SC cancels allocation of 214 coal blocks since 1993

Exempts blocks allotted to Sail, NTPC, Sasan Power Ltd

SC cancels allocation of 214 coal blocks since 1993

In a major setback to the corporate sector, the Supreme Court on Wednesday quashed allocation of 214 out of the 218 coal blocks allotted to various companies from 1993 and allowed the Centre to take over 42 functional blocks.

A bench headed by Chief Justice R M Lodha said the beneficiaries of the illegal process “must suffer” the consequences and refused to show sympathy to private companies.

The order, which paved the way for the Centre to auction the remaining 172 coal blocks, will also hit several firms which claimed to have invested Rs 2.87 lakh crore in coal blocks and over Rs 4 lakh crore for end-user projects.

The bench said the judgment was intended to correct the wrong done by the Centre over the years and to send a message to the government not to deal with the natural resources as if they belong to a few individuals who can fritter them away at their sweet will.

The court exempted four blocks, one each to Sail and NTPC and two blocks to Sasan Power Ltd owned by Anil Ambani’s Reliance Power. The apex court set the deadline to March 31, 2015, for the rest of the allottees to wind up operations.

However, to maintain supply of the fossil fuel to projects, the court has allowed the 46 blocks (42 functioning and 4 ready for functioning), to excavate fuel for another six months. After March 31, 2015, the government will have to auction these blocks or hand it over to Coal India Limited.

The bench, also comprising justices Madan B Lokur and Kurian Joseph, directed the companies, which were allocated coal blocks but had not operationalised them, to pay a compensation to the government for the loss dealt to the exchequer.  

The bench also asked allottees of all 46 coal blocks, where coal is being removed or is ready to be removed, to pay an additional levy of Rs 295 per tonne of coal extracted from the date of extraction.

The additional levy was imposed based on the findings of the Comptroller and Auditor General, which came to the conclusion that a loss of Rs 295 per tonne was caused to the exchequer due to the non-operation of the mines.

“Our judgment highlighted the illegality and arbitrariness in the allotment of coal blocks and these consequent proceedings are intended to correct the wrong done by the Union of India. These proceedings look to the future in that by highlighting the wrong, it is expected that the government will not deal with the natural resources that belong to the country as if they belong to a few individuals who can fritter them away at their sweet will. These proceedings may also compensate the exchequer for the loss caused to it,” it said.

The apex court also took note of the stand taken by the National Democratic Alliance  government that it “is fully prepared to face the socio-economic impact” if the coal block allocations were cancelled. 

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