The apex court directed the gram sabhas of the two districts to decide in three months the issues arising out of the mining project, including that of the tribals residing in the area.
A bench of justices Aftab Alam, K S Radhakrishnan and Ranjan Gogoi also directed the Ministry of Environment and Forests (MoEF) to take action in two months after a report from the gram sabhas is received.
The bench gave the directions on the petition moved by state-owned Orissa Mining Corporations (OMC) challenging MoEF's decision to cancel the environmental clearance granted to the Niyamgiri Bauxite Mining Project of Sterlite Industries Ltd, the Indian arm of UK-based Vedanta Group.
During the proceedings, OMC and Sterlite Industries had claimed that no ecological damage has been caused due to the mining activities in Niyamgiri Hills.
This contention had been opposed by the MoEF and various tribal rights groups which had alleged that the project has violated environmental norms.
The ministry had submitted before the court that the forest dwellers cannot be evicted from proposed mining sites in Niyamgiri Hills of Odisha till the "community and individual" rights of residents are decided under the law.