Coal block deallocation: SC to hear views of legal experts today

Written by Indu Bhan | Indu Bhan | Updated: Sep 1 2014, 17:01pm hrs
CoalSupreme Court will on Monday hear the views of the legal fraternity to find a solution to the consequences of its decision of cancelling all the 218 coal block.
The Supreme Court will on Monday hear the views of the legal fraternity to find a solution to the consequences of its decision of cancelling all the 218 coal block allotments over 1993-2009.

While it said all the allocations cleared by all 36 screening committees in the last two decades were neither fair nor transparent and suffered from arbitrariness and flaws, it had stopped short of cancelling the allocations, saying the matter needed further deliberations and it was open to better options.

The court had suggested to set up a committee, headed by a retired SC judge, to examine what should be done for the re-allocation of these blocks.

The majority of legal experts feel the government is bound to go for auctions only, as it has become the law of the land since 2010, when the government finally brought in an amendment to Section 10 of the Mines and Minerals (Development and Regulation) Act, 1957.

Says Ajay Bhargava of Kaitan and Company: If coal blocks are cancelled, the law of the land is the MMDR Act, which makes auctions the only method for coal block allocation. Even the apex court has held that the allocations ought to have been made under the MMDR Act and the government had no power to allot the coal blocks under the Coal Mines (Nationalisation) Act, 1973.

He further said this will be the first time since 2012 (when the amendment came in force) when the auction process will be held if the SC decides to cancel all or some of the allotments.

The Parliament will sooner or later have to bring further amendments to bring the two Acts in consonance with each other, he said, adding that the government is left with no choice but to amend the MMDR Act further, to bring in the provision of auction for bulk minerals.

Senior SC lawyer CU Singh, however, warns that the court cannot follow a broadbrush approach in quashing all the allotments made since 1993.

Best solution might be to cancel all allocations where mining could not start due to the faults of allottees themselves and the same can be auctioned under the modern regime. And in cases where the mining could not start due to factors beyond their control, they should be allowed to continue after imposing some penalty, if deemed necessary.

However, some warn that auctioning the blocks could make things much more complicated. Top corporate lawyer Harish Salve thinks the other way. The auction-only argument has been expressly rejected. There may be other compelling reasons to allot mines to committed downstream users. Its a way to attract fdi, he says.

Experts feel the coal scam stands on a different footing compared to the 2G scam as the implications of deallocation of mines are much more serious. A holistic approach is required, otherwise there will be policy paralysis. Any bad move could be disastrous for the already struggling energy sector... adds Singh.