Supreme Court Declares 218 Coal Block Allocations Illegal, Orders Further Hearing on Consequences
The Supreme Court on Monday declared all 218 coal block allocations made between 1993 and 2011 as illegal and arbitrary. A bench of Chief Justice R.M. Lodha and Justices Madan B. Lokur and Kurian Joseph held that the allocations, recommended by the Screening Committee and made through the government dispensation route, suffered from arbitrariness and legal flaws.
In its 163-page judgment, the court noted that the Screening Committee had been inconsistent and lacked transparency, with no proper application of mind. The Chief Justice observed that guidelines were often honoured more in their breach, and there were no objective criteria for evaluating comparative merits.
The bench clarified that it would consider the consequences of the cancellation on September 1, taking into account investments made by companies and the procedure to be adopted. It also indicated that a committee headed by a retired Supreme Court judge could be appointed to examine the options available.
The court disposed of writ petitions filed by advocate M.L. Sharma and the NGO Common Cause, challenging the allocation of 218 coal blocks, which included 41 de-allocations and re-allocations. The blocks were allocated to 105 private companies, 99 government firms, 12 ultra power projects, and two coal-to-liquid projects.
The bench further noted that the government dispensation route, which allowed public sector undertakings to allocate blocks and form joint ventures, had defeated the legislative policy of the Coal Mines Management Act. However, the court clarified that allocations made through competitive bidding for Ultra Mega Power Projects (UMPPs) might not be cancelled, provided coal is used only for those projects.
The Supreme Court's ruling follows its 2012 order cancelling spectrum allocations. The court expressed concern over the delay in implementing competitive bidding for coal blocks, which could have ensured transparency and a level playing field.
