Govt may ask Supreme Court for more time to file status report

The Coal Ministry on Monday sought advice from the Cabinet Committee on Economic Affairs on the fate of the coal blocks awarded to private companies for captive use.

“The Cabinet reviewed mining progress in about 61 blocks. We would need to review possibility of cancellation of mining licences,” a senior Government official told Business Line.

The Ministry has also sought views of the Law Ministry. Attorney General G.E. Vahanvati is expected to reply to the Supreme Court on de-allocation of mines, on Wednesday. As the matter is sub-judice and controversial no single department wants to take independent stance, those associated with the developments said.The Cabinet Committee on Economic Affairs met on Monday to discuss the next step with regard to cancelling coal block allocation. “Coal blocks allocation matter is sub judice. AG will update the Supreme Court on the decision of the Government,” Union Minister for Information and Broadcasting Manish Tewari said after the meeting.

Last week, the Attorney General indicated that the Government may like to cancel allocations that have not been ‘converted into mining licences.’

“I have taken up the matter with the Government. I have told them about my views. It is under consideration. By Wednesday, I will inform the court about the Government’s decision,” Vahanvati informed a bench of Justices R.M. Lodha, Madan B. Lokur and Kurian Joseph last week.

Coal Ministry officials are discussing with their counterparts in the Law Ministry to prepare a response to be given to Supreme Court. According to sources, it may not be feasible to present the status report of all the 61 blocks at such short span.

The Coal Ministry is understood to be not in favour of blanket cancellation of coal blocks, as it will hamper investments into the sector. This is because in many cases the end-use project has been commissioned or in advanced stages. The nodal Ministry wants to take a case-by-case decision.

Of the 61 blocks, nearly 29 were awarded in the pre-advertisement phase, while the remaining were allocated post advertisement. Moreover, more than 25 of these blocks are yet to get first stage of clearances.

Industry body FICCI has sought forming an empowered committee by the Supreme Court to look at all cases and action be initiated against those who are found to be deficient in meeting the obligations in the contract.

“Any such en masse cancellation will severely hurt the coal block allocates who had complied with the contractual obligations as specified by the law of that day and will make their assets unviable. This may also put huge distress on the lenders and the banking sector that have funded these projects. This will have a spiralling effect on the entire economy as coal is feedstock to many of our core industries,” said Sidharth Birla, President of FICCI.

(This article was published on January 13, 2014)
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