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Coal allocation scam: 8 things the Supreme Court said in its judgment

Monday, 25 August 2014 - 6:05pm IST Updated: Monday, 25 August 2014 - 8:20pm IST | Place: Mumbai | Agency: dna webdesk

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The Supreme Court (SC) on Monday, categorically said that the coal block allocations from 1993 suffer from "arbitrariness" and were "illegal." It said that the government did not adhere to proper guidelines and no objective criteria was being followed either. However, it said that further hearing would be required to see if 218 coal blocks needed to be deallocated. Here are eight major points that the Supreme Court made about the allocation in its judgment.

1. "The allocation of coal blocks for the period 1993 to 2010 is the subject matter of this group of writ petitions filed in the nature of Public Interest Litigation, principally one by Manohar Lal Sharma and the other by the Common Cause. The allocation of coal blocks made during the above period by the Central Government, according to petitioners, is illegal and unconstitutional."

2. The Court said the allocations not only violated various laws in the country but was also in "violation of the principle of Trusteeship of natural resources by gifting away precious resources as largesse"; suffered from "arbitrariness, lack of transparency, lack of objectivity and non-application of mind" and allotments have been "tainted with malafides and corruption and made in favour of ineligible companies tainted with malafides and corruption."

3. The judgement "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."

4. The Supreme Court went through the allocation of coal blocks done under the Screening Committee in detail and said, "To sum up, the entire allocation of coal block as per recommendations made by the Screening Committee from 14.07.1993 in 36 meetings and the allocation through the Government dispensation route suffers from the vice of arbitrariness and legal flaws. The Screening 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." 

5. The approach had been ad-hoc and casual. There was no fair and transparent procedure, all resulting in unfair distribution of the national wealth. Common good and public interest have, thus, suffered heavily. Hence, the allocation of coal blocks based on the recommendations made in all the 36 meetings of the Screening Committee is illegal. 

6. "The allocation of coal blocks through Government dispensation route, however laudable the object may be, also is illegal since it is impermissible as per the scheme of the CMN Act. No State Government or public sector undertakings of the State Governments are eligible for mining coal for commercial use.... Only an undertaking satisfying the eligibility criteria referred to in Section 3(3) of the CMN Act, viz., which has a unit engaged in the production of iron and steel and generation of power, washing of coal obtained from mine or production of cement, is entitled to the allocation in addition to Central Government, a Central Government company or a Central Government corporation."

7. "As we have already found that the allocations made, both under the Screening Committee route and the Government dispensation route, are arbitrary and illegal, what should be the consequences, is the issue which remains to be tackled. We are of the view that, to this limited extent, the matter requires further hearing." 

8. As a matter of fact, Mr. Prashant Bhushan, learned counsel for Common Cause submitted that since allocation for UMPPs is in accord with the opinion given in Natural Resources Allocation Reference20 and the benefit of the coal block is passed on to the public, the said allocations may not be cancelled. However, he submitted that in some cases the Government has allowed diversion of coal from UMPP to other end uses i.e. for commercial exploitation. 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. 

Read the full judgment here

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