SC pulls up Maharashtra Govt for encouraging coal cartel

The Supreme Court has pulled up the Maharashtra State Power Generation Co Ltd (MAHAGENCO) for encouraging formation of a cartel in the process for awarding contracts for transportation of coal.

The Supreme Court has pulled up the Maharashtra State Power Generation Co Ltd (MAHAGENCO) for encouraging formation of a cartel in the process for awarding contracts for transportation of coal as this would ultimately pinch the consumers.

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"We are distressed to see that MAHAGENCO has been encouraging formation of a cartel and thus allowing the rate of transportation of coal to go high up," the Court said.

"Unless a power generating company takes all measures to cut down such malpractices, the generation cost of electricity is bound to go higher and ultimately the same would be passed on to the consumers of electricity. We hope a public sector undertaking would take adequate and appropriate measures to meet the said contingency in future," the apex court observed.

A Bench of Justices S B Sinha and Cyriac Joseph passed the observation while disposing of a contempt petition filed by M/s B S N Joshi & Sons Ltd seeking contempt proceedings against the officials for allotting the contract to a cartel despite the apex court's direction in its favour.

The Bench regretted that the contract has been awarded to the cartel despite Managing Director of the Corporation Ajoy Mehta himself noting that it has quoted nearly Rs 52 crores, more than that by the lowest tenderer.

Three companies - M/s Nair Coal Services Ltd, Nagpur, M/S Naresh Kumar and Co Ltd, Nagpur and M/S Karamchand Thapar & Bros Ltd, Mumbai - have formed the cartel to bid for the MAHAGENCO contract.