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Coal block allocations since 1993 illegal: SC
Court remains silent on cancellation of allotments
Legal Correspondent

New Delhi, August 25
The Supreme Court today declared as "arbitrary and illegal" all coal block allocations made on the recommendations of the screening committee since July 1993, but said "further hearing" was required to decide the "consequences".

A three-member Bench headed by Chief Justice RM Lodha delivered the 163-page verdict on a batch of PILs seeking cancellation of about 250 coal block allocations, including 101 for the steel sector, 97 for the power industry, 10 for cement companies and 37 for commercial use.

The screening committee had made its recommendations on the basis of 36 meetings held during the period. "The committee has never been consistent, it has not been transparent, there is no proper application of mind... relevant factors have seldom been its guiding factors, there was no transparency," the Bench observed.

"The approach had been ad hoc and casual. There was no fair and transparent procedure, resulting in unfair distribution of the national wealth. Common good and public interest have thus suffered heavily," the Bench, which included Justices Madan Lokur and Kurian Joseph, said.

The judgment did not specify that it was quashing or cancelling the allocations. Advocate Prashant Bhushan, who appeared for one of the PIL petitioners, NGO Common Cause, said in a statement issued through his junior that "only an idiot can argue that a thing is illegal, but is not cancelled as some lawyers were trying to do." "The only question that the court has left open is that those few cases where the state governments have signed mining leases and people are actually mining, what would happen to that, for which hearing is on September 1," the statement said.

The petitioners and other parties to the case were welcome to make "better suggestions," the Chief Justice said.

The apex court clarified that coal blocks allocated through competitive bidding for the lowest tariff for power for ultra mega power projects (UMPPs) "may not be cancelled".

Coal blocks allocated for UMPPs would only be used for UMPPs and no diversion of coal for commercial exploitation would be permitted. The word "cancelled" used in this context gives rise to drawing an inference that the court has indeed cancelled the other allocations.

The judgment mentions all major power, steel and cement firms that benefitted from illegal recommendations, covering the regimes of the minority Congress governments of PV Narasimha Rao (1991-96), HD Deve Gowda, IK Gujral, AB Vajpayee (1998-2004), Manmohan Singh (2004-14).

What the court said

  • There was no fair and transparent procedure for allocation
  • This resulted in unfair distribution of the national wealth
  • Common good and public interest have suffered
  • No state government or public sector undertakings of the state governments are eligible for mining coal for commercial use

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. SC Bench

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