Delhi HC restrains allocation of cancelled mines to Coal India

Mar 24, 2015, 08:56 IST | IANS

New Delhi: The Delhi High Court on Monday granted interim relief to Jindal Steel and Power Ltd. (JSPL) and restrained the central government from allocating two coal blocks to Coal India, for which JSPL had emerged as the successful bidder during a recent auction.

A division bench of Justice B.D. Ahmed and Justice Sanjeev Sachdeva directed the Centre to maintain status quo on coal blocks Gare Palma IV/2 and IV/3, and issued notice to the government and asked it to file a response on JSPL's plea by March 26. JSPL approached the court against the government's March 20 decision to cancel the company's winning bids for the two coal blocks in Chhattisgarh.

The government allotted Gare Palma IV/2, IV/3 and Tara block to Coal India despite JSPL and Balco emerging as the top bidders. JSPL, however, said the coal ministry allotted Gare Palma to Coal India by annulling the tender process for the blocks. With regard to the plea on annulment of the tender process for Tara coal block, the bench sought the government's response by April 16.

It asked the coal ministry to bring relevant records regarding the tender annulment and to place it before the court. The two pleas filed by JSPL sought quashing of the March 20 order of the government as well as directions to the government to declare the company as the successful bidder for the three blocks and award these to it.

A coal ministry official told IANS on Monday that blocks Gare Palma IV/1, IV/2 and IV/3, for which JSPL and Balco had emerged as the highest bidders in the recent two rounds of auctions, have been allotted to Coal India. The ministry said last week it was "re-examining" nine winning bids out of the 33 coal blocks auctioned so far, on whether there were any price discrepancies in case of the nine winning bids, including those made by companies like Jindal Steel and Balco.

The ministry was considering whether these bids were too low when compared with the winning bids for other similar blocks through an analytical tool called "outlier", which looks for unusual observations that are far removed from the mass of data. JSPL told the court that the coal ministry cancelled the allocation on March 20 and it feared that blocks Gare Palma IV/2, IV/3 and Tara in Chhattisgarh might be allocated to someone else as the government was "moving very fast".

"Government takes decision on bids for nine coal blocks after examination. Bids for five blocks accepted. Bids for Gare Palma 4/1, 4/2, 4/3 and Tara coal blocks not accepted," Coal Secretary Anil Swarup tweeted. He had told reporters last week that "the government can reauction the mines, it can allot the mines to the state and it can give the blocks to Coal India". Business chambers have expressed concern at the government's move.

"Any instance of reversing the process or withholding an award will adversely impact the overall business sentiment," said A. Didar Singh, secretary general of industry chamber FICCI. "At a time when the government has introduced legislation to open up coal mining as an industry, global mining companies intending to participate will need the assurance and comfort of a stable policy regime that will guarantee predictability of decision-making, certainty of investments as well as security of tenure," he added. Industry chamber Assocham had on Friday termed the central government's decision as "unfair".

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