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MAR 27 2015

No obvious reason to deny coal block to JPL, says Delhi HC

  • Economic Times, ET Bureau / Hyderabad
  • Created: Fri 27th MAR 2015

The Delhi high court on Thursday asked the centre to find a temporary arrangement in relation to the government’s recent rejection of Jindal Power Ltd’s (JPL) closing bids for a coal block in Chhattisgarh, saying it saw no apparent reason for the cancellation.

 The court also said that it did not want to create rights in favour of third parties, including Coal India Ltd (CIL), before deciding the case. This could come as a setback to the government, which had allotted the block to CIL after annulling the auction process for Gare Palma (IV/2 and IV/3), a schedule II block which is operational.

 A bench of justices B.D. Ahmed and Sanjeev Sachdeva observed in court that there was no obvious reason for not allowing JPL, which was a preferred bidder, rights to the block. “We are not very impressed with this. This does not smack of fairness.

 We don’t want any third-party rights to be created,” Ahmed said in court. “This does not leave a good taste in the mouth. Come back tomorrow with an interim arrangement.” The court will hear the case on Friday. JPL is controlled by Congress party leader and former parliamentarian Naveen Jindal.

 However, additional solicitor general P.S. Narsimha told the court that JPL had no standing to approach the court for the block, as no rights had been created in its favour by the government. He said that there was no vesting order by the nominating authority for the block to JPL. “We won’t speak on the matter pending in court,” said a spokesperson of the coal ministry.

 A Jindal Steel and Power Ltd (JSPL) spokesperson also refused comment, saying the case is pending before the court. JPL is a subsidiary of JSPL. Representing JPL, Kapil Sibal, a former minister with the United Progressive Alliance government, suggested that no third-party rights be created. He also said JPL would not mine after 31 March—the deadline for schedule II mines as per an apex court ruling on coal block allocations—till such time as the high court decides on the issue.

 The government’s affidavit before the high court, a copy of which Mint has reviewed, said that its decision of 20 March to “not declare JPL as successful bidder” for the Gare Palma (IV/2 and IV/3) block was not in conflict with the Coal Mines (Special Provisions) Second Ordinance, 2014, which didn’t bar the government from doing so. It added that it had decided to allot the same to CIL “after due deliberations” because fresh auctions would not conclude by 31 March.

 “The government is well within its rights to reject any bid which does not reflect the value of the resource. The rejection itself underlines the fact that the auctions have been very transparent and objective, because if they were not, we would not have been able to point out this discrepancy,” said Vivek Bharadwaj, the nominated authority responsible for conducting the auctions and who is also joint secretary in the coal ministry, on 21 March.

 On 21 March, JPL, in an emailed statement had said that “the reason cited being ‘the highest bidder doesn’t reflect fair value’, which we fail to understand as our bid was much below the ceiling price during the reverse auction process”. In a related plea, Bharat Aluminium Co. Ltd (Balco), whose closing bids were also rejected by the government also sought relief from the high court. However, the Delhi high court said that Balco, which was not a preferred bidder for the block Gare Palma IV/1, was not prejudiced in any manner. The court will hear Balco’s plea in further detail later.


Delhi Jindal Power Ltd Bharat Aluminium Company Ltd Jindal Steel and Power Ltd Coal Coal India Limited Coal Mines Naveen Jindal Coal Block CIL Power India

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