Coal scam: Supreme Court imposes ₹1 lakh costs on Central government for incorrectly including name of company in list of illegal allottees

The Supreme Court on Wednesday imposed costs of ₹1 lakh on the Central government for its "callous, careless and casual approach" resulting in the cancellation of a coal mining lease that was validly granted in favour of a company, BLA Industries Private Limited [BLA Industries vs Union of India]. .A bench of Chief Justice of India NV Ramana and Justices Krishna Murari and Hima Kohli held that BLA Industries had followed the correct procedure of approaching the State government first with an application seeking a mining lease and that it was granted in accordance with the Mines and Mineral (Development and Regulation) Act, 1957 (MMDR Act).The mining lease granted in favour of the petitioner was not tainted by mala fides, as was the case of the other allottees and the allocation of the coal block made to the petitioner did not run foul of the procedure prescribed in the MMDR Act and the Mineral Concession Rules of 1960, the Court held. The Central government, however, did not undertake the necessary due diligence to determine as to whether the petitioner had been allotted the mine through lawful procedure, the Court said.Consequently, it incorrectly included the name of the petitioner in a list of 46 coal blocks submitted before the top court in the Coalgate case monitored by the top court. "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 lakh shall be paid by the respondent No.1 – UOI to the petitioner within four weeks," the Court ordered..The Court was hearing a plea by BLA Industries which stated that its name was incorrectly included by the Central government in the list of 46 coal block allottees before the Supreme Court in 2014 case of ML Sharma vs Union of India. The petitioner had not been allotted coal block through the Screening Committee constituted by the Ministry of Coal of Union of India. The Coalgate case before the top court considered prayer regarding quashing of the allocation of coal blocks to private companies made by the Central government between 1993 to 2011. In its 2014 judgment in that case, the apex court held that the exercise undertaken by the Central government of allocation of coal blocks, was neither traceable to the MMDR Act or the Coal Mines (Nationalization) Act and the practice and procedure adopted by the Central government for allocation of coal blocks to the beneficiaries through the Screening Committee Route, was inconsistent with the law already enacted and the Rules framed. Consequently, it declared that the entire allocation of coal blocks as per the Screening Committee recommendations were illegal. Pursuant to the judgment of the Court, the Central government demanded an additional levy from the petitioner as compensation towards coal extracted..Advocate Abhimanyu Bhandari, appearing for the petitioner, argued that the erroneous inclusion of the name of the petitioner in the list of 46 allottees of coal blocks and the erroneous inclusion of its name at serial No. 22 and 23 in an annexure-1 filed by the Central government before this Court, resulted in cancellation /quashing of the lease that was validly granted in its favour.Additional Solicitor General Balbir Singh, appearing for the Central government, contended that the additional levy has been imposed in principle on the beneficiaries of illegal allocation like the petitioner.He stated that the object and purpose of imposition of the additional levy was that since the process of allocation was found to be fundamentally flawed by the Supreme Court therefore, all the beneficiaries of the said flawed process including the petitioner ought to suffer the consequences and compensate the public exchequer for the loss caused.Pertinently, he also highlighted how the petitioner along with some other allottees had attended the 11th Meeting of the Screening Committee held on 26th-27th September, 1997 and once the allocations made by the Central government on the recommendations of the Screening Committee have been held by the Supreme Court to be illegal, the petitioner cannot claim any different treatment from that extended to the other allottees. .The Supreme Court, however, held that the fact that the BLA Industries had participated in the meetings conducted by the Screening Committee cannot be held against it."Participation in the said meetings can also not be taken to mean that the petitioner had applied directly to the respondent No.1 (Union of India) for grant of the mining lease. In fact, the records reveal that the letter dated 21st June, 1996 issued by the respondent No. 1 stating that the petitioner’s proposal for identification of the captive mining block for supply of coal to the 24 MW captive power plant in Madhya Pradesh was considered in the meeting of the Screening Committee and was approved, never found its way to the respondent No. 2 – State Government," the Court said..The Court further noted that the affidavit by State of Madhya Pradesh supported the claim of the petitioner."Affidavit filed by State government is in consonance with the plea taken by the petitioner that the decision to grant the mining lease in its favour was not based on any allocation letter issued directly by the Central Government and/or the Screening Committee, but was founded on an independent consideration of the petitioner’s application made by the State government and done in accordance with the provisions of the MMDR Act read with the MC Rules," the judgment said.No parity can be drawn between the petitioner and the other allottees of the coal blocks when the petitioner followed the correct procedure of applying through proper channel for grant of a mining lease, the Supreme Court said..The Court further observed that this was a case where a private party followed all the rules and the law, as applicable, before investing large sums of money to undertake business, and it was Central government that did not follow the letter of the law."To compound the petitioner’s woes, the respondent no. 1 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," the Court stated.The Court, therefore, allowed the petition and held that the Central government is not entitled to claim payment of an additional levy for the coal extracted by the petitioner. .Advocate Abhimanyu Bhandari instructed by advocate Ayush Agarwaal argued for petitioners. .[Read Judgment]