Coalgate: Modi govt likely to claw back policy-making power after court verdict

Is the Narendra Modi government beginning to claw back policy-making powers from the courts? These powers were eroded by court decisions during the Manmohan Singh government, where multiple scams allowed the courts to wade into policy-making spaces as a weak government lost credibility.

Some hints on this were available in the Supreme Court yesterday (9 September), when the bench hearing the coal blocks case seemed to indicate that it was willing to let the government fully handle the fallout from any potential cancellation of licences.

The bench, headed by Chief Justice RM Lodha, had declared all coal block allocations from 1993 onwards - some 218 blocks in all - illegal on 25 August, and is expected to pronounce its final verdict later this month. What everyone is waiting to hear from the court is whether all 218 allocations will be cancelled, or whether the 46 blocks that are currently in production (or close to it) will be allowed to retain their blocks with penalties, or whether the court will appoint its own panel to view each case separately. The last decision would mean a serious loss of policy-making powers to the government as it is not really the court’s job to decide what policy to follow after giving its verdict.

At yesterday’s hearing, the government, represented by Attorney General Mukul Rohatgi, clearly said that there was no case for the Supreme Court constituting a committee to look at coal blocks on a case-by-case basis. The Times of India quotes Rohatgi as saying: “Constituting a committee is not necessary. We have applied our mind to the situation and its consequences. We came to the conclusion that where there is mass irregularity, the allocations should be logically cancelled. We have only informed the court about the position of the 46 coal blocks. If anything is to be saved, only these 46 deserve to be.”

This must have shocked the coal block allottees, for they wanted to be heard, claiming that cancellation could have a major economic impact. Their lawyer

KK Venugopal, representing the Coal Miners’ Association, opposed cancellation and re-auction, painting coal block allottees as victims. T he Hindu quoted Venugopa l as asking the court: “Why should we, innocent victims, be subjected to great deprivation?”

But the court gave them short shrift by noting: “The government understands the economic impact, the consequences and the darkness that will follow. It has its eyes wide open. It can see every possible fallout. It has full competence to take a position on this issue.” According to The Hindu, the Chief Justice added: “The government knows the problems which will ensure from cancellation. There is no reason to give spectacles for it to see.” (Italics mine).

The phrases “full competence to take a position” and that there was no need for court-mandated “spectacles for it to see” can be taken as references to the proposed court-supervised committee for a case-by-case appraisal of the economic impact of the cancellation. The court seems to be moving away from this idea.

The court may be veering towards a decision where it will give its verdict and let the government work out the fallout and remedies. Regardless of whether the court cancels all allocations or spares the 40 already producing coal (and another six about to start production), the government will now probably get the right to work out how to handle the post-cancellation fallout.

The government probably sees prospects of revenue gain in case of either full cancellation or partial cancellation with penalties.

If all allotments are fully cancelled, the government can obtain high prices for mines that are already in production since a functional mine will have higher value than one that still has to start producing. Even if the old owner is given the right of first refusal and match the highest bid price, the government’s coffers (including states where the mines are located) will benefit.

It should be obvious to the courts that the Modi government knows what to do and is not willing to cede policy space. It is unlikely to micromanage the fallout of its verdict.

The executive’s right to make policy, ceded by the Manmohan Singh’s ineffective government, is likely to be reclaimed bit by bit with this verdict.