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Mining auction: Govt may approach Delhi HC to annul order to disallow clubbing of end-user

ASG observed it would become ‘a binding direction’, hamper auction.

Written by Amitav Ranjan | New Delhi |
Updated: April 18, 2019 3:15:18 am
coal mines, coal mines auction, Mining auction india, coal mines, coal mines safety, Indian express The ministry’s move follows a petition by JSW Steel last November challenging the ministry’s decision to group the three sectors in the auction of Jamkhani mine.

With the coal mines auction process for non-regulated sectors stuck in a limbo, the government plans to approach the Delhi High Court to annul its October 2016 order that disallows clubbing of separate and distinct end-users in bidding for a coal mine.

Additional Solicitor General Maninder Acharya last month advised the Coal Ministry to file a petition “to set aside” the 2016 observation as it would become “a binding direction” and hamper auction of coal mines to non-regulated iron and steel, cement and captive power plants.

“Observations made in the judgement, if not clarified, may again be used by prospective bidders challenging the decision of the government to club end-uses in future. Filing of review petition in the matter is necessary to bring finality to the issue of clubbing of specified end-uses as non-regulated sector,” Acharya advised on March 7.

The ministry’s move follows a petition by JSW Steel last November challenging the ministry’s decision to group the three sectors in the auction of Jamkhani mine. Considering the court’s inclination during the JSW Steel hearing to stay the auction process, the ministry last month cancelled the sixth round under which it was planning to put on sale 13 blocks to the non-regulated sectors. In October 2016, a bench headed by Justice Badar Durrez Ahmed recognised that clubbing of end-users would result in unequals being treated equally and have an adverse impact on the core sectors.

“Requirements, mechanics and economics for bidding for coal blocks with specific end-uses would be different, putting them together in one category would be adversarial,” it said. Prospective bidders wanting coal for a specified end-use such as ‘iron and steel’ would be different from bidders wanting it for ‘cement’ or for ‘captive power plants’, it added.

Four firms had then submitted that allowing clubbing of specific end-uses would result in violation of a level playing field as one end-user would have an advantage over the other.

All coal blocks were categorised into ‘regulated’ and ‘non-regulated sector’ based on their end-use following a Central government notification of 18 December, 2014. The ASG’s argument is that the October 2016 observations were ober dicta meaning that these parts of the judgement were not essential to or had a bearing on the court’s decision to dismiss the writ petitions. He has argued that clubbing of end-uses would increase the competition and could fetch fair value for natural resource. Moreover, each of the three sectors had less number of potential bidders and the auction of coal mines separately for each sector could result in cartelisation, he opined.

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