The Supreme Court of India Judgement on COAL ALLOCATION came today

The Supreme Court of India Judgement on COAL ALLOCATION came today, Aug 25, 2014. The

operative part of the order, vindicates the stand of the petition fought

by Prashant Bhushan:

“154. To sum up, the entire allocation of coal block as per
recommendations made by the Screening Committee from
14.07.1993 in 36 meetings and the allocation through the
Government dispensation route suffers from the vice of arbitrariness
and legal flaws. 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.
155. The allocation of coal blocks through Government
dispensation route, however laudable the object may be, also is
illegal since it is impermissible as per the scheme of the CMN Act.
No State Government or public sector undertakings of the State
Governments are eligible for mining coal for commercial use. Since
allocation of coal is permissible only to those categories under
Section 3(3) and (4), the joint venture arrangement with ineligible
firms is also impermissible. Equally, there is also no question of any
consortium / leader / association in allocation. Only an undertaking
satisfying the eligibility criteria referred to in Section 3(3) of the CMN
Act, viz., which has a unit engaged in the production of iron and
steel and generation of power, washing of coal obtained from mine
or production of cement, is entitled to the allocation in addition to
Central Government, a Central Government company or a Central
Government corporation.
156. In this context, it is worthwhile to note that the 1957 Act
has been amended introducing Section 11-A w.e.f. 13.02.2012. As
per the said amendment, the grant of reconnaissance permit or
prospecting licence or mining lease in respect of an area containing
coal or lignite can be made only through selection through auction
by competitive bidding even among the eligible entities under
Section 3(3)(a)(iii), referred to above. However, Government
companies, Government corporations or companies or corporations,
which have been awarded power projects on the basis of
competitive bids for tariff (including Ultra Mega Power Projects)
have been exempted of allocation in favour of them is not meant to
be through the competitive bidding process.
157. As we have already found that the allocations made,
both under the Screening Committee route and the Government
dispensation route, 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
158. 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 (UMPPs). As a matter of fact, Mr. Prashant
Bhushan, learned counsel for Common Cause submitted that since
allocation for UMPPs is in accord with the opinion given in Natural
Resources Allocation Reference20 and the benefit of the coal block
is passed on to the public, the said allocations may not be
cancelled. However, he submitted that in some cases the
Government has allowed diversion of coal from UMPP to other end
uses i.e. for commercial exploitation. Having regard to this, it is 163
directed that the coal blocks allocated for UMPP would only be used
for UMPP and no diversion of coal for commercial exploitation would
be permitted.”

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