1

IN THE SUPREME COURT OF INDIA

CIVIL ORIGINAL JURISDICTION

WRIT PETITION (CIVIL) NO. 463 OF 2012

PUBLIC INTEREST LITIGATION

In the matter of:

Common Cause & Ors …Petitioners

Versus

Union of India & Ors …Respondents

REJOINDER SUBMISSIONS ON BEHALF OF THE PETITIONERS

1. The instant petition filed under Article 32 of the Constitution of India has

raised a fundamental question as to whether the state is empowered to

distribute scarce and precious natural resources worth lakhs of crores of

rupees to a few favoured companies as largesse without following any

competitive, transparent and objective process of selection, and by

allowing private companies to make windfall gains from public resources.

The entire allocation of coal blocks made by the Central Government is

illegal & unconstitutional on the following legal grounds:

A. Not following mandatory legal procedure under MMDR Act

B. Allotment to companies and corporations in violation of

Section 3 (a)(iii) of the Coal Mines (Nationalisation) Act of 1973

C. Violation of the principle of trusteeship of natural resources,

gifting away of precious resources as largesse

D. Arbitrariness, lack of transparency, lack of objectivity and

non-application of mind

E. Mala-fides, allotment to ineligible companies and corruption

2. This Hon‟ble Court has heard the arguments advanced by the Union of

India, State Governments of 7 coal bearing states and of Coal Producers

Association in response to the above writ petition. These rejoinder

submissions deal with the arguments put forth by these respondents.

2

Not following mandatory legal procedure

3. Certain coal mines were nationalised through the Coal Mines

(Nationalisation) Act 1973 and vested in the Central Government after

payment of specified compensation. However, the States continued to be

the owner of the coal reserves and the coal mineral continued to be a

mineral specified by the first schedule of the Mines and Minerals

(Development & Regulation) Act 1957. The process of grant of allocation of

mining leases including coal blocks continued to be governed by the

MMDR Act as admitted by the Government in its Counter Affidavit at page

3-6. Under the said Act, though leases/mining plans need the approval of

the Central Government, however it is the State Government which has to

receive applications for mining leases including for coal blocks, make the

selection from amongst applicants, and has to process such applications

as per the MMDR Act and Mineral Concession Rules 1960.

4. In this light, it is important to consider the statutory effect of Section 4,

10, 11 and 19 of the MMDR Act. Section 4(1) states: “No person shall

undertake any reconnaissance, prospecting or mining operations in any

area, except under and in accordance with the terms and conditions of a

reconnaissance permit or of a prospecting licence or, as the case may

be, of a mining lease, granted under this Act and the rules made

thereunder.”

5. Section 10 of the MMDR Act provides: “(1) An application for a

reconnaissance permit, prospecting licence or mining lease in respect of

any land in which the minerals vest in the Government shall be made to

the State Government concerned in the prescribed form and shall be

accompanied by the prescribed fee.

(2) …

(3) On receipt of an application under this section, the State Government

may, having regard to the provisions of this Act and any rules made

thereunder, grant or refuse to grant the permit, licence or lease.”

3

6. Section 11 (2) proviso of the MMDR Act deals with the grant of prospecting

licenses, mining leases in non-virgin area and it states: “…the State

Government, after taking into consideration the matter specified in sub-

section (3), may grant the reconnaissance permit, prospecting license or

mining lease, as the case may be, to such one of the applicants as it may

deem fit.” Thus it is clear that the selection of the successful applicant has

to be made by the State Government and not the Central Government.

7. Section 19 of the MMDR Act states: “Any reconnaissance permit,

prospecting licence or mining lease granted, renewed or acquired in

contravention of the provisions of this Act or any rules or orders made

thereunder shall be void and of no effect.”

8. Rule 22 (1) of the MC Rules states: “An application for the grant of a mining

lease in respect of land in which the mineral vest in the Government shall

be made to the State Government in Form I through such officer or

authority as the State Government may specify in this behalf.” Form I is a

detailed form that elicits certain necessary information on the basis of

which an applicant has to be evaluated as per Section 11(3) of the MMDR

Act. While making the coal block allocations, the Central Government did

not follow such a procedure. The Form I application was made to the State

Government after the final allocation to a particular company for a

particular coal block had already been made by the Central Government.

9. Rule 63A of the MC Rules states: “The State Government shall dispose of

the application for grant of reconnaissance permit, prospecting license or

mining lease in the following period:

…

…

Provided further that the disposal by the State Government in case of

minerals listed in the First Schedule to the Act shall mean either

recommendation to the Central Government for grant of the mineral

concession, or refusal to grant the mineral concession by the State

Government under rule 5 for reconnaissance permit, rule 11 for

4

prospecting license and rule 26 for mining lease, and in all other cases,

disposal shall mean either intimation regarding grant of precise area, or

refusal to grant the mineral concession under rule 5 for reconnaissance

permit, rule 12 for prospecting license and rule 26 for mining lease.”

Therefore, the stage of prior approval would only after the State

Government has made the selection and approved a particular applicant

for grant of mining lease.

10. It is clear from the above, that the procedure under the MMDR Act is

mandatory and under section 19 any lease or permit granted in

contravention of any provision of the Act or of the Rules made under the

Act is void and of no consequence. In the case of coal, the entire process

for grant of captive coal blocks that has been followed since 1993 is

completely in violation and contravention of the MMDR Act. Here the

Central Government was receiving the applications, deciding whom to

allocate, for what end use and in which area. Only after the decision has

been taken, State Governments were signing the mining leases as per the

MMDR Act. On this ground alone, all the allocations for captive coal blocks

made since 1993 are illegal, against mandatory statutory procedure and

are liable to be set-aside.

11. The State Governments have accepted in their affidavits that it was the

Centre which was receiving the applications and making all the allocations,

leaving the State Governments to only sign the mining lease as per MMDR

Act. Extracts from the affidavits of the State Governments is given below:

Chhatisgarh: “The State Government of Chattisgarh accordingly

understood the allocation of blocks by the Central Government, pursuant

to the allocation orders issued from time to time to the several applicants,

as being final, in so far as it concerns identification of the allocate and

the coal block.” (para 39)

Orissa: “That a conjoint reading of the MMDR Act, 1957 and the CMN

Act indicates that the persons specified under Section 3(3) of the CMN

Act alone can be considered for grant of a mining lease for coal but the

procedure for the grant shall be as prescribed under the MMDR Act,

5

1957. Thus, the applications for grant of prospecting license or mining

lease for coal will have to filed with the State Government having

jurisdiction over the applied area. The application would be considered in

accordance with the provisions of the MMDR Act, 1957 and the MC

Rules, 1960 as detailed in paragraphs hereinbefore. The State

Government may recommend to the Central Government one or more

applicant for the grant of the prospecting license or mining lease over the

applied area. The role of the Central Government would arise only after it

receives a recommendation for prior approval from the State

Government under section 5(1) of the MMDR Act, 1957 and not prior

thereto.

That notwithstanding the aforesaid legal provisions and schemes of the

statute, the allocation of the coal blocks was made by the Central

Government from 1993 to 2012 by evolving its own mechanism by

constituting a Screening Committee, as apparent from the counter

affidavit filed by the Central Government. The Screening Committee

framed its own guidelines and also followed the guidelines framed by the

ministry of coal from time to time in the matter of allocation of coal

blocks, including identifying the final allocate/beneficiary having already

been identified by the Central Government, on the basis of the purported

recommendation of the Screening Committee, processing the

prospecting license/mining lease application by the State Government

did not arise before such decision. That it may be relevant here to state

that the proviso to Section 5(1) of the MMDR Act, 1957 vests with the

Central Government with the final authority for grant of approval in the

absence of which no State Government is mandated to grant any

person, any prospecting license or mining lease. Once the beneficiary

has been identified by the Central Government by making the allocation

of coal block, there was nothing left out for the State Government to

decide, save and except to carry out the formality of processing the

application and for execution of the lease deed with the beneficiary

selected by the Central Government subject to all the statutory

clearances under various enactments like Forest (Conservation) Act,

1980, the Environment Protection Act, 1986. In the above said

circumstances, it is apparent that the Central Government exercised

pervasive control in the matter of allocation of coal block and

consequently grant of mining lease.” (para 5.12, 5.13)

6

Maharashtra: “…the role of the State Government is limited in the case

of coal mines as the discretion to reject once the Central Government

has issued an allocation letter is virtually non-existent. The necessary

compliances are prescribed by law and the role of the State Government

is to ensure the necessary compliances and the terms and conditions of

the allocation letter issued by the Central Government.” (para 10)

“...the Authority for grant of coal mines is with the Central Government

and the State Government plays a sub-ordinate role in so much as the

role of State Government is only to ensure that the conditions imposed in

the allocation letter including statutory compliances are to be ensured by

the State Government before the actual issuance of coal mining lease. It

is respectfully submitted that the State Government as per the existing

statutory framework cannot go behind the allocation letter or can review

any of the conditions imposed by the Central Government in the

allocation letter. The State Government cannot impose any further

conditions than what has been imposed by the Central Government. It is

appropriate to say that State Government comes into picture only when

the allocation letter gets issued and not before that.” (para 18)

“The allocation letter thus confers a right to a mining lease upon the

allocatee. It is submitted that as per the understanding of the State

Government it is the statutory obligation of the State to grant a mining

lease for coal to a person selected for coal mining by the Central

Government for the specified end use.” (para 24, 25)

West Bengal: “It is stated that in case of companies, including private

companies engaged in the production of iron and steel, sponge iron,

power and cement, the applications for the allocation of the coal blocks

are made directly to the Central Government. In some cases the State

Government has knowledge of such applications and in some cases the

State Government has no such knowledge.” (para 7)

“It is the Central Government, which has the final say in the allocation of

coal blocks.” (para 8)

7

12. It is clear from the provisions of the CMN Act 1973, that only two kinds of

entities: a) Central Government, and undertakings/corporations owned by

the Central Government, and b) Companies having end-use plants in iron

& steel, power, cement etc. Under the Constitutional scheme, the

Parliament could not have prescribed such an eligibility criteria, without

declaring this under Entry 54 of the 7th Schedule of the Constitution as a

regulation under the control of Union to be expedient in public interest.

Section 1A of the CMN Act needs to be read under this light as without

having made such a declaration, Parliament could not have prescribed

such eligibility criteria as it did under Section 3 of the CMN Act. The CMN

Act does not in any way give the power of calling for applications, selection

and allocation of coal blocks to the Central Government. Section 3 of the

CMN Act only provides eligibility criteria for allocation of coal mines, and

the procedure for allocation continues to be governed by the MMDR Act.

That is why ultimately Section 11A for allocation of coal mines was

introduced in MMDR Act only.

13. It is a settled law that when an authority is entrusted with decision making

powers under a statute, then it cannot further sub-delegate its authority to

some other body, unless permitted by the statute itself. Also, while

delegating one must retain control over that body, i.e. that body must be

subordinate, and the final control must be with the authority entrusted by

the statute. Here Central Government is not subordinate to State

Governments and was taking all decisions, many times over-ruling the

wishes of the State Government. Also, in the instant case, no such

delegation has actually been made by the State Governments to the

Central Government. Even if this kind of delegation of statutory duty and

power under the MMDR Act could have been legally made by the State

Governments to the Central Government, then also it could not have

been done without a notification, circular or order made in writing by all

the concerned State Governments delegating their statutory powers &

duties to the Central Government.

14. In NGEF Ltd. v. Chandra Developers (P) Ltd., (2005) 8 SCC 219, at

page 240, this Hon‟ble Court held: “69. BIFR admittedly had the power

to sell the assets of the Company but the High Court until a winding-up

8

order is issued does not have the same. BIFR in its order dated 24-8-

2002 might have made an observation to the effect that the Company

may approach the High Court in case it intended to dispose of its

property by private negotiation but the same would not mean that BIFR

could delegate its power in favour of the High Court. BIFR being a

statutory authority, in the absence of any provision empowering it to

delegate its power in favour of any other authority had no jurisdiction to

do so. “Delegatus non potest delegare” is a well-known maxim which

means unless expressly authorised a delegatee cannot sub-delegate its

power. Moreover, the said observations of BIFR would only mean that

the Company Court could exercise its power in accordance with law and

not dehors it. If the Company Court had no jurisdiction to pass the

impugned order, it could not derive any jurisdiction only because BIFR

said so.”

15. Therefore it is submitted that the entire allocation made to the through the

screening committee and government dispensation route by the Central

Government after 1993 is in violation of the clear provisions of the statute

and therefore illegal. Under Section 19 of the MMDR Act, it is expressly

stated that any lease or permit granted in contravention of any provision of

the said Act or of the Rules made thereunder is void and of no

consequence. It is a settled principle that when law provides a procedure

for doing something, then that procedure must be followed. On this ground

alone, all the allocations ought to be set-aside.

Violation of Section 3 of the CMN Act

16. The Government of India while making the allocations failed to even follow

the basic statutory eligibility for grant of captive coal blocks. The power of

grant of captive coal blocks is governed under the Coal Mines

(Nationalisation) Act of 1973. Section 3 (a) of the said Act provides:

(3) On and from the commencement of section 3 of the Coal Mines

(Nationalisation) Amendment Act, 1976 (67 of 1976),--

(a) no person, other than—

9

(i) the Central Government or a Government, company or a

corporation owned, managed or controlled by the Central

Government, or

(ii) a person to whom a sub- lease, referred to in the proviso

to clause (c), has been granted by any such Government,

company or corporation, or

(iii) a company engaged in—

(1) the production of iron and steel,

(2) generation of power,

(3) washing of coal obtained from a mine, or

(4) such other end use as the Central Government

may, by notification, specify,

shall carry on coal mining operation, in India, in any form.

It is clear from the provisions of the CMN Act 1973, that only two kinds of

entities: a) Central Government, and undertakings/corporations owned by

the Central Government, and b) Companies having end-use plants in iron

& steel, power, cement and washing of coal.

17. Thus, State Government undertakings are not included in the above

provision, and any allocation to them can only be made if they are engaged

in any of the end-uses specified under Sec 3(a)(iii) of the CMN Act.

Commercial mining is not permitted to State public sector

undertakings/companies. However, the Central Government allocated

about 38 coal blocks to State PSUs for commercial mining, which were not

engaged in any specified end-use activity (Pg 114-138 of intervener‟s

application). Such an allocation made by the Central Government (whether

by way of screening committee route or dispensation route) is ipso-facto

illegal and in total violation of the CMN Act 1973. Almost all of these State

PSUs then signed agreements with private companies wherein the right to

mine coal was given to the private company which then later sold the coal

to the State PSU either at market price or at Coal India Ltd (CIL) price. A

CAG report on Chhattisgarh mining for Bhatgaon Extension coal block (at

pages 302-303 of the intervenor‟s application) reported Rs. 1052 crore loss

10

to the exchequer in the formation of JV agreement between the State PSU

and the private company.

18. From the expression “engaged in” used in Section 3 (1)(iii), it is clear that

the company that was applying for the coal block must have set-up an iron

& steel plant, power plant or cement plant (Central Govt. has notified

cement as an end use under Sec 3(a)(iii)(4) of the Act) and be engaged in

the production of steel, power or cement. In fact, most companies that did

apply did not even state in their applications that they were operating a

power, steel or cement plant. All that they claimed was that either they

propose to set-up such plants. The screening committee cleared them and

the government allotted them coal blocks despite the clear statutory bar for

the same (Pg 55, para 62 of UoI Counter). From 2006, even the

requirement of end use project was done away (Pg 68, para 88(i) of UoI

Counter). Government allowed coal mining companies to apply and obtain

coal blocks, and stated that the coal mined from these blocks would be

transferred to an end user company. This relaxation was completely

contrary to the requirement of the statute. The applicant ought to have

demonstrated that a steel, power or cement plant has been set-up or is in

the final stages of being set-up, and that the applicant has obtained all

statutory clearances and only then it could ought applied and been

considered by the State Government as per the MMDR Act. The fact that

this basic minimum statutory requirement was not followed makes the

entire allocation process illegal.

19. Also, the allocation of blocks were made which had reserves far in excess

of requirement for the end use project. This shows total non-application of

mind and arbitrariness of the decision making process. It is also in violation

of the principle of captive block allocation enshrined in the Sec 3 (a) (iii) of

the Coal Nationalisation Act. Examples: Coal requirement parameter for

the sponge iron category is 1:1.6, which means for producing 1 ton of

sponge iron, 1.6 ton of F grade coal is required. When the projected

requirement of the coal by the applicants for the same category (sponge

iron) differs hugely, Screening Committee went on to allot the coal blocks.

Even same company (JSPL) mentioned different quantity of coal

requirement, Screening Committee allotted the Gare IV/1 block even

11

hugely disproportionate to the exaggerated requirement. Even the highest

project requirement was 2 MTPA, but the block allotted to it contains 123

MT coal much in excess to its 30 year requirement (In AG‟s compilation

volume 3-A). The Raipur Alloys and Steel Ltd sought a coal block with an

exaggerated requirement of 1.2 MTPA coal for producing 0.3 MTPA

sponge iron at the ratio of 1:4. However the screening committee ultimately

allotted Gare IV/7 having coal reserve upto 156 MT against the projected

requirement of 36 MT. This arbitrariness is evident from the fact that in the

same meeting BS Ispat was allotted Marki Mangli block having 34.34 MT

coal for the similar 1.2 MTPA coal requirement (at pages 856-858 of

volume IV of UoI‟s counter affidavit).

20. Excessive allotment for power plants is evident from the Sarisatoli coal

block in which 1.7 MTPA of coal requirement for the RPG group company

ICCL for 30 years would make up for a figure of 51 MT, whereas the

allotted block contains 140 MT coal (In AG‟s compliation volume 3-A). The

aforesaid company is producing the coal much in excess of the projected

requirement thus negating the government‟s claim that no mining

permission has been accorded for extra quantity (Pg 142-144 of

intervenor‟s Crl.M.P. for production figures). Inspite of the aforesaid

situation the arbitrary allotment continued and a major example of this sort

is the case of M/s Bhushan Steel Ltd. which has got the Bijahan coal block

of 80 MT for a project and the block is sufficient for its requirement, yet it

was allotted another coal block Jamkhani of 130 MT without any new

project (AG‟s compilation volume 3-B).

Allocation constitutes a largesse and is therefore unconstitutional

21. The AG has argued that since an allocatee of the coal block did not

automatically have a right to mine the block without first executing a lease

with the State Government, therefore the allocation does not confer a

largesse or substantial benefit to the allocatee. This argument is not correct

as the allocation, as was understood, by the Centre & the State

Governments was the most critical step in the final award of a coal mining

lease. The allocation conferred a very valuable benefit on the applicant to

apply for mining lease. The final selection for a particular block was made

by the Centre, which has been challenged in these proceedings. To say

12

that allocation per se is not a largesse, is like arguing giving away free land

for building factories is not a largesse, because before starting a factory

you need clearance from municipal authorties, fire department etc.

22. Mining leases have not been executed in most of the cases, because of the

delay and default on the part of the allocatee, mostly in setting up end use

plant. Some delay is also due to the fact the allocatee has not been able to

obtain environment or forest clearance. The delay has been due to the fact

that arbitrary allotments were made to non-suitable and ineligible

companies. But the allocation letters have been treated as bankable by the

allotees, they have taken huge loans on the basis of these letters, and

some allottees have divested their companies of shares at huge prices.

23. Coal Secretary in a note moved for competitive bidding on 16.07.2004, had

himself stated that “…since there is a substantial difference between price

of coal supplied by Coal India and coal produced through captive mining,

there is a windfall gain to the person who is allotted a captive block…” (Pg

109 of WP). CAG in its conservative estimate of this windfall gain to the

private companies stated: “Audit has attempted to estimate the financial

estimate of the benefit to the coal blocks allottees restricting itself to private

parties… Based on the above method, financial gain of Rs 185,591.34

crore to private parties in respect of 57 OC/Mixed mines as on 31 March

2011 has been calculated.” (para 4.3)

24. Parliamentary Standing Committee on Coal (comprising of 30 MPs from

across party lines) in its report submitted on 23.04.2013 has inter-alia

stated: “The Committee observe that most non-transparent procedure was

adopted from 1993 to 2010 for allocation and supply of coal blocks. Several

coal blocks were allocated to few fortunate without disclosing the same to

the public at large. The natural resources and state largesse were

distributed to few fortunate for their own benefit without following any

transparent system, was total abuse of power by the Government… It is

unfortunate that for allocating coal blocks neither any auction was held nor

the Central Government earned any revenue… The Committee observe

that whole procedure adopted by the Government for distributing coal

13

blocks betrays the confidence of the people of our country reposed in the

Government… Since Committee have come to conclusion that entire

procedure for distribution of coal was unauthorized, no one should enjoy

the benefit of distribution/allocation, and therefore, recommend that all coal

blocks allotted to the private coal companies, at least where coal

production has not yet started, should be cancelled immediately…” (Pg 55-

56 of IA-3).

“The Committee are perturbed to note that although normative date of

production from coal blocks like Utkal B2 (Talcher, Odisha) allotted to

Monet Ispat Enerfy Ltd on 16.08.1999 was 16th February, 2003, it is only

the stage-II forest clearance that has been obtained on 21.07.2011.

Another coal block Brahmadih (Jharkhand) allocated on 01.09.1999 to

Castron Mining Ltd. for steel sector, though all milestones are reported to

be completed, there is synchronization problem between coal production

and end use steel plant, as the company does not have its own steel

plant… The question that why a coal block was allotted to a company who

has failed to set up end use projects for 13 years, needs to be answered…

These instances speak volumes of the total failure on the part of the

Ministry in the entire process of allotment of coal blocks and their

subsequent development. From the analysis of status report of captive coal

blocks and end use project linked with the blocks allocated from August

2004 to November 2008, the Committee observe that for 138 coal blocks

allocated for captive mining for power, iron and steel, commercial

purposes, etc, the normative date of production was kept more than 6 and

7 years i.e. 72 to 84 months though the guidelines provide that in respect of

unexplored block, the allocate company shall apply for prospecting license

within 3 months of date of issue of allotment. The Committee are further

constrained to note that forest clearances/ prospecting license has been

obtained/granted only in 2010 and 2011 to those blocks which were

allocated in the years 2004-2005. The Committee further find that out of

195 coal blocks allocated so far for captive mining 30 blocks have started

production and out of 160 captive coal blocks allocated during 2004 to

2008, only 2 have started production.” (Pg 57-59 of IA-3)

“The Committee feel that the Screening Committee has failed to take into

account state of project preparedness, track record, etc of applicant

company, which have resulted in major setback to the ambitious policy

14

decision to exploit 44.23 BT of coal by allocation of blocks for captive use.”

(Pg 60 of IA-3)

“The Committee are dismayed to note that although coal blocks were

allocated to private power sector projects without any monetary

consideration by the Government with the purpose of making available

cheap power to the consumers, no specific condition was included by the

Screening Committee in the allocation letter to ensure that benefit of

allocating coal free of cost is passed on to the consumer.” (Pg 61 of IA-3)

“…the Committee are unable to accept the Government’s contention that

the Screening Committee acted in a fair and transparent manner for

allocating coal blocks during 2004-2009, as coal blocks allocates approved

by the Screening Committee have failed to start production so far which

raises apprehension that they were considered without taking into account

the techno-economic feasibility of the end use projects, past track record of

the developers in execution of projects and their technical and financial

capabilities.” (Pg 70 of IA-3)

25. The fact that huge losses have been caused is clear from the report of the

Central Empowered Committee (CEC, expert committee appointed by this

Hon‟ble Court) made in I.A. No. 2167 made to the Forest Bench regarding

the loss from the allocation of coal mine in State of Madhya Pradesh. CEC

estimated the loss at a staggering sum of Rs. 80,000 crores, and therefore

recommended that the agreement entered between the mining company

and the state government corporation be cancelled (Pg 332-333 of WP).

CEC stated: “The total mineable reserves of these two mines are to the

tune of about 400 Million tonnes of coal… If the private entity is selected for

the joint venture after giving wide publicity and laying transparent

guidelines, the States are likely to get substantially higher revenues to the

tune of tens of thousands of crores… to a staggering sum of Rs 80,000

crores. It would be in public interest that instead of allowing a private entity

to corner this huge benefit, sincere efforts should be made to make the

States beneficiary of this… The MoU signed with M/s Sainink Mining &

Allied Services Ltd should be cancelled…” The CEC and the MoEF (Govt

of India) thereupon made a joint recommendation to this Hon‟ble Court to

cancel the said agreement (Pg 334 of WP). It submitted: “The State of

MP/MP State Mining Corporation Ltd may be asked to cancel the MOU

15

entered…” Thereafter this Hon‟ble Court vide order dated 20.02.2009

directed the MoEF to take appropriate decision in light of CEC‟s

observations, pursuant to which the said agreement was cancelled (Pg 336

of WP).

26. Government of Maharashtra in their latest affidavit at internal page 4 have

stated: “The allotment of coal blocks under the screening committee

mechanism meant that the benefits of the differential in price of coal as

mined in a captive mine and the market price of coal or the price of

imported coal as the case may be would accrue to the allottee of the coal

block. The differential in price would not necessarily be passed to the

public as the price of the final product of the company is determined by

import parity price in case of steel companies, competitive market price in

case of cement companies (many may not have access to captive coal)

and the price of power on an exchange or in bids by State Utilities

irrespective of the source of fuel. Since the access to low price coal is not

reflected in the sale price of product, this would lead to undue gain for the

allottee companies. The auction process which is now in place would give

a level playing field to all applicants of coal and lower the difference

between the market price of coal and the cost of coal for the allotee by way

of premium which would accrue to the Government.” (para 3)

“Accordingly it is the considered opinion of the State Government of

Maharashtra that in the cases of coal block allotment to private companies

where the Government of India has given approval under S. 5(1) of the

MMDR Act but the mining lease has still not been executed, all such cases

should be put to Auction…” (para 5)

27. The argument of the Government has been that the price of power is

regulated and hence there is no windfall gain to the allottee. As far as

manufacture of steel or cement is concerned, it is clear that there is no

regulation of prices. Even in the case of power, the price of power has

been rising and power producers with captive coal blocks have made

windfall gains. This has been admitted by the State of Maharashtra in their

latest affidavit. It has come to light that while the power producers were

selling power between Rs 4 to 14.50 per unit, the competitive bid for tariff

for Ultra Mega Power Projects (UMPPs) was as low as Rs 1.19 per unit.

16

NTPC, which procures coal not from captive coal but from CIL, sells most

of its power at Rs 2 to 2.50 per unit. This is clear from the CERC orders

and The Hindu story of 20.09.2013 based on CERC orders. CERC finally

stepped in and capped the maximum price of electricity as high as Rs 8 per

unit, thereby allowing those with captive coal blocks to continue to make

windfall profits.

28. This Hon‟ble Court has repeatedly held that natural resources are owned

by the people and that the Government only acts as a trustee. As a trustee,

it is the duty of the Government to recover the full value of the resource for

the people. In the Meerut Development Authority case [(2009) 6 SCC 171],

this Hon‟ble Court held: “It is well said that the struggle to get for the State

the full value of its resources is particularly pronounced in the sale of State

owned natural assets to the private sector. Whenever the Government or

the authorities get less than the full value of the asset, the country is being

cheated; there is a simple transfer of wealth from the citizens as a whole to

whoever gets the assets `at a discount'.”

29. In the 2G case (CPIL & Ors vs UoI & Ors, (2012) 3 SCC 1), this Hon‟ble

Court has held that “Natural resources belong to the people but the State

legally owns them on behalf of its people… The State is empowered to

distribute natural resources. However, as they constitute public

property/national asset, while distributing natural resources, the State is

bound to act in consonance with the principles of equality and public trust

and ensure that no action is taken which may be detrimental to public

interest. Like any other State action, constitutionalism must be reflected at

every stage of the distribution of natural resources.” Further this Hon‟ble

Court in the said case held: “As natural resources are public goods, the

doctrine of equality, which emerges from the concepts of justice and

fairness, must guide the State in determining the actual mechanism for

distribution of natural resources. In this regard, the doctrine of equality has

two aspects: first, it regulates the rights and obligations of the State vis-a-

vis its people and demands that the people be granted equitable access to

natural resources and/or its products and that they are adequately

compensated for the transfer of the resource to the private domain; and

second, it regulates the rights and obligations of the State vis-`-vis private

17

parties seeking to acquire/use the resource and demands that the

procedure adopted for distribution is just, non-arbitrary and transparent and

that it does not discriminate between similarly placed private parties.”

30. In the Presidential Reference on the issue of Alientation of Natural

Resources (2012) 10 SCC 1, this Hon‟ble Court has held that when

“precious and scarce natural resources are alienated for commercial

pursuits of profit maximizing private entrepreneurs, adoption of means

other than those that are competitive and maximize revenue may be

arbitrary and face the wrath of Article 14 of the Constitution.” In light of the

above, it is crystal clear that the coal block allocations do not withstand the

test of Article 14 of the Constitution and, in fact, are in subversion of the

rule of law. Justice J S Khehar in his concurring opinion has further

elaborated the above principle by giving the example of allocation of coal

blocks. The said concurring opinion states: “Hypothetically, assume a

competitive bidding process for tariff, amongst private players interested in

a power generation project. The private party which agrees to supply

electricity at the lowest tariff would succeed in such an auction. The

important question is, if the private party who succeeds in the award of the

project, is granted a mining lease in respect of an area containing coal, free

of cost, would such a grant satisfy the test of being fair, reasonable,

equitable and impartial. The answer to the instant query would depend on

the facts of each individual case. Therefore, the answer could be in the

affirmative, as well as, in the negative. …If the bidding process to

determine the lowest tariff has been held, and the said bidding process has

taken place without the knowledge, that a coal mining lease would be

allotted to the successful bidder, yet the successful bidder is awarded a

coal mining lease. Would such a grant be valid? In the aforesaid fact

situation, the answer to the question posed, may well be in the negative.

This is so because, the competitive bidding for tariff was not based on the

knowledge of gains, that would come to the vying contenders, on account

of grant of a coal mining lease. Such a grant of a coal mining lease would

therefore have no nexus to the “competitive bid for tariff”. Grant of a mining

lease for coal in this situation would therefore be a windfall, without any

nexus to the object sought to be achieved. In the bidding process, the

parties concerned had no occasion to bring down the electricity tariff, on

18

the basis of gains likely to accrue to them, from the coal mining lease. In

this case, a material resource would be deemed to have been granted

without a reciprocal consideration i.e., free of cost. Such an allotment may

not be fair and may certainly be described as arbitrary, and violative of the

Article 14 of the Constitution of India. Such an allotment having no nexus to

the objective of subserving the common good, would fall foul even of the

directive principle contained in Article 39(b) of the Constitution of India.

Therefore, a forthright and legitimate policy, on account of defective

implementation, may become unacceptable in law.” The opinion in its

conclusion states: “I would therefore conclude by stating that no part of the

natural resource can be dissipated as a matter of largesse, charity,

donation or endowment, for private exploitation. Each bit of natural

resource expended must bring back a reciprocal consideration. The

consideration may be in the nature of earning revenue or may be to “best

subserve the common good”. It may well be the amalgam of the two. There

cannot be a dissipation of material resources free of cost or at a

consideration lower than their actual worth. One set of citizens cannot

prosper at the cost of another set of citizens, for that would not be fair or

reasonable.”

Arbitrary, non-transparent selection and mala fides

31. Coal Nationalisation Act was amended with effect from 09.06.1993 to allow

private sector participation in captive coal mining for generation of power,

washing of coal or other end uses notified by the Central Government (Pg

8 of UoI Counter Afd). To start the process of allocation of coal blocks to

private companies for designated end uses (i.e. iron & steel, power &

cement), Central Government by an executive order on 14.07.1992

constituted a „screening committee‟. Since 1993, successive governments

have been allocating coal blocks to government and private companies

through the mechanism of the screening committee to private &

government companies, and later through government dispensation route

also for government undertakings. Till June 2004, 39 coal blocks stood

allocated to government and private companies (Pg 114 of WP).

Government in its first counter affidavit admitted: “From 1st meeting of the

Screening Committee (held on 14.07.1993) to the 21st Meeting (held on

19.08.2003), the guidelines did not deal with the subject of determining

19

inter-se priority between applicants… The additional guidelines adopted at

the 22nd

Meeting (held on 4.11.2003) introduced guidelines for determining

inter-se priorities amongst applicants for the first time.” The Government

also admitted that advertisement for coal blocks was first issued only in

2005. (Pg 45-46 of the UoI Counter). This position makes the entire

allocation from 1993 illegal and unconstitutional, as held in numerous

judgments of this Hon‟ble Court. It is also incorrect to argue that there were

not many applicants in the 1993-2003 era of coal block allocation, since the

screening committee way back in 1995 in its meeting dated 20.12.1995

itself has noted that there are many companies seeking coal block and

comprehensive exercise is needed to optimally utilized the resources. (at

page 559 of the Volume III of the UoI‟s counter affidavit). And when coal

blocks were finally advertised in 2005, a situation of huge deluge of

applicants was witnessed.

32. By 2004, prices of the coal had increased manifold in view of its scarcity &

rising demand in industry and power sector. On 16.07.2004, a

comprehensive note on competitive bidding for allocation of coal blocks

was placed by the then Coal Secretary stating that “…since there is a

substantial difference between price of coal supplied by Coal India and coal

produced through captive mining, there is a windfall gain to the person who

is allotted a captive block…” On 30.07.2004, Coal Secretary stated that the

present system of allocation in the changed scenario would not be able to

achieve any transparency or objectivity in the allocation process. (Pg 109

of WP). Therefore, by this time, it had become clear that in view of the

changed scenario, the screening committee method of allocation to private

companies had become decidedly non-transparent, non-objective and was

leading to windfall gains to the private companies, thereby causing a

corresponding loss to the public exchequer.

33. Instead of acting on the categorical stand of the Coal Secretary in favour of

competitive bidding, the government delayed its introduction for 8 years till

February 2012. Since the screening committee had itself been constituted

through an executive order, there was no legal hurdle in introduction of

competitive bidding by an executive order. This was also the clear stand of

the law ministry (Pg 88-89 & 113 of WP). With the proposed introduction of

20

competitive bidding pending, this led to huge rush for the coal blocks under

the old allotment system, and the Government allotted as many as 142

coal blocks between 2004 to 2009, with billions of tonnes of coal (Pg 114 of

WP). Most of the blocks did not have an end use plant in place, and

ultimately have not started coal production even after elapse of several

years.

34. The above actions of the Government have been found to be totally

arbitrary, non-transparent and non-objective by the CAG (Pg 107-127 of

WP), by the Parliamentary Standing Committee on Coal & Steel (Pg 6-71

of IA-3) and also by the CVC & the CBI. The CAG in its report stated: “It

was also noted that the Screening Committee recommended the allocation

of coal block to a particular allottee/allottees out of all the applicants for that

coal block by way of minutes of the meeting of the Screening Committee.

However, there was nothing on record in the said minutes or in other

documents on any comparitive evaluation of the applicants for a coal block

which was relied upon by the Screening Committee. Minutes of the

Screening Committee did not indicate how each one of the applicant for a

particular block was evaluated. Thus, a transparent method for allocation of

coal blocks was not followed by the Screening Committee.” (Pg 108 of

WP).

35. CAG further observed the following:

“Test check of file/documents maintained by MOC in respect of Fatehpur

and Rampia & dip side of Rampia by audit in April 2012 revealed that:

(i) In case of Fatehpur coal block, 69 applications were received

against the advertisement for allocation of coal blocks. Out of

these 69 applications only 36 applicants were scheduled for

making presentation before the Screening Committee. The

Screening Committee recommended SKS Ispat & Power Limited

and Prakash Industries Limited for allocation of Fatehpur coal

block.

(ii) Similarily in case of Rampia and dip side of Rampia coal block,

108 (67 + 41) applications were received against the

advertisement for allocation of coal blocks. Out of these 108

21

applicants only 2 applicants were scheduled for making

presentation before the Screening Committee. The Screening

Committee, however, recommended six companies..for allocation

of Rampia and Dip side of Rampia coal blocks.” (para 4.1)

“Government of India does not charge any money for allocation of coal

blocks for captive mining except the cost of exploration. The allottee has

to pay mainly royalty to the State Government. Thus, the difference

between the market price of the coal and the cost of production is a

direct/incentive gain to the allottee.” (para 5.8)

“Audit has attempted to estimate the financial estimate of the benefit to

the coal blocks allottees restricting itself to private parties… Based on

the above method, financial gain of Rs 185,591.34 crore to private

parties in respect of 57 OC/Mixed mines as on 31 March 2011 has been

calculated… A part of this financial gain could have been tapped by the

Government by taking timely decision on competitive bidding for

allocation of coal blocks.” (para 4.3)

36. The Government claims that the selection was made after proper

assessment by the Screening Committee. However, as can been seen

from the actual minutes of the Screening Committee, there is no such

assessment on record, no verification of claims, no evaluation of merit and

moreover, no inter se comparison of the applicants. The Screening

Committee not only did not follow any criterion, it also did not give any

reason for the final selection either in its decision or in its minutes. (Pg 169-

206 of WP). The Government has submitted that till 21st meeting of the

Screening Committee there were no guidelines to determine inter-se

priority. And post the 21st meeting, the Government claims that the

Screening Committee‟s recommendations were made on the basis of

presentations made by allottee companies and deliberations held as

recorded in the minutes, as well as on the basis of recommendations

received from various quarters. Thus, it is clear, no objective criteria was

followed in determination of who is to be selected and who is to be

rejected. It is also not the case of the Government that proper evaluation

on the basis of these guidelines was made, and all allocations can be

justified on that basis. No chart of evaluation was prepared, and the

determination of the screening committee was kept entirely subjective.

22

37. Since the entire allocation was absolutely arbitrary, non-objective and non-

transparent, it is therefore no coincidence that a large number of coal block

allottees are either powerful corporate groups, or shady companies linked

with politicians and ministers, as is shown in the writ petition (Pg 207- 237

of WP). Prominent politicians were big beneficiaries of coal block

allocations. (Pg 215 of WP). Other blocks were allotted to companies that

came with high profile recommendations like from Union Ministers, for

instance Union Tourism Minister wrote to the PM for allocation of coal block

to his brother‟s firm and the said firm was then allotted the block. (Pg 217-

220 of WP). Most of the allottees were, in fact, ineligible for allocation and

had misrepresented the facts in their applications, as is clear from the 15

FIRs registered by the CBI itself. However, the Screening Committee still

cleared them despite a stiff competition from a multitude of applicants for

these blocks. There was no verification of claims, no check on eligibility

and nepotistic considerations prevailed. Former Coal Secretary has clearly

stated that the screening committee was susceptible to corruption,

favoritism and political pressure. He has said: “When you are giving assets

worth 1000 and crores rupees without charging anything I don't think any

allottee would mind passing on a few benefits to others.” (Pg 71-72 of WP)

38. In this case, the CBI has registered a set of 15 Regular Cases after

conducting detailed preliminary enquiries, and has found substantial

evidence of large scale illegalities & irregularities in the allocation process,

no inter-se merit evaluation, several instances of manipulations, allotment

of blocks to scores of ineligible companies, no verification of eligibility by

the Ministry, and also instances of corruption, bribery and conspiracy to

cheat the public exchequer. These enquiries and investigations (Pg 269 –

317 of WP) have been carried out after the CVC found serious irregularities

and directed the CBI to investigate the same. (Pg 268 of WP) Irrespective

of whether or not the CBI can eventually successfully prosecute the

accused persons for corruption & conspiracy before the competent criminal

court, the fact remains that the CBI investigations have established that no

proper system of allocation was followed, and the entire process was

subject to serious manipulations and abuse, quite apart from the fact that

23

many ineligible companies were successful in grabbing the blocks, despite

the stiff competition.

39. In Union of India vs. O Chakradhar (2002) 3 SCC 146, this Hon‟ble Court,

while relying on CBI investigation report, held: “If the mischief played is so

widespread and all pervasive, affecting the result, so as to make it difficult

to pick out the person who have been unlawfully benefited or wrongfully

deprived of their selection, in such cases it will neither be possible nor

necessary to issue individual show cause notices to each selected. The

only way out would be to cancel the whole selection.” It further states: “As

per the report of the CBI whole selection smacks of mala fide and

arbitrariness. All norms are said to have been violated with impunity at

each stage viz. right from the stage of entertaining applications, with

answer-sheets while in the custody of Chairman, in holding typing test, in

interview and in the end while preparing final result. In such circumstances

it may not be possible to pick out or choose any few persons in respect of

whom alone the selection could be cancelled and their services in

pursuance thereof could be terminated. The illegality and irregularity are so

inter-mixed with the whole process of the selection that it becomes

impossible to sort out right from the wrong or vice versa. The result of such

a selection cannot be relied or acted upon.”

40. It is a settled law that while entering into contract or while distributing

largesse, the state cannot adopt a policy of „pick & choose‟ or discriminate

between similarly placed applicants. In R D Shetty case (1979) 3 SCC 489,

this Hon‟ble Court held: “In our constitutional structure, no functionary of

the State or public authority has an absolute or unfettered discretion. The

very idea of unfettered discretion is totally incompatible with the doctrine of

equality enshrined in the Constitution and is an antithesis to the concept of

rule of law.” Further this Court held: “It must, therefore, be taken to be the

law that where the Government is dealing with the public, whether by way

of giving jobs or entering into contracts or issuing quotas or licences or

granting other forms of largesse, the Government cannot act arbitrarily at

its sweet will and, like a private individual, deal with any person it pleases,

but its action must be in conformity with standard or norms which is not

arbitrary, irrational or irrelevant. The power or discretion of the Government

24

in the matter of grant of largesse including award of jobs, contracts, quotas,

licences, etc. must be confined and structured by rational, relevant and

non-discriminatory standard or norm and if the Government departs from

such standard or norm in any particular case or cases, the action of the

Government would be liable to be struck down, unless it can be shown by

the Government that the departure was not arbitrary, but was based on

some valid principle which in itself was not irrational, unreasonable or

discriminatory.”

41. In the Petrol Pump allotment case (1996) 6 SCC 530, this Hon‟ble Court

while declaring the discretionary allotments as wholly arbitrary, nepotistic

and motivated by extraneous considerations, held: “While Article 14

permits a reasonable classification having a rational nexus to the objective

sought to be achieved, it does not permit the power to pick and choose

arbitrarily out of several persons falling in the same category. A transparent

and objective criteria/procedure has to be evolved so that the choice

among the members belonging to the same class or category is based on

reason, fair play and non-arbitrariness… Lack of transparency in the

system promotes nepotism and arbitrariness. It is absolutely essential that

the entire system should be transparent right from the stage of calling for

the applications up to the stage of passing the orders of allotment.”

42. In Kasturi Lal vs State of J & K (1980) 4 SCC 1, this Hon‟ble Court held:

“The Government is not free to act as it likes in granting largesse such as

awarding a contract or selling or leasing out its property. Whatever be its

activity, the Government is still the Government and is, subject to restraints

inherent in its position in a democratic society. The constitutional power

conferred on the Government cannot be exercised by it arbitrarily or

capriciously or in and unprincipled manner; it has to be exercised for the

public good. Every activity of the Government has a public element in it and

it must therefore, be informed with reason and guided by public interest.

Every action taken by the Government must be in public interest; the

Government cannot act arbitrarily and without reason and if it does, its

action would be liable to be invalidated. If the Government awards a

contract or leases out or otherwise deals with its property or grants any

other largesse, it would be Liable to be tested for its validity on the touch-

25

stone of reasonableness and public interest and if it fails to satisfy either

best, it would be unconstitutional and invalid.”

43. This Hon‟ble Court in Nagar Nigam Meerut case (2006) 13 SCC 382

analysed the law on Government contracts and held: “This Court time and

again has emphasized the need to maintain transparency in grant of public

contracts. Ordinarily, maintenance of transparency as also compliance of

Article 14 of the Constitution would inter alia be ensured by holding public

auction upon issuance of advertisement in the well known newspapers…It

is well settled that ordinarily the State or its instrumentalities should not

give contracts by private negotiation but by open public auction/tender after

wide publicity.”

Conclusion and Prayers

44. Grant of largesse of natural resources by the Government is today leading

to a situation of huge corruption, depletion of scarce resources,

environmental devastation, local discontent, conflict and displacement,

without the State getting any revenue which could be used for social &

economic development, and without any real benefits from these natural

resources for the ordinary people. Apart from the above, this has also

created a situation where the entire administration, regulators and state

agencies are becoming compromised and those with money power

(acquired through hugely subsidised access to natural resources) are

dictating public policies in the country, as can be discerned from the Radia

tapes.

45. This Hon‟ble Court has held that the collusion between the resource

extraction industry and the agents of the State, leads to failure of the State

and violates Articles 14 and 21 of the Constitution. This Court in Nandini

Sunder‟s case (2011) 7 SCC 547 stated: “…A development paradigm

depending largely on the plunder and loot of the natural resources more

often than not leads to failure of the State; and that on its way to such a

fate, countless millions would have been condemned to lives of great

misery and hopelessness. Policies of rapid exploitation of resources by the

private sector, without credible commitments to equitable distribution of

26

benefits and costs, and environmental sustainability, are necessarily

violative of principles that are “fundamental to governance”, and when such

a violation occurs on a large scale, they necessarily also eviscerate the

promise of equality before law, and equal protection of the laws, promised

by Article 14, and the dignity of life assured by Article 21. Additionally, the

collusion of the extractive industry, and in some places it is also called the

mining mafia, and some agents of the State, necessarily leads to

evisceration of the moral authority of the State, which further undermines

both Article 14 and Article 21.”

46. The show-cause notices to individual allottees and the de-allocations being

made by the Government proceed on the assumption that there was

nothing wrong with the allocation process itself and only seek to obfuscate

the real issue of the massive fraud perpetrated by the Government. The

argument of the counsel for the allottees that the allotment letter created

rights for them is incorrect as the allotment process was itself

unconstitutional, against the provisions of MMDR Act, and creates no

rights.

47. Therefore, the petitioners submit that the entire process of allotment of coal

blocks was non-transparent, unfair and tainted with all kinds of violation of

rules and procedures. Even according to the CBI FIRs, crimes under the

Prevention of Corruption Act were committed during the allotment of coal

blocks. The arbitrary allocation of coal blocks resulted in a windfall gain to

few private parties running into lakhs of crores of rupees, and a

corresponding loss to the public exchequer. The very basis of the allotment

of the coal blocks without any competitive bidding process is against the

doctrine of trusteeship and the Constitutional mandate under Article 14.

The Government also allocated coal blocks to State PSUs (which were not

engaged in any specified end use activity) for commercial exploitation in

direct contravention of the CMN Act. Therefore, this Hon‟ble Court should

set-aside the entire allocation of coal blocks to both private and

government companies.

27

48. The petitioners submit that only those handful number of blocks where

competitive bidding was held for the lowest tariff for power (on the basis

that the winner would be allotted an identified coal block or blocks) for Ultra

Mega Power Projects (UMPPs) may not be cancelled, in accordance with

the opinion given in the Presidential Reference (quoted above) since the

benefit of the coal block is passed onto the public. However, in some

cases, the Government has allowed the diversion of the coal block from

UMPP to other end uses i.e. for the commercial exploitation by the

successful bidder causing huge loss to the public exchequer. This has

been brought out in the detailed report of the CAG on UMPPs (Pg 240-259

of WP) which has concluded: “Permission for use of excess coal by RPL

from the three coal blocks allocated to Sasan UMPP after its award not

only vitiated the bidding process but also resulted in undue benefit to RPL.”

CAG has calculated the benefit to the said private company as over Rs

29000 crores. Therefore this Hon‟ble Court, while not cancelling the

allocation of coal blocks for UMPPs that have been made on the basis of

competitive bidding, may direct that the coal block would only be used for

the UMPP where power tariff is fixed on the basis of competitive bidding

and no diversion of coal would be permitted.

49. There are numerous allocations to public sector corporations wherein the

public sector corporation has entered into an agreement with a private

company under which substantial benefit or interest from the coal block

accrues with the private company, thereby causing a loss to the public

exchequer and a windfall gain to the private company with which the

agreement has been entered. The petitioners therefore request the Hon‟ble

Court to cancel all allotments made to private companies and to public

sector companies either through the Screening Committee or the

Government Dispensation route, and/or to declare as void all the joint

venture agreements made between public sector undertakings holding coal

blocks with private companies wherein private companies are given right to

mine or some other interest in coal blocks, or wherein full or partial benefit

of the coal block came to a private company.

50. A decision was taken in a meeting headed by the PM in 2006, to introduce

competitive bidding and auction for all minerals and not just coal (CAG

28

report). However, new MMDR Bill was only introduced in 2011 and has

been pending for the last 3 years. It provides for competitive bidding and

auction as the only method of allocation of mining leases in non-virgin

areas. Government‟s own committee (2011-12) headed by current

Competition Commission Chairperson Shri Ashok Chawla which was

signed by all the Secretaries of all the Ministries, recommended auction for

all natural resources given for commercial exploitation including mines and

minerals. However, the same has been ignored. Justice M B Shah

Commission has also recommended auctioning of mines and minerals. The

CAG has also stressed on competition, transparency and proper pricing of

all natural resources. Petitioners submit that this is a fit case to lay down as

a matter of constitutional law that when valuable minerals are granted for

commercial exploitation of private parties, in non-virgin areas, where there

are multitude of applicants for such a mineral, then only competitive bidding

or auction would satisfy the twin tests of Article 14 as laid down in the 2G

case (quoted in para 29 above) and in the Presidential Reference.

51. Petitioners submit that this is also a fit case for this Hon‟ble Court to send a

firm message that such kind of crony capitalism, pervasive corruption and

transfer of valuable public resources to profit maximizing companies as

largesse would not be allowed to continue, and this Court would not

hesitate to uphold the rule of law by striking down such unconstitutional

and illegal allocations. The non-transparent and arbitrary allocations made

by Central Government defeated the very object of the policy of captive

coal mining as enshrined in CMN Act. Putting all these blocks to auction

would hugely serve public interest by selecting the best and the most

serious applicants, providing revenue to the State Governments and

increasing power & steel production.

Dated: 16.01.2014 Prashant Bhushan

(Counsel for the Petitioners)