While quashing allocation of 214 coal blocks allotted since 1993, the apex court granted six months 'breathing time' to companies whose 42 blocks were cancelled, to wind up business
The Supreme Court on Wednesday quashed allocation of 214 coal blocks out of 218 allocated since 1993. While announcing the judgement, the apex court granted six months 'breathing time' to companies whose blocks were cancelled, to wind up business. Only four ultra mega power projects (UMPPs), including NTPC and SAIL have been exempted out of the 218 coal blocks.
The Court asked Coal India Ltd to take over such blocks within six months and auction them. As per the apex court order, 36 operational coal blocks have been cancelled and they are ordered to stop production after 1 March 2015. Out of the 214 coal blocks, 168 of the allocations are cancelled with immediate effect while 42 has been given six months' grace time to wind up.
The Supreme Court also directed these 42 block holders to pay a penalty of Rs295 per tonne of coal extracted for making up for the loss highlighted by the CAG in its report.
In a draft report issued in March 2014, the Comptroller and Auditor General of India (CAG) accused the union government of allocating coal blocks in an inefficient manner during 2004–2009. The CAG Final Report tabled in the Parliament put the figure at Rs1.86 lakh crore ($30 billion). Even the Parliamentary Standing Committee report on Coal and Steel states that all coal blocks distributed between 1993 and 2008 were done in an unauthorized manner and allotment of all mines where production is yet to start should be cancelled.
Last month, the apex court held that all coal block allocations made since 1993 till 2010 before pre-auction era during previous NDA and UPA regimes have been done in an illegal manner by an "ad-hoc and casual" approach "without application of mind".
While passing strictures on the Screening Committee, the Supreme Court, in its ruling on 25th August, had said, "...the entire allocation of coal block as per recommendations made by the Screening Committee from 14 July 1993 in 36 meetings and the allocation through the Government dispensation route suffers from the vice of arbitrariness and legal flaws. The Screening Committee has never been consistent, it has not been transparent, there is no proper application of mind, it has acted on no material in many cases, relevant factors have seldom been its guiding factors, there was no transparency and guidelines have seldom guided it. On many occasions, guidelines have been honoured more in their breach. There was no objective criteria, nay, no criteria for evaluation of comparative merits. The approach had been ad-hoc and casual. There was no fair and transparent procedure, all resulting in unfair distribution of the national wealth. Common good and public interest have, thus, suffered heavily. Hence, the allocation of coal blocks based on the recommendations made in all the 36 meetings of the Screening Committee is illegal."
The Screening Committee had allotted coal blocks to 29 state government public sector undertakings (PSUs) while 72 PSUs were allotted blocks through government dispensation route.
The Bench headed by Chief Justice RM Lodha, had said, "The allocation of coal blocks through Government dispensation route, however laudable the object may be, also is illegal since it is impermissible as per the scheme of the CMN Act. No State Government or public sector undertakings of the State Governments are eligible for mining coal for commercial use. Since allocation of coal is permissible only to those categories under Section 3(3) and (4), the joint venture arrangement with ineligible firms is also impermissible."
The apex court mentioned that no challenge was laid before it for the blocks where competitive bidding was held for the lowest tariff for power for UMPPs. Prashant Bhushan, counsel for Common Cause said that since allocation for UMPPs is in accord with the opinion given in Natural Resources Allocation Reference and the benefit of the coal block is passed on to the public, the said allocations may not be cancelled.
He, however, had pointed out that in some cases, the government has allowed diversion of coal from UMPP to other end user for commercial exploitation.
"Having regard to this, it is directed that the coal blocks allocated for UMPP would only be used for UMPP and no diversion of coal for commercial exploitation would be permitted," the Supreme Court had said in its judgement on 25 August 2014.