Supreme Court order on coal blocks could force nationalisation

With the Supreme Court order on cancelling coal mining rights expected to throw up legal challenges for the National Democratic Alliance government, the ministry of coal is preparing a back-up plan.

This could entail changes in the Coal Bearing Areas (Acquisition and Development) Act or an altogether new law similar to what was enacted at the time of nationalisation of coal mining in 1973. The major issue the government will face is the acquisition of land titles and takeover of leases from the existing holders of captive coal mining rights.

The Supreme Court is expected to deliver its final verdict on coal mine allocations later this week. In its August 25 ruling, the court had ruled allocation of 194 blocks illegal under the Coal Mining Nationalisation Act.

A person close to the development said a plan was being worked out to meet the exigencies that could arise from the final court order, though a call would be made after the verdict.

In case of new legislation, the government might opt for an ordinance through which the assets would be taken over and handed to a custodian appointed by the government.

Industry insiders expect this job might be given to Coal India or its subsidiaries. The law would deal with a variety of issues on production, exploration and deployment of machinery.

Under the Coal Bearing Areas Act, government-owned companies acquire unworked land with likelihood of coal deposits for mining and activities incidental to mining. For other activities, land is acquired under the Land Acquisition Act. Private captive block owners have to acquire land through direct purchase from individuals or through government lease.

In its affidavit to the Supreme Court, the government had sought clarity on land titles. It said if the court cancelled the coal blocks, the title of the land would still remain with the allottee. "In the event of a subsequent grant of the coal block, it may not be possible for the grantee to obtain the title of the land from the earlier owner," the government's submission said.

It suggested re-conveying the land to the government or its nominees on payment. The government will issue a notification under Section 9(1) of the Coal Bearing Areas Act act for acquiring land. Subsequently, the rights and title of the land can be transferred to coal companies.