Coal blocks allocation cancellation may disrupt investor trust: Ficci
The Supreme Court judgment that coal blocks allocated since 1993 onwards were illegal may disrupt restoration of investors' trust in the country, Sidharth Birla, president, Federation of Indian Chamber of Commerce and Industry (Ficci) said Thursday.
"This latest judgment has once again brought to the fore concerns about the country's policy regime and has the potential to disrupt restoration of investors' trust," he said in a statement.
"We reasonably expect that any extreme step (such as possible en-masse cancellation of allocations) shall not compromise legitimate business and investors who participated in good faith in processes laid out over an extended period by the governments of the day. Of course, in cases of proven mala fide, the law must take its own course," Birla added.
Earlier Aug 25, a bench of Chief Justice R.M. Lodha, Justice Madan B. Lokur, and Justice Kurian Joseph said: "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 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," the court said.
"Since allocation of coal is permissible only to those categories under section 3(3) and (4) (of the CMN Act, 1973), the joint venture arrangement with ineligible firms is also impermissible. Equally, there is also no question of any consortium/leader/ association in allocation," the court added.
"FICCI has consistently advocated the principles of transparency and constitutionality in allocation of natural resources (including coal) and making these rapid, enforceable and certain via robust processes," Birla said.
"At stake are productive assets estimated at Rs.286,000 crore till 2012, which could be left stranded and rendered non-performing, in an hitherto unprecedented manner. We urge the fullest consideration of multiple levels of serious economic implications to the nation, including loss of employment, replacing domestic loss of production with imports and compromising energy security," Birla said.
"One tangible solution going forward could be introduction of independent mining companies, selected by competitive revenue-sharing bidding and engaging them from exploration to mining in un-mineralised blocks; this is in line with global practices," he said.
"Use of electronic platforms for market access and price discovery ensures transparency and avoids implicit transfers from the Centre. A comprehensive legislation encompassing these objectives is urgently required to overhaul the coal sector" Birla added.
(Posted on 28-08-2014)