India Inc keeps fingers crossed as Supreme Court to decide fate of 218 blocks today

The Supreme Court is expected to pass an order today that would decide the fate of 218 coal blocks allocated during 1993-2010 to various public and private sector companies. In its earlier order on 1 September, the apex court had held the allocations illegal.

Yesterday ( September 8) the government told the court in an affidavit that it had no objection to the cancellation of the allocations, a stance which is a reiteration of its earlier submission in the court. The affidavit also made it clear that the government was not insisting on any particular course of action, leaving for the Supreme Court to decide the fate of all the 218 coal blocks.

The government gave the details of the 40 blocks that are operational and another six that are ready to produce 50 million tonnes coal in the current year. This is in line with the court's order seeking the details of the blocks that are now functional.

Attorney general Mukul Rohatgi had on 1 September urged the court to allow status quo on the 46 coal blocks that are either functional or will be operationalised this year. The government, however, did not make any such statements in the affidavit filed by the ministry of coal yesterday.

The ministry placed before the court the gist of information about mining lease, commencement of production and linked End-Use Production (EUP) investment received from allocatees of these 40 productional coal mines and six on the verge of production.

Out of 40 functional mines, two are allocated to an ultra mega power project (UMPP), which has not been declared as illegal by 25 August judgement, it said. Further, the affidavit said the six coal blocks which are likely to come under production were determined by the Coal Controller's Organization (CCO), as they have received mine opening permission under Rule 9 of the Colliery Control Rules, 2004 (framed under MMDR ACT, 1957), which is the final step towards opening of the mines.

The ministry, which gave details of information of 15 lignite blocks received from the allocatees, also stated some of the hurdles it was facing as a result of the apex court judgement and sought suitable directions.

It said the numbers of allocatees have acquired title of the land in respect of coal blocks which were allocated and now are held as illegal and on re-allocation those previous allocatees be directed to "re-convey" the land to Central government.

"Upon cancellation of the coal block, the title of the land would still remain with the allocatee. In the event of subsequent grant of the coal block, it may not be possible for the grantee to obtain title of the land from the earlier owner," it said.

The markets and economists are keeping their fingers crossed as today's judgement will have a lasting impact on the country's growth prospects, especially if indeed it decides to cancel all the coal blocks, operational and non-operational.

"Such a jolt could seriously upset Jaitley's budget calculations as the Modi government will have to fight the capital implications on multiple fronts. The implications range from the likely pressure on bank loans in the backdrop of cost-impact on these companies, the fate of the investments already gone into about 35 projects that have production, the tremors in the stock markets and the expected additional cost burden on the exchequer in the event of complete de-allocation of coal blocks," an earlier article on Firstbiz had said.

Over to the court.

With inputs from PTI

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Updated Date: Sep 09, 2014 08:27:58 IST