Coal mining lease: SC imposes Rs one lakh cost on Centre for its callous approach

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Supreme Court of India | Photo: Mathrubhumi

New Delhi: The Supreme Court Wednesday imposed a cost of Rs one lakh on the Centre for its “callous, careless and casual approach” that had led to the cancellation of a coal block that was validly granted to private firm BLA Industries in Madhya Pradesh in 1997.

The top court also held that the Union Coal Ministry was not entitled to claim payment of an additional levy for the coal extracted by the private firm from the mine, saying “Any such demand raised by the respondent No. 1 – UOI is hereby quashed and set aside.”

A bench comprising Chief Justice N V Ramana and Justices Krishna Murari and Hima Kohli referred to the sequence of events in the case related to BLA Industries which had followed the due process in securing “Gotitoria (East & West) Coal Blocks" in Mohapani Coalfield in Madhya Pradesh to meet the coal requirements of the captive power plant.

“We are constrained to make certain observations regarding the conduct of respondent no. 1 – UOI. Here is a case where a private party followed all the rules and the law, as applicable, before investing large sums of money to undertake business. In fact, it appears from the facts of the case that it was respondent no. 1 – UOI that did not follow the letter of the law,” it said.

The top court said it was the private party that had to suffer the consequences of the “careless and callous approach” of the Centre which had led to the cancellation of the coal block consequent to a 2014 judgement on a PIL.

“To compound the petitioner's woes, the respondent no. 1 – UOI filed an affidavit before this Court including the petitioner in the list of errant mine owners, based on its own unlawful conduct. It did not undertake the necessary due diligence to determine as to whether the petitioner had been allotted the mine through the lawful procedure. As a result of this callous, careless, and casual approach of respondent no. 1 – UOI, the present petitioner had to suffer loss and ignominy,” it held.

It directed the Centre to pay litigation costs quantified at Rs one lakh to the private firm in four weeks.

The verdict held that the erroneous inclusion of the name of the private firm in the list of 46 allottees of coal blocks with the apex court by the Centre in a PIL proceeding had resulted in the cancellation /quashing of the lease that was validly granted in its favour, the judgement said.

The top court, while deciding a PIL filed by advocate M L Sharma, in 2014, had declared that the entire allocation of coal blocks, as per the recommendations made by the Screening Committee constituted by the Centre, from July 14, 1993, onwards and the allocations made through the Government Dispensation Route after 1993 suffered from the vice of arbitrariness and were illegal.

Deciding the plea of BLA Industries, the verdict, penned by Justice Kohli, said the private firm, which had got the mining lease through valid procedures, had to “suffer loss and ignominy” also as its allocation was quashed.

The top court was to decide whether the firm was allocated coal mines through the Screening Committee Route and/or the Government Dispensation Route to ascertain if the Centre was entitled to claim compensatory payment.

“It is therefore held that allocation of the coal block made in the form of the petitioner did not run foul of the procedure prescribed in the MMDR Act and the MC Rules. The petitioner was not allocated the coal block either through the Screening Committee Route or the Central Government Dispensation Route, which fact was not pointed out by respondent No. 1 – UOI at the appropriate stage, which led to painting the petitioner with the same brush as the other allottee listed in Annexures...

“Having held that the petitioner was not a beneficiary of the flawed process, the consequences spelt out in the Second Judgement would not apply to it and therefore, it cannot be called upon to pay penalty as compensatory payment, as demanded by the respondent No. 1 – UOI,” it said.

The private firm submitted an application in November 1994 with the District Collector of Narsinghpur District in Madhya Pradesh for permission to undertake coal mining on forest land.

The central government, in 1997, had accorded approval to the private firm for the grant of the mining lease. PTI

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