Supreme Court scraps 214 coal blocks, gives companies 6 months to wind up

The Supreme Court on Wednesday cancelled 214 of the 218 coal blocks allocated by the successive governments since 1993 and gave the companies awarded coal licences six months to wind up their operations.

Four blocks run by the central government agencies have been spared the axe. "214 coal block allocations have been cancelled. Four coal blocks remain, two of which belong to Steel Authority of India and the National Thermal Power Corporation," Attorney General Mukul Rohatgi said.

"The Supreme Court has said that the government can auction all cancelled blocks at the end of six months in March, 2015," Rohatgi said.

"The Supreme Court has also asked the companies running the coal blocks for the next months to pay Rs.295 per tonne of coal they extract. They also have to pay the same amount per tonne for the coal they have already extracted from the blocks," senior Supreme Court lawyer Prashant Bhushan said.

In a landmark verdict last month, the apex court had said that licences to the blocks were illegal and arbitrary, and a transparent process for their bids was not followed.

"…the entire allocation of coal block as per recommendations made by the Screening Committee from July 14, 1993 in 36 meetings and the allocation through the government dispensation route suffers from the vice of arbitrariness and legal flaws. The Screening Committee has never been consistent, it has not been transparent, there is no proper application of mind, it has acted on no material in many cases, relevant factors have seldom been its guiding factors, there was no transparency and guidelines have seldom guided it," a bench headed by Chief Justice RM Lodha had said in its 163-page verdict.

The allocation of the coal blocks to various companies had been at the centre of what has come to be known as the Coalgate scandal, said to cost the exchequer Rs.1.86 lakh crore according to a 2012 audit report.

The CBI, which is investigating the multi-crore scam, has alleged that for several years, mining licences were given arbitrarily to private companies without a transparent bidding process.

The Congress faced a huge embarrassment during the UPA II regime with investigation into coal scam directly implicating the office of Prime Minister Manmohan Singh, who briefly held the coal portfolio.