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Friday, September 5, 2014

Coal mines - allotment of blocks through screening committee but not by public auction - challenged - quashed except some- Apex court held that The allocation of coal blocks through Government dispensation route, however laudable the object may be, also is illegal since it is impermissible as per the scheme of the CMN Act. No State Government or public sector undertakings of the State Governments are eligible for mining coal for commercial use. Since allocation of coal is permissible only to those categories under Section 3(3) and (4), the joint venture arrangement with ineligible firms is also impermissible. Equally, there is also no question of any consortium / leader / association in allocation. Only an undertaking satisfying the eligibility criteria referred to in Section 3(3) of the CMN Act, viz., which has a unit engaged in the production of iron and steel and generation of power, washing of coal obtained from mine or production of cement, is entitled to the allocation in addition to Central Government, a Central Government company or a Central Government corporation. In this context, it is worthwhile to note that the 1957 Act has been amended introducing Section 11-A w.e.f. 13.02.2012. As per the said amendment, the grant of reconnaissance permit or prospecting licence or mining lease in respect of an area containing coal or lignite can be made only through selection through auction by competitive bidding even among the eligible entities under Section 3(3)(a)(iii), referred to above. However, Government companies, Government corporations or companies or corporations, which have been awarded power projects on the basis of competitive bids for tariff (including Ultra Mega Power Projects) have been exempted of allocation in favour of them is not meant to be through the competitive bidding process. As we have already found that the allocations made, both under the Screening Committee route and the Government dispensation route, are arbitrary and illegal, what should be the consequences, is the issue which remains to be tackled. We are of the view that, to this limited extent, the matter requires further hearing. By way of footnote, it may be clarified and we do, that no challenge was laid before us in respect of blocks where competitive bidding was held for the lowest tariff for power for Ultra Mega Power Projects (UMPPs). = Manohar Lal Sharma …… Petitioner Vs. The Principal Secretary & Ors. …… Respondents= 2014 - Aug.Part - http://judis.nic.in/supremecourt/filename=41841

  Coal mines - allotment of blocks through screening committee but not by public auction - challenged - quashed except some  - Apex court held that The allocation of coal blocks  through  Government  dispensation route, however laudable the object may be,  also  is  illegal  since  it  is
impermissible as per the scheme of the CMN  Act.   No  State  Government  or public sector undertakings of the State Governments are eligible for  mining coal for commercial use.   Since allocation of coal is permissible  only  to those categories under Section 3(3) and (4), the joint  venture  arrangement with ineligible firms is also impermissible.   Equally,  there  is  also  no
question of any consortium / leader / association in  allocation.   Only  an undertaking satisfying the eligibility criteria referred to in Section  3(3) of the CMN Act, viz., which has a unit engaged in  the  production  of  iron and steel and generation of power, washing of coal  obtained  from  mine  or production of cement, is entitled to the allocation in addition  to  Central Government,  a  Central  Government  company   or   a   Central   Government corporation. In this context, it is worthwhile to note that the 1957 Act  has been amended introducing Section 11-A w.e.f. 13.02.2012.  As  per  the  said amendment, the grant of reconnaissance permit  or   prospecting  licence  or mining lease in respect of an area containing coal or lignite  can  be  made
only through selection through auction by  competitive  bidding  even  among the  eligible  entities  under  Section  3(3)(a)(iii),  referred  to  above. However, Government  companies,  Government  corporations  or  companies  or corporations, which have  been  awarded  power  projects  on  the  basis  of competitive bids for tariff (including Ultra Mega Power Projects) have  been exempted of allocation in favour of them is not  meant  to  be  through  the competitive bidding process. As we have already found that the allocations made,  both  under the Screening Committee route and the  Government  dispensation  route,  are arbitrary and illegal, what should be the consequences, is the  issue  which remains to be tackled.  We are of the view that,  to  this  limited  extent,
the matter requires further hearing. By way of footnote, it may be  clarified  and  we  do,  that  no
challenge was laid before us in respect of blocks where competitive  bidding was held for the lowest tariff for  power  for  Ultra  Mega  Power  Projects (UMPPs). =

 the allocation of coal blocks for the period 1993 to 2010  is  the
subject matter of this group of  writ  petitions  filed  in  the  nature  of
Public Interest Litigation, principally one by Manohar Lal  Sharma  and  the
other by the Common Cause.
The allocation of coal  blocks  made  during  the
above period  by  the  Central  Government,  according  to  petitioners,
is
illegal and unconstitutional inter alia on the following grounds:
(a)   Non-compliance of the mandatory legal procedure under  the  Mines  and
Minerals (Development and Regulation) Act, 1957 (for short, ‘1957 Act’).
(b)   Breach of Section 3(3)(a)(iii) of  the  Coal  Mines  (Nationalisation)
Act, 1973 (for short, ‘CMN Act’).
(c)   Violation of the principle of  Trusteeship  of  natural  resources  by
gifting away precious resources as largesse.
(d)   Arbitrariness, lack of transparency,  lack  of  objectivity  and  non-
application of mind; and
(e)   Allotment tainted with mala fides and corruption and  made  in  favour
of ineligible companies tainted with mala fides and corruption.=
 for quashing the allocation of coal  blocks  to  private
companies made by the Central Government between the above period. =
 At  the
outset, therefore, it is clarified that consideration of the present  matter
shall not be construed, in any manner, as touching  directly  or  indirectly
upon the investigation being conducted by CBI and ED into the allocation  of
coal blocks.=
In Natural Resources  Allocation  Reference20  the  Constitution
Bench, in the main judgment, thus, concluded that auction  despite  being  a
more preferable method  of  alienation  /  allotment  of  natural  resources
cannot  be  held  to  be  constitutional  requirement  or   limitation   for
alienation of all natural resources and, therefore, every method other  than
auction cannot be struck down as ultra  vires  the  constitutional  mandate.
The Court also opined that auction as a mode cannot be conferred the  status
of a constitutional  principle.
While  holding  so,  the  Court  held  that
alienation of natural resources is a policy decision and the  means  adopted
for the same are, thus, executive prerogatives.
The  Court  summarized  the
legal position as under:

“146. To summarise in the context of the present Reference, it needs  to  be
emphasised that this  Court  cannot  conduct  a  comparative  study  of  the
various methods of distribution of natural resources and  suggest  the  most
efficacious mode, if there is one universal efficacious method in the  first
place.
 It respects  the  mandate  and  wisdom  of  the  executive  for  such
matters.
The methodology pertaining to  disposal  of  natural  resources  is
clearly an economic policy. It entails intricate economic  choices  and  the
Court lacks the necessary expertise to make them.  As  has  been  repeatedly
said, it cannot, and shall not, be the endeavour of this Court  to  evaluate
the efficacy of auction vis-à-vis  other  methods  of  disposal  of  natural
resources.
The Court cannot mandate one method to be followed in  all  facts
and circumstances.
Therefore, auction, an economic  choice  of  disposal  of
natural resources, is not a constitutional mandate. We may, however,  hasten
to add that the Court can test the legality and constitutionality  of  these
methods.
When questioned, the courts  are  entitled  to  analyse  the  legal
validity of different  means  of  distribution  and  give  a  constitutional
answer as to which methods are ultra vires and intra  vires  the  provisions
of the Constitution.
Nevertheless, it cannot  and  will  not  compare  which
policy is fairer than the other, but, if a policy or law is patently  unfair
to the extent that it falls foul of the fairness requirement of  Article  14
of the Constitution, the Court would not hesitate in striking it down.

147. Finally, market price, in economics, is an index of the  value  that  a
market prescribes to a good.
However,  this  valuation  is  a  function  of
several dynamic variables: it is a science and not a law.  Auction  is  just
one of the several price discovery mechanisms.
Since multiple variables  are
involved in such valuations,  auction  or  any  other  form  of  competitive
bidding,  cannot  constitute  even  an  economic  mandate,   much   less   a
constitutional mandate.

148. In our opinion, auction despite  being  a  more  preferable  method  of
alienation/allotment  of  natural  resources,  cannot  be  held  to   be   a
constitutional requirement or  limitation  for  alienation  of  all  natural
resources and therefore, every method other than auction  cannot  be  struck
down as ultra vires the constitutional mandate.

149. Regard being had  to  the  aforesaid  precepts,  we  have  opined  that
auction as a mode  cannot  be  conferred  the  status  of  a  constitutional
principle.
Alienation of natural resources is a  policy  decision,  and  the
means adopted for the same are thus, executive prerogatives.  However,  when
such a policy decision is not backed by a social  or  welfare  purpose,  and
precious and scarce natural resources are alienated for commercial  pursuits
of profit maximising private entrepreneurs, adoption  of  means  other  than
those that are competitive and maximise revenue may be  arbitrary  and  face
the wrath of Article 14 of the Constitution.
 Hence, rather than  prescribing
or proscribing a method, we believe,  a  judicial  scrutiny  of  methods  of
disposal of natural resources should depend on the facts  and  circumstances
of each case, in consonance with the principles which  we  have  culled  out
above.
Failing which, the Court, in exercise of power  of  judicial  review,
shall term the executive  action  as  arbitrary,  unfair,  unreasonable  and
capricious due to its antimony with Article 14 of the Constitution.”=

The entire exercise of allocation  through  Screening  Committee
route thus appears  to  suffer  from  the  vice  of  arbitrariness  and  not
following any objective criteria in determining as to who is to be  selected
or who is not to be selected.  There is no evaluation of merit and no  inter
se comparison of the applicants.  No chart of evaluation was prepared.   The
determination of the Screening Committee is  apparently  subjective  as  the
minutes of the Screening Committee meetings do not show that  selection  was
made after proper assessment.  The project preparedness, track record  etc.,
of the applicant company were  not  objectively  kept  in  view.  Until  the
amendment was brought in Section 3(3) of the CMN Act w.e.f. 09.06.1993,  the
Central Government alone was permitted to mine coal  through  its  companies
with the limited exception of private companies engaged  in  the  production
of iron and steel.  By virtue of the bar contained in Section  3(3)  of  the
CMN Act, between 1976 and 1993, no private company (other than  the  company
engaged in the production of iron and steel) could  have  carried  out  coal
mining operations in India.  Section 3(3) of the CMN Act, which was  amended
on 09.06.1993 permitted private sector entry in coal mining  operations  for
captive use.  The power for grant of  captive  coal  block  is  governed  by
Section 3(3)(a) of the CMN  Act,  according  to  which,  only  two  kind  of
entities, namely, (a) Central Government or undertakings/corporations  owned
by the Central Government; or (b) companies having end-use  plants  in  iron
and steel, power, washing of coal  or  cement  can  carry  out  coal  mining
operations.  The expression “engaged in” in Section 3(3)(a)(iii) means  that
the company that was applying for the coal block must have set  up  an  iron
and steel plant,  power  plant  or  cement  plant  and  be  engaged  in  the
production of steel, power or  cement.   The  prospective  engagement  by  a
private company in the production  of  steel,  power  or  cement  would  not
entitle such private company to carry out coal mining  operation.   Most  of
the companies, which have been allocated coal blocks, were  not  engaged  in
the production of steel, power or cement at the time of  allocation  nor  in
the applications made by them any disclosure was made  whether  or  not  the
power, steel or cement plant was operational. They  only  stated  that  they
proposed to set up such plants.  Thus, the requirement  of  end-use  project
was not met at the time of allocation.=

 To  sum  up,  the  entire  allocation  of  coal  block  as  per
recommendations made by  the  Screening  Committee  from  14.07.1993  in  36
meetings and  the  allocation  through  the  Government  dispensation  route
suffers from the vice  of  arbitrariness  and  legal  flaws.  The  Screening
Committee has never been consistent, it has not been transparent,  there  is
no proper application of mind, it has acted on no material  in  many  cases,
relevant factors  have  seldom  been  its  guiding  factors,  there  was  no
transparency and guidelines have  seldom  guided  it.   On  many  occasions,
guidelines have been honoured more in their breach.  There was no  objective
criteria, nay, no  criteria  for  evaluation  of  comparative  merits.   The
approach had been ad-hoc and casual.  There  was  no  fair  and  transparent
procedure, all resulting in unfair  distribution  of  the  national  wealth.
Common good and public interest have, thus, suffered  heavily.   Hence,  the
allocation of coal blocks based on the recommendations made in  all  the  36
meetings of the Screening Committee is illegal.
155.        The allocation of coal blocks  through  Government  dispensation
route, however laudable the object may be,  also  is  illegal  since  it  is
impermissible as per the scheme of the CMN  Act.   No  State  Government  or
public sector undertakings of the State Governments are eligible for  mining
coal for commercial use.   Since allocation of coal is permissible  only  to
those categories under Section 3(3) and (4), the joint  venture  arrangement
with ineligible firms is also impermissible.   Equally,  there  is  also  no
question of any consortium / leader / association in  allocation.   Only  an
undertaking satisfying the eligibility criteria referred to in Section  3(3)
of the CMN Act, viz., which has a unit engaged in  the  production  of  iron
and steel and generation of power, washing of coal  obtained  from  mine  or
production of cement, is entitled to the allocation in addition  to  Central
Government,  a  Central  Government  company   or   a   Central   Government
corporation.
156.        In this context, it is worthwhile to note that the 1957 Act  has
been amended introducing Section 11-A w.e.f. 13.02.2012.  As  per  the  said
amendment, the grant of reconnaissance permit  or   prospecting  licence  or
mining lease in respect of an area containing coal or lignite  can  be  made
only through selection through auction by  competitive  bidding  even  among
the  eligible  entities  under  Section  3(3)(a)(iii),  referred  to  above.
However, Government  companies,  Government  corporations  or  companies  or
corporations, which have  been  awarded  power  projects  on  the  basis  of
competitive bids for tariff (including Ultra Mega Power Projects) have  been
exempted of allocation in favour of them is not  meant  to  be  through  the
competitive bidding process.
157.        As we have already found that the allocations made,  both  under
the Screening Committee route and the  Government  dispensation  route,  are
arbitrary and illegal, what should be the consequences, is the  issue  which
remains to be tackled.  We are of the view that,  to  this  limited  extent,
the matter requires further hearing.
158.        By way of footnote, it may be  clarified  and  we  do,  that  no
challenge was laid before us in respect of blocks where competitive  bidding
was held for the lowest tariff for  power  for  Ultra  Mega  Power  Projects
(UMPPs).  As a matter of fact, Mr. Prashant  Bhushan,  learned  counsel  for
Common Cause submitted that since allocation for UMPPs  is  in  accord  with
the opinion given  in  Natural  Resources  Allocation  Reference20  and  the
benefit of the coal block is passed on to the public, the  said  allocations
may not be  cancelled.   However,  he  submitted  that  in  some  cases  the
Government has allowed diversion of coal from UMPP to other  end  uses  i.e.
for commercial exploitation.  Having regard to this,  it  is  directed  that
the coal blocks allocated for UMPP would  only  be  used  for  UMPP  and  no
diversion  of  coal  for  commercial  exploitation   would   be   permitted.

2014 - Aug.Part - http://judis.nic.in/supremecourt/filename=41841

                                                                  REPORTABLE


                        IN THE SUPREME COURT OF INDIA
                            ORIGINAL JURISDICTION
                    WRIT PETITION (CRL.) NO. 120 OF 2012



Manohar Lal Sharma                                       ……  Petitioner

                   Vs.

The Principal Secretary & Ors.                                ……
Respondents

                                    WITH

                      WRIT PETITION [C] NO. 463 OF 2012

                      WRIT PETITION [C] NO. 515 OF 2012

                      WRIT PETITION [C] NO. 283 OF 2013




                                  JUDGMENT

R.M. LODHA, CJI.


            Coal is king and paramount Lord of industry is an old saying  in
the industrial world.  Industrial greatness has been built  up  on  coal  by
many countries.  In India, coal is  the  most  important  indigenous  energy
resource and remains  the  dominant  fuel  for  power  generation  and  many
industrial applications.  A number of  major  industrial  sectors  including
iron and steel production depend on coal as a source of energy.  The  cement
industry is also a major coal user. Coal’s  potential  as  a  feedstock  for
producing  liquid  transport  fuels  is  huge  in  India.  Coal   can   help
significant economic  growth.  India’s  energy  future  and  prosperity  are
integrally dependant upon mining and using  its  most  abundant,  affordable
and dependant energy supply – which is coal.  Coal  is  extremely  important
element in the industrial life of  developing  India.  In  power,  iron  and
steel, coal is used as an input and in cement, coal is  used  both  as  fuel
and an input.  It is no exaggeration that coal is regarded by  many  as  the
black diamond.
2.           Being  such  a  significant,  valuable  and  important  natural
resource, the allocation of coal blocks for the period 1993 to 2010  is  the
subject matter of this group of  writ  petitions  filed  in  the  nature  of
Public Interest Litigation, principally one by Manohar Lal  Sharma  and  the
other by the Common Cause. The allocation of coal  blocks  made  during  the
above period  by  the  Central  Government,  according  to  petitioners,  is
illegal and unconstitutional inter alia on the following grounds:
(a)   Non-compliance of the mandatory legal procedure under  the  Mines  and
Minerals (Development and Regulation) Act, 1957 (for short, ‘1957 Act’).
(b)   Breach of Section 3(3)(a)(iii) of  the  Coal  Mines  (Nationalisation)
Act, 1973 (for short, ‘CMN Act’).
(c)   Violation of the principle of  Trusteeship  of  natural  resources  by
gifting away precious resources as largesse.
(d)   Arbitrariness, lack of transparency,  lack  of  objectivity  and  non-
application of mind; and
(e)   Allotment tainted with mala fides and corruption and  made  in  favour
of ineligible companies tainted with mala fides and corruption.
3.          The first of these writ  petitions  was  filed  by  Manohar  Lal
Sharma.  When that writ petition  was  listed  for  preliminary  hearing  on
14.09.2012, the Court issued notice to Union of India  and  directed  it  to
file counter affidavit through Secretary, Ministry of Coal dealing with  the
following aspects:
      (i)   The details of guidelines framed by the Central  Government  for
allocation of subject coal blocks.
      (ii)  The process adopted for allocation of subject coal blocks.
      (iii) Whether the guidelines contain inbuilt mechanism to ensure  that
allocation does not lead to distribution of largesse unfairly in  the  hands
of few private companies?
      (iv)  Whether the guidelines were strictly  followed  and  whether  by
allocation of the subject coal blocks, the objectives  of  the  policy  have
been realised?
       (v)    What  were  the  reasons  for  not  following  the  policy  of
competitive bidding adopted by the Government of India way back in 2004  for
allocation of coal blocks?
      (vi)  What steps have been taken or are proposed to be  taken  against
the allottees who have not adhered to the terms  of  allotment  or  breached
the terms thereof?
4.          Another PIL came to be filed by Common  Cause  after  the  above
order was passed.  PIL by Common Cause came up for  preliminary  hearing  on
19.11.2012.  Since, certain additional issues  were  raised  and  additional
reliefs were also made in the PIL by Common Cause, this Court issued  notice
in that matter as well on 19.11.2012.

5.          Principally, two  prayers  have  been  made  in  these  matters,
first, for quashing the entire allocation of coal  blocks  made  to  private
companies by the Central Government between 1993  and  2012  and  second,  a
court monitored investigation by the Central Bureau of  Investigation  (CBI)
and Enforcement Directorate (ED) or by a Special  Investigation  Team  (SIT)
into the entire allocation of coal blocks by  the  Central  Government  made
between the above period covering all aspects.
6.          The present consideration of  the  matter  is  confined  to  the
first prayer, i.e., for quashing the allocation of coal  blocks  to  private
companies made by the Central Government between the above period.   At  the
outset, therefore, it is clarified that consideration of the present  matter
shall not be construed, in any manner, as touching  directly  or  indirectly
upon the investigation being conducted by CBI and ED into the allocation  of
coal blocks.
7.          The first counter affidavit was filed by the Central  Government
on 22.01.2013 running into  eleven  volumes  and  2607  pages.   Thereafter,
further/additional counter affidavit was filed by  the  Central  Government.
However, when the  matters  were  listed  on  10.07.2013,  learned  Attorney
General submitted that in the counter affidavits filed so far, the Union  of
India had focused on the six queries raised by the Court  on  14.09.2012  in
the writ petition filed by Manohar  Lal  Sharma.  He  sought  some  time  to
enable  the  Central  Government  to  file  appropriate  counter   affidavit
justifying  allocation  of  coal  blocks.   Thereafter,   further/additional
counter affidavits have also been filed by the Central Government.
8.          On  10.09.2013,  the  arguments  with  regard  to  challenge  to
allocation  of  coal  blocks  commenced  which  continued   on   11.09.2013,
12.09.2013, 17.09.2013, 18.09.2013, 24.09.2013, 25.09.2013  and  26.09.2013.
 On 26.09.2013, Attorney General in the course of  his  arguments  submitted
that allocation letter by the Central  Government  was  only  a  first  step
towards obtaining mining lease and that,  by  itself,  did  not  confer  any
right on the allottee to work mines.  He submitted that at the best,  letter
of allocation was a letter of intent and issuance of such allocation  letter
in no way impinges the rights of the State Governments under the  1957  Act.
In light of the submissions of the learned Attorney General  on  26.09.2013,
we wanted to know from the counsel for  the  petitioners  whether  concerned
State Governments should be asked to explain their position  in  the  matter
to which Mr. Manohar  Lal  Sharma,  petitioner-in-person  and  Mr.  Prashant
Bhushan agreed and, accordingly, the Court issued notice to  the  States  of
Jharkhand,  Chhattisgarh,  Odisha,  Maharashtra,  Andhra   Pradesh,   Madhya
Pradesh  and  West  Bengal  as  the  subject  coal  blocks,  for  which  the
allocation is in issue, were located in these States.  The Court sought  the
views of the above States on the following:
(i)         How did the State Government understand the allocation  of  coal
blocks by the Central Government?
(ii)        What  was  the   role   of   the   State   Government   in   the
    allocation of  coal blocks ?
(iii) What was the role of the State  Government  in  the  subsequent  steps
having regard to the provisions of the 1957 Act?
(iv)  The details of the agreements entered into by the State Public  Sector
Undertakings, which were allotted coal blocks, with private parties for  the
coal blocks located in the State.
9.          In pursuance of the above, 7 States have filed their  responses.

10.          The  arguments  re-commenced  on  05.12.2013.   On  that   day,
arguments  of  the  States  of  Jharkhand,  Chhattisgarh  and  Odisha   were
concluded and  matters  were  fixed  for  08.01.2014.   On  08.01.2014,  the
arguments on behalf of the States of  Maharashtra,  Andhra  Pradesh,  Madhya
Pradesh and West Bengal were  concluded  and  the  matters  were  fixed  for
09.01.2014.  On  that  day,  arguments  of  learned  Attorney  General  were
concluded.
11.         Three Associations, viz., Coal  Producers  Association,   Sponge
Iron Manufacturers Association and Independent Power  Producers  Association
of India have made applications for their intervention  stating  that  these
associations represented large number of allottees who have  been  allocated
subject coal  blocks.   Accordingly,  Mr.  K.K.  Venugopal,  learned  senior
counsel was heard for Coal Producers Association and Mr.  Harish  N.  Salve,
learned senior counsel was heard on behalf of the Sponge Iron  Manufacturers
Association and Independent  Power  Producers  Association  of  India.  They
commenced their arguments on 09.01.2014, which continued on  15.01.2014  and
concluded on 16.01.2014.  The arguments in  rejoinder  by  Mr.  Manohar  Lal
Sharma, petitioner-in-person and Mr. Prashant Bhushan, learned  counsel  for
Common Cause were also concluded on that day.  The arguments of  Mr.  Sanjay
Parikh, who had made an  application  for  intervention  on  behalf  of  Mr.
Sudeep Shrivastav were also heard and concluded.  The judgment was  reserved
on that day.
12.         It is appropriate that we first notice the  statutory  framework
relevant  for  the  issues  under  consideration.  The  Mines  and  Minerals
(Development and Regulation) Act, 1948 (for short, ‘1948 Act’)  was  enacted
to provide  for  the  regulation  of  mines  and  oil  fields  and  for  the
development of the minerals under entry 36 of the Government of  India  Act,
1935.  It received the assent of the  Governor  General  on  08.09.1948  and
came into effect from that date.
13.         1948 Act was repealed by the 1957 Act.  The introduction of  the
1957 Act reads:
“In the Seventh  Schedule  of  the  Constitution  in  Union  List  entry  54
provides for regulation of mines and minerals development to the  extent  to
which such regulation and development under the  control  of  the  Union  is
declared by Parliament by law to be expedient in the  public  interest.   On
account  of  this  provision  it  became  imperative  to  have  a   separate
legislation.  In order to provide  for  the  regulation  of  mines  and  the
development  of  minerals,  the   Mines   and   Minerals   (Regulation   and
Development) Bill was introduced in the Parliament.”

14.         1957 Act has undergone amendments from time to time.  Section  2
of the 1957 Act reads:
“Declaration as to the expediency of Union Control - it is  hereby  declared
that it is expedient in the public  interest  that  the  Union  should  take
under its control the regulation of mines and the  development  of  minerals
to the extent hereinafter provided.”

15.          Sections  3(a),  (c),  (d),  (e),  (f),  (g)  and  (h)  define:
“minerals”,  “mining  lease”,   “mining   operations”,   “minor   minerals”,
“prescribed”,  “prospecting  licence”,  and   “prospecting   operations”[1],
respectively.
16.         Section 4 mandates that prospecting or mining  operations  shall
be under licence or lease.  Sub-section (2) provides that no  reconnaissance
permit, prospecting licence or mining lease shall be granted otherwise  than
in accordance with the provisions of the Act and the rules made  thereunder.

17.         Section 5 is a restrictive  provision.  The  provision  mandates
that in  respect  of  any  mineral  specified  in  the  First  Schedule,  no
reconnaissance permit, prospecting licence or mining lease shall be  granted
except with the previous  approval  of  the  Central  Government.  Coal  and
Lignite are at item no.1 in Part A under  the  title  “Hydro  Carbons/Energy
Minerals” in the First Schedule appended to the 1957 Act.
18.         Section 6 provides for maximum  area  for  which  a  prospecting
licence or mining lease may be granted.  Section 7 makes provisions for  the
periods for which prospecting licence may be granted or renewed and  Section
8 provides for periods for which mining leases may be  granted  or  renewed.
Section 10 provides that application for reconnaissance permit,  prospecting
licence or mining lease in respect of any land in which  the  minerals  vest
in the Government shall be made to the  State  Government  concerned,  inter
alia, it empowers the State Government  concerned  to  grant  or  refuse  to
grant permit, licence or lease having regard to the provisions of  the  1957
Act or the Mineral Concession Rules, 1960 (for short ‘1960 Rules’).
19.         Section 11 provides for preferential right of  certain  persons.
Sub-section (1) of Section 11 makes a provision that where a  reconnaissance
permit or prospecting licence has been granted in respect of any  land,  the
permit holder or the licensee shall have a preferential right for  obtaining
a prospecting licence or mining lease, as the case may  be,  in  respect  of
that land over any  other  person.   This  is,  however,  subject  to  State
Government’s satisfaction and certain conditions as provided  therein.  Sub-
section (2) of Section 11 says that where  the  State  Government  does  not
notify in the Official Gazette the area for grant of  reconnaissance  permit
or prospecting licence or mining lease and two or more persons have  applied
for a reconnaissance permit,  prospecting  licence  or  a  mining  lease  in
respect of any land in  such  area,  the  applicant  whose  application  was
received earlier, shall have a preferential right to be considered for  such
grant over the applicant whose application was  received  later.   This  is,
however, subject to  provisions  of  sub-section  (1).   The  first  proviso
appended thereto enacts that  where  an  area  is  available  for  grant  of
reconnaissance permit,  prospecting licence or mining lease  and  the  State
Government has invited applications by notification in the Official  Gazette
for grant of such permit,  licence  or  lease,   the  applications  received
during the period specified in such notification and the applications  which
had been received prior to the publication of such notification  in  respect
of the lands within such area or had not been disposed of, shall  be  deemed
to have been received on the same day for the purpose of assigning  priority
under sub-section  (2).   The  second  proviso  indicates  that  where  such
applications are received on the  same  day,  the  State  Government,  after
taking into consideration the  matter  specified  in  sub-section  (3),  may
grant the reconnaissance permit, prospecting licence or mining lease to  one
of the applicants as it may deem fit. Sub-section (3) elaborates the  matter
referred to in sub-section  (2),  namely,  (a)  any  special  knowledge  of,
experience in reconnaissance operations, prospecting  operations  or  mining
operations, possessed by the applicant; (b) the financial resources  of  the
applicant; (c) the nature and quality of the technical staff employed or  to
be employed by  the  applicant;  (d)  the  investment  which  the  applicant
proposes to make in the mines and in the industry  based  on  the  minerals;
and (e) such other matters as may be prescribed.
20.         Section 13 empowers the Central  Government  to  make  rules  in
respect of minerals.  By virtue of the  power  conferred  upon  the  Central
Government under  Section  13(2),  the  1960  Rules  have  been  framed  for
regulating the grant of, inter alia, mining leases in  respect  of  minerals
and for purposes connected therewith.
21.         By virtue of Section 17, the Central Government has  been  given
special powers to undertake prospecting  or  mining  operations  in  certain
lands.  Section 17-A authorises the Central Government to reserve  any  area
not already held under any prospecting licence or mining lease with  a  view
to conserve any mineral and after consultation with the State Government  by
notification in the Official Gazette.
 22.        Section 18 indicates that it shall be the duty  of  the  Central
Government to take all such steps as will be necessary for the  conservation
and systematic development of minerals in India and for  the  protection  of
the environment by preventing or controlling  any  pollution  which  may  be
caused by prospecting  or  mining  operations  and  for  such  purposes  the
Central Government may, by notification in the Official Gazette,  make  such
rules as it thinks necessary.
23.         Section 18A  empowers the Central Government  to  authorise  the
Geological Survey of India to carry  out  necessary  investigation  for  the
purpose of information with regard to the availability of any mineral in  or
under any land in relation to which any prospecting licence or mining  lease
has been granted by a State Government or by any other person.  The  proviso
that follows sub-section (1) of  Section  18A  provides  that  in  cases  of
prospecting licences or mining leases granted  by  a  State  Government,  no
such authorisation shall be made except after consultation  with  the  State
Government.
 24.        Section 19 provides that any  prospecting  licences  and  mining
leases granted, renewed or acquired in contravention of the 1957 Act or  any
rules or orders made thereunder shall be void and of no effect.
25.         The 1960 Rules were framed by the Central Government,  as  noted
above, in exercise of the powers conferred by Section 13.
26.         Chapter IV of 1960 Rules deals with grant of  mining  leases  in
respect of land in which the minerals vest in the Government.  Sub-rule  (1)
of Rule 22 provides that an application for the grant of a mining  lease  in
respect of land in which the minerals vest in the Government shall  be  made
to the State Government in Form I through such officer or authority  as  the
State Government may specify in this behalf.  Sub-rule (3) provides for  the
documents to  be  annexed  with  the  application  and  so  also  that  such
application must be  accompanied  by  a  non-refundable  fee  as  prescribed
therein.   Sub-rule  (4)  of  Rule  22  provides  that  on  receipt  of  the
application for the grant of mining lease, the State Government  shall  take
decision to  grant  precise  area  and  communicate  such  decision  to  the
applicant. The  applicant,  on  receipt  of  communication  from  the  State
Government of the precise areas to be  granted,  is  required  to  submit  a
mining plan within a period of six months or such other  period  as  may  be
allowed by the State Government to the Central Government for its  approval.
The applicant is required to submit the mining plan  duly  approved  by  the
Central  Government  or  by  an  officer  duly  authorized  by  the  Central
Government to the State Government to grant mining  lease  over  that  area.
Sub-rule (5) of Rule 22 provides the  details  to  be  incorporated  in  the
mining plan.
27.         Rule 26 empowers the State Government  to  refuse  to  grant  or
renew mining lease over the whole or part of  the  area  applied  for.   But
that has to be done after giving an  opportunity  of  being  heard  and  for
reasons to be recorded in writing and communicated to the applicant.
28.         Rule 31 provides for time within which lease is to  be  executed
where an order has been made for grant of  such  lease  on  an  application.
Rule 34 provides for manner of exercise of preferential  rights  for  mining
lease.
29.         Rule 35 provides that where two or  more  persons  have  applied
for a reconnaissance permit or a prospecting licence or a  mining  lease  in
respect of the same land, the State Government shall,  for  the  purpose  of
sub-section (2) of Section 11, consider besides  the  matters  mentioned  in
clauses (a) to (d) of sub-section (3) of Section 11,  the  end  use  of  the
mineral by the applicant.
30.         In short, the 1957 Act  provides  for  general  restrictions  on
undertaking prospecting and mining operations, the procedure  for  obtaining
prospecting licences or mining leases in  respect  of  lands  in  which  the
minerals vest in the government, the rule-making power  for  regulating  the
grant of prospecting licences and mining leases, special powers  of  Central
Government to undertake prospecting or mining operations in  certain  cases,
and for development of minerals.
31.         The Coal Mines (Taking Over of  Management)  Act,  15  of  1973,
(for short, ‘Coal Mines Management Act’) was passed,
“to provide for the taking over, in the public interest, of  the  management
of coal mines, pending  nationalisation  of  such  mines,  with  a  view  to
ensuring rational and coordinated development of  coal  production  and  for
promoting optimum utilisation of the  coal  resources  consistent  with  the
growing requirements of the country, and for matters connected therewith  or
incidental thereto.”
32.         The Coal  Mines  Management  Act  received  the  assent  of  the
President on 31.03.1973 but it was made  effective  from  30.01.1973  except
Section 8(2) which came into force at once.  Section 3(1) provides  that  on
and from the appointed day (that is, 31.01.1973) the management of all  coal
mines shall vest in the Central Government. By Section 3(2), the coal  mines
specified in the  Schedule  shall  be  deemed  to  be  the  coal  mines  the
management of which shall vest in the Central Government  under  sub-section
(1). Under the proviso to Section 3(2), if, after  the  appointed  day,  the
existence of any other coal mine comes  to  the  knowledge  of  the  Central
Government, it shall by a  notified  order  make  a  declaration  about  the
existence of such mine, upon which the management of  such  coal  mine  also
vests in the Central  Government  and  the  provisions  of  the  Act  become
applicable thereto.
33.         Immediately after the Coal Mines Management Act, the  Parliament
enacted the CMN Act.  CMN Act was passed,
“to provide for the  acquisition  and  transfer  of  the  right,  title  and
interest of the owners in respect of coal mines specified  in  the  Schedule
with a view to reorganising and reconstructing any such coal mines so as  to
ensure the rational, coordinated and scientific development and  utilisation
of coal resources consistent with the growing requirements of  the  country,
in order that the ownership and control of such resources are vested in  the
State and thereby so distributed as best to subserve the  common  good,  and
for matters connected therewith or incidental thereto.”
34.         Section 2(b) of the CMN Act defines a  coal  mine  in  the  same
manner as the corresponding provision of  the  Coal  Mines  Management  Act,
namely,  a mine “in which there exists one or more seams of  coal”.  Section
3(1) provides that on the appointed day (i.e., 01.05.1973) the right,  title
and interest of the owners in relation to the coal mines  specified  in  the
Schedule shall stand transferred  to,  and  shall  vest  absolutely  in  the
Central Government free from all encumbrances. Section  4(1)  provides  that
where the rights of an owner under any mining lease granted,  or  deemed  to
have been granted, in relation to a coal mine, by a State Government or  any
other person, vest in the Central Government under Section  3,  the  Central
Government shall, on and from the date of such vesting, be  deemed  to  have
become the lessee of the State Government or such other person, as the  case
may be, in relation to such coal mine as if a mining lease  in  relation  to
such coal mine had been granted to the Central  Government.  The  period  of
such lease is to be the entire period for which the lease  could  have  been
granted by the Central Government or such other person under the 1960  Rules
and thereupon all the rights under the mining lease granted  to  the  lessee
are to be deemed to have been transferred to, and  vested  in,  the  Central
Government. By Section 4(2) on the expiry of the term of any lease  referred
to in sub-section (1), the lease, at the option of the  Central  Government,
is liable to be renewed on the same terms and conditions  on  which  it  was
held by the lessor for the maximum period for  which  it  could  be  renewed
under the 1960 Rules. Section 5(1) empowers  the  Central  Government  under
certain conditions to direct by an order in writing that  the  right,  title
and interest of an owner in relation  to  a  coal  mine  shall,  instead  of
continuing to vest  in  the  Central  Government,  vest  in  the  Government
company. Such company, under Section 5(2), is to be deemed  to  have  become
the lessee of the coal mine as if the mining lease had been granted  to  it.
By Section 6(1), the property which vests in the Central Government or in  a
government  company  is  freed  and  discharged  from  all  obligations  and
encumbrances affecting it.  Section 8 requires that the owner of every  coal
mine or group of coal mines specified in the second column of  the  Schedule
shall be given  by  the  Central  Government  in  cash  and  in  the  manner
specified in Chapter VI, for the vesting  in  it  under  Section  3  of  the
right, title and interest of the  owner,  an  amount  equal  to  the  amount
specified against it in the corresponding entry in the fifth column  of  the
Schedule. By Section 11(1), the general superintendence, direction,  control
and management of the affairs and business of a coal mine, the right,  title
and interest of an owner in relation to which have  vested  in  the  Central
Government under Section 3 shall vest in the Government company  or  in  the
Custodian, as the case may be.
35.          The  CMN  Act  came  to  be   amended   by   the   Coal   Mines
(Nationalisation) Amendment Ordinance which was promulgated  on  29.04.1976.
The Ordinance was replaced by the  Coal  Mines  (Nationalisation)  Amendment
Act,  1976  (for  short,  ‘1976  Nationalisation  Amendment  Act’).   A  new
section, Section 1-A was inserted by which  it  was  declared  that  it  was
expedient in the public interest  that  the  Union  should  take  under  its
control the regulation and development of coal mines to the extent  provided
in sub-sections (3) and (4) of Section 3 and sub-section (2) of  Section  30
of the  CMN  Act.  By  sub-section  (2)  of  Section  1-A,  the  declaration
contained in sub-section (1) was to be in addition to and not in  derogation
of the declaration contained in Section 2 of the 1957 Act. By Section  3  of
the  1976  Nationalisation  Amendment  Act,  a  new  sub-section   (3)   was
introduced in Section 3 of the principal Act. Under clause (a) of the  newly
introduced sub-section (3) of Section 3, on and  from  the  commencement  of
Section 3 of the 1976 Nationalisation Amendment Act, no  person  other  than
(i) Central Government or a  Government  company  or  a  corporation  owned,
managed or controlled by the Central Government or (ii) a person to  whom  a
sub-lease, referred to in the proviso to clause (c) has been granted by  any
such Government, company or corporation or (iii) a company  engaged  in  the
production of iron and steel, shall  carry  on  coal  mining  operation,  in
India in any form. Under  clause  (b)  of  sub-section  (3),  excepting  the
mining leases granted before  the  1976  Nationalisation  Amendment  Act  in
favour of the Government company or corporation referred to in  clause  (a),
and any sub-lease granted by any  such  Government,  Government  company  or
corporation, all other mining leases and  sub-leases  in  force  immediately
before such commencement shall insofar as they  relate  to  the  winning  or
mining of coal, stand terminated. Clause (c) of the  newly  introduced  sub-
section (3) of Section 3 provides that no lease for winning or  mining  coal
shall be granted  in  favour  of  any  person  other  than  the  Government,
Government company or corporation referred  to  in  clause  (a).  Under  the
proviso  to  clause  (c),  the  Government,  Government   company   or   the
corporation to whom a lease for winning or mining coal has been granted  may
grant a sub-lease to any person in any area if, (i) the reserves of coal  in
the area are in isolated small pockets or are not sufficient for  scientific
and economical development in a coordinated and integrated manner, and  (ii)
the coal produced by the sub-lessee will not be required to  be  transported
by rail. By sub-section (4) of  Section  3,  where  a  mining  lease  stands
terminated under sub-section  (3),  it  shall  be  lawful  for  the  Central
Government or a Government company or corporation  owned  or  controlled  by
the Central Government to obtain a prospecting licence or  mining  lease  in
respect of the whole or part of the land covered by the mining  lease  which
stands terminated. Section 4  of  the  1976  Nationalisation  Amendment  Act
introduces an additional provision in Section 30 of  the  principal  Act  by
providing that any person who engages, or causes  any  other  person  to  be
engaged, in winning or mining coal from the whole or part  of  any  land  in
respect of which no valid prospecting licence or mining lease  or  sub-lease
is in force, shall be punishable with imprisonment  for  a  term  which  may
extend to two years and also with fine which may extend to Rs.10,000/-.
36.         By the Coal Mines (Nationalisation)  Amendment  Act,  1993  (for
short, ‘1993 Nationalisation  Amendment  Act’),  the  CMN  Act  was  further
amended.  The Statement of Objects and Reasons of the  1993  Nationalisation
Amendment Act reads thus:
“Considering the need to augment power generation and to  create  additional
capacity during the eighth plan,  the  Government  have  taken  decision  to
allow private sector participation in the  power  sector.  Consequently,  it
has become necessary to provide for coal linkages to power generating  units
coming up in the private sector.  Coal India  Limited  and  Neyveli  Lignite
Corporation Limited, the major producers of coal and lignite in  the  public
sector, are experiencing resource constraints.  A number of projects  cannot
be taken up in a short span of time.  As an alternative, it is  proposed  to
offer new coal and lignite mines to  the  proposed  power  stations  in  the
private sector for the purpose of captive end use.  The same arrangement  is
also considered necessary for other industries  who  would  be  handed  over
coal mines for captive end use.  Washeries have  to  be  encouraged  in  the
private sector also to augment the availability of washed  coal  for  supply
to steel plants, power houses, etc.
Under  the  Coal  Mines  (Nationalisation)  Act,  1973,   coal   mining   is
exclusively reserved for the public sector,  except  in  case  of  companies
engaged in the production of iron and steel, and mining  in  isolated  small
pockets not amenable  to  economical  development  and  not  requiring  rail
transport.  In order to allow private sector participation  in  coal  mining
for captive use for purpose  of  power  generation  as  well  as  for  other
captive end uses to be notified from time to time and to allow  the  private
sector to set up coal washeries, it is considered  necessary  to  amend  the
Coal and Coal Mines (Nationalisation) Act, 1973.
The Coal Mines (Nationalization) Amendment Bill, 1992 seeks to  achieve  the
aforesaid objectives.”
37.         Section 3 of the CMN Act was amended and thereby in  clause  (a)
of sub-section (3) for item (iii), the following was substituted, namely,
      (iii) a company engaged in –
(1)         the production of iron and steel,
(2)         generation of power,
(3)         washing of coal obtained from a mine, or
(4)   such other end use as the Central  Government  may,  by  notification,
specify.

38.          By  further  Notification   dated   15.03.1996,   the   Central
Government specified production of cement to be an end-use for the  purposes
of the CMN Act.
39.          By  another  Notification   dated   12.07.2007,   the   Central
Government   specified  production  of   syn-gas   obtained   through   coal
gasification (underground and surface) and coal  liquefaction  as  end  uses
for the purposes of the CMN Act.
40.         The background in which Section 3(3) of the CMN Act was  amended
to permit private sector entry in coal mining operation for captive use  has
been sought to be explained by the Central Government.  It  is  stated  that
nationalization of coal through the CMN Act was done with the  objective  of
ensuring “rational, coordinated and scientific development  and  utilization
of coal resources consistent with the growing requirements of  the  country”
and as a first step in 1973,  711  coal  mines  specified  in  the  Schedule
appended to CMN Act were nationalized and vested in the Central  Government.
By 1976 Nationalisation Amendment Act,  the  Central  Government  alone  was
permitted to mine coal with  the  limited  exception  of  private  companies
engaged in the production of iron  and  steel.  In  1991,  the  country  was
facing huge crisis due to (a) the situation regarding balance  of  payments;
(b) the economy being in doldrums; (c) dismal power situation; (d)  shortage
in coal production; and  (e)  inability  of  Coal  India  Limited  (CIL)  to
produce coal because  of  lack  of  necessary  resources  to  maximize  coal
production amongst other reasons. There was a huge shortage of power in  the
country.  The  State  Electricity  Boards  were   unable   to   meet   power
requirements. Post liberalization, in the 8th Five Year Plan  (1992-1997)  a
renewed focus was placed on developing  energy  and  infrastructure  in  the
country. CIL was not in a position to generate the  resources  required.  It
was in this background that in a meeting taken by  the  Deputy  Chairman  of
the  Planning  Commission  on  31.10.1991,  it  was  decided  that  “private
enterprises may be permitted to develop coal and lignite  mines  as  captive
units of power projects”. The approval of Cabinet  was  consequently  sought
vide  a  Cabinet  note  dated  30.01.1992  for  “allowing   private   sector
participation in coal mining  operations  for  captive  consumption  towards
generation of power and other end use, which may be notified  by  Government
from  time  to  time”.  The  Cabinet  in  the  meeting  held  on  19.02.1992
considered the above Cabinet note and it was decided that the  proposal  may
be brought up only when specific projects of  private  sector  participation
in coal mining come  to  the  Government  for  consideration.  Subsequently,
another  Cabinet  note  dated  23.04.1992  was  placed  before  the  Cabinet
containing references to certain  private  projects  like  the  two  250  MW
thermal power plants of RPG Enterprises, which had been recommended  by  the
Government of West Bengal. The proposal contained in the Cabinet note  dated
23.04.1992 was approved by the Cabinet on  05.05.1992.  On  15.07.1992,  the
Bill for amendment of Section 3(3) of CMN Act was introduced in Rajya  Sabha
and the same was passed on 21.07.1992. The Bill was passed in Lok  Sabha  on
19.04.1993 and got assent of the President on 09.06.1993.
41.         The Central Government has highlighted that  once  Section  3(3)
of the CMN Act was amended to permit private sector  entry  in  coal  mining
operations for captive use, it became necessary to select  the  coal  blocks
that could be offered to the  private  sector  for  captive  use.  The  coal
blocks to be offered for captive mining were duly identified and  a  booklet
containing particulars of 40 blocks was  prepared  which  was  revised  from
time to time.
42.         Mr. Goolam E.  Vahanvati,  learned  Attorney  General  with  all
persuasive skill and eloquence at his command  has  sought  to  justify  the
allocation of coal blocks by the Central Government.  He  submits  that  the
Central Government is not only empowered but is duty bound to take the  lead
in allocation of coal blocks and that is what it did.  He traces this  power
to Sections 1A and 3(3) of the  CMN  Act.   It  is  argued  by  the  learned
Attorney General that in addition to the declaration contained in Section  2
of the 1957 Act, Parliament has made  a  further  declaration  in  terms  of
Entry 54 of List I (Union List) of the Seventh Schedule  in  Section  1A  of
the CMN Act which makes specific reference to Section 3(3) of  the  CMN  Act
and both have to be read in  conjunction  with  each  other.  By  virtue  of
Parliament having placed the regulation and development of coal mines  under
the control of the Union, Section 1A of the CMN Act  regulates  coal  mining
operations under Sections 3(3) and 3(4). He argues that  coal  reserves  are
primarily concentrated in seven States, viz., Maharashtra,  Madhya  Pradesh,
Chhattisgarh, Odisha, Jharkhand, Andhra Pradesh and  West  Bengal  and   all
these seven States have accepted and acknowledged the  source  of  power  of
Government of India with respect to allocation of coal blocks.
43.         It is argued by the learned Attorney General that by  virtue  of
the bar contained in Section 3(3) of the CMN Act between 1976 and  1993,  no
private company (other than the company engaged in the  production  of  iron
and  steel)  could  have  carried  out  coal  mining  operations  in  India.
Therefore,  if  no  other  company  could  have  carried  on   coal   mining
operations, it follows that it could also not  have  applied  to  the  State
Government for grant of lease for mining of coal. Even  if  they  did  (post
1993) make an application for  grant  of  prospective  licence/mining  lease
directly to the State Government, the State  Government  could  not  process
the same until it  received  the  letter  of  allocation  from  the  Central
Government.
44.         Learned  Attorney  General  argues  that  the  consideration  of
proposals by the Central Government for allocation of coal blocks  does  not
contravene the provisions of the 1957 Act in any  manner,  firstly,  because
Section 1A of CMN Act is in addition to and not in derogation  of  the  1957
Act; secondly, an application for allocation of a coal block  is  not  dealt
with by the provisions of the 1957 Act; and thirdly, after  allocation,  the
allocatee  has  to  make  an  application  for  grant  of  mining  lease  or
prospecting licence to the State Government in accordance with the 1957  Act
and the 1960 Rules. It is for these reasons, he submits, that  none  of  the
States nor any private person ever challenged the  grant  of  allocation  by
the Central Government on the ground that the  Central  Government  was  not
empowered to allocate the coal blocks.
45.          The  above  arguments  of  the  learned  Attorney  General  are
vehemently contested by Mr. Prashant Bhushan,  learned  counsel  for  Common
Cause. He submits that under the provisions of CMN Act  only  two  kinds  of
entities (a) Central Government and undertakings/corporations owned  by  the
Central Government; and (b) companies having  end-use  plants  in  iron  and
steel, power, cement, etc., could work the coal mines. He submits  that  the
CMN Act does not, in any  way,  give  the  power  of  calling  applications,
selection and allocation of  coal  blocks  to  the  Central  Government  and
Section 3 of the CMN Act only provides eligibility criteria  for  allocation
of coal mines.  The procedure for allocation continues  to  be  governed  by
the 1957 Act  and  it  is  for  this  reason  that  ultimately  Section  11A
concerning allocation of coal mines was introduced in the 1957 Act only.
46.         Mr. Harish N. Salve, learned senior counsel,  who  appeared  for
interveners, Sponge Iron Manufacturers  Association  and  Independent  Power
Producers Association of India, argues that Section 1A(2)  of  the  CMN  Act
makes the declaration in addition to the existing declaration in  Section  2
of the 1957 Act.  The additional declaration has done away with any  vestige
of power in the State in the matter of selection  of  beneficiaries  of  the
mineral and if Section 1A had not been inserted  vide  1976  Nationalisation
Amendment Act, it may have been possible to argue that  the  State,  as  the
owner of the mineral, would nonetheless  be  required  to  grant  the  lease
under Section 10 of the 1957 Act by exercising its discretion under  Section
10(3) albeit subject to further “conditionalities” imposed by  Section  3(2)
of the CMN Act. The additional declaration, learned senior counsel  for  the
interveners submits, is intended to denude the State of  power  under  Entry
23 of List II of the Seventh  Schedule  and  corresponding  executive  power
under Article 162 of the Constitution of India. According to Mr.  Harish  N.
Salve, the grant or refusal of  the  lease  by  State  insofar  as  coal  is
concerned, is no longer governed by Section 11 of the 1957 Act and  that  it
is governed by Sections 3(3) and 3(4) of  the  CMN  Act  and,  thus,  it  is
obvious that  there  has  to  be  first  a  recommendation  by  the  Central
Government before the State can exercise its discretion under Section  10(3)
of the 1957 Act and that the converse would  lead  to  conferring  upon  the
State, in Section 10(3) of the 1957 Act, an unguided and un-canalised  power
to grant or refuse a lease. He submits that if Section 3(3) of the  CMN  Act
is read as prescribing qualifications in addition to those in  Section  5(1)
of the 1957 Act, such position would make the scheme of both the  enactments
– 1957 Act and CMN Act – unworkable.
47.         Mr. Harish N. Salve argues that the allocation letter issued  by
the Central Government is the procedure which regulates the  exercise  under
Rule 22 of the 1960 Rules (and Section 10(3) of the 1957 Act) by  the  State
Government and that procedure is to ensure that a  lease  is  granted  to  a
company engaged in stipulated permissible activities  by  making  it  a  two
step process, viz., the issue of letter of allotment  conditional  upon  the
end-use plant, followed by grant of a lease once end usage is  achieved.  He
submits that Section 3(3) of the CMN Act is fully satisfied  where  a  lease
is granted to a company which engages in the permissible  activity.  Learned
senior counsel for the interveners  fully  supports  the  arguments  of  the
learned Attorney General that  the  Central  Government  has  the  power  to
identify the beneficiary of an allotment and  once  the  Central  Government
has identified the beneficiary of allotment, the State will  be  obliged  to
grant a lease if other conditions are satisfied.
48.         Mr. K.K. Venugopal, learned senior counsel appearing  for   Coal
Producers Association argues that having  regard  to  the  declaration  made
under Section 2 of the 1957 Act and the declaration under Section 1A of  the
CMN Act and so also Section 3(3) thereof, it  is  perfectly  legitimate  for
the Central Government to exercise its power and jurisdiction in the  manner
it has done for the purpose of selecting the allottees for coal  blocks.  He
contends that under Article 73 of the Constitution, the executive  power  of
the Union  extends  to  matters  in  regard  to  which  the  Parliament  has
legislative competence and this power it undoubtedly possesses by reason  of
the declarations  contained  in  the  1957  Act  and  the  CMN  Act  enacted
specifically for the regulation and development of coal and coal mines.
49.         It shall have been noticed that the thrust of the  arguments  of
the learned Attorney General and so also Mr. Harish N. Salve and Mr.  K.  K.
Venugopal hinges around the premise that Sections 1A and  3(3)  of  the  CMN
Act clothe the Central Government with power to  allocate  the  coal  blocks
or, in other words, select the allottees for coal blocks.  Is  it  so?   The
constitutional  philosophy  about  law  making  in  relation  to  mines  and
minerals and List I Entry 36 (Federal Legislative List) and  List  II  Entry
23 (Provincial Legislative List) in Schedule VII of the Government of  India
Act, 1935 which correspond to List I Entry  54  (Union  List)  and  List  II
Entry 23 (State List) in our Constitution has been noticed by this Court  in
Monnet[2].  Speaking through one of us (R.M. Lodha, J., as he then  was)  in
Monnet2,  this Court has  noted  the  statement  of  the  learned  Solicitor
General in the House of Commons made in the course of debate in  respect  of
the above entries in the Government of India  Bill  that  the  rationale  of
including only the “regulation of mines” and “development of  minerals”  and
that, too, only to the extent it was  considered  expedient  in  the  public
interest by a federal  law  was  to  ensure  that  the  provinces  were  not
completely cut out from the law relating to mines and minerals and if  there
was inaction at the Centre, then the provinces could make  their  own  laws.
Thus, power in relation to the mines and minerals was accorded to both,  the
Centre and the States. The Court in Monnet2 said:
“130. …………... The management of the mineral resources  has  been  left  with
both the Central Government and the State Governments in  terms  of  List  I
Entry 54 and List II Entry 23. In the scheme of our Constitution, the  State
Legislatures enjoy the power to enact legislation on the  topics  of  “mines
and  minerals  development”.  The  only  fetter   imposed   on   the   State
Legislatures under Entry 23 is by the latter part of the  said  entry  which
says, “subject to the provisions of List I with respect  to  regulation  and
development under the control of the  Union”.  In  other  words,  the  State
Legislature loses  its  jurisdiction  to  the  extent  to  which  the  Union
Government had taken over control, the regulation of mines  and  development
of minerals as manifested by legislation incorporating the  declaration  and
no more. If Parliament by its law has declared that regulation of mines  and
development of minerals should in the public interest be under  the  control
of the Union, which it did by making declaration in Section 2  of  the  1957
Act, to the extent of such legislation incorporating  the  declaration,  the
power of the State Legislature is excluded. The  requisite  declaration  has
the effect of taking out regulation of mines  and  development  of  minerals
from List II Entry 23 to that extent. It needs no elaboration  that  to  the
extent to which the Central Government had taken under  “its  control”  “the
regulation of mines and development of minerals” under  the  1957  Act,  the
States had lost  their  legislative  competence.  By  the  presence  of  the
expression “to the extent hereinafter provided” in Section 2, the Union  has
assumed control to the extent  provided  in  the  1957  Act.  The  1957  Act
prescribes the extent of control and specifies it.  We  must  bear  in  mind
that  as  the  declaration  made  in  Section  2  trenches  upon  the  State
legislative power, it has to be construed strictly. Any legislation  by  the
State  after  such  declaration,  trespassing  the  field  occupied  in  the
declaration cannot constitutionally stand. …...”

50.         The declaration made by Parliament in Section 2 of the 1957  Act
states that it is expedient in the public interest  that  the  Union  should
take under its control the  regulation  of  mines  and  the  development  of
minerals to the extent  provided  in  the  Act.  Legal  regime  relating  to
regulation of mines and development of minerals  is,  thus,  guided  by  the
1957 Act and the 1960 Rules.  In addition to the above declaration  in  1957
Act, a further declaration has been inserted by Section 1A of the  CMN  Act,
insofar as coal mines are concerned. By this provision, it is declared  that
it is expedient in the public interest that the Union should take under  its
control regulation and development of coal mines to the extent  provided  in
sub-sections (3) and (4) of Section 3 and sub-section (2) of Section  30  of
the CMN Act.
51.         The two declarations – Section 2 of the 1957 Act and Section  1A
of the CMN Act – have to be conjointly  read  insofar  as  the  control  and
regulation of coal mines is concerned. As a  consequence,  the  States  have
lost their jurisdiction to legislate to the extent to which  the  Union  had
taken over control, regulation and development of coal mines  as  manifested
by the two enactments. When the Parliament by its law contained in 1957  Act
has declared that regulation of mines and development  of  minerals  should,
in the public interest, be  under  the  control  of  the  Union  and  by  an
additional  declaration  in  the  CMN  Act  declared  that  regulation   and
development of mines to the extent provided in sub-sections (3) and  (4)  of
Section 3 and sub-section (2) of Section 30 of the CMN Act  should,  in  the
public interest, be under the control of the Union, the power of  the  State
legislature to legislate on the subject covered by these two  enactments  is
excluded. In other words, the field disclosed in the declarations under  the
1957 Act and the CMN Act is abstracted from the  legislative  competence  of
the State Legislature. The requisite declarations have the effect of  taking
out regulation and development of coal mines from  List  II  Entry  23.   To
that extent, the States have lost their legislative competence.
52.         In Baijnath Kadio[3] the  Constitution  Bench  referred  to  two
earlier decisions of this Court in Hingir-Rampur Coal Co. Ltd.[4]  and  M.A.
Tulloch and Co.[5]. While dealing with declaration contained  in  Section  2
of the 1957 Act, the Court stated in para 14, page 847  of  the  Report,  as
follows:

“14. The declaration is contained in Section 2 of Act 67 of 1957 and  speaks
of the taking under the control of the Central Government the regulation  of
mines and development of minerals to the extent provided in the Act  itself.
We have thus not to look outside Act 67 of 1957 to determine  what  is  left
within the competence of the State Legislature but have to work it out  from
the terms of that Act……….”

53.         In Sandur Manganese and Iron Ores Ltd.[6], this Court held  that
the declaration made in Section 2 of the 1957 Act had denuded the  State  of
its legislative power to make any law with  respect  to  the  regulation  of
mines and mineral development to the extent provided in the 1957 Act.  As  a
sequitur, it is also held that the State is also denuded  of  its  executive
power in regard to matters covered by the 1957 Act and the  1960  Rules  and
there is no question of the State having any power to  frame  a  policy  de-
hors the 1957 Act and the 1960 Rules.
54.         Om Prakash Mehta[7] highlights that the 1957 Act  and  the  1960
Rules  are  a  complete  code  in  respect  of  the  grant  and  renewal  of
prospecting licences as well as mining leases  in  lands  belonging  to  the
Government as well as lands belonging to private persons.
55.         In Monnet2, the  scope  and  extent  of  the  word  ‘regulation’
occurring in Section 2 has been examined and it is stated that  ‘regulation’
must receive wide interpretation but the extent of control by the  Union  as
specified in the 1957 Act has to be construed strictly.   The  same  meaning
must apply to the word ‘regulation’ occurring in Section 1A of the CMN  Act.
 In other words, the extent of control by the Union as specified in the  CMN
Act has to be construed strictly.
56.         In Orissa Cement Ltd.[8] a  three  Judge  Bench  of  this  Court
explained that in the case of a declaration under Entry 54, the  legislative
power of the State Legislature is eroded  only  to  the  extent  control  is
assumed by the Union pursuant to  such  declaration  as  spelt  out  by  the
legislative enactment which makes the declaration.
57.         1957  Act  provides  for  general  restrictions  on  undertaking
prospecting   and   mining   operations,   the   procedure   for   obtaining
reconnaissance permits, prospecting licences and mining leases and the  rule
making power of regulating the grant of reconnaissance permits,  prospecting
licences and mining leases.  Clause (a) of sub-section (3) of Section  3  of
the CMN Act enables  persons specified therein only to carry on coal  mining
operation. In  clause (c),  it is provided that  no  lease  for  winning  or
mining coal should be granted  in  favour  of  any  person  other  than  the
Government, Government company or corporation referred  to  in  clause  (a).
Under clause (b) of sub-section (3), excepting  the  mining  leases  granted
before 1976 in favour of the Government, Government company  or  corporation
referred to  in  clause  (a)  and  any  sub-lease(s)  granted  by  any  such
Government, Government company or corporation, all other mining  leases  and
sub-leases in force immediately before such  commencement  insofar  as  they
relate to the winning or mining of coal stand terminated.  When a  sub-lease
stands terminated under  sub-section  (3),  sub-section  (4)  of  Section  3
provides that  it  shall  be  lawful  for  the  Central  Government  or  the
Government company  or  corporation  owned  or  controlled  by  the  Central
Government to obtain a prospecting licence or a mining lease in  respect  of
whole or  part  of  the  land  covered  by  mining  lease  which  stands  so
terminated.  The above provisions in the  CMN  Act,  as  inserted  in  1976,
clearly show that the target of these provisions in  the  CMN  Act  is  coal
mines, pure and simple.  CMN Act effectively places embargo on granting  the
leases for winning or mining of coal to persons other than  those  mentioned
in Section 3(3)(a).  Does  CMN  Act  for  the  purposes  of  regulation  and
development of mines to the extent provided therein alter the  legal  regime
incorporated in the 1957 Act?  We do not think so.  What  CMN  Act  does  is
that in regard to the matters falling under the Act,  the  legal  regime  in
the 1957 Act is made subject to the prescription under Section  3(3)(a)  and
(c) of the CMN Act.   1957  Act  continues  to  apply  in  full  rigour  for
effecting prescription of Section 3(3)(a) and  (c)  of  the  CMN  Act.   For
grant of reconnaissance permit,  prospecting  licence  or  mining  lease  in
respect of coal mines, the MMDR  regime  has  to  be  mandatorily  followed.
1957 Act and so also the 1960 Rules do not provide for  allocation  of  coal
blocks nor they provide any mechanism, mode or manner of such allocation.
58.    Learned Attorney General submits that an application  for  allocation
of a coal  block  is  not  dealt  with  by  the  1957  Act  and,  therefore,
consideration  of  proposals  for  allocation  of  coal  blocks   does   not
contravene the provisions of the 1957 Act.  The submission  of  the  learned
Attorney General does  not  merit  acceptance  for  more  than  one  reason.
First, although the Central Government has pre-eminent role under  the  1957
Act inasmuch as no reconnaissance  permit,  prospecting  licence  or  mining
lease of coal mines can be granted by the  State  Government  without  prior
approval of the Central  Government  but  that  pre-eminent  role  does  not
clothe the Central  Government  with  the  power  to  act  in  a  manner  in
derogation to or inconsistent with the  provisions  contained  in  the  1957
Act. Second, the CMN Act, as amended from time to time, does  not  have  any
provision, direct or indirect, for allocation of coal blocks.  Third,  there
are no rules framed by the Central Government nor is there any  notification
issued by it under the CMN Act providing for allocation of  coal  blocks  by
it first and then consideration of  an  application  of  such  allottee  for
grant of prospecting licence  or  mining  lease  by  the  State  Government.
Fourth, except providing for the persons who could  carry  out  coal  mining
operations  and  total  embargo  on  all  other  persons  undertaking   such
activity, no procedure or mode or manner  for  winning  or  mining  of  coal
mines is provided in the CMN Act or  the   1960  Rules  or  by  way  of  any
notification. Fifth, even in regard to the matters falling  under  CMN  Act,
such as prescriptive direction that no person other than those  provided  in
Sections 3(3) and 3(4) shall carry on mining operations in the  coal  mines,
the legal regime under the 1957  Act,  subject  to  the  prescription  under
Sections 3(3) and 3(4), continues to apply in full rigour.   Mr.  Harish  N.
Salve, learned senior counsel for the  interveners,  is  not  right  in  his
submission that allocation letter issued by the Central  Government  is  the
procedure which regulates the exercise under Rule 22 of the 1960 Rules.  Had
that been so, some provisions to that effect would have  been  made  in  the
CMN Act or the 1960 Rules framed thereunder but there is none.
59.         The submission of  the  learned  Attorney  General  that  the  7
States -  Maharashtra,  Madhya  Pradesh,  Chhattisgarh,  Odisha,  Jharkhand,
Andhra Pradesh and West Bengal – which have  coal  deposits,  have  accepted
and acknowledged the source of power of the Central Government  with  regard
to allocation of coal blocks is not  fully  correct.   Odisha  has  strongly
disputed that position.  Odisha’s stand is that the system of allocation  of
coal blocks by the Central Government is alien to  the  legal  regime  under
the CMN Act and the 1957 Act.  It is true that many  of  these  States  have
taken the position that allocation letter confers a right on  such  allottee
to get mining lease and the only role left with the State Government  is  to
carry out the formality of processing the application and for  execution  of
lease deed,  but,   in  our  view,  the  source  of  power  of  the  Central
Government  in  allocation  of  coal  blocks  is  not   dependant   on   the
understanding of the State Governments but  it  is  dependant  upon  whether
such power exists in law or not.  Indisputably, power  to  regulate  assumes
the continued existence of that which is to be  regulated  and  it  includes
the authority to do all things which are necessary for  the  doing  of  that
which is authorized including whatever  is  necessarily  incidental  to  and
consequential upon it but the question is,  can  this  incidental  power  be
read to empower the Central Government to allocate the coal blocks which  is
neither contemplated by the CMN Act nor by the 1957 Act?   In  our  opinion,
the answer has to be in the negative.  It is  so  because  where  a  statute
requires to do a certain thing in a certain way, the thing must be  done  in
that way or not at  all.   Other  methods  of  performance  are  necessarily
forbidden[9]. This is uncontroverted legal principle.
60.          It  is  argued  by  the  learned  Attorney  General  that   the
allocation letter does not by itself confer the right to work mines and  the
identification of the coal block does not impinge upon  the  rights  of  the
State Government under the 1957 Act.  Learned Attorney General  argues  that
allocation of coal block is essentially  an  identification  exercise  where
coal blocks selected by the CIL for captive mining were  identified  by  the
Screening Committee for development by an allocatee, after  considering  the
suitability of the coal block (in terms of exercise and quality of  reserve)
vis-à-vis the requirements of the end-use plan  of  the  applicant.   It  is
submitted by the Attorney General that a letter of allocation is  the  first
step. It entitles the allocatee to apply to the State Government  for  grant
of prospecting licence/mining lease in accordance  with  the  provisions  of
the 1957 Act.  The right to apply for grant  of  prospecting  licence/mining
lease does not imply  that  with  the  issuance  of  allocation  letter  the
allocatee automatically gets the clearances and approval required under  the
1957 Act, the 1960 Rules,  the  Forest  (Conservation)  Act,  1980  and  the
Environment (Protection) Act, 1986, etc.  According to the learned  Attorney
General, after allocation, the following steps are required to  be  complied
with:
The allocatee is required to apply to the  State  Government  for  grant  of
Prospecting Licence in case of an unexplored block, or  a  Mining  Lease  in
case of an explored block.

On receipt of the application for grant of  Prospecting  License  or  Mining
Lease, as the case may be, the State Government, in the case of  Prospecting
Licence can process the application for Prospecting  Licence  in  accordance
with Chapter III of the 1960 Rules.

In the case  of  application  for  Mining  Lease  (in  Form  I),  the  State
Government has to take a decision to grant precise area for the  purpose  of
the lease and communicate such decision to the applicant.

On receipt of the communication from the State  Government  of  the  precise
area to be granted, the applicant is required to submit  a  mining  plan  to
the Central Government for its approval. [Rule 22(4)]

After the mining plan has been duly approved by the Central Government,  the
applicant submits the same to the  State  Government  for  grant  of  mining
lease over the area.

After receipt of the duly approved mining plan, the State  Government  makes
a proposal for grant of prior consent by the Central Government in terms  of
the proviso to Section 5(1) of the 1957 Act.

In addition to the approved  mining  plan,  the  allocatee  is  required  to
obtain permission under Section 2 of the Forest (Conservation) Act, 1980  if
the coal block is located in a scheduled forest.  Further, the allocatee  is
required to submit to the State Government,  prior  environmental  clearance
from the Ministry of Environment and Forests, Government of  India  for  the
project.  Forest Clearance and EIA clearance operate separately.

Mining Lease is thereafter granted by the State Government, after  verifying
that all  statutory  requirements  have  been  duly  complied  with  by  the
allocatee.

61.         There seems to be no doubt to us that allocation letter  is  not
merely an identification exercise as  is  sought  to  be  made  out  by  the
learned Attorney General.  From the  position  explained  by  the  concerned
State Governments, it is clear that the allocation  letter  by  the  Central
Government creates and confers a very valuable right upon the allottee.   We
are unable to accept the submission of the  learned  Attorney  General  that
allocation letter is not bankable.  As a  matter  of  fact,  the  allocation
letter by the Central Government leaves practically  or  apparently  nothing
for the State Government  to  decide  save  and  except  to  carry  out  the
formality of processing the application and for execution of the lease  deed
with the beneficiary selected by the Central Government.  Though, the  legal
regime under the 1957 Act imposes responsibility  and  statutory  obligation
upon the State Government to recommend or not to recommend  to  the  Central
Government grant of prospecting licence or mining lease for the coal  mines,
but once the letter allocating  a  coal  block  is  issued  by  the  Central
Government, the statutory  role  of  the  State  Government  is  reduced  to
completion  of  processual  formalities  only.   As  noticed  earlier,   the
declaration under Section 1A of the CMN Act does not take away the power  of
the State under Section 10(3) of  the  1957  Act.   It  is  so  because  the
declaration under  Section  1A  of  the  CMN  Act  is  in  addition  to  the
declaration made under Section 2 of the 1957 Act and not in its  derogation.
 1957 Act continues to apply with the same rigour in the matter of grant  of
prospecting licence or mining lease of coal mines  but  the  eligibility  of
persons who can carry out  coal  mining  operations  is  restricted  to  the
persons specified in Section 3(3)(a) of the CMN Act.
62.         In Tara Prasad  Singh[10],  a  seven  Judge  Constitution  Bench
while dealing with the purposiveness of the CMN Act,  as  amended  in  1976,
vis-à-vis the 1957 Act, stated that nothing  in  this  Act  (CMN)  could  be
construed as a derogation of the principle enunciated in Section 18  of  the
1957 Act. The Court said:
“Therefore, even in regard to  matters  falling  under  the  Nationalisation
Amendment Act which terminates existing leases and makes it lawful  for  the
Central Government to obtain fresh leases, the obligation of Section  18  of
the Act of 1957 will continue to apply in its full rigour. As  contended  by
the learned Solicitor General, Section 18 contains a  statutory  behest  and
projects a purposive legislative policy. The later Acts on  the  subject  of
regulation of mines and mineral development are linked up  with  the  policy
enunciated in Section 18.”
                                   (emphasis supplied by us)

63.         The observations made by  this  Court  in  Tara  Prasad  Singh10
about interplay between the CMN Act and the 1957 Act with reference  to  the
policy enunciated in Section 18, in our view, apply equally  to  the  entire
legal regime articulated in the 1957 Act.    We  are  of  the  opinion  that
nothing should be read in the two Acts, namely, CMN Act and  the  1957  Act,
which results in destruction of the policy, purpose and scheme  of  the  two
Acts.  It is not right to  suggest  that  by  virtue  of  declaration  under
Section 1A of the CMN Act, the power of the State  under  Section  10(3)  of
the 1957 Act has become  unavailable.   The  submission  of  Mr.  Harish  N.
Salve,  learned  senior  counsel  for  the   interveners   that   additional
declaration under Section 1A of the CMN  Act  seeks  to  do  away  with  any
vestige of power in the State in the matter of  selection  of  beneficiaries
of the mineral is not meritorious.  Had that been so, Rule 35  of  the  1960
Rules would not have been amended to provide that where two or more  persons
have applied for reconnaissance permit or prospecting licence  or  a  mining
lease in respect of the same land, the State Government shall,  inter  alia,
consider the end-use of the mineral by the applicant. The declaration  under
Section 1A has not denuded the States of any power in relation to  grant  of
mining leases and determining of those permitted to  carry  on  coal  mining
operation.
64.        The allocation of coal block is not simply identification of  the
coal block or the allocatee as contended by  the  learned  Attorney  General
but it is in fact selection of  beneficiary.   As  a  matter  of  fact,  Mr.
Harish N. Salve, learned senior counsel for the  interveners,  has  taken  a
definite position that allocation letter may not by itself confer  purported
rights in the minerals  but  such  allocation  has  legal  consequences  and
confers private rights to the  allocatees  for  obtaining  the  coal  mining
leases for their end-use plants.
65.         In view of the foregoing discussion, we hold,  as  it  must  be,
that the exercise undertaken by the Central  Government  in  allocating  the
coal blocks or, in other words,  the  selection  of  beneficiaries,  is  not
traceable either to the 1957 Act  or  the  CMN  Act.   No  such  legislative
policy (allocation of coal blocks by the Central Government) is  discernible
from these two enactments.  Insofar as Article 73  of  the  Constitution  is
concerned, there is no doubt that the executive power of the  Union  extends
to the matters with respect to which the Parliament has power to  make  laws
and the  executive  instructions  can  fill  up  the  gaps  not  covered  by
statutory provisions but it is  equally  well  settled  that  the  executive
instructions cannot be in  derogation  of  the  statutory  provisions.   The
practice and  procedure  for  allocation  of  coal  blocks  by  the  Central
Government through administrative route is  clearly  inconsistent  with  the
law already enacted or the rules framed.
66.         The  principle  of  Contemporanea  Expositio  was  pressed  into
service by the learned Attorney General and the learned senior  counsel  for
interveners.  It is argued that the Ministries of  Central  Government,  the
State Governments and all concerned have understood  the  declaration  under
Section 1A read  with  Section  3  of  the  CMN  Act  recognizing  that  the
selection of beneficiaries through allocation letter  is  the  task  of  the
Union. The exposition of the legal position by  them  must  be  accepted  as
there is nothing to show that the exposition in  respect  of  allocation  of
coal blocks received by the Central Government, State  Governments  and  all
concerned was clearly wrong.  In this regard, reliance has  been  placed  on
the decision of this Court in Desh Bandhu Gupta[11].
67.         In Desh Bandhu Gupta11, this Court has dealt with the  principle
of  Contemporanea  Expositio.   While  doing  so,  this  Court  referred  to
Crawford on Statutory Construction (1940 ed.) and the two decisions  of  the
Calcutta High Court in Baleshwar  Bagarti[12]  and  Mathura  Mohan  Saha[13]
and culled out the legal position in para 9 (page  572  of  the  Report)  as
under:
“9.   It may be stated that it was not disputed before  us  that  these  two
documents which came into existence almost simultaneously with the  issuance
of the notification could be looked at for finding out  the  true  intention
of the Government in issuing the notification in question,  particularly  in
regard to the manner in which outstanding transactions were to be closed  or
liquidated.   The  principle  of  contemporanea  expositio  (interpreting  a
statute or any  other  document  by  reference  to  the  exposition  it  has
received from contemporary authority) can be invoked though  the  same  will
not always be decisive of the question of construction (Maxwell  12th  ed.p.
268).  In Crawford on Statutory Construction (1940 ed.) in para 219 (at  pp.
393-395)  it  has  been  stated  that  administrative   construction   (i.e.
contemporaneous construction placed by administrative or executive  officers
charged with executing a statute) generally should be clearly  wrong  before
it is overturned; such a construction, commonly  referred  to  as  practical
construction,  although  not  controlling,  is  nevertheless   entitled   to
considerable weight; it is  highly  persuasive.   In  Baleshwar  Bagarti  v.
Bhagirathi Dass [ILR 35 Cal 701 at 713] the principle, which was  reiterated
in Mathura Mohan Saha v. Ram Kumar Saha [ILR 43 Cal 790 : AIR 1916 Cal  136]
has been stated by Mookerjee, J., thus:

‘It is a well settled principle of interpretation that courts in  construing
a statute will give much weight to the interpretation put upon  it,  at  the
time of its enactment and  since,  by  those  whose  duty  it  has  been  to
construe, execute and apply it….. I do not suggest for a  moment  that  such
interpretation has by any means a controlling effect upon the  courts;  such
interpretation may, if occasion arises, have to be  disregarded  for  cogent
and persuasive reasons, and in a clear case of error, a court would  without
hesitation refuse to follow such construction.

Of course, even without the aid of  these  two  documents  which  contain  a
contemporaneous exposition of the Government’s intention, we  have  come  to
the conclusion that on a plain construction of the notification the  proviso
permitted the closing out or liquidation of all outstanding transactions  by
entering into a forward contract in accordance with the rules, bye-laws  and
regulations of the respondent.”

68.         The above is consistent view.  In our  view,  an  interpretation
to the statute received from contemporary authority is not binding upon  the
courts and may  have  to  be  disregarded  if  such  interpretation  by  the
contemporary authority is clearly wrong. The process evolved by the  Central
Government for allocation of coal blocks for captive use  has  significantly
and effectively reversed the scheme provided in the 1957 Act inasmuch as  in
most of the cases the applications have been made directly  to  the  Central
Government. West Bengal has stated that in some cases,  they  had  knowledge
of such applications and in some cases the  State  Government  had  no  such
knowledge.  Then once allocation letter  has  been  issued  by  the  Central
Government,  virtually  no  power  remains  with  the  State  Government  in
objectively  considering  the   application   for   reconnaissance   permit,
prospecting licence or mining lease. Maharashtra says,  “…the  role  of  the
State Government is limited in the case of coal mines as the  discretion  to
reject once the Central  Government  has  issued  an  allocation  letter  is
virtually non-existent………”.  Odisha says, “……Once the beneficiary  has  been
identified by the Central  Government  by  making  the  allocation  of  coal
block, there was nothing left out for the State Government  to  decide…………”.
It must be noted  without  an  iota  of  hesitation  that  the  process  for
allocation of coal blocks for captive use  has  rendered  the  role  of  the
State Government only mechanical and the concept of ‘previous  approval’  in
Section 5 of the 1957 Act meaningless  after recommendation  has  been  made
by the State Government.  It is not without any reason that confronted  with
this difficulty, the 1957 Act has been amended and Section 11A  inserted  in
2010 providing for allocation of coal blocks and also the  mode  and  manner
of such allocation.
69.         Assuming that the Central  Government  has  competence  to  make
allocation of coal blocks, the next question  is,  whether  such  allocation
confers  any  valuable  right  amounting  to  grant  of  largesse?   Learned
Attorney General argues that allocation of coal blocks does  not  amount  to
grant of largesse since it is only the first statutory step.   According  to
him, the question whether the allocation amounts to grant of  largesse  must
be appreciated not from  the  perspective  whether  allocation  confers  any
rights upon the allocatee but whether allocation amounts  to  conferment  of
largesse  upon  the  allocatee.   An  allocatee,  learned  Attorney  General
submits, does not get right to win or  mine  the  coal  on  allocation  and,
therefore, an allocation letter does not result in  windfall  gain  for  the
allocatee.  He submits that diverse steps, as provided in  Rules  22A,  22B,
and 22(5) of the 1960 Rules and the other statutory  requirements,  have  to
be followed and ultimately the grant of prospecting licence in  relation  to
unexplored coal blocks or grant of mining  lease  with  regard  to  explored
blocks entitles the allocatee/licensee/lessee to win or mine the coal.
70.         We are unable to accept the submission of the  learned  Attorney
General that allocation of coal block does not amount to grant of  largesse.
 It is true  that  allocation  letter  by  itself  does  not  authorize  the
allottee to win or mine the coal  but  nevertheless  the  allocation  letter
does confer a very important right upon the allottee to apply for  grant  of
prospecting licence or mining lease.  As a matter of fact,  it  is  admitted
by the interveners that allocation letter issued by the  Central  Government
provides rights to the allottees for obtaining the  coal  mines  leases  for
their end-use plants.  The banks, financial institutions,  land  acquisition
authorities, revenue authorities and various other entities and so also  the
State Governments,  who  ultimately  grant  prospecting  licence  or  mining
lease, as the case may be, act on the basis  of  the  letter  of  allocation
issued by the Central Government.  As noticed  earlier,  the  allocation  of
coal  block  by  the  Central  Government  results  in  the   selection   of
beneficiary which entitles the beneficiary to get  the  prospecting  licence
and/or mining lease from the State Government.  Obviously, allocation  of  a
coal block amounts to grant of largesse.
71.          Learned Attorney General accepted  the  position  that  in  the
absence of allocation letter, even the eligible person  under  Section  3(3)
of  the  CMN  Act  cannot  apply  to  the  State  Government  for  grant  of
prospecting licence or  mining  lease.   The  right  to  obtain  prospecting
licence or mining lease of the coal mine admittedly is  dependant  upon  the
allocation letter.   The allocation letter, therefore,  confers  a  valuable
right in favour of the allottee.  Obviously, therefore, such allocation  has
to meet the twin constitutional tests,  one,  the  distribution  of  natural
resources that vest in the State is to sub-serve the common good  and,  two,
the allocation is not violative of Article 14.
72.          The  PIL  petitioners  have  seriously  criticized  the  entire
allocation process by the Central Government.  They submit that  allocations
made on the recommendations of  the  Screening  Committee  and  through  the
government dispensation route after  1993  are  in  violation  of  statutory
provisions contained in the 1957  Act.   Moreover,  the  Central  Government
while making the allocations failed  to  even  follow  the  basic  statutory
eligibility for grant of captive  coal  blocks.   The  power  for  grant  of
captive  coal  block  is  governed  by  Section  3(3)(a)  of  the  CMN  Act.
According  to  which,  only  two  kinds  of  entities,  viz.,  (a)   Central
Government, or undertakings/corporations owned by the Central Government  or
(b) a company having end-use plants in iron, steel, power, washing  of  coal
or cement, can carry out  coal  mining  operations.   The  State  Government
undertakings are not included in the above provision and any  allocation  to
them can only be made if they are engaged in any of the  end-uses  specified
under  that  provision.   Commercial  mining  by  the  State  Public  Sector
Undertakings/companies is not permitted, yet as many as 38 coal blocks  were
allocated to State Public Sector Undertakings for commercial  mining  though
these undertakings were not engaged in any specified end-use activity.  They
submit that allocation of  coal  blocks  made  by  the  Central  Government,
whether by way of Screening Committee route or dispensation route,  is  ipso
facto illegal and it is in total violation of the CMN Act.  Moreover, it  is
submitted that almost all these  State  PSUs  then  signed  agreements  with
private companies wherein the right to mine coal was  given  to  them  which
later sold the coal to the State PSUs either at the market price or  at  CIL
price.
73.         According to Mr.  Prashant  Bhushan,  learned  counsel  for  the
petitioner-Common Cause and Mr. Manohar  Lal  Sharma,  petitioner-in-person,
the expression “engaged in” in Section 3(3)(a)(iii) means that  the  company
that was applying for the coal block must have set  up  an  iron  and  steel
plant, power plant or cement plant and  be  engaged  in  the  production  of
steel, power or cement.  Most companies were silent  in  their  applications
as to whether or not the power,  steel  or  cement  plant  was  operational.
They only stated that they proposed to set up such plants.   Moreover,  from
2006 even the requirement of end-use project was  done  away  with  and  the
Central Government allowed companies to apply and obtain  coal  blocks,  and
it was stated that the coal mined from these blocks would be transferred  to
an end-user company.  Thus, the basic minimum  statutory  requirements  were
not adhered to and followed in making allocation of coal blocks.
74.         It is submitted  on behalf  of  the  PIL  petitioners  that  the
allocation of those blocks which had reserves far in excess  of  requirement
for  the  end-use  project  was  made  which  demonstrates  the  total  non-
application of mind  and  arbitrariness  in  the  decision  making  process.
Mr. Prashant Bhushan, learned counsel for Common Cause and Mr.  Manohar  Lal
Sharma, petitioner-in-person submit  that  the  allocation  of  coal  blocks
constitutes a largesse as it confers very valuable benefit on the  applicant
to get mining lease.  It is argued that the  arbitrary  and  non-transparent
allocation process has resulted in windfall gain to the  allottees  and  the
State has been deprived of the full value of its  resources.   Besides  that
the  process  of  allocation  was  arbitrary  and  non-transparent,  it   is
submitted by the PIL petitioners that the process  also  suffers  from  mala
fides inasmuch as though a comprehensive  note  on  competitive  bidding  on
allocation of  coal  blocks  was  placed  by  the  then  Coal  Secretary  on
16.07.2004,  the  allocation  process  through   the   Screening   Committee
continued leading to windfall gain to  the  private  companies  and  thereby
corresponding loss to the public exchequer.  In this  regard,  Mr.  Prashant
Bhushan, learned counsel for  Common  Cause  and  Mr.  Manohar  Lal  Sharma,
petitioner-in-person referred to  Parliamentary  Standing  Committee  Report
submitted on 24.03.2013, Central Empowered Committee  Report  made  in  I.A.
No.2167 to the Forest Bench regarding the loss from the allocation  of  coal
mines in the State of  Madhya  Pradesh,  the  additional  affidavit  of  the
Government of Maharashtra filed on 09.01.2014 and the CAG Report.
75.         It  is  argued  on  behalf  of  the  PIL  petitioners  that  the
Screening Committee did not follow any objective criteria in determining  as
to who is to be selected or who is to  be  rejected.   The  minutes  of  the
Screening Committee meetings do not  show  that  selection  was  made  after
proper assessment.  There  is  no  evaluation  of  merit  and  no  inter  se
comparison of the applicants.  No chart of  evaluation  was  prepared.   The
determination of the Screening Committee is apparently subjective.    It  is
no co-incidence that  a  large  number  of  allottees  are  either  powerful
corporate groups or shady companies linked with  politicians  and  ministers
or  those  who  came  with  high  profile  recommendations.  Most  of  these
allottees were in fact ineligible for allocation;  they  had  misrepresented
the facts and were not more meritorious than others whose claims  have  been
rejected, but by serious manipulations and abuse, they were able to get  the
coal blocks.
76.         With regard to  Government  dispensation  route  whereby  public
sector corporations and undertakings  were  allocated  coal  blocks,  it  is
submitted by Mr. Prashant Bhushan, learned counsel for the Common Cause  and
Mr. Manohar Lal Sharma,  petitioner-in-person  that  such  allocations  were
violative of Section 3 of the CMN Act.  The  State  Government  undertakings
are not included in Section 3 and in any case allocation to them could  have
been made only if they were engaged in any of the end-uses  specified  under
Section 3(3)(a)(iii) of the CMN Act.  The State PSUs have signed  agreements
with private companies under which substantial  benefits  or  interest  from
the coal blocks had accrued to the private companies  thereby  causing  huge
loss to the public exchequer and windfall gain  to  the  private  companies.
The PIL petitioners, therefore, vehemently argued  that  the  allocation  of
coal  blocks  deserves  to  be  quashed  being  non-transparent,  arbitrary,
illegal and unconstitutional.
77.         According to  Central  Government,  the  need  for  a  Screening
Committee was felt because development of coal mines  for  captive  end-uses
required consideration of inputs from a variety  of   stakeholders  such  as
the Ministry of Coal, Ministry of Railways, the concerned  State  Government
(owner of the  coal  block),  the  concerned  Administrative  Ministry  like
Ministry of Power (for inputs pertaining to the  end  use  plant)  and  Coal
India Limited (to protect CIL’s interest in coal blocks being  developed  by
its subsidiaries).  Initially, by Office  Memorandum  dated  14.07.1992[14],
the Screening  Committee  was  constituted  by  the  Ministry  of  Coal  for
scrutinizing applications/proposals received from private  power  generating
companies requesting for ownership and  operation  of  captive  coal  mines.
The Screening Committee was reconstituted  on  more  than  one  occasion  by
Office   Memorandum   dated   05.08.1993[15],   Office   Memorandum    dated
10.01.2000[16],   Office  Memorandum   dated   17.04.2003[17]   and   Office
Memorandum dated 26.09.2005[18].
78.         Learned Attorney General argues  that  the  Screening  Committee
provided  opportunity  to  stakeholders  to  express   their   views   about
permitting a particular company to develop a particular coal block  for  its
end-use plant. The State Governments as the owners  of  coal  blocks  within
their territories participated in the Screening Committee meetings.   At  no
stage, anybody objected to the allocation of  coal  blocks  by  the  Central
Government through the Screening Committee route.  Learned Attorney  General
in this regard referred to the affidavits filed on  behalf  of  Maharashtra,
Madhya Pradesh, Odisha, Chhattisgarh,  West  Bengal,  Jharkhand  and  Andhra
Pradesh.   The process of allocation was  participatory.   The  coal  blocks
were allocated to private companies only from the approved  list  of  blocks
to be offered for captive mining and the interests of CIL, being  paramount,
were duly protected and preserved. Only in such cases of  subsisting  lease,
where CIL had no plans to work these blocks in near future and consented  to
these blocks being offered for captive  mining,  few  of  such  blocks  were
allocated but  CIL’s  interest  was  kept  into  consideration.   He,  thus,
submitted that allocation of coal  blocks  during  the  subject  period  was
transparent and it does not suffer from any  constitutional  vice  or  legal
infirmity.
79.         Moreover, it is the submission of the learned  Attorney  General
that allocation of  coal  blocks  by  the  Central  Government  has  brought
significant benefits and investment  to  the  States  in  which  these  coal
blocks and the associated end-use plants are located.   Due  to  substantial
investment and employment opportunities generated  in  various  States,  the
State Governments have accepted, participated and  made  recommendations  in
the meetings of the Screening Committee.   A  number  of  blocks  have  been
allocated in accordance with the recommendations of the  State  Governments.
  Besides the benefits and investment to the State in which coal blocks  and
the associated end-use plants are located,  learned  Attorney  General  also
submits that there are number of States where coal blocks are  not  located,
which have got benefits due to the substantial investment in associated  end
use plants. For instance,  it  is  submitted  that  blocks  in  Maharashtra,
namely, Baranj – I to IV, Kiloni and Manoradeep were allocated to  Karnataka
Power Corporation for captive use in its power generation plants.   The end-
use is the supply of coal to Bellary Thermal Power  Station  (in  Karnataka)
which is supplying 1000 MW power to the State grid.
80.         Learned Attorney General for the  sake  of  convenience  divided
the allocations recommended  by  the  Screening  Committee  for  the  period
between 14.07.1993 and 03.07.2008 in 36 meetings into  four  periods:  first
period  between  14.07.1993  to  19.08.2003  (1st  meeting  till  the   21st
meeting); second period from 04.11.2003 to 18.10.2005 (22nd meeting to  30th
meeting); third period from 29/30.06.2006  to  07/08.09.2006  (32nd  meeting
till the 34th meeting) and the fourth period from 20.06.2007  to  03.07.2008
(35th and 36th meeting).  Learned Attorney General argues that in the  first
period,   21  coal  blocks  were  recommended  for  allocation  after   full
consideration of each case.   During  the  second  period,  26  blocks  were
recommended.   These  recommendations  were  also  made  by  the   Screening
Committee after consideration of each applicant.  The third  period  relates
to recommendations made pursuant to the advertisement issued by Ministry  of
Coal in September, 2005.  The decision to advertise was taken as  there  was
growing demand for coal  blocks  which  had  substantially  matured  in  the
economy by  this  time.   In  the  third  period,  the  Screening  committee
recommended 20 blocks for allocation. In the fourth period,  recommendations
were made by the Screening Committee pursuant to  the  advertisement  issued
in 2006 whereby 38 coal blocks were advertised for allocation, out of  which
15 blocks were reserved for the  power  sector.   Learned  Attorney  General
clarified that  a  coal  block  that  was  approved  as  one  block  in  the
advertisement has been subsequently considered as two  blocks  in  the  36th
meeting of the Screening Committee.  Learned  Attorney  General  has  fairly
admitted that the minutes of the Screening Committee meetings in  the  third
and fourth periods do not contain the particulars showing  consideration  of
each application.  He, however, justifies the manner in which  the  exercise
was undertaken by the Screening Committee in the third  and  fourth  periods
as, according to him, the huge number of applications had been  received  by
the Ministry of Coal in response  to  its  advertisement  and  recording  of
particulars of each application in the minutes was not possible.   Moreover,
he submits that each application was  duly  considered  and  evaluated  with
reference to other applications by  the  Administrative  Ministry  concerned
and the recommendations of the Screening Committee were primarily  based  on
the exercise conducted by  the  concerned  Administrative  Ministry.   Thus,
learned Attorney General submits that the entire exercise by  the  Screening
Committee was done properly and in a non-arbitrary manner.
81.         Learned Attorney General vehemently contends that allocation  of
coal blocks without auction is  not  unlawful.   He  submits  that  lack  of
public auction does not render the allocation process arbitrary.   Moreover,
according to him, when coal mining sectors were first opened up  to  private
participants, the idea of  the  Central  Government  was  to  encourage  the
private sector so that they could come forward and  invest.   Allocation  of
coal  blocks  by  public  auction  in  such  a  scenario  would  have   been
impractical and unrealistic.  As a matter of  fact,  he  would  submit  that
when the proposal for introduction of competitive bidding was  first  mooted
in June, 2004,  the  State  Governments  expressed  their  reservations  and
concerns. In this regard, learned Attorney General referred to  the  letters
sent by the Governments of Chhattisgarh, West Bengal, Rajasthan and  Odisha.
  Learned  Attorney  General  submits  that  the  concerns  of   the   State
Governments could not have been brushed  aside  by  introducing  competitive
bidding by an administrative  fiat.   Moreover,  according  to  the  learned
Attorney General, competitive bidding could have  resulted  in  increase  in
the input price which would have a cascading effect.
82.         From the above submissions, the  following  questions  fall  for
determination:

(i)   Whether the allocation of coal blocks ought to have been done only  by
public auction?
(ii)   Whether  the  allocation  of  coal  blocks  made  on  the  basis   of
recommendations of the Screening Committee  suffer from  any  constitutional
vice and legal infirmity?
(iii) Whether the allocation of  coal  blocks  made  by  way  of  Government
dispensation route (Ministry of Coal) is consistent with the  constitutional
principles and the fundamentals of the  equality  clause  enshrined  in  the
Constitution?

83.         Two recent  decisions  viz.,  (1)  Centre  for  Public  Interest
Litigation   (2G   case)[19]    and   (2)   Natural   Resources   Allocation
Reference[20] directly deal with the question of auction  as  mode  for  the
disposal or allocation of natural resources.  But before we  consider  these
two decisions, reference to some of the decisions of this Court,  which  had
an occasion to deal with disposal of natural resources, may be of some  help
in appreciating this aspect in correct perspective.
84.         P.N. Bhagwati, J. in Kasturi  Lal  Lakshmi  Reddy[21]  had  said
that where the State was allocating resources  such  as  water,  power,  raw
materials, etc., for the purpose of encouraging  setting  up  of  industries
within the State, the State was not bound to advertise and tell  the  people
that it wanted a particular industry to be  set  up  within  the  State  and
invite those interested to come up with proposals for the  purpose.  It  was
also observed that if any private party comes before the  State  and  offers
to set up an industry, the State would  not  be  committing  breach  of  any
constitutional or legal obligation if it  negotiates  with  such  party  and
agrees to provide resources and other facilities for the purpose.
85.          In  Sachidanand  Pandey[22]  this  Court  had  observed    that
ordinary rule for disposal of State-owned or public-owned property,  was  by
way of public auction or by inviting tenders but  there could be  situations
where departure from the said rule may be necessitated but then the  reasons
for the  departure  must  be  rational  and  should  not  be  suggestive  of
discrimination and that nothing should be done which gives an appearance  of
bias, jobbery or nepotism.
86.         The statement of law in Sachidanand Pandey22  was  echoed  again
in Haji T.M. Hassan Rawther[23], wherein  this  Court  reiterated  that  the
public property owned by the State or by an instrumentality of State  should
be generally  sold  by  public  auction  or  by  inviting  tenders.  It  was
emphasized that this rule has  been  insisted  upon  not  only  to  get  the
highest  price  for  the  property  but  also  to  ensure  fairness  in  the
activities of the State and public authorities and to  obviate  the  factors
like  bias,  favoritism  or  nepotism.   Clarifying  that  this  is  not  an
invariable rule, the Court  reiterated  that  departure  from  the  rule  of
auction could be made but then it must be justified.
87.         The above principle is again stated by this Court  in  M.P.  Oil
Extraction[24], in which this Court said that distribution  of  largesse  by
inviting open tenders or by public auction is desirable  but  it  cannot  be
held that in no  case  distribution  of  such  largesse  by  negotiation  is
permissible.
88.         In Netai Bag[25] this Court said that when  any  State  land  is
intended  to  be  transferred  or  the  State  largesse  is  decided  to  be
conferred, resort should be had to public auction  or  transfer  by  way  of
inviting tenders from  the  people  as  that  would  be  a  sure  method  of
guaranteeing compliance with mandate of Article 14 of Constitution but  non-
floating of tenders or not holding public auction would not in all cases  be
deemed to be the result of  the  exercise  of  the  executive  power  in  an
arbitrary manner.
89.         In Villianur Iyarkkai Padukappu  Maiyam[26]  the  matter  before
this Court related to the selection of contractor  for  development  of  the
port of Pondicherry without floating a tender  or  holding  public  auction.
The Court said that where the State was allocating resources such as  water,
power, raw materials, etc., for the purpose of  encouraging  development  of
the port, the State was not bound to advertise and tell the people  that  it
wanted development of the port in  a  particular  manner  and  invite  those
interested to come up with proposals for the purpose.
90.         There are numerous decisions of  this  Court  dealing  with  the
mode and manner of disposal of natural resources but  we  think  it  is  not
necessary to refer to all of them.  Having indicated the view taken by  this
Court in some of the cases, now we may turn to 2G  case19.   In  that  case,
the two-Judge Bench of this Court stated  that  a  duly  publicised  auction
conducted fairly and impartially was perhaps the best method for  alienation
of natural resources lest there was likelihood  of  misuse  by  unscrupulous
people who were only interested in garnering maximum financial  benefit  and
have no respect  for  the  constitutional  ethos  and  values.   Court  laid
emphasis that while transferring or alienating the  natural  resources,  the
State is duty bound to adopt the method of auction by giving wide  publicity
so that all eligible persons can participate in the process.
91.         The above view in 2G case19 necessitated the  reference  by  the
President of India to this Court under Article 143(1) of  the  Constitution.
The first two questions – Question 1 and  Question  2  –  referred  to  this
Court for consideration and report read as under:

 “Question 1  -  Whether the only permissible method  for  disposal  of  all
natural resources across all sectors and in  all  circumstances  is  by  the
conduct of auctions?

      Question 2  -    Whether a broad proposition  of  law  that  only  the
route of auctions can be resorted to for disposal of natural resources  does
not run contrary to several judgments of the Supreme Court  including  those
of the larger Benches?”



92.         The Constitution Bench which  dealt  with  the  above  reference
observed that the answer to the  following  three  questions  would  provide
comprehensive answer to the parent question, viz., Question 1:

(i)   Are some methods ultra vires and others intra vires  the  Constitution
of India, especially Article 14?

(ii)   Can  disposal  through  the  method  of  auction  be  elevated  to  a
constitutional principle?

(iii) Is this Court entitled to direct the  executive  to  adopt  a  certain
method because it is the “best” method? If  not,  to  what  extent  can  the
executive deviate from such “best” method?

93.         The Constitution Bench clarified that the statement  of  law  in
2G case19 that while transferring or alienating the natural  resources,  the
State is duty bound to adopt the method  of  auction  was  confined  to  the
specific  case  of  spectrum  and  not  for  dispensation  of  all   natural
resources. The Constitution Bench said that findings of  this  Court  in  2G
case19 were limited to the case of spectrum and not beyond that and that  it
did not deal with the modes of allocation for natural resources  other  than
spectrum.
94.          The  Constitution  Bench  while  dealing  with  the  aspect  of
disposal of natural resources other than auction, divided the  consideration
of this aspect under two heads, viz., “Legitimate deviations  from  auction”
and “Potential  of  abuse”.  Under  the  head  “Legitimate  deviations  from
auction” the Court  considered  the  earlier  decisions  of  this  Court  in
Kasturi  Lal  Lakshmi  Reddy21,  Sachidanand  Pandey22,  Haji  T.M.   Hassan
Rawther23,  M.P.  Oil  Extraction24,  Netai  Bag25  and  Villianur  Iyarkkai
Padukappu Maiyam26, which we have briefly noted above, and it was held  that
there is no constitutional mandate in favour of auction  under  Article  14.
In the main judgment (paras 129 to 131,  pg.  92),  the  Constitution  Bench
stated as under:

“129. Hence, it is manifest that  there  is  no  constitutional  mandate  in
favour of auction under Article 14. The Government has  repeatedly  deviated
from the course of  auction  and  this  Court  has  repeatedly  upheld  such
actions. The judiciary  tests  such  deviations  on  the  limited  scope  of
arbitrariness and fairness under Article 14 and its role is limited to  that
extent. Essentially whenever the object of policy is  anything  but  revenue
maximization, the Executive is seen to adopt methods other than auction.

130. A fortiori, besides legal logic, mandatory auction may be  contrary  to
economic  logic  as  well.  Different  resources   may   require   different
treatment. Very often, exploration and exploitation  contracts  are  bundled
together due to the  requirement  of  heavy  capital  in  the  discovery  of
natural resources. A concern would risk  undertaking  such  exploration  and
incur heavy costs only  if  it  was  assured  utilization  of  the  resource
discovered; a prudent business venture, would not like  to  incur  the  high
costs involved in exploration activities and then compete for that  resource
in an open auction. The logic is similar to that applied in  patents.  Firms
are given incentives to invest in research and development with the  promise
of exclusive access to the market for the sale of that  invention.  Such  an
approach is economically and legally sound and sometimes necessary  to  spur
research and development. Similarly, bundling exploration  and  exploitation
contracts may be necessary to spur growth in a specific industry.

131. Similar deviation from auction cannot be ruled out when the  object  of
a State policy is to promote domestic development of an  industry,  like  in
Kasturi Lal’s case, discussed above.  However,  these  examples  are  purely
illustrative in order  to  demonstrate  that  auction  cannot  be  the  sole
criteria for alienation of all natural resources.”

95.         While dealing with the argument  that  even  if  the  method  of
auction was not a mandate under Article 14, it must be the only  permissible
method due to the susceptibility of other methods to abuse, the Court  under
the head “Potential of abuse” held that a potential for abuse cannot be  the
basis for striking down the method as  ultra  vires  the  Constitution.  The
Court  noted  two  decisions  of  this  Court  in  R.K.  Garg[27]  and  D.K.
Trivedi[28] and held that neither auction nor any other method  of  disposal
can be held ultra vires the  Constitution  merely  because  of  a  potential
abuse. The Constitution Bench (para 135, pgs. 93-94) stated as under:

“135. Therefore, a potential for abuse cannot  be  the  basis  for  striking
down a method as ultra vires  the  Constitution.  It  is  the  actual  abuse
itself that must be brought before the Court for being tested on  the  anvil
of constitutional provisions. In fact, it may be said that even auction  has
a potential of abuse, like any other method of allocation, but  that  cannot
be the basis of declaring it  as  an  unconstitutional  methodology  either.
These drawbacks include cartelization, “winners curse”  (the  phenomenon  by
which a bidder bids a higher, unrealistic and  unexecutable  price  just  to
surpass the competition; or where a bidder, in case  of  multiple  auctions,
bids for all the resources and ends up winning licenses for exploitation  of
more resources than he can pragmatically execute),  etc.  However,  all  the
same, auction cannot  be  called  ultra  vires  for  the  said  reasons  and
continues to be an attractive and preferred means  of  disposal  of  natural
resources especially when revenue maximization  is  a  priority.  Therefore,
neither auction, nor any other method of disposal can be  held  ultra  vires
the Constitution, merely because of a potential abuse.”

96.         In Natural Resources  Allocation  Reference20  the  Constitution
Bench, in the main judgment, thus, concluded that auction  despite  being  a
more preferable method  of  alienation  /  allotment  of  natural  resources
cannot  be  held  to  be  constitutional  requirement  or   limitation   for
alienation of all natural resources and, therefore, every method other  than
auction cannot be struck down as ultra  vires  the  constitutional  mandate.
The Court also opined that auction as a mode cannot be conferred the  status
of a constitutional  principle.  While  holding  so,  the  Court  held  that
alienation of natural resources is a policy decision and the  means  adopted
for the same are, thus, executive prerogatives.  The  Court  summarized  the
legal position as under:

“146. To summarise in the context of the present Reference, it needs  to  be
emphasised that this  Court  cannot  conduct  a  comparative  study  of  the
various methods of distribution of natural resources and  suggest  the  most
efficacious mode, if there is one universal efficacious method in the  first
place. It respects  the  mandate  and  wisdom  of  the  executive  for  such
matters. The methodology pertaining to  disposal  of  natural  resources  is
clearly an economic policy. It entails intricate economic  choices  and  the
Court lacks the necessary expertise to make them.  As  has  been  repeatedly
said, it cannot, and shall not, be the endeavour of this Court  to  evaluate
the efficacy of auction vis-à-vis  other  methods  of  disposal  of  natural
resources. The Court cannot mandate one method to be followed in  all  facts
and circumstances. Therefore, auction, an economic  choice  of  disposal  of
natural resources, is not a constitutional mandate. We may, however,  hasten
to add that the Court can test the legality and constitutionality  of  these
methods. When questioned, the courts  are  entitled  to  analyse  the  legal
validity of different  means  of  distribution  and  give  a  constitutional
answer as to which methods are ultra vires and intra  vires  the  provisions
of the Constitution. Nevertheless, it cannot  and  will  not  compare  which
policy is fairer than the other, but, if a policy or law is patently  unfair
to the extent that it falls foul of the fairness requirement of  Article  14
of the Constitution, the Court would not hesitate in striking it down.

147. Finally, market price, in economics, is an index of the  value  that  a
market prescribes to a good.  However,  this  valuation  is  a  function  of
several dynamic variables: it is a science and not a law.  Auction  is  just
one of the several price discovery mechanisms. Since multiple variables  are
involved in such valuations,  auction  or  any  other  form  of  competitive
bidding,  cannot  constitute  even  an  economic  mandate,   much   less   a
constitutional mandate.

148. In our opinion, auction despite  being  a  more  preferable  method  of
alienation/allotment  of  natural  resources,  cannot  be  held  to   be   a
constitutional requirement or  limitation  for  alienation  of  all  natural
resources and therefore, every method other than auction  cannot  be  struck
down as ultra vires the constitutional mandate.

149. Regard being had  to  the  aforesaid  precepts,  we  have  opined  that
auction as a mode  cannot  be  conferred  the  status  of  a  constitutional
principle. Alienation of natural resources is a  policy  decision,  and  the
means adopted for the same are thus, executive prerogatives.  However,  when
such a policy decision is not backed by a social  or  welfare  purpose,  and
precious and scarce natural resources are alienated for commercial  pursuits
of profit maximising private entrepreneurs, adoption  of  means  other  than
those that are competitive and maximise revenue may be  arbitrary  and  face
the wrath of Article 14 of the Constitution. Hence, rather than  prescribing
or proscribing a method, we believe,  a  judicial  scrutiny  of  methods  of
disposal of natural resources should depend on the facts  and  circumstances
of each case, in consonance with the principles which  we  have  culled  out
above. Failing which, the Court, in exercise of power  of  judicial  review,
shall term the executive  action  as  arbitrary,  unfair,  unreasonable  and
capricious due to its antimony with Article 14 of the Constitution.”

97.         J.S. Khehar, J., while concurring  with  the  main  opinion  has
stated that auction is certainly not a constitutional mandate in the  manner
expressed, but it can be applied in  some  situations  to  maximise  revenue
returns, to satisfy legal and constitutional requirements.  In his view,  if
the State arrives at a  conclusion,  in  a  given  situation,  that  maximum
revenue would be earned by auction of the particular natural resource,  then
that alone would be the process which  it  would  have  to  adopt.   In  the
penultimate para of his opinion, J.S. Khehar, J.,  observed,  “………there  can
be no doubt about  the  conclusion  recorded  in  the  “main  opinion”  that
auction which is just one of the several price recovery  mechanisms,  cannot
be held to be the only constitutionally recognised method for alienation  of
natural resources.  That should not be  understood  to  mean,  that  it  can
never be a valid method for disposal of natural resources…………..”.

98.         In Natural Resources Allocation  Reference20,  the  Constitution
Bench said that  reading  auction  as  a  constitutional  mandate  would  be
impermissible because such an approach may  distort  another  constitutional
principle embodied in Article 39(b).  In the main judgment,  with  reference
to Article 39(b), the Court stated as follows:


“113…The  disposal  of  natural  resources  is  a  facet  of  the  use   and
distribution of such resources. Article 39(b) mandates  that  the  ownership
and control of natural resources should be so  distributed  so  as  to  best
subserve the common good. Article 37 provides that the  provisions  of  Part
IV shall not be enforceable by [pic]any court, but the principles laid  down
therein are nevertheless fundamental in the governance of  the  country  and
it shall be the duty of the State to apply these principles in making  laws.
Therefore, this Article, in a sense,  is  a  restriction  on  “distribution”
built into the Constitution. But the restriction is imposed  on  the  object
and not the  means.  The  overarching  and  underlying  principle  governing
“distribution” is furtherance of common good. But  for  the  achievement  of
that objective, the  Constitution  uses  the  generic  word  “distribution”.
Distribution has broad contours and cannot be limited to  meaning  only  one
method  i.e.  auction.  It  envisages  all  such   methods   available   for
distribution/allocation of natural resources which ultimately  subserve  the
“common good”.

***                    ***                   ***

115. It can thus, be seen from the  aforequoted  paragraphs  that  the  term
“distribute” undoubtedly, has wide amplitude  and  encompasses  all  manners
and methods  of  distribution,  which  would  include  classes,  industries,
regions, private and public  sections,  etc.  Having  regard  to  the  basic
nature of Article 39(b), a narrower concept of  equality  under  Article  14
than  that  discussed  above,  may  frustrate   the   broader   concept   of
distribution, as conceived in Article 39(b). There cannot, therefore,  be  a
cavil that “common good” and “larger public interests” have to  be  regarded
as constitutional reality deserving actualisation.

116. The learned counsel for CPIL argued that  revenue  maximisation  during
the sale or alienation of a natural resource for commercial exploitation  is
the only way of achieving public good since the  revenue  collected  can  be
channelised to welfare policies  and  controlling  the  burgeoning  deficit.
According to the learned counsel, since the best way to maximise revenue  is
through the route of auction, it becomes  a  constitutional  principle  even
under Article 39(b). However, we are not persuaded to hold so. Auctions  may
be [pic]the best way of maximising revenue but revenue maximisation may  not
always be the best way to subserve public good. “Common good”  is  the  sole
guiding factor under Article 39(b) for distribution  of  natural  resources.
It is the touchstone of testing whether any  policy  subserves  the  “common
good” and if it does, irrespective of the means adopted, it  is  clearly  in
accordance with the principle enshrined in Article 39(b).

***                    ***                   ***

119. The norm of “common good” has to be understood  and  appreciated  in  a
holistic manner. It is obvious that the manner in which the common  good  is
best subserved is not a matter that can be measured  by  any  constitutional
yardstick—it would depend on the economic and political  philosophy  of  the
Government. Revenue maximisation is not the only way  in  which  the  common
good can be subserved.  Where  revenue  maximisation  is  the  object  of  a
policy, being considered qua that resource at that point of time to  be  the
best way  to  subserve  the  common  good,  auction  would  be  one  of  the
preferable methods, though not the only method. Where  revenue  maximisation
is not the object of a policy of distribution, the question of  [pic]auction
would not arise. Revenue considerations may assume  secondary  consideration
to developmental considerations.

120. Therefore, in conclusion, the submission that the  mandate  of  Article
14 is that any disposal of a natural resource for  commercial  use  must  be
for revenue maximisation, and thus by auction, is based neither on  law  nor
on logic. There is no constitutional imperative in the  matter  of  economic
policies—Article  14  does  not  predefine  any   economic   policy   as   a
constitutional mandate.  Even  the  mandate  of  Article  39(b)  imposes  no
restrictions on the means adopted to subserve the public good and  uses  the
broad term “distribution”, suggesting that the methodology  of  distribution
is not fixed.  Economic  logic  establishes  that  alienation/allocation  of
natural resources to the highest bidder may not necessarily be the only  way
to subserve the common good, and at times, may run counter to  public  good.
Hence, it needs little emphasis  that  disposal  of  all  natural  resources
through auctions is clearly not a constitutional mandate.”


99.         In light of the above legal position, the argument that  auction
is a best way to select private parties as per Article 39(b) does not  merit
acceptance.  The emphasis on  the  word  “best”  in  Article  39(b)  by  the
learned  senior  counsel  for  the  intervener  does  not  deserve   further
discussion in light of the legal  position  exposited  by  the  Constitution
Bench in Natural Resources Allocation Reference20 with reference to  Article
39(b).  We are fortified in our view by a recent decision of this Court  (3-
Judge Bench) in  Goa  Foundation[29]  wherein  following  Natural  Resources
Allocation Reference20, it is stated, “…it is for the  State  Government  to
decide as a matter of policy in what manner  the  leases  of  these  mineral
resources would be granted, but this decision has to be taken in  accordance
with the provisions of the MMDR Act and the Rules  made  thereunder  and  in
consonance with the constitutional provisions…”.

100.        The explanation by the Central Government for not  adopting  the
competitive bidding is that coal  is  a  natural  resource  used  as  a  raw
material in several basic industries like power generation, iron  and  steel
and cement. The end products of these basic industries are,  in  turn,  used
as  inputs  in  almost  all  manufacturing  and  infrastructure  development
industries.  Therefore, the price of coal occupies a  fundamental  place  in
the growth of the economy and any increase in the input price would  have  a
cascading effect.  The auction of coal blocks could not have  been  possible
when the power generation and, consequently, coal mining sectors were  first
opened up to private  participants  as  the  private  sector  needed  to  be
encouraged at that time to come forward  and  invest.   Allocation  of  coal
blocks through competitive bidding  in  such  a  scenario  would  have  been
impractical  and  unrealistic.   When  the  proposal  for  introduction   of
competitive bidding was first mooted in June, 2004,  the  State  Governments
expressed their reservations based on diverse concerns.  The  Government  of
Chhattisgarh inter alia pointed  out  that  (a)  competitive  bidding  would
result  in  substantial  increase  in  the  cost  of  coal  for   iron/steel
undertakings, (b) there were large number of projects  under  implementation
whose viability is based on availability of coal as per  the  then  existing
policy, (c)  competitive bidding would raise the  price  of  domestic  coal,
which would result in end-use projects in inland  States  like  Chhattisgarh
becoming  unviable  due  to  additional  costs  by  transporting   coal   by
rail/road, and (d) competitive bidding  would  result  in  only  the  bigger
players getting the coal blocks.  The Government of West Bengal opposed  the
introduction of competitive bidding because (a)  the  then  existing  system
could accommodate both subjective and  objective  aspects  of  the  projects
whereas competitive bidding would only lead to  coal  blocks  going  to  the
highest bidder, (b) competitive  bidding  would  not  allow  priority  being
accorded to the power sector,  (c)   competitive  bidding  would  result  in
views of the State  Governments  becoming  redundant,  and  (d)  competitive
bidding would lead to concentration of industries  in  a  particular  State.
The Government of Orissa opposed competitive bidding because (a)  the  State
Government had signed  MOUs  for  investment  in  end-use  plants  based  on
existing  policy  and  those  MOUs  would  suffer,  (b)  State  Government’s
authority to recommend cases for  allocation  based  on  investment  in  the
State would not be available, and (c) competitive bidding would prevent  the
State from  leveraging  its  coal  reserves  to  accelerate  its  industrial
development.

101.        It was for the above reasons that the  Central  Government  says
that competitive bidding was not introduced from 2004.

102.        As a matter of fact, the Central Government  has  explained  the
circumstances because of  which  since  1992-1993  competitive  bidding  for
allocation of coal blocks was not followed. The explanation is that in 1992-
1993, the power generation and coal mining sectors were first opened  up  to
private participants and, at  that  time,  the  private  sector  had  to  be
encouraged to come forward and invest. Allocation  of  coal  blocks  through
auction in such a scenario  would  have  been  impractical  and  unrealistic
because during that time existing demand for coal was not  being  fully  met
by CIL and SCCL. There was supply-demand mismatch and there was also a  huge
shortage of power in the country. The  State  Electricity  Boards  had  been
unable to meet power requirements.

103.        The material  placed  on  record  reveals  that  the  then  Coal
Secretary in his note dated 16.07.2004 and subsequent note  dated  30.7.2004
mooted  introduction  of  bidding  system  to   achieve   transparency   and
objectivity in the allocation process and also to tap part of  the  windfall
gain to the allottee for captive mining. These notes were considered at  the
level of Minister (Coal and Mines) and the PMO and certain disadvantages  of
allocation  of  coal  blocks  through  competitive   bidding   were   noted.
Ultimately, it appears that in the month of October, 2004 the  proposal  for
competitive bidding was not pursued further as it was felt that  this  would
result in delay in the allocation of coal blocks.   The  Coal  Secretary  in
October, 2004 after discussion also felt that since a number  of  applicants
had requested for allotment of blocks based on the current policy, it  would
not be appropriate  to  change  the  allotment  policy  through  competitive
bidding in respect  of  applications  received  on  the  basis  of  existing
policy.  He suggested that  the  policy  of  allotment  through  competitive
bidding could be made prospective and pending applications might be  decided
on the basis of existing policy.

104.        Then, there appears to be exchange of notes  and  discussion  at
various levels on the question whether CMN Act needed to be  amended  before
the proposed competitive bidding becomes operational or  1957  Act  so  that
the system of competitive bidding could be made applicable to  all  minerals
covered under the said Act. The opinion of Department of Legal  Affairs  was
also sought.  In 2006, it appears that Ministry of Coal communicated to  the
PMO and Cabinet Secretariat that Ministry of Law  and  Justice  has  advised
Ministry of Coal to initiate suitable measures for  amendment  in  the  1957
Act for addressing the issue of competitive bidding.  A Bill  to  amend  the
1957 Act was introduced in the Parliament by the  Ministry  of  Mines.   The
Amendment Bill was then referred to Standing Committee  on  Coal  and  Steel
for examination and for its report.  On  receipt  of  the  report  from  the
Standing Committee in 2009, the MMDR Amendment  Bill,  2008  was  passed  by
both the Houses of  Parliament  in  2010  and  ultimately  Section  11A  was
inserted in the 1957 Act providing for competitive  bidding  for  allocation
of coal blocks by the Central Government.  Then, on  02.02.2012,  rules  for
auctions by competitive bidding of coal mines were notified.

105.        The above facts show that it took almost 8 years in  putting  in
place allocation of captive coal blocks through competitive bidding.  During
this period,  many  coal  blocks  were  allocated  giving  rise  to  present
controversy, which was avoidable  because  competitive  bidding  would  have
brought in transparency, objectivity and  very  importantly  given  a  level
playing field to all applicants of coal and lowered the  difference  between
the market price of coal and the cost of coal for the  allottee  by  way  of
premium which would have accrued to the Government.   Be  that  as  it  may,
once it is laid down by the Constitution Bench  of  this  Court  in  Natural
Resources  Allocation  Reference20  that  the   Court   cannot   conduct   a
comparative study of various methods of distribution  of  natural  resources
and  cannot  mandate  one  method  to  be  followed   in   all   facts   and
circumstances, then if the grave situation of shortage of  power  prevailing
at that time necessitated private  participation  and  the  Government  felt
that it would have been impractical and unrealistic to allocate coal  blocks
through auction and later on in 2004 or so there was serious  opposition  by
many State Governments to bidding system, and the Government did not  pursue
competitive  bidding/public  auction  route,   then   in   our   view,   the
administrative decision of the Government not to pursue competitive  bidding
cannot be said to  be  so  arbitrary  or  unreasonable  warranting  judicial
interference.  It is not the domain of the Court to evaluate the  advantages
of competitive bidding vis-à-vis other methods of  distribution  /  disposal
of natural resources. However, if the allocation of subject coal  blocks  is
inconsistent with Article 14 of the Constitution and the procedure that  has
been followed in such  allocation  is  found  to  be  unfair,  unreasonable,
discriminatory, non-transparent, capricious or suffers  from  favoritism  or
nepotism and violative of the mandate of Article  14  of  the  Constitution,
the  consequences  of  such  unconstitutional  or  illegal  allocation  must
follow.

106.         The Central Government in its first counter affidavit filed  on
22.01.2013 has stated that for the  period  from  1993  to  31.03.2011,  216
allocations have been made. In the course  of  arguments,  learned  Attorney
General submitted that in addition to 216, 2 coal blocks for Coal to  Liquid
(CTL) projects were also allocated. According to said affidavit, out of  216
allocations, 105 allocations were made to private companies, 99  allocations
were made to Government companies and 12  allocations  were  made  to  Ultra
Mega Power Projects (UMPPs) and that after adjusting 24  de-allocations  and
2 re-allocations, a total number of 194 allocations,  including  allocations
to private parties, form the subject matter of the writ  petitions.  In  the
course of arguments, however, learned Attorney General submitted that  total
41 de-allocations have already been ordered.

107.        In the first counter affidavit filed on 22.01.2013, the  Central
Government  has  also  given  the  details  of  the  procedure  adopted  for
allocation of the above  coal  blocks,  in  which  it  is  stated  that  the
allocations to  the  private  companies  were  made  through  the  Screening
Committee route.  As  regards  allocations  made  to  Government  companies,
before 2001, allocations were made  only  through  the  Screening  Committee
route but on and from 2001, allocations  were  made  through  the  Screening
Committee  route  as  well  as  directly  by  the  Ministry  of  Coal.   The
allocations which were made by  the  Ministry  of  Coal  to  the  Government
companies are referred to  by  the  Central  Government  as  the  Government
dispensation route. Insofar  as UMPPs are concerned, it is the stand of  the
Central  Government  that  captive  blocks  were  pre-identified   for   the
projects,  that  bidders  for  the  projects  were  selected  as   per   the
competitive bidding guidelines  of  the  Ministry  of  Power  (tariff  based
bidding) and, thus, the 12 allocations to UMPPs were done by  a  competitive
method. It is further stated in the affidavit that the two  blocks  allotted
for Coal to Liquid (CTL) projects were after inviting  applications  through
advertisement in 2008 and that the applications received were considered  by
an inter-Ministerial Group (IMG) under the Chairmanship of Member  (Energy),
Planning Commission and Secretaries of Department of  Expenditure,  Ministry
of Coal, Department  of  Industrial  Policy  and  Promotion,  Department  of
Science and Technology, Ministry of Petroleum and Natural Gas and  Principal
Advisor (Energy), Planning Commission as members.

108.        We shall first deal  with  the  coal  allocations  made  to  the
private companies as  well  as  Government  companies  for  captive  purpose
through Screening Committee route.
109.        On 14.09.2012, while issuing notice to the Union of  India,  the
Court framed six questions  on  which  answer  was  sought  in  the  counter
affidavit.  One of such  questions  was  about  the  details  of  guidelines
framed by the Central Government for allocation of subject coal blocks.   In
the first counter affidavit filed on 22.01.2013,  it  is  stated  that  from
1993 until 31st meeting held on 23.06.2006, the Screening  Committee  framed
its own guidelines for allocation of coal  blocks.   Insofar  as  guidelines
for 31st to 36th meetings of the Screening Committee are  concerned,  it  is
stated that the Ministry of Coal framed the guidelines and these  guidelines
were brought to the attention of the members of the Screening Committee.
110.        The minutes of the 1st meeting held on 14.07.1993 indicate  that
the guidelines were framed in that meeting by the  Screening  Committee  for
the primary purpose to identify suitable blocks for captive  development  by
power  generating  companies.  The  guidelines  framed  by   the   Screening
Committee on 14.07.1993 read as under:

“(i)  Preferably blocks in green  field  areas  where  basic  infrastructure
like road, rail links, etc. is yet to be developed should be  given  to  the
private sector. The areas where CIL has already invested  in  creating  such
infrastructure for opening new mines  should  not  be  handed  over  to  the
private sector, except on reimbursement of costs.

(ii)  The blocks offered to private sector should be at reasonable  distance
from existing mines and projects  of  CIL  in  order  to  avoid  operational
problems.

(iii) Blocks already identified  for  development  by  CIL,  where  adequate
funding is on hand or in sight should not be offered to the private sector.

(iv)  Private sector should be asked to bear full  cost  of  exploration  in
these blocks which may be offered.

(v)    While  discussing  proposals  of  power  generating   companies   and
identifying  blocks  the  requirement  of  coal  for  30  years   would   be
considered.”

111.        In its 2nd meeting held on 13.08.1993,  the Screening  Committee
accepted that any addition  to  generation  of  power,  whether  captive  or
utility, amounted to value addition and, therefore, no distinction would  be
made between the two.
112.        In the 3rd meeting held on 27.09.1993, the  Screening  Committee
discussed whether the guidelines for identification of coal blocks  for  the
power sector were suitable for adoption in respect of  the  iron  and  steel
sector particularly in view of the position explained by the  representative
of Ministry of Steel that requirement of coal  for  iron  and  steel  plants
would be much  less  than  the  coal  required  by  the  power  plants.  The
Screening Committee, accordingly, decided to permit sub-blocking  of  blocks
identified by Central Mine Planning and Design Institute Ltd. (CMPDIL).
113.        In the 4th meeting dated 12.01.1994, proposals relating to  M/s.
RPG Industries  Ltd./Calcutta  Electric  Supply  Corporation,  M/s.  Kalinga
Power Corporation, M/s. Indian Aluminium Company, M/s. Indian Charge  Chrome
Ltd., Andhra Pradesh State Electricity Board, M/s.  Development  Consultants
Ltd., M/s. Gujarat Power Corporation Ltd., M/s.  Associated  Cement  Company
Ltd.,  M/s.  Hellmuth,  Obata  and  Kassabagm  P.C.   were   considered   in
continuation of  earlier  meetings.   Certain  blocks  were  identified  for
allocation to some of these companies.
114.        In its 5th meeting held on 26.05.1994, the  Screening  Committee
while  considering  whether  any  further  changes  were  required  in   the
procedures being  adopted  for  considering  proposals  for  captive  mining
recorded that in the  earlier  meetings,  the  Ministry  of  Coal  had  been
liberal in considering proposals with a view to make the scheme  a  success.
In the said meeting, the Committee reviewed the progress made  by  M/s.  RPG
Industries Ltd., M/s. Kalinga Power  Corporation  Ltd.,  M/s.  Nippon  Denro
Ispat Nigam Ltd., Nagpur, M/s. Andhra Pradesh State Electricity Board,  M/s.
Tamil Nadu Electricity Board,  M/s.  Indian  Aluminium  Company  Ltd.,  M/s.
Development Consultants Ltd., M/s.  Associated  Cement  Company  Ltd.,  M/s.
Hellmuth, Obata and Kassabagm P.C. and M/s. Gujarat Power Corporation Ltd.
115.         In the 6th meeting held on 20.01.1995,  the  Committee  decided
to earmark Sarisatolli block and western part  of  Tara  block  for  captive
mining by  M/s.  RPG  Industries  Ltd.  for  proposed  Budge-Budge  TPS  and
Balagarh TPS.   The proposal of M/s. Jindal Strips Ltd. for a captive  block
for expansion of their Sponge Iron Plant from 2 lakh tonnes per annum  to  6
lakh tonnes per annum was also discussed in the meeting and it  was  decided
that CMPDIL would carry out the exercise of sub-blocking so that a  suitable
block can be allocated to M/s. Jindal Strips Ltd.
116.        In the 7th meeting held on 06.06.1995,  the  Chairman  felt  the
need for fixing certain time limit and laying down corresponding  milestones
otherwise there would be a tendency on the part of developer of  the  mining
block to  proceed  in  a  casual  manner  with  the  result  that  the  coal
production would not be realized within the required  time  frame.   It  was
decided that once the blocks are  identified,  the  party  concerned  should
complete necessary formalities and should be able to apply for lease  within
6 months. In continuation  of  earlier  meetings,  the  Screening  Committee
further  considered  the  proposal  of  M/s.   RPG   Industries   Ltd.   for
identification of coal mining blocks for supply  of  coal  to  the  proposed
Budge-Budge TPS, Balagarh TPS and Dholpur TPS.  In  the  said  meeting,  the
proposals of M/s. West Bengal State  Electricity  Board  and  M/s.  Videocon
Power Ltd. were also considered.
117.        In the 8th meeting held on  04.10.1995,  the  proposal  of  M/s.
Steel Authority of India Limited for captive  blocks  in  Jharia  coalfields
was  discussed.   The  Committee  decided  to  identify  Parbatpur,   Mahal,
Seetanala  and  Tasra  blocks  located  in  Jharia  Coalfields  for  captive
development by SAIL.
118.        In the 9th meeting held on  20.12.1995,  the  proposal  of  M/s.
Nippon Denro Ispat Ltd. for identification of additional coal mining  blocks
for supply of coal to the 2nd stage of the  Bhadravati  TPS  was  discussed.
Apart from the above-mentioned  proposal,  the  other  proposals  were  from
Maharashtra State Electricity Board, National Thermal Power Corporation  and
Lloyds Metals (Sponge Iron Plant) and Larsen & Tourbo captive  power  plant,
Chandrapur.  Since there were conflicting requirements of various  projects,
the Committee decided  that  the  long-term  coal  requirements  of  various
projects of M/s. Nippon Denro  Ispat  Ltd.,  Maharashtra  State  Electricity
Board, National Thermal  Power  Corporation,  Lloyds  Metals  and  Larsen  &
Tourbo should be examined in a comprehensive exercise so that the  available
resources are optimally utilized.  Review of the proposals  of  M/s.  Jindal
Strips – Sponge Iron Plant and M/s. Monnet Ispat –  Sponge  Iron  Plant  was
also undertaken.
119.        In the 10th meeting held  on  03.04.1996,  the  Committee  noted
with concern that out of the blocks already offered, only four parties  have
taken action for development of blocks.  The Committee decided that all  the
identified parties should be issued a notice to pay the exploration cost  by
30.06.1996 and take action for development of the block  failing  which  the
offer would be cancelled.
120.        In  the  11th  meeting  held  on  26/27.09.1997,  the  Screening
Committee carried out a review of the progress made so far.   It  was  noted
that M/s. RPG Industries for Budge-Budge TPS, M/s. Indian Aluminium  Company
Ltd. for new captive power plants in  Orissa,  M/s.  Associated  Cement  Co.
Ltd. for new captive power plant at Wadi, Karnataka, M/s. West Bengal  State
Electricity Board for higher generation for Bendel TPS  and  Santaldih  TPS,
M/s. West Bengal Power Development Corpn. Ltd. for Bakreshwar TPS, M/s.  BLA
Industries for 24 MW capacity power  plant  in  Distt.  Narsinghpur,  Madhya
Pradesh, M/s. Jindal Strips Ltd. for Sponge Iron  Plant  in  Madhya  Pradesh
and M/s. Nippon Denko Ispat Ltd. for Bhadravati TPS, Stage  –  I,  had  paid
exploration charges to  CIL  and  submitted  mining  plans  which  had  been
approved by the Standing Committee of Ministry of Coal.   In  that  meeting,
the representative of M/s. Nippon Denko Ispat  Ltd.  submitted  that  Bunder
block was far away from the power plant  as  well  as  from  the  other  two
mining blocks allotted to them and requested that  a  block  nearer  to  the
other two blocks, i.e.,  Baranj  and  Lohara  West  may  be  considered  for
allotment by the Committee.  Accordingly, the Committee decided to  allocate
Monora Deep Block, which is adjacent to Baranj and Lohara  Extn.  (which  is
adjacent to Lohara West)  to M/s. Nippon Denko  Ispat  Ltd.   The  Committee
also discussed the proposals which were  considered  earlier  but  no  final
decision could be taken.  The Committee decided  that  Utkal  ‘C’  block  in
Talcher coalfield having geological  reserves  of  about  190  m.t.  may  be
considered  for  allotment  to  M/s.  Indian  Charge  Chrome  Ltd.  for  two
additional captive power plants at Choudhwar, Orissa.  It  is  pertinent  to
mention that the Committee found that the  total  requirement  for  all  the
three units would be about 2.36 m.t. and for a life of 30  years,  it  would
work out to be 71 m.t.   The  Committee,  however,  proposed  allocation  of
Utkal ‘C’ block having geological  reserves  of  about  190  m.t.   In  that
meeting, Takli-Jena-Bellora block was allotted to  M/s.  Lloyds  Metals  and
Engineers Ltd. and the company was directed to obtain  mining  lease  within
six months of issue of these minutes.   As  regards  the  proposal  of  M/s.
Associated Cement Company  Ltd.  for  expansion  at  Wadi  Cement  Works  in
Karnataka, the Committee decided  to  allot  Bisrar  block  in  addition  to
Lohara (East) allocated earlier as the total requirement was  of  the  order
of 3.7 m.t.  In the said meeting, M/s. J.K.Corp.  Ltd.  was  allocated  Gare
IV/8 block with gross geological reserves of 91 m.t. for their Cement  Plant
at Sirohi and Khemli in Rajasthan for which  their  total  coal  requirement
was 1.23 m.t.p.a.
121.        In the 12th meeting held on 03.04.1998, the Committee  allocated
Gare-Palma IV/2 and IV/3 blocks having Geological reserves of  100  and  110
m.t. to  M/s. Jindal Power Ltd. for Raigarh TPS Stage –  II  (500  MW).   In
the said meeting,  M/s.  Central  Collieries  Co.  requested  the  Screening
Committee for a portion of the Takli-Jena-Bellora block  which  had  already
been allotted to M/s. Lloyds Metals &  Engineers  Ltd.   In  the  course  of
discussions, it transpired that the total reserves in the block  are  higher
than the requirement of M/s. Lloyds Metals.   The Committee was of the  view
that it was possible to allot some of the reserves to  a  party  other  than
M/s. Lloyd Metals.  The Committee noted the clarification made by  DGM  (MS)
that it was possible to cut out an independent sub-block  of  40  m.t.  coal
reserves within the Takli-Jena Bellora block.   Accordingly,  the  same  was
allotted to M/s. Central Collieries Co.
122.        In the 13th meeting held on 24.08.1998, as regards the  proposal
of M/s. Nippon Denro Ispat Ltd. –  Bhandravati  TPS  I,  the  Committee  was
informed that the Apex  Committee  of  CIL  on  captive  mining  blocks  had
objected to allocation of Kilhoni block to Nippon on  the  ground  that  the
company had been changing its preference from one  block  to  another  block
and allotment of Kilhoni block  would  not  be  sufficient  to  satisfy  the
company’s coal requirement for 30 years.  Therefore, it was  suggested  that
the company should either work the  Lohara  West  block  or  enter  into  an
agreement with WCL for  supply  of  their  balance  coal  requirement.   The
Ministry of Power, on the other hand, indicated that they had  no  objection
if the same was acceptable to the Government of Maharashtra.   It  was  also
indicated that in the absence of firm figures of availability  of  coal  and
its likely price on cost plus basis, only an  in-principle  agreement  could
be arrived at for linkage in lieu of the Kilhoni block.  It was also  stated
that the Kilhoni  block  being  adjacent  to  Baranj  block  would  be  more
practicable for them to mine the reserves whereas WCL would have to  develop
the block as an isolated project.  The Government  of  Maharashtra  strongly
supported the allocation of Kilhoni block  to  the  company.   The  Director
(Technical), CIL and CMD, WCL indicated that the Kilhoni  block  was  likely
to be taken up  in  the  11th  plan  period  and  pointed  out  some  unique
geographical and man-made features of the block which,  according  to  them,
would make the project both cost and time intensive, resulting in very  high
cost for WCL.  The Committee felt that Nippon  would  be  better  placed  to
tackle these problems.  It was finally decided that M/s. Nippon Denro  Ispat
Ltd will work Baranj I-IV, Manora Deep and Kilhoni Blocks  for  mining  coal
for Bhadravati TPS, Lohara West  and Lohara West Extension  blocks  will  be
withdrawn from the party and no further request for change  or  modification
of blocks made by the party will be considered.
123.        The Committee had  decided  in  the  12th  meeting  to  allocate
southern portion of Takli-Jena-Bellora block to M/s. Central Collieries  Co.
Ltd.  In the 13th meeting, the representative  of  M/s.  Central  Collieries
Co. Ltd. requested that a decision on  allocation  of  a  small  portion  of
Kilhoni block should be taken.  It was informed to the  Committee  that  the
area  identified  at  Kilhoni  by  the  company  was  actually  a  different
location, and that location did not form part of the identified  blocks  for
captive mining.
124.        In  its  14th  meeting  held  on  18/19.06.1999,  the  Screening
Committee decided as follows:

“(i)  The  Administrative  Ministries  will  assess  the  soundness  of  the
proposals  in  consultation  with  the  State  Govt.  before  sending  their
comments/recommendations to the Screening  Committee  for  consideration  of
allotment of a captive mining block; and

(ii)  The Administrative Ministries  should  consult  State  Governments  as
well  as  use  their  own  agencies  for  assessing  the  progress  of   the
implementation of  end  use  plants  for  which  blocks  have  already  been
allotted by the Screening Committee and  send  a  report  to  the  Screening
Committee for further action.”

124.1.      In the  said  meeting,  Adviser  (Projects),  Ministry  of  Coal
informed that a policy has been framed that captive mining  block  producing
less than 1 m.t. of coal per annum from an  opencast  block  and  less  than
0.25 m.t.  of  coal  per  annum  from  an  underground  block  will  not  be
considered for allotment.  The Committee agreed to adopt the  above  policy.
In that meeting, the Committee  decided  to  withdraw  the  Gare-Palma  IV/4
block allotted to M/s.  Phoenix  Cement  Ltd.   The  block  Gare-Palma  IV/8
allotted to M/s. J.K. Corp. Ltd. was also withdrawn due  to  non-seriousness
of the party in the matter.
124.2       In the 14th meeting, the proposal of M/s. Monnet Ispat Ltd.  for
a new Sponge Iron plant in Keonjhar area of Orissa of 1.2 million tonnes  of
capacity for which the  requirement  of  2.2  m.t.  of  raw  coal  has  been
indicated, was discussed.  This plant will have a CPP of 40 MW  in  the  1st
phase.  The party requested for Utkal-B2 block in Talcher  coalfield  having
106 m.t. of reserves.  The party informed that the existing  plant  capacity
of 1 lakh tonnes is being expanded to 3 lakh tonnes by March, 2000 and to  5
lakh tonnes beyond that.  During discussion, CMD MCL was of  the  view  that
Chendipada block is likely to have better grade of  coal  and  suggested  to
the party in preference of Utkal B-2 block.  However,   the  party  insisted
for Utkal B-2 block and the same was allotted subject to the condition  that
the party must achieve financial closure within one  year  of  allotment  of
the block, failing which the allotment will be withdrawn.
124.3.      As regards the proposal of M/s. Jayaswal  Neco  Ltd.  for  their
Sponge Iron Plant, the party had earlier requested for Gare-Palma  IV/6  and
IV/7 blocks for meeting their Sponge Iron Plant and a captive  power  plant.
Now, they requested for allocation of IV/4 and IV/8 blocks as the same  have
been withdrawn from other firms.   Accordingly, the same  were  allotted  to
M/s. Jayaswal Neco Ltd.
124.4       The Brahmadiha block was allotted to M/s. Castron Technology  in
the 14th meeting.  The Committee noted that the mine  did  not  fit  in  the
criteria of captive block as per its latest guidelines, but decided to  make
the allocation in view of  the  fact  that  the  reserves  could  either  be
permitted to be exploited by a private party or lost forever.
125.        In the 15th meeting held on 06.03.2000, M/s. Jindal Strips  Ltd.
had submitted a request for  a  block  in  Talcher  coalfield  to  meet  the
requirement of sponge iron plant of 2 m.t. capacity.  In January, 2000,  the
party made an application for allocation of Utkal  D  block  in  MCL  having
geological reserves of 190 m.t. for their proposed sponge iron  plant  of  1
m.t. capacity requiring clean coal of 1.2 mtpa.  The party also proposed  to
set up a washery of 3 m.t.  input capacity.  The requirement  of  the  block
was proposed by the party for working the sponge iron plant and the CPP  for
a period of 50 years.  In the course of discussion, it was pointed out  that
allocation of block for captive mining is generally made on the basis of  30
years’ requirement whereas the party had requested for allocation  of  block
on the basis of 50 years requirement for their sponge iron  plant.   It  was
also indicated that the total requirement of coal for 30 years  life  period
of the project worked out to be 90 m.t. for which a  geological  reserve  of
about 120 m.t. should be adequate.  The estimated reserve of Utkal  D  block
was  about  190  m.t.  and  was,  therefore,  higher   than   the   probable
requirement.  The representative of Ministry of Steel  indicated  that  coal
block having geological reserve of about 125 m.t. would be  adequate.   Yet,
the Committee decided to allot Utkal D block in  principle  to  M/s.  Jindal
Strips Ltd. but this was cancelled in the 16th meeting.
125.1.      The proposal of M/s. Prakash  Industries  was  rejected  in  the
14th meeting in view of the  company’s  reference  to  BIFR  and  the  party
enjoying coal linkage of 0.76 m.t. for their existing  plant.   In  November
and December, 1999, they informed that they had a linkage of 0.5  mtpa  only
and that they proposed to develop an underground mine for  the  balance  0.5
mtpa.  The Committee in the 15th meeting decided to allocate  Choita  block,
having geological reserves of about 60.00 m.t. to M/s. Prakash Industries.
125.2.      In the said  meeting,  M/s.  Raipur  Alloys  &  Steel  Ltd.  had
requested for allocation of Choita block for  their  sponge  iron  plant  at
Siltara, Raipur, the capacity of which was proposed to be expanded from  the
existing  60,000 tpa to 3 lakh tonnes per annum  and  for  a  captive  power
plant of 18 MW.  That block was  not  in  the  identified  list  of  captive
mining.  Accordingly, they revised their  request  for  allocation  of  Gare
Palma IV/7 or any one of the three blocks in Gare Palma,  i.e.,  IV/7,  IV/6
and IV/8 in order of preference.  The Committee  decided  to  allocate  Gare
Palma IV/7 to M/s. Raipur Alloys & Steel Ltd.  with  coal  reserves  of  156
m.t. which is on the much higher side than the requirement of the company.
126.        In the 16th meeting  held  on  31.05.2001,  M/s.  Orissa  Mining
Corporation Ltd. was allotted Utkal D block for generation of power  through
Orissa Power Generation Corporation.
127.        In the 17th meeting held on 28.11.2001, the request of M/s.  GVK
Power Gowindal Sahib Ltd. for allotment of  Tokusud  coal  block  for  their
proposed 2 x 250 MW power plant was considered and  Tokusud North block  was
allotted to them.
128.         In  the  18th  meeting  held  on  05.05.2003,   the   Screening
Committee, for the first time, considered the issue of determining inter  se
merit of applicants for the same block as well as certain  other  issues  to
bring in transparency and felt that  guidelines  for  determining  inter  se
priority among claims for blocks between public sector  and  private  sector
for captive use and between public sector for non-captive  use  and  private
sector for captive use need to be evolved. The  Chairman  of  the  Committee
put the following few general guidelines for consideration:

(i)   The blocks in captive list should be allocated to  an  applicant  only
after the same have been put in the pubic domain for a reasonable  time  and
not immediately upon their inclusion in the list  of  block  identified  for
captive mining, so as to give an opportunity to interested parties to  apply
for the same and make the process more  transparent.  The  need  for  giving
very cogent and detailed reasons before withdrawal of a block  from  captive
list by CIL was also emphasized.

(ii)  The Administrative Ministries were requested to appraise the  projects
from the point of view of the genuineness of the applicant,  techno-economic
viability of the project and  the  state  of  preparedness/progress  in  the
project while indicating the quantity and quality  of  coal  requirement  of
the project and recommending allocation of captive block to  the  applicant.
In case  there  were  more  than  one  applicant  for  the  same  block  the
Administrative Ministry should rank them based on the project appraisal  and
the past/track record of the applicant without necessarily naming the  block
to be allotted. This would facilitate the Screening Committee  in  allotting
a suitable block to the applicant more objectively.

(iii) Only those power projects would be  considered  for  allocation  which
are included in the Xth Plan Period.

128.1.            The  above  guidelines  met  with  general  approval.  The
Screening Committee also decided that while  recommendations  of  the  State
Governments would continue to be taken into consideration,  the  same  would
not be taken as pre-condition for entertaining the application  by  it.   In
that meeting, the two blocks- Bandhak (East) and Bandhak  (West)  were  also
included in the list of captive blocks.
 129.            In the 19th meeting held on  26.05.2003,  various  projects
were reviewed.
129.1.      In that meeting, the Committee allocated Bandhak (West) to  M/s.
Shree Baidyanath Ayurved Bhawan Ltd.  Similarly, M/s.  Fieldmining  &  Ispat
Limited was allocated Warora (West) and Chinora blocks.
130.        In the 20th meeting held on 06.06.2003, the Committee  discussed
the matter of allocation  of  captive  mining  blocks  to  small  Greenfield
projects or to applicant  companies  who  did  not  have  well  known  track
records in the sectors approved for allocation of captive blocks for  mining
of coal.  It adopted a policy that for such  small  projects  the  Committee
instead of straight away allocating the block, the Committee  would  reserve
the block and offer a temporary tapering linkage through CIL  for  achieving
financial closure  and  development  of  the  end-use  project  first.   The
allocation of the block would be  made  subject  to  the  applicant  company
achieving the project milestones submitted by them  to  the  Committee,  and
after financial closure is achieved.
130.1.      In that meeting, M/s. Jindal Steel and Power  Limited  requested
for allocation of Utkal B-1 block for their sponge iron production,  200  MW
of captive power generation, steel plant and ferro alloy plants  to  be  set
up in two phases. The Screening Committee decided to allocate Utkal  B  –  1
block to that company for exclusive and  captive  use  of  the  entire  coal
produced from the block in their own project in the end-use plants.
130.2.      M/s. Usha Beltron Ltd. requested for allocation of a  block  for
their sponge iron and power  plant.    CIL  had  recommended  allocation  of
Kathautia UG block for their expansion project.  Accordingly, the  Committee
allocated the same subject  to  the  existing  linkages  of  coal  from  CIL
continuing.
130.3.      The Committee also discussed the proposals  of  M/s.  Shyam  DRI
Power Ltd. for allocation of Radhikapur block and M/s. Neepaz Metalics  Pvt.
Ltd. for allocation of Patrapara block.  In both the  cases,  it  was  found
that the size of the block is larger in comparison to  the  need.   However,
the applicants stated that while geological reserve  in  the  block  may  be
large, the recoverable reserve would be very much  less.   Accordingly,  the
blocks   were    allocated    provisionally    to    them    for    detailed
exploration/prospecting purposes.
130.4.      In that meeting, M/s. Ambuja Cement requested for allocation  of
Baranj III and IV block for their new  as  well  as  expansion  of  existing
cement  plants.   Though  the  Government  of  Maharashtra   supported   the
proposal, the representative from Ministry of Power stated  that  there  are
two  contenders  for  the  Baranj  blocks  and  the  Ministry  of  Power  is
considering and evaluating the case.  He stated that decision on  allocation
of Baranj I to IV could be deferred by one month by which time the  Ministry
of Power would  be  in  a  position  to  give  their  views.   However,  the
Screening Committee decided to allocate Baranj III and IV blocks  to  Ambuja
Cement Ltd. subject to any order of the High Court in the matter.
131.         In  the  21st  meeting  held  on  19.08.2003,  the   issue   of
competitive bidding was raised.  On this, the Screening Committee felt  that
further  guidelines  need  to  be  evolved  for  allocation  of  blocks  and
competitive bidding should also be looked at. In that meeting  it  was  also
felt by the Committee that coal being only one  of  the  inputs  of  end-use
projects, other matching inputs should also be considered before  allocation
of a coal block.
132          Significantly,  the  guidelines  framed  and  applied  by   the
Screening  Committee  for  the  period  from  14.07.1993  (1st  meeting)  to
19.8.2003 (21st meeting) are conspicuously silent about  inter  se  priority
between the applicants for  the  same  block.   In  the  18th  meeting,  the
Screening Committee considered the issue of determining inter  se  merit  of
applicants for the same block as well as certain other issues  for  bringing
in  transparency.   The  Screening  Committee  felt  that   guidelines   for
determining inter se priority among claims for block between  public  sector
and private sector for captive  use  and  between  public  sector  for  non-
captive use  and  private  sector  for  captive  use  need  to  be  evolved.
However, no guidelines for determining inter se priority of  applicants  for
the same  block  was  evolved.  The  guidelines  also  do  not  contain  any
objective criterion for determining the merits of  applicants  and  lack  in
healthy competition and equitable treatment. In the first counter  affidavit
filed by the Central Government, it is admitted that from  the  1st  meeting
(held  on  14.07.1993)  to  the  21st  Meeting  (held  on  19.08.2003),  the
guidelines did not deal with the subject of determining  inter  se  priority
between applicants.
133.        As  regards  26  coal  blocks  allocated  to  private  companies
pursuant to the recommendations of the Screening Committee  for  the  period
from 04.11.2003 (22nd meeting) and 18.10.2005 (30th meeting),  the  Attorney
General submits that the  Screening  Committee  had  devised  guidelines  to
determine inter se priority amongst applicants for the same  block.   It  is
also  submitted  that  the  recommendations  were  made  by  the   Screening
Committee after consideration of each application  and  assessment  of  each
applicant’s merits in terms of the criterion laid down in the guidelines.
134.        The  counter  affidavit  filed  by  the  Central  Government  on
22.06.2013 at  pages  102-159  deals  with  this  period.   The  compilation
(Volume 3-B) contains materials relating  to  recommendations  made  by  the
Screening Committee for allocation  of  coal  blocks  to  private  companies
pursuant to its 22nd meeting to 30th meeting  held  between  04.11.2003  and
18.10.2005.  It transpires from the materials placed on  record  that  there
was boom in the iron and steel sector at that time. The Screening  Committee
was usually required to consider 3-4 applicants for each block.  Though  the
guidelines required that a captive block cannot be allocated as  replacement
for a linkage and that coal  blocks  can  only  be  allocated  for  specific
projects and not as back  up  in  general  and  additional  guidelines  also
provided that Central PSU was to be accorded priority over State  Government
PSU if all other factors (like suitability of  coal  grade,  techno-economic
viability/feasibility of the project, state of preparedness of the  project,
etc.) were equal but a careful look at these guidelines show  that  they  do
not lay down any criterion for evaluating  the  comparative  merits  of  the
applicants. As a matter of fact, the guidelines  applied  by  the  Screening
Committee  are  totally  cryptic  and  hardly  meet   the   requirement   of
constitutional   norms   to   ensure   fairness,   transparency   and   non-
discrimination.
135.        In the 23rd meeting held on 29.11.2004 for Belgaon  coal  block,
three applicants, namely, (i) M/s. Chandrapur Ispat Ltd.,  (ii)  M/s.  Gupta
Metallics and Power Ltd. and (iii) M/s. Sunflag  Iron  and  Steel  Ltd.  had
applied.  The particulars of these three applicants have been noted  by  the
Screening Committee but besides that there is nothing to indicate as to  why
M/s. Sunflag Iron and Steel Ltd. was found more meritorious than  the  other
two applicants.  It  is  pertinent  to  note  that  Ministry  of  Steel  had
supported the proposal of both Gupta Metallics and Power  Ltd.  and  Sunflag
Iron and Steel Ltd.  The consideration of inter se merit appears to  be  ad-
hoc.  There is no comparative assessment of the merits  of  the  applicants.
There is so much of ad-hocism in consideration of the applications  that  in
every meeting, the guidelines were altered.
136.         In  the  24th  meeting  held  on  09.12.  2004,  the  Screening
Committee altered the norms by shifting insistence  on  achieving  financial
closure of the end-use projects to some appropriate stage after  the  mining
plan approval.  In that meeting, the Screening Committee was  informed  that
the proposal to allow disposal of coal produced during development phase  of
the mine has  been  approved  by  the  Government.   In  that  meeting,  the
Committee considered allocation of  Brinda,  Sisai,  Dumri,  Meral,  Lohari,
Moitra, Kotre-Basantpur and Pachmo blocks.  Applications were received  from
M/s. Abhijeet Iron Processors Pvt. Ltd  for  allocation  of  Brinda,  Sisai,
Dumri, Meral and Lohari blocks, M/s.  Neelachal  Iron  and  Power  Ltd.  for
allocation of Brinda, Sisai and Dumri blocks, M/s. Bajrang Ispat  Pvt.  Ltd.
for allocation of Dumri, Brinda and Sisai blocks  and  M/s.  Pawanjay  Steel
and Power Ltd. for allocation of Dumri and  Brinda  blocks.   The  Screening
Committee noticed that among applicants  competing  for  Brinda  and  Sisai,
M/s. Abhijeet Iron Processors Pvt. Ltd., applied way ahead  of  others,  its
requirement was large and it has a good track record and Ministry  of  Steel
had recommended its case.  The other applicants, viz.,  M/s.  Bajrang  Ispat
and M/s. Pawanjay Steel were later  applicants.   The  requirement  of  M/s.
Bajrang was small and sub-blocking was not  desirable  while  M/s.  Pawanjay
had not yet given the required details to Ministry  of  Steel.   For  Meral,
M/s. Abhijeet was the only applicant.  The Screening  Committee  decided  to
allocate Brinda, Sisai and Meral  blocks  to  M/s.  Abhijeet  Infrastructure
Private Ltd.
136.1            In the same meeting, M/s. Jayaswal Neco Ltd. was  allocated
Moitra block in place of Jogeshwar and Choritand-Tilaya,  already  allocated
to them. Lohari block was allocated to M/s. Usha Martin Limited  subject  to
the views of Ministry of Steel.  It is  important  to  mention  that  Lohari
coal block was  acquired  under  the  Coal  Bearing  Acquisition  Act.   The
Committee noted that the transfer modalities were yet to be  worked  out  in
details.
136.2       The Screening Committee in 24th meeting  noted  the  particulars
of each applicant but how each applicant  met  such  parameters  is  neither
mentioned nor are they discernible.
137          In  its  25th  meeting*  held  on  10.01.2005,  the   Screening
Committee considered allocation  of  five  coal  blocks  in  the  MCL  area.
Thirty applicants made presentations before the Committee.   Many  of  these
applicants were meritorious.  The size of these blocks  was  large  compared
to the requirement of the applicants.  The Screening Committee decided  that
for each such block, one applicant company who had  the  highest  stake  and
which was likely to take up proper mining could  be  designated  the  leader
company and allocated the block and a group  of  other  companies  could  be
nominated as associate companies for supply of coal by  the  leader  company
to  these  designated  associates.   In  our  opinion,  such  procedure   is
apparently in contravention of the statutory provision contained in  Section
3(3)(a)(iii) of the CMN Act. Moreover,  the  arrangement  of  consortium  of
companies violates Section  3(3)(a)(iii)  of  the  CMN  Act  as  the  leader
company supplies the associate share of coal to the associate company  at  a
price (though the price  is  determined  by  the  Government).   Winning  or
mining of coal by such company is  impermissible  under  the  CMN  Act.  The
rules of game were changed  to  adjust  large  number  of  applicants  whose
applications would have been otherwise rejected as  their  coal  requirement
was far less than the coal available in the coal block.  However,  in  order
to accommodate these applicants, a novel idea of choosing a  leader  company
and  associate  companies  was  evolved  which,  as  indicated   above,   is
impermissible  under  the  CMN  Act.  The  merits  of  13  companies   whose
applications were rejected have not been comparatively assessed with the  17
companies (5 leaders and 12 associates)  whose  applications  were  accepted
and recommended for allocation to the Central Government.
138.         In  its  26th  meeting**  held  on  01.02.2005,  the  Screening
Committee considered allocation of five blocks  in  SECL  area.  Twenty-five
applicants had applied for these blocks. Ten applicants  who  had  submitted
their applications after the cut-off  date  were  rejected.   The  remaining
fifteen were chosen for allocation on the same lines  as  was  done  in  the
25th meeting for allocation of coal blocks in the  MCL  area.  Of  these  15
applicants, the Screening Committee listed out seven companies  as  possible
leaders for 5 blocks.  The procedure followed in the 26th  meeting  suffered
from the flaws similar to recommendations made by  the  Screening  Committee
in its 25th meeting. Moreover, the minutes of the 26th meeting  reveal  that
the Ministry of Steel raised the issue that a number of companies  have,  in
their presentations, mentioned the  capacity  of  the  end-use  projects  in
excess of what has been recommended by the Ministry of Steel. It is  further
seen that the representative of the concerned State  Government  had  stated
that the ground realities of the projects needed  to  be  verified  and  the
capacities of the end-use plants and coal requirements of such  projects  is
required  to  be  confirmed,  but  despite  that,  the  Screening  Committee
proceeded  to  list  out  the  possible  leaders  from  among  the  selected
companies,  viz.,  1.  Hindustan  Zinc  Ltd.;  2.  Chhattisgarh  Electricity
Company Ltd.; 3. Jayaswal Neco Ltd.;  4.  Jindal  Steel  &  Power  Ltd.;  5.
Prakash  Industries  Ltd.;  6.  Sunflag  Iron  &  Steel  Co.  Ltd.;  and  7.
Consortium of Nav Bharat Coalfields Pvt. Ltd., Ind Agro Synergy Ltd.,  Ispat
Godawari Ltd., Sri Bajrang Power & Ispat Ltd., Sri  Nakoda  Ispat  Ltd.  and
Vandana Global Ltd.    Moreover, the Screening Committee did not assess  the
capacities and coal requirement of these companies.  The  Committee  decided
that detailed formulation of groups  or  ‘common  pool’  for  allocation  of
coal/blocks in line with the dispensation being contemplated in  MCL  blocks
will be worked out by the Ministry of Coal.  In our view, the expression  ‘a
company’ occurring in Section 3(3)(a)(iii) of the CMN  Act  does  not  cover
“consortium of companies” or “formulation of groups” or “common pool”.   The
decision of the Screening Committee to recommend allocation of  coal  blocks
to consortium of companies or formulation of groups or  common  pool  is  in
contravention of Section 3(3)(a)(iii)  of  the  CMN  Act.   CMN  Act  places
embargo on granting the leases for winning or mining coal to  persons  other
than those mentioned  in  Section  3(3)(a)(iii).   Consortium  of  companies
surely falls outside Section 3(3)(a)(iii).  The statutory scheme of the  CMN
Act generally and Section 3(3)(a)(iii)  in  particular  have  been  given  a
complete go-bye in the procedure followed by  the  Screening  Committee  and
finally by issuing allocation letters to one leader company with  obligation
to share associate’s share of coal to  the  associate  company  at  a  price
determinable by the Government.
139.        In  the  27th  meeting***  held  on  01.03.2005,  the  Screening
Committee considered allocation of blocks in the  CCL  area  while  in  28th
meeting**** held on  15.04.2005,  the  Committee  considered  allocation  of
blocks in SECL area. Neither the counter affidavit nor the minutes of  these
two meetings show that assessment of comparative merits  of  the  applicants
was done. The Screening Committee continued with  consortium  /  leader  and
associate approach, as was done for the MCL area in the 26th meeting.   This
procedure is clearly in contravention of Section  3(3)(a)(iii)  of  the  CMN
Act. Except recording the particulars of  these  companies,  who  had  given
presentation, nothing is said about inter se priority or comparative  merits
of the applicants. By adopting consortium / leader and  associate  approach,
the Screening Committee had indirectly done away with inter se priority  and
merit  of  the  applicant  companies.  The  consideration  does  not  reveal
application of any objective criterion.  It is admitted in para 206  of  the
counter affidavit filed by  the  Central  Government  that  as  regards  the
applicant - Neepaz Metalicks whose case was considered in 28th meeting,  the
recommendation  of  the  Administrative  Ministry  was   contrary   to   the
recommendation of the State Government, yet the allocation  of  a  sub-block
in  Patrapara  block  was  made  on  the   basis   of   State   Government’s
recommendation.  Moreover, it may be noticed that though the  representative
of the State Government supported the  request  of  M/s  Bhushan  Steel  and
Strips Limited for allocation of Patrapara block  but  he  stated  that  the
State Government supports the  claimants  for  Patrapara  in  the  following
order: (a) M/s  Neepaz  Metalicks  Limited,  (b)  M/s  SCAW,  (c)  M/s  Visa
Industries, (d) M/s Shree Metalicks, all of whom have already  entered  into
a MOU with the Government of Orissa  and  the  order  of  priority  for  M/s
Bhushan Steel and Strips Limited would be lower than these  four  claimants.
As regards Panch Bahini block, the representative of  the  State  Government
stated that the applicant, M/s Shree Radha  Industries,  may  be  considered
for a share and inclusion in the earliest list of blocks allocated  in  26th
meeting, still the Screening Committee decided to  recommend  allocation  of
Panch Bahini block to M/s Shree Radha Industries.
140.        The counter affidavit in para 208 as regards  29th  meeting*****
held  on  03.06.2005  states  that  the  Screening  Committee  considered  a
detailed presentation of modalities of competitive bidding  by  the  CMPDIL.
Despite the fact that modalities for auctioning through competitive  bidding
were discussed in 29th meeting, that was not  carried  further  as  is  seen
from the minutes of the 30th meeting of  the  Screening  Committee  held  on
18.10.2005.
141.         The minutes of 30th meeting! show that the Screening  Committee
decided to club Gare Palma Blocks IV/1  and  IV/6  and  further  decided  to
allot the combined block (IV/1 and IV/6) to JSPL  with  Nalwa  Sponge  as  a
partner company.  The minutes also record that if surplus still  remains  in
the block, then JSPL-Nalwa be  asked  to  select  another  allottee  failing
which the excess reserves to be handed over to  SECL,  in  terms  of  annual
production, at transfer price to be  determined  by  the  Government.   Coal
availability and requirement in Gare Palma IV/1 block  as  recorded  in  the
minutes show that 31.05 m.t. remained surplus with these companies.  In  the
30th meeting, the Screening Committee also recommended to allot  Dumri  Coal
Block to M/s. Neelachal and  M/s.  Bajrang  despite  the  fact  that  CMPDIL
informed the Committee that north  portion  (rise  side)  of  Dumri  remains
unexplored in detail  on  account  of  security  problems.   The  unexplored
portion has superior grades of coal of about 15 m.t. As regards  Gare  Palma
IV/8 block, the minutes indicate that for this block  M/s  CECL;  Consortium
of five applicants and  M/s  Jayaswal  Neco  Ltd.  had  made  presentations.
Consortium of five  applicants  companies  was  not  recommended  apparently
inter alia for the reasons; (1)  that  the  Consortium  of  five  applicants
companies was yet to be incorporated and (2) that they  claimed  the  blocks
mainly on the ground of promoting consortium approach. It is interesting  to
note that in the earlier meetings for allocation  of  coal  blocks  in  MCL,
SECL and CCL areas, the Screening Committee on its own adopted consortium  /
leader and associate approach and the factor such  as  that  the  consortium
company was not  incorporated was not at all viewed  as  an  impediment  for
recommendation  but  in  this  meeting  the  claim  of  consortium  of  five
companies was not accepted and it was noted that they  may  be  accommodated
in other blocks.  The  application  of  norms  by  the  Screening  Committee
changed from meeting  to  meeting.   There  was  no  consistent  or  uniform
consideration.  The portion of Dumri Coal Block bearing superior  grade  was
admittedly unexplored but it was recommended for allocation.   The  clubbing
of blocks or sub-blocks was done which  was  not  the  brief  given  to  the
Screening Committee.
141.1       The recommendations made by the Screening Committee in its  30th
meeting suffer from the same infirmities as the recommendations made  by  it
in favour of other applicants in earlier meetings.
142.        In the 31st meeting held on 23.06.2006, the Screening  Committee
examined the applications for lignite  blocks.   25  applicants  made  their
presentation.  The Screening Committee, after noticing  the  particulars  of
each of the 25 applicants individually and recording that it  discussed  the
presentations made by the applicants and that  it  took  into  consideration
the views/comments of the Ministry of Power, Ministry  of  Steel,  concerned
State Governments and the  guidelines,  recommended  allocation  of  lignite
blocks to 6 applicants.
143.        In September, 2005, the Ministry of  Coal  issued  advertisement
inviting applications for allocation of 20 coal blocks.  This was the  first
time when applications were invited for allocation of coal blocks by way  of
an  advertisement.   The  applications  received  pursuant  to   the   above
advertisement were taken up for consideration by the Screening Committee  in
 32nd meeting held on  29.06.2006  and  30.06.2006,  33rd  meeting  held  on
31.08.2006, 01.09.2006 and 02.09.2006 and 34th meeting  held  on  07.09.2006
and 08.09.2006.  In the 32nd meeting,  the  Screening  Committee  considered
allocation  of  Rohne,  Sitanala,  Tenughat-Jhirki,   Choritand-Taliya   and
Jogeswar coal blocks.  54 companies (some of  which  were  group  companies)
made presentations.  The Committee also  considered  applications  of  those
companies which  did  not  come  for  presentation.   The  minutes  of  32nd
meeting!!      record  that  the  applications  received  in  the   Ministry
regarding above coal blocks were sent to the State Government  of  Jharkhand
and the concerned Administrative Ministries in the  Central  Government  for
their views/comments.  The views/comments of  the  Government  of  Jharkhand
were received on 28.06.2006.  The Committee then recommended the  allocation
of Rohne coal block jointly in favour of M/s. JSW Steel Ltd.,  M/s.  Bhushan
Steel and Power Ltd. and M/s. Jai Balaji Sponge  Ltd.  Tenughat–Jhirki  coal
block was recommended jointly  in  favour  of  M/s.  Rashtriya  Ispat  Nigam
Limited                       and M/s. Jindal Steel and Power Limited  while
Choritand-Taliya         was recommended jointly in favour of  M/s.  Sunflag
Iron and Steel Limited and M/s. Rungta Mines Limited.  Insofar  as  Sitanala
coal block is concerned, the Committee recommended the said block in  favour
of M/s. Steel Authority of India Limited.  As regards Jogeswar  coal  block,
the Committee  in  view  of  the  comments  of  the  representative  of  the
Government of Jharkand decided not to recommend allocation of that block  in
favour of any applicant for the time being.  The minutes of 32nd meeting  do
not show how and in what manner the applications  of  those  companies  were
considered which did not come for presentation.   There  is  no  comparative
assessment or evaluation of the applicants.  Why the chosen  companies  have
been preferred over the others is not  discernible?   Merely  because  there
were large number of applicants, it did not mean that the  consideration  of
each applicant could not have been recorded  or  comparative  assessment  or
evaluation of the applicants could  not  have  been  made.    What  are  the
reasons for recommending three blocks jointly in favour  of  more  than  one
company  are  neither  recorded  nor  disclosed   in   the   minutes.    The
recommendations for allocation of blocks jointly in favour of two  or  three
companies, as indicated earlier, are not in conformity  with  the  CMN  Act.
Rather, they are in contravention thereto.
144.         In  the  33rd  meeting,  the  Screening  Committee   considered
allocation of Tubed, Chakla, Jitpur and Pengedappa  coal  blocks.   In  that
meeting, 165 companies made their  presentations.  The  applications  of  16
companies  which  did  not  turn  up  for  making  presentations  were  also
considered.  In the 32nd meeting held on three dates,  namely,  31st  August
and 1st and 2nd September, 2006, the Committee decided that  recommendations
regarding the above  four  blocks  would  be  finalised  after  hearing  the
applicants for the remaining 11 blocks, for which the  meeting  was  already
notified for 07.09.2006 and 08.09.2006.
145.        On 07.09.2006 and 08.09.2006, the 34th meeting of the  Screening
Committee was held to consider allocation of  Ansettipali,  Punukula-Chilka,
Brahmpuri, Mandla North, Rawanwara North, Sial-Shoghri Lohara  East,  Kosar-
Dongargaon, Warora West (North), Biharinath and Mednirai  coal  blocks.   In
that meeting, geological reserves of some of the coal blocks  were  reported
by  CMPDIL/SCCL.   The  presentations  were  made  by  101  companies.    44
companies  did  not  turn  up  for  making  presentations.   However,  their
applications were considered.  In that meeting,  it  was  decided  that  the
recommendations regarding the above 11 blocks  would  be  finalized  in  the
next meeting.
146.        As seen from the above, in the 33rd meeting held on  31.08.2006,
01.09.2006 and 02.09.2006 for allocation of four  blocks  and  in  the  34th
meeting held on 07.09.2006 and 08.09.2006 for allocation of  11  blocks,  no
final decision was taken and the matters were deferred.  On 22.09.2006,  the
Screening Committee met regarding allocation of 15 coal  blocks,  which  was
subject matter  of  consideration  in  its  33rd  and  34th  meetings.   The
minutes!!! of the meeting  held  on  22.09.2006  record  recommendation  for
allocation of 15 coal blocks.

146.1       Of these 15 blocks, three namely,                   Ansettipali,
Punukula-Chilka and Pengedappa were recommended  for  allocation  to  Andhra
Pradesh Government undertaking as these blocks were located in the  notified
tribal area.  Of the remaining twelve, the Screening  Committee  recommended
their allocation to fifteen companies.  Five companies were recommended  for
their power plants,  three  were  recommended  for  the  cement  plants  and
remaining seven were recommended for  the  Sponge  Iron  Units.   For  these
twelve  blocks,  Jharkhand  recommended  seven  companies,  Madhya   Pradesh
recommended five, Maharashtra recommended ten and  West  Bengal  recommended
one company.   It is pertinent to notice that some  of  the  companies  like
Chaman Metallics Ltd., which was recommended by the Screening Committee  for
Kosar Dongergaon  block  had  no  recommendation  by  the  State  Government
(Maharashtra).   Similarly,  Pushp  Steel  and  Mining   Ltd.,   which   was
recommended for  Brahmpuri  block  had  no  recommendation  from  the  State
Government (Madhya  Pradesh)  and  so  also  Kohinoor  Steel  (P)  Ltd.  for
Mednirai  coal  block  had  no  recommendation  from  the  State  Government
(Jharkhand).  The minutes do not disclose in what manner the merits  of  the
companies  which  were  chosen  for  recommendation  were  determined.  Even
particulars of the applicants individually are not  noticed.   There  is  no
indication at all in the minutes of 33rd meeting and  34th  meeting  or  the
meeting held on 22.09.2006 when final  decision  that  the  conditions  laid
down in the guidelines are met by these companies was taken.   Twenty  three
companies were recommended by  the  four  State  Governments  while  fifteen
companies  were  finally  recommended  for  allocation  by   the   Screening
Committee but the reasons therefor are not discernible at all.  The  minutes
also do not disclose the criterion which the Screening Committee applied  in
selection of the fifteen companies and  the  reason  for  allocating  twelve
blocks to fifteen companies.  M/s. Grace Industries Limited was  recommended
allocation   of   a   coal   block   although   that    company    had    no
recommendation/categorization.       It      is      true      that      the
recommendation/allocation made in favour of M/s.  Grace  Industries  Limited
was subsequently withdrawn/de-allocated but that is altogether  a  different
matter.
147.         In  2006,  the  Ministry  of  Coal  invited  applications   for
allocation of 38 coal blocks, of  which  15  were  reserved  for  the  power
sector.  The advertisement indicated that preference  will  be  accorded  to
the power sector  and  steel  sector.   Within  the  power  sector,  it  was
indicated that priority shall be accorded to projects with more than 500  MW
capacity.  Similarly, in the steel sector, priority would be given to  steel
plants with more than 1 million ton per annum capacity.  In response to  the
advertisement, more  than  1400  applications  were  received  for  38  coal
blocks.
148.        The allocation of coal blocks  earmarked  for  power  generation
was considered by the Screening Committee in  its  35th  meeting  which  was
held on 20.06.2007 to  23.06.2007,  30.07.2007  and  13.09.2007.   The  coal
block that was numbered as one block in the advertisement  was  subsequently
considered as two  blocks.   Thus,  15  coal  blocks,  namely,  Amarkonda  -
Murgadangal,   Ashok   Karkata   Central,   Durgapur-II/Sariya,    Durgapur-
II/Taraimar, Fatehpur, Fatehpur (East), Ganeshpur,  Gourangdih  ABC,  Lohara
West & Lohara East, Mahuagarhi, Mandakini, Patal East, Rampia  Dip  Side  of
Rampia, Sayang and Seregarha were  considered.   The  status  of  geological
reserve of 15 blocks was  indicated.   The  minutes?  of  the  35th  meeting
briefly record  the  proceedings  of  the  meeting  held  on  20.06.2007  to
23.06.2007, 30.07.2007 and  13.09.2007.  The  Screening  Committee  in  that
meeting recommended to  allocate  all  the  15  blocks  reserved  for  power
sector, many of which were recommended jointly in  favour  of  two  or  more
companies.   The  minutes   do   not   contain   the   particulars   showing
consideration  of  each  application.   They  also  do  not   disclose   any
comparative assessment or evaluation of the applicant  companies.   In  what
manner and for what reasons the companies were selected  for  recommendation
are neither disclosed nor are they discernible from  the  minutes.   Though,
the guidelines±  provide for norms for consideration for inter  se  priority
for allocation of a block among competing applicants  for  a  captive  block
but the minutes do not disclose at all how the norms for inter  se  priority
are met by the  companies  selected  for  recommendation  by  the  Screening
Committee. Many of the companies selected by the Screening Committee had  no
recommendation from the State Government or from the Ministry of  Power  and
CEA and some of them had no recommendation either from the State  Government
or the Ministry of Power  and  CEA  at  all.   For  example,  for  Durgapur-
II/Taraimar, the selected company Balco had no recommendation  at  all  from
the State Government,  Ministry  of  Power  and  CEA.   Although  the  group
company M/s. Vedanta Alumina Ltd. was recommended by Ministry of  Power  and
CEA, but it was not selected.  Similarly, for  Mandakini  block,  M/s.  Tata
Power Company Ltd. had no  recommendation  from  the  State  Government  and
Ministry of Power and CEA.  For Rampia and  Dip  Side  of  Rampia,  Reliance
Energy Ltd. did not have  any  recommendation  from  the  State  Government,
Ministry of Power and CEA.  For Fatehpur East,  the  selected  company  Visa
Power Ltd. had no recommendation  from  Ministry  of  Power  and  CEA.   For
Fatehpur block, Prakash Industries Ltd. had neither recommendation from  the
State Government nor from the Ministry of  Power  and  CEA.   The  Screening
Committee, as a matter of fact, did not select eight  companies  which  were
recommended by the Ministry of Power but  selected  eleven  companies  which
were not recommended by Ministry of Power.   Though  in  additional  counter
affidavit, some justification in this regard has been sought to be made  but
we are afraid that the said justification hardly merits  acceptance  as  the
minutes of the 35th meeting of  the  Screening  Committee  do  not  disclose
anything what is now stated in the additional counter affidavit.  The  eight
companies which were recommended by the Ministry of Power but  not  selected
by the Screening Committee are (1) M/s. Rashmi Cement  Ltd.;  (2)  M/s.  TRN
Energy Pvt. Ltd.; (3) M/s. Maithon Power Ltd.; (4) M/s. Mahavir Global  Coal
Ltd.; (5) M/s. Rosa Power Supply Ltd.; (6) M/s.  Bhushan  Energy;  (7)  M/s.
Lanco Amarkantak Power Ltd. and (8) M/s. Vedanta Alumina Ltd.   The  minutes
do not disclose any reason at all for not selecting  these  companies  which
were recommended by the Ministry of Power.  The eleven companies which  were
not recommended by the Ministry of  Power  and  selected  by  the  Screening
Committee are (1) M/s. Tata Power Company Ltd.;  (2)  M/s.  Reliance  Energy
Ltd.; (3) M/s. Balco; (4) M/s. SKS Ispat and Power Ltd.;  (5)  M/s.  Prakash
Industries Ltd.; (6) M/s. Green Infrastructure  Pvt.  Ltd.;  (7)  M/s.  Visa
Power Ltd.; (8) M/s. Vandana Vidyut Energy Ltd.;  (9)  M/s.  GVK  (Govindwal
Sahib) Ltd.; (10) M/s. Gagan Sponge Iron Pvt.  Ltd.;  and  (11)  M/s.  Lanco
Group Ltd. The reasons for selecting above eleven companies which  were  not
recommended by the Ministry of Power are neither disclosed nor discernible.
149.        In the 36th meeting, which was  held  on  07.12.2007-08.12.2007,
07.02.2008-08.02.2008 and 03.07.2008,  the  Screening  Committee  considered
allocation of 23 coal blocks earmarked for non-power sector.  For  these  23
coal blocks earmarked for non-power sector, 674 applications were  submitted
by 184 companies for allocation.  Some companies had applied for  more  than
one block and some had submitted more than one application for single  block
for  different  end  use  plants  located  at  different   locations.    The
geological reserve of 23 blocks?? was  noted  by  the  Screening  Committee.
The minutes  of  the  36th  meeting  show  that  the  Committee  decided  to
recommend blocks earmarked for pig iron (coking  coal)  jointly  to  two  or
more than  two companies  and  nineteen  blocks  earmarked  for  other  end-
uses/non-cooking coal were recommended for allocation  to  single  companies
as well as jointly to two or more companies.  The minutes  of  36th  meeting
do not contain the particulars showing consideration  of  each  application.
There is no assessment of comparative merits  of  the  applicants  who  were
selected for recommendation.  The minutes do not disclose how  and  in  what
manner the selected companies meet the norms fixed for  inter  se  priority.
Many of the  selected  companies  were  neither  recommended  by  the  State
Government  nor  by  the  Administrative  Ministry.   Some  of   them   were
recommended  by  the  State  Government   but   not   recommended   by   the
Administrative Ministry while one of them was not recommended by  the  State
Government but recommended by  the  Administrative  Ministry.   For  Rajhara
North (Central & Eastern) coal block, Vini Iron & Steel Udyog  Ltd.  had  no
recommendation by the State Government or by  the  Administrative  Ministry.
Similarly, for Thesgora-B/Rudrapuri coal block, Revati Cement  P.  Ltd.  did
not have recommendation  either  from  the  State  Government  or  from  the
Administrative Ministry.  As  regards  Tandsi-III  and  Tandsi-III  (Extn.),
Mideast Integrated Steels Ltd. did not have recommendation  from  the  State
Government.  Similarly, as regards Thesgora-B/Rudrapuri, Kamal Sponge  Steel
& Power Limited  had  no  recommendation  from  the  State  Government.   As
regards Moira Madhujore  coal  block,  Ramswarup  Lohh  Udyog  Ltd.  had  no
recommendation from the Administrative Ministry.
150.        From the above discussion, it  is  clear  that  21  coal  blocks
stood allocated to private companies in pursuance of  Screening  Committee’s
recommendations during the period from the 1st meeting  held  on  14.07.1993
till the 21st meeting held on 19.08.2003.  For the  period  from  04.11.2003
(22nd meeting) to  18.10.2005  (30th  meeting)  in  pursuance  of  Screening
Committee’s recommendations, 26  coal  blocks  stood  allocated  to  private
companies.  Following 32nd meeting held on  29.06.2006/30.06.2006  till  the
34th meeting on 07.09.2006/08.09.2006, in pursuance of  the  recommendations
made by the Screening Committee, two coking coal blocks  were  allocated  to
private companies and  twelve  non-coking  coal  blocks  were  allocated  to
private  companies.   In  pursuance  of  the  recommendations  made  by  the
Screening  Committee  in  35th  and  36th  meetings,  33  coal  blocks  were
allocated to private companies.  Some of the coal block allocations made  to
the private companies  have  been  de-allocated  from  time  to  time.   For
consideration  of  legality  and  validity  of  allocations  made  to   such
companies, it is not necessary to deal with de-allocation aspect.  It  needs
no  emphasis  that  assuming  that  the  Central  Government  had  power  of
allocation of coal blocks yet such power should have  been  exercised  in  a
fair, transparent and non-arbitrary manner.    However,  the  allocation  of
coal blocks to the private companies pursuant to  the  recommendations  made
by the Screening Committee in 36 meetings suffers from  diverse  infirmities
and flaws which may be summarized as follows:
1st Meeting to 21st Meeting
      1.    The guidelines framed and applied  by  the  Screening  Committee
for the period from 14.07.1993 (1st meeting) to  19.08.2003  (21st  meeting)
are conspicuously silent about inter se priority between the applicants  for
the same block.  As a matter of fact, for the 21 coal  blocks  allocated  to
private companies  in  pursuance  of  Screening  Committee’s  recommendation
during the first period, inter se priority or merit of  the  applicants  for
the same block had not at all been determined.
      2.    The guidelines  do  not  contain  any  objective  criterion  for
determining the merits of the applicants.  The  guidelines  do  not  provide
for measures to prevent any unfair distribution of coal in the hands of  few
private companies.  As a matter of fact,  no  consistent  or  uniform  norms
were applied by the Screening Committee to ensure that there was  no  unfair
distribution of coal in the hands of the applicants.
      3.    The Screening  Committee  simply  relied  upon  the  information
supplied by  the  applicants  without  laying  down  any  method  to  verify
applicant’s experience in the end-use project for which allocation  of  coal
block was sought.  The guidelines also do not lay down any method  to  allot
coal blocks as per the end-use projects coal requirement.
      4.    The Screening Committee kept  on  varying  the  guidelines  from
meeting to meeting.  It failed to adhere to any transparent system.
      5.    No applications were invited through advertisement and thus  the
exercise of allocation denied level playing field, healthy  competition  and
equitable treatment.
      6.    Certain coal blocks which did  not  fit  into  the  criteria  of
captive blocks were decided to be allocated by  applying  peculiar  approach
that the reserves could either be permitted to  be  explored  by  a  private
party or lost forever.  For example, Brahmadiha block was allocated to  M/s.
Castron Technology pursuant to the recommendations  made  by  the  Screening
Committee in the 14th meeting.
      7.    If a certain party requested for a particular block, it  was  so
recommended without objectively considering the merit of such request.   For
example, in the 14th meeting, the proposal of M/s. Monnet Ispat Ltd.  for  a
new Sponge Iron plant in Keonjhar area of Orissa of 1.2  million  tonnes  of
capacity for which the  requirement  of  2.2  m.t.  of  raw  coal  has  been
indicated, was  discussed.   The  party  requested  for  Utkal-B2  block  in
Talcher coalfield having 106 m.t. of reserves.   CMD, MCL was  of  the  view
that Chendipada block is likely to have better grade of coal  and  suggested
to the party  for  preference  of  Utkal  B-2  block.   However,  the  party
insisted for Utkal B-2 block and  the  same  was  allotted.   Similarly,  as
regards the proposal of M/s.  Jayaswal  Neco  Ltd.  for  their  Sponge  Iron
Plant, the party had earlier requested for Gare-Palma IV/6 and  IV/7  blocks
for meeting their requirement of 1 m.t. Sponge  Iron  Plant  and  a  captive
power plant.  Then they requested for  allocation  of  Gare-Palma  IV/4  and
IV/8 blocks.  On the representation made by the representative of the  party
that 125 m.t. of reserves in Gare-Palma IV/4  block  will  be  adequate  for
meeting the requirement of their Sponge Iron Plant for a period of 30  years
and 91 m.t. of reserves in Gare-Palma IV/8 block will  be  adequate  for  30
years  life  of  the  proposed  CPP,  the  Screening  Committee  recommended
allocation of Gare-Palma IV/4 and IV/8 blocks to  M/s.  Jayaswal  Neco  Ltd.
The representation made by the party was  accepted  as  it  is  without  any
verification.
      8.    Certain blocks with  coal  reserves  on  the  higher  side  were
recommended to the companies with lower requirement.  There  were  no  steps
or measures taken to prevent possible misuse of end-use project  of  private
companies.  For example, M/s.  Prakash  Industries  Limited,  being  a  BIFR
company, was denied coal block earlier.  However,  the  Screening  Committee
recommended Chotia I and II coal blocks to M/s. Prakash  Industries  Limited
in 2003 for its proposed expansion project of 0.4 MTPA  Sponge  Iron  though
the company was having capacity of only 0.3 MTPA.
      9.    Some coal blocks which were already identified  for  development
by CIL were offered to the private companies and some of  the  blocks  which
were close to the projects of CIL were, in fact, recommended for  allocation
and ultimately allocated.  This was clearly in breach of the guidelines  for
selection of captive blocks.
22nd Meeting to 30th Meeting
      10.   With regard to allocation of coal blocks  to  private  companies
pursuant to its 22nd meeting to 30th meeting  held  between  04.11.2003  and
18.10.2005, the guidelines do not lay down any criteria for  evaluating  the
comparative merits of the applicants.  The consideration had been ad-hoc  in
so much so that in every meeting, the guidelines were altered.
      11.   In the 24th meeting held on 09.12.2004, the Screening  Committee
altered the norms by shifting insistence on achieving financial  closure  of
the end-use projects  to  some  appropriate  stage  after  the  mining  plan
approval.   Except  mentioning  the  particulars  of  each  applicants,  the
minutes do not show that there was any application of mind by the  Screening
Committee.  How the guidelines are met by the recommended companies has  not
been discussed.
      12.   In the 25th meeting held on 10.01.2005, the Screening  Committee
considered allocation of 5 coal blocks in the MCL area.   The size of  these
blocks was large as compared to  the  requirement  of  the  applicants.  The
rules of game were changed  to  adjust  large  number  of  applicants  whose
applications would have been otherwise rejected as  their  coal  requirement
was far less than the coal available in the coal blocks.  However, in  order
to accommodate these applicants, a novel idea of choosing a  leader  company
and associate companies was evolved though such procedure is  apparently  in
contravention of the statutory provision contained in  Section  3(3)(a)(iii)
of the CMN Act.
      13.   The merits of the companies, who were recommended for  selection
and those companies whose applications were rejected were not  comparatively
assessed.
      14.   While considering allocation for 5 blocks in SECL  area  in  the
26th meeting, despite the revelation by the Ministry of  Steel  that  number
of companies have in their presentations mentioned the capacity of the  end-
use plants in excess of what has been recommended by the  Ministry  and  the
concern expressed by the representative of the  State  Government  that  the
ground realities of the project needed to be verified and the capacities  of
the end-use plants and coal requirements of such projects  are  required  to
be confirmed,  the Screening Committee proceeded to list  out  the  possible
leaders without assessing the  capacities  of  coal  requirements  of  these
companies.
      15.   The minutes of the 27th and 28th meetings also do not show  that
the assessment of  comparative  merits  of  the  applicants  was  done.  The
Screening  Committee  continued  with  consortium  /  leader  and  associate
approach  which,  as  noted  above,  was   in   contravention   of   Section
3(3)(a)(iii) of the CMN Act. Even  in  case  of  a  certain  company,  where
recommendation  of  the  Administrative  Ministry  was   contrary   to   the
recommendation of the State Government, yet the recommendation was  made  by
the Screening Committee that  led  to  allocation  on  the  basis  of  State
Government’s recommendation. The Screening Committee even  decided  to  club
the  blocks  and  recommended  allotment  of  such  combined  block  to  two
companies jointly.
      16.   The consideration has been absolutely ad-hoc and   without  even
knowing how much surplus will remain, the company so  chosen  was  asked  to
select another allottee for surplus, if any.  This is seen from the  minutes
of the 30th meeting.  In the 30th  meeting,  the  Screening  Committee  also
recommended allocation of Dumri coal block although north  portion  of  that
block remained unexplored and the unexplored portion had superior  grade  of
coal.
      17.   The policy of pick and choose was adopted.   The application  of
norms was changed from meeting to meeting  with  no  uniform  or  consistent
consideration.
      18.   Certain companies which did not come for presentation were  also
considered but how and in what manner the applications  of  those  companies
were considered is not discernible.  Why  the  chosen  companies  have  been
preferred over the others is also not discernible.
32nd Meeting to 36th Meeting
      19.   The minutes of the 32nd meeting do  not  show  the  reasons  for
recommending three blocks jointly in favour of more than one company.
      20.   Some of the companies which had no recommendation by  the  State
Government were recommended by the Screening Committee.  The minutes of  the
33rd and 34th meeting  do  not  show  in  what  manner  the  merits  of  the
companies  which  were  chosen  for  recommendation  were  determined.   The
minutes of the 33rd   and 34th meeting even do not note the  particulars  of
the applicants individually.  The criterion which  the  Screening  Committee
applied in the selection of 15 companies and the reasons for  allocating  12
blocks to these companies are not discernible.
      21.   A certain company  which  has  no  recommendation/categorisation
was also recommended for allocation  and  ultimately  allocation  was  made.
The recommendation to allocate 15 blocks reserved for power  sector  by  the
Screening Committee in its 35th meeting does  not  contain  the  particulars
showing consideration of  each  application.   Though,  at  that  time,  the
guidelines provided for norms for consideration of  inter  se  priority  for
allocation of a block among competing applicants for a  captive  block,  but
the minutes do not at all disclose how the norms for inter se  priority  are
met by the company selected for recommendation by the  Screening  Committee.
Many  of  the  companies  selected  by  the  Screening  Committee   had   no
recommendation from the State Government or from the Ministry of  Power  and
CEA and some of them  had  no  recommendation  from  the  State  Government,
Ministry of Power and CEA at all.  As many as  eight  companies  which  were
recommended by the Ministry of Power were not recommended by  the  Screening
Committee while eleven companies which were not recommended by the  Ministry
of Power were recommended by the Screening Committee.
      22.   The minutes of the 36th meeting do not contain  the  particulars
showing  consideration of each application for allocation of 23 coal  blocks
earmarked for non-power  sector.    There  is  nothing  in  the  minutes  to
indicate how and in what manner the selected companies meet the norms  fixed
for inter  se  priority.   Many  of  the  selected  companies  were  neither
recommended by the State Government  nor  by  the  Administrative  Ministry.
Some of them were recommended by the State Government  but  not  recommended
by the Administrative Ministry while one of them was not recommended by  the
State Government but  recommended  by  the  Administrative  Ministry.   Many
companies which had failed to  secure  allocations  earlier  yet  they  were
recommended.  The Screening Committee  failed  to  consider  capability  and
capacity of the applicant in implementing the projects.
151.        The entire exercise of allocation  through  Screening  Committee
route thus appears  to  suffer  from  the  vice  of  arbitrariness  and  not
following any objective criteria in determining as to who is to be  selected
or who is not to be selected.  There is no evaluation of merit and no  inter
se comparison of the applicants.  No chart of evaluation was prepared.   The
determination of the Screening Committee is  apparently  subjective  as  the
minutes of the Screening Committee meetings do not show that  selection  was
made after proper assessment.  The project preparedness, track record  etc.,
of the applicant company were  not  objectively  kept  in  view.  Until  the
amendment was brought in Section 3(3) of the CMN Act w.e.f. 09.06.1993,  the
Central Government alone was permitted to mine coal  through  its  companies
with the limited exception of private companies engaged  in  the  production
of iron and steel.  By virtue of the bar contained in Section  3(3)  of  the
CMN Act, between 1976 and 1993, no private company (other than  the  company
engaged in the production of iron and steel) could  have  carried  out  coal
mining operations in India.  Section 3(3) of the CMN Act, which was  amended
on 09.06.1993 permitted private sector entry in coal mining  operations  for
captive use.  The power for grant of  captive  coal  block  is  governed  by
Section 3(3)(a) of the CMN  Act,  according  to  which,  only  two  kind  of
entities, namely, (a) Central Government or undertakings/corporations  owned
by the Central Government; or (b) companies having end-use  plants  in  iron
and steel, power, washing of coal  or  cement  can  carry  out  coal  mining
operations.  The expression “engaged in” in Section 3(3)(a)(iii) means  that
the company that was applying for the coal block must have set  up  an  iron
and steel plant,  power  plant  or  cement  plant  and  be  engaged  in  the
production of steel, power or  cement.   The  prospective  engagement  by  a
private company in the production  of  steel,  power  or  cement  would  not
entitle such private company to carry out coal mining  operation.   Most  of
the companies, which have been allocated coal blocks, were  not  engaged  in
the production of steel, power or cement at the time of  allocation  nor  in
the applications made by them any disclosure was made  whether  or  not  the
power, steel or cement plant was operational. They  only  stated  that  they
proposed to set up such plants.  Thus, the requirement  of  end-use  project
was not met at the time of allocation.
152.         It  is  pertinent  to  note  here  the  stand  of  Maharashtra.
According to Maharashtra, the allocation of coal  blocks  by  the  Screening
Committee meant that the benefits of the differential in price of  coal,  as
the case may be, would accrue to  the  allottee  of  the  coal  block.   The
differential in price would not necessarily be passed to the public  as  the
price of the final product of the company is  determined  by  import  parity
price in case of steel  companies,  competitive  market  price  in  case  of
cement companies (many may not have access to captive coal)  and  the  price
of power on an exchange or  in  bids  by  State  utilities  irrespective  of
source of fuel.  No material has  been  placed  by  the  Central  Government
which may rebut the Maharashtra’s stand.
153.        The challenge  has  also  been  laid  to  the  legality  of  the
allocations made to the State/State PSUs  through  the  Screening  Committee
route as well as Government dispensation route.  It is not in  dispute  that
the Screening Committee has recommended allocation  of  coal  blocks  to  29
State  Government  PSUs  while   through   Government   dispensation   route
allocation has been recommended for 72 PSUs.   The  question  that  requires
consideration is whether commercial mining operation can be  carried  on  by
the State or State PSUs. The answer has to be found out from  the  statutory
provisions.  By virtue of Section 3  of  the  CMN  Act,  as  was  originally
enacted, on and from the appointed day, the right,  title  and  interest  of
the owners in relation to the coal mines specified  in  the  Schedule  stood
transferred to and vested absolutely in the  Central  Government  free  from
all encumbrances.   This  provision  further  provides  that  if  after  the
appointed day, the existence of any other coal mine comes to  the  knowledge
of the Central Government, the provisions of the Coal Mines  Management  Act
shall apply until that mine is nationalized by an  appropriate  legislation.
Section 3 of the CMN Act was amended by the 1976  Nationalisation  Amendment
Act whereby sub-sections (3) and (4) of  Section  3  were  inserted.   Along
with this, Section 1A was also inserted in the CMN Act.  By sub-section  (3)
of Section 3, it is provided that on and from the commencement of  amendment
in Section 3, no person other than the Central Government  or  a  Government
company or a  corporation  owned,  managed  or  controlled  by  the  Central
Government or a person to whom the sub-lease has been granted  by  any  such
Government, Government company or corporation or a company  engaged  in  the
production of iron and steel shall carry on coal  mining  operation  in  any
form.   Clause (b) of sub-section (3) also provides for termination  of  all
mining leases and sub-leases for  winning  or  mining  of  coal  except  the
mining leases granted before such commencement in favour of the  Government,
Government company or corporation and any  sub-lease  granted  by  any  such
Government, Government company or corporation.  Clause  (c)  of  sub-section
(3) of  Section 3 prohibits grant of lease for winning  or  mining  coal  in
favour of any person  other  than  the  Government,  Government  company  or
corporation referred to in clause (a)  thereof.   But  this  prohibition  is
subject to only  one  exception  inasmuch  as  the  Government,  company  or
corporation owned, managed or  controlled  by  the  Central  Government  may
grant a sub-lease to any person in any area on such terms and conditions  as
may be specified in the instrument granting sub-lease provided the  reserves
of coal in the area are in isolated small pockets or are not sufficient  for
scientific and  economical  development  in  a  coordinated  and  integrated
manner and the coal produced by the sub-lessee will not be  required  to  be
transported by rail.   Section 3(3)(a)(i) thus provides  that  only  Central
Government or a Government company (Central PSU or a  corporation  owned  or
managed by the Central Government) can carry on mining operations  in  India
in any form.   In other words, commercial mining cannot  be  carried  on  by
the State Government or the State PSU.  The expression  “Government  company
or a corporation owned, managed or controlled  by  the  Central  Government”
means Government of India Public Undertaking.  It  does  not  include  State
Government Public Sector Undertaking.  This is fortified  by  Section  3(4),
Section 4 and Sections 5, 6 and 7.  The mining leases and  sub-leases  which
were terminated under Section 3(3)(b) were available  only  to  the  Central
Government or for that matter,  the  Government  company  or  a  corporation
owned,  managed  and  controlled  by  the  Central  Government.   The  State
Government or State Public Sector Undertakings  became  entitled  to  obtain
sub-lease of reserves of coal in isolated small pockets  under  clauses  (i)
and (ii) of proviso to Section 3(3)(c).  It  is  pertinent  to  notice  here
that Circular dated 30.07.1979  records the correct position of  legislative
policy articulated in the CMN Act under which only  the  Central  Government
Public Undertakings have been permitted to carry on coal  mining  operations
in the country.  After the amendment was carried out in  the  CMN  Act,  the
circular states that while continuing the existing  policy  of  the  Central
Government carrying out coal mining operations by its own undertakings,  the
State Governments might also be allowed to carry out coal mining  operations
in isolated small pockets subject to the conditions set  out  therein.   The
“isolated small pockets” are those which are away from the  main  coalfields
and have limited known reserves which are not sufficient for scientific  and
economic development in a coordinated and integrated  manner  and  the  coal
produced from such areas would mainly  be  utilized  for  local  consumption
without transportation by railways.   However, almost after 22  years,  vide
Circular dated 12.12.2001, the Central  Government,  reviewing  its  earlier
policy, allowed the State Government companies or undertakings to do  mining
of coking and non-coking coal or lignite  reserves  either  by  opencast  or
underground method, anywhere in the country, subject to the  conditions  set
out   therein.    Under   the   revised   policy,   the   State   Government
company/undertaking was permitted to mine non-coking coal  and  coking  coal
reserves or lignite by opencast/underground method without  the  restriction
of “isolated  small pockets”.  Having carefully examined the Circular  dated
12.12.2001, in light of the provisions of the CMN Act, as amended  in  1976,
it appears to us that the circular is not in conformity with the  provisions
of the CMN Act and, consequently,  has  no  legal  sanction.   CMN  Act  and
further  amendments  therein  carried  out  in  1976  do  not  allow   State
Government or State PSUs to mine  coal  for  commercial  use.   The  problem
seems to have arisen because of the 2001 circular which  permits  the  State
Government companies or undertakings to do mining of coking  and  non-coking
coal reserves but, as noted above, the legislative policy  in  the  CMN  Act
does not permit that.  The recommendation for allocation  by  the  Screening
Committee to the State PSUs and also the allocation made to the  State  PSUs
through Government dispensation route are, therefore, in  violation  of  the
provisions of the CMN Act, as amended from  time  to  time.   Moreover,  the
State  PSUs,  besides  having  been  allocated  coal  mines  for  commercial
purpose, have also been allowed to form joint venture companies,  i.e.,  51%
shareholding of State PSUs and 49% of  private  company.   However,  in  the
joint venture agreements between the State PSUs and the  private  companies,
mining operations have been given  to  private  company.  For  example,  the
notice inviting  offer  dated  02.07.2008  issued  by  Chhattisgarh  Mineral
Development Corporation (CMDC) for selection of partner for formation  of  a
joint venture company for exploration, development, mining and marketing  of
coal from coal blocks provided that the Joint Venture Company  (JVC)  to  be
formed by CMDC and the selected offerers / bidder will explore, develop  and
operate such coal deposits and  the  coal  produced  by  JVC  will  be  sold
commercially to various consumers in the open market.   CMDC  was  allocated
Sondiha coal block and coal blocks Bhatgaon-II and Bhatgaon-II  (Extension).
 Similarly, the Joint Venture Agreement between  the  Madhya  Pradesh  State
Mining Corporation Limited and Monnet Ispat and Energy Limited reveals  that
Joint  Venture  Company  has  been  further  allowed  to  enter  into   Mine
Development Operation  Agreements  with  other  private  partner  or  sister
concern.  This modus operandi has virtually defeated the legislative  policy
in the CMN Act and winning and mining of coal mines has resultantly gone  in
the hands of private companies for commercial use.  As indicated  above,  by
1976 amendment in the CMN Act, other than the Central Government or  Central
Government undertakings, a company engaged in the  production  of  iron  and
steel was permitted to carry on coal mining  operations  in  any  form.   By
subsequent amendments in Section  3  of  the  CMN  Act,  besides  a  company
engaged  in  the  production  of  iron  and  steel,  a  company  engaged  in
generation of power or a company engaged in washing of coal obtained from  a
mine or such other end-use, as the Central Government  may  by  notification
specify,  no  other  company  can  “carry  on  mining  operation  in  coal”.
Allocation of coal blocks to the State  PSUs  which  ultimately  on  getting
mining leases may enable them to win or mine coal  commercially  is  clearly
in breach of the provisions of the CMN Act.
154.         To  sum  up,  the  entire  allocation  of  coal  block  as  per
recommendations made by  the  Screening  Committee  from  14.07.1993  in  36
meetings and  the  allocation  through  the  Government  dispensation  route
suffers from the vice  of  arbitrariness  and  legal  flaws.  The  Screening
Committee has never been consistent, it has not been transparent,  there  is
no proper application of mind, it has acted on no material  in  many  cases,
relevant factors  have  seldom  been  its  guiding  factors,  there  was  no
transparency and guidelines have  seldom  guided  it.   On  many  occasions,
guidelines have been honoured more in their breach.  There was no  objective
criteria, nay, no  criteria  for  evaluation  of  comparative  merits.   The
approach had been ad-hoc and casual.  There  was  no  fair  and  transparent
procedure, all resulting in unfair  distribution  of  the  national  wealth.
Common good and public interest have, thus, suffered  heavily.   Hence,  the
allocation of coal blocks based on the recommendations made in  all  the  36
meetings of the Screening Committee is illegal.
155.        The allocation of coal blocks  through  Government  dispensation
route, however laudable the object may be,  also  is  illegal  since  it  is
impermissible as per the scheme of the CMN  Act.   No  State  Government  or
public sector undertakings of the State Governments are eligible for  mining
coal for commercial use.   Since allocation of coal is permissible  only  to
those categories under Section 3(3) and (4), the joint  venture  arrangement
with ineligible firms is also impermissible.   Equally,  there  is  also  no
question of any consortium / leader / association in  allocation.   Only  an
undertaking satisfying the eligibility criteria referred to in Section  3(3)
of the CMN Act, viz., which has a unit engaged in  the  production  of  iron
and steel and generation of power, washing of coal  obtained  from  mine  or
production of cement, is entitled to the allocation in addition  to  Central
Government,  a  Central  Government  company   or   a   Central   Government
corporation.
156.        In this context, it is worthwhile to note that the 1957 Act  has
been amended introducing Section 11-A w.e.f. 13.02.2012.  As  per  the  said
amendment, the grant of reconnaissance permit  or   prospecting  licence  or
mining lease in respect of an area containing coal or lignite  can  be  made
only through selection through auction by  competitive  bidding  even  among
the  eligible  entities  under  Section  3(3)(a)(iii),  referred  to  above.
However, Government  companies,  Government  corporations  or  companies  or
corporations, which have  been  awarded  power  projects  on  the  basis  of
competitive bids for tariff (including Ultra Mega Power Projects) have  been
exempted of allocation in favour of them is not  meant  to  be  through  the
competitive bidding process.
157.        As we have already found that the allocations made,  both  under
the Screening Committee route and the  Government  dispensation  route,  are
arbitrary and illegal, what should be the consequences, is the  issue  which
remains to be tackled.  We are of the view that,  to  this  limited  extent,
the matter requires further hearing.
158.        By way of footnote, it may be  clarified  and  we  do,  that  no
challenge was laid before us in respect of blocks where competitive  bidding
was held for the lowest tariff for  power  for  Ultra  Mega  Power  Projects
(UMPPs).  As a matter of fact, Mr. Prashant  Bhushan,  learned  counsel  for
Common Cause submitted that since allocation for UMPPs  is  in  accord  with
the opinion given  in  Natural  Resources  Allocation  Reference20  and  the
benefit of the coal block is passed on to the public, the  said  allocations
may not be  cancelled.   However,  he  submitted  that  in  some  cases  the
Government has allowed diversion of coal from UMPP to other  end  uses  i.e.
for commercial exploitation.  Having regard to this,  it  is  directed  that
the coal blocks allocated for UMPP would  only  be  used  for  UMPP  and  no
diversion  of  coal  for  commercial  exploitation   would   be   permitted.


       ….………..……………………CJI.
(R.M. Lodha)


       …….………..……………………J.
(Madan B. Lokur)


             …….………..……………………J.                    (Kurian Joseph)


NEW DELHI;
AUGUST 25, 2014.
-----------------------
[1]    “3(a) "minerals” includes all minerals except mineral oils;
       (c)  "mining  lease”  means  a  lease  granted  for  the  purpose  of
undertaking mining operations, and includes a  sub-lease  granted  for  such
purpose;
      (d) “mining  operations"  means  any  operations  undertaken  for  the
purpose of winning any mineral;
       (e) "minor minerals" means building stones,  gravel,  ordinary  clay,
ordinary sand other than sand used for prescribed purposes,  and  any  other
mineral which the Central Government may, by notification  in  the  Official
Gazette, declare to be a minor mineral;
      (f) "prescribed" means prescribed by rules made under this Act;
      (g) "prospecting licence" means a licence granted for the  purpose  of
undertaking prospecting operations;
      (h)"prospecting operations" means any operations  undertaken  for  the
purpose of exploring, locating or proving mineral deposit;”


[2]    Monnet Ispat and Energy Ltd. v. Union of India and Ors.; [(2012) 11
SCC 1]
[3]    Baijnath Kadio v. State of Bihar; [(1969) 3 SCC 838]
[4]    Hingir-Rampur Coal Co. Ltd. v. State of Orissa; [AIR 1961 SC 459:
(1961) 2 SCR 537]
[5]    State of Orissa v. M.A. Tulloch and Co.; [AIR 1964 SC 1284 : (1964)
4 SCR 461]
[6]    Sandur Manganese and Iron Ores Ltd. v. State of Karnataka; [(2010)
13 SCC 1]
[7]    State of Assam v. Om Prakash Mehta; [(1973) 1 SCC 584]
[8]    Orissa Cement Ltd. v. State of Orissa; [1991 Supp. (1) SCC 430]
[9]    Nazir Ahmad v. King Emperor; [(1935-36) 63 IA 372]
[10]   Tara Prasad Singh and others v. Union of India and others; [(1980) 4
SCC 179]
[11]   Desh Bandhu Gupta and Co. v.Delhi Stock Exchange Association Ltd.;
[(1979) 4 SCC 565]
[12]   Baleshwar Bagarti v. Bhagirathi Dass; [ILR 35 Calcutta 701]
[13]   Mathura Mohan Saha v. Ram Kumar Saha; [ILR 43 Calcutta 790]
[14]  .                               NO.13011/3/92-CA
                                Government of India
                                 Ministry of Coal
                                             New Delhi, the 14th July, 1992.
                                 OFFICE MEMORANDUM
      Subject:   Constitution of a Screening Committee for screening
proposals received for captive mining by private power generation
companies.
      In the context of participation of private power generating  companies
in power generation, proposals are also being received in  the  Ministry  of
Coal from such companies requesting for ownership and operation  of  captive
coal mines.  For screening of  such  applications/  proposals  it  has  been
decided to constitute a Screening  Committee  comprising  of  the  following
members:-
      1. Additional Secretary, Ministry of Coal          -    Chairman
      2. Adviser (Projects), Ministry of Coal            -    Member-
Convenor

      3. Joint Secretary & Financial Adviser,
          Ministry of Coal.                  -     Member
      4. Representative of Ministry of Railways          -    Member
      5. Representative of Ministry of Power       -     Member
      6. Representative of concerned
          State Govt. (Revenue Deptt.)             -     Member
      The Committee will meet once in a month and examine the proposals
received from various parties.
                                               (S. KRISHNAN)
                                   UNDER SECY. TO THE GOVERNMENT OF INDIA


[15]  .                                                NO.13011/3/92-CA
                                Government of India
                                 Ministry of Coal
                                              New Delhi, the 5th August, 93.
                                 OFFICE MEMORANDUM

                Subject:      Constitution    of   a   Screening   Committee
for  screening
      proposals received for captive  mining  by  private  power  generation
companies
       – Matter regarding.
      In continuation of this Ministry’s Office Memorandum  of  even  number
dated 14.7.1992 constituting a Screening Committee for  screening  proposals
received for captive mining by private sector  power  generation  companies,
it has been  decided  to  revise  partially  the  composition  of  the  said
Screening Committee as under:-

      1. Additional Secretary,                     -     Chairman
          Ministry of Coal, New Delhi.
      2. Adviser (Project)                   -     Member-convenor
          Ministry of Coal, New Delhi.
      3. JS & FA,                            -     Member
          Ministry of Coal, New Delhi.
      4. Representative of Ministry                -     Member
          of Railways, New Delhi.
      5. Representative of Ministry                -     Member
          of Power, New Delhi.
      6. Representative of concerned               -     Member
          State Govt. (Revenue Deptt.)
      7. Director (Technical) CIL,                 -     Member
          Calcutta.
      8. Chairman/Managing Director –              -     Member
          CMPDIL, Ranchi.
      9. CMD/ of concerned subsidiary              -     Member.
          Companies of CIL.


                                        (J.L. MEENA)
                       DEPUTY SECY. TO THE GOVERNMENT OF INDIA

[16]  .                         No.47011/15/95-CPAM
                                Government of India
                          Ministry of Mines and Minerals
                                Department of Coal
                                           New Delhi, the 10th January, 2000
                                 Office Memorandum

      Subject:   Constitution of a Screening Committee for screening
proposals received for captive mining by companies engaged in the
generation of power and manufacture of iron, steel and cement.
      The undersigned  is  directed  to  refer  to  this  Ministry  of  O.M.
No.13011/3/92-CA dated 14.7.1992 and 5.8.1993 and No.47011/15/95-CPAM  dated
26/28.10.1999 and to  say  that  instead  of  Joint  Secretary  &  Financial
Adviser, Deptt. Of Coal, Joint Secretary (Coal),  Deptt.  Of  Coal  will  be
member of the Screening  Committee.  Accordingly,  Screening  Committee  for
screening proposals for allocation of coal/ lignite blocks  for  manufacture
of iron/ steel captive production of power and production of cement  in  the
public / private sector is reconstituted as under:-

      1. Additional Secretary,                     -     Chairman
          Department of Coal
      2. Adviser (Projects)                  -     Member - Convenor
          Department of Coal
      3. Joint Secretary (Coal)                    -     Member
          Department of Coal
      4. Joint Secretary (LA)                      -     Member
          Department of Coal
      5. Representative of Ministry of Railways,         -    Member
          New Delhi,
      6. Representative of Ministry of Power,            -    Member
          New Delhi.
      7. Representative of concerned State         -     Member
          Govt. (Revenue Deptt.)
      8. Director (Technical), CIL, Calcutta       -     Member
      9. Chairman-cum-Managing Director,           -     Member
          CMPDIL, Ranchi
      10.CMD of concerned subsidiary company       -     Member
           Of CIL/NLC
                                        (T.K. Ghosh)
                                            Director

[17]  .                             No.13011/5/2003-CA
                                Government of India
                                 Ministry of Coal
                                                  New Delhi, dated 17.4.2003
                                 Office Memorandum

      Subject:-  Reconstitution of a Screening Committee for screening
proposals received for captive mining by companies engaged in the
generation of power and manufacture of iron, steel and cement.
       The  undersigned  is  directed  to  refer  to  this  Ministry’s  O.M.
No.13011/3/92-CA dated  14.7.1992  and  5.8.1993  and  No.  47011/15/95-CPAM
dated 10.1.2000 and to state that from the date of  issuance  of  this  O.M.
the Screening Committee shall be headed by Secretary, Ministry of  Coal  and
Joint Secretary (Coal), Ministry of  Coal  shall  be  the  member  convenor.
Accordingly, Screening Committee for screening proposals for  allocation  of
coal / lignite blocks for generation  of  power  and  manufacture  of  iron,
steel and cement in the public/ private sector is reconstituted as under:-

      1.Secretary
      Ministry of CoalChairman2.Joint Secretary (Coal)
               Ministry of CoalMember – Convenor3.Adviser (Projects)
                   Ministry of CoalMember4.Joint Secretary (LA)
        Ministry of CoalMember5.Representative of Ministry of Railways, New
           Delhi.Member6.Representative of Ministry of Power, New
    DelhiMember7.Representative of concerned State Govt.Member8.Director
  (Technical), CIL, CalcuttaMember9.Chairman-cum-Managing Director, CMPDIL,
     RanchiMember10.CMD of concerned subsidiary company of CIL/NLCMember
                                               (S. Gulati)
                                               Director

[18]  .                                 No.13016/35/2005-CA-I
                                Government of India
                                 Ministry of Coal
                                         New Delhi, the 26th September, 2005
                                 OFFICE MEMORANDUM

      Subject:   Reconstitution of Screening Committee for screening
proposals received from companies engaged in the generation of power and
manufacture of iron, steel and cement for allocation of coal blocks.
      The undersigned is director to refer to this Ministry’s O.M.
No.13011/5/2003-CA dated 17.4.2003 and corrigendum No.13011/5/2003-CA
issued on 7.5.2003 and the O.M. of even no. dated 2.9.2003 on the subject
mentioned above and to state that from the date of issuance of this O.M.,
the following shall be the member of the Screening Committee in addition to
the existing members of the Committee:-
      Secretary, or his representative, of Ministry of Environment &
Forests.

                                                                  (S.Gulati)
                                                               Director.

[19]   Centre for Public Interest Litigation & Ors. v. Union of India &
Ors.; [(2012) 3 SCC 1]
[20]   Natural Resources Allocation, In re, Special Reference No.1 of 2012;
[(2012) 10 SCC 1]
[21]   Kasturi Lal Lakshmi Reddy & Ors. v. State of J&K & Anr.; [(1980) 4
SCC 1]
[22]   Sachidanand Pandey & Anr. v. State of West Bengal & Ors.; [(1987) 2
SCC 295]
[23]   Haji T.M. Hassan Rawther v. Kerala Financial Corporation; [(1988) 1
SCC 166]
[24]   M.P. Oil Extraction & Anr. v. State of M.P. & Ors.; [(1997) 7 SCC
592]
[25]   Netai Bag & Ors. v. State of West Bengal & Ors.; [(2000) 8 SCC 262]
[26]   Villianur Iyarkkai Padukappu Maiyam v. Union of India & Ors.;
[(2009) 7 SCC 561]
[27]   R.K. Garg v. Union of India & Ors.; [(1981) 4 SCC 675]
[28]   D.K. Trivedi & Sons & Ors. v. State of Gujarat & Ors.; [1986 Supp
SCC 20]
[29]   Goa Foundation v. Union of India and Others; [(2014) 6 SCC 590]
*      ………The sizes of blocks in terms of reserves are large and the
individual requirements of the sponge iron/steel producers were
comparatively smaller.  All the meritorious applicants deserve to be given
captive coal.
      In order to accommodate  all  the  meritorious  and  deserving  cases,
these blocks would need to be sub-divided which  would  result  in  enormous
loss of coal between barriers because  of  statutory  and  practical  mining
conditions. Therefore, to sub-block the larger blocks as an alternative  for
accommodating all the deserving cases had  to  be  ruled  out.   The  second
alternative was of grouping the deserving cases, so that  they  can  form  a
joint venture company, an SPV for mining of coal  and  carry  out  the  coal
mining jointly in the allocated block.  This alternative was also  presented
to the applicant companies, but most of them had expressed  reservations  on
grounds like cultural and administrative differences among the  constituents
of the joint venture company, inherently  because  they  were   competitors,
the joint venture company would be off balance-sheet  and  may  not  attract
sufficient lending, there could be intersee slippages in development of  the
end-use projects and injection of equity by the  constituents  which   could
jeopardize the mining project and would not lead to production at  an  early
stage.  A number of other similar  objections  to  the  formation  of  joint
venture company or mining through SPV  were  put  forward  by  a  number  of
applicants.  This alternative also, therefore, had to  be  left  alone.   It
was then discussed that for each natural block, one  applicant  company  who
had the highest stake and which was likely to take up proper mining  at  the
earliest, could be designated the Leader company  and  allocated  a  captive
block and a group of other  meritorious  companies  could  be  nominated  as
associated companies for supply of coal  by  the  leader  company  to  these
designated associates.  The amount of coal to  be  supplied  by  the  leader
company to the associate company would have  a  ceiling  determined  by  the
assessed requirement of the associate company, after  deducting  the  linked
quantum of coal given by CIL/its subsidiaries.   The  leader  company  would
commit to supply the  ceiling  amount  of  coal  to  the  associate  company
depending upon its requirements i.e. as and when the plant of the  associate
company comes up, its requirements would be met upto the  level  of  ceiling
quantum by the  leader  company.   The  yearly  percentage  of  satisfaction
through this supply would be in the same proportion as the rated  production
capacity of the mine, to be approved during the mining plan,  to  the  total
of the assessed requirements of the leader (after fully  protecting  earlier
allocation, if any) and the associated companies attached to a  coal  block.
In the alternative, this supply of coal  from  the  leader  company  to  the
associated companies could be done through MCL also where depending  on  the
actual requirement of the associate company, subject  to  the  ceiling,  MCL
would add service charge, gather coal from the  leader  company  and  supply
the same to the associate company.  In either of these cases, coal would  be
transferred  from  the  leader  company  to   the   associate   company   at
administratively determined transfer price and not at any free market  price
or notified price of CIL, as this arrangement is  in  lieu  of  giving  coal
blocks to the  associate  companies  and  their  taking  up  captive  mining
themselves.  This administrative  transfer  price  would  be  determined  by
Ministry of  Coal  through  its  sub-committee  headed  by  Addl.  Secretary
(Coal).  Having decided as above,  the  Screening  Committee   proceeded  to
select the leader and the associate companies.
      …….To  sum  up,  the  following  companies  were  found  deserving  of
allocation of coal blocks alongwith their status:

            Block                 Name of the Company               Status

            Utkal A               To be merged with Gopalprasad for
                             Mining by MCL as one mine or by
                             Jindal Thermal Power Ltd./
                             Jindal Vijayanagar Ltd. and include
                              Jindal  Stainless  Steel  Ltd.  as  a   linked
Consumer
                             or an associate.  Final decision and details
                             to be taken up in the Ministry of Coal.

            Talabira II           NLC

                             Priority linkage to  be  given  for  supply  of
coal
                             to companies to be worked out in the Ministry
                             of  Coal  so  that  their  yearly  satisfaction
level
                             based on their assessed requirement after
                             adjusting the linkage is about equal to
                              those   companies   in   the   other   blocks.

            Bijahan               Bhushan  Limited                    Leader
Company
                             Associate companies to be  worked  out  in  the
Ministry of Coal
      so that their yearly satisfaction level based on their assessed
      requirement  after adjusting the linkages is about equal to the
      associate companies in the other block.

              Radhikapur         Rungta   Mines                       Leader
Company
              (West)
                             Associate companies to be  worked  out  in  the
Ministry   of   Coal,   so   that                            their    yearly
satisfaction   level   based   on   their   assessed    requirement    after
      adjusting the linkages is about equal to the  associate  companies  in
the
      other block.

                               Radhikapur        Tata   Sponge   Iron   Ltd.
Leader Company
              (East)
                             Associate companies to be  worked  out  in  the
Ministry   of   Coal,   so   that                            their    yearly
satisfaction   level   based   on   their   assessed    requirement    after
      adjusting the linkages is about equal to the  associate  companies  in
the
      other block.

      To the extent possible, linkaged/associate companies would be  grouped
in the blocks sought by them.

      Following companies  were  considered  to  be  included  as  associate
companies or for linkages:
      1)    Jindal Stainless Steel Ltd.
      2)    Orissa Sponge Iron Ltd.
      3)    SMC Power Generation Ltd.
      4)    OCL India Limited
      5)    Shree Metalliks Limited
      6)    Scaw Industries Limited
      7)    Deepak Steel & Power Limited
      8)    SPS Sponge Iron Limited
      9)    Shyam DRI Power Limited

       [However,  subsequently  after  the  long-term  linkage   of   Aditya
Aluminium  was  revealed  from  records,  the  other  three  companies   who
substantially met with the criteria employed  for  selection  of  the  above
associate  companies,  were  found  includable  without   much   change   in
percentage satisfaction  of  the  earlier  determined  associate  companies.
These companies are:

      Mahavir Ferro Alloys Ltd.
      Nalwa Sponge Iron Ltd.
      Bajrang Ispat Private Ltd.]

      The companies whose cases were not decided in  their  favour  for  the
five captive blocks under consideration, are as follows:
      N.T.P.C.
      Bengal Sponge Iron Ltd.
      Mundra SEZ
      Gujarat Electricity Board
      INDAL
      OPGENCO
      Madhya Utilities & Investment Ltd.
      Deo Mines & Minerals P Ltd.
      Madhyadesh paper Limited
      Sunflag
      Aditya Aluminium (HINDALCO)
      Jaiswal Neco
      MSEB




*     *…..Considering the financial soundness of the  companies,  status  of
advance action taken, requirement of the end-use projects  already  put  up,
the likelihood of setting up of the entire capacity of the end-use  projects
and the support of the Ministry of Steel and/or Power  and  the  support  of
the State Government the following companies were selected by the  Screening
Committee for allocation of coal from captive blocks on the pattern  similar
to the blocks in MCL area considered  by  the  Screening  Committee  in  its
meeting held on 10.1.2005.
      Anjani Steels Pvt. Ltd.
       Hindustan Zinc Limited
      Chattisgarh Electricity Company Ltd.
      Ind Agro-Synergy Ltd.
      Ispat Godavari Ltd.
      Jayaswal Neco Ltd.
      Jindal Steel and Power Ltd.
      MSP Steel and Power Ltd.
      Nalwa Sponge Iron Ltd.
      Nav Bharat Coalfields Pvt. Ltd.
      Prakash Industries Ltd.
      Sri Bajrang Power and Ispat Ltd.
      Sri Nakoda Ispat Ltd.
      Sunflag Iron & Steel Co. Ltd.
      Vandana Global Ltd.

*     It was decided to allocate coal from the captive blocks in the same
way as decided in case of blocks in MCL area, the Committee proceeded to
listing out the possible leaders from among the selected  companies and
listed out the following possible leaders:

      Hindustan Zinc Ltd.
      Chhattisgarh Electricity Company Ltd.
      Jayaswal Neco Ltd.
      Jindal Steel & Power Ltd.
      Prakash Industries Ltd.
      Sunflag Iron & Steel Co. Ltd.
         Consortium    of    Nav    Bharat     Coalfields     Pvt.     Ltd.,
Ind  Agro  Synergy;  Ispat  Godawari,  Sri  Bajrang  Power  &  Ispat   Ltd.,
Sri      Nakoda      Ispal       Ltd.,       Vandana       Global       Ltd.
It was decided by the Committee  that  detailed  formulation  of  groups  or
‘common pool’ for allocation of coal/blocks in line  with  the  dispensation
being contemplated in MCL blocks, will be worked  out  by  the  Ministry  of
Coal.  In this regard, it was decided that the following  three  alternative
formulations for mining and distribution of  coal  by  the  group  from  the
captive                mine                 appear                 workable.
      i)    Formation of a Consortium  company  which  will  mine  coal  and
distribute           among         the          consortium          members.
      ii)    If  no  consortium  emerges  by  consensus,  a  leader  may  be
identified in the group who will do mining of coal and distribute  it  among
the members of the group at a transfer price to be fixed by a  Committee  in
the  Ministry  of  Coal.                               iii)   If  the  group
members and leaders are not agreeable to a direct dealing with  each  other,
they being competitors among themselves, the subsidiary (here SECL)  of  CIL
operating in that area shall undertake  distribution  of  the  coal  to  the
associate companies at the transfer  price  fixed  by  a  Committee  in  the
Ministry of Coal.                                        Ministry  of  Steel
raised the issue that a number of companies have,  in  their  presentations,
mentioned the capacity of the end-use projects in excess of  what  has  been
recommended by the Ministry of Steel and a view  has  to  be  taken  on  the
same.  Further it was also observed that a number of companies  have  raised
the proposed capacity of their end-use projects after the  cut-off  date  of
28.6.2004.  On this, representative of the State Government stated that  the
ground realities of the projects need to be verified and the  capacities  of
the end-use plants and coal requirements of  such  projects  require  to  be
confirmed.  Therefore, the Screening Committee decided that a  Committee  of
the representatives  of  the  Ministry  of  Steel  and  Ministry  of  Power,
Government of Chhattisgarh and the Ministry of Coal will sit  in  a  meeting
and assess and firm up the capacities and  coal  requirement.   The  Meeting
would be convened in the Ministry of Coal.
*     ** The above submissions of various companies  who  made  presentation
before the Screening Committee  were  deliberated  by  the  members  of  the
committee in details and with the support  of  the  representatives  of  the
state  governments  concerned,   representatives   of   the   administrative
ministries, such as Ministry Steel, Ministry  Power,  Ministry  of  Commerce
and Industries (Deptt. of Industrial Policy and Promotion) and the  Ministry
of Railway and other members, allocation of the following blocks  in  favour
of the companies mentioned against each in line with  consortium/leader  and
associate approach adopted in case of the blocks in MCL and SECL areas,  was
decided:-

      i)    North Dhadu (670 mt.) -Tata Power                 -     Leader
                       Subject to their studying the details and making
                       available their views  to  Min.  of  Coal  who  would
                       then take an  appropriate  decision  in  the  matter.


                         M/s.   Adhunik   Alloys    and    Power    Limited]
                  M/s.  Pawanjay  Iron  and    Steel   Ltd.                ]
Associates
                                           M/s    Jharkhand    Ispat    Ltd.
      ]
*       ii) Bundu                 -Rungta Mines Ltd
Leader/consortium
                        Jai Balaji Sponge Ltd.

        iii)     Ardhagram        -Sova Ispat Ltd.                  Leader
                             - Bengal Sponge Iron Manufactures
                         Mining Ltd.

      iv)   Parvatpur        Electrosteels Casting Ltd.

      v)    Gondulpara       -Tenughat Vidyut Nigam Ltd.
                       - Damodar Valley Corporation Ltd.

      TVNL laid claim to Gondulpara on the assertion that  since  they  have
the adjoining block of Badan, it would  save  coal  if  the  two  are  mined
together.  CMPDIL clarified that there had to be two separate mines  looking
to the geography of the block and, therefore, the question  of  coal  saving
does not arise.  It was decided to share the produce between DVC  and  TVNL.
Leader would be decided in the Ministry of Coal.

      vi)   Pirpainti-Barahat           - Shyam Sel Ltd.
                       - Rashmi Cement Ltd.

      vii)  Mahan                 - M/s. Hindalco (subject  to  confirmation
by Govt. of Madhya Pradesh)

      viii) Gurha (East)          -M/s. Marudhar Power Pvt. Ltd.

       ix)    Dumri                  -   Neelachal   Iron   &   Power   Ltd.
                             - Bajrang Ispat Pvt. Ltd.

      6.    In regard to the decision taken  on  allocation  of  Mahan  coal
block to M/s Hindalco since the representative of Govt.  of  Madhya  Pradesh
made repeated request to consider to allocation of the block  in  favour  of
the Madhya Pradesh State Mineral Development  Corporation  Limited,  it  was
observed by the Chairman of the  Screening  Committee  that   allocation  of
Mahan block to Hindalco is likely to lead to substantial value addition  and
economic activities in the state  generating  considerable  revenue  to  the
State exchequer.  The State Mineral Corporation can  ask  for  other  blocks
such as Amelia and  Amelia  north  in  the  vicinity  of  the  Mahan  block.
However, considering the overall position, it was decided that it  would  be
appropriate to have the views of the Govt. of Madhya Pradesh  on  the  same.
It was decided that within  a  CIL  subsidiary  area,  production  from  the
blocks, instead of a  one  to  one  relation  between  the  leader  and  the
associates, it could be pooled and shared amongst  the  associate  companies
via the local CIL subsidiaries.  The coal from these blocks would  be  mined
by the designated leader  and  transferred  at  a  price  to  be  determined
administratively as in the case of MCL and SECL blocks.

      The issue of change of the area of  the  Gare-Palma-IV/I  block  which
was allocated to M/s. Jindal Steel and Power Ltd., by the allocatee  company
themselves was also discussed.   The  details  of  the  case  was  explained
before the Screening Committee.  It was stated  that  M/s.  Jindal  Steel  &
Power Limited had shifted the area of the block to cover an  adjoining  area
containing a coal reserve of about 15 million tonne between  the  border  of
the  State  of  Orissa  and  block  boundary  which  is  in  the  State   of
Chhattisgarh.  On the other side,  a  portion  of  the  block  containing  a
reserve of about 36 million tonne under forest cover  and  human  habitation
has been left out matching the acreage of the changed area with the  acreage
area of the block allocated to them.  It was pointed out by CMPDIL that  the
area between Orissa border and block boundary  which  has  been  covered  by
M/s. Jindal Steel and Power Ltd., could not form an  independent  block  and
should have been included earlier in the area of  Gare-Palma-IV/I.   It  was
also stated that M/s. Jindal Steel and Power Ltd., have already  obtained  a
lease over the area which contains the un-allocated  area  covered  by  them
with the approval to the mining plan and previous approval  by  the  Central
Government for grant of mining lease.  In view of the same it  was  held  by
the Committee that it was an error both on the part of  the  Government  and
the Company and this needed to be regularized.  Thereafter, it  was  decided
that M/s. Jindal Steel and Power Ltd. should mine the left out area  of  the
block under forest cover and human habitation while mining  the  reserve  in
the extra covered area.  Accordingly, the  representatives  of  M/s.  Jindal
Steel and Power  Ltd.  were  called  before  the  Committee  and  they  were
informed that they should work the entire area of the  block  including  the
forest area and the area under villages and  also  the  additional  area  in
question which has been covered by them and they should give details of  the
whole area and its coal reserves to the CMPDIL and Ministry of Coal and  the
mining plan be accordingly revised and considered.
*
*                       ***                   i)                   Patrapara
Looking to the size of the project, investment involved etc. it was  decided
that the leadership should go to M/s. Bhushan Steel and Strips  Limited  and
for the  associate  status  M/s.  Nepaz  Metalicks  who  had  already   been
allocated a sub-block in Patrapara would need  to  be  included,  M/s.  Visa
Industries in view of the progress achieved by them need to be included  and
after checking up the availability of reserves, case  of  M/s.  Ocean  Ispat
could be decided in the Ministry of Coal for  inclusion  of  otherwise.  The
committee discussed at length the limited reserve  available  in  Patrapara.
Considering the requirement of the above applicants and the fact that  Aunli
block, north of Patrapara, which was yet  to  be  explored  in  detail,  had
access from Patrapara and Machhakatta, most of  the  intervening  boundaries
of Aunli being occupied by Patrapara,  it  was  decided  that  CMPDIL  would
redraw the boundary of Patrapara so as to include Aunli  and  the  necessary
part of Machhakatta so as to result in a fairly large  size  block  to  meet
the           requirement           of           these            companies.

            ii)      Marki      Mangli      II,       III       and       IV
           It was decided that Marki Mangli II, III and IV be  allocated  to
M/s. Viangana.  As regards the request of M/s BS  Ispat  it  was  felt  that
since they already have MM I and if the percentage satisfaction  with  MM  I
matches the percentage satisfaction of Virangana with Marki Mangli  II,  III
and  then  BS  Ispat  does  not  have  a   case   for   Marki   Mangli   II.
                                         iii)         Nirad         Malegaon
                               The Screening Committee decided  to  allocate
this block to M/s. Gupta Metalicks and Power as the leader  and  they  could
give rejects/middlings to M/s. Gupta Coalfields  for  their  proposed  power
plants.  As the grade of coal was superior, allocation of  this  coal  block
for  power  generation  would  not  be  desirable.       iv)  Panch   Bahini
                                                 The   Screening   Committee
decided to allocate this block to M/s. Radhe Industries they being the  sole
applicant for this block.

                                    v)                                Bisrar
                   It was decided  that  this  block  be  allocated  to  the
following  companies:                                 i)  Chattisgarh  State
Electricity   Board   as   leader   and   the   following   as   associates:
           a)  Ultra  Tech  (for  their  pre  cut  of  project  requirement)
                                                                    b)   M/s
Chattisgarh                 Steel                 and                  Power
                     c)           M/s          Singhal           Enterprises
                                d)                M/s                Vnadana
                  e) M/s Akshay Investment (subject  to  the  views  of  the
Ministry of  Steel)                             CMD,  CMPDIL  informed  that
earlier Madanpur was proposed to be sub-blocked  into  two  blocks  and  now
Bisrar is also being proposed to be sub-blocked  in  two  blocks.   However,
between the four sub-blocks, i.e. two  sub  blocks  of  Bisrar  and  two  of
Madanpur, one each from  Bisrar  and  Madanpur,  could  be  combined  to  be
called, Madanpur North or Bisrar (North)  and  Madanpur  (South)  or  Bisrar
(South) could be mined as one block each.  Consequently,  the  total  number
of blocks between Bisrar and Madanpur would remain two.  One would  be  with
about 10 million tones of extractable  reserves  and  the  other  about  120
million tones of extractable reserves.   It  was  decided  that  since  CSEB
would be inducted as the leader consequently one  leader  from  among  those
selected as leaders in the 26th meeting would  need  to  be  dropped.   This
matter would be analysed and decided in the Ministry of Coal.  It  was  also
decided that the allocattees under the  leader-associate/consortium  concept
should be called in the  Ministry  of  Coal  for  seeking  their  views  and
finalizing the sharing of coal from captive mine arrangement  between  them.

*
*
*
*     **** CMD, CMPDIL stated  that  with  respect  to  mining  in  the  new
patrapara block, which would include Aunil and  part  of  Machhakatta,  that
Aunil is yet to be explored in detail and part  of  Machhakatta  would  also
need to be explored.  This would take like time.   It  was  pointed  out  to
CMD, CMPDIL that they should examine the possibility of allowing  mining  in
the existing patrapara and thereafter dove-tailing the mining  plan  of  new
patrapara which would include Machhakata and Aunil.  In any cases  Aunil  is
in the dip side of patrapara and mining would reach there  only  after  many
years.  Therefore, its immediate exploration for the purposes of mining  may
not be necessary.  Chairman, Screening Committee pointed out  that  for  the
purposes of calculating reserves, the data available as on  date  should  be
taken into consideration.  He  also  directed  that  Machhakatta  should  be
explored within the next  six  months  by  the  time  the  mining  plan  for
existing patrapara comes up.  In case  dove-tailing  is  possible  then  the
mining plan should be approved otherwise  it  could  be  modified  suitably,
instead of holding back the entire process.
*     ……..Sharing of Mahan Block  between  M/s.  Hindalco  and  Esser  Power
Limited:  The  matter  was  discussed  and  by  way  of  recapitulation  the
screening committee was informed that in the last meeting of  the  screening
committee the representative of Government of Madhya  Pradesh  had  taken  a
position that  the  Mahan  block  should  be  given  to  the  State  Mineral
Development considering the overall merit of  the  competing  claimants  the
block should be allocated to M/s Hindalco for  their  aluminium  project  in
which the coal should be used in the  captive  power  plant.   However,  the
final decision was to be  taken  in  consultation  with  the  Government  of
Madhya Pradesh. The Government of Madhya Pradesh subsequently have given  up
their  position  for  allocation  of  Mahan  block  to  the  State   Mineral
Development Corporation and have instead supported allocation of this  block
to M/s  Essar  Power  Limited.  Representative  from  Government  of  Madhya
Pradesh stated that as they are power deficit state,  they  would  recommend
allocation of mahan coal block to Essar Power Limited  only.  Representative
from the Ministry of power also  supported  the  request  of  Government  of
Madhya Pradesh.  The Screening Committee  decided  that  the  views  of  the
State Government and of the representative of Ministry of power be taken  on
record as they too had merit.

       Iron  and  Case  of  M/s.  Neelachal  Power  Limited:  The  Screening
Committee took note of the assessed requirement of M/s. Neelachal  Iron  and
Power Limited and also that of its possible  associate  M/s.  Bajrang  Ispat
Limited.  It also  took  note  of  the  fact  that  the  overall  percentage
satisfaction was  nearly  50%  from  the  allocated  block  of  Dumri.   The
decision for allocation of Dumri to M/s. Neelachal Iron  and  Power  Limited
as leader with M/s. Bajrang Ispat as associate would remain unchanged.

*
*
*
!      CMPDIL made an audio  visual  presentation  Gare  Pelma  Blocks  viz,
IV/1, IV/2, IV/3, IV/6  and  IV/7  copy  of  the  presentation  is  kept  at
Annexure-II. CMPDIL essentially  said  that  partial  detailed  exploration,
except in IV/6, was done by the allocattees themselves and  exploration,  in
the lower seams in IV/2 and 3 is underway, precise data would  be  available
only thereafter, and hence the estimates of reserves arrived  at,  based  on
GSI boreholes which are very few, is highly tentative in  respect  of  lower
seams.
      On the availability side
      Addition to Gare Pelma IV/1
      On account of additional area is estimated at 33.6 mill. Tonnes.
      On account of lower seams with inferior grade coals, which may not  be
extracted being deep underground and of inferior grades, is for  4.76  mill.
T and is not being taken into amount.
      Addition to Gare Pelma IV/2 and IV/3
      On account of lower seams is estimated at 35 mill. Tonnes.   Of  which
22.12 mill tonnes is of superior grade.
      Gare Pelma IV/6
      The block has been detailed  explored  by  CMPDIL  and  has  total  of
102.77 mill tonnes of extractable reserves of which  13.68  mill  Tonnes  in
the lower seams are of superior grades and the remaining 89.09 are  inferior
grade of which 27.79 are in the lower seams (underground)
      Gare Pelma IV/7
      The  block  has  been  partially  detail  explored  by  the  allocate.
Exploration of the lower seams has not yet been taken up  or  mandated.  The
upper  seams  (opencast)  in  the  approved  mining  plan  show  extractable
reserves of 56.62 million tonnes. Extractable Reserves in  the  lower  seams
are tentatively assessed at 21.98 mill tones of which 14.56 are of  superior
grade

      On the Demand Side
      JSPL and JPL
      The existing Sponge Iron plant of JSPL of 6 Ltpa capacity requires  72
mill T of inferior grade coal for a 30 year life of which 11  million  tones
have already been extracted from GP IV/1. The 1000 MW power  plants  of  JPL
require about 158 mill T of  ROM, considering the inferior  grades  of  coal
for a 30 years life.
      The Proposed expansion of 6.6. Itpa in sponge Iron  capacity  of  JSPL
requires about 80 mill T of inferior grade coal for  30 year life for  which
GP IV/6 is being sought. The proposed  2.6  itpa  sponge  iron  through  the
Rotary Hearth Furnace (RHF) of JSPL requires 6.34 mill T of 10-12% ash  coal
which would result in an increased ROM Quantity  depending  upon  the  yield
upon washing.
      The  reserves  available  in  IV/1,  Considering  11  mill  T  already
extracted, would be 95.88 mill  T.  with  extracted  reserves  it  would  be
106.88 mill. T another 4.76 mill T are inferior and in UG. Total reserve  in
GP IV/2 and IV/3 would be 160 + 35 = 195 Mill T. Where the  35  addition  is
highly tentative.
      Total available in IV/1, IV/2 and IV/3 = 95.88 + 11 +  4.76  +  195  =
306.64 mill T including 22.12 superior in  UG  and  17.64  inferior  in  UG.
Inferior equivalent not counting 4.76 in GP IV/1 would be 326.86 mill. T
      Total required = 72+79.2+157.5 = 308.7  mill  T  inferior  grade.  Not
counting the requirement of RHF as superior grade coal in IV/2 and IV/3  may
not be suitable for the RHF.
       Another  34  mill  T  inferior  equivalent  count  be  added  to  the
requirement if washing yield is taken as 36% instead of 40% for sponge  iron
and 80% yield is taken for power instead of 100% with rom  as  direct  feed.
Addition on account of RHF would depend upon the wash yield, if it is  taken
as 50% the addition would be about 13  mill  tones  of  superior  grade  rom
coal.
      Representative from the Government of Chhattisgarh  stated  that  JSPL
and JPL are two separate Companies/legal entities. JPL cannot  be  compelled
to share coal given to them with JSPL. Company Law does not recognize  Group
companies. Section 370(1B) mention companies under the same  management  and
JPSL JPL do  not  meet  the  criteria.  Separate  mining  leases  have  been
executed with them. They have different shareholders, combining  them  would
create legal complications and therefore,  they  should  be  treated  apart.
Reserves in GP IV/2 and GP IV/3 should be kept out  of  the  reckoning  when
considering  request of GP IV/6 as the company is the same and  the  project
is of expansion in capacity.
      CMD SECL stated that when allocation are  being  made  in  groups  why
should sister companies not be asked to share first.
      Representative from the Govt. of Chattisgarh stated  that  this  would
be discrimination against JSPL JPL. When excess coal cannot  be  taken  back
from earlier allocattees why should JSPL-JPL be singled  out.  Besides,  all
is being based on data/projections which is admittedly highly tentative.  He
further said that power generation  (JPL)  is  crucial  and  should  not  be
affected.
      Chairman sought views of the Ministry of  Steel.  The  representatives
of Mos stated that the date is tentative, it is not  fool  proof.  JSPL  and
JPL are two separate companies and  that  they  agreed  with  views  of  the
representative from Chattisgarh Govt.
      Representative from CEA (power) stated  that  coal  blocks  given  for
power project of JPL should be kept apart and not clubbed with  Sponge  Iron
project’s requirement of JSPL.
      Chairman observed that large numbers of people are looking  for  coal.
There should be a sense of enquiry for meeting requirement of people.  Legal
solution can and should be found for it.
      Representative from the Govt. of Chattisgarh stated that JSPL and  JPL
should not be clubbed. People have invested in  these  companies.  They  are
public limited companies, listed companies. There would be complications.
      Chairman sought views of Chattisgarh on clubbing IV/1 and  IV/6.  This
was agreed and supported by Chattisgarh, CEA and MoS.
      It was accordingly decided that reserves in GP IV/2 and IV/3 would  be
kept out of consideration for deciding on extent of alloction in  IV/6.  The
extractable reserves in GP IV/1 + GP IV/6 are 95.88 + 102.77 = 198.65  mill.
T.
      The Requirement of JSPL for 6  Itpa  +  6.6  Itpa  S.I  comes  to  72-
11+79.2=140.2 mill. T. And if 36% yield  in  washing  is  considered,  given
high percentage of G grade coal in GP IV/1 and 6 this becomes 157.2  mill  T
with addition of 17 mill. T.
      As to the requirement in 2.6 Itpa in RHF, CMD CMDPIL was of  the  view
that coal from lower seams of IV/6 may not yield 10-12% ash coal on  washing
and that JSPL should seek linkage of superior coal.
       Representative  from  the  Govt.  of  Chattisgarh  stated  that  such
superior coal is available nowhere  and  that  JSPL  should  be  allowed  to
innovate and use the lower seams to meet their RHF  Requirement.  MoC  could
keep  condition  that  when  full  facts  are  known  at  the  mining   plan
appropriately at the stage and allocate IV/6 to JSPL and Nalwa Sponge.
      CMD CMPDIL said that superior coal in lower seams  if  IV/2  and  IV/3
should not be used for power generation and but for sponge Iron marking.
      Chairman, summing up the discussion, observed that IV/2  IV/3  are  to
be kept out; reserve in IV/1 and IV/6 are be  clubbed;  RHF  requirement  be
kept out; requirement of partner company M/s Nalwa Sponge be  included;  the
existing requirement be accounted for at  100%  satisfaction  and  expansion
requirement  of  JSPL  and  requirement  of  Nalwa  Sponge  be  given   same
satisfaction level as the overall in SECL area. If surplus still remains  in
IV/1+ after this then JSPL-Nalwa  be  asked  to  select  another  allocattee
failing which the excess reserves be  handed  over  to  SECL,  in  terms  of
annual production, at transfer price to be determined by the Government.
      Coal availability and requirement in IV/1
                                                                    Inferior
                    Superior
      Total
      Available;    95.88+89.09=184.97                   13.68
      198.65

             Required            :            JSPL                     157.2
            NIL
      At 100%          Nalwa           026.6
      Satisfaction

      Required       JSPL                    144.7 (satisfaction  level  for
existing 6 Itpa SI at 100%)
                           At   86%          Nalwa                     022.9


      Satisfaction                                   167.6

             Surplus:                                                  17.37
                         13.68
      31.05

!     ! The Screening Committee discussed in detail the  presentations  made
and the applications submitted by the companies.  Taking into  consideration
the views/comments of the Ministry of Power,  Ministry of  Steel,  concerned
State  Governments,  and  considering  the  guidelines  laid  down  for  the
allocation of  coal/lignite  blocks,  the  Screening  Committee  decided  to
recommend the allocation of the coal blocks as follows:
      i)  Rohne coal block jointly in favour of  M/s.  JSW  Steels  Limited,
M/s. Bhushan Steel and Power Limited and M/s. Jai Balaji Sponge Limited.
      ii) Sitanala coal block in favour of M/s.  Steel  Authority  of  India
Limited.                                 iii)  Tenughat-Jhirki  coal   block
jointly in favour of M/s. Rashtriya Ispat  Nigam  Limited  and  M/s.  Jindal
Steel and Power Ltd.
      iv)  Choritand-Taliaya coal block jointly in favour  of  M/s.  Sunflag
Iron and Steel Limited and M/s Rungta Mines Limited.
      It was further  decided  that  a  sub-committee  consisting  of  Joint
Secretary, Ministry of Coal and Joint Secretary,  Ministry  of  Steel  would
have discussions with the recommended joint allocattees of  Rohne,  Tenughat
Jhirki and Choritand-Taliaya coal blocks and work  out  the  modalities  and
details of the arrangements of the joint allocation.  In  case  there  is  a
problem in the allocation as proposed, the  sub-committee  will  bring   the
matter again before the screening committee.
      As regards Jogeswar coal block the representative  of  the  Government
of Jharkand had informed the Committee that the  State  Government  were  of
the view that due to some problems at the local level, it may  be  difficult
for private companies to undertake coal mining.  He further added that  this
block may be earmarked  for  some  State  Public  Sector  Undertaking.   The
Screening Committee also took note of the fact that this block  was  earlier
allocated but due to some local problems the allocattee could  not  commence
mining and  it  was  consequently  surrendered.   The  Screening  Committee,
therefore, decided not to recommend allocation of Jogeswar block  in  favour
of any applicant for the time being.
!
!     !! 5.3 The State Government of Jharkhand vide its letter no.571/M.C.
dated 29.8.06 and letter no. 592/CS dated 21.9.06 had conveyed the
following views regarding the captive coal blocks situated in the State of
Jharkhand:- S.No.            BLOCK                        RECOMMENDATIONS

      1.          Tubed                      i) M/s Hindalco
                                  ii) M/s Tata Power
                       iii) M/s Jindal Steel & Power Limited

      2.          Jitpur                     M/s Jindal Steel & Power
Limited

      3.          Chakla                     i) M/s Essar Power
                                  ii) M/s Chaibasa Steel

      4.         Medinirai              i) M/s JSMDC
                             ii) M/s Rungta Mines



      5.4 The State Government of Madhya Pradesh vide  its  letter  no.F-19-
36/2005/12/2 (part-I) dated 23.1.06 and letter no.  F-19-36/2005/122  (Part-
1) dated 12.7.06 had conveyed the  following  views  regarding  the  captive
coal blocks situated in the State of Madhya Pradesh.

      S.No.            BLOCK            RECOMMENDATIONS

      1.         Brahmpuri        M/s Satna Power Company Limited

      2.         Mandla North           i) M/s Occidental Power Private
Limited                                      ii) M/s Jaiprakash Associates
Limited

      3.          Rawanwara North       M/s Ind Synergy Limited

      4.         Sial-Ghoghri           M/s Prism Cement Limited

      5.5 The State Government of  Maharashtra  vide  its  letter  no.  MMN-
1005/C.R.969/Ind-9 dated 19.11.05, letter no.MMN-1005/C.R. 1000/Ind-9  dated
10.1.06, letter no.MMN-1005/C.R.969 part-II/Ind-9 dated  4.5.06  and  letter
no.MMN-1005/C.R.1000/Ind-9 dated 11.5.06 had conveyed  the  following  views
regarding the captive coal blocks situated in the State of Maharashtra.

      S.No.            BLOCK            RECOMMENDATIONS

      1.         Lohara East            i) M/s Murli Agro Product Private
Limited                                      ii) M/s Ultra Tech Cement
Limited                                            iii) M/s IBEL Gas Power
Limited

      2. Warora  West             i) M/s Bhatia International Limited
                                             (North)                ii) M/s
Shri Sidhbali Ispat limited                                         iii)
M/s MSP Steel Private Limited
                 iv) M/s Central India Power Company Ltd.
                 v) M/s Gupta Energy Limited
      vi) M/s Jas Toll Road Company Limited

      3. Kosar-Dongargaon               M/s Wardha Power Company Private
Ltd.



       5.6   The  State  Government  of  West   Bengal   vide   its   letter
no.5477/PrS/CI dated 9.8.06 had conveyed the following views  regarding  the
captive coal blocks situated in the State of West Bengal.

      S.No.       BLOCK                 RECOMMENDATIONS

      1.                        Biharinath   i) M/s Bankura DRI
Manufacturing Pvt. Co. Limited

      5.7  The Secretary, Industries, Government of Andhra Pradesh  apprised
the Screening Committee that Ansettipali, Punkula-Chilka and Pengedappa  are
located in the notified  tribal  areas  where  the  provisions  of  AP  Land
Transfer Regulations are applicable. In such  areas,  the  State  Government
will not be in a position to  grant  mining  leases  in  favour  of  private
sector companies. The Government of Andhra  Pradesh  has  also  brought  out
amendments to Section 11(5) of MMDR Act, 1957. Pursuant  to  this  amendment
grant of mining lease in Andhra Pradesh to non-tribals except public  sector
undertakings is prohibited in case of mines located in the  notified  tribal
areas.

      5.8 The Screening Committee  discussed  in  detail  the  presentations
made  and  the  applications  submitted  by  the  companies.   Taking   into
consideration the views/comments of  the  Ministry  of  Power,  Ministry  of
Steel, concerned State Governments,  and  considering  the  guidelines  laid
down for the allocation of  coal/lignite  blocks,  the  Screening  Committee
decided to recommend the allocation of the coal blocks as follows:

      S.No.      BLOCK                  Company and end use plant

      1. Tubed jointly to    i) M/s Hindalco Industries Ltd. for its enduse
plant in Latehar, Jharkhand

      ii) M/s Tata Power Company Ltd. for its enduse plant in Singhbhum,
Jharkhand

      2. Chakla  M/s Essar Power Limited for its enduse plant in Latehar,
Jharkhand

      3. Jitpur  M/s Jindal Steel and Power Limited for its enduse plant in
East Singhbhum, Jharkhand.

      4. Mednirai jointly to      i) M/s Rungta Mines Limited for its
enduse plant in Saraikela Kharswan, Jharkhand

      ii) M/s Kohinoor Steels Pvt. Ltd. for its enduse plant in Saraikela
Kharswan, Jharkhand

      5. Brahmpuri     M/s Pushp Steel and Mining for its enduse plant in
Durg, Chhatisgarh

      6. Mandla North  M/s Jaiparkash Associates Limited for its enduse
plant in Madhya Pradesh/Himachal Pradesh

      7. Rawanwara North     M/s SKS Ispat Limited for its enduse plant in
Raipur, Chhatisgarh

      8. Sial-Ghoghri   M/s Prism Cement Ltd. for its enduse plant in
Satna, MP

      9. Lohara East jointly to   i) M/s Murli Agro Product Ltd. for its
enduse plant in Nagpur and Chandrapur, Maharashtra

      ii) M/s Grace Industries Ltd. for its enduse plant in Chandrapur,
Maharashtra

      10 Warora West (North)      M/s Bhatia International Ltd. for its
enduse plant in Chandrapur, Maharashtra

      11. Kosar-Dongargaon   M/s Chaman Metallics Pvt. Ltd. for enduse
plant in Chandrapur, Maharashtra

      12. Biharinath   M/s Bankura DRI Manufacturing Pvt. Co. Ltd. for its
enduse plant in Bankura, West Bengal



      13. Ansettipali  M/s Andhra Pradesh Power Generation Corporation
Limited (APGENCO) for its enduse plants in Andhra Pradesh

      14. Punkula-Chilka

      15. Pengedappa

      5.9 In respect of blocks recommended  to  be  allocated  jointly,  the
allocatee companies shall share the coal in  the  ratio  of  their  assessed
requirement  for  the  capacities  (end-use  plants)  as  reflected  in  the
original applications.



!
!
?      The Screening Committee, thereafter, deliberated at length  over  the
information furnished by the applicant companies in the  application  forms,
during the presentations and subsequently.  The  Committee  also  took  into
consideration the views/comments of  the  Ministry  of  Power,  Ministry  of
Steel, State Governments concerned, guidelines laid down for  allocation  of
coal blocks, and other factors as mentioned  in  paragraph  10  above.   The
Screening Committee, accordingly, decided to  recommend  for  allocation  of
coal blocks in the manner as follows:
      Name of  BlockRecommended  CompaniesEnd  use  Plant1.Mandakini1.  M/s.
Monnet Ispat & Energy Ltd.
      2.  M/s. Jindal Photo Ltd.
      3. M/s. Tata Power Comp. Ltd.Orissa

      Orissa
      Orissa2.Rampia
      &
      Dip Side of Rampia  1. M/s. Sterlite Energy Ltd.
        2. M/s. GMR Energy Ltd.
        3. M/s. Lanco Group Ltd.
        4. M/s. Navbharat Power Pvt.
        5. M/s. Mittal Steel India Ltd.
        6. M/s. Reliance Energy Ltd.Orissa
      Orissa
      Orissa
      Orissa
      Orissa
        Orissa3.Durgapur   II/Sariya     1.    M/s.    D.B.    Power    Ltd.
Chhattisgarh4.Durgapur  II/Taraimar   1.  M/s.  Bharat  Aluminium  Co.  Ltd.
Chhattisgarh5.Sayang     1.    M/s.    AES    Chhattisgarh    Energy    Pvt.
Ltd.Chhattisgarh6.Fathepur 1.  M/s. SKS Ispat & Power Ltd.
       2. M/s. Prakash Industries Ltd.Chhattisgarh
      Chhattisgarh7.Fathepur East 1.  M/s. JLD Yavatmal Energy Ltd.
      2. M/s. Green Infrastructure Pvt. Ltd.
      3. M/s. R.K.M. Powergen Pvt. Ltd.
      4.  M/s. Visa Power Ltd.
      5. M/s. Vandana Vidyut Energy Ltd.Maharashtra

      Chhattisgarh

      Chhattisgarh

      Chhattisgarh

      Chhattisgarh
      8.Lohara West  &  Lohara  East1.  M/s.  Adani  Power  (P)  Ltd.  (1200
MW)Maharashtra9.Ganeshpur1. M/s. Tata Steel Ltd. (CPP-600 MW)
      2. M/s. Adhunik Thermal Energy Ltd. (Equal Share) 1000 MWJharkhand

      Jharkhand10.Seregarha1.  M/s Mittal Steel Ltd.
      2.  M/s GVK (Gonvindwal Sahib) Ltd.Jharkhand
      Punjab11.Ashok Karkata CentralM/s.  Essar Power  Ltd.Jharkhand12.Patal
EastM/s.   Bhushan   Power   &   Steel    Ltd.    (750)Jharkhand13.Amarkonda
Murgadangal1. M/s. Jindal Steel & Power Ltd.
      2. M/s. Gagan Sponge Iron Pvt. Ltd.Jharkhand
      Jharkhand14.Mahuagarhi1. CESC
      2. Jas Infrastructure Capital Pvt. Ltd.Jharkhand
      West Bengal15.Gourangdih ABC1.  M/s.  Himachal  Emta  Power  Ltd.  and
M/s. JSW Steel Ltd. on equal share basis.

      2.   Representative from the West Bengal Govt. suggested  that  either
the block be allotted to WBMDTC Bengal or  else  be  left  unallotted.   The
committee felt that since WBMTDC Bengal had not applied for  the  block,  it
would not be  possible  to  consider  them.   Regarding  non-allotment,  the
matter may be placed for consideration of the Govt.

±       Inter-se  priority  for  allocation  of  a  block  among   competing
applicants for  a  captive  block  may  be  decided  as  per  the  following
guidelines.
      Status (stage) level of progress and  state  of  preparedness  of  the
projects;
      Networth of the applicant company (or in the case of  a  new  JV,  the
networth of their principals);
      Production capacity as proposed in the application;
      Date of commissioning of captive mine as proposed in the application;
      Date of completion of detailed exploration (in respect  of  unexplored
blocks only) as proposed in the application;
      Technical experience (in terms of existing capacities in  coal/lignite
mining and specified end use);
      Recommendation of the Administrative Ministry concerned;
      Recommendation of the  State  Government  concerned  (i.e.  where  the
captive block is located);
      Track record and financial strength of the company
      Preference will be accorded  to  the  power  and  the  steel  sectors.
Within the power sector also, priority shall be accorded  to  projects  with
more than 500 MW capacity.  Similarly, in steel sector,  priority  shall  be
given to steel plants with more than 1 million tonne per annum capacity.


?     ? Urtan Beharaband North Extn., Tandsi-III & Tandsi-III  extn.,  Urtan
North (coking blocks), Macherkunds, Rajhara North (Central & Eastern)  Moira
Madhujore (North  &  South),  Datima,  Bhaskarpara,  Kudari,  Bikram,  Vijay
Central Rajgamar Dipside (South of Phulakdih Nala), Kesla North,  Gondkhari,
Kappa & Extn. Dahegaon-Makardhokra-IV, Bander,  Hurilong,  Hutar  sector  C,
Rajgamar  Dipside  (Deavnara),  Tehsgora-B/Rudrapuri  and  Andal  East  (Non
cooking blocks)
?

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