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The Big Picture – Coal block allocation cancellations: Implications and future?



SC has cancelled 214 of the 218 coal block allocations made since 1993.

The apex court had held that the allocations made by the various regimes at the centre since 1993 were illegal and were made arbitrarily.

The court has also directed the companies, which were allocated coal blocks but had not operationalized, to pay compensation to the government for the loss to the exchequer.

The findings of the CAG had said that the loss of rupees 295 per ton was caused due to the non- operation of the mines. It was also upheld by the court.

Few companies, which are already operating, are given a time- period of 6 months to wind down their operations.

The government had urged the court to spare 44 blocks. But the court hasn’t made any exceptions. It has upheld the transparency and has taken the judgement holistically.

It will be a benchmark judgement which will enhance transparency in public dealing involving all the natural resources.

This is a time for introspection for all the parties.

This judgement provides an equal platform for all the steel companies. Earlier, the companies with captive coal blocks had an unfair advantage.

So far as coal is concerned, the mine and minerals act says that if it is for a private company it has to be auctioned.

SC judgement on presidential reference on natural resource allocation says that auction is not necessary in every natural resource allocation.

But when it is being given to any private company for commercial purpose then allocating through any other methods except competitive method would fall foul of article 14 of the constitution.

The SC in its 2G judgement held that two things are essential for competitive method. One is, Fairness between the various competitors. Second is, the people of the country, who own the resources, should get a fair compensation.