The Supreme Court on Wednesday cancelled 88 iron ore mining leases in Goa, dealing a blow to miners including Vedanta Ltd.

The existing leases will run till 15 March, after which mining activity has to stop, the court directed.

The Supreme Court bench, headed by justice Madan B. Lokur, held the government’s process of renewing the mining leases of companies to be “in violation of law" and directed the state government to grant fresh licences through an auction.

The court also directed the setting up of a special investigation team that will include a chartered accountant to determine the charges to be levied on the mining companies whose leases were renewed in 2015.

Shares of Vedanta Ltd fell 1.96% to Rs315.35 on BSE, on a day the exchange’s benchmark Sensex dropped 0.33% to 34,082.71 points.

The Supreme Court was hearing a public interest litigation by the Goa Foundation. The petition had questioned the renewal of mining leases in the state.

The Goa Foundation, through its lawyer Prashant Bhushan, had argued that the state’s policy on renewing leases did not conform to the Supreme Court’s stand on optimum utilization of natural resources.

Bhushan contended that the state government ought to have auctioned the mining leases instead of renewing them.

He pointed out that the mines ordinance approved on 12 January 2015 did not spell out a renewal procedure. All renewals were done before the ordinance came into force, he said, with 31 leases being renewed on 12 January 2015.

The Mines and Minerals Amendment Bill was subsequently placed before Parliament and approved on 27 March 2015.

The Goa Foundation’s petition, a copy of which Mint has reviewed, alleged that miners and government authorities had colluded to circumvent not just the ordinance, but also the Supreme Court’s ruling of 21 April 2014. The renewal was against the court’s precedents laid down for the appropriate and optimum utilization of natural resources, the petition claimed.

According to the petition, 56 leases were renewed between 6 and 12 January 2015, shortly before the ordinance was passed.

The petition has named 20 miners whose leases have been renewed. Some of these companies had earlier moved the Bombay high court seeking to direct the Goa government to consider and grant a second renewal of mining leases.

It was on their petition that the Panaji bench of the Bombay high court had on 13 August 2014 directed the state government of Goa to execute a second renewal of leases in favour of companies that had paid the required stamp duty.

Last year, the Goa Foundation had appealed this decision before the Supreme Court; that case is also being heard in the current batch of cases. The appeal said that the order “disembodies the directions" of the court.

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