Coal allocations made from 1993 to 2010 illegal, rules SC

Coal allocations made from 1993 to 2010 illegal, rules SC

Coal allocations made from 1993 to 2010 illegal, rules SC

The Supreme Court on Monday termed illegal all coal block allocations made between 1993 and 2010 and slammed the different governments at the Centre, including the previous NDA and UPA regimes, for “arbitrary and unfair” distribution of national wealth.

A three-judge bench presided over by Chief Justice R M Lodha, however, decided to adjudicate further on September 1 on the consequences of the 218 arbitrary allocations. 

Coal, also called black diamond, is used in power generation, iron, steel and cement industry. The court’s rule on future of allocations would be keenly watched due to its possible repercussion on economic growth. 

“There were 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... Common good and public interest have, thus, suffered heavily. Hence, the allocations based on the recommendations made in all the 36 meetings of the screening committee are illegal.” 

The court passed the strongly-worded judgment after hearing two PILs filed by advocate M L Sharma and NGO “Common Cause” in 2012, seeking cancellation of all the allocations of coal blocks. The petitions were filed following the damning report by the then Comptroller and Auditor General Vinod Rai, estimating Rs 1.86 lakh crore loss to exchequer due to “illegal” allocations. 

The bench, while pronouncing the verdict, suggested setting up of a committee of retired Supreme Court judges to give a report on figures of coal block allocations and invited suggestions from the government and petitioners.

“The allocations from 14/07/1993 in 36 meetings and the allocations through the government-dispensation route suffer from the vice of arbitrariness and legal flaws,” the bench, also comprising Justices Madan B Lokur and Joseph Kurian, said in a 163-page verdict. 

It also concluded that most of the companies which got the coal blocks were not engaged in the production of steel, power or cement at the time of allocation, nor did they make any disclosure whether or not the power, steel or cement plant was operational. 

They merely stated that they proposed to set up such plants, thus failing to meet the criterion of end-use project at the time of allocation.

However, the court clarified that the allocations made to ultra mega power projects for supplying lowest tariffs of electricity through competitive bidding would not be cancelled. ­But those projects were not allowed to divert the coal for commercial purpose.

Relying upon the eligibility requirement as mentioned in the Coal Mines Nationalisation Act, 1973, the bench agreed with the contention of petitioners that state governments and their public sector undertakings were not eligible for mining coal for commercial use.

Only a unit engaged in the production of iron and steel and generation of power, washing of coal obtained from mine or production of cement, is entitled to the allocation in addition to central government, a central government company or corporation, it added.

The court did not agree to the Centre’s contention that coal reserves were primarily concentrated in seven states viz Maharashtra, Madhya Pradesh, Chhattisgarh, Odisha, Jharkhand, Andhra Pradesh and West Bengal and all those states have accepted and acknowledged the power of central government in allocating coal blocks.

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