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‘Illegal, arbitrary, not transparent’: SC could cancel 20 years of coal licences [Read judgment]

The Supreme Court bench of three, headed by Chief Justice of India (CJI) RM Lodha, has ordered the potential cancellation of 218 coal block licences – all allocated since 1993 - because they suffered from the “vice of arbitrariness”, according to reports.

The court held that the government screening committee had followed a policy of “pick and choose”, with the “application of norms was changed from meeting to meeting with no uniform or consistent consideration”.

Furthermore, “guidelines do not contain any objective criterion for determining the merits of the applicants. The guidelines do not provide for measures to prevent any unfair distribution of coal in the hands of few private companies”.

The court wrote in its judgment:

154. To sum up, the entire allocation of coal block as per recommendations made by the Screening Committee from 14.07.1993 in 36 meetings and the allocation through the Government dispensation route suffers from the vice of arbitrariness and legal flaws. The Screening Committee has never been consistent, it has not been transparent, there is no proper application of mind, it has acted on no material in many cases, relevant factors have seldom been its guiding factors, there was no transparency and guidelines have seldom guided it. On many occasions, guidelines have been honoured more in their breach. There was no objective criteria, nay, no criteria for evaluation of comparative merits. The approach had been ad-hoc and casual. There was no fair and transparent procedure, all resulting in unfair distribution of the national wealth. Common good and public interest have, thus, suffered heavily. Hence, the allocation of coal blocks based on the recommendations made in all the 36 meetings of the Screening Committee is illegal…

157. As we have already found that the allocations made, both under the Screening Committee route and the Government dispensation route, are arbitrary and illegal, what should be the consequences, is the issue which remains to be tackled. We are of the view that, to this limited extent, the matter requires further hearing.

Download full judgment

The Indian Express wrote that the screening committee’s procedure was “not fair”, lacked objective criteria, overlooked principles of common good and public purpose.

The Hindu, via wire copy, reported the court as having said in January that companies having invested a huge amount was not a sufficient argument against cancelling the licences.

The petitioners were advocate ML Sharma as petitioner-in-person and the NGO Common Cause, represented by Prashant Bhushan.

Three different coal industry associations were represented by senior counsel KK Venugopal and Harish Salve.

In 2012 the Supreme Court cancelled all 122 2G spectrum licences2012 the Supreme Court cancelled all 122 2G spectrum licences to be re-auctioned.

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