Peanuts: Gujarat High Court on ArcelorMittal's compensation offer for 10-year delay in meeting forest clearance conditions

The Gujarat High Court on Friday pulled up ArcelorMittal (formerly Essar Steel) for taking more than a decade to comply with forest clearance conditions imposed in 2013.

A Bench of Chief Justice Sunita Agarwal and Justice Vaibhavi D Nanavati noted that the delay in fulfilling the conditions attached to the Centre’s in-principle forest clearance could not be ignored.

The Bench also said that the company’s ₹3-crore compensation offer was “peanuts" and the steel giant may be required to pay substantially higher compensation to the State.

Further, the Court added that if the company is interested in keeping the land, it has to offer a higher compensation failing which it has to return the land.

“So what we are saying is that if you are really interested in keeping this land, then you have to do something more. Otherwise return it. This is a forest land, return it. In-principle approval stands revoked after 5 years. They (State) will utilize the land, restore the forests in that land,” observed Justice Agarwal during the hearing.

The Court also noted that while the company had taken certain steps, they were not sufficient to address the prolonged delay in complying with the 2013 conditions.

"We do not say that you did nothing. But whatever you did was not enough. It was not enough to meet the situation which you were required to meet in 2013. For over ten years there are lapses on the part of the company...  So what we are saying is that these lapses can be met or can be compensated. Not met, rather you are required to compensate it. So if you give us a reasonable figure, then we will decide it. But you are telling ₹3 crores. ₹3 crores is peanuts for you," the Bench said.

Pertinently, the Court also questioned the lackadaisical role of the State authorities in monitoring compliance with the conditions imposed by the Central government.

“What were you doing for 10 years? Is there any responsibility of the State officers to see that the compliance is made? The central government has put this responsibility on you that you will ensure that the compliance is done. For 10 years, you are not responding,” the Bench observed.

The proceedings arose out of a long-pending public interest litigation (PIL) petition concerning the company's compliance with conditions attached to the Centre’s in-principle approval dated June 8, 2013 for diversion of forest land in Gujarat.

The approval required the company to fulfil several conditions, including payment of penalties and transfer of alternative land to the State for forest and ecological purposes.

During the hearing on Friday, the Bench noted that the matter is being monitored pursuant to directions of the Supreme Court of India, which had earlier affirmed the High Court’s May 3, 2013 judgment with a limited modification.

The High Court clarified that its present role is confined to ensuring compliance with the conditions attached to the forest clearance.

The State government informed the Court that it had issued nine communications to the company between 2014 and August 2025 asking it to comply with the conditions of the approval.

According to the State’s submissions, the first parcel of land required under the conditions was transferred only in October 2024, more than a decade after the initial approval. It pointed out that while some monetary obligations had been fulfilled earlier, key compliance steps took place only recently.

The Bench also observed that although certain payments had been made earlier, the core condition relating to land transfer, described as a “very important element” of the approval, remained unfulfilled for years.

Responding to the Court’s concerns, Senior Advocate Mukul Rohatgi, appearing for ArcelorMittal, submitted that the company had complied with several of the conditions imposed as part of the forest clearance process and had already incurred substantial expenditure in doing so.

Rohatgi pointed out that the company had purchased and handed over 133 hectares of land to the State government as part of the compensatory afforestation requirement.

“I have today given 133 hectares. I have purchased it and given milord, I don’t want it back,” he told the Bench.

Rohatgi also argued that the delay could not be attributed entirely to the company. He pointed out that the company went through insolvency proceedings after 2017 and said the process of compliance was further affected by disruptions during the COVID-19 pandemic.

According to Rohatgi, these factors contributed to the time taken to fulfil some of the conditions attached to the forest clearance.

The Court, however, indicated that the delay in fulfilling the remaining conditions could not simply be overlooked, particularly given the time that had passed since the Centre granted in-principle approval in 2013.

Chief Justice Agarwal noted that the company had accepted the conditions attached to the forest clearance and was therefore under an obligation to comply with them within the stipulated time.

“By accepting those conditions, you are not doing some charity. Actually illegality cannot be regularized, but then it will be regularization of your action in occupying a forest land, had you completed all these conditions on time,” the Chief Justice observed.

The Bench further pointed out that a significant gap remained between the grant of the in-principle approval and the completion of the required compliances.

The Bench clarified that it was not examining whether the project itself should be undone, but was concerned with ensuring accountability for the prolonged delay in compliance.

“We are not saying that we want to undo everything,” said the Bench.

"Our tentative opinion is that the company is at fault in not complying with the conditions of the in principle approval in a time period, in a time-bound manner, which should be a reasonable time if not exactly five years," the Court ultimately observed.

The matter will be taken up for further consideration after the company places a revised proposal regarding the compensation amount before the Court.