Case Note & Summary
The Supreme Court addressed the consequences of its earlier judgment delivered on 25th August 2014, which declared the allotment of coal blocks by the Government of India as arbitrary and illegal. The petitioner, Manohar Lal Sharma, sought clarity on the implications of this declaration. The court noted that the allocations made through the Screening Committee and Government dispensation route were illegal under the Mines and Minerals (Development and Regulation) Act, 1957. The court heard submissions from various stakeholders, including coal producers and power producers, regarding the potential consequences of cancelling the coal block allotments. The Union of India submitted an affidavit detailing the current status of coal blocks, indicating that 40 blocks were already producing coal and 6 more were ready for extraction. The Attorney General proposed two options: cancelling all coal block allotments except those mentioned in the judgment or allowing continued extraction from the operational blocks while cancelling others. The court ultimately decided to cancel 42 out of 46 coal blocks but allowed a six-month period for adjustment before the cancellation took effect. The court also imposed an additional levy of Rs. 295 per metric ton of coal extracted, based on the CAG's assessment of financial loss. The court emphasized that the principles of natural justice had been adhered to during the original proceedings, as the associations representing the allottees had been heard. The judgment underscored the need for corrective measures to address the illegalities in the coal block allocation process while considering the economic implications of such cancellations.
Headnote
A) Administrative Law - Consequences of Illegal Allotment - Cancellation of Coal Block Allotments - Mines and Minerals (Development and Regulation) Act, 1957, Section 3 - The court held that the allotment of coal blocks was arbitrary and illegal, necessitating cancellation of all allotments except those specifically mentioned. The court emphasized the need for a structured approach to manage the consequences of this cancellation (Paras 1-2). B) Administrative Law - Principles of Natural Justice - Right to Hearing Before Cancellation - Not applicable - The court found that the associations representing coal block allottees were heard during the original proceedings, thus negating the claim for a separate hearing before cancellation (Paras 29-30). C) Economic Law - Impact of Cancellation - Economic Ramifications of Coal Block Cancellation - Not applicable - The court acknowledged the potential adverse economic impact of cancelling coal blocks but maintained that the illegality of the allotments necessitated such action (Paras 15-19). D) Administrative Law - Additional Levy on Coal Extraction - Imposition of Additional Levy - Not applicable - The court directed that an additional levy of Rs. 295 per metric ton of coal extracted be paid by allottees, based on the CAG report, to compensate for the financial loss caused by illegal allotments (Paras 40-41).
Issue of Consideration
What should be the consequences of the declaration that the allotment of coal blocks was arbitrary and illegal?
Final Decision
The Supreme Court quashed the allotment of 42 out of 46 coal blocks, allowing a six-month period for adjustment before the cancellation took effect. The court imposed an additional levy of Rs. 295 per metric ton of coal extracted by the allottees, based on the CAG's assessment of financial loss. The court emphasized that the principles of natural justice had been adhered to during the original proceedings.
Law Points
- arbitrary allotment
- coal block allocation
- natural justice
- competitive bidding
- economic implications
- additional levy
