NEW DELHI: The Supreme Court on Monday dithered from cancelling all coal block allocations made by both NDA and UPA governments between 1993 and 2009, even while declaring them “arbitrary and illegal” in the much-awaited judgment on three public interest litigations (PILs) in the coalgate scam.
In an unprecedented move, the bench headed by Chief Justice R M Lodha decided to hold further hearings starting September 1 on the enormity of the consequences instead of cancelling all allocations outright.
The coal blocks were alloted in Jharkhand, Chattisgarh, Maharashtra, West Bengal, Odisha and Madhya Pradesh to private companies and parties.
At the outset itself, it underlined that “coal is an extremely important element in the industrial life of developing India, the most important indigenous energy resource and remains the dominant fuel for power generation and many industrial applications.”
The court indicated that it may hear further or it may appoint a panel of retired judges to decide the consequences of the illegal allocation on the beneficiaries. “As we have already found that the allocations made…are arbitrary and illegal, what should be the consequences, is the issue which remains to be tackled. We are of the view that, to this limited extent, the matter requires further hearing,” the court said in the judgment..
Justices Madan B Lokur and Kurian Joseph were the two other judges on the bench that held marathon hearings on the three PILs since 2012.
The bench was also conscious of the enormous role of coal in the power generation as it chose not to interfere in allocations of blocks to the ultra mega power projects on the basis of who offers the lowest power tariff in the competitive bidding. It, however, made it clear that the coal should be used only for the projects and “no diversion of coal for commercial exploitation.”
The allocation of the coal mine licences is under the Supreme Court-monitored CBI probe since 2012 when the comptroller and auditor general (CAG) blasted the government for loss of Rs 1.83 lakh crore for not auctioning the blocks in what came to be known as the “coalgate scam” The CBI examined allocations of as many as 194 coal blocks since 1992, including 39 assigned to companies before the UPA government came to power.
The court held that all coal block allocations, whether directly by the government or through the screening committees from July 14, 1993 in 36 meetings “suffers from the vice of arbitrariness and legal flaws” as no objective criteria was adopted in deciding “as to who is to be selected or who is not to be selected.:”
“There is no evaluation of merit and no inter-se comparison of the applications…. The 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. There was no objective criteria, nay, no criteria for evaluation of comparative merits. The approach had been ad-hoc and casual. There was no fair and transparent procedure, all resulting in unfair distribution of the national wealth. Common good and public interest have, thus, suffered heavily. Hence, the allocation of coal blocks based on the recommendations made in all the 36 meetings of the screening committee is illegal,” the court held.
It also held illegal the state governments or its undertakings mining coal for commercial sale on their own or through joint ventures with ineligible firms or through any consortium or association, noting that the Coal Mining National Act allows only the captive coal mines for the units engaged in production of iron and steel, cement and generation of power, besides the Centre and its company or corporation
PTI adds: After the pronouncement, the bench orally said though the attorney general had given the figures of coal blocks, they were not verified and even the state governments had raised objections..
The bench, which heard the PILs filed in 2012 by advocate M L Sharma and NGO, Common Cause, seeking quashing of the coal blocks allocated during the relevant period, said, “To sum up, the entire allocation of coal blocks as per recommendations made by the screening committee from July 14, 1993 in 36 meetings and the allocation through the government dispensation route suffers from the vice of arbitrariness and legal flaws.”
In the conclusion, the bench said “By way of footnote, it may be clarified and we do, that no challenge was laid before us in respect of blocks where competitive bidding was held for the lowest tariff for power for ultra mega power projects.
The bench noted that Common Cause counsel Prashant Bhushan had submitted that since allocation for UMPPs was in accord with the opinion given in Natural Resources Allocation Reference and the benefit of the coal block is passed on to the public, the said allocations may not be cancelled.
It accepted the NGOs submission that there should be an order to restrain in some cases in which the government has allowed diversion of coal from UMPP to other end uses i.e. for commercial exploitation.
