Ruling that none of the governments between 1993 to 2010 had applied their mind for allocation of coal blocks, the Supreme Court on Monday held such allocation is "illegal and suffers from the vice of arbitrariness."
Finding that the screening committee, which held 36 meetings, had flouted the guidelines and recommended coal blocks for allocation on the basis of no merits, the court said that there was no transparency and it had adopted a pick and choose policy. "The policy of pick and choose was adopted. The application of norms was changed from meeting to meeting with no uniform or consistent consideration," a bench headed by Chief Justice RM Lodha said in its 163-page judgment. The court, which had examined 218 coal block allocations, said the consequences arising from the verdict of such coal blocks will be considered after further hearing and fixed for 1 September.
The bench held that the screening committee's approach had been "ad-hoc and casual" and due to lack of fair and transparent procedure for distribution of national wealth, the common good and public interests have heavily suffered. "The entire allocation of coal block as per recommendations made by the Screening Committee from July 14, 1993 and the allocation through the Government dispensation route suffers from the vice of arbitrariness and legal flaws... Many companies which had failed to secure allocations earlier yet they were recommended," stated the judgment. It also said that many private companies did not meet the requirement of the end-use project at the time of allocation.
These companies, observed the bench, were not engaged in the production of steel, power or cement at the time of allocation and were as such not entitled to carry out coal mining operations.
The judgment was also scathing in its observation on the government's lax attitude. "The committee has never been consistent, it has not been transparent, there is no proper application of mind, it has acted on no material in many cases, relevant factors have seldom been its guiding factors, there was no transparency and guidelines have seldom guided it. On many occasions, guidelines have been honoured more in their breach," the bench said.
It clarified that there was no challenge laid before it for cancellation in respect of blocks where competitive bidding was held for the lowest tariff for power for Ultra Mega Power Projects (UMPPs). However, it said "having regard to this, it is directed that the coal blocks allocated for UMPP would only be used for UMPP and no diversion of coal for commercial exploitation would be permitted".
After the pronouncement, the bench orally said though the Attorney General had given the figures of coal blocks, they were not verified and even the state governments had raised objections. These issues have to be gone into, the court said while suggesting that a committee comprising a retired Supreme Court judge be set up to suggest a further course of action.
218 coal blocks allocated over 17 years from 1993 onwards, resulting in consequential investments to the tune of around Rs 2 lakh crore