You’ve no power to grant lease for coal block, which can be done only by State, says Bench

The Supreme Court on Tuesday pulled up the Union government for not following the procedure contemplated in the Mines and Minerals (Development and Regulation) Act and the rules framed thereunder in the allocation of coal blocks.

A Bench of Justices R.M. Lodha, Madan B. Lokur and Kurian Joseph told Attorney-General G.E. Vahanvati, “You have put the cart before the horse. You [the Centre] have no power to grant lease for coal block, which exercise can be done only by the State. You can only grant approval. You have not followed the procedure under the Rules.” The AG replied that while coal allocation was done by the Centre, leases were granted by the States.

Justice Lodha told the AG, “You must show how the Screening Committee was given power to identify the coal blocks. The Cabinet note [of April 1992] says identification of blocks will be done by CMPDIL [Central Mine Planning and Design Institute Limited]. Why this departure to Screening Committee?  Why has the Screening Committee become an extra player?”

Mr. Vahanvati said the CMPDIL chairman was one of the members of the Screening Committee and that he would justify each and every allocation to private companies.

Justice Lodha posed a series of questions to the AG and asked him to respond by Wednesday. “We want to have all booklets identifying the coal blocks for allocation to private parties and power plants over a period of time; how the applications were received from the private power plant operators by the Central government, either directly or through the State government concerned; the brief given to the Screening Committee for selection, whether any guidelines were framed or the Screening Committee was asked to frame its own guidelines and how the applications for allocation of blocks were considered.”

When the AG said the decision was taken by the Prime Minister himself, Justice Lodha told the AG, “We are concerned with the decision-making process, whether it is ultra vires or not.” He also wanted to know how many private captive power plants were allocated coal blocks between 1993 and 2003, 2003 and 2004, 2004 and 2005, and 2005 and 2009; when they became operational; and how many did not begin production at all; and whether these blocks were re-allocated.

The judge wanted to know why competitive bidding was not followed in the allocation of blocks to private power plants; what were the norms fixed by the Central or State governments for such allocation and minutes of the meetings for coal allocations.

Earlier, the AG traced the 1991 economic crisis that led to privatisation of coal mining. He said that in 1991, the government needed Rs. 1,25,000 crore for producing 38,000 MW power.

He quoted the speech of the then Finance Minister, Manmohan Singh, on July 21, 1991 on the economic problems faced by the country, which, at that time had only Rs. 2,500 cr. foreign exchange, to drive home the point how private sector participation was allowed.

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