Characterising its verdict as futuristic, corrective as well as compensatory, the Supreme Court on Wednesday quashed allocations of 214 out of 218 coal blocks that it had declared as illegal last month. A bench led by Chief Justice of India R M Lodha spared four blocks, two of which were allocations made to the Ultra Mega Power Projects (UMPPs) and two other allocations to the Steel Authority of India Ltd (SAIL) and National Thermal Power Corporation (NTPC).
The court turned down a suggestion by the government to consider saving as many as 46 blocks, either in production or ready to be made operational, after noting that since “these allocations are also illegal and arbitrary, they are also liable to be cancelled”. The four blocks saved are out of these 46. The court took on record the Centre’s alternate stand that it was fully prepared to face the consequences of the cancellation of all coal blocks and was desirous of moving forward.
The bench said the relief to be granted in a case always looks to the future; it is generally corrective and in some cases, compensatory. “The present case takes within its fold all three elements. Our judgment highlighted the illegality and arbitrariness in the allotment of coal blocks and these ‘consequence proceedings’ are intended to correct the wrong done by the Union of India.” “These proceedings look to the future by highlighting the wrong. It is expected that the government will not deal with the natural resources that belong to the country as if they belong to a few individuals, who can fritter them away at their sweet will. These proceedings may also compensate the exchequer for the loss caused to it,” it said.
The bench, also comprising Justices Madan B Lokur and Kurian Joseph, however, gave a “breathing time” of six months for the Coal Indian Ltd (CIL) to take over the blocks, and also to the allottees to manage their affairs on the cancellation. It rejected a contention by a bunch of allottees that the CIL was inefficient and incapable of accepting the challenge, noting that “the central government is confident, as submitted by the learned Attorney General, that the CIL can fill the void and take things forward”. The court accepted AG Mukul Rohatgi’s submission that the allottees must pay an amount of Rs 295 per metric ton of coal extracted as an additional levy, as assessed by the Comptroller and Auditor General. It asked allottees to make the additional payment latest by December 31 and also directed that the coal extracted hereafter till March 31, 2015 will also attract the additional levy. It added that the CBI would go on with its probe regarding the illegalities in the allocation. According to the allottees’ submissions in the court, huge investments of about Rs 2.87 lakh crore had been made in 157 coal blocks as on December 2012 while around Rs 4 lakh crore were at stake in respect of end-use plants. The allottees had also said that loans to the extent of about Rs 2.5 lakh crore given by banks and financial institutions would become non-performing assets if the allocations were scrapped in one stroke. They sought to be heard individually, besides pleading for a committee to decide upon the future course of action. The court nixed their requests, saying the the process of allotment cannot be reopened collaterally through the appointment of a committee since this would amount to nullifying the August 25 judgment which held all allocations as illegal and arbitrary.
“The process is a continuous thread that runs through all the allotments. Since it was fatally flawed, the beneficiaries of the flawed process must suffer the consequences thereof and the appointment of a committee would really amount to permitting a body to examine the correctness of the judgment. This is clearly impermissible,” it noted. It said that the August 25 judgment was delivered after hearing Coal Producers Association, Sponge Iron Manufacturers Association and Independent Power Producers Association of India, and hence it was incorrect to say that these associations, which represented the bulk the allottees or beneficiaries, were not heard.
Indian Express | Sep 25, 2014
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