Millennium Post

HC stays encashment of Jindal Steel & Power bank guarantee

In a relief to two firms whose coal blocks in Odisha have been de-allocated, the Delhi High Court on Wednesday asked their bankers not to ‘transmit’ the bank guarantee amount to the Coal Ministry which has sought to encash them.
Jindal Steel and Power Ltd and Strategic Energy Technology Systems Ltd, a joint venture between a consortium of Tata Group companies and South African company Sasol, have moved the court seeking a stay on the bid of Coal Ministry to encash their bank guarantees given in pursuance of allocation of coal blocks in Odisha.

‘This court is of the view there have been similar petitions pending in this court in which a stay on encashment of bank
guarantee was granted.

‘On the principle of parity, this court directs the bankers of the petitioners not to transmit the amount, qua the bank guarantee, to the respondent (Coal Ministry),’ Justice Manmohan said. The court also granted the companies the liberty to approach it again if the de-allocated coal blocks are given to somebody else.

It also issued notices to the Ministry of Coal, State Bank of India and Punjab National Bank on the pleas.The two companies have challenged the 17 February de-allocation and bid of the Coal ministry to encash the bank guarantees.The bank guarantee of Rs 104 crore, which is sought to be encashed by the Centre, was given by JSPL in relation to allocation of Ramchandi coal-to-liquid block in Odisha.

Strategic Energy Technology Systems Ltd--a joint venture between a consortium of Tata Group companies and South African company Sasol— had given a bank guarantee of Rs 55.35 crore for allocation of North of Arkhapal Srirampur coal-to-liquid block.

These coal blocks were de-allocated on 17 February by the ministry on the ground of delay in meeting development-related milestones.
Earlier this month, an inter-ministerial group on coal, headed by the Additional Secretary in Coal Ministry, had reviewed the performance of 61 coal blocks that were given time until 5 February to secure requisite clearances and furnish information on various milestones related
to mine development.

The panel had recommended de-allocation of around 30 coal blocks due to delay in timely development of the blocks. So far, the ministry has issued letters of de-allocation to over 22 coal blocks.
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