Cancelling JPL’s bid, allotting mines to CIL wrong: HC

By: and |
Updated: March 27, 2015 1:00 AM

The government's decision to cancel the bid of Jindal Power (JPL)...

The government’s decision to cancel the bid of Jindal Power (JPL) for two Chhattisgarh coal mines by annulling the tender process and allotting them to Coal India (CIL) is “prima facie wrong”, the Delhi High Court said on Thursday.

“This does not smack of fairness. Prima facie we feel it is wrong,” a bench of Justices Badar Durrez Ahmed and Sanjeev Sachdeva said in response to Additional Solicitor General (ASG) PS Narasimha’s argument that the coal ministry had the right to take the decision. “The more we look into it, the more we feel there should be an interim order. We are not impressed,” the court said in response to the ASG’s arguments opposing any interim order. While the ASG said there was no question of an interim order, the bench directed him to take instructions on what interim order could be passed in the matter and inform the court on Friday.

The court also did not agree with the ASG’s argument that the tender was annulled as the bid had not inspired confidence, saying “You are not alleging anything, but you are killing them.” It also said that in the petitions challenging the two-phased auction in which 50% bidders are eliminated, the government had said there could be no cartelisation but it was arguing here that the system of auction was operated by the bidders.

The court also gave adverse observations on one of the reasons given by the ministry to annul the tender process that comparing the price fetched in the auction of other mines for the power sector, the highest bid for Gare Palma IV/2 and IV/3 in Chhattisgarh did not reflect fair value.

Although the government cancelled three blocks’ bids, it said a re-examination of the auction process failed to find conclusive evidence of malpractice or collusive bidding but only a deviation from the trend. The coal ministry last week cancelled the completed bidding processes for Gare Palma IV/2/ IV/3 and Tara blocks, wherein JSPL emerged the successful bidder. It also rejected bids for Gare Palma IV/1 block, depriving the highest bidder, Balco, of the right to lay hands on it. The government’s rationale was that the bidding ended rather abruptly and

the highest bid prices were lower compared to those received for blocks with similar grades of coal and same end-use. Balco has moved the HC challenging the government’s decision.

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