SC questions centre on legality of coal blocks allocation

The Supreme Court Tuesday nudged the central government for not adhering to rules in the allocation of coal blocks to private companies from 1993 to 2009 and following a policy which lacked legal sanction.

"The procedure you have followed in the allocation of coal blocks was like putting the cart before the horse," the apex court bench of Justice R.M. Lodha, Justice Madan B. Lokur and Justice Kurian Joseph said.

"Having framed a certain policy to involve private sector for the growth of power sector, that policy has to be in tune with the existing statutory provisions," the court said.

"Once a policy is framed then that policy must have a legal sanction. You have to bring legislation," Justice Lodha said.

"The procedure contemplated under the Mines and Minerals (Development and Regulation) Act has not at all been followed," the court said.

"First we follow the legal regime. Once we are clear about the legal regime then we can come to its enforcement," Justice Lodha told Attorney General G.E. Vahanvati.

Apparently unimpressed by the government's response, Justice Lodha asked Vahanvati how the coal blocks were identified for allocation to private companies and how the applications were received by the government directly.

Vahanvati was asked about the brief given to the screening committee for the consideration of applications by private companies.

The judges asked whether it was the government or the screening committee which framed the guidelines for the coal blocks allocation.

"We are (focusing) on whether the decision making process (for allocation of coal blocks) was ultra vires or not...," said Justice Lodha.

From 1993 to 2003, 2003 to 2005, 2005 to 2006 and 2006 to 2009 how many coal blocks were allocated and to whom, the court asked.

The judges wanted to know in how many cases the allocated coal blocks were reallocated.

Vahanvati was also asked why competitive bidding was not followed and whether norms for allocation of coal blocks were fixed by the state governments or the central government.

Justice Lodha asked: "What was the process adopted for the allocation of coal blocks. What was the first step?"

"How did you get applications (from private players) for the allocation of coal blocks. Did you put it on website or state governments got it and forwarded it to you. This is what we want to know."

As Vahanvati told about the economy in 1991 and the reforms, the court said: "We don't have slightest doubt about the necessity of the policy..."

"The people who framed it must have taken all the aspects into consideration, the question is (that) it should have legislative sanction," the court said.

When Vahanvati told the court that while inviting private participation in the coal sector development the interest of public sector Coal India Limited (CIL) was safeguarded, the court said: "You say public sector becomes an engine of growth, on the contrary you are allowing it a pre-mature death."