Supreme Court cancels allotment of 214 coal blocks

All the operational mines have been asked to wind up their production by March 2015

By Srestha Banerjee
Published: Wednesday 24 September 2014

coal mining

In a bold judgement on Wednesday, the Supreme Court has cancelled 214 coal blocks that were allotted since 1993. The bench spared only four blocks—one each allotted to the National Thermal Power Corporation (NTPC) and Steel Authority of India Limited (SAIL) and two allocated to Ultra Mega Power Projects (UMPPs), said Pranav Sachdeva, a junior lawyer with Prashant Bhushan’s team that is handling the case on behalf of non-profit Common Cause.

In its earlier pronouncement in August 25, the court had said that all 218 coal blocks allocated between 1993 and 2010 are illegal as they have been allotted in an “ad hoc and casual” manner by the Centre. The bench has strongly noted that the blocks were allocated by the inter-ministerial screening committee in a non-transparent manner to private parties for captive mining due to which “common good” and “public interest” had “suffered heavily”. The bench has also said that coal blocks given to state government companies or their Public Sector Undertakings (PSU), through the government for mining coal for “commercial use” purposes were also illegal as the allocation is not allowed under provisions of the Coal Mines Nationalisation Act, 1993.
Following the apex court’s observation, the Attorney General of India, Mukul Rohatgi, on September 1, had sought an exemption for 46 coal blocks, 40 of which were producing coal and six of which were yet to start producing. Accordingly, the coal ministry had issued a letter to the 46 allottees asking them to submit detailed affidavits regarding the production status. According to the letter sent by ministry, while SAIL is already producing coal, NTPC, the other company that has been spared, is yet to begin its operations.

The blocks that have been exempted are Moher and Moher Amroli Extension in Madhya Pradesh (two UMPPs allocated to Sasan Power Ltd), Tasra in Jharkhand (allotted to Steel Authority of India Ltd) and Pakri Barwadih in Jharkhand (allotted to NTPC).

Barring the four exempted blocks, the court has asked all other operational mines to wind up production by March 2015, say sources. The operational companies have also been asked to pay a fine of Rs 295 for every tonne of coal mined since they started producing. This compensatory amount is based on the assessment made by the Comptroller and Auditor General of India.

The companies that were producing and will now be required to wind up operations include Jindal Power Limited, Hindalco Industries Limited, Jayaswal Neco Limited.
What next?

The cancelled coal blocks will now be auctioned by the government. The coal ministry, in its public statement, has already said that it would abide by the Supreme Court decision and is ready to auction the blocks. In its report, earlier this year, it had also said that with the amendment of Mines and Mineral (Development & Regulation) Act, 1957 in the year 2010, and in accordance with guidelines under “Auction by Competitive Bidding of Coal Mines Rules, 2012”, the coal blocks can now be allocated “only through the process of competitive bidding” with the exception of allocation to a government company and to a company awarded a power project on the basis of competitive bids for tariff (including UMPPs). The Mines and Mineral (Development & Regulation) Act, after an amendment in 2010, allows the Centre to set the terms and conditions for the selection of a company through competitive bidding.
The Supreme Court’s observation, thus, has placed much emphasis on the legality of the allocation process which the court had repeatedly underlined. In their observations on August 25, the court had said, “Where a statute requires to do a certain thing in a certain way, the thing must be done in that way or not at all. Other methods of performance are necessarily forbidden.”

Order of the Supreme Court of India regarding allocation of coal blocks, 24/09/2014

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