Supreme Court holds coal blocks allocation from 1993 illegal
NEW DELHI: The Supreme Court held the coal blocks
allocated from 1993 onwards by a steering committee and through government
dispensation route were illegal, arbitrary, and non-transparent without any
objective criteria but did not cancel them yet.
A bench of Chief Justice RM Lodha, Justice Madan B
Lokur and Justice Kurian Joseph said, “The entire allocation of coal block 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.”
Pronouncing the judgment, Chief Justice Lodha noted
there was “no objective criteria” for evaluation of comparative merit. “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.”
The verdict came on a batch of PILs initially by
advocate ML Sharma and NGO Common Cause challenging the validity of allocation
and seeking their cancellation. Unlike the court verdict in 2G case where it
cancelled all the 121 licences, the court took a cautious approach as it wanted
to address the consequences of its verdict and how to tackle it.
“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,” the court said as it directed the next
hearing on Sep 1.
It said one way of dealing with it is to appoint a
committee headed by a retired apex court judge and such a committee’s report
may help the court to have an objective view on the options available for
The court said as it pointed out that the former
attorney general was not able to give facts and figures and the money involved
in these allotments, as whatever figures he gave were disputed by the state
Pointing to the ad-hoc manner in which the screening
committee had acted in its 36 meetings from 1993 till 2010, the court said,
"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."
Holding that the allocations based on the committee's
recommendations as illegal, the court said that the allocations through the
government dispensation route, "however laudable the object may be,"
were also illegal as they were impermissible as per The Coal Mines (Nationalisation)
Referring to some of coal mines allocated to the state
governments or its undertakings which in turn entered into joint venture for
mining and prospecting, the judgment said that no state governments or their
public sector undertakings are eligible for mining coal for commercial use.
"Since allocation of coal is permissible only to
those categories under section 3(3) and (4) (of the CMN Act, 1973), the joint
venture arrangement with ineligible firms is also impermissible. Equally, there
is also no question of any consortium/leader/association in allocation,"
the court said.
The court also said that 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
“It is directed that the coal blocks allocated for
UMPPs would only be used for UMPPs and no diversion of coal for commercial
exploitation would be permitted,” the court stressed.