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Supreme Court Cancels Allocation of 214 Coal Blocks Since 1993-2010; Orders Re-auction
Sep 25, 2014

In a landmark decision, the Supreme Court on 24 September scrapped 214 of the coal blocks allocated between 1993 and 2010, sparing only four allocations. The 4 coal blocks that were spared are government-run, non-joint ventures, 2 of them in Madhya Pradesh and 2 in Jharkhand. These coal blocks were allotted to SAIL, NTPC and two for Ultra Mega Power Projects.

The apex court said the government is free to re-auction the cancelled coal mines and gave six months breathing time to the holders of the 42 coal blocks that are already operational. But the companies running these blocks too would have to compensate the Government by paying Rs. 295 per metric tonne.

The court said the blocks have to go as the allotments were illegal and arbitrary. The observations and findings in the case will have no bearing on the CBI probe.

The court asked Coal India Ltd to take over such blocks within 6 months and auction them. As per the order, 36 operational coal blocks have been cancelled and they are ordered to stop production after March 1, 2015. 

Earlier, Supreme Court declared allocation of all the 218 coal blocks made since 1993 as illegal and arbitrary while also holding that the central government had no power of allocation under the relevant laws. It also said the prevailing practice of the Centre issuing allocation letters after selecting the private companies reversed the legal procedure stipulating that the states should take such decisions. 

The bench, led by Chief Justice R.M. Lodha said the entire allocation of coal blocks, on recommendations made by the screening committee in 36 meetings and through the government dispensation route, suffered from the vice of arbitrariness and legal flaws.

The allocations relate to the period from 1993 to 2011, during the regimes of both the NDA and UPA governments. However, over 190 of these allocations were done during the tenure of the UPA government, which had defended these allocations.

The allocations were done on the recommendations of the screening committee, set up in 1992, for scrutinising applications from private power generating companies for ownership and operation of captive coal mines. The second route was through the government dispensation quota, wherein the allocations were made by the Coal Ministry to the government companies. 

The court also said, “No applications were invited through advertisement and thus the exercise of allocation denied a level playing field, healthy competition and equitable treatment. There were no steps or measures taken to prevent possible misuse of end-use project of private companies.” 


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