SC scraps most coal blocks allocated since 1993

NEW DELHI (Reuters) - The Supreme Court ruled on Wednesday that companies will have until end-March next year to return most of the coal blocks allocated by the government since 1993, sinking shares of firms that have spent billions of dollars on projects around them.

The court declared last month that India's decades-old method of granting coal mining concessions was illegal and arbitrary. The latest ruling will allow the government to come up with a plan to auction the blocks.

The verdict sent shares of Jindal Steel and Power Ltd , Hindalco Industries Ltd and Tata Power Co Ltd sharply lower.

The court, led by Chief Justice Rajendra Mal Lodha, let off two coal blocks operated by Reliance Power and one each by state firms NTPC Ltd and Steel Authority of India Ltd .

The government's award of more than 200 coal blocks to steel, cement and power companies was at the centre of the "Coalgate" scandal. An auditor report in 2012 said the underpriced sales had cost the exchequer as much as $33 billion.

The government had earlier proposed auctioning the blocks, a process that is likely to take months. Legal wrangling and investigations into the concession process meant there was a tepid response to India's first coal block auction in February.

The government withdrew the auction after only two firms bid for one of the three blocks on offer.

(Reporting by Suchitra Mohanty; Editing by Tom Hogue)