TaxTMI 
TaxTMI 
2014 (8) TMI 1170
X X X X Extracts X X X X
X X X X Extracts X X X X
....ore Mishra, Kamini Jaiswal and Manohar Lal Sharma, Advs. Party-in-Person For the Respondent : None JUDGMENT R.M. Lodha, C.J.I. 1. Coal is king and paramount Lord of industry is an old saying in the industrial world. Industrial greatness has been built up on coal by many countries. In India, coal is the most important indigenous energy resource and remains the dominant fuel for power generation and many industrial applications. A number of major industrial sectors including iron and steel production depend on coal as a source of energy. The cement industry is also a major coal user. Coal's potential as a feedstock for producing liquid transport fuels is huge in India. Coal can help significant economic growth. India's energy future and prosperity are integrally dependant upon mining and using its most abundant, affordable and dependant energy supply-which is coal. Coal is extremely important element in the industrial life of developing India. In power, iron and steel, coal is used as an input and in cement, coal is used both as fuel and an input. It is no exaggeration that coal is regarded by many as the black diamond. 2. Being such a significant, valuable and....
X X X X Extracts X X X X
X X X X Extracts X X X X
....hearing on 19.11.2012. Since, certain additional issues were raised and additional reliefs were also made in the PIL by Common Cause, this Court issued notice in that matter as well on 19.11.2012. 5. Principally, two prayers have been made in these matters, first, for quashing the entire allocation of coal blocks made to private companies by the Central Government between 1993 and 2012 and second, a court monitored investigation by the Central Bureau of Investigation (CBI) and Enforcement Directorate (ED) or by a Special Investigation Team (SIT) into the entire allocation of coal blocks by the Central Government made between the above period covering all aspects. 6. The present consideration of the matter is confined to the first prayer, i.e., for quashing the allocation of coal blocks to private companies made by the Central Government between the above period. At the outset, therefore, it is clarified that consideration of the present matter shall not be construed, in any manner, as touching directly or indirectly upon the investigation being conducted by CBI and ED into the allocation of coal blocks. 7. The first counter affidavit was filed by the Central Government on ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....cks located in the State. 9. In pursuance of the above, 7 States have filed their responses. 10. The arguments re-commenced on 05.12.2013. On that day, arguments of the States of Jharkhand, Chhattisgarh and Odisha were concluded and matters were fixed for 08.01.2014. On 08.01.2014, the arguments on behalf of the States of Maharashtra, Andhra Pradesh, Madhya Pradesh and West Bengal were concluded and the matters were fixed for 09.01.2014. On that day, arguments of learned Attorney General were concluded. 11. Three Associations, viz., Coal Producers Association, Sponge Iron Manufacturers Association and Independent Power Producers Association of India have made applications for their intervention stating that these associations represented large number of allottees who have been allocated subject coal blocks. Accordingly, Mr. K.K. Venugopal, learned senior counsel was heard for Coal Producers Association and Mr. Harish N. Salve, learned senior counsel was heard on behalf of the Sponge Iron Manufacturers Association and Independent Power Producers Association of India. They commenced their arguments on 09.01.2014, which continued on 15.01.2014 and concluded on 16.01.2014. The....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ny mineral specified in the First Schedule, no reconnaissance permit, prospecting licence or mining lease shall be granted except with the previous approval of the Central Government. Coal and Lignite are at item No. 1 in Part A under the title "Hydro Carbons/Energy Minerals" in the First Schedule appended to the 1957 Act. 18. Section 6 provides for maximum area for which a prospecting licence or mining lease may be granted. Section 7 makes provisions for the periods for which prospecting licence may be granted or renewed and Section 8 provides for periods for which mining leases may be granted or renewed. Section 10 provides that application for reconnaissance permit, prospecting licence or mining lease in respect of any land in which the minerals vest in the Government shall be made to the State Government concerned, inter alia, it empowers the State Government concerned to grant or refuse to grant permit, licence or lease having regard to the provisions of the 1957 Act or the Mineral Concession Rules, 1960 (for short '1960 Rules'). 19. Section 11 provides for preferential right of certain persons. Sub-section (1) of Section 11 makes a provision that where a reconna....
X X X X Extracts X X X X
X X X X Extracts X X X X
....0. Section 13 empowers the Central Government to make rules in respect of minerals. By virtue of the power conferred upon the Central Government Under Section 13(2), the 1960 Rules have been framed for regulating the grant of, inter alia, mining leases in respect of minerals and for purposes connected therewith. 21. By virtue of Section 17, the Central Government has been given special powers to undertake prospecting or mining operations in certain lands. Section 17-A authorises the Central Government to reserve any area not already held under any prospecting licence or mining lease with a view to conserve any mineral and after consultation with the State Government by notification in the Official Gazette. 22. Section 18 indicates that it shall be the duty of the Central Government to take all such steps as will be necessary for the conservation and systematic development of minerals in India and for the protection of the environment by preventing or controlling any pollution which may be caused by prospecting or mining operations and for such purposes the Central Government may, by notification in the Official Gazette, make such rules as it thinks necessary. 23. Section 1....
X X X X Extracts X X X X
X X X X Extracts X X X X
....f the area applied for. But that has to be done after giving an opportunity of being heard and for reasons to be recorded in writing and communicated to the applicant. 28. Rule 31 provides for time within which lease is to be executed where an order has been made for grant of such lease on an application. Rule 34 provides for manner of exercise of preferential rights for mining lease. 29. Rule 35 provides that where two or more persons have applied for a reconnaissance permit or a prospecting licence or a mining lease in respect of the same land, the State Government shall, for the purpose of Sub-section (2) of Section 11, consider besides the matters mentioned in Clauses (a) to (d) of Sub-section (3) of Section 11, the end use of the mineral by the applicant. 30. In short, the 1957 Act provides for general restrictions on undertaking prospecting and mining operations, the procedure for obtaining prospecting licences or mining leases in respect of lands in which the minerals vest in the government, the rule-making power for regulating the grant of prospecting licences and mining leases, special powers of Central Government to undertake prospecting or mining operations in c....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e., 01.05.1973) the right, title and interest of the owners in relation to the coal mines specified in the Schedule shall stand transferred to, and shall vest absolutely in the Central Government free from all encumbrances. Section 4(1) provides that where the rights of an owner under any mining lease granted, or deemed to have been granted, in relation to a coal mine, by a State Government or any other person, vest in the Central Government Under Section 3, the Central Government shall, on and from the date of such vesting, be deemed to have become the lessee of the State Government or such other person, as the case may be, in relation to such coal mine as if a mining lease in relation to such coal mine had been granted to the Central Government. The period of such lease is to be the entire period for which the lease could have been granted by the Central Government or such other person under the 1960 Rules and thereupon all the rights under the mining lease granted to the lessee are to be deemed to have been transferred to, and vested in, the Central Government. By Section 4(2) on the expiry of the term of any lease referred to in Sub-section (1), the lease, at the option of the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....l Act. Under Clause (a) of the newly introduced Sub-section (3) of Section 3, on and from the commencement of Section 3 of the 1976 Nationalisation Amendment Act, no person other than (i) Central Government or a Government company or a corporation owned, managed or controlled by the Central Government or (ii) a person to whom a sub-lease, referred to in the proviso to Clause (c) has been granted by any such Government, company or corporation or (iii) a company engaged in the production of iron and steel, shall carry on coal mining operation, in India in any form. Under Clause (b) of Sub-section (3), excepting the mining leases granted before the 1976 Nationalisation Amendment Act in favour of the Government company or corporation referred to in Clause (a), and any sub-lease granted by any such Government, Government company or corporation, all other mining leases and sub-leases in force immediately before such commencement shall insofar as they relate to the winning or mining of coal, stand terminated. Clause (c) of the newly introduced Sub-section (3) of Section 3 provides that no lease for winning or mining coal shall be granted in favour of any person other than the Government, ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... for other industries who would be handed over coal mines for captive end use. Washeries have to be encouraged in the private sector also to augment the availability of washed coal for supply to steel plants, power houses, etc. Under the Coal Mines (Nationalisation) Act, 1973, coal mining is exclusively reserved for the public sector, except in case of companies engaged in the production of iron and steel, and mining in isolated small pockets not amenable to economical development and not requiring rail transport. In order to allow private sector participation in coal mining for captive use for purpose of power generation as well as for other captive end uses to be notified from time to time and to allow the private sector to set up coal washeries, it is considered necessary to amend the Coal and Coal Mines (Nationalisation) Act, 1973. The Coal Mines (Nationalization) Amendment Bill, 1992 seeks to achieve the aforesaid objectives. 37. Section 3 of the CMN Act was amended and thereby in Clause (a) of Sub-section (3) for item (iii), the following was substituted, namely, (iii) a company engaged in- (1) the production of iron and steel, ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s for captive consumption towards generation of power and other end use, which may be notified by Government from time to time". The Cabinet in the meeting held on 19.02.1992 considered the above Cabinet note and it was decided that the proposal may be brought up only when specific projects of private sector participation in coal mining come to the Government for consideration. Subsequently, another Cabinet note dated 23.04.1992 was placed before the Cabinet containing references to certain private projects like the two 250 MW thermal power plants of RPG Enterprises, which had been recommended by the Government of West Bengal. The proposal contained in the Cabinet note dated 23.04.1992 was approved by the Cabinet on 05.05.1992. On 15.07.1992, the Bill for amendment of Section 3(3) of CMN Act was introduced in Rajya Sabha and the same was passed on 21.07.1992. The Bill was passed in Lok Sabha on 19.04.1993 and got assent of the President on 09.06.1993. 41. The Central Government has highlighted that once Section 3(3) of the CMN Act was amended to permit private sector entry in coal mining operations for captive use, it became necessary to select the coal blocks that could be offe....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s of the 1957 Act in any manner, firstly, because Section 1A of CMN Act is in addition to and not in derogation of the 1957 Act; secondly, an application for allocation of a coal block is not dealt with by the provisions of the 1957 Act; and thirdly, after allocation, the allocatee has to make an application for grant of mining lease or prospecting licence to the State Government in accordance with the 1957 Act and the 1960 Rules. It is for these reasons, he submits, that none of the States nor any private person ever challenged the grant of allocation by the Central Government on the ground that the Central Government was not empowered to allocate the coal blocks. 45. The above arguments of the learned Attorney General are vehemently contested by Mr. Prashant Bhushan, learned Counsel for Common Cause. He submits that under the provisions of CMN Act only two kinds of entities (a) Central Government and undertakings/corporations owned by the Central Government; and (b) companies having end-use plants in iron and steel, power, cement, etc., could work the coal mines. He submits that the CMN Act does not, in any way, give the power of calling applications, selection and allocation ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....7 Act) by the State Government and that procedure is to ensure that a lease is granted to a company engaged in stipulated permissible activities by making it a two step process, viz., the issue of letter of allotment conditional upon the end-use plant, followed by grant of a lease once end usage is achieved. He submits that Section 3(3) of the CMN Act is fully satisfied where a lease is granted to a company which engages in the permissible activity. Learned senior counsel for the interveners fully supports the arguments of the learned Attorney General that the Central Government has the power to identify the beneficiary of an allotment and once the Central Government has identified the beneficiary of allotment, the State will be obliged to grant a lease if other conditions are satisfied. 48. Mr. K.K. Venugopal, learned senior counsel appearing for Coal Producers Association argues that having regard to the declaration made Under Section 2 of the 1957 Act and the declaration Under Section 1A of the CMN Act and so also Section 3(3) thereof, it is perfectly legitimate for the Central Government to exercise its power and jurisdiction in the manner it has done for the purpose of sele....
X X X X Extracts X X X X
X X X X Extracts X X X X
....pics of "mines and minerals development". The only fetter imposed on the State Legislatures under Entry 23 is by the latter part of the said entry which says, "subject to the provisions of List I with respect to Regulation and development under the control of the Union". In other words, the State Legislature loses its jurisdiction to the extent to which the Union Government had taken over control, the Regulation of mines and development of minerals as manifested by legislation incorporating the declaration and no more. If Parliament by its law has declared that Regulation of mines and development of minerals should in the public interest be under the control of the Union, which it did by making declaration in Section 2 of the 1957 Act, to the extent of such legislation incorporating the declaration, the power of the State Legislature is excluded. The requisite declaration has the effect of taking out Regulation of mines and development of minerals from List II Entry 23 to that extent. It needs no elaboration that to the extent to which the Central Government had taken under "its control" "the Regulation of mines and development of minerals" under the 1957 Act, the States had lost t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tracted from the legislative competence of the State Legislature. The requisite declarations have the effect of taking out Regulation and development of coal mines from List II Entry 23. To that extent, the States have lost their legislative competence. 52. In Baijnath Kadio v. State of Bihar [(1969) 3 SCC 838] the Constitution Bench referred to two earlier decisions of this Court in Hingir-Rampur Coal Co. Ltd. v. State of Orissa [AIR 1961 SC 459 : (1961) 2 SCR 537] and State of Orissa v. M.A. Tulloch and Co. [AIR 1964 SC 1284 : (1964) 4 SCR 461]. While dealing with declaration contained in Section 2 of the 1957 Act, the Court stated in para 14, page 847 of the Report, as follows: 14. The declaration is contained in Section 2 of Act 67 of 1957 and speaks of the taking under the control of the Central Government the Regulation of mines and development of minerals to the extent provided in the Act itself. We have thus not to look outside Act 67 of 1957 to determine what is left within the competence of the State Legislature but have to work it out from the terms of that Act........... 53. In Sandur Manganese and Iron Ores Ltd. v. State of Karnataka [(2010) 13 SCC 1], t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....-section (3), excepting the mining leases granted before 1976 in favour of the Government, Government company or corporation referred to in Clause (a) and any sub-lease(s) granted by any such Government, Government company or corporation, all other mining leases and sub-leases in force immediately before such commencement insofar as they relate to the winning or mining of coal stand terminated. When a sub-lease stands terminated under Sub-section (3), Sub-section (4) of Section 3 provides that it shall be lawful for the Central Government or the Government company or corporation owned or controlled by the Central Government to obtain a prospecting licence or a mining lease in respect of whole or part of the land covered by mining lease which stands so terminated. The above provisions in the CMN Act, as inserted in 1976, clearly show that the target of these provisions in the CMN Act is coal mines, pure and simple. CMN Act effectively places embargo on granting the leases for winning or mining of coal to persons other than those mentioned in Section 3(3)(a). Does CMN Act for the purposes of Regulation and development of mines to the extent provided therein alter the legal regime inc....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... subject to the prescription Under Sections 3(3) and 3(4), continues to apply in full rigour. Mr. Harish N. Salve, learned senior counsel for the interveners, is not right in his submission that allocation letter issued by the Central Government is the procedure which regulates the exercise Under Rule 22 of the 1960 Rules. Had that been so, some provisions to that effect would have been made in the CMN Act or the 1960 Rules framed thereunder but there is none. 59. The submission of the learned Attorney General that the 7 States-Maharashtra, Madhya Pradesh, Chhattisgarh, Odisha, Jharkhand, Andhra Pradesh and West Bengal-which have coal deposits, have accepted and acknowledged the source of power of the Central Government with regard to allocation of coal blocks is not fully correct. Odisha has strongly disputed that position. Odisha's stand is that the system of allocation of coal blocks by the Central Government is alien to the legal regime under the CMN Act and the 1957 Act. It is true that many of these States have taken the position that allocation letter confers a right on such allottee to get mining lease and the only role left with the State Government is to carry out ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed to apply to the State Government for grant of Prospecting Licence in case of an unexplored block, or a Mining Lease in case of an explored block. b. On receipt of the application for grant of Prospecting License or Mining Lease, as the case may be, the State Government, in the case of Prospecting Licence can process the application for Prospecting Licence in accordance with Chapter III of the 1960 Rules. c. In the case of application for Mining Lease (in Form I), the State Government has to take a decision to grant precise area for the purpose of the lease and communicate such decision to the applicant. d. On receipt of the communication from the State Government of the precise area to be granted, the applicant is required to submit a mining plan to the Central Government for its approval. [Rule 22(4)] e. After the mining plan has been duly approved by the Central Government, the applicant submits the same to the State Government for grant of mining lease over the area. f. After receipt of the duly approved mining plan, the State Government makes a proposal for grant of prior consent by the Central Government in terms of the proviso t....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 3(3)(a) of the CMN Act. 62. In Tara Prasad Singh and Ors. v. Union of India and Ors. [(1980) 4 SCC 179], a seven Judge Constitution Bench while dealing with the purposiveness of the CMN Act, as amended in 1976, vis-a-vis the 1957 Act, stated that nothing in this Act (CMN) could be construed as a derogation of the principle enunciated in Section 18 of the 1957 Act. The Court said: Therefore, even in regard to matters falling under the Nationalisation Amendment Act which terminates existing leases and makes it lawful for the Central Government to obtain fresh leases, the obligation of Section 18 of the Act of 1957 will continue to apply in its full rigour. As contended by the learned Solicitor General, Section 18 contains a statutory behest and projects a purposive legislative policy. The later Acts on the subject of Regulation of mines and mineral development are linked up with the policy enunciated in Section 18. (Emphasis supplied by us) 63. The observations made by this Court in Tara Prasad Singh and Ors. v. Union of India and Ors. [(1980) 4 SCC 179] about interplay between the CMN Act and the 1957 Act with reference to the policy enunciated in Section 18....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tutory provisions but it is equally well settled that the executive instructions cannot be in derogation of the statutory provisions. The practice and procedure for allocation of coal blocks by the Central Government through administrative route is clearly inconsistent with the law already enacted or the rules framed. 66. The principle of Contemporanea Expositio was pressed into service by the learned Attorney General and the learned senior counsel for interveners. It is argued that the Ministries of Central Government, the State Governments and all concerned have understood the declaration Under Section 1A read with Section 3 of the CMN Act recognizing that the selection of beneficiaries through allocation letter is the task of the Union. The exposition of the legal position by them must be accepted as there is nothing to show that the exposition in respect of allocation of coal blocks received by the Central Government, State Governments and all concerned was clearly wrong. In this regard, reliance has been placed on the decision of this Court in Desh Bandhu Gupta and Company v. Delhi Stock Exchange Association Ltd. [(1979) 4 SCC 565]. 67. In Desh Bandhu Gupta and Co. v. De....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Of course, even without the aid of these two documents which contain a contemporaneous exposition of the Government's intention, we have come to the conclusion that on a plain construction of the notification the proviso permitted the closing out or liquidation of all outstanding transactions by entering into a forward contract in accordance with the rules, bye-laws and Regulations of the Respondent. 68. The above is consistent view. In our view, an interpretation to the statute received from contemporary authority is not binding upon the courts and may have to be disregarded if such interpretation by the contemporary authority is clearly wrong. The process evolved by the Central Government for allocation of coal blocks for captive use has significantly and effectively reversed the scheme provided in the 1957 Act inasmuch as in most of the cases the applications have been made directly to the Central Government. West Bengal has stated that in some cases, they had knowledge of such applications and in some cases the State Government had no such knowledge. Then once allocation letter has been issued by the Central Government, virtually no power remains with the State....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ion letter by itself does not authorize the allottee to win or mine the coal but nevertheless the allocation letter does confer a very important right upon the allottee to apply for grant of prospecting licence or mining lease. As a matter of fact, it is admitted by the interveners that allocation letter issued by the Central Government provides rights to the allottees for obtaining the coal mines leases for their end-use plants. The banks, financial institutions, land acquisition authorities, revenue authorities and various other entities and so also the State Governments, who ultimately grant prospecting licence or mining lease, as the case may be, act on the basis of the letter of allocation issued by the Central Government. As noticed earlier, the allocation of coal block by the Central Government results in the selection of beneficiary which entitles the beneficiary to get the prospecting licence and/or mining lease from the State Government. Obviously, allocation of a coal block amounts to grant of largesse. 71. Learned Attorney General accepted the position that in the absence of allocation letter, even the eligible person Under Section 3(3) of the CMN Act cannot apply to....
X X X X Extracts X X X X
X X X X Extracts X X X X
....pression "engaged in" in Section 3(3)(a)(iii) means that the company that was applying for the coal block must have set up an iron and steel plant, power plant or cement plant and be engaged in the production of steel, power or cement. Most companies were silent in their applications as to whether or not the power, steel or cement plant was operational. They only stated that they proposed to set up such plants. Moreover, from 2006 even the requirement of end-use project was done away with and the Central Government allowed companies to apply and obtain coal blocks, and it was stated that the coal mined from these blocks would be transferred to an end-user company. Thus, the basic minimum statutory requirements were not adhered to and followed in making allocation of coal blocks. 74. It is submitted on behalf of the PIL Petitioners that the allocation of those blocks which had reserves far in excess of requirement for the end-use project was made which demonstrates the total non-application of mind and arbitrariness in the decision making process. Mr. Prashant Bhushan, learned Counsel for Common Cause and Mr. Manohar Lal Sharma, Petitioner-in-person submit that the allocation of ....
X X X X Extracts X X X X
X X X X Extracts X X X X
...., Petitioner-in-person that such allocations were violative of Section 3 of the CMN Act. The State Government undertakings are not included in Section 3 and in any case allocation to them could have been made only if they were engaged in any of the end-uses specified Under Section 3(3)(a)(iii) of the CMN Act. The State PSUs have signed agreements with private companies under which substantial benefits or interest from the coal blocks had accrued to the private companies thereby causing huge loss to the public exchequer and windfall gain to the private companies. The PIL Petitioners, therefore, vehemently argued that the allocation of coal blocks deserves to be quashed being non-transparent, arbitrary, illegal and unconstitutional. 77. According to Central Government, the need for a Screening Committee was felt because development of coal mines for captive end-uses required consideration of inputs from a variety of stakeholders such as the Ministry of Coal, Ministry of Railways, the concerned State Government (owner of the coal block), the concerned Administrative Ministry like Ministry of Power (for inputs pertaining to the end use plant) and Coal India Limited (to protect CIL&#....
X X X X Extracts X X X X
X X X X Extracts X X X X
....en allocated in accordance with the recommendations of the State Governments. Besides the benefits and investment to the State in which coal blocks and the associated end-use plants are located, learned Attorney General also submits that there are number of States where coal blocks are not located, which have got benefits due to the substantial investment in associated end use plants. For instance, it is submitted that blocks in Maharashtra, namely, Baranj-I to IV, Kiloni and Manora Deep were allocated to Karnataka Power Corporation for captive use in its power generation plants. The end-use is the supply of coal to Bellary Thermal Power Station (in Karnataka) which is supplying 1000 MW power to the State grid. 80. Learned Attorney General for the sake of convenience divided the allocations recommended by the Screening Committee for the period between 14.07.1993 and 03.07.2008 in 36 meetings into four periods: first period between 14.07.1993 to 19.08.2003 (1st meeting till the 21st meeting); second period from 04.11.2003 to 18.10.2005 (22nd meeting to 30th meeting); third period from 29/30.06.2006 to 07/08.09.2006 (32nd meeting till the 34th meeting) and the fourth period from 2....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ate participants, the idea of the Central Government was to encourage the private sector so that they could come forward and invest. Allocation of coal blocks by public auction in such a scenario would have been impractical and unrealistic. As a matter of fact, he would submit that when the proposal for introduction of competitive bidding was first mooted in June, 2004, the State Governments expressed their reservations and concerns. In this regard, learned Attorney General referred to the letters sent by the Governments of Chhattisgarh, West Bengal, Rajasthan and Odisha. Learned Attorney General submits that the concerns of the State Governments could not have been brushed aside by introducing competitive bidding by an administrative fiat. Moreover, according to the learned Attorney General, competitive bidding could have resulted in increase in the input price which would have a cascading effect. 82. From the above submissions, the following questions fall for determination: (i) Whether the allocation of coal blocks ought to have been done only by public auction? (ii) Whether the allocation of coal blocks made on the basis of recommendations of the Screening ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....blic property owned by the State or by an instrumentality of State should be generally sold by public auction or by inviting tenders. It was emphasized that this rule has been insisted upon not only to get the highest price for the property but also to ensure fairness in the activities of the State and public authorities and to obviate the factors like bias, favoritism or nepotism. Clarifying that this is not an invariable rule, the Court reiterated that departure from the rule of auction could be made but then it must be justified. 87. The above principle is again stated by this Court in M.P. Oil Extraction and Anr. v. State of M.P. and Ors. [ (1997) 7 SCC 592], in which this Court said that distribution of largesse by inviting open tenders or by public auction is desirable but it cannot be held that in no case distribution of such largesse by negotiation is permissible. 88. In Netai Bag and Ors. v. State of West Bengal and Ors. [ (2000) 8 SCC 262] this Court said that when any State land is intended to be transferred or the State largesse is decided to be conferred, resort should be had to public auction or transfer by way of inviting tenders from the people as that would b....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ers. intra vires the Constitution of India, especially Article 14? (ii) Can disposal through the method of auction be elevated to a constitutional principle? (iii) Is this Court entitled to direct the executive to adopt a certain method because it is the "best" method? If not, to what extent can the executive deviate from such "best" method? 93. The Constitution Bench clarified that the statement of law in Centre for Public Interest Litigation and Ors. v. Union of India and Ors. [(2012) 3 SCC 1] that while transferring or alienating the natural resources, the State is duty bound to adopt the method of auction was confined to the specific case of spectrum and not for dispensation of all natural resources. The Constitution Bench said that findings of this Court in Centre for Public Interest Litigation and Ors. v. Union of India and Ors. [(2012) 3 SCC 1] were limited to the case of spectrum and not beyond that and that it did not deal with the modes of allocation for natural resources other than spectrum. 94. The Constitution Bench while dealing with the aspect of disposal of natural resources other than auction, divided the consideration of this aspect under t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n a specific industry. 131. Similar deviation from auction cannot be ruled out when the object of a State policy is to promote domestic development of an industry, like in Kasturi Lal's case, discussed above. However, these examples are purely illustrative in order to demonstrate that auction cannot be the sole criteria for alienation of all natural resources. 95. While dealing with the argument that even if the method of auction was not a mandate under Article 14, it must be the only permissible method due to the susceptibility of other methods to abuse, the Court under the head "Potential of abuse" held that a potential for abuse cannot be the basis for striking down the method as ultra vires the Constitution. The Court noted two decisions of this Court in R.K. Garg v. Union of India and Ors. [(1981) 4 SCC 675] and D.K. Trivedi and Sons and Ors. v. State of Gujarat and Ors. [ 1986 Supp SCC 20] and held that neither auction nor any other method of disposal can be held ultra vires the Constitution merely because of a potential abuse. The Constitution Bench (para 135, pgs. 93-94) stated as under: 135. Therefore, a potential for abuse cannot be the basis for ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....urt lacks the necessary expertise to make them. As has been repeatedly said, it cannot, and shall not, be the endeavour of this Court to evaluate the efficacy of auction vis-a-vis other methods of disposal of natural resources. The Court cannot mandate one method to be followed in all facts and circumstances. Therefore, auction, an economic choice of disposal of natural resources, is not a constitutional mandate. We may, however, hasten to add that the Court can test the legality and constitutionality of these methods. When questioned, the courts are entitled to analyse the legal validity of different means of distribution and give a constitutional answer as to which methods are ultra vires and intra vires the provisions of the Constitution. Nevertheless, it cannot and will not compare which policy is fairer than the other, but, if a policy or law is patently unfair to the extent that it falls foul of the fairness requirement of Article 14 of the Constitution, the Court would not hesitate in striking it down. 147. Finally, market price, in economics, is an index of the value that a market prescribes to a good. However, this valuation is a function of several dynamic variab....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... one of the several price recovery mechanisms, cannot be held to be the only constitutionally recognised method for alienation of natural resources. That should not be understood to mean, that it can never be a valid method for disposal of natural resources........... 98. In Natural Resources Allocation, In re, Special Reference No. 1 of 2012 : [(2012) 10 SCC 1], the Constitution Bench said that reading auction as a constitutional mandate would be impermissible because such an approach may distort another constitutional principle embodied in Article 39(b). In the main judgment, with reference to Article 39(b), the Court stated as follows: 113......The disposal of natural resources is a facet of the use and distribution of such resources. Article 39(b) mandates that the ownership and control of natural resources should be so distributed so as to best subserve the common good. Article 37 provides that the provisions of Part IV shall not be enforceable by any court, but the principles laid down therein are nevertheless fundamental in the governance of the country and it shall be the duty of the State to apply these principles in making laws. Therefore, this Article, in a s....
X X X X Extracts X X X X
X X X X Extracts X X X X
....y constitutional yardstick-it would depend on the economic and political philosophy of the Government. Revenue maximisation is not the only way in which the common good can be sub-served. Where revenue maximisation is the object of a policy, being considered qua that resource at that point of time to be the best way to subserve the common good, auction would be one of the preferable methods, though not the only method. Where revenue maximisation is not the object of a policy of distribution, the question of auction would not arise. Revenue considerations may assume secondary consideration to developmental considerations. 120. Therefore, in conclusion, the submission that the mandate of Article 14 is that any disposal of a natural resource for commercial use must be for revenue maximisation, and thus by auction, is based neither on law nor on logic. There is no constitutional imperative in the matter of economic policies-Article 14 does not predefine any economic policy as a constitutional mandate. Even the mandate of Article 39(b) imposes no restrictions on the means adopted to subserve the public good and uses the broad term "distribution", suggesting that the methodology....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... mooted in June, 2004, the State Governments expressed their reservations based on diverse concerns. The Government of Chhattisgarh inter alia pointed out that (a) competitive bidding would result in substantial increase in the cost of coal for iron/steel undertakings, (b) there were large number of projects under implementation whose viability is based on availability of coal as per the then existing policy, (c) competitive bidding would raise the price of domestic coal, which would result in end-use projects in inland States like Chhattisgarh becoming unviable due to additional costs by transporting coal by rail/road, and (d) competitive bidding would result in only the bigger players getting the coal blocks. The Government of West Bengal opposed the introduction of competitive bidding because (a) the then existing system could accommodate both subjective and objective aspects of the projects whereas competitive bidding would only lead to coal blocks going to the highest bidder, (b) competitive bidding would not allow priority being accorded to the power sector, (c) competitive bidding would result in views of the State Governments becoming redundant, and (d) competitive bidding ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....xisting policy. He suggested that the policy of allotment through competitive bidding could be made prospective and pending applications might be decided on the basis of existing policy. 104. Then, there appears to be exchange of notes and discussion at various levels on the question whether CMN Act needed to be amended before the proposed competitive bidding becomes operational or 1957 Act so that the system of competitive bidding could be made applicable to all minerals covered under the said Act. The opinion of Department of Legal Affairs was also sought. In 2006, it appears that Ministry of Coal communicated to the PMO and Cabinet Secretariat that Ministry of Law and Justice has advised Ministry of Coal to initiate suitable measures for amendment in the 1957 Act for addressing the issue of competitive bidding. A Bill to amend the 1957 Act was introduced in the Parliament by the Ministry of Mines. The Amendment Bill was then referred to Standing Committee on Coal and Steel for examination and for its report. On receipt of the report from the Standing Committee in 2009, the MMDR Amendment Bill, 2008 was passed by both the Houses of Parliament in 2010 and ultimately Section 11A....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... from 1993 to 31.03.2011, 216 allocations have been made. In the course of arguments, learned Attorney General submitted that in addition to 216, 2 coal blocks for Coal to Liquid (CTL) projects were also allocated. According to said affidavit, out of 216 allocations, 105 allocations were made to private companies, 99 allocations were made to Government companies and 12 allocations were made to Ultra Mega Power Projects (UMPPs) and that after adjusting 24 de-allocations and 2 re-allocations, a total number of 194 allocations, including allocations to private parties, form the subject matter of the writ petitions. In the course of arguments, however, learned Attorney General submitted that total 41 de-allocations have already been ordered. 107. In the first counter affidavit filed on 22.01.2013, the Central Government has also given the details of the procedure adopted for allocation of the above coal blocks, in which it is stated that the allocations to the private companies were made through the Screening Committee route. As regards allocations made to Government companies, before 2001, allocations were made only through the Screening Committee route but on and from 2001, alloca....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... (i) Preferably blocks in green field areas where basic infrastructure like road, rail links, etc. is yet to be developed should be given to the private sector. The areas where CIL has already invested in creating such infrastructure for opening new mines should not be handed over to the private sector, except on reimbursement of costs. (ii) The blocks offered to private sector should be at reasonable distance from existing mines and projects of CIL in order to avoid operational problems. (iii) Blocks already identified for development by CIL, where adequate funding is on hand or in sight should not be offered to the private sector. (iv) Private sector should be asked to bear full cost of exploration in these blocks which may be offered. (v) While discussing proposals of power generating companies and identifying blocks the requirement of coal for 30 years would be considered. 111. In its 2nd meeting held on 13.08.1993, the Screening Committee accepted that any addition to generation of power, whether captive or utility, amounted to value addition and, therefore, no distinction would be made between the two. 112. In the 3rd meeting held on ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... allocated to M/s. Jindal Strips Ltd. 116. In the 7th meeting held on 06.06.1995, the Chairman felt the need for fixing certain time limit and laying down corresponding milestones otherwise there would be a tendency on the part of developer of the mining block to proceed in a casual manner with the result that the coal production would not be realized within the required time frame. It was decided that once the blocks are identified, the party concerned should complete necessary formalities and should be able to apply for lease within 6 months. In continuation of earlier meetings, the Screening Committee further considered the proposal of M/s. RPG Industries Ltd. for identification of coal mining blocks for supply of coal to the proposed Budge-Budge TPS, Balagarh TPS and Dholpur TPS. In the said meeting, the proposals of M/s. West Bengal State Electricity Board and M/s. Videocon Power Ltd. were also considered. 117. In the 8th meeting held on 04.10.1995, the proposal of M/s. Steel Authority of India Limited for captive blocks in Jharia coalfields was discussed. The Committee decided to identify Parbatpur, Mahal, Sitanala and Tasra blocks located in Jharia Coalfields for capti....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... mining blocks allotted to them and requested that a block nearer to the other two blocks, i.e., Baranj and Lohara West may be considered for allotment by the Committee. Accordingly, the Committee decided to allocate Monora Deep Block, which is adjacent to Baranj and Lohara Extn. (which is adjacent to Lohara West) to M/s. Nippon Denko Ispat Ltd. The Committee also discussed the proposals which were considered earlier but no final decision could be taken. The Committee decided that Utkal 'C' block in Talcher coalfield having geological reserves of about 190 m.t. may be considered for allotment to M/s. Indian Charge Chrome Ltd. for two additional captive power plants at Choudwar, Orissa. It is pertinent to mention that the Committee found that the total requirement for all the three units would be about 2.36 m.t. and for a life of 30 years, it would work out to be 71 m.t. The Committee, however, proposed allocation of Utkal 'C' block having geological reserves of about 190 m.t. In that meeting, Takli-Jena-Bellora block was allotted to M/s. Lloyds Metals and Engineers Ltd. and the company was directed to obtain mining lease within six months of issue of these minutes. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....lock. It was also stated that the Kilhoni block being adjacent to Baranj block would be more practicable for them to mine the reserves whereas WCL would have to develop the block as an isolated project. The Government of Maharashtra strongly supported the allocation of Kilhoni block to the company. The Director (Technical), CIL and CMD, WCL indicated that the Kilhoni block was likely to be taken up in the 11th plan period and pointed out some unique geographical and man-made features of the block which, according to them, would make the project both cost and time intensive, resulting in very high cost for WCL. The Committee felt that Nippon would be better placed to tackle these problems. It was finally decided that M/s. Nippon Denro Ispat Ltd. will work Baranj I-IV, Manora Deep and Kilhoni Blocks for mining coal for Bhadravati TPS, Lohara West and Lohara West Extension blocks will be withdrawn from the party and no further request for change or modification of blocks made by the party will be considered. 123. The Committee had decided in the 12th meeting to allocate southern portion of Takli-Jena-Bellora block to M/s. Central Collieries Company Ltd. In the 13th meeting, the rep....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ect to the condition that the party must achieve financial closure within one year of allotment of the block, failing which the allotment will be withdrawn. 124.3. As regards the proposal of M/s. Jayaswal Neco Ltd. for their Sponge Iron Plant, the party had earlier requested for Gare-Palma IV/6 and IV/7 blocks for meeting their Sponge Iron Plant and a captive power plant. Now, they requested for allocation of IV/4 and IV/8 blocks as the same have been withdrawn from other firms. Accordingly, the same were allotted to M/s. Jayaswal Neco Ltd. 124.4. The Brahmadiha block was allotted to M/s. Castron Technology in the 14th meeting. The Committee noted that the mine did not fit in the criteria of captive block as per its latest guidelines, but decided to make the allocation in view of the fact that the reserves could either be permitted to be exploited by a private party or lost forever. 125. In the 15th meeting held on 06.03.2000, M/s. Jindal Strips Ltd. had submitted a request for a block in Talcher coalfield to meet the requirement of sponge iron plant of 2 m.t. capacity. In January, 2000, the party made an application for allocation of Utkal D block in MCL having geological....
X X X X Extracts X X X X
X X X X Extracts X X X X
....6. In the 16th meeting held on 31.05.2001, M/s. Orissa Mining Corporation Ltd. was allotted Utkal D block for generation of power through Orissa Power Generation Corporation. 127. In the 17th meeting held on 28.11.2001, the request of M/s. GVK Power Gowindal Sahib Ltd. for allotment of Tokusud coal block for their proposed 2 x 250 MW power plant was considered and Tokusud North block was allotted to them. 128. In the 18th meeting held on 05.05.2003, the Screening Committee, for the first time, considered the issue of determining inter se merit of applicants for the same block as well as certain other issues to bring in transparency and felt that guidelines for determining inter se priority among claims for blocks between public sector and private sector for captive use and between public sector for non-captive use and private sector for captive use need to be evolved. The Chairman of the Committee put the following few general guidelines for consideration: (i) The blocks in captive list should be allocated to an applicant only after the same have been put in the pubic domain for a reasonable time and not immediately upon their inclusion in the list of block identifie....
X X X X Extracts X X X X
X X X X Extracts X X X X
....subject to the applicant company achieving the project milestones submitted by them to the Committee, and after financial closure is achieved. 130.1. In that meeting, M/s. Jindal Steel and Power Limited requested for allocation of Utkal B-1 block for their sponge iron production, 200 MW of captive power generation, steel plant and ferro alloy plants to be set up in two phases. The Screening Committee decided to allocate Utkal B-1 block to that company for exclusive and captive use of the entire coal produced from the block in their own project in the end-use plants. 130.2. M/s. Usha Beltron Ltd. requested for allocation of a block for their sponge iron and power plant. CIL had recommended allocation of Kathautia UG block for their expansion project. Accordingly, the Committee allocated the same subject to the existing linkages of coal from CIL continuing. 130.3. The Committee also discussed the proposals of M/s. Shyam DRI Power Ltd. for allocation of Radhikapur block and M/s. Neepaz Metalicks Pvt. Ltd. for allocation of Patrapara block. In both the cases, it was found that the size of the block is larger in comparison to the need. However, the applicants stated that while ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....om the 1st meeting (held on 14.07.1993) to the 21st Meeting (held on 19.08.2003), the guidelines did not deal with the subject of determining inter se priority between applicants. 133. As regards 26 coal blocks allocated to private companies pursuant to the recommendations of the Screening Committee for the period from 04.11.2003 (22nd meeting) and 18.10.2005 (30th meeting), the Attorney General submits that the Screening Committee had devised guidelines to determine inter se priority amongst applicants for the same block. It is also submitted that the recommendations were made by the Screening Committee after consideration of each application and assessment of each applicant's merits in terms of the criterion laid down in the guidelines. 134. The counter affidavit filed by the Central Government on 22.06.2013 at pages 102-159 deals with this period. The compilation (Volume 3-B) contains materials relating to recommendations made by the Screening Committee for allocation of coal blocks to private companies pursuant to its 22nd meeting to 30th meeting held between 04.11.2003 and 18.10.2005. It transpires from the materials placed on record that there was boom in the iron a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....allocation of Brinda, Sisai, Dumri, Meral and Lohari blocks, M/s. Neelachal Iron and Power Ltd. for allocation of Brinda, Sisai and Dumri blocks, M/s. Bajrang Ispat Pvt. Ltd. for allocation of Dumri, Brinda and Sisai blocks and M/s. Pawanjay Steel and Power Ltd. for allocation of Dumri and Brinda blocks. The Screening Committee noticed that among applicants competing for Brinda and Sisai, M/s. Abhijeet Iron Processors Pvt. Ltd., applied way ahead of others, its requirement was large and it has a good track record and Ministry of Steel had recommended its case. The other applicants, viz., M/s. Bajrang Ispat and M/s. Pawanjay Steel were later applicants. The requirement of M/s. Bajrang was small and sub-blocking was not desirable while M/s. Pawanjay had not yet given the required details to Ministry of Steel. For Meral, M/s. Abhijeet was the only applicant. The Screening Committee decided to allocate Brinda, Sisai and Meral blocks to M/s. Abhijeet Infrastructure Private Ltd. 136.1. In the same meeting, M/s. Jayaswal Neco Ltd. was allocated Moitra block in place of Jogeshwar and Choritand-Tilaya, already allocated to them. Lohari block was allocated to M/s. Usha Martin Limited subj....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... applications after the cut-off date were rejected. The remaining fifteen were chosen for allocation on the same lines as was done in the 25th meeting for allocation of coal blocks in the MCL area. of these 15 applicants, the Screening Committee listed out seven companies as possible leaders for 5 blocks. The procedure followed in the 26th meeting suffered from the flaws similar to recommendations made by the Screening Committee in its 25th meeting. Moreover, the minutes of the 26th meeting reveal that the Ministry of Steel raised the issue that a Ministry of Steel raised the issue that a number of companies have, in their presentations, mentioned the capacity of the end-use projects in excess of what has been recommended by the Ministry of Steel and a view has to be taken on the same. Further it was also observed that a number of companies have raised the proposed capacity of their end-use projects after the cut-off date of 28.6.2004. On this, representative of the State Government stated that the ground realities of the projects need to be verified and the capacities of the end-use plants and coal requirements of such projects require to be confirmed. Therefore, the Screening Com....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s share of coal to the associate company at a price determinable by the Government. 139. In the 27th meeting*** held on 01.03.2005, the Screening Committee considered allocation of blocks in the CCL area while in 28th meeting**** held on 15.04.2005, the Committee considered allocation of blocks in SECL area. Neither the counter affidavit nor the minutes of these two meetings show that assessment of comparative merits of the applicants was done. The Screening Committee continued with consortium/leader and associate approach, as was done for the MCL area in the 26th meeting. This procedure is clearly in contravention of Section 3(3)(a)(iii) of the CMN Act. Except recording the particulars of these companies, who had given presentation, nothing is said about inter se priority or comparative merits of the applicants. By adopting consortium/leader and associate approach, the Screening Committee had indirectly done away with inter se priority and merit of the applicant companies. The consideration does not reveal application of any objective criterion. It is admitted in para 206 of the counter affidavit filed by the Central Government that as regards the applicant-Neepaz Metalicks who....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the fact that CMPDIL informed the Committee that north portion (rise side) of Dumri remains unexplored in detail on account of security problems. The unexplored portion has superior grades of coal of about 15 m.t. As regards Gare Palma IV/8 block, the minutes indicate that for this block M/s. CECL; Consortium of five applicants and M/s. Jayaswal Neco Ltd. had made presentations. Consortium of five applicants companies was not recommended apparently inter alia for the reasons; (1) that the Consortium of five applicants companies was yet to be incorporated and (2) that they claimed the blocks mainly on the ground of promoting consortium approach. It is interesting to note that in the earlier meetings for allocation of coal blocks in MCL, SECL and CCL areas, the Screening Committee on its own adopted consortium/leader and associate approach and the factor such as that the consortium company was not incorporated was not at all viewed as an impediment for recommendation but in this meeting the claim of consortium of five companies was not accepted and it was noted that they may be accommodated in other blocks. The application of norms by the Screening Committee changed from meeting to ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ended jointly in favour of M/s. Rashtriya Ispat Nigam Limited and M/s. Jindal Steel and Power Limited while Choritand-Taliya was recommended jointly in favour of M/s. Sunflag Iron and Steel Limited and M/s. Rungta Mines Limited. Insofar as Sitanala coal block is concerned, the Committee recommended the said block in favour of M/s. Steel Authority of India Limited. As regards Jogeswar coal block, the Committee in view of the comments of the representative of the Government of Jharkhand decided not to recommend allocation of that block in favour of any applicant for the time being. The minutes of 32nd meeting do not show how and in what manner the applications of those companies were considered which did not come for presentation. There is no comparative assessment or evaluation of the applicants. Why the chosen companies have been preferred over the others is not discernible? Merely because there were large number of applicants, it did not mean that the consideration of each applicant could not have been recorded or comparative assessment or evaluation of the applicants could not have been made. What are the reasons for recommending three blocks jointly in favour of more than one co....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d for their power plants, three were recommended for the cement plants and remaining seven were recommended for the Sponge Iron Units. For these twelve blocks, Jharkhand recommended seven companies, Madhya Pradesh recommended five, Maharashtra recommended ten and West Bengal recommended one company. It is pertinent to notice that some of the companies like Chaman Metallics Ltd., which was recommended by the Screening Committee for Kosar Dongargaon block had no recommendation by the State Government (Maharashtra). Similarly, Pushp Steel and Mining Ltd., which was recommended for Brahmpuri block had no recommendation from the State Government (Madhya Pradesh) and so also Kohinoor Steel (P) Ltd. for Mednirai coal block had no recommendation from the State Government (Jharkhand). The minutes do not disclose in what manner the merits of the companies which were chosen for recommendation were determined. Even particulars of the applicants individually are not noticed. There is no indication at all in the minutes of 33rd meeting and 34th meeting or the meeting held on 22.09.2006 when final decision that the conditions laid down in the guidelines are met by these companies was taken. Twent....
X X X X Extracts X X X X
X X X X Extracts X X X X
....parative assessment or evaluation of the applicant companies. In what manner and for what reasons the companies were selected for recommendation are neither disclosed nor are they discernible from the minutes. Though, the guidelines1 provide for norms for consideration for inter se priority for allocation of a block among competing applicants for a captive block but the minutes do not disclose at all how the norms for inter se priority are met by the companies selected for recommendation by the Screening Committee. Many of the companies selected by the Screening Committee had no recommendation from the State Government or from the Ministry of Power and CEA and some of them had no recommendation either from the State Government or the Ministry of Power and CEA at all. For example, for Durgapur-II/Taraimar, the selected company Balco had no recommendation at all from the State Government, Ministry of Power and CEA. Although the group company M/s. Vedanta Alumina Ltd. was recommended by Ministry of Power and CEA, but it was not selected. Similarly, for Mandakini block, M/s. Tata Power Company Ltd. had no recommendation from the State Government and Ministry of Power and CEA. For Rampi....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... had submitted more than one application for single block for different end use plants located at different locations. The geological reserve of 23 blocks## was noted by the Screening Committee. The minutes of the 36th meeting show that the Committee decided to recommend blocks earmarked for pig iron (coking coal) jointly to two or more than two companies and nineteen blocks earmarked for other end-uses/non-cooking coal were recommended for allocation to single companies as well as jointly to two or more companies. The minutes of 36th meeting do not contain the particulars showing consideration of each application. There is no assessment of comparative merits of the applicants who were selected for recommendation. The minutes do not disclose how and in what manner the selected companies meet the norms fixed for inter se priority. Many of the selected companies were neither recommended by the State Government nor by the Administrative Ministry. Some of them were recommended by the State Government but not recommended by the Administrative Ministry while one of them was not recommended by the State Government but recommended by the Administrative Ministry. For Rajhara North (Central ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 19.08.2003 (21st meeting) are conspicuously silent about inter se priority between the applicants for the same block. As a matter of fact, for the 21 coal blocks allocated to private companies in pursuance of Screening Committee's recommendation during the first period, inter se priority or merit of the applicants for the same block had not at all been determined. 2. The guidelines do not contain any objective criterion for determining the merits of the applicants. The guidelines do not provide for measures to prevent any unfair distribution of coal in the hands of few private companies. As a matter of fact, no consistent or uniform norms were applied by the Screening Committee to ensure that there was no unfair distribution of coal in the hands of the applicants. 3. The Screening Committee simply relied upon the information supplied by the applicants without laying down any method to verify applicant's experience in the end-use project for which allocation of coal block was sought. The guidelines also do not lay down any method to allot coal blocks as per the end-use projects coal requirement. 4. The Screening Committee kept on varying the guide....
X X X X Extracts X X X X
X X X X Extracts X X X X
....es. For example, M/s. Prakash Industries Limited, being a BIFR company, was denied coal block earlier. However, the Screening Committee recommended Chotia I and II coal blocks to M/s. Prakash Industries Limited in 2003 for its proposed expansion project of 0.4 MTPA Sponge Iron though the company was having capacity of only 0.3 MTPA. 9. Some coal blocks which were already identified for development by CIL were offered to the private companies and some of the blocks which were close to the projects of CIL were, in fact, recommended for allocation and ultimately allocated. This was clearly in breach of the guidelines for selection of captive blocks. 22nd Meeting to 30th Meeting 10. With regard to allocation of coal blocks to private companies pursuant to its 22nd meeting to 30th meeting held between 04.11.2003 and 18.10.2005, the guidelines do not lay down any criteria for evaluating the comparative merits of the applicants. The consideration had been ad-hoc in so much so that in every meeting, the guidelines were altered. 11. In the 24th meeting held on 09.12.2004, the Screening Committee altered the norms by shifting insistence on achieving financ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ernment's recommendation. The Screening Committee even decided to club the blocks and recommended allotment of such combined block to two companies jointly. 16. The consideration has been absolutely ad-hoc and without even knowing how much surplus will remain, the company so chosen was asked to select another allottee for surplus, if any. This is seen from the minutes of the 30th meeting. In the 30th meeting, the Screening Committee also recommended allocation of Dumri coal block although north portion of that block remained unexplored and the unexplored portion had superior grade of coal. 17. The policy of pick and choose was adopted. The application of norms was changed from meeting to meeting with no uniform or consistent consideration. 18. Certain companies which did not come for presentation were also considered but how and in what manner the applications of those companies were considered is not discernible. Why the chosen companies have been preferred over the others is also not discernible. 32nd Meeting to 36th Meeting 19. The minutes of the 32nd meeting do not show the reasons for recommending three blocks jointly in favour ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ailed to secure allocations earlier yet they were recommended. The Screening Committee failed to consider capability and capacity of the applicant in implementing the projects. 151. The entire exercise of allocation through Screening Committee route thus appears to suffer from the vice of arbitrariness and not following any objective criteria in determining as to who is to be selected or who is not to be selected. There is no evaluation of merit and no inter se comparison of the applicants. No chart of evaluation was prepared. The determination of the Screening Committee is apparently subjective as the minutes of the Screening Committee meetings do not show that selection was made after proper assessment. The project preparedness, track record etc., of the applicant company were not objectively kept in view. Until the amendment was brought in Section 3(3) of the CMN Act w.e.f. 09.06.1993, the Central Government alone was permitted to mine coal through its companies with the limited exception of private companies engaged in the production of iron and steel. By virtue of the bar contained in Section 3(3) of the CMN Act, between 1976 and 1993, no private company (other than the com....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ing Committee has recommended allocation of coal blocks to 29 State Government PSUs while through Government dispensation route allocation has been recommended for 72 PSUs. The question that requires consideration is whether commercial mining operation can be carried on by the State or State PSUs. The answer has to be found out from the statutory provisions. By virtue of Section 3 of the CMN Act, as was originally enacted, on and from the appointed day, the right, title and interest of the owners in relation to the coal mines specified in the Schedule stood transferred to and vested absolutely in the Central Government free from all encumbrances. This provision further provides that if after the appointed day, the existence of any other coal mine comes to the knowledge of the Central Government, the provisions of the Coal Mines Management Act shall apply until that mine is nationalized by an appropriate legislation. Section 3 of the CMN Act was amended by the 1976 Nationalisation Amendment Act whereby Sub-sections (3) and (4) of Section 3 were inserted. Along with this, Section 1A was also inserted in the CMN Act. By Sub-section (3) of Section 3, it is provided that on and from the....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... entitled to obtain sublease of reserves of coal in isolated small pockets under Clauses (i) and (ii) of proviso to Section 3(3)(c). It is pertinent to notice here that Circular dated 30.07.1979 records the correct position of legislative policy articulated in the CMN Act under which only the Central Government Public Undertakings have been permitted to carry on coal mining operations in the country. After the amendment was carried out in the CMN Act, the circular states that while continuing the existing policy of the Central Government carrying out coal mining operations by its own undertakings, the State Governments might also be allowed to carry out coal mining operations in isolated small pockets subject to the conditions set out therein. The "isolated small pockets" are those which are away from the main coalfields and have limited known reserves which are not sufficient for scientific and economic development in a coordinated and integrated manner and the coal produced from such areas would mainly be utilized for local consumption without transportation by railways. However, almost after 22 years, vide Circular dated 12.12.2001, the Central Government, reviewing its earlier ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ng Corporation Limited and Monnet Ispat and Energy Limited reveals that Joint Venture Company has been further allowed to enter into Mine Development Operation Agreements with other private partner or sister concern. This modus operandi has virtually defeated the legislative policy in the CMN Act and winning and mining of coal mines has resultantly gone in the hands of private companies for commercial use. As indicated above, by 1976 amendment in the CMN Act, other than the Central Government or Central Government undertakings, a company engaged in the production of iron and steel was permitted to carry on coal mining operations in any form. By subsequent amendments in Section 3 of the CMN Act, besides a company engaged in the production of iron and steel, a company engaged in generation of power or a company engaged in washing of coal obtained from a mine or such other end-use, as the Central Government may by notification specify, no other company can "carry on mining operation in coal". Allocation of coal blocks to the State PSUs which ultimately on getting mining leases may enable them to win or mine coal commercially is clearly in breach of the provisions of the CMN Act. 15....