Supreme Court declares Coal Block Allocation since 14-07-1993 as illegal

The Hon’ble Supreme Court of India has ruled that the entire allocation of Coal Blocks as per recommendations made by the Screening Committee from  14.07.1993 in 36 meetings and the allocation through the  Government dispensation route suffers from the vice of arbitrariness  and legal flaws. However, the court has postponed its decision on the fate of such illegal allocations stating that the matter would require further hearing.

The judgement was delievered by the Hon’ble Supreme Court in response to Public Interest Litigation. The petitioners( principally Manohar Lal Sharma and Common Cause) have filed PIL(s) challenging that the allocation of coal blocks made during the period 1993 to  2010 by the Central Government, was illegal and unconstitutional. The grounds of their appeal were as under:

(a)   Non-compliance of the mandatory legal procedure  under the Mines and Minerals (Development and Regulation) Act,  1957 (for short, ‘1957 Act’).

(b)   Breach of Section 3(3)(a)(iii) of the Coal Mines  (Nationalisation) Act, 1973 (for short, ‘CMN Act’).

(c)   Violation of the principle of Trusteeship of natural resources by gifting away precious resources as largesse.

(d)   Arbitrariness, lack of transparency, lack of objectivity and non-application of mind; and

(e)   Allotment tainted with mala fides and corruption and made in favour of ineligible companies tainted with mala fides and corruption.

Principally, following  two prayers were made in these PILs,

(a)   quashing the entire allocation of coal blocks made to private companies by the Central Government between 1993  and 2012, and

(b)   a court monitored investigation by the Central Bureau of Investigation (CBI) and Enforcement Directorate  (ED) or by a Special Investigation Team (SIT) into the entire allocation for the period.

The excerpts from the judgement of the Hon’ble Supreme Court as as under;

“Mr. Goolam E. Vahanvati, learned Attorney General with all persuasive skill and eloquence at his command has sought to justify the allocation of coal blocks by the Central Government.”

“However, the allocation of coal blocks to the private companies  pursuant to the recommendations made by the Screening  Committee in 36 meetings suffers from diverse infirmities and flaws.”

“The entire exercise of allocation through Screening  Committee route thus appears to suffer from the vice of arbitrariness and not following any objective criteria in determining as to who is to be selected or who is not to be selected. There is no evaluation of merit and no inter se comparison of the applicants. No chart of evaluation was prepared. The determination of the Screening Committee is apparently subjective as the minutes of the Screening  Committee meetings do not show that selection was made after  proper assessment.”

“Most of the companies, which have been  allocated coal blocks, were not engaged in the production of steel, power or cement at the time of allocation nor in the applications made by them any disclosure was made whether or not the power, steel or cement plant was operational. They only stated that they proposed to set up such plants. Thus, the requirement of end-use project was not met at the time of allocation.”

“To sum up, the entire allocation of coal block as per  recommendations made by the Screening Committee from 14.07.1993 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. On many occasions, guidelines have been honoured more in their breach. There was no objective criteria, nay, no criteria for evaluation of comparative merits. 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. Hence, the allocation of coal blocks based on the recommendations made in all the 36 meetings of the Screening Committee is illegal.”

“The allocation of coal blocks through Government  dispensation route, however laudable the object may be, also is illegal since it is impermissible as per the scheme of the CMN Act. No State Government or public sector undertakings of the State Governments are eligible for mining coal for commercial use.”

“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.”

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