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Bhushan Power & Steel Limited v. Mr. S.L. Seal, Addl. Secretary (Steel & Mines), Government of Odisha & Ors.

Contempt Petition (Civil) · Neutral citation not assigned (Contempt Petition (Civil) No. 275 of 2016)Decided 15 Dec 2016
Contempt Petition (Civil) No. 275 of 2016
Justice A.K. Sikri · Justice Abhay Manohar Sapre

Background

Bhushan Power & Steel Ltd. had earlier won a 2012 Supreme Court judgment directing the Odisha State Government to recommend it for an iron ore mining lease over the "Keora" area, in line with a prior MoU. When the State Government failed to act, a first contempt petition (2012) led to a 2014 order giving the State one final chance to send the recommendation to the Central Government, with the matter to be "closed" if it complied. The State did eventually send the recommendation in May 2014, but before the Central Government approved it, Parliament passed the Mines and Minerals (Development and Regulation) Amendment Act, 2015, which altered the legal regime for granting mining leases and the Central Government treated the company's pending proposal as having become ineligible/closed under the new law. The company filed this second contempt petition, arguing that the Central and State governments' refusal to grant the lease defied the Court's earlier orders, and that its case should fall within a savings clause (Section 10A) of the amended Act because the State's May 2014 letter amounted to a "Letter of Intent."

Decision Breakdown

The Court held that the State Government's May 24, 2014 letter to the Central Government could not be treated as a "Letter of Intent" under Section 10A of the amended Act, because the State itself lacked power to communicate any binding intention to grant the lease without the Central Government's prior approval: the letter was merely recommendatory. Relying on precedent (including Rishi Kiran Logistics v. Kandla Port Trust) on what constitutes a genuine Letter of Intent, the Court concluded the company's case did not fall within the statutory savings category protecting pre-amendment applicants. It also noted that its earlier 2014 contempt order had never directed the Central Government itself to grant approval, only that the Central Government consider the State's recommendation on its own merits, so the Central Government's eventual refusal (based on the new 2015 law) could not be treated as contempt of the Court's orders. The contempt petition was accordingly closed with these observations, with no finding of contempt against either government.

Lesson Learnt

A company relying on a favourable court judgment must still contend with intervening changes in law: if a statute is amended before a government approval is finally granted, a court will not treat the government's refusal to act under the old regime as contempt unless its original order specifically bound that authority to a particular outcome; informal recommendatory communications are not the same as a binding "Letter of Intent" that can preserve old rights.

Official source (sci.gov.in)View Judgment (PDF)

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