SC quashes Orissa HC order favouring Adhunik Coalfields

Written by Indu Bhan | Indu Bhan | New Delhi | Updated: Oct 11 2013, 10:11am hrs
The Supreme Court has quashed the Orissa High Court's order that asked Mahanadi Coalfields to continue supply of coal to Adhunik Coalfields as per fuel supply agreements (FSAs) under the New Coal Distribution Policy (NCDP) of 2007 and without mandating the provisions of 2010 tapering linkage policy.

The order came on a petition filed by Coal India subsidiary Mahandi Coalfields alleging that the deallocation of the new Patrapara coal block in Orissa was due to the default on the part of the allotees, including Adhunik and they were solely responsible for the loss caused to the state resources.

Mahanadi further stated that the tapering policy had been implemented by the Centre and as such it had to abide by the policies.

Mahanadi said that the new Patrapara coal block in Orissa, allocated to seven allotees with Bhushan Steel (BSL) being the leader, was deallocated on account of unsatisfactory progress by the latter.

A bench headed by Justice GS Singhvi while setting aside the HC's May 16 order said, ...while disposing of the appeal filed against the order of the trial court, the HC did not keep in view the parameters laid down by this court for exercise of jurisdiction by appellate court against an interlocutory order passed by the court of first instance.

However, it requested the HC to decide the matter related to the supply of coal in three months.

The government's February 2010 tapering policy had rendered all FSAs, including that of Adhunik, signed in 2009 as per the 2007 policy, as futile. As deallocation of the Patrapada coal block in November 2012 spelt major trouble for Adhunik, which was dependent on the coal block for its two captive power plants in Orissa, the company had moved a Sambalpur civil court for quashing the de-allocation of New Patrapara coal block and sought a direction to Central government to grant an alternate coal block or put it under another group leader as an associate or a permanent source of coal supply at parity with other similarly situated consumers.

Besides, it also sought to permanently restrain Mahanadi Coalfields from truncating/tapering the quantities of coal as determined under the national Coal distribution Policy. However, the trial court dismissed its plea.

Adhunik Metaliks then moved the HC contending that the mandate to comply with the 2010 tapering linkage policy was unfair as by no fault of its own it would have to procure coal as per the new policy.

Stating that the coal block deallocation was beyond their control, it argued that irreparable injury would be caused because of the tapering linkage policy introduced by the Union government.