HC: mine allotments subject to outcome on prior allottees’ pleas
2 min read . Updated: 20 Mar 2015, 01:09 AM IST
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Court order will not affect auctions, says Vivek Bharadwaj, the nominated authority responsible for conduct of auctions
The Delhi high court on Thursday said government orders vesting the mines issued to the new allottees of some auctioned coal blocks shall be subject to the final outcome of the petitions filed by the prior allottees of those blocks challenging the alleged undervaluation of the mining infrastructure they had set up.
A bench of justices B.D. Ahmed and Sanjeev Sachdeva has directed the central government to ensure that payments to the secured creditors of the prior allottees of the coal blocks be kept in abeyance till the final decision in the petitions.
“Meanwhile, respondents (coal ministry and designated authority) shall not proceed with ensuring satisfaction of security interests of the secured creditors," the court said.
The court order will not affect the auctions, said Vivek Bharadwaj, the nominated authority responsible for the conduct of the auctions. He is also joint secretary in the coal ministry.
“We have always said that if the court orders that the compensation should be revised, we have no problems with that because the successful bidder already knows this. He has already been informed in writing when he bid that the compensation amounts determined by the government may change," said Bharadwaj.
Jindal Steel and Power Ltd, GVK Power (Goindwal Sahib) Ltd, Jayaswal Neco Industries Ltd, Electrosteel Castings Ltd, Utkal Coal Ltd, Prakash Industries Ltd, MP AMRL (Bicharpur) Coal Co. Ltd and Mandakani Coal Co. Ltd had approached the high court challenging the assessment of the compensation that would be payable to them for the development of mining infrastructure, in case they were unable to win the mine in the auctions.
Mandakani is the only company which has managed to win back its mine.
“The process that the government is following is that the winning bidder pays the value of mine infrastructure to the government. The government has a list including secured creditors who have exposure to the mine. After settling these dues, the remainder passes onto the prior allottee. Issues around the appropriate valuation and exposure still remain," said Sambitosh Mohapatra, a partner (power and utilities) at PricewaterhouseCoopers in India.
The companies have alleged that since the mining infrastructure they have erected has been so undervalued, the compensation will not be sufficient to meet their existing liabilities, let alone go to the companies for the money spent by them.
Senior advocates P. Chidambaram, Gopal Subramaniam and Rajiv Nayyar, appearing for the companies, contended that as a result of this they will have to raise money to pay their debt.
Seeking a stay on passing of the vesting orders, they argued that as a result of being “undercompensated", if the vesting orders are passed, the secured creditors will issue notices for getting back the balance of their loans for which the companies will have to raise money from elsewhere and would cause “grave financial loss" to them.
PTI contributed to this story.
