BackGVK challenges coal ordinance in court
The firm questioned the method used to set the compensation payable in the case of an operational coal mine being deallocated
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New Delhi: GVK Power (Goindwal Sahib) Ltd and GVK Steel (Goindwal Sahib) Ltd have challenged the Coal Ordinance 2014 on the grounds that it was aggrieved at the “arbitrary" determination of compensation for its mining infrastructure, which was much lower than it expected.
GVK has challenged the ordinance’s provision which provides the method to determine the compensation payable to a company which had an operational coal mine and the allocation of which was cancelled by the Supreme Court in August last year.
GVK is aggrieved by the government’s 28 January decision by which it “arbitrarily" determined the quantum of compensation at ₹ 57 crore, while the company claims it should have been between ₹ 276 crore and ₹ 350 crore.
Senior lawyer P. Chidambaram, appearing for GVK, argued that a prospective bidder cannot bid for the Tokisud coal block in Jharkhand without knowing what the capital investment and stream of payment are.
According to GVK, it has become unclear after a 31 January corrigendum in the tender document issued for auctions of deallocated coal blocks for the Schedule II Coal Mines for iron and steel, cement and captive power plant sector.
The amended tender document says, “Any upward revision in the Fixed Amount on a subsequent date by the Government or the Nominated Authority consequent upon any process or on the orders of any competent court of law, shall also be payable by the Successful Bidder".
As a result, the compensation would be subject to any upward revision ordered by a court. The technical bids have to be submitted by 12.00pm on 3 February. The hearing in the case will resume on 3 February.
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