Birla Corp to take legal recourse against mine deallocation

Deallocation was on grounds that the company failed to develop the mine for captive use in accordance with the prescribed milestones

Birla Corporation, the flagship company of the M P Birla Group, is taking legal recourse against the Coal Ministry's decision to deallocate its coal block in Madhya Pradesh.

Birla Corporation's Bikram coal block, allotted in August 2008, was deallocated on grounds that the company failed to develop the mine for captive use in accordance with the prescribed milestones.

"The company is in the process of taking appropriate legal recourse against the deallocation of coal block and deduction of bank guarantee," Birla Corp said today in a filing to the BSE.

Birla said that though significant progress has been made in developing the coal block, there were delays or lapses in getting various clearances and approvals from government authorities, which were beyond the control of the company.

"Such facts have not been recognised by the Inter Ministerial Group (IMG) constituted by the government to review the progress of development of allocated coal blocks in arriving at the decision to deallocate the coal block," the company said.

"Order regarding deduction of 50% of bank guarantee, which is linked to the milestones set for the development of the block, would be issued separately after receipt of calculation of amount from the office of Coal Controller," it added.

The decision to cancel the allotment of the mine was taken following recommendations of the IMG.

The government set up the IMG in 2012 to review the progress made in coal blocks allotted to firms for captive use and recommend action, including deallocation, for delays in development of mines.

The panel under the chairmanship of the Additional Secretary in the Coal Ministry includes members from the steel and power ministries.