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CIL supply pact to cancelled allottees to be examined

Besides, the Supreme Court which is currently scrutinising the allotment of captive blocks has reserved its final orders.

New Delhi |
February 19, 2014 4:29:31 am

The coal ministry has told cabinet secretary Ajit Seth that the legality of supplying fuel to those companies from Coal India (CIL), whose captive coal blocks have been cancelled, will have to be ascertained with the law ministry, especially when the Supreme Court is scrutinising the entire allotment process of blocks. 

The ministry says it needs to be cautious as 49 writ petitions have been filed before nine High Courts besides two civil suits by project developers, whose blocks have been canceled. In their petitions they have challenged the constitution of an inter-ministerial group (IMG), which recommended the de-allocations and also the subsequent endorsement by the government. Following its latest meeting on February 8, the IMG has recommended de-allocation of 31 coal blocks subject to court orders in certain cases.

So concerned is the government on the fate of those projects, whose coal blocks have got cancelled that Seth has decided to chair a high level meeting to discuss coal requirements for such projects.

But coal ministry in a note to the cabinet secretary on February 17 said that it will have be ascertained whether the same companies whose blocks have been canceled owing to their delay in development, can be provided fuel from Coal India Limited’s (CIL) reserves.

Besides, the Supreme Court which is currently scrutinising the allotment of captive blocks has reserved its final orders. Acting on the decision of the IMG, the coal ministry has cancelled captive blocks of industry giants like Tata, Jindal Steel and Power and Adani.

“In this situation, the legality of providing coal supplies to end use plants of such defaulting coal block developers from CIL sources and that too at the risk of making the PSU liable to pay penalties to its existing customers has legal implications, which need to be examined in consultation with the law ministry,” the coal ministry said argued in its note.

Further, there are court cases pending in respect of the de-allocated blocks and there is no finality, it contended. Of the total 49 petitions so far, 18 have been filed in Delhi High Court, 16 in Jharkhand High Court, four each in Chhattisgarh and Orissa high courts, two each in Bombay and Madhya Pradesh high courts and one each in Gujarat and Himachal Pradesh high courts.

The ministry argued that in view of the negative coal balance of the PSU, it is clear that it cannot supply additional fuel for the end use plants whose blocks have been de-allocated by the IMG and the only source available is through import of coal.

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