Cancellation of coal block allocations: A murky tale

India is one of the largest energy consumers in the world. Coal is the most important and abundant fossil fuel in India and accounts for 55% of India’s energy consumption. The iron and steel, cement and power generation industries are major coal users in India.

Through 1976 and 1993 amendments to the Coal Mines (Nationalisation) Act, 1973, companies engaged in iron and steel production and power generation were permitted to carry out coal mining operations for captive use. Under the amendments, a Screening Committee composed of officials from the coal and railways ministries and relevant state governments was constituted to consider applications from private power companies interested in captive mining on a first come-first served basis. Accordingly, coal blocks were allocated to public and private sector enterprises from 1993 to 2010.

Allocations cancelled

A three-judge bench of the Supreme Court of India (headed by the then chief justice, RM Lodha) has held that these allocations were made in an “illegal, arbitrary, and non-transparent” manner and suffered from the “vice of arbitrariness”. After considering the “far-reaching consequences”, the court quashed the allocation of 214 out of 218 coal blocks made since 1993.

Khaitan Sud & Partners is a fast growing law firm providing specialist legal services to both domestic and international clients. Bhumika Tripathi is an associate at the firm.