Centre pulled up for wrongly projecting company as beneficiary of flawed process

The mining lease granted to the company was not tainted by mala fides, and therefore, it cannot be called upon to pay penalty as compensatory payment: SC

In a big face loss to the Union government, the Supreme Court on Wednesday pulled it up for its “unlawful conduct” and making a company, BLA Industries, suffer due to its “careless and callous approach” of including the company’s name in the list of coal block allottees whose leases were cancelled by the top court in 2014.

A bench presided over by Chief Justice N V Ramana quashed the coal ministry’s demand for additional levy for the coal extracted by BLA Industries, after noting that the company was not a beneficiary of the flawed process.

The mining lease granted to the company was not tainted by mala fides, and therefore, it cannot be called upon to pay penalty as compensatory payment, as demanded by the government, the court concluded.

“The erroneous inclusion of the company’s name in the list of allottees of coal blocks and its mining lease area by the government had resulted in cancellation/quashing of the lease by the SC in 2014 that was validly granted in its favour,” it said.

The SC told the ministry to pay Rs 1 lakh cost to the company within four weeks. It also dismissed the contempt petition filed by the government against the company for non-payment of levy as “meritless”.

“We are constrained to make certain observations regarding the conduct of the Union of India (coal ministry). Here is a case where a private party followed all the rules and the law before investing large sums of money to undertake business. In fact, it appears that it was the UoI that did not follow the letter of the law. But ultimately, it was the private party that had to suffer the consequences of the careless and callous approach of the UoI,” the bench said.

The SC had in 2014 cancelled the allocation of coal blocks - Gotitoria (East and West) in Mahapani coalfields of Madhya Pradesh - to BLA Industries on a PIL alleging that the coal blocks were arbitrarily allocated between 1993 to 2011 without adhering to the mandatory legal procedures to favour ineligible companies.