Investigation report of the committee to carry out assessment of the loss on amount of mining in the 687.93 hectare area (Kathautia coal mines) formerly leased out to M/s Usha Martin Ltd. for mining of coal mineral.


For assessment of the loss on amount of mining in the 687.93 hectare area (Kathautia coal mines) leased out to M/s Usha Martin Ltd. for mining of coal mineral, a committee formed on the basis of Dy. Commissioner, Palamu’s letter No. 732 dt. 01.10.2015 conducted various meetings and a letter was sent to submit required documents against various points raised in the letter. The investigation report is hereby submitted after reviewing the detected mistakes and mineral related loss assessment.


  1. M/s Usha Martin Ltd. was awarded mining lease for thirty (30) years by the Dy. Secretary of the mine and geology department of the Government vide letter Kh.Ni (Palamu)-15/05/523/M, Ranchi, dt. 07.03.2007 only in the 687.93 hectare area against the applied area of 938.27 hectares. (Annexure-1).
  2. The contract of Kathautia Coal Mines of M/s Usha Martin Ltd. was executed on 15.10.2007.
  3. The leaseholder had to submit a consent letter of farmers to the Deputy Commissioner before beginning the mining work under Section XXXII of the approval order. The leaseholder had to begin mining work after the Deputy Commissioner ascertained that the concerned farmers have been paid proper compensation for the land taken for the mining work.

In this connection, the District Mining Officer vide his letter no. 250 dated 14.03.2008 had asked the leaseholder to begin the work under the mining plan only after obtaining consent of the farmers as well as permission of the honorable Deputy Commissioner for the Gairmazarua area (Annexure 1A).”

  1. It is known that the mining lease of Kathautia coal mines was terminated vide supreme court’s order dt.24.09.2014 and the mining lease was awarded a new to M/s Hindalco Industries Ltd. vide GOI’s coal Ministry’s letter vesting order 004/3/2015/NA, Date 23.03.2015 and the new allottee M/s Hindalco Industries Ltd. was handed over the acceptance order with various conditions issued by joint secretary of mine and geology department of the Jharkhand Government vide letter No. Kh.Ni (Miscellaneous) 64/2015/15581 M, Ranchi 27.07.2015 (Annexure 2).
  2. The new allottee M/s Hindalco Industries Ltd., while executing the mining work related to kathautia coal mines, submitted the deviation plan with respect to the former lease holder M/s Usha Martin Ltd. regarding execution of mining work with non-compliance with the mining plan and from this it is seems that they violated the terms and conditions. (Annexure-3).
  3. M/s Usha Martin Ltd. was asked to submit point-wise replies against this office letter No. 202/DDM, Palamu, dt. 10.11.2015. (Annexure-4).


The details of the point-wise requested information and replies of M/s Usha Martin Ltd. are as follows:

Sl. No. Question Reply
1 Copy of modified mining plan against the approved mining lease on 687.93 hectare area It is clear from their reply that mining work was executed in the approved mining lease area of 687.93 hectares without carrying out modifications in the earlier approved mining plan for 938.00 hectare area. This is a violation of rule 22A.
2 Copy of progressive mines closure plan of the approved mining lease of 687.93 hectares area They didn’t submit the mines closure plan for 687.93 hectares and instead of that they have stated submission of draft mines closure plan related to 938.00 hectares. The submitted draft mines closure plan is not signed by the RQP and the covering letter related to its submission in the coal ministry is also not attached.

In the clause 1-6 of the mines closure plan, it is clarified that in addition to 687.93 hectare of developed mining lease, they have been allowed to use 250.07 hectares for dump, infrastructure /colony and facility. It means that mining activity has been carried out beyond the approved mining lease area.

3 Statement / Record related to land reclamation of the 687.93 hectare area, under approved mining lease. In the statement / record for land reclamation, it has been stated by them that the process of Bank Filling has been executed in compliance with the approved mining plan. It is clear that it has been done in compliance with the earlier approved mining plan for 938.27 hectares. Thus the work has been done in violation of the rule. Wherein, the approval for mining lease was granted to them only for 687.93 hectares.
4 Copy of pit opening permission from related department Pit opening permission was received by them for Rajhare A, Rajhare B and Pandawa top seam ride coal ministries letter No. CC/tech/open/Kathautia oc(UML)/07-08 dt. 28.02.2008, in which there was a condition mentioned that the surface  right of the above area must be taken before starting the mining work and must be done according to OB dumping mining plan.

They executed the mining work according to the formerly approved mining plan for 938.27 instead of preparing mining plan, which is in violation of the rule. Similarly, in the light of the opening permission received by them, they have not attached any surface right related document. For pit opening permission they submitted letter KCM/08/P/16 dt. 01.10.2008 to DGMS. (Annexure-5)


In clause 1 of the coal ministries letter 4701/1(6)/2002- CPAM/CA  dt. 13.01.2006 it is clear that the coal production must start by July……………………………..


5 Copy of coal grade of all pits-related document issued by the coal controller The documents submitted by M/s Usha Martin Ltd. related to coal grade are for the years 2012-13, 2013-14 and 2014-15, issued by the coal controller, wherein, provisional grade ROM G-6 is inscribed for coal seam of Pandawa Top and Rajhare B and it is also stated that the dispatch sample must be tested in the Govt. accredited laboratory so that final grade can be announced. In this regard they have not submitted any document related to dispatch sample analysis grade. (Annexure-7)

It is worth to note that they started coal mines opening in the year 2008-09 but for 2008-09 to 2011-12 no document has been attached related to annual grade declaration and there is no description attached for the grade related ro Rajhare A seam, however they took the opening permission for Rajhare-A.

6 Status of submission of financial assurance They have not submitted the financial assurance and only this has been stated that a provision has been made in the balance sheet. Therefore, they have not complied with the rules.
7 Permission letter from the Dy. Commissioner, Palamu for starting the mining work They have not taken permission from the Dy. Commissioner before starting the mining work which is in gross violation of the defined conditions in the permission to open the seam issued by the coal controller.
8 Undertaking for the farmer’s related compensation payment. Please submit detailed report if any case is under consideration in the court. From their reply related to farmer’s compensation it is clear that they have not paid the designated amount to the farmers and under the land acquisition process and mining work has been executed due to which a total of four (4) ongoing cases in the various courts. (Annexure-8)
9 Area and its acreage related complete information used additionally for mining work other than the allocated mining lease of 687.93 hectares area From the records, maps and Deviation Report it is clear that additional land has been used for mining work in addition to the allocated mining lease of 687.93 hectares. In the Mines Closure Plan (Draft) they have admitted that 250.07 hectares area has been used in dumping, infrastructure / colony /facilities. From the Working Plan submitted by them it is clear that they were allocated mining lease of 687.93 hectares and in addition to this other areas were used for External-O.B. Dump, explosive Magazine, reservoir and different structure etc. and area in excess of the leased area was used.
10 M/s Hindalco Industries Ltd. has submitted the Deviation Plan after accessing the loss caused due to deviation taken during the mining work under the former mining lease. Please submit the report along with the map for all the deviation taken by you during the mining work. From the Deviation Plan submitted by M/s Hindalco Industries Ltd., it is clear that M/s Usha Martin Ltd. has taken deviation by violating the rules during the execution of mining work. The mining work has not been executed in compliance with the Mining Plan.

Upon request, a copy of the Deviation Plan was handed over to their representative Shri. Niranjan Kumar Choubey on 21.12.2015. But they have not submitted any reply which makes it clear that they have accepted the Deviation work.

11 Report related to opening of Escrow account by you. It is clear from their reply that that they have not opened the Escrow account, which should have been opened in compliance with rules.
12 Report related to liquidation by you of the violations after all the inspections conducted till date by DGMC and IBM From the letters related to objections raised by DGMC after conducting the inspections it is clear that they have taken violations from time to time. They have only submitted the inspection related reports only for 2012, 2013 and 2014. Wherein the work started in 2008 itself.


13. Payment related proof against the thirty percent amount of royalty for coal dispatched from 12.01.2015 to 31.03.2015 under the rule 2 (B) under the Mines and Minerals  Rule,2015 (Subscription to the District mineral institute) They have not made payment for thirty percent amount of Royalty for the dispatches made for the period 12-01-2015 to 31-03-2015 against subscription to the District mineral institute. In addition to this the NMET amount of 2% of the royalty is also payable.
14. The above mining-lease area comprises of jungle and bush type land, please submit report. They have informed that they do not have any information regarding jungle and bushes in the mining lease area, wherein they have submitted Affidavit in this regard, that in case in future jungle-bushes are found in the leased area then they shall pay compensation.

It is reported in the letter 1400/S, dt.19.10.2015 issued by Dy. Commissioner, Palamu, that the 1731.17 acre (700.87 hectare) area surveyed under the Kathautia coal mines, an area of 344.16 acre is jungle bush type. Therefore compensation is payable.



The following is the amount of payable penalty on account of violation and non-compliance of different rules by M/S Usha Martin Limited.

  1. They have not submitted the Modified Mining Plan and from the reply and attached map it is clear that they have used a total area of 938.27 hectares of land for mining work. From the Land Use details given in the Mining Plan, it is clear that the above land comprises of Private Inhabitated area, Govt. Building, Pvt. Khalihan, Govt. Land etc. On the basis of the records and described land list in the Mining plan, the Additional Collector can be asked to calculate the payable penalty against compensation to be paid the displaced people and amount payable for using Government  land for commercial purposes, according to the rules  so that demand letter can be issued to M/S Usha Martin Limited.

(Action-Additional Collector, Palamu)


  1. In the Mining Plan the coal grade B & C are indicated which falls under the new grade G3 to G6, wherein they have paid only for G6 for the produced coal. It must be known that after terminating the mining lease held by them, this coal block has been allotted to M/S Hindalco Industries limited and for calculating the Performance Security amount, M/S Hindalco Industries Limited vide their HIL/IH/KAT/33, dated 10.08.2015 , has taken in to account coal grade G4 for Kathuthia  mines and Bank Guarantee for the said amount has already been submitted. Therefore demand can be raised against royalty taking in to account G4 grade. Because in the different letters of 2012-13, 2013-14, 2014-15 of coal ministry related to Annual grade of declaration of coal seam, only proposed provisional grade of coal from Pandawa top seam and Rajhara B seam has been stated and it clearly states  that “All proposed grade of seams of Kathautia open cast coal mine of Usha martin Ltd. Are to be declared on provisional basis which should be finalized within the stipulated period supported with results (proximate analysis and GCV by Bomb calorimeter) of dispatch samples from any Govt. Accredited laboratory preferably CIMFR.

The grade declarations are to be kept provisional till its finalization within six months of such declaration, based on dispatch sample analysis results. In this regard they have neither taken any action nor submitted any document.


On the basis of calculations for royalty against dispatched coal of grade B and presently grade G-4 from the Kathautia coal mines by M/S Usha Martin Limited, the calculation for the differential royalty payment is as follows, which can be demanded (Annexure-12 to 15)


  • On the basis of price of grade G-4 coal Rs.1650/ton, from December 2008 to February2011, the differential payable royalty for the dispatched coal on the basis of (RR=a +bp) Rs.173/ton is- 3,29,781.40 M.ton

X 173


Payable royalty amount                             –                       Rs.5,70,52,182.00

Paid royalty amount                                  –           (-)          Rs.5,01,77,795.00


Differential payable royalty amount                    –             Rs.68,74,387.00



  • On the basis of price of grade B coal Rs.3990/ton, from March 2011 to December 2011, the differential payable royalty for the dispatched coal on the basis of (Rr=a +bp) Rs.290/ton is- 2,42,056.56 M.ton

X 290


Payable royalty amount                             –                       Rs. 7,02,04,812.00

Paid royalty amount                                  –           (-)          Rs. 3,51,12,198.00


Differential payable royalty amount                    –           Rs. 3,50,92,614.00


  • On the basis of price of grade G-4 coal Rs.4130/ton, from January 2012 to May 2013, the differential payable royalty for the dispatched coal on the basis of 14% (Rs.578/ton) is-                                                                                  8,40,640.83 M.ton

X 578


Payable royalty amount                             –                       Rs. 48,58,90,400.00

Paid royalty amount                                  –           (-)          Rs. 22,49,85,955.00


Differential payable royalty amount                    –           Rs. 26,09,04,445.00


  • On the basis of price of grade G-4 coal Rs.3490/ton, from June 2013 to March 2015, the differential payable royalty for the dispatched coal on the basis of 14% (Rs.489/ton) is-                                                                               14,25,759.78 M.ton

X 489


Payable royalty amount                             –                       Rs. 69,71,96,530.00

Paid royalty amount                                  –           (-)          Rs. 42,66,87,098.00


Differential payable royalty amount                    –           Rs. 27,05,09,432.00


Therefore the after the payment of total royalty, the payable differential royalty amount for 1+2+3+4 is Rs. 57,33,80,878 (Fifty seven crores thirty three lacs eighty thousand eight hundred and seventy eight only).

(action:-District Mining Officer, Palamu)


  1. It has been accepted by them in the draft of Mines Closure Plan, that in addition to 587.93 hectares 250.07 hectares have been used for dump, Infrastructure, colony and other facilities, wherein this should be 250.34 hectares. It is clear from the Deviation plan that mining has been executed in 5.28 hectare area. In this manner 250-34-5.28=245.06 hectares have been used for dump, infrastructure, colony and facilities.

In compliance with the order passed by the honorable supreme court on 18.04.2013 in the case Writ petitioner (civil) No.562 of 2009 Samaj privartana samudaya & others Vrs State of Karnatka, at the rate of Rs. 1.00 crore per hectare as compensation/penalty for using area beyond the leased area for O.B. dump, road, reservoir, the amount payable is Rs. 245.06 crores  and on execution of mining work in 5.28 hectare area beyond the leased area, according to the deviation plan, the amount of compensation / penalty at the rate of Rs. 5.00 crores per hectare the payable amount is 26.40 crores. Therefore, a total amount of Rs. 271.46 crores is payable, for executing mining work beyond the mining lease area, O.B. dump, road, office, colony, etc., against compensation / penalty by M/s Usha Martin Ltd..

(Action:- District Mining Officer, Palamu)


  1. According to the Deviation Plan submitted by M/s Hindalco Industries Ltd., M/s Usha Martin Ltd. has paid tax on 4.97 hectares of the mining lease area on O.B. dump, D2 coal bearing area. Below the above dump there is a reserve of 1.35 lac metric ton of coal. For mining it, 9.3 lacs cubic meter O.B. has to be removed. Whose value at the rate of Rs. 75 per cubic meter comes approximately Rs. 6.97 crores.

(Action:- District Mining Officer, Palamu)


  1. The abandonment cost related to Mines closure is payable by M/s Usha Martin Ltd.. For this annual closure cost was calculated with reference to Coal Mines Notification No. 55011-01-2009-CPAM, 27th Aug. 2009 and as stated in the draft of the Mine Closure Plan, is as follows :
1 1st year 2008-09 197.71 lacs
2 2nd year 2009-10 207.60 lacs
3 3rd year 2010-11 217.98 lacs
4 4th year 2011-12 228.88 lacs
5 5th year 2012-13 240.32 lacs
6 6th year 2013-14 252.34 lacs
7 7th year 2014-15 264.96 lacs
Total 1609.79 lacs


This amount should have been deposited in Escrow Account in the form of Financial Assurance, which can be deposited.

(Action:- District Mining Officer, Palamu)


  1. The Mines Closure Certificate was supposed to be issued by the Coal Controller but due to its non-availability it is not possible to carry out the exact estimation of the loss.

(Action:- District Mining Officer, Palamu)


  1. 30% of the Royalty amount equivalent to Rs. 9213 crores is due to be paid to District Mineral Foundation which is applicable since 12th January 2015 and 2% of the Royalty amount equivalent to Rs.0.128 crores is due to be paid to National Mineral Exploration Trust.

(Action:- District Mining Officer, Palamu)


  1. The Mines and Geology Department vide their letter No. KH.NI.Palamu 15/05-523/M, Ranchi dt. 07.03.2005 allotted the mining lease to M/s Usha Martin Ltd. for Kathautia and other mines only an area of 687.93 hectares out of a total area of 938.27 hectares and as per clause XII the land suitable for agriculture use was not acquired on permanent basis and the mining work was carried out by private arrangement. They have to carry out Back filling related to mining work as per the instructions of Dy. Commissioner or any other authorized officer.

From the deviation plan submitted by M/s Hindalco Industries Ltd. it is also highlighted that the former allottee M/s Usha Martin Ltd. has carried out Back Filling / Land reclamation of 5.583 hectares area upto 31.03.2015. However, according to the mining plan they were supposed to carry out Back filling/land reclamation of 50.45 hectares area upto the fourth year. M/s Usha Martin Ltd. has executed coal mineral excavation work in 103.087 hectares area by 31.03.2015.

According to the mining plan M/s Usha Martin Ltd. was supposed to collect Top Soil for Top Soil Management purposes in 4.00 hectares marked up area but until 31.03.2015 no marked up area was found for collection of the Top Soil. The entire Top Soil plantation was used and for future Top Soil was not found in any marked up area, this is a serious issue.

In this regard, for land filling of useful agriculture area, after loss assessment calculation to be carried out by the District Technical Department, demand letter may be issued to M/s Usha Martin Ltd..


(Action:- Regional Officer, Pandawa / District Agriculture Officer, Palamu / Land Protection Officer Palamu)


  1. An order may be issued to the related officer for issuing the demand letter to M/s Usha Martin Ltd. against the arrangement and appropriate compensation to be paid after calculation according to the rules for the purposes of resettlement of the displaced persons due to the mining lease.

(Action:- District Land Acquisition Officer, Palamu)


  1. In the clause No. 5 of the permission order it is described that for the transferring the coal extracted from the Captive Block prior permission is required from the mines ministry of Central Government. The District Mining Officer. Palamu can be instructed to obtain the detailed report, of total quantity of extracted coal dispatched to captive plant and quantity received in DRI plant in located in Gamharia of Saraikela district, through District / Assistant Mining Officer, Saraikela.

(Action:- District Mining Officer, Palamu)


  1. In the clause No. 8 (E) of the allotment order, there is a mention of forest land and jungle bush type of land. It is known that subsequently approximately 700.87 hectares of area was verified and vide letter No. 1400/Ra, dt. 19.10.2015 issued by the Dy. Commissioner of Palamu, it is informed that 344.16 acres of land in the mining lease area has been found to be jungle bush land. (Photocopy attached). The forest Division officer, Palamu, may be informed in writing to carry out the calculation of the loss compensation value and appropriate action as per the rules. M/s Usha Martin Ltd. used a total of 938.27 hectares of area for mining work. Therefore, investigation is required to be carried out for the land under app. 237.40 hectares area also, so that report can be obtained for jungle bush, displacement, farming, Government land, etc.. Therefore, it would be appropriate to take future action after completion of the investigation by the Additional Collector. It is worth noting that from clause 6 (E-ii) of the allotment order and lease it is clear that in the light of the order passed by the Honorable Supreme Court, that they shall carry out the investigation at their level so as to find out whether any plot does not come under the category of jungle-bush under applied land. M/s Usha Martin Ltd. has submitted an affidavit and its photocopy is attached herewith for consideration. (Annexure  -16).

On the basis of the discussions on the available documents and replies of M/s Usha Martin Ltd. by the Committee and investigation report has been prepared.

(Action :- Forest Divisional Officer, Northern Forest Division, Palamu / Add. Collector, Palamu)



Sd/-                                          Sd/-                                          Sd/-

Divisional Officer                    Land Protection Officer          District Agriculture Officer

Pandawa, Palamu                               Palamu                                    Palamu

10.08.16                                     10.08.16                                  10.08.16





Sd/-                                                      Sd/-                                          Sd/-

District Mining Officer            Land Development Dy.Collector         Dy. Director, Mines

Palamu                                               Palamu                           Palamu circle, Palamu

10.08.16                                               10.08.16                                    10.08.16







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