The Central government today said it has made clear to Jharkhand that its Rs 25,000—crore claim from Coal India Ltd (CIL) In lieu of land for excavating fuel does not have any legal standing, a move that may further escalate the tension between the state and the world’s largest coal miner.

The development comes a day after the state government said that Coal India (CIL), as per a preliminary assessment owed a compensation to the tune of Rs 25,000 crore to it for excavating coal in the state and the amount may increase.

“As per law there is no such provision requiring Coal India to pay any amount to state government for mining in the State. Centre has clarified it to the state that no such claim can be entertained,” Coal Secretary S K Srivastava told PTI.

Sources said that CIL, which is already facing a plethora of problems, including less production, has taken opinion from Solicitor General of India (Mohan Parasaran) in this regard, who said there was no such law under which the state can seek claim.

However, the state officials said there claim was justified as CIL in case of “raiyati” (private) land has paid compensation to the people concerned but was using state’s land without any amount to the exchequer.

If the state remains adamant on its stance, it could spell trouble for Coal India which has two of its subsidiaries — Central Coalfields Ltd (CCL) and Bharat Coking Coal (BCCL) housed in the state besides some areas of the Eastern Coalfields Ltd (ECL).

Coal India CMD S Narsing Rao did not respond to the repeated calls, while Independent Director on Coal India Board and former Coal Secretary Alok Perti questioned the state government’s stance saying, “Under which law they are seeking such claims.”

“Any such claim must be under a specific law,” Perti said, adding, under the circumstances no such claim can be justified.

Yesterday, Jharkhand Chief Secretary R S Sharma has said, “Coal India has acquired land for mining in the state through Coal Bearing Areas Act. It pays compensation to individuals for private land, but the for government land it has not paid any compensation, which as per the basis of preliminary assessment runs into thousands of crores of rupees, which we have demanded.”

Revenue and Land Reforms Secretary J B Tubid has also said, “The report is being finalised on the basis of assessments from district collectors and preliminary assessment indicates Rs 25,000 crore.”

The officials said CIL can’t take the land “free of cost” and it is accountable for the compensation as it is state’s property.

The move could lead to erosion of the cash reserves of the world’s largest miner which recently announced record interim dividend of 290 per cent. It will pay a dividend of Rs 29 per share, amounting to Rs 18,317 crore, for 2013—14.

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