Coal blocks auction: Delhi High Court says no evidence of cartelisation in low bids

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New Delhi | Updated: March 28, 2015 11:28 AM

Cautioning that the allocation of the blocks will depend on the final outcome of the case, the Delhi High Court...

coal block allocation, coal blocks auction, coal block news, coal india, coal ministry, coal auction, coal blocks, Supreme Court, Hindalco, Jindal Power, Usha Martin, business newsDelhi High Court directed Coal India to take charge of two coal blocks in Chhattisgarh as “designated custodian” as an interim measure from April 1. (Reuters)

Cautioning that the allocation of the blocks will depend on the final outcome of the case, the Delhi High Court on Friday directed Coal India Limited (CIL) to take charge of two coal blocks in Chhattisgarh as “designated custodian” as an interim measure from April 1, when the Supreme Court deadline for completing the coal block auction process expires.

The court has also directed Jindal Power Limited (JPL), which had got the rights to the blocks before the Supreme Court had cancelled all allocations, to provide the manpower and equipment to CIL to “ensure continuity in mining” while the cases were being heard.

The directions were issued on a plea filed by JPL, which had placed bids for the Gare Palma IV/2 and Gare Palma IV/3 mines in Chhattisgarh.

On March 20, the Central government had cancelled the auction for the two blocks, on grounds that the final bid price did not reflect a fair price. JPL, in its plea had alleged that the decision was taken as no other company had placed a final bid for the two mines. The government had on March 23 taken the decision to allot the mine to CIL. Both decisions have been challenged by JPL in the Delhi High Court.

Additional Solicitor General PS Narsimha, in his arguments, however, said that the Centre had taken the decision to cancel the auction before any rights had been created in “anyone’s favour”, adding that the nominated authority of the auction, which is an officer of the level of the joint secretary, had only recommended that JPL was the “preferred bidder”, but the ministry had not taken a final decision or conferred any rights on JPL before taking the decision to cancel the auction.

The ASG also told the court that any interim measures, which delayed the hand-over of the mines, would “go in the teeth of the Supreme Court orders” as the apex court has set a deadline of March 31.

During the hearing on Friday, the court of Justice Badar Durrez Ahmed and justice Sanjeev Sachdeva observed that there was “absolutely no evidence of cartelisation” in the bidding process, and pulled up the government for its decision. “The decision that the government is taking is unfair,” observed the court.

The counsel for CIL, senior advocate Sandeep Sethi, however, argued that the government had taken a decision to allot the mines to CIL, and a vested right had been created in CIL, which could not be taken away.

Adjourning the matter for further hearing on April 13, the court has for now directed that “it would be appropriate if CIL functions as custodian akin to the designated custodian contemplated under Section 18 of the Coal ordinance CIL shall utilise the requisite manpower or the petitioner to ensure continuity in mining operations.” The court, however, clarified that the measure was an “interim measure…”

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