Supreme Court quashes allocation of 214 coal blocks NEWS » NATIONAL

NEW DELHI, September 24, 2014

KRISHNADAS RAJAGOPAL

http://www.thehindu.com/news/national/supreme-court-quashes-allocation-of-all-but-four-of-218-

coal-blocks/article6441855.ece?ref=relatedNews

Coal blocks allocated to SAIL and NTPC and two Ultra Mega Power Projects have been

exempted.

The Supreme Court on Wednesday cancelled all but four of the 218 coal block allocations it had

declared illegal and arbitrary in its August 25, 2014 verdict.

Acting on the Central government's assurance that it is “fully prepared” to face the cancellation of the

coal block allocations and will not have any difficulty to take the coal industry forward, a three-judge

bench led by Chief Justice of India R.M. Lodha passed the order, opting that the "natural

consequence" of its August 25 judgment declaring the allocations would be to cancel them.

On the Centre's request to save 40 functional coal blocks and six ready-to-function ones, the court

said 42 of them would continue to function for the next 6 months, till March 31, 2015, to give the

government "breathing space to manage the emerging situation".

These 42 blocks would have to pay an additional levy of Rs. 295 per metric tonne of coal extracted to

make up for the loss highlighted in the CAG report in the coal scam.

The four functional coal blocks exempted from cancellation are two ultra mega power projects, one

operated by NTPC and another by SAIL.

Reacting to the order, Attorney-General Mukul Rohatgi, who represented the Centre in the case, told

the media that the "government would now decide which of the blocks will be auctioned and which

not to".

He said the six-month gap in implementation of cancellation of 42 functional coal blocks would

ensure that the transition would happen with the “least disturbance”.

On the impact of the cancellation on industries, Mr. Rohatgi said “private industries can come back

by way of auction”.

Coal blocks: SC rejects private miners’ plea

In its 27-page order cancelling the allocation of 214 coal blocks on Wednesday, a three-judge Bench

headed by Chief Justice of India R.M. Lodha dismissed the argument by private miners‟ associations

that Coal India Ltd. would not be equipped to handle the post-cancellation challenges.

Private miners had said that cancellation of the blocks would hit investors‟ confidence, cause acute

distress in some industries, affect 28,000 MW of power capacity, and cause an estimated loss of Rs.

4.4 lakh crore in terms of royalty, cess, direct and indirect taxes, besides raising the cost of coal

imports and setting back the process of extraction and effective utilisation of coal by eight years.

Countering this, the court observed that the submission “that the CIL is inefficient and incapable of

accepting the challenge is not an issue at all.”

“The Central government is confident, as submitted by the learned Attorney-General, that the CIL

can fill the void and take things forward,” the order said.

On the impact of the cancellation on industries, Attorney General Mukul Rohatgi, who represented

the government in the case, said, “Private industries can come back by way of auction.”

Opting for cancellation as the “natural consequence” of declaring coal block allocations arbitrary and

illegal, the court saved four allocations from the “guillotine”. The four blocks, left undisturbed, are

among the 46 illegal coal blocks -- 40 functional and six ready to start operations this year -- the

government wanted to be saved from cancellation.

The court made it clear that the order will not affect the CBI‟s pending criminal investigation on 12

functional coal blocks.

The court order exempted four blocks. These include two ultra mega power projects -- Moher and

Moher Amroli Extension -- allocated to Sasan Power Ltd, Tasra allotted to Steel Authority of India

Ltd. and Pakri Barwadih coal block of the National Thermal Power Corporation. Though the

Government wanted 46 blocks exempted, the court said the remaining 42 could continue production

for the next six months, provided they pay the Rs 295 per tonne levy. This six-month window, the

court explained, was merely a buffer time.

Coal block allocation: chronology of events

July 14, 1992

A number of coal blocks, which were not in the production plan of Coal India Ltd and the

Singareni Collieries Company Limited (SCCL), were identified and a list of 143 blocks were

prepared.

1993 to 2010

A total of 70 coal mines or blocks were allocated between 1993 and 2005, 53 in 2006, 52 in

2007, 24 in 2008, 16 in 2009 and one in 2010.

In all, 216 block were allocated between 1993 and 2010, out of which 24 were taken away at

different points in time, effectively leaving the total number of allocated blocks at 194.

March 2012

CAG‟s draft report accuses govt of „inefficient‟ allocation of coal blocks 2004—2009; estimates

windfall gains to allottees at Rs 10.7 lakh crore.

May 29, 2012

Prime Minister Manmohan Singh offers to give up his public life if found guilty in the scam *

May 31, 2012: CVC, based on a complaint of two BJP MPs — Prakash Javadekar and Hansraj

Ahir — directs a CBI enquiry

June 2012

Coal ministry forms an inter—ministerial panel to review the process of allocation of blocks and

to decide either on de—allocations or forfeiture of bank guarantees.

Since then, the government has taken back about 80 coal fields while bank guarantees in 42

cases have been forfeited.

August 2012

CAG‟s final report, tabled in Parliament, tones down loss to exchequer figure to Rs 1.86 lakh

crore.

June 2012

Coal ministry forms an inter—ministerial panel to review the process of allocation of blocks and

to decide either on de—allocations or forfeiture of bank guarantees.

Since then, the government has taken back about 80 coal fields while bank guarantees in 42

cases have been forfeited.

August 2012

CAG‟s final report, tabled in Parliament, tones down loss to exchequer figure to Rs 1.86 lakh

crore.

August 25, 2012

Govt claims CAG‟s presumptive loss theory flawed, no mining yet.

August 27, 2012

PM says CAG flawed; “The observations of the CAG are clearly disputable”

September 6, 2012

PIL in SC seeks cancellation of 194 coal block allotments Supreme Court begins monitoring the

CBI probe into the coal field allocations

March 2013

The Apex Court asks CBI not to share probe details with govt

April 23, 2013

Standing Committee on Coal and Steel, in a report tabled in Parliament, says coal blocks

distributed between 1993—2008 done in unauthorized manner. Says allotment of mines where

production not started should be cancelled.

April 26, 2013

CBI Director Ranjit Sinha submits affidavit saying investigation report shared with law minister

Ashwani Kumar.

May 10, 2013

Ashwani Kumar resigns.

June 11, 2013

CBI registers first information report (FIR) against Naveen Jindal and Dasari Narayana Rao.

October 16, 2013

CBI files an FIR against industrialist Kumar Mangalam Birla and former coal secretary PC

Parakh.

July 2014

The Supreme Court sets up a special CBI court to try all coal field allocation cases.

August 2014

The CBI decides to close its case against Birla and Parakh.

September 12, 2014

CBI pulled up over „hurry‟ in filing closure report against K.M. Birla.

September 22, 2014

CBI seeks time to reply to court's query on closure report.

September 24, 2014

Supreme Court quashes allocation of 214 coal blocks.