Ministry stand hits CBI case in Coalgate

In a major setback to CBI's coal scam probe, the coal ministry has communicated that its terms for allocation did not prohibit the sale or transfer of equity shares by any private firm pursuant to allocation of a coal block.

In a major setback to CBI's coal scam probe, the coal ministry has communicated that its terms for allocation did not prohibit the sale or transfer of equity shares by any private firm pursuant to allocation of a coal block.

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The ministry said that it is examining the legality involved, according to CBI sources.

"The complete reply of the coal ministry, including the opinion sought from the law ministry, is yet to be sent to us even though the CBI had sought its reply on the issue five months ago," said an agency source.

The ministry's stand weakens the CBI's case against several allocatees - at least three identified so far - during 2006-09 who allegedly sold or transferred equity shares after having a coal block allocated.

The CBI's FIR registered last September against the directors of the Hyderabad-based Navabharat Power Private Limited had accused its promoters and shareholders of allegedly earning illegal profits of over Rs 200 crore by selling their entire holding in July 2010 after allocation of two captive coal blocks (Rampia and Dipside of Rampia blocks) in January 2008.

CBI had accused the company of allegedly misrepresenting facts to qualify and then make wrongful gains. Another CBI FIR registered last September against Vini Iron and Steel Udyog Limited accused its management of selling their stakes to an alleged aide of former Jharkhand chief minister Madhu Koda, which allegedly helped it bag the Rajhara North coal block.

CBI is also scanning Virangana Steel Private Limited for transferring shares after allocation to it of three coal blocks.