islamabad

The detailed judgement of Supreme Court noted that Chagai Hills Exploration Joint Venture Agreement (CHEJVA) dated 23-07-1993 was executed contrary to the provisions of Mineral Development Act, 1948, Mining Concession Rules, 1970 and Transfer of Property Act, 1882 therefore, the same was declared to be illegal, void and non est.

The CHEJVA was entered into in violation of a large number of provisions of BMCR 1970, therefore, opposed to public policy, which calls for across the board enforcement and application of the laws of the land, said the judgement. BHP-BDA failed to get CHEJVA registered under section 17 of the Registration Act.

The 149-page judgement announced on Friday was authored by Chief Justice Iftikhar Muhammad Chaudhry contained detailed reasons. A three-member bench headed by Chief Justice Iftikhar Muhammad Chaudhry and comprised Justice Gulzar Ahmed and Justice Sh Azmat Saeed heard the case and had announced short order on January 7, 2013.

The judgement said that executant of CHEJVA, Ata Muhammad Jaffer, held dual position of Chairman Balochistan Development Authority (BDA) and Additional Chief Secretary at the relevant time. The BDA entered into negotiations with BHP and took up the issue of grant of exploration rights with the Balochistan government in a most haphazard manner.

An undated authorisation letter on a plain paper was got signed from the then Governor of Balochistan [Justice (retired) Amir-ul-Mulk Mengal], purporting to authorise Chairman BDA to sign the addendum on behalf of the governor.

The Balochistan government failed to determine the terms and conditions to be fixed in granting the relaxations sought for BHP. The key provisions of CHEJVA were made subject to a reliance on relaxations that were illegal and void ab initio, the illegality of the agreement seeps to its root. Initially an area of 50 sq km was granted to the licencee for exploration, which was illegally extended to 1000 sq km pursuant to the request made by BHP-BDA.

All the relaxations were granted in excess of authority and were entirely beyond the scope of the provisions of the law, therefore ultra vires the powers granted under rule 98 of Balochistan Mining Concession Rules (BMCR) 1970 read with section 5 of the Act of 1948, and thus void.

The court observed that a perusal of CHEJVA reveals that BHP and BDA exceeded their mandate by going beyond the scope of the actions envisaged in Article 2.1 (i) and (ii) of CHEJVA.

Rule 27 of BMCR 1970 provides an exclusive right to mine for a specified mineral, but does not envisage exclusive possession of the area for which Prospecting Licence (PL) was granted for all purposes of conducting activities of a Joint Venture being given to the holder of the licence.

Since BHP did not have any mineral title under the said rule, the government of Balochistan was empowered under rule 67 of the BMR 2002 to invite bids to tender for award of exploration licences for the same area. However, the government of Balochistan did not exercise its prerogative and instead granted exploration licence (EL-5) for the Reko Diq area, which was renewed for a further period of 6 years. Under CHEJVA, BHP/TCC enjoyed rights for exploration in the Reko Diq area between 1994 and 1996; held a prospecting licence for the same area for 5 years and an exploration licence for the same area for 9 years, meaning thereby that the exploration/prospecting facility was extended to BHP/TCC for a total period of 17 years, which is an extraordinary and undue favour in itself granted under CHEJVA.

It appears that neither did BHP-BDA pay the annual fee nor did it comply with other conditions so prescribed, and the department through letter dated 16.11.1994 conveys the approval of the competent authority to the waiving of annual fee of Rs 3.347 million mentioning once again no justification for the said waiver, as was done in granting relaxation of bulk of the provisions of BMCR 1970.

It was an extraordinary treatment meted out to BHP whereby a loss of Rs 16,736,130 per annum was caused to the public exchequer without any justification.

No advertisement published in the press to invite tenders with a view to providing opportunity to other investors in the field of mining to come forward and compete with others.

It may be mentioned that rule 14 of the BMCR 1970 provides that a licence or lease shall only be granted or assigned to a company incorporated in Pakistan. But the BHP, party to CHEJVA, a company incorporated in the State of Delaware of the United States of America.

The BHP despite repeatedly orders did not produce certificates of registration from the board of investment or the registrar of companies before the court.