Karnataka HC quashes Rs 482.69 crore penalty on Adani-controlled ACC

Bengaluru, Sept 12 : The Karnataka High Court has quashed the Rs 482.69 crore penalty imposed on Adani-controlled ACC Limited in connection with limestone mining in Kalaburagi, holding that the company had a valid statutory right to continue mining.

A Division Bench comprising Chief Justice Vibhu Bakhru and Justice K S Hemalekha held that the 2015 amendment to the Mines and Minerals (Development and Regulation) Act had extended ACC's mining lease up to March 31, 2030.

The court observed that ACC could not be treated as carrying out illegal mining merely because the state government had not executed a supplementary lease deed.

The mining lease, originally granted in 1963, covers limestone mines at Ingalgi and Ravoor villages in Kalaburagi district. ACC uses the extracted limestone for its captive cement plant.

The state government had imposed the Rs 482.69 crore penalty after treating the lease as having expired in 2023 and alleging that ACC continued mining without a supplementary lease deed.

Rejecting the state's contention, the High Court held that insisting on execution of a supplementary lease deed would defeat the purpose of the 2015 amendment, which extended existing mining leases by operation of law.

The Bench also rejected the state's method of calculating royalty, holding that ACC was liable to pay royalty on the actual quantity of limestone extracted and consumed, rather than on a notional quantity calculated by the authorities.

The court upheld the findings of the Central government revisional authority, which had accepted ACC's weighment records and rejected the state's notional calculation of the quantity mined.

In another relief to ACC, the High Court directed the state government and the Department of Mines and Geology to restore the company's full access to the Integrated Lease Management System portal, which is used for royalty payments and transport permits.

The court also directed the state to refund Rs 125 crore deposited by ACC pursuant to an earlier interim order.

It further directed the authorities to execute the supplementary lease deed in favour of ACC.

Senior Advocate K N Phaneendra and Advocate Vaishali Hegde appeared for ACC, while Central Government Standing Counsel Vinay Venugopal represented the Union government.

Additional Advocate General Reuben Jacob and Government Advocate K S Harish appeared for the state government.