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11 things you need to know about the coal block allocation scam

Monday, 25 August 2014 - 6:30pm IST | Place: Mumbai | Agency: dna webdesk

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On Monday the Supreme Court termed all the coal allocations made from 1993 to 2010 illegal. The three-judge special bench comprising chief justice RM Lodha, Madan B Lokur and Kurian Joseph reported that the allocations were arbitrary and lacked transparency.

The actual impact of several coal companies is likely to be better understood post the judgment, which is slated to be announced on September 1. While this judgement may go down in history as a landmark judgement, here are 11 things you need to know about the coal allocation scam:

1. The coal gate scam is the allocation of coal blocks to corporates of public centre entities (PSE) and companies and the private sector during the UPA rule under Prime Minister Manmohan Singh's mandate. The government allocates coal blocks through a process of competitive bidding. However, this procedure was not followed and there were discrepancies in its reporting, and the allocations were believed to be arbitrary.

2. About 194 blocks were allocated to private establishments in this manner.

3. This political scam took centre-stage when the Comptroller and Auditor General (CAG) of India report in 2012 highlighted that the failure to auction 194 coal blocks amounted to huge losses to the Indian government.

4. The CAG first estimated the government's losses to be a mammoth Rs 10 lakh crore. After the CAG final report was tabled in parliament the losses were shown to be Rs 1.76 lakh crore.

5. According to the CAG report, about 25 big industrial company names were involved. Amongst them were Tata group, Naveen Jindal group, Essar group, Abhijeet group, Laxmi Mittal's Arcelor and Vedanta. All of them allegedly made major gains due to the lack of bidding between 2004 and 2006.

6. Former Prime Minister Manmohan Singh held the coal portfolio from 2006 to 2009, and the loss in reserves at the same time was estimated to be 40 billion tonnes, as highlighted by Firstpost.

7. It was the complaints made by two Bharatiya Janata Party (BJP) leaders, Hansraj Ahir and Prakash Javadekar, who brought in the CBI. On the orders of the Central Vigilance Commission (CVC), the CBI began its probe; at the same time the Income tax department began its probe as well.

8. The Parliamentary standing committee played a key role as in April 2013, it had slammed the allocation process between 1993 and 2008 being arbitrary. It also asked for an investigation to be set up into all those involved in the scam.

9. In 2013, the CBI filed FIRs against top bracket industrialists Naveen Jindal, Dasari Narayana Rao, Kumar Mangalam and former coal secretary PC Parakh. Parakh said he had followed procedures during the allocation, and if he was guilty, Manmohan Singh should be held guilty as well.

10. In July 2014, the Supreme Court set up a special CBI court to undertake the trials of all allocation cases. The CBI, in August, also took back its cases against Kumar Mangalam Birla and PC Parakh.

11. On August 25, 2014, the Supreme court passed the judgement, terming all coal allocations between 1993 and 2010 illegal. It observed that as per the recommendations made by the Screening Committee from July 14, 1993, in 36 meetings the allocation through the government dispensation route suffers from the vice of arbitrariness and legal flaws. The apex court pointed out that the scam resulted in the heavy suffering of common good and public interest.

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