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TMI Blog2014 (9) TMI 992X X X X Extracts X X X X X X X X Extracts X X X X ..... P 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. 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. 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 covere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oint 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ₹ 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, appear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; coal imports (already very high) will go up even more in FY 2016-17 to the extent of ₹ 1.44 lakh crores (without deallocation); 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. (2)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 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has not applied its mind while suggesting the figure of ₹ 295/- per metric ton and it has only considered the average price of coal as given by CIL for the year 2010-11 (being ₹ 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(2002) 4 SCC 388 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 i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itous 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 Administrative Law by Sir William Wade, 9th Edn. 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 (1988) 4 SCC 226 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hhattisgarh 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 individual ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r 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, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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