All coal block allocations since 1993 illegal

[Free Karma]

All coal block allocations since 1993 illegal: Here's what the Supreme Court said - Firstbiz

New Delhi: The Supreme Court today held that all coal block allocations made since 1993 till 2010 before pre-auction era during previous NDA and UPA regimes have been done in an illegal manner by an "ad-hoc and casual" approach "without application of mind".

However, the consequences arising from the verdict of such coal blocks will be considered after further hearing by the apex court.

Why is it illegal? Here's what the SC said:

"Common good and public interest have, thus, suffered heavily. Hence, the allocation of coal blocks based on the recommendations made in all the 36 meetings of the Screening Committee is illegal," the bench said. It observed that the allocation of coal blocks through Government dispensation route, however laudable the object may be, also is illegal since it is impermissible as per the scheme of the CMN (Coal Mines Nationalisation) Act.

While holding that State Government or its public sector undertakings are not eligible for mining coal for commercial use, the bench said, "Since allocation of coal is permissible only to those categories under Section 3(3) and (4), the joint venture arrangement with ineligible firms is also impermissible."

What the SC said on transparency in the allocation:

"Common good and public interest have, thus, suffered heavily" as "there was no fair and transparent procedure, all resulting in unfair distribution of the national wealth." A bench headed by Chief Justice R M Lodha also held that "no State Government or public sector undertakings of the State Governments are eligible for mining coal for commercial use".

What the SC said on cancellation of blocks:

The bench also clarified that there was no challenge laid before it for cancellation in respect of blocks where competitive bidding was held for the lowest tariff for power for Ultra Mega Power Projects (UMPPs) in accordance with the opinion given in Natural Resources Allocation Reference. However, it said "having regard to this, it is directed that the coal blocks allocated for UMPP would only be used for UMPP and no diversion of coal for commercial exploitation would be permitted".

What the SC said should be the consequences:

The bench, also comprising justices Madan B Lokur and Kurian Joseph, said as allocation made both under the Screening Committee route and the Government dispensation route, are arbitrary and illegal, further hearing was needed to deterimine the consequences for which it would hear the matter on September 1.

"As we have already found that the allocations made, both under the Screening Committee route and the Government dispensation route, are arbitrary and illegal, what should be the consequences, is the issue which remains to be tackled. We are of the view that, to this limited extent, the matter requires further hearing," the bench in its 163-page judgement said.

 

[Free Karma]

SC coal blocks verdict will ruin power sector - and Manmohan's reputation - Firstbiz

The larger implications of the Supreme Court's decisions will, however, go beyond just embarrassing Manmohan Singh. It will singe the economy for five reasons.

One, all power plants operators will now have to pay penalties, and this has implications for power prices.

Two, the reallocation process, which the Supreme Court will take some time to decide, will lead to delays and more policy uncertainties.

Three, at a time when global coal prices are falling, domestic prices are likely to rise due to this whole process.

Four, the banks which lent money to power producers will find many more loan accounts turning sticky. They will have to rework their bad loan balances.

Five, the government may want a say in how coal blocks are allocated, since this is a policy decision that can't be left just to the courts. This can lead to more delays if executive and courts are fighting over the issue.

But this link says the damage wont e as extensive, atleast up front:
Coal blocks allocation illegal: Supreme Court - News

The apex court bench comprising Chief Justice R.M. Lodha, Justice Madan B. Lokur, and Justice Kurian Joseph, however, stopped short of pronouncing instant cancellation of the coal blocks as it may have serious repercussions.[/url]

Anyway , hope things will be cleared up soon.