SC questions Centre’s authority to allot coal blocks, says coal a state mineral

The Supreme Court Thursday questioned the Centre's "authority" and the "very foundation" of its policy to allocate coal blocks, pointing out that its power to allot the mineral prima facie lacked legal sanction and was also "doubtful" in view of the current legal regime.

Putting the Centre in a tight spot for the second time in a week, a bench led by Justice R M Lodha underlined that the Mines and Minerals (Regulation and Development) Act did not give any authorisation to the government to decide who should be allocated coal blocks in the states.

Another bench led by Justice Lodha had on Tuesday asked the Centre if its FDI in multi-brand retail policy was only a "political gimmick" or had fructified into some investments as well. It had also sought an affidavit on ensuring small traders' and farmers' interests.

"Allocation of coal blocks, prima facie, does not seem to be backed by any statutory provision and that surprises us. The situation raises a few fundamental legal questions right away regarding your (Centre's) authority. If there have been no amendments in the Act, it is doubtful that you can do it through executive decisions," the court told Attorney General G E Vahanvati.

It asked the AG to go through the relevant laws, including the Coal Mines (Nationalisation) Act, to find out whether it was empowered to allocate the blocks.

Vahanvati submitted that he did not want to give off-the-cuff answers and sought time to examine the issues. The Bench granted six weeks' time.

The bench is hearing a bunch of petitions alleging irregularities in coal block allocation. Advocate M L Sharma's PIL is seeking to cancel the allotment of 194 coal blocks while the plea by NGO Common Cause has sought a court-monitored investigation, besides cancellation of allocations from 1993 onwards.

Enumerating the legal provisions, the court noted that coal was a state mineral, falling in the appropriate schedule of the Act, which accorded legal control to state governments over the blocks. However, the state apparently has no power since the Central government approves allocation and the states are left with no choice but to enter into agreement with such allottees, the court said.

"The problem is that there is absolutely no power given to the Central government under the Act. The question is if the government's power of prior approval extends to you the authority to allocate coal blocks by overriding the entire statutory mechanism under the Act? Can you override the statutory process by administrative or executive orders?" asked the bench.

Critical of the current policy, the bench said the Centre's actions amounted to "putting a cart before the horse" since there was no discretion left with the state governments in the matter of allocation. "It strikes at the root of all allocation," said the bench.

The court, which went through the Coal Secretary's affidavit in response to a bunch of PILs challenging the allocation of coal blocks, further noted that while the Ministry of Coal had approved the allocation in some cases, the screening committee had also cleared a few cases.

"Under the Rule of Business, has the Screening Committee been given any power? If it has not been authorised under the Rule of Business, the whole exercise had to be deemed extra legal," said the court. The screening committee is an inter-ministerial group chaired by the Coal Secretary.

Justice Lodha, who had last year authored a significant judgment in the Monnet Ispat energy case relating to grant of leases of iron ore mines in Jharkhand, told the AG that unlike in the Monnet case, the Centre had not acquired coal and hence states continued to remain the owners.

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