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

hearing.

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."

Read Full order here: https://drive.google.com/file/d/0Bz_lzf_d6056WnR4VklaVkpmdG8/edit?usp=sharing