SC orders status quo on 3 coal blocks, issues notice to JSPL

New Delhi, July 20

The Supreme Court on Monday ordered maintainance of status quo on three coal blocks in Odisha and one in Chhattisgarh, which the Delhi High Court had directed to be excluded from the auction process.

The apex court also issued notice and sought response of the Jindal Steel and Power Ltd (JSPL) and its promoter Naveen Jindal on an appeal by the government challenging the High Court's February 11 verdict, directing the technical committee to review its own decision to change the end-use of two coal blocks — Utkal B1 and B2 blocks in Odisha.

JSPL had contended in the High Court that change of end-use of these blocks from steel and iron to power has prevented them from bidding for them.

The two blocks in Odisha and Gare Palma IV/6 block in Chhattisgarh were earlier alloted to JSPL but were cancelled along with 214 blocks by the apex court and later, when re-auction was announced, their end-use was changed from steel and cement to power.

“Maintain status quo as of today,” a bench comprising Justices M B Lokur, Kurian Joseph and A K Sikri said while posting the matter for hearing in second week of September.

Attorney General Mukul Rohatgi had sought stay of the High Court judgement which was opposed by JSPL's counsel and senior advocate Kapil Sibal, who said that the company has already invested Rs 20,000 crore for developing the steel plant using a new technology.

“Why can’t I bid? Only because there is a change in end-use cannot be a ground,” he submitted after Rohatgi assailed the High Court verdict which gave a go-bye to the decision of the Inter Ministerial Expert Technical Committee, which was constituted specifically to formulate criteria for classifying the coal mines for the purpose of auction.

The Attorney General said that on August 25, 2014 the apex court had held as illegal and arbitrary all allocation and by subsequent order on September 24, 2014, quashed them by ordering re-auction.

The expert committee made classification of mines and changed the end-use of the two coal blocks on the ground that the quality of the coal from there were of inferior and average quality suited for power as better quality coal is required for cemnent and steel. — PTI

The Attorney General said there was also a no man’s land between Utkal B1 and B2 blocks, which were merged at the time of re-auction.

He contended that the High Court had wrongly interfered with the decision of the expert committee, which after long deliberations, had taken a conscious decision to determine the end-use by examining the grade and the volume of coal in the mine/block and also considered the issue of merger of mines which had a common boundary.

"The manner in which the High Court examined the decision of the Technical Committee amounts to sitting in appeal over it. And hence the same is unsustainable and needs to be set aside by this court," he argued.

The High Court had provided relief to JSPL by saying that while changing end-use of these blocks to power sector, the aspect of its adverse impact on steel sector "has not been considered".

It had also directed the committee, which had been set up to classify coal blocks as well as formulate criteria for their auction and allotment, to review its decision to merge Utkal B1 and B2, saying "there was no application of mind".

JSPL had been allocated Utkal B1 for operating a steel unit and Gare Palma IV/6 for a sponge iron industry. But the allocations, along with others, were cancelled by Supreme Court last year.

Government had contended that end-use of both blocks was changed in view of the "energy security of the country".

The High Court had observed that as per the Coal Mines (Special Provisions) Second Ordinance, 2014, "it cannot be concluded that power has been given priority over steel and other sectors. On the contrary, all the core sectors have been placed at par." — PTI