The Supreme
Court on Wednesday Sep 24,2014 cancelled 214 of 218 coal block allocations to
various private companies since 1993, calling the process “fatally
flawed, non-transparent and arbitrary”.
On the chopping block was, however, Rs 6.87 lakh crore of investment in coal blocks and end-use plants.
The
bench headed by Chief Justice R.M. Lodha - who retires on Friday - said
in a hard-hitting judgment: “Beneficiaries of the illegal process must
suffer the consequences. Our judgement highlights the illegality and
arbitrariness in the allotment of the blocks and these consequence
proceedings are intended to correct the wrong done by the Union of
India.
"These
proceedings look to the future by highlighting the wrong; it is
expected that the government will not deal with the natural resources
that belong to the country as if they belong to a few individuals who
can fritter them away at their sweet will,”
All private
firms allotted blocks by the UPA and NDA governments stood to lose. Only
four blocks - three related to Ultra Mega Power Projects of the
government and one of Steel Authority of India Limited- have been saved
from the guillotine.
The SC allowed the Centre and Coal India to take over operation of 42 such blocks which are operational.
Wednesday’s
order paves the way for the Centre to put remaining 172 blocks for
auction. For the past two years, the court had been scrutinising coal
block allocations since 1993 on two Public Interest litigations, one of
them filed by lawyer and activist Prashant Bhushan and the other by
lawyer Manohar Lal Sharma seeking cancellation of blocks on the ground
that rules were flouted in giving away natural resources and that
certain companies were favoured in this process.
The
order is reminiscent of the cancellation of all 122 2G spectrum
licenses in February 2012 on ground of arbitrariness. The bench refused
to sympathise with private companies which vehemently argued against
cancellation by pleading that a total of Rs 2.87 lakh crore have been
invested in 157 coal blocks and Rs 4 lakh crore in end-use plants.
Note
Power
generation units commissioned after 2009 that have a cumulative capacity
of 42,480 MW are currently getting only about two-thirds of their coal
requirement from domestic mines.
India has the world’s fifth-largest reserves of coal, but is among the biggest three importers.
The SC had
on August 25 termed all 218 allocations illegal, but decided to hear
the Centre, allottees and sponge iron and steel manufacturers on the
consequences.
Attorney
General Mukul Rohatgi had said the government was agreeable to
cancellation of licences of allotees who were still holding letters of
allotment and had not still entered into mining agreements but had
pleaded with the court to save 46 blocks which were functional.
The SC in its judgment said: “Learned Attorney General identified 46
coal blocks that could be saved from the guillotine, since all of them
have commenced production or are on the verge of commencing production.
As these allocations are also illegal and arbitrary they are also liable
to be cancelled.”
Terming
the allotments “illegal”, the court had on August 25 said: “Entire
allocation by Screening Committee from 14.07.1993 in 36 meetings and the
allocation through the Government dispensation route suffers from
arbitrariness and legal flaws.
"Screening
Committee has never been consistent, it has not been transparent, there
is no proper application of mind, it has acted on no material in many
cases, relevant factors have seldom been its guiding factors, there was
no transparency and guidelines have seldom guided it. On many occasions,
guidelines have been honoured more in their breach”.
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