NAME : ADITI AGRAWAL

CLASS : 1ECOH A
REG. NO.: 1833333

COAL ALLOCATION SCAM

Abstract

In 1993, because of the incompetence of the public sector, Coal India Limited (CIL) was
established after which a remarkable increase in the allocation of coal was seen which was
free of the auctions that the Government made to the private and public sectors of the
company. This was because of the fact that the institution, Coal India Limited, satisfied the
power requirements of India and thus the coalmine sector was undertaken by the private
sector. The Mines and Minerals Act was changed in 2010, thus introducing the allocation of
coal blocks through the auctions (competitive bidding). After the report given to the
Parliament which showed the losses incurred by India due to the illegal allocations of coal in
2012, formal written orders were issued by Mr. Manohar Lal Sharma due to the violation of
the interests of the public. The report gave strength to the suggestions made by Hansraj Ahir,
a member of Parliament from Bharatiya Janta Party about the illegal coal allocations.
According to Indian Supreme Court cancels 214 coal scandal permits. (2014, September 24).
Retrieved from https://www.bbc.com/news/world-asia-india-29339842 In its 2012 report
into the sale of coalfields, federal watchdog the Comptroller and Auditor General (CAG) had
said that private and state companies had benefited from the allocations. The ‘coalgate’ scam
came into notice when the Controller and the Auditor General of India (CAG) charged the
Indian government of the illegal allocation of 194 coal blocks to private and public sector
between 2003 to 2009. The CAG charged that in spite of having a clean process of highest
bidding for coal allocation, the government allowed some of the major companies to earn
high profits. It was also found that the allocation to some of the private companies was
affected by the politicians as those companies got more coal than the others so as to increase
their gains. The loss was calculated to be of some lakh crores and billions of tonnes of coal
reserves of India.
Judgements declaring Coal Block Allocations illegal (25 August, 2014)
According to Venkatesan J. (2014 August, 25). Coal block allocations since 1993 illegal:
Supreme Court. Retrieved from https://www.thehindu.com/news/national/supreme-court-
cancels-all-coal-block-allocations/article6349454.ece A Bench of Chief Justice R.M. Lodha
and Justices Madan B. Lokur and Kurian Joseph said the entire allocation of coal blocks as
recommended by the Screening Committee from July 14, 1993, in 36 meetings and the
allocation made through the government dispensation route suffered from the vice
of arbitrariness and legal flaws. During the proceeding in front of the Bench of three judges,
the main questions that were put up were, first, whether the Central Government has the
authority to carry out the decisions regarding the coal block allocations, and second, if it has
the authority to take the decisions, whether the allocations were carried out legally or not.
According to the Attorney General of India, Mr. Goolam E. Vahanvati, the powers regarding
the regulation and development of coal mines are with the Central Government as said in the
articles mentioned in the Coal Mines Nationalisation Act (CMN Act).
The Court, agreeing with Mr. Bhushan, held that the ability to make coal block
allocations did not vest in the Central Government and that such authoritative course
embraced by it was illicit. Seeing that Article 73 of the Constitution was worried, there was
presumably that the official intensity of the Union stretches out to the issues concerning
which the Parliament has capacity to influence laws and the official directions to can top off
the holes not secured by statutory arrangements but rather it was similarly all around settled
that the official guidelines can't be in disparagement of the statutory arrangements.
According to Lodha R.M. Manohar Lal Sharma vs The Principle Secretary & Others.
Retrieved from https://indiankanoon.org/doc/135364996/. Attorney General in the course of
his arguments submitted that allocation letter by the Central Government was only a first step
towards obtaining mining lease and that, by itself, did not confer any right on the allottee to
work mines. The Court, by analyzing 36 minutes of gatherings of the Screening Committee,
came to the conclusion that since, no similar appraisal of the value of the candidates had been
completed before the designation of the coal squares to them; besides, no uniform use of
standards for allotment had been received by it; and thirdly, no notice for application had
been made in order to enable candidates to be on a level-playing field, in this manner
rendering the criteria of designation obviously abstract, rather than having adequate target
parameters, the designations made by the Screening Committee were self-assertive and
unlawful. Also, assignments made to consortiums, State open endeavors and joint endeavors
were held to be in negation of area 3(3)(a)(iii) of the CMN Act on grounds of ineligibility.
Consequence Proceedings leading to cancellation of allocations (Order dated September
24, 2014)
 In the oath documented by the Union of India before the hearing, it was expressed that
there were 40 coal hinders from which coal was really being mined (additionally involving of
2 coal blocks assigned to Ultra Mega Power Projects which were not held to be unlawful in
the Judgement). Union of India was completely arranged to confront the financial results of
wiping out if these were to occur.
According to Coal block allocation case: The real reason the government lost in SC.
(2014, August 30). Retrieved from
https://www.livemint.com/Opinion/zsuuXSXCaNvGEhjpeneA4J/The-real-reason-the-govt-
lost-the-coal-allocation-case-in-Su.html SC notes: “It shall have been noticed that the thrust
of the arguments of the learned Attorney General (representing the Union government) and
so also Mr. Harish N. Salve (representing the Sponge Iron Manufacturers Association and
Independent Power Producers Association of India) and Mr. K.K. Venugopal (representing
the Coal Producers Association) hinges around the premise that sections 1A and 3(3) of the
CMN Act, [Coal Mines (Nationalisation) Act, 1973] clothe the Central government with
power to allocate the coal blocks or, in other words, select the allottees for coal blocks.
In light of the entries of the Attorney General, Mr.Venugopal, showing up in the interest of
Coal Producers Association (intervener), drew out a 4- pronged contention featuring the
conceivable hindering result of the abrogation of all coal blocks - right off the bat, talking
about the monetary effects, he expressed that there would be an unfriendly effect on the
economy of the nation as the government was not in a situation to supply the required
measure of coal through CIL, or meet exclusive requirements of coal quality. He specified
that aggregate financial speculations to the tune of Rs. 2.87 lakh crores had been made in 157
coal squares and about Rs.4 lakh crores in the end-utilize plants, which remained to turn
endless supply of the squares. He too specified that such wiping out would put the
employments of very nearly 10 lakh individuals in danger. Indeed, even the banks and
budgetary organizations, he expressed, would be at a serious misfortune due to having loaned
cash regarding the coal squares. Also, while talking about the authoritative issues related with
the crossing out, he affirmed that it would take any place around 7 to 8 years to put the entire
procedure of coal extraction back to where it was at present, due to the authoritative wasteful
aspects in the nation and the absence of eagerness among the financial specialists, which
stretched the procedure of sale. Thirdly, examining the social effects, he specified that the
allottees of the coal blocks had made critical commitments not just by practicing their
eagerness to work coal mines in the spots where CIL itself did not wish to, but rather had
likewise contributed essentially as a piece of their corporate social duty as play areas, private
provinces, water offices, and so on., and had prompted the formation of lakhs of
employments.
On the cancellation of the remainder of 44 coal blocks
Treating the 46 blocks that could be spared, at par with the rest 172, the Court held that
they as well would be at risk to be suppressed except for 4 hinders altogether. Be that as it
may, having respect for the Attorney General, that the Central Government would require
some 'breathing time' to get things all together and attempt the exercises at the previously
mentioned 44 coal squares, and furthermore taking note of that the allottees would likewise
require some an opportunity to twist up the exercises at the coal hinders, the Court articulated
the date of wiping out in regard of these 42 squares to be March 31, 2015 (6 months from the
date of the request).
On the fine imposed on the allottees
The Court, while agreeing with the figure said by the Attorney General based on the
CAG Report, i.e., Rs. 295 for each metric ton of coal extricated beginning from the date of
extraction, expressed that in such issues as the current one, it is hard to touch base at a
scientifically exact figure and, accordingly, Rs.295 per metric ton of coal was acknowledged.
It additionally specified that the coal which would be removed here in after, till the time of
March 31, 2015, would pull in a similar measure of punishment.
Conclusion
The historic point arrange dated September 24, 2014 strengthens the conviction of
justitiaruatcaelum (Let justice be done even though heavens may fall) . It maintains the
privilege of the general population towards open property what's more, shields people in
general's cash from being stashed by a couple of rich, great what's more, shady people and
associations. While it brings along more prominent straightforwardness what's more,
conviction in the State, it additionally conveys the length of different grave legitimate, social
and efficient results which would need to be settled by the Authoritative, Judicial and
Executive collections of the nation right away. Thirdly, despite the fact that lawful equity to
people in general seems to have been done, yet such obvious lawful equity may come at the
cost of traded off financial equity. It is assessed that at the given rate, in the nonappearance of
auspicious activity by the Central Government and its experts in correcting the circumstance,
the Coal Import Bill may see a swelling of 3 billion US dollars. Promptly after the Judgment
on August 25, 2014, the stock exchange saw an enormous descending development,
particularly in regard of the supplies of steel, bond and power organizations. Seeing that the
banks and monetary foundations are concerned, SBI what's more, IDBI, among different
banks and establishments, remain to perhaps lose Rs. 50,000 crores and Rs.2,000 crores
because of this order. Fourthly, this request isn't reliable with the present "Make in India"
belief system being drifted by Prime Minister, Mr. Narendra Modi for the reason that the
large number of misfortunes which would be endured by different partners would adversely
influence the financial specialist's slant in India, accordingly shaking its confidence in the
solidness of the republic. In conclusion, what is definitely anticipated is the activity of the
Central Government in execution of this Court arrange. While the Court, putting confidence
in the Government's cases of being fit for taking care of the circumstance, has abandoned it to
them to take additionally activity, it should be viewed with respect to what moves it makes in
the presence of just market-driven powers and no conclusive Court headings. Unreasonable
postponement in embraced of the coal squares would affect the financial status of the nation.
Likewise, portion to those organizations which are presently the allottees, furthermore, would
likewise be qualified under area 3(3)(a)(iii) of the CMN Act to work coal mines, ought to
preferably be given the coal hinders, as that additionally involves an chance to recoup the
measure of cash lost. Be that as it may, according to the current law, the extent of financial
equity which should be possible to the blameless allottees likewise stays to be seen. Likewise,
what is dubious is the period when the closeout for the 44 coal blocks will happen.
References
Indian Supreme Court cancels 214 coal scandal permits. (2014, September 24). Retrieved
from https://www.bbc.com/news/world-asia-india-29339842
Venkatesan J. (2014 August, 25). Coal block allocations since 1993 illegal: Supreme
Court. Retrieved from https://www.thehindu.com/news/national/supreme-court-cancels-all-
coal-block-allocations/article6349454.ece
Lodha R.M. Manohar Lal Sharma vs The Principle Secretary & Others. Retrieved from
https://indiankanoon.org/doc/135364996/
Coal block allocation case: The real reason the government lost in SC. (2014, August
30). Retrieved from https://www.livemint.com/Opinion/zsuuXSXCaNvGEhjpeneA4J/The-
real-reason-the-govt-lost-the-coal-allocation-case-in-Su.html
‘Coalgate’: Government releases bits of CAG letter to deny TOI report. (2012, March
23). Retrieved from https://economictimes.indiatimes.com/news/politics-and-nation/coalgate-
government-releases-bits-of-cag-letter-to-deny-toi-report/articleshow/12376684.cms
 Choudhary Sunetra. (2012, March 22). Coal report not final, leak causes us anguish: CAG

writes to Prime Minister. Retrieved from https://www.ndtv.com/india-news/coal-report-not-final-

leak-causes-us-anguish-cag-writes-to-prime-minister-472762

Coal scam: CBI hands over fresh list of ‘missing’ files to Attorney General. (2014, April

8). Retrieved from https://indianexpress.com/article/india/india-others/coal-scam-cbi-hands-

over-fresh-list-of-missing-files-to-attorney-general/