Mass cancellations of coal blocks mooted on 2G lines

NEW DELHI: Supreme Court has asked the government to consider cancelling all coal block allocated by the screening committee after 2005 when auctioning was first proposed, and observed that companies that had invested heavily in mining without clearances had done so at their own risk. The court’s observations raises the spectre of another mass 2G-style cancellation of licences, with the concomitant impact on investor confidence.

"If you cancel allocations after 2005 it will restrict the scope of the controversy," Justice RM Lodha told Attorney General GE Vahanvati on Wednesday. The court would then be left to deal with only the allocations prior to that period, restricting the scope of its enquiry, he said.

The criminality aspect is in any case, for allotments from 1993 to 2005, was being dealt with by the CBI, he said. "The considerations of law will then be different," Justice Lodha said. "In those cases where the allocations have not ripened into leases without elaborate debate certain directions can be issued," he said. "Cases where leases have been granted stand on a different footing."

Vahanvati resisted this saying though the end-users may not have got leases yet, they had invested substantial amounts in the hope they would get leases. Most of these were allocated to joint ventures in the power sector. In others "substantial work" has been done. "Investments made have been to the tune of over Rs 2 lakh crores. What do we do with them?" the AG asked. "If we act, we will be tied up in litigation," he said after the court insisted that the government take some action, but promised to get back with instructions by Thursday.

He said government was periodically reviewing all cases and in some cases had encashed bank guarantees and issued notices etc. "There has to be a reasonable assessment." Activist lawyer Prashant Bhushan, who’s arguing the case of one PIL petitioner, claimed that in three-fourths of the cases no mining leases had been granted.

The bench wondered how endusers could invest that kind of money without any clearances. Surely they do it at their own risk, Justice Lodha said.

"If on contemplation of land sale, you start digging you do so at your own risk," he observed.