Coalgate verdict: SC cleans up the mess, but what next? | business | Hindustan Times
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Coalgate verdict: SC cleans up the mess, but what next?

business Updated: Aug 26, 2014 02:44 IST
Satya Prakash
Satya Prakash
Hindustan Times
Coal block

The Supreme Court verdict declaring illegal all coal block allocations made between 1993 and 2010 has highlighted the arbitrary use of power by successive governments in allocation of a natural resource crucial for power, steel and cement industries.

Unlike the 2G scam verdict in which the top court cancelled 122 licences over the government’s decision to not auction spectrum, a bench headed by Chief Justice of India RM Lodha said it was not for courts to evaluate the advantages of competitive bidding vis-à-vis other methods of disposal of natural resources.

Read: SC says coal block allocations from 1993 to 2010 illegal, done in arbitrary manner

However, the bench said “if...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... the Constitution, the consequences of such unconstitutional or illegal allocation must follow.”

What surprised many is the fact that despite declaring the coal block allocations illegal, the top court did not cancel the allocations. Why?

Read: Cancellation order may put Rs. 2 lakh-crore projects at stake

The SC complained of not being supplied with relevant information regarding mines in which coal extraction had already started and those that are still virgin. Whatever was stated by the previous UPA government was contradicted by companies and state governments. The bench suggested that a committee be set up under a retired SC judge to examine the issue and recommend what should be done with these coal blocks.


The curious case of the missing files

What can the SC do now? Well, there are two options. It can either cancel an allocation, or order that it is regularise with the imposition of a fine.

It would be interesting to see what stand the NDA government takes, as the BJP and its allies have been demanding outright cancellation of these allocations.

During 2013-14, India imported coal worth `93,293 crore. It is a sad commentary on successive governments that India, once almost self sufficient in coal, has been reduced to one of the world’s three top importers.

Read: CBI to soon close case against Hindalco, KM Birla

Power and coal minister Piyush Goyal on Monday welcomed the verdict, saying the government was ready to act quickly once the court delivered its final view. If the matter is resolved at the earliest, it can potentially make India self-reliant in power generation.