Supreme Court reserves order on coal block allocations

Centre wants Coal India to take over active mines if all blocks are cancelled or firms be allowed to continue production until these are re-auctioned

On a day when the Centre and industry bodies seemed divided on the way forward for captive coal miners, the Supreme Court reserved its order on coal block allocations. While the government didn’t press the court to favour a few blocks, industry representatives pleaded for a committee to select and exempt the blocks, allocations of which didn’t involve any criminality.

The government, however, said it was against the setting up a committee to hear individual complaints of allottees, as this would delay the way forward.

The court heard all the parties before deciding to take up the matter in two weeks.

In their submissions, industry bodies Independent Power Producers Association of India and Coal Producers’ Association said only those blocks in whose case criminality had been proven should be cancelled. “As long as a coal block is not misrepresented, the fault is not with the individual; why, then, should the stakeholder suffer?” the submission asked.

On August 25, a Supreme Court Bench headed by Chief Justice R M Lodha had termed 194 coal allocations carried out through the screening committee and the government dispensation routes illegal under the Coal Mining Nationalisation Act.

On Tuesday, the Centre told the court it stood by its statement that if the judgment in the case related to coal block allocations between 1993 and 2010 was to be complied with, all such allocations must be cancelled. Attorney General Mukul Rohtagi said “only a pocket of some 46 units can be saved”. Forty blocks are already producing, while six are about to start production.

“An expert group needs to look at various other implications, apart from legal ones. There is a time factor wherein the blocks allocated in 1999 cannot be equated to those awarded in 2007. Then, how can some block be allocated and some cancelled? Such issues cannot be overlooked when the court is dealing with such a large quantum and range of coal blocks,” said an executive of one of the associations representing industry. He asked not to be named, as the matter was sub judice.

Associations of coal producers, power producers and sponge iron producers sought a three-member panel, headed by a retired Supreme Court judge and with an accountant as a member, be set up to hear their cases. Rohtagi opposed the idea of another committee, saying this would delay the whole process at a time when the country was starved of energy.  He said if all blocks are cancelled, state giant Coal India should be allowed to take over active mines, or companies be allowed to continue production until the blocks are re-auctioned, in order to avoid supply disruptions.

K K Venugopal, the counsel for coal producers association, argued it was the government that was at fault in the case, adding the allottees were being punished for no fault of theirs. He added cancellation of coal block allocations would have a far-reaching impact, as huge investments had already been made on these blocks and there was a crippling shortage of coal and power in several parts of the country.

The three industry associations complained their views weren’t heard before the judgment was pronounced. This was denied by Prashant Bhushan, counsel for Common Cause, which had filed a public interest suit in this regard. Harish Salve, who represented power producers, alleged the petition was based on wrong and distorted facts, adding these had crept into the judgment. He, too, sought a panel to hear individual complaints.

Denying the government was at fault, Rohtagi said all parties were heard by the court before it delivered its judgment. “Now, we have to move forward. We are not against any industry. We have taken the present stand after applying our mind to all possible situations,” he said.

The court also directed Central Bureau of Investigation Director Ranjit Sinha to file a reply on the controversial entry register of his house that was stolen and presented to another Bench on Monday, in the 2G telecom spectrum allocation case. Though Vikas Singh, Sinha’s counsel, expressed his opposition to filing an affidavit, the court insisted it was a serious matter and, therefore, Sinha’s reply was necessary. The court will take up this matter on Monday.
 

Meanwhile, companies, who were allocated coal blocks, also pleaded with the SC not to cancel allocations without hearing them.

The Supreme Court had on August 25 declared that the entire allocation of coal blocks from 1993 till 2010 was illegal, arbitrary, non-transparent and without application of mind and guidelines.

 

The order affects 194 coal blocks allocated since 1993. 
 

The screening committee which had sat 36 times to take decisions did not make any objective evaluation while distributing national wealth, the judgment delivered by a bench headed by Chief Justice R M Lodha said. The allocations both under the screening committee route and the government dispensation route, were arbitrary and illegal, according to the three-judge bench.
 

The court was hearing PILs moved by Common Cause, advocate Manohar Lal Sharma and a few others challenging the allocations as tainted with corruption and nepotism. They had sought cancellation of all such allocations.
 

Subsequently, the government asked the apex court to exempt 46 blocks that were either already active in production or were in an advanced stage or readiness for production. The remaining blocks allotted could be auctioned, Attorney-General Mukul Rohatgi told a Bench headed by Chief Justice R M Lodha.
 

Around 40 of the 105 blocks with private companies are producing coal and six are ready for production. These mines produce 53 million tonnes of coal, about 10 per cent of the total projected output from all blocks, and feed 26,000 Mw of power output and 12 million tonnes of steel production.

 

An estimated half of the 63 dormant blocks are awaiting mining leases from state governments.
 

The attorney-general also said allottees without power-purchase agreements could be asked to refund the government profits made from subsidised coal at the rate of Rs 295 for every tonne produced.