In a setback to the Rs.51,000-crore Posco steel plant planned at Paradeep, the Orissa High Court on Wednesday set aside the State government's recommendation for granting the South Korean steel major a licence for prospecting in the Khandadhar iron ore mines in Sundargarh district.

Allowing a writ petition filed by Geomin Minerals and Marketing (P) Ltd, a Bhubaneswar-based company, a Division Bench of Justices B.P. Das and B.P. Ray directed the State government to take a fresh decision on the licence giving preferential right of consideration to the petitioner. In January 2009, the government recommended that the Centre grant Posco a licence for prospecting on 2,500 hectares of the Khandadhar mines. The recommendation was based on Section 11(5) of the Mining and Minerals (Regulation and Development) Act.

Terming the decision “arbitrary” and “illogical,” Geomin Minerals challenged it in the High Court, claiming that it had made the first application for a mining lease in the area way back in August 1991.

The Bench said that the preferential right for consideration was available to the petitioner, and the recommendation made in favour of Posco was not valid.

Urging the court to restrain the government from considering applications for mineral concessions filed by the latter applicants until its application was disposed of, Geomin Minerals also sought an order to dispose of all its applications pending with govt.

Holding that the writ petition was not premature and was maintainable as there was no alternative remedy, the High Court directed the government to dispose of all pending applications of the petitioner in four months.

A dozen other petitions, including an intervention petition filed by Visa Steel Ltd, were tagged to the petition of Geomin Minerals. The Bench, however, rejected Visa Steel's contention and asked it to file an independent writ petition if it had any cause of action.