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Can't Cite Big Spend to Escape Action: SC

Companies must suffer for investing in coal blocks without getting clearances, says apex court; asks Centre if it intends to cancel such licences.

Published: 09th January 2014 07:49 AM  |   Last Updated: 09th January 2014 07:52 AM   |  A+A-

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Directing the Centre to re-examine the allocation of 32 coal blocks to private companies after 2006, the Supreme Court on Wednesday made it clear that huge investments made by companies in coal blocks without getting clearances cannot be a ground for not cancelling the licences.

The apex court has asked the Centre to respond by Thursday on whether it intends to cancel such allocations. “If you are going to cancel it, then we will have to look differently from the point of view of law. Then we will look (at allocations of coal blocks) prior to 2005,” the bench, comprising justices R M Lodha, Madan B Lokur and Kurian Joseph, said.

The bench added that it would look into allocations made before 2005 as after the incorporation of Section 11(a) in the Mines and Minerals (Development and Regulation) Act, all future allocations of coal blocks would be on the basis of auction only.

Explaining the procedure followed in the allocation, Attorney General G E Vahanvati said that no development has taken place in coal blocks allocated after 2006. Asked by the court on why the blocks in question haven’t been de-allocated, Vahnvati said, “It is possible”. The attorney general sought time till Thursday to discuss the same with the Central government.

With regard to pre-2005 allocations, Vahanvati said that 46 coal blocks were allocated from 1993 to 2005 to private companies and mining leases were issued by states in 17 allocations. The rest are in different stages of clearances, he added. The bench made it clear that the companies had invested in the blocks without clearances at their own risk.

“They (companies) must suffer the consequences no matter how much investment has been made by them. The alleged illegality cannot be compounded,” the bench said when Vahanvati contended that around Rs 2 lakh crore had been invested in such blocks and it would be difficult to cancel the licence for want of clearances. “All such investments would go in drain and it cannot be a defence and no law would help them,” the bench added. The apex court further said that any investment made in anticipation of clearances cannot be justified and such blocks cannot be protected if the companies fail to get clearances within a time frame fixed under the law. “Such investments are made at their own risk if their rights have not matured. All such investments would be unauthorised,” the bench said.

The court pointed out that merely holding an allocation letter does not guarantee mining lease, unless three conditions under the MMRD Act are met. “No reconnaissance permit, prospecting licence or mining lease shall be granted otherwise than in accordance with the provisions of this Act and the rules made there under,” the bench said.

Cong-ruled states pin the blame on UPA

In a major embarrassment to the UPA government, Congress-ruled Maharashtra and Andhra Pradesh on Wednesday took a stand identical to the opposition-ruled mining states to squarely blame the Centre in the Supreme Court for alleged irregularities in allocation of coal blocks.

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