The Supreme Court Wednesday cancelled 214 coal blocks allocated from 1993 to 2011, except four vested with the NTPC, SAIL and Sasan Ultra Mega Power Project (UMPP).
The court also imposed an additional levy of Rs.295 per tonne of coal extracted from exempted or operational mines.
The four coal blocks that escaped the axe were the three in Annexure 1 - Moher and Moher Amroli Extension allocated to Sasan Power Ltd. and Tasra, allotted to Steel Authority of India Ltd. (SAIL), a central government public sector undertaking not having any joint venture.
Cancelling 214 coal blocks, a bench of Chief Justice R.M. Lodha, Justice Madan B. Lokur and Justice Kurian Joseph put them in two categories - coal blocks which have not commenced operation notwithstanding the stage of their development, and 46 others of which 40 were operational and six that can start operation virtually anytime.
"As far as the first category of coal block allotments is concerned, they must be cancelled (except those mentioned in the judgment). There is no reason to save them from cancellation," the bench said.
The "allocations are illegal and arbitrary; the allottees have not yet entered into any mining lease and they have not yet commenced production.
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"Whether they are 95 percent ready or 92 percent ready or 90 percent ready for production (as argued by some learned counsel) is wholly irrelevant," it said.
On the 46 coal blocks that were sought to be saved by the Centre from the guillotine, as 40 have commenced production and six were on the verge of commencing production, the court said: "As these allocations are also illegal and arbitrary, they are also liable to be cancelled."
"As far the six coal blocks are concerned, the allocatees have not yet commenced production. They do not stand on a different or better footing as far the consequences are concerned. These allotments are also liable to be cancelled," it said.
However, the court made an exception for four coal blocks and said they will not be cancelled.
In the remaining 42 coal clocks, the court noted that the central government needed some time before the management of the operational coal blocks, now cancelled, is taken over by Coal India Limited.
The court said: "Although we have quashed the allotment of 42 of these 46 coal blocks, we make it clear that the cancellation will take effect only after six months from today (Wednesday) -- with effect from March 31, 2015.
"This period of six months is being given since the central government and Coal India would need some time to adjust to the changed situation and move forward," the order said.
The court said the allottees of the coal blocks other than those covered by the judgment and the four coal blocks exempted by it "must pay an amount of Rs.295 per tonne of coal extracted as an additional levy. This compensatory amount is based on the assessment made by the CAG".
The court rejected the contention of the allottees that it should appoint a committee to consider each individual case to determine whether the coal block allotments should be cancelled or not and the principle of natural justice demands that they should be heard before the coal blocks allocated to them are cancelled.
Rejecting the contention of the allottees, the court said: "It dealt only with the process of allotment of coal blocks and found it to be illegal and arbitrary. The process of allotment cannot be reopened collaterally through the appointment of a committee."
"This would virtually amount to nullifying the judgment. The process is a continuous thread that runs through all the allotments. Since it was fatally flawed, the beneficiaries of the flawed process must suffer the consequences thereof and the appointment of a committee would really amount to permitting a body to examine the correctness of the judgment. This is clearly impermissible," it said.
On the contention that the allottees should be heard before the coal blocks allocated to them are cancelled, the court said that in the course of the hearing of the PILs seeking cancellation of coal blocks they had heard the Coal Producers Association, the Sponge Iron Manufacturers Association and the Independent Power Producers Association of India.
"Therefore, it is incorrect to say that these associations which represented the bulk (if not all) the allottees or beneficiaries of coal blocks were not heard. They presented their point of view, like any other party, and it was only then that judgment was delivered."