HC orders status quo on allotment of Chhattisgarh coal block

The Delhi High Court on Monday directed the Centre to maintain status quo on a Chhattisgarh mine, the bid for which by Jindal Power Ltd (JPL) had been cancelled by the government.

While passing the order on Tara coal block till April 16, the court also asked the Coal Ministry how it can allot a mine to Coal India Ltd (CIL) when the block had been earmarked for allocation through auction.

The query was raised after the court was informed that Coal Ministry had alloted to CIL two mines--Gare Palma IV/2 and IV/3 in Chhattisgarh--for which Jindal Power Ltd (JPL) had bid the highest, by annulling the tender process for the blocks.

"What you have earmarked for allocation, how can you allot it. How have you switched from allocation to allotment," a bench of justices B D Ahmed and Sanjeev Sachdeva asked the ministry while hearing JPL's petitions challenging the government's March 20 decision.

The court issued notice to the ministry and directed it to file its response in two days with regard to the Gare Palma mines and listed the matter for further hearing on March 26.

It also asked the ministry to bring the relevant records regarding the tender annulment and to place it before the bench for its perusal. With regard to the plea on annulment of tender process for coal block Tara, the court sought the government's response by the next date of hearing, on April 16.

In its two petitions, JPL has sought quashing of the March 20 order as well as directions to the government to declare it as the successful bidder for the three mines and to award them to it. 

During the proceedings, senior advocates Kapil Sibal, Gopal Subramaniam and Rajiv Nayar, appearing for JPL, contended that the only reason the government had given for cancelling their bids and annulling the tender process was that the highest bids did not reflect a fair value.

They alleged that handing over the mines, meant for power sector, to CIL would result in the cost of coal extraction being passed on to the consumers.

They also alleged that CIL would not be able to operate the mines, especially Gare Palma IV/2 and IV/3 which are already operational mines and will be operated till March 31 by JPL.

Additional Solicitor General (ASG) Sanjay Jain opposed the contentions raised by JPL saying CIL can operate the mines. He said CIL can operate the mines just like any other new entrant would have had they won the mine.

The government had cancelled bids of JPL and Bharat Aluminium Company (Balco) for four coal blocks amid speculation of cartelisation and had said it will take a final decision on these mines after deliberations.

The government was re-examining the bids for nine coal blocks, including those where JPL and Balco emerged as top bidders in the recently held auction.

Jindal Power had emerged as successful bidder for Gare Palma IV/2, Gare Palma IV/3 and Tara coal blocks, while Balco had successfully bid for Gare Palma IV/1 coal block. So far, a total of 33 coal blocks have been auctioned in two tranches. 

While in the first lot 19 coal mines were auctioned, in the second lot 14 coal blocks went under the hammer.