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All coal blocks during last 17 years since 1993 by various regimes at the Centre have been allocated illegally and arbitrarily, the Supreme Court on Monday held, bringing uncertainty to the fate of 218 block allocations and consequential investments to the tune of around Rs 2 lakh crore.
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Coal and Power Minister Piyush Goyal welcomed the Supreme Court’s verdict declaring coal block allocations illegal and said his government would act quickly after the court delivers the final order.

The apex court, which used almost all terms to condemn the procedures adopted by 36 screening committee meetings since 1993, however, stopped short of cancelling them saying “what should be the consequences, is the issue which remains to be tackled.” The court, which examined the allocation of 218 blocks in pre-auction era till 2010, held that they were done in an illegal manner by an “ad-hoc and casual” approach “without application of mind” and “Common good and public interest have, thus, suffered heavily” due to lack of fair and transparent procedure resulting in “unfair distribution” of the “national wealth” - coal - “which is king and paramount Lord of industry.”

“To sum up, the entire allocation of coal block as per recommendations made by the Screening Committee from July 14, 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,” a bench headed by Chief Justice R M Lodha said in its 163-page verdict.

The bench, also comprising justices M B Lokur and Kurian Joseph, said “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,” it said.

Holding that allocation of coal block amounts to grant of largesse to companies, the apex court said procedure for allocation by the Central Government through administrative route is “inconsistent with the law already enacted or the rules framed”. The screening committee was constituted to screen proposals for grant of captive mines to private power generation companies and has six members including Additional Secretary of the Coal Ministry who heads it. The bench referred to and analysed the meetings of the screening committees since 1993.

It also said “no State Government or public sector undertakings are eligible for mining coal for commercial use”. The bench also clarified that there was no challenge laid before it for cancellation in respect of blocks where competitive bidding was held for the lowest tariff for power for Ultra Mega Power Projects (UMPPs) in accordance with the opinion given in Natural Resources Allocation Reference.