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Monday, October 27, 2014

Coal Blocks - Apex court Declared as arbitrary and illegal - consequences left open - granted 6 months time as breathe taking time for allottees and CIL to manage their affairs in view of cancellation of coal blocks - heard - Apex court held that It was submitted by the learned Attorney General that on the cancellation of the coal block allotments, CIL would require some breathing time to manage its affairs. The Central Government is keen to move ahead but some time would be required to manage the emerging situation.Similarly, breathing time is also required to be given to the allottees to manage their affairs on the cancellation of the coal blocks. In view of the submissions made, although we have quashed the allotment will take effect only after six months from today, which is with effect from 31st March, 2015. This period of six months is being given since the learned Attorney General submitted that the Central Government and CIL would need some time to adjust to the changed situation and move forward.This period will also give adequate time to the coal block allottees to adjust and manage their affairs. =CRIMINAL/CIVIL ORIGINAL JURISDICTION WRIT PETITION (CRL.) NO. 120 OF 2012 Manohar Lal Sharma ….Petitioner Versus The Principle Secretary & Ors. …Respondents =2014 - Sept.Month - http://judis.nic.in/supremecourt/imgst.aspx?filename=41955

 Coal Blocks - Apex court Declared as arbitrary and illegal - consequences left open -  granted 6 months time as breathe taking time for allottees and CIL to manage their affairs in view of cancellation of coal blocks - heard - Apex court held that It  was  submitted  by  the  learned  Attorney  General  that  on   the cancellation of the coal block allotments, CIL would require some  breathing time to manage its affairs. The Central Government is  keen  to  move  ahead but  some  time  would  be  required  to  manage  the  emerging   situation.Similarly, breathing time is also required to be given to the  allottees  to manage their affairs on the cancellation of the coal blocks.  In view of the submissions made, although we have quashed the  allotment will take effect only after six months from  today,  which  is  with  effect from 31st March, 2015. This period of six months is being  given  since  the learned Attorney General submitted  that  the  Central  Government  and  CIL would need some time to adjust to the changed situation  and  move  forward.This period will also give adequate time to  the  coal  block  allottees  to adjust and manage their affairs. =

 On 25th August, 2014 judgment was delivered in these cases  and  it  was
held, inter alia, that the allotment of coal blocks made  by  the  Screening
Committee of the Government of India, as also the  allotments  made  through
the Government dispensation route  are  arbitrary  and  illegal.
Since  the
conclusion arrived at would have potentially had far-reaching  consequences,
on which submissions were not made when the case was heard, the question  of
what should be the  consequences  of  the  declaration  was  left  open  for
hearing.=

   There are two categories of coal block allotments:
the  first  category
being allotments other than those mentioned in Annexure 1  and  Annexure  2;
the second category 
being the 46 coal blocks mentioned  in  Annexure  1  and
Annexure 2 that could possibly  be  “saved”  from  cancellation  on  certain
terms and conditions, as submitted by the learned Attorney General.
35. As far as the first category of  coal  block  allotments  is  concerned,
they must be cancelled (except those mentioned in the  judgment).
There  is no reason to “save” them from cancellation. The allocations are illegal  and
arbitrary;
the allottees have not yet entered  into  any  mining  lease  and they have not yet commenced production.
Whether they are 95%  ready  or  92%
ready or 90% ready for production (as argued by  some  learned  counsel)  is wholly irrelevant.
Their allocation was illegal and  arbitrary,  as  already held, and therefore we quash all these allotments.
36. Learned Attorney  General  identified  46  coal  blocks  that  could  be
“saved” from the guillotine, since all of them have commenced production  or
are on the verge of commencing production.
As  these  allocations  are  also illegal and arbitrary they are also liable to  be  cancelled.  
However,  the
allotment of three coal blocks in Annexure 1 is not disturbed and  
they  are
Moher and Moher Amroli Extension allocated to Sasan Power  Ltd.  (UMPP)  and
Tasra  (allotted  to  Steel  Authority  of  India  Ltd.  (SAIL),  a  Central
Government public sector undertaking not having any joint venture).
As far the 6  coal  blocks  mentioned  in  Annexure  2  are  concerned,  the
allocatees have not yet  commenced  production.
They  do  not  stand  on  a
different or better footing as far the  consequences  are  concerned.  
These allotments are also liable to be cancelled.
The  allocation  of  the  Pakri
Barwadih coal block (allotted to National Thermal Power Corporation  (NTPC),
being a Central Government public sector undertaking not  having  any  joint
venture) is not liable to be cancelled.
37. Except  the  above  two  allocations  made  to  the  UMPP  and  the  two
allocations made to the Central Government  public  sector  undertaking  not
having any joint venture mentioned above, all  other  allocations  mentioned
in Annexure 1 and Annexure 2 are cancelled.
38.  It  was  submitted  by  the  learned  Attorney  General  that  on   the
cancellation of the coal block allotments, CIL would require some  breathing
time to manage its affairs. The Central Government is  keen  to  move  ahead
but  some  time  would  be  required  to  manage  the  emerging   situation.
Similarly, breathing time is also required to be given to the  allottees  to
manage their affairs on the cancellation of the coal blocks.
39. In view of the submissions made, although we have quashed the  allotment
of 42 out of these 46 coal blocks, we make it clear  that  the  cancellation
will take effect only after six months from  today,  which  is  with  effect
from 31st March, 2015. This period of six months is being  given  since  the
learned Attorney General submitted  that  the  Central  Government  and  CIL
would need some time to adjust to the changed situation  and  move  forward.
This period will also give adequate time to  the  coal  block  allottees  to
adjust and manage their affairs. 
That the CIL is inefficient  and  incapable
of accepting the challenge, as submitted  by  learned  counsel,  is  not  an
issue at all. 
The Central Government  is  confident,  as  submitted  by  the
learned Attorney General, that the CIL can fill the  void  and  take  things
forward.
40. In addition to the  request  for  deferment  of  cancellation,  we  also
accept the submission of the learned Attorney General that the allottees  of
the coal blocks other than those covered by the judgment and the  four  coal
blocks covered by this order must pay an amount of Rs. 295/- per metric  ton
of coal extracted as an additional levy. This compensatory amount  is  based
on the assessment made by  the  CAG.  It  may  well  be  that  the  cost  of
extraction of coal  from  an  underground  mine  has  not  been  taken  into
consideration by the CAG, but in matters of this nature it is  difficult  to
arrive  at  any  mathematically  acceptable  figure  quantifying  the   loss
sustained. The estimated loss of Rs.  295/-  per  metric  ton  of  coal  is,
therefore, accepted for  the  purposes  of  these  cases.  The  compensatory
payment on this basis should be made within a period of three months and  in
any case on or before 31st December,  2014.  The  coal  extracted  hereafter
till 31st March, 2015 will also attract the additional  levy  of  Rs.  295/-
per metric ton.
41. It is made clear that  the  scrutiny  by  the  CBI  in  respect  of  the
allotment of 12 coal blocks out of 46 identified  by  the  learned  Attorney
General (and for that matter against any other allottee) will  continue  and
be taken to its logical conclusion. Needless to say,  the  observations  and
findings in this order shall have no bearing on the pending investigations.
2014 - Sept.Month - http://judis.nic.in/supremecourt/imgst.aspx?filename=41955
                                                             REPORTABLE
                        IN THE SUPREME COURT OF INDIA
                    CRIMINAL/CIVIL ORIGINAL JURISDICTION
                    WRIT PETITION (CRL.) NO. 120 OF 2012

Manohar Lal Sharma                         ….Petitioner
                                   Versus
The Principle Secretary & Ors.              …Respondents
                                    WITH
                    WRIT PETITION (CIVIL) NO. 463 OF 2012
                                    WITH
                    WRIT PETITION (CIVIL) NO. 515 OF 2012
                                     AND
                    WRIT PETITION (CIVIL) NO. 283 Of 2013

                                  O R D E R

1.  On 25th August, 2014 judgment was delivered in these cases  and  it  was
held, inter alia, that the allotment of coal blocks made  by  the  Screening
Committee of the Government of India, as also the  allotments  made  through
the Government dispensation route  are  arbitrary  and  illegal.  Since  the
conclusion arrived at would have potentially had far-reaching  consequences,
on which submissions were not made when the case was heard, the question  of
what should be the  consequences  of  the  declaration  was  left  open  for
hearing.
2.  The relevant paragraphs of the judgment dated 25th August, 2014 read  as
follows:-
“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.”

3.  Accordingly, we heard several learned  counsels  appearing  for  a  very
large number of interveners, impleadment applicants and  State  Governments.
Substantive submissions were made, amongst others,  by  the  Coal  Producers
Association, the Independent Power Producers Association of  India  and  the
Sponge Iron Manufacturers Association.  These  associations  had  also  been
heard on an earlier occasion well before  judgment  was  delivered  on  25th
August, 2014.
4.  For the purposes of these “consequence proceedings”, the Union of  India
filed an affidavit dated 8th September, 2014. It is stated in the  affidavit
that coal is actually being mined from 40 coal blocks listed in  Annexure  I
to the affidavit. This list includes two coal blocks allotted  to  an  Ultra
Mega Power Projects (Sasan Power Ltd. [UMPP] allotted the coal blocks  Moher
and Moher Amroli Extension). Coal blocks allotted to  UMPPs  have  not  been
disturbed in the judgment. The list of the 40 coal  blocks  is  attached  to
this order as Annexure 1.
5.  In addition to the above 40 coal blocks, it is stated in  the  affidavit
that 6 more coal blocks are ready for extraction  of  coal  in  2014-15  and
this list is Annexure  II  to  the  affidavit.  These  6  coal  blocks  have
obtained  the  Mine  Opening   Permission   from   the   Coal   Controller’s
Organization under Rule 9 of the  Colliery  Control  Rules  2004[1]  (framed
under the Mines and Minerals (Development and Regulation) Act,  1957).  This
permission is granted subsequent to the execution of  a  mining  lease.  The
list of these 6 coal blocks is attached to this order as Annexure 2.
6.  Therefore, the affidavit is quite clear that 40 coal blocks are  already
producing coal and  6  coal  blocks  are  in  a  position  to  produce  coal
virtually with immediate effect. The question is whether  the  allotment  of
these coal blocks should be cancelled or not.
7.  It was  submitted  by  the  learned  Attorney  General  that  after  the
declaration of law and the conclusion that the allotment of coal blocks  was
arbitrary and illegal, only two consequences flow  from  the  judgment.  The
first is the natural consequence, that is, the allotment of the coal  blocks
(other than those mentioned in the judgment) should  be  cancelled  and  the
Central Government is fully prepared to  take  things  forward.  The  second
option is that 46 coal blocks (as above) be  left  undisturbed  (subject  to
conditions) and the  allotment  of  the  remaining  coal  blocks  should  be
cancelled.
8.  Expounding on the alternative consequence, it was  submitted  that  Coal
India Limited (CIL) a public sector undertaking can take over  and  continue
the  extraction  of  coal  from  these  44  coal  blocks  without  adversely
affecting the rights of those employed therein. However,  it  was  submitted
that CIL would require some time to take over the  coal  blocks  and  manage
its affairs for continuing the mining  process.  Effectively  therefore,  it
was submitted that even  if  the  allotment  of  these  44  coal  blocks  is
cancelled, the Central Government can ensure that coal production  will  not
stop.
9.  Learned Attorney General  submitted  that  all  the  allottees  of  coal
blocks should be directed to pay an additional levy of Rs. 295/- per  metric
ton of coal extracted from the date of extraction as per the Report  of  the
Comptroller and Auditor  General  (CAG)  dealing  with  the  financial  loss
caused to the exchequer by the illegal  and  arbitrary  allotments.  It  was
further submitted that in the case of allottees supplying coal to the  power
sector, they should be mandated to  enter  into  Power  Purchase  Agreements
(PPAs) with the State utility or distribution company (as the case  may  be)
so that the benefit is passed on to the consumers.
10. By way of abundant precaution, the learned Attorney General pointed  out
that in respect of the allotment of  6  coal  blocks,  a  First  Information
Report has been  lodged  by  the  Central  Bureau  of  Investigation  (CBI).
Therefore, investigations are in progress to ascertain whether any  criminal
offence has been committed in respect of the allotment of 6 coal blocks.  In
addition, it is pointed  out  that  the  CBI  has  on  3rd  September,  2014
informed that a final decision with regard to  any  alleged  criminality  or
otherwise in the allotment of 6 other coal blocks is pending  consideration.
In other words, the alleged criminality in the allotment of 12  out  of  the
46 coal blocks identified by the learned Attorney General is under  scrutiny
by the CBI.
11. To put the suggestions of the learned Attorney General  in  perspective,
they are summarized below:
 All coal block allotments (except those mentioned in the judgment)  may  be
cancelled.
 Alternatively,
Extraction of coal from the 40 functional and 6 “ready” coal blocks  may  be
permitted and the remaining coal blocks be cancelled;
The allottees of all 46 coal blocks be directed to pay  an  additional  levy
of Rs.295/- per metric ton of coal extracted from the  date  of  extraction;
and
The allottees of coal blocks for the power sector be also directed to  enter
into PPAs with the State utility or distribution company  as  the  case  may
be.
12.  Learned  Attorney  General  made  two  supplementary  submissions,  not
directly connected with the suggestions made. It was submitted  that  though
all  the  allotments  made  by  the  Screening  Committee  and  through  the
Government  dispensation  route  were  held  illegal  and   arbitrary,   the
allotment of lignite blocks was not the subject matter of discussion in  the
judgment delivered on 25th August, 2014.  This is correct  and  it  is  made
clear that the judgment delivered on 25th  August,  2014  does  not  concern
lignite blocks at all and their allotments  are  not  covered  by  the  said
judgment.
13. Secondly, the figure of Rs. 295/- per metric ton of  coal  extracted  as
additional levy  (based  on  the  Report  of  the  Comptroller  and  Auditor
General) has been calculated on the basis  of  open  cast  mines  and  mixed
mines, while underground mines were not taken into calculation. Of the  coal
blocks sought to be “saved” from cancellation, it has not been  pointed  out
by any learned counsel whether any one of the 46  coal  blocks  contains  an
underground mine or not. Therefore, there is no  occasion  to  deal  with  a
hypothetical case.
14. In response to the submissions of  the  learned  Attorney  General,  Mr.
K.K. Venugopal, Senior Advocate, appearing on behalf of the  Coal  Producers
Association submitted that cancellation of all the coal  blocks  would  have
very serious and far reaching consequences.
15. The consequences of cancellation of the coal blocks were categorized  by
Mr. Venugopal under various heads and these are detailed below.
There would be a serious adverse impact on the economy of  the  country:  It
was submitted that Government companies are not in a position to supply  the
required quantity of coal; in fact,  a  large  number  of  applications  are
pending with the Ministry  of  Coal  for  long  term  coal  linkages;  power
stations have a supply of less than one week of  coal  and  therefore  there
are possibilities of power outages; as  many  as  10  power  plants  of  the
National  Thermal  Power  Corporation  (NTPC)   and   the   Damodar   Valley
Corporation (DVC) have been shut down because of shortage of coal supply  by
Coal India Ltd. (CIL); there is an issue of poor quality  of  coal  supplied
by CIL; huge investments up to about Rs. 2.87 lakh crores have been made  in
157 coal blocks as on December, 2012; investments  in  end-use  plants  have
been made to the extent of about  Rs.  4  lakh  crores;  the  employment  of
almost 10 lakh people  is  at  stake;  end-use  plants  have  been  designed
keeping in mind the specification of coal in the allocated  coal  block  and
cancellation of the coal blocks would result in the end-use  plant  becoming
redundant; loans to the extent of about Rs. 2.5 lakh crores given  by  banks
and financial institutions  would become non-performing  assets;  the  State
Bank of India may suffer a loss of up to Rs. 78,263 crores which  is  almost
7.9% of its net worth for the  financial  year  2013;  other  Public  Sector
Banks such as the Punjab National Bank and the Union  Bank  will  receive  a
massive  set  back;  Public  Sector  Corporations  like  Rural   Electricity
Corporation and Power Finance Corporation have an even higher exposure  than
banks; there will be global ramifications of the  de-allotments  such  as  a
negative impact on investor confidence; acute distress in  some  industries;
the country’s dependence on coal as a primary fuel source  with  up  to  60%
for power generation may result in inflationary trends; 28,000 MW  of  power
capacity will be affected due to de-allocation; closure of coal mines  would
result in an estimated loss of Rs. 4.4 lakh  crores  in  terms  of  loss  of
royalty, cess, direct and indirect taxes; coal imports (already  very  high)
will go up even more in FY 2016-17 to the  extent  of  Rs.1.44  lakh  crores
(without de-allocation); and on the  other  hand,  the  production  of  coal
would substantially increase in case all coal blocks  are  made  operational
after the grant of necessary permission.
The cancellation of coal blocks would set back the  process  (of  extraction
and effective utilization of coal) by about 7 to 8 years: It  was  submitted
that the auction of coal blocks would take at least 1-2 years and from  past
experience, it is unlikely that the auction would be successful due to  lack
of bids or proper participation; it  would  take  at  least  5-6  years  for
making the auctioned coal blocks operational; in any  event  (based  on  the
time lines given by the Ministry of  Coal  in  the  allocation  letters)  it
would take 36-42 months to develop an open cast mine and about 48-54  months
to develop an underground mine; and  the  commissioning  of  end-use  plants
after obtaining various clearances would take a minimum of 3-4 years.
(3) If the coal blocks are  not  cancelled,  the  allottees  could  continue
their  contribution  towards  corporate  social  responsibility  and  socio-
economic development of the country:  It was submitted on  a  positive  note
that the allottees have invested in basic  infrastructure  like  road,  rail
links etc. since the coal blocks allotted to them were in  areas  where  CIL
was not interested in making an investment; the  allottees  have  made  huge
investments in setting up other infrastructure such as  schools,  hospitals,
facilities for clean and  potable  water,  residential  colonies,  community
centers, playground etc. and in creation of job opportunities; thousands  of
crores of rupees have already been paid by the coal block allottees  by  way
of direct and indirect taxes and in the form of royalty, cess etc.;  and  if
the coal blocks are cancelled, the development activities initiated  by  the
allottees would come to a standstill.
(4) Many of the allottees have problems peculiar to them which  need  to  be
examined along with ground realities: It was submitted  that  the  delay  in
development of coal blocks is not attributable  to  the  allottees  who  are
actually victims of the  faults  of  the  Screening  Committee;  delays  are
attributable to various reasons such as administrative delays  on  the  part
of the Ministry of Environment and Forest and Ministry of Coal, the  consent
by the Pollution Control  Boards  was  not  given  on  time,  Court  orders,
Naxalite issues in some  areas,  State  Governments  directing  that  mining
lease should not be executed, introduction of  go/no  go  areas  or  without
statutory   permission   etc.;   this   Court   has   tacitly   acknowledged
administrative delays in grant of clearances  in  an  order  passed  on  1st
September, 2014 in Samaj Parivartana Samudaya v. State of Karnataka;[2]  the
appropriate course of action to adopt would be for this Court to  appoint  a
Committee to examine the peculiar facts of each individual allotment.
(5) The additional levy of Rs.  295/-  per  metric  ton  of  coal  extracted
(described as a penalty) is unjustified: The figure of loss  of  revenue  to
the exchequer to the extent of Rs. 295/- per metric ton  of  coal  extracted
is borrowed from the Report of the CAG which  Report  is  contested  by  the
Government of India and is  pending  consideration  before  a  Parliamentary
Committee on Public Undertakings; the Report itself suggested  that  only  a
part of the financial gain could have accrued  to  the  national  exchequer;
the Government of India has  not  applied  its  mind  while  suggesting  the
figure of Rs. 295/- per metric ton and it has only  considered  the  average
price of coal as given by CIL for the  year  2010-11  (being  Rs.1028/-  per
metric ton) and that cannot be adopted  for  earlier  financial  years;  the
coal extracted from the blocks allotted are of an inferior quality  and  the
sale price thereof is much lower than the average sale  price  of  CIL;  the
CAG has not taken into consideration  underground  mines  while  calculating
the alleged financial loss; the cost of production of coal for CIL  is  less
since CIL has economically viable mines as compared to the  mines  allocated
to the private sector which  lack  infrastructure  and  have  several  other
problems; and penalty cannot be imposed with retrospective effect since  the
coal extracted by the allottees has already been utilized for production  of
power, steel, cement etc.
16. Finally, Mr. Venugopal relied on Ashok Hurrah v.  Rupa  Ashok  Hurrah[3]
to contend  that  the  allottees  are  entitled  to  a  hearing  before  the
cancellation of their coal blocks  in  accordance  with  the  well  accepted
principles of natural  justice  since  the  cancellation  adversely  affects
their interests. Paragraph 51 of the Report was relied on and this reads  as
follows:
“Nevertheless, we think that a petitioner is entitled to  relief  ex  debito
justitiae if he establishes (1)  violation  of  the  principles  of  natural
justice in that he was not a party to the lis  but  the  judgment  adversely
affected his [pic]interests or, if he was a party to the  lis,  he  was  not
served with notice of the proceedings and the matter proceeded as if he  had
notice, and (2) where in the proceedings a learned Judge failed to  disclose
his connection with the subject-matter or the parties giving  scope  for  an
apprehension of bias and the judgment adversely affects the petitioner.”

17. Mr. Harish  Salve,  Senior  Advocate,  appearing  for  the  Sponge  Iron
Manufacturers Association generally supported the submissions  made  by  Mr.
Venugopal. He emphasized that the more appropriate course for this Court  to
adopt would be to appoint a Committee of three persons,  including  experts,
to examine each individual allotment and  consider  the  facts  peculiar  to
each allottee and report to this Court  whether  the  coal  block  allotment
should be cancelled or not.
18. Learned counsel also emphasized the necessity of granting a  hearing  to
each allottee and referred to  a  passage  from  National  Textile  Workers’
Union v. P. R. Ramakrishna[4] wherein the Constitution Bench emphasized  the
importance of natural justice in paragraph 16  of  the  Report.   Particular
emphasis was laid on the following passage:
“….It will surely be a travesty of justice to deny natural  justice  on  the
ground that  courts  know  better.   There  is  a  peculiar  and  surprising
misconception  of  natural  justice,  in  some   quarters,   that   it   is,
exclusively, a principle of administrative law.  It is not.  It is  first  a
universal principle and, therefore, a rule of  administrative  law.   It  is
that  part  of  the  judicial  procedure  which   is   imported   into   the
administrative process because of its universality.  “It is of  the  essence
of most systems of justice – certainly of the Anglo-Saxon System –  that  in
litigation both sides of a dispute musts be  heard  before  decision.  ‘Audi
Alteram Partem’ was the aphorism of St. Augustine which was adopted  by  the
courts at a time when Latin Maxims were fashionable”.  “Audi Alteram  Partem
is as much a principle of African, as it is of English legal procedure  :  a
popular Yoruba saying is “ ‘wicked and iniquitous is he who decides  a  case
upon the testimony of only one party to it” (T.O.  Elias  :  The  Nature  of
African Customary Law).  Courts even more than administrators  must  observe
natural justice.”

19. Mr. Salve also referred to  a  passage  from  Administrative  Law[5]  to
contend that the principle of legal relativity should be borne  in  mind  by
the Court so that “the law can be made to operate justly and  reasonably  in
cases  where  doctrine  of  ultra  vires,  rigidly  applied,  would  produce
unacceptable results.”
20. Unfortunately, it is difficult to see relevance of the passage cited  by
learned counsel since it deals with the nullity and voidness of  an  Act  or
order which  is  ultra  vires.  The  applicable  principles  are  completely
different and we are not  dealing  with  such  a  case.  It  would  be  more
apposite to refer to a passage from Sheela Barse v. Union of India[6]  cited
by Dr. A.M. Singhvi, Senior Advocate (appearing for  the  Independent  Power
Producers Association of India) wherein this Court observed  the  future  is
important (and that is what we are looking at). This Court said:
“Again, the relief to be granted looks to  the  future  and  is,  generally,
corrective rather than compensatory  which,  sometimes,  it  also  is.   The
pattern of relief need not necessarily be derived logically from the  rights
asserted or found. More importantly, the court  is  not  merely  a  passive,
disinterested umpire or onlooker, but has a more dynamic and  positive  role
with the responsibility for the organization of  the  proceedings,  moulding
of the relief and – this is important – also supervising the  implementation
thereof.  The court is entitled to, and often does, seek the  assistance  of
expert panels, Commissioners, Advisory  Committee,  amici  etc.   This  wide
range of the responsibilities  necessarily  implies  correspondingly  higher
measure of control over the parties, the subject matter and  the  procedure.
Indeed as  the  relief  is  positive  and  implies  affirmative  action  the
decisions are not “one-shot” determinations but have  ongoing  implications.
Remedy is both imposed, negotiated or quasi-negotiated.”

21.  Dr.  A.M.  Singhvi  also  submitted  a  note  which   essentially   and
substantially reiterates some of the submissions made by Mr. Venugopal.   It
is not, therefore, necessary to repeat those submissions. He  also  referred
to Onkar Lal Bajaj v. Union of India[7]  to  submit  that  in  the  case  of
apparently tainted allotment of dealerships  for  petroleum  products,  this
Court felt the necessity of appointing a Committee and therefore  we  should
also appoint a Committee of retired judges to examine each  individual  case
of coal block allotment.
22. Dr. Rajeev Dhavan, Senior Advocate appearing for one of the  interveners
referred  to  Chingleput  Bottlers  v.  Majestic  Bottling   Company[8]   to
emphasize the necessity  of  applying  the  principles  of  natural  justice
before cancelling the allotments made in favour of the allottees.
23. Other  learned  counsels  more  or  less  repeated  and  reiterated  the
submissions made, with slight variations and  emphasis  depending  upon  the
facts of the case of their respective clients, including State  Governments.

24. In response to the submissions made by various learned counsels, it  was
submitted by the learned Attorney General that  all  the  aspects  mentioned
above including the economic implications or fall-out  of  the  cancellation
of coal block allotments and the possible adverse impact that  it  may  have
on other socio-economic factors have been taken into  consideration  and  it
is only thereafter that the affidavit has been filed by the Union of  India,
which has been explained by him in his opening address. In other words,  the
Union  of  India  is  fully  prepared  to  face  the  consequences  of   the
cancellation of all coal blocks, if need  be,  and  is  desirous  of  moving
forward.
25. The learned Attorney General vehemently opposed the setting  up  of  any
committee  as  proposed  by   learned   counsels.   He   categorically   and
emphatically stated that the Central Government has no difficulty in  taking
matters forward consequent upon the cancellation of the coal blocks.
26.  Learned  counsels  for  the  allottees  have  essentially  raised   two
contentions. Firstly, the principles of natural justice  require  that  they
must be heard before their coal block allotments  are  cancelled.  Secondly,
we should appoint a committee to consider each individual case to  determine
whether the coal block allotments should be cancelled or not.
27. As far as the second contention is concerned, this is  strongly  opposed
by the learned Attorney General and we think he is right in  doing  so.  The
judgment did not deal with any individual  case.  It  dealt  only  with  the
process of allotment  of  coal  blocks  and  found  it  to  be  illegal  and
arbitrary. The process of allotment cannot be reopened collaterally  through
the appointment of a committee. This would virtually  amount  to  nullifying
the judgment. The process is a continuous thread that runs through  all  the
allotments. Since it was fatally flawed, the  beneficiaries  of  the  flawed
process must suffer the  consequences  thereof  and  the  appointment  of  a
committee  would  really  amount  to  permitting  a  body  to  examine   the
correctness of the judgment. This is clearly impermissible.
28. It is true that this Court has taken the assistance of one committee  or
the other in several cases but that was where an inquiry was required to  be
conducted and this Court was obviously not in  a  position  to  conduct  any
such inquiry. This had happened, for example, in Onkar Lal  Bajaj.  No  such
occasion or situation has arisen in the  present  case  to  necessitate  the
appointment  of  a  committee.  Therefore,  the  question  of  appointing  a
committee simply does not arise.
29. The first contention relates to the applicability of the  principles  of
natural justice. As far as this  is  concerned,  it  has  specifically  been
recorded in the judgment (in paragraph 11) to the following effect:
“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.”

30. Therefore,  it  is  incorrect  to  say  that  these  associations  which
represented the bulk (if not all) the allottees  or  beneficiaries  of  coal
blocks were not heard. They presented their point of view,  like  any  other
party to a lis and it was only then that judgment was delivered.
31. Similarly, several States were also heard as recorded  in  paragraph  10
of the judgment. In this regard, it was said:
“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.”

32. In effect, therefore, all parties likely to be adversely  affected  were
given a hearing. The principles of natural justice, though  universal,  must
be realistically and pragmatically applied.
33. In Sheela Barse it was observed, and we  endorse  that  view,  that  the
relief to be granted in a case always looks to the future. It  is  generally
corrective and in some cases it is  compensatory.  The  present  case  takes
within its fold all three elements mentioned in Sheela Barse.  Our  judgment
highlighted the illegality  and  arbitrariness  in  the  allotment  of  coal
blocks and these “consequence  proceedings”  are  intended  to  correct  the
wrong done by the Union of India; these proceedings look to  the  future  in
that by highlighting the wrong, it is expected that the Government will  not
deal with the natural resources that  belong  to  the  country  as  if  they
belong to a few individuals who can fritter them away at their  sweet  will;
these proceedings may also compensate the exchequer for the loss  caused  to
it, in the manner suggested by the learned Attorney General,  and  which  we
now propose to consider.
34. There are two categories of coal block allotments:  the  first  category
being allotments other than those mentioned in Annexure 1  and  Annexure  2;
the second category being the 46 coal blocks mentioned  in  Annexure  1  and
Annexure 2 that could possibly  be  “saved”  from  cancellation  on  certain
terms and conditions, as submitted by the learned Attorney General.
35. As far as the first category of  coal  block  allotments  is  concerned,
they must be cancelled (except those mentioned in the  judgment).  There  is
no reason to “save” them from cancellation. The allocations are illegal  and
arbitrary; the allottees have not yet entered  into  any  mining  lease  and
they have not yet commenced production. Whether they are 95%  ready  or  92%
ready or 90% ready for production (as argued by  some  learned  counsel)  is
wholly irrelevant. Their allocation was illegal and  arbitrary,  as  already
held, and therefore we quash all these allotments.
36. Learned Attorney  General  identified  46  coal  blocks  that  could  be
“saved” from the guillotine, since all of them have commenced production  or
are on the verge of commencing production. As  these  allocations  are  also
illegal and arbitrary they are also liable to  be  cancelled.  However,  the
allotment of three coal blocks in Annexure 1 is not disturbed and  they  are
Moher and Moher Amroli Extension allocated to Sasan Power  Ltd.  (UMPP)  and
Tasra  (allotted  to  Steel  Authority  of  India  Ltd.  (SAIL),  a  Central
Government public sector undertaking not having any joint venture).
As far the 6  coal  blocks  mentioned  in  Annexure  2  are  concerned,  the
allocatees have not yet  commenced  production.  They  do  not  stand  on  a
different or better footing as far the  consequences  are  concerned.  These
allotments are also liable to be cancelled.  The  allocation  of  the  Pakri
Barwadih coal block (allotted to National Thermal Power Corporation  (NTPC),
being a Central Government public sector undertaking not  having  any  joint
venture) is not liable to be cancelled.
37. Except  the  above  two  allocations  made  to  the  UMPP  and  the  two
allocations made to the Central Government  public  sector  undertaking  not
having any joint venture mentioned above, all  other  allocations  mentioned
in Annexure 1 and Annexure 2 are cancelled.
38.  It  was  submitted  by  the  learned  Attorney  General  that  on   the
cancellation of the coal block allotments, CIL would require some  breathing
time to manage its affairs. The Central Government is  keen  to  move  ahead
but  some  time  would  be  required  to  manage  the  emerging   situation.
Similarly, breathing time is also required to be given to the  allottees  to
manage their affairs on the cancellation of the coal blocks.
39. In view of the submissions made, although we have quashed the  allotment
of 42 out of these 46 coal blocks, we make it clear  that  the  cancellation
will take effect only after six months from  today,  which  is  with  effect
from 31st March, 2015. This period of six months is being  given  since  the
learned Attorney General submitted  that  the  Central  Government  and  CIL
would need some time to adjust to the changed situation  and  move  forward.
This period will also give adequate time to  the  coal  block  allottees  to
adjust and manage their affairs. That the CIL is inefficient  and  incapable
of accepting the challenge, as submitted  by  learned  counsel,  is  not  an
issue at all. The Central Government  is  confident,  as  submitted  by  the
learned Attorney General, that the CIL can fill the  void  and  take  things
forward.
40. In addition to the  request  for  deferment  of  cancellation,  we  also
accept the submission of the learned Attorney General that the allottees  of
the coal blocks other than those covered by the judgment and the  four  coal
blocks covered by this order must pay an amount of Rs. 295/- per metric  ton
of coal extracted as an additional levy. This compensatory amount  is  based
on the assessment made by  the  CAG.  It  may  well  be  that  the  cost  of
extraction of coal  from  an  underground  mine  has  not  been  taken  into
consideration by the CAG, but in matters of this nature it is  difficult  to
arrive  at  any  mathematically  acceptable  figure  quantifying  the   loss
sustained. The estimated loss of Rs.  295/-  per  metric  ton  of  coal  is,
therefore, accepted for  the  purposes  of  these  cases.  The  compensatory
payment on this basis should be made within a period of three months and  in
any case on or before 31st December,  2014.  The  coal  extracted  hereafter
till 31st March, 2015 will also attract the additional  levy  of  Rs.  295/-
per metric ton.
41. It is made clear that  the  scrutiny  by  the  CBI  in  respect  of  the
allotment of 12 coal blocks out of 46 identified  by  the  learned  Attorney
General (and for that matter against any other allottee) will  continue  and
be taken to its logical conclusion. Needless to say,  the  observations  and
findings in this order shall have no bearing on the pending investigations.
…......…………………….CJI.
                                        ( R.M. Lodha )

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

                                                   …….………………………..J.
                              ( Kurian Joseph )
New Delhi;
September 24, 2014
                                                  Annexure 1
          Details of 40 coal blocks which have come into production

|Sl. No.|Name of Coal Block           |Name of Allocatee Company   |
|                                                                  |
|1.     |Gare Palma IV/4              |Jayaswal Neco Ltd.          |
|2.     |Chotia                       |Prakash Industries Ltd.     |
|3.     |Namchik Namphuk              |Arunachal Pradesh Mining    |
|       |                             |Corp.                       |
|4-5.   |GarePalma IV/2&3             |JSPL                        |
|6.     |Belgaon                      |Sunflag Iron &Steel Ltd.    |
|7-12.  |Baranj I-IV, Kiloni and      |Karnataka Power Corp. Ltd.  |
|       |Manoradeep                   |                            |
|13.    |Kathautia                    |Usha Martin Ltd.            |
|14.    |Parbatpur                    |Electrosteel Castings Ltd.  |
|15.    |Gare Palma IV/7              |RAPL                        |
|       |                             |(Now Sarda Energy Ltd.)     |
|16.    |Barjore                      |WBPDCL                      |
|17.    |Tara (East)                  |WBSEB                       |
|18.    |Tara (West)                  |WBPDCL                      |
|19.    |Gare Palma IV/1              |Jindal Power Ltd.           |
|20.    |Sarshatali                   |CESC                        |
|21.    |Talabira-I                   |Hindalco Industries Ltd.    |
|22-23. |Gotitoria (East & West)      |BLA Industries              |
|24.    |Gare Palma IV/5              |Monnet Ispat Ltd.           |
|25.    |Pachwara Central             |Punjab State Electricity    |
|       |                             |Board                       |
|26.    |Tasra                        |Steel Authority of India    |
|       |                             |Ltd.                        |
|27.    |Barjora North                |DVC                         |
|28.    |Marki Mangli-I               |B.S. Ispat                  |
|29-30. |Marki Mangli-III             |Shree Virangana Iron & Steel|
|       |                             |Ltd.                        |
|       |Marki Mangli-II              |                            |
|31.    |Trans Damodar                |WBMTCDL                     |
|32-33. |Moher & Moher Amlori         |Sasan Power Ltd.            |
|       |Extension                    |                            |
|34.    |Ardhagram                    |Sova Ispat Ltd. & Jai Balaji|
|       |                             |Industries Ltd.             |
|35-36. |Parsa (east) & Kanta Basan   |RRVUN Ltd.                  |
|37-38. |Gangaramchak & Gangaramchak  |WBPDCL                      |
|       |Bhadulia                     |                            |
|39.    |Amelia North                 |MPSMDC Ltd.                 |
|40.    |Pachwara North               |WBPDCL                      |



                                                                  Annexure 2

 Details of Coal Blocks which are likely come into production during 2014-15


|Sl.No.|Company Name                        |Name of Coal Block    |
|of    |                                    |                      |
|block |                                    |                      |
|                                                                  |
|1.    |GVK Power (Govindwal Sahib)         |Tokisud North         |
|2.    |DVC                                 |Khagra Joydev         |
|3.    |Prism Cement                        |Sial Ghogri           |
|4.    |Jaiprakash Associates Ltd.          |Mandla North          |
|5.    |MPSMCL                              |Bicharpur             |
|6.    |NTPC                                |Pakri Barwadih        |




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[1]  9. Requirement of prior permission to open a coal mine, seam or
section of a seam.--
    (1) No owner of a colliery shall open a coal mine, seam or a section  of
a seam without the prior permission in writing of the Central Government.
    (2) No owner of a colliery shall also commence mining  operations  in  a
colliery or seam or a section of a seam, in which the mining  operation  has
been discontinued for a  period  exceeding  one  hundred  and  eighty  days,
without the prior permission in writing of the Central Government.
[2]  I.A. No.201 & 219, 223 in I.A. No.204 and I.A. Nos. 224 in I.A.  No.215
in WP(C) No. 562/2009
[3]  (2002) 4 SCC 388
[4]  (1983) 1 SCC 228
[5]  Administrative Law by Sir William Wade, 9th Edn.
[6]  (1988) 4 SCC 226
[7]  (2003) 2 SCC 673
[8]  AIR 1984 SC 1030

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