report.
 147

4 Sri Madan Balasore (1) Sri Biswal did not

Mohan Biswal, Vigilance PS take any prompt
Dy. Director, Case action on receipt of
Mines, Joda No.35/2009 report regarding
from 06.05.1998 u/s. 13(2) illegal mining
to 10.08.2009. r/w. S. activities by Sri
13(1)(d) of S.N. Dasmohapatra
P.C. Act, by shifting the ML
1988 and S. pillars.
120–B of IPC
(2) That, Sri Madan
Mohan Biswal,
approved stack
removal permission
and despatch of
Manganese Ore by
Sri S.N.
Dasmohapatra
knowing fully well
that Sri
Dasmohapatra is
indulged in illegal
mining beyond
mining lease area
and in the forest
land.

(3) Sri Biswal

recommended for
engagement of
security guards in
the proposed ML
area of RBT
without approval of
the Govt.
 148

5 Sri Routray Balasore (1) Sri Murmu did not

Murmu, Ex– Vigilance PS take any prompt
Mining Officer Case action in receipt of
was posted in No.35/2009 report regarding
the O/o. Dy. u/s. 13(2) illegal mining
Director Mines, r/w. S. activities by Sri
Joda from 13(1)(d) of S.N. Dasmohapatra
29.06.2006 to P.C. Act, by shifting the ML
10.08.2009. 1988 and S. Pillars.
120–B of IPC
(2) That, Sri Routray
Murmu, approved
stack removal
permission and
despatch of
Manganese Ore by
Sri S.N.
Dasmohapatra
knowing fully well
that Sri
Dasmohapatra is
indulged in illegal
mining beyond
mining lease area
and in the forest
land.

From the records, it has been observed that

the lessee and M/s. RBT Ltd. are projecting
themselves as “whistleblowers” to expose the illegal
mining in the encroached area but the facts are
otherwise, as could be made out, after closely
examining all the records, Vigilance Report, State
Government’s records, etc. It is reported that about
 149

52,376 MT of manganese ore has been illegally

extracted from the encroached area. The market
value with penalty should be recovered along with
other penal action arising out of it.

The statement; submitted by the lessee that

the State Government, Department of Steel and
Mines has suo moto, without the approval of
Government of India, reduced the granted area of
40.185 ha. to 36.474 ha., vide letter No.3368/SM,
dated 09.04.2000; is totally incorrect, as explained
above. The lessee himself was a signatory for survey
and lease map plan dated 19.11.2001 for ML area to
an extent of 36.474 ha. and no Appeal has been
filed against it.

Be it as that may be, the encroachments

reported and communicated to the lessee by the
Commission is actually calculated from the lease
area taking into consideration as 40.00 ha. If the
present lease boundary is even slightly shifted, it
would not match with the blocks which are the part
of the leased area. Hence, the lease boundary plan
sketch prepared by the State Government and
approved by the Commission in its 1st report and
then transferred at the field is absolutely correct. It
is stated here that this exercise has been weighted
by the expert team of the Commission in survey
 150

matters who has measured hundreds of leases in

Karnataka, Goa and Orissa.

For accurate assessment of the volume /

quantity of ore from the pit, following methodology
may be adopted:–

“Assessment of iron ore extracted from a lease can

be done using modern technologies like LIDAR (Light
Detection And Ranging), 3–D Laser Scanner, DGPS
etc. and the parameters that may have to be taken
into consideration include the surface profiles,
stripping ratio, bulk density etc.

In order to accurately assess the volume /

tonnage of the iron ore illegally extracted with regard
to any lease, the technical expertise available with
the Singareni Collieries Company Limited in this field
can be leveraged. It is also to be noted that Singareni
Collieries Company Limited has assisted the Central
Bureau of Investigation (CBI), Bangalore in a similar
work for few of the iron ore leases in Karnataka,
using a standard methodology and survey
instruments like DGPS, 3 D Laser Scanner and Total
Station.”

Now, the only disputed matter to be resolved is

that –– who had carried out such large scale illegal
mining of manganese and float iron in the
encroached area?
 151

From the available records, it seems both Shri

S. N. Dasmohapatra and M/s. RBTL have joined
hands with the full connivance of Government
officials at field, Mines Directorate and State
Government to carry out this illegal mining. The
political shelter for such a large scale mining can
not be ruled out.

5. Recommendation:––

The Commission recommends that this matter

should be referred to Central Bureau of
Investigation for further investigation to take action
as per the law. This is also necessary because:–

(i) the criminal cases filed by the Vigilance Wing

of the State Government have not progressed
much; and

(ii) concrete action has to be taken to recover the

loss suffered by the State for the theft of public
property. And for this, proceedings under
Section 21(5) of MM(DR) Act, 1957, require to
be initiated.

***