Four years after operations started Lafarge’s gigantic limestone mine in Meghalaya state, north-east India, is still at a standstill, pending a decision by India’s Supreme Court.

In February the court ordered a temporary halt to mining, demanding the French firm carry out an additional environmental impact assessment focusing in particular on protection of biodiversity on the site and in nearby forests, and prevention of sediment dispersal towards the river. The shut-down is costing Lafarge Umiam Mining Private Limited (LUMPL) US$3m a month.

In 2006 Lafarge boasted about the diplomatic and technical expertise deployed to locate this massive industrial facility, costing US$275m, on the border between India and Bangladesh. A 17km-long conveyor belt can carry up to 6000t of limestone a day to the cement works on the other side of the border, where the supply of gas, essential to the production of cement, is plentiful.

In 1997 the project gained the financial backing of the Asian Development Bank and the International Finance Corporation, a World Bank subsidiary, on account of its contribution to developing this out-of-the-way area.

But in 2008 a confidential report by an ADB mission highlighted shortcomings, in particular the lack of transparency in the purchase or lease of land belonging to indigenous peoples. The report, which Le Monde consulted, concluded that the use of a go-between fell short of transparency requirements and did not comply with ADB policy on good governance.

The go-between in question was SG Lyngdoh, a member of the Meghalaya state parliament. In the mid-1990s he negotiated the purchase or use of land owned by indigenous peoples. From 1997 onwards he gradually sold the assets of his own company to LUMPL, a joint venture also involving Cementos Molins of Spain.

Under the Indian constitution, land in tribal areas cannot be transferred to "non-tribals", unless the transaction contributes to the development of local communities. "And so far no one has benefited from it," says a member of the Shella Action Committee, which opposes Lafarge’s incursion.

Lyngdoh, however, convinced the authorities to allow him to sell the land he had purchased to foreign organisations. "As far as we know land acquisition policy followed the relevant ADB rules," a Lafarge spokesperson said.

In the village of Nongtrai, where the population has transferred land-use rights to the mine, Lafarge executives show off the recent improvements: a football pitch, an extension to the school, the purchase of six looms for the women of the village and a visit by a mobile clinic at least once a week.

"It is not much. Above all LUMPL has not allocated an annual budget for local community development. Projects are funded piecemeal," says Kai Schmidt Solau, who took part in the ADB mission.

In February the Supreme Court decided to appoint other bodies to implement sustainable development policies. It also ordered a fund to be set up and endowed with US$4m a year – existing investments are estimated at US$200,000 – to be paid for out of royalties on the limestone. The fund will be managed by NGOs and the state governor for villages near the mine.

At Shella, villagers are demanding more jobs. "Out of 300 jobs on offer, we only got 50," says village councillor Tobias Tiewdop. "And the lowest wages are only US$65 a month, not enough to feed a family." "Mike Cowell, of LUMPL’s parent company. responds: "A third of the workforce is allocated to security duties and we cannot give that work to local people."

Lafarge now plans to invest US$1m in a scheme for local residents. "But it is difficult for us to deploy sustainable development policies until we are sure we can operate the mine," Cowell adds.

The villagers are already dependent on revenue from the mine. Although they only receive 25 cents per tonne of mined limestone, a third of what the owners of small mines in the vicinity – they all dread what would happen if Lafarge actually left. "We would have to take our children out of the school and find other means of subsistence," says Daioris Stembon, deputy-chair of the Shella women’s council.