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Supreme Court reserves order on plea seeking coal block cancellation

Posted on Jan 16 2014 | IANS

New Delhi, Jan 16 : The Supreme Court Thursday reserved its verdict on a plea seeking cancellation of coal blocks allocated from 1993 to 2008 in an "irregular and illegal manner" by the central government in breach of statutory provisions.

Reserving the order on the plea by petitioner advocate M.L. Sharma and NGO Common Cause, the bench of Justice R.M. Lodha, Justice Madan B. Lokur and Justice Kurian Joseph gave a week's time to the central government, seven states having coal reserves and other applicants to file their written submissions.

The court also asked the Directorate of Enforcement to file its status report on its investigations into money laundering by Feb 8 which will be taken up for hearing Feb 10.

It asked both the Central Bureau of Investigation (CBI) and Directorate of Enforcement to cooperate so that the investigations are not hampered.

The court reserved its order after it was told by the central government and the private parties engaged in coal mining that the centre alone had the authority to allocate the coal blocks.

The petitioners, however, contended that the centre was taking recourse to the Coal Nationalisation Act, 1973 as amended in 1976 to usurp the powers of the state governments to allocate coal blocks under the Mines and Minerals (Development and Regulation) Act, 1957.

The petitioners said there was nothing in the Coal Nationalisation Act that vested any power in the centre to identify and allocate coal blocks.

Addressing the court, counsel Harish Salve said the economic control of the centre over coal was apparent from the fact that the power to fix rates of royalty rests with it.

Salve, who appeared for private miners, told the court that in the absence of any machinery for the identification applicant for the allocation of coal blocks under the Mines and Minerals (Development and Regulation) Act, 1957, this has to be done by the exercise of executive power which rests with the centre and not the governments of coal bearing states.

"Therefore, the union government had the power to identify the beneficiary of allotment. The union government having identified the beneficiary of allotment, the state would be obliged to grant a lease if other conditions are satisfied," Salve told the court.

While agreeing with the centre that the power to identify and allocate coal blocks was vested in the centre, Salve disapproved the centre's position that the allocation of coal blocks by it did not mean conferment of any right for mining leases.

He said that though the exercise of executive (government) power can be taken back and letter of allocation may not be conclusive, but taking it back was both "worrisome and wrong".

Appearing for the NGO Common Cause, counsel Prashant Bhushan said "there is nothing, absolutely noting in the Coal Nationalisation Act which indicate that the power of the state government to allocate the coal blocks under the MMRD Act stands transferred to the centre".

He said the centre has no power to accept applications and apply its mind, and grant allocation letters except in cases where mining leases have been cancelled.

At this, the court asked: "Who will formulate the policy? Policy can be formulated by the centre since it has the power of consent or prior approval. The centre may say that it will not give consent or prior approval till you (coal bearing states) give allocation to states not having coal reserves and central government undertakings or corporations."

In an observation, the court said "the valuation that exchequer has been put to 'X' loss or 'Y' loss is too simple" as such allocation leads to development and general employment and it could not just be linked to revenue sharing.

The court said this after Bhushan said giving mines to private operators without any reciprocal linkage with the price of end products amounts to giving them windfall gains.

Bhushan said if the allocations of these mines are cancelled, there would not be any loss to the end-use plant because it is being fed coal from other sources.

Petitioner Sharma reiterated his position that the centre had no powers to identify and allocate coal blocks. All it had was the power of prior approval before state governments grant mining leases.

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