SC quashes allocation of 214 coal blocks allocated since 1993

In a major blow to the corporate sector, the Supreme Court today quashed allocation of 214 out of 218 coal blocks which were alloted to various companies since 1993 and in which it was claimed that around Rs 2 lakh crores were invested.

A bench, headed by Chief Justice R M Lodha, saved only four blocks--one belonging to NTPC and SAIL each and two allocated to Ultra Mega Power Projects--from being cancelled.

The bench, also comprising justices Madan B Lokur and Kurian Joseph, granted six months breathing time to mining companies to wind up their operations in the coal blocks.

The bench also directed the companies, which were allocated coal blocks but had not operationalised them, to pay a compensation to the government for the loss of exchequer. It accepted the findings of the CAG which came to the conclusion that the loss of Rs 295 per tonne was caused due to the non-operation of the mines.

The apex court also noticed the stand taken by the NDA government that it is "fully prepared to face socio-economic impact" if the coal block allocations were cancelled.

During the earlier hearing in the case, the UPA govt had opposed cancellation of coal blocks allocation saying that around Rs 2 lakh crore had been invested by various companies after blocks were alloted to them.

The apex court had on August 25 held that all coal blocks allocation since 1993 by various regimes at the Centre have been made illegally and arbitrarily.

The apex court, which had used almost all terms to condemn the procedures adopted by 36 screening committee meetings since 1993, however, had stopped short of cancelling them saying, "what should be the consequences, is the issue which remains to be tackled."  The apex court, which examined the allocation of 218 blocks in pre-auction era till 2010, had held that they were done in an illegal manner by an "ad-hoc and casual" approach "without applicatio n of mind" and "Common good and public interest have, thus, suffered heavily" due to lack of fair and transparent procedure resulting in "unfair distribution" of the "national wealth" -- coal -- "which is king and paramount Lord of industry."

"To sum up, 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.

"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," the bench had said in its 163-page verdict.