HC to hear GVK Power plea against Coal ordinance

Company is aggrieved at the 'arbitrary' determination of compensation for its mining infrastructure which was much lower than it expected

Delhi High Court today agreed to hear GVK Power Ltd's plea challenging provisions of the 2014 Coal Ordinance on the grounds that it was aggrieved at the "arbitrary" determination of compensation for its mining infrastructure which was much lower than it expected.

A bench of justices Badar Durrez Ahmed and Sanjeev Sachdeva agreed to hear the matter tomorrow after it was mentioned before it by senior advocate P Chidambaram.

The provision pertains to the computation of compensation payable towards mining infrastructure of operators of functional coal blocks.

GVK is aggrieved by the government's January 28 decision by which it "arbitrarily" determined quantum of compensation at Rs 57 crore, while the company claims it should have been between Rs 276 crore and Rs 350 crore.

Chidambaram said till the issue of compensation was decided, no company, including GVK, would be able to bid for the Tokisud coal block in Jharkhand, as the government on February 1 had come out with an addendum to January 28 decision that the compensation would be subject to any upward revision ordered by a court.

He said compensation was an important aspect as the successful bidder would have to pay it to the earlier allottee towards capital costs, including mining infrastructure.

Chidambaram also said the matter required urgent hearing, since government records indicate that the bidding was scheduled to commence tomorrow at noon.

The matter was earlier in the day listed before Justice Rajiv Shakdher who said he will send GVK's plea to a tribunal set up under provisions of the ordinance if the company is only challenging the compensation determined by government.

Thereafter, GVK said it will challenge the provisions of the ordinance which provided for computing the compensation. It moved an application after lunch amending its plea which was allowed by the single-judge.

GVK has challenged the 2014 ordinance's provision which provides the method to determine the compensation payable to a company which had an operational coal mine and the allocation of which was cancelled by Supreme Court in August last year.

The apex court, however, had allowed such mines to continue operating till March 31, 2015.