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Naini coal block allocation: Gujarat High Court rejects GMDC's plea

The company claimed that it could not meet the milestone chart as the Odisha government did not issue the prospecting licence within the stipulated period of nine months of making an application.

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The Gujarat High Court has refused to entertain a plea filed by the Gujarat Mineral Development Corporation Limited (GMDC) challenging the union government's decision to invoke a bank guarantee of Rs 32.5 crore for non-performance in the Naini coal block in Odisha allocated to it in 2007. A single-judge bench of the court, while dismissing the plea filed in 2013, remarked that it finds no reason to interfere in the subject matter which is in the realm of the contract between GMDC and the Union government.

The company claimed that it could not meet the milestone chart as the Odisha government did not issue the prospecting licence within the stipulated period of nine months of making an application. It also contended that the Union government could not have held the company responsible for lagging in the milestone chart and there was no reason for it to invoke the bank guarantee. The company also drew the court's attention to communication by Odisha chief minister who had strongly opposed the allocation of the coal blocks to entities which were not from the state and sought a review of the coal block allocation.

On the contrary, the Union government contended that the invoking of the bank guarantee was done as per the contract. The Centre also argued that the alleged action of the state in not processing the prospecting licence was never challenged by the company before any forum and therefore, its argument of the situation being out of its control was an afterthought. The Naini coal block was allocated to the company to meet the coal requirement of then-proposed 1,500 MW power plant in Odisha, or in Jharkhand.

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