Supreme Court of India(SCI) cancels 214 coal blocks Wednesday Sep 24,2014

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”.