HC upholds cancellation of JPL bids for 3 coal mines

The Delhi High Court today upheld the government's decision to cancel the bid of Jindal Power Ltd (JPL) for three Chhattisgarh coal mines by annulling the tender process, saying the Coal Ministry's view that fair value was not achieved cannot be faulted.

A bench of justices Badar Durrez Ahmed and Sanjeev Sachdeva, however, did not uphold allotment of the Gare Palma IV/2 and IV/3 mines to Coal India Ltd (CIL), saying the blocks were given to it only as a "stop gap measure".

The court left it open to the government to take a decision within six weeks as to whether the the two mines should be put up for re-auction or be allotted to CIL or any other public sector corporation.
 

The ruling came while dismissing JPL's pleas challenging the ministry's March 20, 2015 decision cancelling its bids for the two Gare Palma mines and Tara coal block in Chhattisgarh.

The court said, "The view taken by the government that the bid of JPL for the Gare Palma coal mines and Tara coal mine did not reflect a fair value cannot be regarded as unreasonable, arbitrary or whimsical".

It also did not accept JPL's arguments that each coal mine has to be considered in isolation and cannot be compared as there are inherent differences with regard to variation in extractable reserves, quality of coal, the terrain etc., and said, "The decision of the respondents (the ministry and its nominated authority) cannot be faulted".

The bench said that as as long as the view taken by the ministry was backed by reason, "even if we had a different view, we cannot substitute our view for that of the government".

"As such, the decision not to declare JPL as the successful bidder cannot be interfered with," it said.

On allotment of the gare palma mines to CIL, the bench said it was "a stop gap measure" which was taken to maintain coal production as the ministry was left with no other viable option at that point of time.

"In our view, since the allotment of the coal mine was made to Coal India Limited in order to override an emergency situation, it cannot be regarded as a long-term allotment. Therefore, we confirm our interim order and record that Coal India Limited would function as a designated custodian," the bench said.