Government today told the Supreme Court that it "wants re-auction of all 218 coal blocks" declared as illegal allocation but sought its indulgence to "exempt" 40 of them which are functional and ready for the end use power plants.
"Government stands by the August 25 judgement. We want re-auction of 218 coal blocks. We will be happy if we save some 40 of them which are functional or operational and ready for end use plant," Attorney General Mukul Rohatgi submitted while making clear the stand of the Narendra Modi Government before a bench headed by Chief Justice R M Lodha.
However, the Attorney General said the 40 mines for which requisite clearances have been on board and are operational must not be treated with "one brush" and "can be exempted" from cancellation and re-auction, provided they meet the condition of compensating the loss of Rs 295 per tonne caused to the government and enter into a power purchase agreement at Rs 95 per tonne to make up the loss.
He said there was a need for saving 40 coal blocks from "guillotine of cancellation" as uncertainity of coal availability would affect the plants, when the country is facing acute shortage of power supply.
Rohatgi said Government was not in favour of setting up of any committee comprising its retired judges as suggested by the apex court to analyse the consequences of the verdict on the allocation which has been held as illegal.
"We don't want any committee. If it has to go, all (coal block allocations) must go. My thought is the Government view," Rohatgi told the bench, also comprising justices Madan B Lokur and Kurian Joseph.
While asking the Centre to file an affidavit on its stand, the bench said, "Union is very clear that auction should take place. They are very clear that all the 218 coal blocks be put under auction".
"The allocations have been found to be altogether illegal. Therefore it (centre) wants to start from a clean slate," the bench observed.
During the hearing, Rohatgi said like the 40 operational mines, there are six others which are "absolutely in readiness" to be operational for end use plant and if the verdict has to be strictly followed "all have to be cancelled with one stroke of brush".
The apex court's hearing revolved around the assumptions and submissions by PIL petitioners -- NGO, Common Cause, through advocate Prashant Bhushan, and lawyer Manohar Lal Sharma -- that since there was no transparency in the allocation of coal blocks from 1993 to 2010 and have been held as illegal, that natural outcome would be the cancellation of all 218 coal blocks allocation.
The apex court posted the matter for next hearing on September 9 by asking Centre, the three Associations -- Coal Producers Association, Sponge Iron Manufacturers Association and Independent Power Producers Association of India -- and petitioners to file their affidavits.
The apex court had on August 25 held that all coal blocks allocated during the last 17 years since 1993 by various regimes at the Centre were done illegally and arbitrarily, bringing uncertainty to the fate of 218 block allocations and consequential investments to the tune of around Rs 2 lakh crore.
The apex court, which used almost all terms to condemn the procedures adopted by 36 screening committee meetings since 1993, however, stopped short of cancelling them saying "what should be the consequences, is the issue which remains to be tackled."
The court, which examined the allocation of 218 blocks in pre-auction era till 2010, had held that they were done in an illegal manner by an "ad-hoc and casual" approach "without application of mind" and "Common good and public interest have, thus, suffered heavily" due to lack of fair and transparent procedure resulting in "unfair distribution" of the "national wealth" -- coal -- "which is king and paramount Lord of industry."
The government has been exceedingly fair in its submissions, respecting the logical consequence of cancellation when the process of allotment has been held by the apex court to be arbitrary and illegal. The effort to exempt mines in production, at a time when there is an acute shortage of coal at the power plants and India has become one of the world's largest importers of coal is worthy of consideration. A fair via media would be to charge these 46 allottees a premium that places them on par with a successful bidder in an auction. the revenue from the early auction of these blocks will help contain the fiscal deficit.