Firms seeking waiver on encashment; argue that work on mines failed to start due to delays by government agencies in granting clearances
Its a double whammy for coal mine owners. While those with producing mines are paying penalty for coal mined so far, others will now have to suffer encashment of bank guarantees for failing to start work on the mines they no longer possess.
Companies belonging to power, steel and cement, who were earlier allocated coal blocks but couldn't start work due to various factors including delays by government agencies in granting clearances, had asked for waiver on encashment of their bank guarantees. Their argument is that since the mines are no longer with them, they shouldn't be forced to pay up for failing to stick to timelines for production.
That request has now been turned down in a decision which has been communicated to the mine owners following a meeting of the Inter-ministerial group (IMG) on Tuesday, sources said.
The decision of the IMG is based upon the ruling of Delhi High Court, which was approached by several such aggrieved mine owners.
"IMG observed that subsequent annulment of coal blocks cannot exempt the allottees of cancelled coal blocks from invocation or deduction of bank guarantees because even if subsequently de-allocated, it was a fact that coal blocks were allocated to them. Subsequent development or consequence can't override the condition precedent or bounded stipulations of allocation of coal blocks," the meeting attended by secretaries of coal ministry, officials of power ministry, the coal controllers among others, decided.
"As per the conditions of the allotment letter, allocates are bound to develop the coal blocks within the time period stipulated in the allotment letters, and in case of default, allocatees were liable to pay consequences including damages. The order of Delhi High Court also makes it ambiguously clear that the issue of bank guarantee remains alive," the minutes of the meeting mentioned.
The only leeway the industry got from the decision of the Delhi High Court and the subsequent meeting of the IMG, is that the government henceforth will decide on invocation of the bank guarantees by considering factors which are beyond the control of the allocatees and may get breather if they can prove that failure to stick to milestones happened predominantly due to delays by various government agencies in providing clearances.
"The group felt that it was a fact that apart from delays and lapses on part of prior allocatees, the same might also have been caused due to delay both on part of central government as well as state governments," the IMG said.
Fresh show-cause notices will now be sent to prior allocatees even though they the mines are not with them, asking them to explain exactly why the delays occurred and which agency is responsible.
As per coal ministry data, the IMG had recommended several deduction of bank guarantees ranging from Rs 15 crore against Damodar Valley Corp-Tenughat Vidyut Nigam combine for their Gondulpara block to Rs 1.6 crore against Andhra Pradesh Mineral Dev Corp for failing to start work on the mine allocated to it.
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