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Petitioner: Maulana ABDUL HAQ BALOCH, and 2 others VS Respondent: GOVERNMENT OF JUDGMENT
Court Name: Balochistan High Court Judge(s): Amanullah Khan, Akhter Zaman Malghani Title:Maulana ABDUL HAQ BALOCH, and 2 others vs GOVERNMENT OF
JUDGMENT
Reported As: PLD 2007 Quetta 118 Result: Petition dismissed Judgment JUDGMENT ' AMANULLAH KHAN C J.---Facts relevant for disposal of instant petition are that; petitioners Moulana Abdul Haq Baloch, Yousaf Masti Khan and Ehsanullah Vaqas; claim to be a Former MPA, MNA, Jamat-e-Islami, Secretary General, National Workers' Party and MPA Punjab Assembly/Member, Jamat-e-Islami Political Party, respectively in such capacity, have filed instant petition, in the larger interest of public, to ensure that the mineral resources of copper and gold deposits, explored in the area of Reko, Diq situated in District Chagai of the Province of Balochistsan, are not plundered and looted by the Authorities, who have control over them. It is their case that, Province of Balochistan is rich in mineral resources, which exclusively belongs to the people and the Provincial and Federal Governments, are just Custodian/Trustees of the said Wealth. It is stated that, Reko Diq area (earlier known as `Koh-e-Dalil in District Chagai, is rich in copper and gold Deposits, which have been discovered by the Geological Survey of Pakistan and that a News Article appeared in Daily 'Business Recorder' of 22nd July, 2006, which revealed that a meeting between the Federal Minister for Petroleum and Natural Resources and the Chief Executive and Chairman of respondents 4 and 5, was held and that in said meeting, the respondents 4 and 5 showed their interest to make investment, with the intention to explore and extract 250,000 tons of copper and substantial amount of associated gold from the said area. After going through the said News Item, the petitioners as per their case, started probing in the matter, regarding mining of copper and gold in the Reko Diq area and initially they were of the view that huge and substantial work must have already been done in the Reko Dig area in the last 14 years when the said area was
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handed over to the respondent No,8 for exploration, but now they have come to know that no real work has been done and that, all transactions in respect of exploration and production of copper and gold with foreign companies are contaminated with illegalities. On the strength of news item, published in Daily 'The News' on May 26th 2004, it is further the case of petitioners that, transactions with foreign companies were carried out in a clandestine and illegal manner, whereby deposits of huge mineral resources, have been handed over to respondents, without taking into consideration the interest, of the people of Balochistan and that, initially the area was leased out to respondent No,8 without observing the Rules and Regulations, covering the subject of exploration of mineral resources and its mining and thus; after going through its news item, they tried their best to lay hand on the relevant documents and during this process they came to know that, an agreement was executed by the Government of Balochistan with the Australian based Company (respondent No,8). They could not be able to get any other information from official, sources. However, through other sources i,e, Websites, they have come to know that, Balochistan Development Authority (in short "BDA") had entered into an Agreement known as "Chagai Hills Exploration Joint Venture Agreement" (herein. After referred to as "CHEJVA") with respondent No,8,- entitling respondent No,8 and BDA to have profit share in the production of minerals at the ratio of 75% and 25% respectively. According to the petitioner, they could not be able to lay hands on this agreement executed on 29th July, 1993. It is the plea of petitioners that leasing of such area to respondent No,8 through CHEJVA was in violation of various provisions of Balochistan Mining Concession Rules, 1970 (hereinafter referred as "1970 BNC Rules"). From the Websites it was further revealed to them that, respondent No,8 has further assigned the Reko Diq area to respondent No,4. Petitioners have further pointed out that though respondent No,8 by virtue of CHEJVA was committed to spend an amount of U.S. $ 130 Million for H4 (Starter) Project (a part of deposits of copper and gold in Reko Diq), but had only spent U.S.$7.00. Million and after exploration has assigned H4 Project to respondent No,4, which is a newly-established Company, having no experience in the field of mining. It is-the contention of petitioners that since 1993 no substantial work has been carried out that only respondent-Companies are sniffing around Reko Diq, without doing anything towards the Project. It is their case that, assignment made in favour of respondent No, 4 was through good office of respondent No,6, who also made huge money in this deal. It has been pointed out that, respondents Nos.5 and 7 had acquired the entire share holdings of respondent No,4 at the ratio of 50:50. It is also the contention of petitioners that, 1970 BMC Rules were repealed and new Rules known as "Balochistan Mineral Rules, 2002 (hereinafter referred as "2002 BMC Rules") were framed by the Government of Balochistan under the influence of respondent-Companies, to make out a way for legalizing the illegal acts. Besides the Reko Diq area has also been illegally declared as Export Promotion Zone (in short "EPZ"), just to benefit the respondents. In a nutshell; the grievance of the petitioners seems to be that execution of CHEJVA, is in violation of 1970 BMC Rules and since 1993 no significant work has been done and the Foreign Companies are only sniffing around deposits of Reko Diq and making money, without any practical work, thus following relief has been sought :-- "Under the circumstances, it is respectfully prayed that this honourable court may be pleased to declare that all transactions, starting from and based upon the CHJV of 1992-93, including each grant of a license or other concession to any of the respondents and every transfer of interest in Reko Diq leading up to the latest acquisition (whether contemplated or completed) of respondent No,4, by respondents Nos.5 and of respondent No,4's interest in Reko Diq by Respondent No,5 and 7, are illegal, ultra vires, unconstitutional and mala fides and liable to be set aside. This honourable court may be pleased as a consequence, to order that interests in Reko Diq be disposed of strictly in accordance with the applicable law, rules and policy and after inviting bids.
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' Any other relief including orders for appropriate inquiries and investigations and recovery of fortunes amassed by the respondents in the subject deals may also be kindly granted." ' As observed above, the entire petition was basically filed on the strength of News item of the Daily "The News" dated May 26th, 2004, so in order to understand the real controversy notices were issued to the respondents, who filed their respective replies supported by numerous documents, which will be discussed at a later stage, but before that, we would like to streamline the factual position and background of entire scenario. ' History reveals that copper and gold are being mined and converted into metal since ancient times. The scientific research proved that, deposits of copper and gold are lying along Tethyan Magmatic Arc which extends from Eastern Europe through Turkey, Iran, Balochistan and across the Himalayas. To Myanmar. The Pakistan section of the Tethyan Arc is known locally as the Chagai Arc. The- Gazetteer of Balochistan, published in 1906, reveals that during the field visit of 1898-1901, for the first time, Mr. E. Vrendernburg, Deputy Superintendent of the Geological Survey of India first documented copper staining at the site known as sulfide Valley in which the Saindak mine is located in the words; "Ores of copper, lead, and iron, and some other minerals of commercial value, such as sulpher-gokurt, sulphate of lime and -sulphate of alumina-phulmak have been met within several localities." He on the basis of his study opined that "the physical drawbacks of the region, the absence of fuel and the difficulty of obtaining labour make it improbable that any satisfactory return could be obtained under existing conditions." The presence of copper deposits was later re- confirmed by the Geological Survey of Pakistan during field mapping in 1962, but as regards the Reko Diq area, there has never been any discovery of copper-gold. However, being an area located on Tethyan Arc there were prospects of copper-gold deposits but no steps were taken for discovery of any deposits. One of its major reasons might be that, without putting large risk capital investment, one could not discover or prove such mineral deposits. On International level, many companies with huge capitals, have .Been established, who are doing the risky business of exploration, and Governments of developing countries, have entered into Agreements with them for exploring the metal deposits, by investing huge amount at their own risk and cost, and on exploration, would be entitled for mining at agreed ratios of profit. For the first time in 1993, BHP, Minerals International Exploration Inc. A Corporation registered in the State of Delaware United States of America, (in short "BHP") i,e, respondent No,8, showed interest in the exploration of copper-gold and other associated minerals in an area of about 8000 Sq. Km in Chagai District. This resulted in execution of CHEJVA on 29th July, 1993, between the BHP and the Government of Balochistan. By virtue of this agreement, the Government of Balochistan without spending a single penny was entitled to have 25% profit on the extraction and production of the minerals. After execution of CHEJVA, BHP commenced with the exploration work, spent huge amount in carrying out in collecting samples, carrying out chemical analysis, by drilling in the said area. The initial work narrowed down the area to 1000 Sq. Km and ultimately on the basis of sampling and mapping Reko Diq was identified as an area containing huge reserves of copper and gold in 1995. To evaluate the reserves, 20,000 meters drilling was carried out in different sites of Reko Diq by BHP resulting in discoveries of copper-gold deposits. On 4th March, 2000 Addendum No,I to CHEJVA was made, whereby BDA was appointed as an Agent of the Government of Balochistan in the matter of Joint Venture. In 2000, after the BHP identified H-4 Reko Diq Prospect, the same was not found to be of much large size by the BHP, as it being a big Company mainly focusing on major mining, therefore, it firstly offered its.75% share to the Government of Balochistan, having first preferential right, and on refusal of Government of 13alochistan, due to lack of resources, NOC was obtained by BHP, for transferring its share to any other Company, capable of making huge investment and thereafter on 28th June, 2000, in view of the provisions of CHEJVA, sold its share of 75% to respondent No,4, an Australian Company in the name and style of Tethyan Copper Company (in
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short "TCC") with a provision of claw back right in case of a major find. TCC thereafter commenced with the further exploration by spending huge amount in the process of drilling, collection of samples and carrying out tests. On 28th April, 2006, respondent No,5- Antofagasta PLC, a Company from Chile purchased the entire shareholding of respondent No,4, and thereafter indirectly transferred 50% shares to respondent No,7 Barrick Gold Corporation, (in short "BCE") a Company based in Canada, including acquisition of respondent No,8's claw-back right. The two Companies are said to have an international recognition in the field of mining copper and gold and already carrying out major mining explorations in different countries of the world. It is said that TCC after becoming 75% share holder in Reko Diq, commenced with operational works and made drilling of 60,000 meters and further committed to make drilling of another 90,000 meters till mid of 2008; this being the factual background of Reko Diq area. ' After service of notice, all the respondents filed their separate counter-affidavits. Respondents Nos.1, 2, 4, 5, 6, 7 and 8, besides contesting the petition on merits, also raised preliminary legal objections, which are summed up as below:-- (i) The petitioners have no locus standi to file instant petition, as they do not fall under the definition of an 'aggrieved person' in terms of Article 199 of the Constitution of Islamic Republic of Pakistan. (ii) As petitioners are seeking setting aside of the acts, orders, decisions and transactions which took place way back in 199293, therefore, the petition is hit by the principles of laches. (iii) As in the Hierarchy of 1970 BNC Rules and 2002 BNC Rules, an alternate remedy is available to peititoners, therefore, instant writ petition is not maintainable. (iv) As petition involves intricate and disputed questions of facts, which are not dealt with in writ jurisdiction, therefore, petition deserves dismissal. (v) The petitioners cannot question the past and closed transaction after a long period of 13 years, therefore, relief as sought cannot be granted to. (vi) Respondent No,6 is not a necessary party, as no relief has been claimed against him. (vii) The petitioners have not approached with clean hands; and (viii)Petitioners have no prima facie case or any cause of action accrued in their favour. ' Respondents Nos.1 and 2 i,e, the Government of Balochistan through Secretary, Industries and BDA, have filed a detailed reply, stating therein that, BDA, with the prior approval of the Government of Balochistan signed a Joint Venture Agreement with BHP for the exploration of gold and Associated Minerals in District Chagai on 29th July, 1993, where it Was agreed that 25% share shall belong to the BDA and 75% share to the BHP. While repudiating the contention that the agreement was in violation of 1970 BMC Rules, it was stated that the Government has rightly executed CHEJVA with respondent No,8. In this regard, Rules were relaxed by the Government. While giving the factual background of the case, it was averred that CHEJVA was executed by BDA with the prior approval of the Government and thereafter the BHP carried out reconnaissance up to 1999 and reported millions of tons of copper-gold in Reko Diq from two areas (projects), i,e, supergene (H4/Tanjeel Project) and Hypogene (Western extension). It was further stated that, BHP was granted ten Prospecting Licences, out of which, nine PL's were surrendered and one PL of Reko Diq was retained. After implementation of the National Mineral Policy, 1970 BMC Rules were replaced and 2002 BMC Rules were enacted, Exploration Licence No,5 was granted to the Joint Venture for Reko Diq area for three years, which was further renewed for a period of three years up to February, 2008. However, it was agreed between the Government of Balochistan and BHP for change in the CHEJVA and Government of Balochistan issued Addendum No,1 in March, 2000, whereby BDA was appointed as an Agent of the Government of Balochistan. On 28th June; 2000, BHP brought in an Australian Company, Mincor Resources NL/Tethyan Copper Company to reply it with the later under certain terms and conditions mentioned in the option agreement, but since the Government of Blaochistan had the first right to purchase therefore offer was made to the Government of
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Balochistan, which was refused, due to heavy risk investment to be made on the exploration and allowed BHP to transfer its interest to TCC. On transfer of interest, TCC carried out extensive exploration activities at Reko Diq on the supergene deposit (H4/Tanmjeel Project) and reported 167 million ton of copper at an average grade of 0.7% copper. It contains 1.1 MT of copper metal (2.9 billion pounds of copper metal). On basis of same, TCC planned to produce 45000 tones copper per annum. It was further stated that TCC is also involved in detailed exploration work on H4 project and has reported an estimated resource of about one billion tones at an average grade of 0.58% copper 0.28% gold containing 7.1 million tones of copper metals (15.6 billion pounds) and 10.9 million ounces of gold. It was further stated that, Antofagasta of Chile and BGC have purchased the shares of TCC and after acquiring the shares both respondents 5 and 7 have started a very huge advanced drilling and exploration programme at Reko Diq with an estimated budget of US$:30 million for eighteen months programme ending December, 2007. It was further stated that, petitioners belong to Political parties and the petition is politically motivated with a view to serve ulterior motive and as far the interest of the people of Balochisstan is concerned, that stands fully secured, as the agreement in no way can be termed adverse to their interest, rather share on higher side has been fixed, which is also unprecedented. The petition has been filed without proper study on the subject of exploration of minerals. ' Respondent No,3 also denied the contents of the petition and stated that mining exploration exclusively falls within the domain of Provincial Government and Federal Government has unnecessarily been made party and that CHEJVA has been arrived at between Government of Balochistan and BHP, with which the respondent No,3, has nothing to do. ' Respondent No,4, averred that the petition is frivolous and without any lawful basis. Regarding main grievance of the petitioners that nothing has been done at the site, the same was denied and it was stated that Reko Diq area was initially discovered in 1996-97 by respondent No,8, after field mapping, collection of samples for analysis and satellite image interpretation. It was stated that over 5,000 samples were collected by respondent No,8 and over 35,000 chemical analysis were performed to measure the concentration of various metals in order to identify anomalous areas for further investigation. It was further stated that after getting the area, the respondent No,4 commenced with the operations and carried out 60,000 meters of drilling and would further carry out another 90,000 meters of drilling till mid of 2008, whereas 170 employees and contractors are employed at the site, who have been accommodated in a modern Camp, who are working day and night. TCC also disputed the averment made in the petition that, initially the Geological Survey of Pakistan discovered the copper-gold deposits, by stating that in fact no drilling was ever made by the GSP and entire discovery has been initially mad by the respondent No,8 and subsequently of respondent No,4. It was also denied that respond= No,4 is a newly-established Company having no experience in the field' of exploration and mining. It was explained that, before starting mining, exploration is the first stage, wherein they have to carry out survey and drilling work to confirm the deposits, which by itself is a time consuming work. Allegation of loot and plunder was categorically denied. It was further stated that without the efforts of respondent No,8, no one would have known about the deposits of copper-gold, lying in the remotest area of Balochistan, which lacks infrastructure. It was further stated that declaring of Reko Diq as 'Export Promotion Zone (in short "EPZ), is beneficial to the province of Balochistan, as due to the same the Government of Balochistan, will be making more money from the Project. It was also pointed out that even the `Saindak Project' has been declared EPZ, but no hue and cry was made in respect of same. It was also stated that, at the time of assignment by the respondent No,8, it was agreed that the respondent No,8 will have a claw back right in case of major find, however the said right of respondent No,8 was terminated against an amount of U.S.$:60 Million, out which $19 Million was paid to the Government of Pakistan as withholding tax, on the said transaction. Respondent No,4,
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further stated that 1.7 Km airstrip at Reko Diq is expected to commence in 2007 and further 330 people staff and contractors will be working. According to the respondent, Data collection and development option studies are continuing whereafter feasibility studies will commence on the most economic option. After feasibility reports, it would be determined when and where the mine will be constructed. It was also pointed out that respondent is recruiting local people and on account of their having low level of literacy and skills the respondent is also imparting education and trainings. Contents of the petition were further denied on the ground that it is based on a 'News Item' appeared in Daily Newspaper "The News" on 26th May, 2004, but they said report was denied and contradicted by the same Newspaper in its Publication dated 1st June, 2004. It was also stated that petitioners cavalier attitude towards one of the country's most significant foreign investment project displays a complete lack of knowledge and sensitivity and betrays a lack of interest for the welfare of the people of Balochistan in particular and of Pakistan in general. ' Respondent. No,5 besides taking legal objection, as referred above, challenged the contents of the petition on merits. It was stated that respondents Nos.5 and 7 have acquired the shares of respondent No,4, against an amount of U.S. $:260 Million (including the acquisition of respondent No,8's claw-back right). It was pointed out that respondents Nos.5 and 7 are the largest Exploration Companies in the field of copper and gold respectively and are managing the mining of minerals in different projects around .That world. After acquiring the respondent No,4, they spend huge amount and made available technical expertise and experience, which resulted in the success of Reko Diq Project. It was averred that the petition is not based on facts rather it has been filed on the basis of Press Report of 26th May, 2004, 'which subsequently has been denied by the same Newspaper. It was stated that the petitioner seems to have never visited the site and therefore, averments made in the petition are without any authenticity. ' Respondent No,6 besides taking preliminary objection to the petition, stated that he remained the Director of Tethyan Copper Company Pakistan (Private) Limited, for a limited period when it was wholly owned subsidiary of TCC, and now he is no more the Director of said Company with effect from 30th June, 2006. It was further stated that he is no more the Director of the Company and has been made party with ulterior motives just to malign him and he has nothing to do with the respondent No,4. It was further stated that the allegations made are totally false, frivolous, vexatious, misconceived and unsubstantial in facts and law. It was pointed out by respondent No,6 that on similar set of allegations a petition filed by petitioner No,3, before the Hon'ble Supreme Court of Pakistan for declaring the grant of concession in respect of Rhodo 2 as illegal was dismissed vide Judgment dated 26th May, 2005. ' Respondent No,7 in reply to the stay application of petitioner, adopted the contents of the counter-affidavit filed by respondent No,5, in addition to summarizing the stature of its Company, being World's preeminent gold mining Company in terms of market capitalization, annual gold production and gold reserves, based in Canada and doing 26 operating mining works in North America, South America, Australia and Africa with over 20,000 employees (including joint venture personnel). ' Respondent No,8 has also filed a detailed counter-affidavit, challenging the petition on legal and factual grounds. It was stated that ever since the CHEJVA was arrived at, the exploration work was started. It was stated that CHEJVA was rightly executed by the Provincial Government as under Article 142(c) read with Article 137 of the Constitution, the Government possesses the legislative and executive authority to deal with and govern all matters relating to exploration and exploitation of minerals. It was further stated that 1970 BMC Rules were competently relaxed, keeping in view the provisions of Article 172(1) and 173 of the Constitution and in this behalf duly Notification dated 20th January, 1994 was issued. It was pointed out that GSP never discovered the deposits and it was the respondent who after making huge investment, was able to prove the deposits in Reko Diq. It was
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also pointed out that permission to carry out exploration work was competently granted to the respondent No,4 by the Government of Balochistan. Regarding the factum of work being carried out it was stated that from 1993 to 1995, satellite imagery and its interpretations, Bulk Leach Extractable Gold (BLEG) sampling programme on over 13000 square kilometers and 6000 rock samples were carried out. On the basis of…
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