Coalgate: Maharashtra, AP join opposition states to blame centre

The Supreme Court, hearing a case related to the irregular allocation of coal block licenses to private companies, said on Wednesday that huge investments have been made by companies in these blocks without getting clearance cannot be a ground for not cancelling their licences, and asked the union government to respond on whether it intends to revoke such allocations.

A three-judge bench headed by Justice R L Lodha said that the companies which invested money on blocks without getting all clearances took the decision at their own risk, and "They must suffer the consequences no matter how much investment has been made by them. The alleged illegality cannot be compounded.

The bench was responding to the Attorney General's contention that around Rs2,00,000 crore has been invested in such blocks and it will be difficult to cancel the licences. "All these investments would go down the drain and it cannot be a defence and no law would help them," the bench said

The top court said any investment made in anticipation of clearances cannot be justified and such blocks cannot be protected if the companies fail to get clearances within a time frame fixed under the law

"Such investments are made at their own risk if their rights have not matured. All such investments would be unauthorised," the bench said

The court asked the centre to respond on whether it intends to de-allocate such allocations.

Meanwhile in a further embarrassment for the central government,  took the same stand as opposition-ruled mining states, shifting the blame for misallocations to the union government.

The Maharashtra government told the Supreme Court bench that allocation of coal blocks is ''entirely controlled and regulated by the centre''. The state has a minimal role to play in the allocation and ''it is just a subordinate party in the process'', senior advocate Vivek Tankha, appearing for Maharashtra government, told the court; and the Andhra government echoed these views.

The bench pointed out that the stand taken by them is in contradiction of the arguments put forward by the attorney general on behalf of the coal ministry.

West Bengal, Madhya Pradesh, Jharkhand, Odisha and Chhatisgarh also told the apex court that they played a minimal role in coal block allocations, and had squarely blamed the centre for alleged irregularities in the allocation.

"The allocation of coal blocks was made by the central government from 1993 to 2012 by evolving its own mechanism by constituting a screening committee which framed its own guidelines and also followed the guidelines framed by the ministry of coal from time to time," the Odisha's counsel had said.

West Bengal and Madhya Pradesh also said they were merely following the centre's directions.

The top court had sought responses from seven mining states - Madhya Pradesh, Andhra Pradesh, Odisha, Jharkhand, Maharashtra, Chhattisgarh and West Bengal - after it had observed that the centre was taking "contradictory" stands on allocations.

The centre had earlier termed allocation by it as just an exercise of identification of blocks and at the most a letter of intent given to the companies by it.

The Attorney General had submitted in September 2013 that coal block allocation was merely a letter of intent and does not confer any right to the companies over the natural resource which is decided by the state government.

He had contended that decision of coal block allocation to companies is only the first stage and firms get rights over coal only when they start mining for which they have to take various clearances.

The court is scrutinising coal block allocation since 1993 on three public interest litigations seeking cancellation of blocks on the ground that rules were flouted in giving away the natural resources and that certain companies were favoured in this process.