HC seeks status quo on Tara coal mine, govt reply on two other JSPL blocks
Government arbitrarily cancelled bids though it had emerged as a successful bidder, JSPL claims in court
New Delhi/Mumbai: The Delhi high court on Monday asked the National Democratic Alliance (NDA) government to maintain “status quo” with respect to the allocation of Tara coal mine in Chhattisgarh till 16 April. As a result, the government will not be able to reallocate or auction the mine till such date.
Jindal Steel and Power Ltd (JSPL) had legally challenged the central government’s decision to reject its closing bids for two coal blocks, including the Tara block. The government has decided not to accept the closing bids for three coal blocks—two by Jindal Power Ltd (JPL), a firm controlled by Congress party leader and former parliamentarian Naveen Jindal, and one by Bharat Aluminium Co. Ltd (Balco)—submitted in the auctions held in the past two months.
JPL is a subsidiary of JSPL.
A bench of justices B.D. Ahmed and Sanjeev Sachdeva has also issued notice to the centre and asked it to respond to JSPL’s challenge to the cancellation of its bids for two coal blocks, Gare Palma IV/2, IV/3 and Tara. While Gare Palma (IV/2, IV/3) is a Schedule II block, which are already operational and whose allocation needs to be completed by 31 March, Tara is a Schedule III mine, which is yet to be operational.
The company’s lawyers, Kapil Sibal and Rajiv Nayar, told the court that although it had emerged as a successful bidder, the government had arbitrarily cancelled its bids without giving any reason. Sibal said that of the eight blocks that are being re-considered by the government, only three had been cancelled, two of which happened to be the blocks for which JPL was the preferred bidder.
Mint reported on the firm planning a legal challenge on Saturday.
“The government is well within its rights to reject any bid which does not reflect the value of the resource. The rejection itself underlines the fact that the auctions have been very transparent and objective, because if they were not, we would not have been able to point out this discrepancy,” said Vivek Bharadwaj, the nominated authority responsible for conducting the auctions and who is also joint secretary in the coal ministry, on Saturday.
JSPL also expressed concern that the information regarding the cancellation had been posted on Twitter even before the company was officially notified about it.
Additional solicitor general Sanjay Jain, appearing for the government, told the court that the Gare Palma block in question had already been permanently allotted to state-owned Coal India Ltd (CIL), which would commence operations from 1 April.
Jain also argued that the process of allocation had not been completed, and no vested right had accrued to JPL.
As a result, the government was at liberty to annul the tender process. He further said that JPL was only operating the mine on “borrowed time” since the apex court had allowed the companies with operational mines, whose blocks had been de-allocated, to continue operations till 31 March.
On being asked by the judges whether JPL would get any compensation from CIL, Jain clarified that it would be entitled to get the cost of mining infrastructure, as already determined by the government.
Saying that the “confusion” had been created by the government, the bench said that it was not clear on how the government had worked out the decision for cancellation of the bids, and asked it to file its response with regard to Gare Palma within two days. The case will come up for hearing on Thursday.
Shares of JSPL fell as much as 15% in intra-day trade before ending 6.30% down at ₹ 154.55 apiece on BSE on Monday. The benchmark Sensex index declined 0.26%, or 69.06 points, to 28,192.02.
Coal secretary Anil Swarup had said in a post on Twitter on 20 March, “Bids for Gare Palma 4/1, 4/2, 4/3 and Tara coal blocks not accepted.”
Jindal Power had submitted a closing bid of ₹ 108 per tonne for the Gare Palma 4/2 and 4/3 blocks, and ₹ 126 per tonne for the Tara coal block. The government had cancelled the bids on the ground that they did not represent the fair value of the resource.
JSPL was among the firms that had already approached the Delhi 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 mines in the auctions.
This comes in the backdrop of Parliament passing the Coal Mines (Special Provisions) Bill, 2015, on Friday, allowing the government to award around 15-20 blocks in the third round of coal block auctions. Two rounds of coal block auctions have already fetched the government ₹ 2.09 trillion from 33 blocks, giving credence to the national auditor’s claims that the allocation of mines over the years had caused substantial losses to the national exchequer.
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