Court halts auction of two coal mines previously held by Jindal Steel

MUMBAI (Reuters) - A court on Wednesday asked the government to halt the auction of two coal mines attached to a Jindal Steel and Power Ltd steel plant, a move that could prompt more companies to go to court and potentially derail plans to auction more than a hundred coal blocks before March 31.

Following a top court ruling in October that cancelled 214 coal blocks, the government had said it would hold auctions for the blocks and invited bids from companies based on their end- use in power, steel or cement.

The government committee in charge of handling the auction had changed the end use of about 20 coal blocks to the power sector, thereby restricting previous owners from bidding for the blocks.

Jindal Steel had challenged the government's decision to change the end use of its Gare Palma IV/6 and Utkal B1 and B2 mines in the states of Chhattisgarh and Odisha, saying it had invested more than 300 billion rupees ($4.80 billion) in setting up plants fed by the mines.

Jindal Steel Chief Executive Ravi Uppal told a local television channel that the two mines can produce about 9 million tonnes of coal per year.

The Delhi High Court also directed that the Utkal B1 and B2 mines, which the government had consolidated for the purpose of the auction, be demerged and taken off the auction.

"We are optimistic that the technical committee will consider the merits for end use of coal blocks as envisaged earlier," Jindal Steel, which was the worst hit by the coal block ruling, said in a statement late on Wednesday.

($1 = 62.4400 rupees)

(Reporting by Aman Shah in Mumbai; Editing by Anupama Dwivedi)