CORRECTED - Court refuses to let off Hindalco in coal block case

MUMBAI (Reuters) - (Corrects paragraph 1 and 5 to remove reference to CBI closure report being rejected by the court)

A court asked for further investigation into an illegal coalfield allocation case involving Hindalco Industries on Tuesday, while hearing an earlier report from the federal police that said the probe was likely to be closed.

Hindalco shares fell as much as 7.4 percent after the court order and closed down 5.5 percent at 144.75 Indian rupees ($2) in a Mumbai market that was down 1.97 percent.

The Central Bureau of Investigation (CBI) said in August it was likely to close the case against Hindalco's billionaire chairman Kumar Mangalam Birla and former bureaucrat P.C. Parakh in relation to a coal block allocated to the firm in 2005.

"As the matter is between the CBI and the Court, and also subjudice, it is inappropriate for us to comment," Hindalco said in a statement.

The court has also asked for a statement from former Prime Minister Manmohan Singh, who was responsible for the coal portfolio in 2005.

Singh's Congress party suffered its worst defeat in polls that were concluded in May this year.

Special CBI judge Bharat Parashar has asked for statements of the then coal minister and other officials to be recorded, a lawyer involved in the case said. The lawyer requested anonymity as he was not authorized to speak to the media.

A CBI spokeswoman said the agency was yet to receive the court order and that the CBI would comply with it.

The CBI has been investigating whether there were irregularities in allocating a coalfield to Hindalco and two other companies in a scandal dubbed as "Coalgate."

The scam surfaced after an auditor's report in 2012 questioned the government's practice of awarding coal mining concessions to companies without competitive bidding.

India's top court in September scrapped all but four of 218 coal blocks allocated by the government over the past two decades.

"Whatever the trial court has directed will have to be first considered and evaluated and seen in the context of the Supreme Court order before a formal reaction can be articulated," Congress leader Manish Tewari told Reuters.

($1 = 63.5250 Indian rupees)

(Reporting by Aman Shah in Mumbai and Suchitra Mohanty in New Delhi; Additional reporting by Aditya Kalra in New Delhi; Editing by Himani Sarkar)