Millennium Post

Who moved my black gold

Coal mining scam or Coalgate is allegedly the mother of all scams. The  Comptroller and Auditor General of India (CAG) office in 2012  accused the Manmohan Singh government  for providing the nation’s coal deposits to private and state-run entities in an irregular and arbitrary manner instead of publicly auctioning them off to the highest bidder, resulting in a loss of approximately INR 186,000 crore (US$ 33.67 billion) to the exchequer during the period 2004-2009.

That time around Sonia Gandhi, UPA Chairperson came out openly defending  Mr Manmohan Singh and made her intentions clear by instructing the party MP’s and functionaries to be more aggressive in defending the party both within and outside Parliament on corruption matters. Taking the leaf out of the party president’s dictate, Congress party general secretary Digvijay Singh hit out at team Anna and opposition for suspecting Manmohan Singh in coal mining scam.

The Supreme Court went a step ahead and on Monday declared the allocations of all coal blocks from as far back as 1993 and until 2010 as illegal, but stopped short of cancelling them. Although the apex court did not take the inclement step, as it did when it cancelled the allocation of 2G spectrum and licenses in 2012, it did inject a sense of uncertainty in the minds of both policy planners and investors.

The Apex court in Writ Petition Manohar Lal Sharma Vs The Principal Secretary & Ors and another PIL came to be filed by Common Cause represented by advocate Mr Prashant Bhushan,  held that 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. There was no objective criteria, nay, no criteria for evaluation of comparative merits. 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.

The Apex court also held that 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. Since allocation of coal is permissible only to those categories under Section 3(3) and (4), the joint venture arrangement with ineligible firms is also impermissible. Equally, there is also no question of any consortium / leader / association in allocation. 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. By way of oral observations after delivering the judgment, Chief Justice of India R M Lodha said that there was a need for further hearing on the possible consequences of the illegal allocations.

The ruling has triggered an erosion of over Rs 20,000 crore in market capitalisation of metals and power companies allocated captive coal mines. Commenting on the court verdict the power and coal minister Piyush Goyal said a final decision by the court would be in the interests of the country. ‘I would look forward to finality in the matter of coal block allocations which have, for several years now, kept the sector in limbo and with the finality that one can expect very soon, I hope the sector can start progressing.’

Some industry experts are of the view that the court may not cancel all those allotments wholesale because cancelling those allotments has very serious implications for the economy and power and coal sector. Commenting on the ruling, Chandrajit Banerjee, Director General, CII said: ‘We are sure the Supreme Court will take into consideration cases where production has begun and investments made, while giving its verdict on the blocks.’ Industry has previously spoken out against mass cancellations, citing huge investments made by companies and the impact such action has on the economy and probably that has weighed on the mind of the court which has declared the auction illegal and not as yet cancelled the allocation and posted the matter for further hearing on 1st September. These decisions have far reaching consequences  on Indian economy, time has come when the new prime minister ensure through his able leadership that these situations do not arise in his government and India enters an era of transparency, accountability and fairness in dealing with resources belonging to the Nation.

The author is an advocate
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