What is the whole matter?

According to information provided by Hindustan Copper to the stock exchange, this notice has been issued by the District Mining Office (DMO) of East Singhbhum (Jamshedpur). The notice alleges that the company has produced copper from the Surda mine without valid statutory approval or in excess of the permissible limits.

The total amount demanded is Rs 929,40,06,242 (Rs nine hundred twenty nine crore, forty lakh, six thousand, two hundred forty two). This notice has been sent as recovery of compensation. The dispute is 17 years old. This matter is not recent, but is almost two decades old. According to the notice received on February 12, the period of alleged violation is between financial years 2000-01 to 2016-17. The Jharkhand government has fixed this liability under Section 21(5) of the Mines and Minerals (Development and Regulation) Act, 1957. The action has been based on the Supreme Court’s famous ‘Common Cause’ judgment, which deals with illegal mining and environmental clearance.

How has the company responded?

Hindustan Copper has completely rejected these allegations. The company has said that it will take appropriate legal action against this demand notice. In the exchange filing, the company has made it clear that its impact on the company’s financial position, operations or other activities will be limited to the extent of the final order.

The imposition of a fine of such a huge amount on a government company by the state government is a serious matter from the point of view of corporate governance and regulatory compliance. Investors will now be keeping an eye on how the company resolves this old dispute legally, as liabilities of more than ₹900 crore could put pressure on the company’s balance sheet.