Coal Mining Lease – Private Party Made To Suffer Because Of Callous Approach, SC Imposes One Lakh Cost On Centre

A three-judge Bench of CJI NV Ramana, Justice Krishna Murari, and Justice Hima Kohli observed –

"Here is a case where a private party followed all the rules and the law, as applicable, before investing large sums of money to undertake business. In fact, it appears from the facts of the case that it was the respondent no. 1 – UOI that did not follow the letter of the law. But ultimately, it was the private party that had to suffer the consequences of the careless and callous approach of the respondent no. 1 – UOI. To compound the petitioner's woes, the respondent no. 1 – UOI filed an affidavit before this Court including the petitioner in the list of errant mine owners, based on its own unlawful conduct. It did not undertake the necessary due diligence to determine as to whether the petitioner had been allotted the mine through the lawful procedure. As a result of this callous, careless and casual approach of the respondent no. 1 – UOI, the present petitioner had to suffer loss and ignominy. Therefore, litigation costs quantified at ₹ 1,00,000/- (Rupees one lakh) shall be paid by the respondent No.1 – UOI to the petitioner within four weeks."

The Court referred to the sequence of events in the case related to the Petitioner that had followed the due process in securing Coal Blocks in Mohapani Coalfield in Madhya Pradesh to meet the coal requirements of the captive power plant.

Counsel Abhimanyu Bhandari appeared for the Petitioner while ASG Balbir Singh appeared for the Union of India before the Supreme Court.

The Apex Court in the year 2014 had declared the entire coal block allocation as per the recommendations of the Screening Committee constituted by the Centre from July 14, 1993, onwards, and the allocations made through the Government Dispensation Route after 1993 suffered from the vice of arbitrariness and were illegal.

The issue that arose in the case was whether the Petitioner was allocated coal mines through the Screening Committee Route and/or the Government Dispensation Route to ascertain if the Centre was entitled to claim compensatory payment.

The Court noted that the Petitioner which had got the mining lease through valid procedures, had to suffer loss and ignominy also its allocation was quashed.

The Bench further also held that the allocation of coal block made in the form of the Petitioner did not run foul of the procedure prescribed in the Mines and Minerals (Development and Regulation) Act, 1957 and the Mineral Concession (MC) Rules, 1960, the Court thus additionally observed –

"The petitioner was not allocated the coal block either through the Screening Committee Route or the Central Government Dispensation Route, which fact was not pointed out by the respondent No. 1 – UOI at the appropriate stage, that led to painting the petitioner with the same brush as the other allottee listed in Annexures – 1 and 2. Having held that the petitioner was not a beneficiary of the flawed process, the consequences spelt out in the Second Judgment would not apply to it and therefore, it cannot be called upon to pay penalty as compensatory payment, as demanded by the respondent No. 1 – UOI."

The Court also held, "The upshot of the aforesaid discussion is that the respondent No. 1 – UOI is not entitled to claim payment of an additional levy for the coal extracted by the petitioner from the subject mine. Any such demand raised by the respondent No. 1 – UOI is hereby quashed and set aside. The writ petition is allowed on the aforesaid terms. Contempt Petition (Crl.) No.7 of 2016 is dismissed as meritless."

The Petitioner had submitted an application in November 1994 with the District Collector of Narsinghpur District in Madhya Pradesh for permission to undertake coal mining on forest land.

The Central Government, in 1997, had accorded approval to the private firm for the grant of the mining lease.