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SC imposes 1 lakh cost on Centre for ‘insensitive’ approach in coal mine lease

The Supreme Court on Wednesday imposed 1 lakh as cost on the Union government for its “callous, careless and casual approach” which led to the cancellation of a coal block validly granted to private firm BLA Industries. The Madhya Pradesh-based firm was granted a coal block lease in 1997.

The court also denied any claim payment to Union Coal Ministry for any additional levy for coal extracted by the BLA Industries from the mine. “Any such demand raised by respondent No. 1 – UOI is hereby quashed and set aside,” the court said.

A Supreme Court bench headed by CJI NV Ramana, Justice Krishna Murari, and Hima Kohli also mentioned the sequence of events in the concerned case. The BLA Industries followed due process in securing the “Gotitoria (East & West) Coal Blocks” in Mohapani Coalfield to meet the coal requirements of the captive power plant.

“We are constrained to make certain observations regarding the conduct of respondent no. 1 – UOI. Here is a case where a private party followed all the rules and the law, as applicable, before investing large sums of money to undertake business. In fact, it appears from the facts of the case that it was respondent no. 1 – UOI that did not follow the letter of the law,” it said according to the news agency PTI.

The Supreme Court also noted that it was the private party that suffered the consequences of the “careless and callous approach” of the Centre. The approach led to the cancellation of the coal block consequent of a 2014 judgment on a PIL.

“To compound the petitioner’s woes, the respondent no. 1 – UOI filed an affidavit before this Court including the petitioner in the list of errant mine owners, based on its own unlawful conduct. It did not undertake the necessary due diligence to determine whether the petitioner had been allotted the mine through the lawful procedure. As a result of this callous, careless, and casual approach of respondent no. 1 – UOI, the present petitioner had to suffer loss and ignominy,” it held.

The verdict asserted that the Centre’s “erroneous” inclusion of the private firm’s name in the list of 46 allottees of coal blocks with the apex court in a PIL hearing resulted in the cancellation/quashing of the lease that was legitimately granted in its favor.

The Supreme Court, in a 2014 decision on a PIL filed by advocate ML Sharma, declared that the whole allocation of coal blocks from July 14, 1993, onwards, as per the recommendations by the Screening Committee constituted by the Centre, and the allocations made through the Government Dispensation Route after 1993 suffered from the vice of arbitrariness and were illegal.

The verdict penned down by Justice Kohli said that the private firm got a mining lease through valid procedures and still had to “suffer loss and ignominy” and also the allocation was quashed.

The apex court was deciding whether the firm was allocated coal blocks through the Screening Committee Route and/or the Government Dispensation Route. It was to ascertain if the government was entitled to claim compensatory payment.

“It is therefore held that allocation of the coal block made in the form of the petitioner did not run foul of the procedure prescribed in the MMDR Act and the MC Rules. The petitioner was not allocated the coal block either through the Screening Committee Route or the Central Government Dispensation Route, which fact was not pointed out by respondent No. 1 – UOI at the appropriate stage, which led to painting the petitioner with the same brush as the other allottee listed in Annexures.”

“Having held that the petitioner was not a beneficiary of the flawed process, the consequences spelled out in the Second Judgement would not apply to it and therefore, it cannot be called upon to pay penalty as compensatory payment, as demanded by the respondent No. 1 – UOI,” it said.

In November 1994, the private firm applied to the District Collector of Narsinghpur District in Madhya Pradesh for authorization to mine coal on forest land.

The Central government granted the private firm permission to grant the mining lease in 1997.

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