We want re-auction of 218 coal blocks and will be happy if we save some 40 of them which are ready for use: Centre. (Source: IE archive) We want re-auction of 218 coal blocks and will be happy if we save some 40 of them which are ready for use: Centre. (Source: IE archive)

A week after the Supreme Court declared the allocation of 218 coal blocks as “illegal and arbitrary”, the NDA government told the court on Monday that it wants a “re-auction” of the coal blocks, but sought exemption for 40 which are operational and another six which are ready to begin work soon.

“The government stands by the judgement. We want a re-auction. As an alternative, we will be happy if 46 blocks can be saved. We don’t want to save anyone. We are not espousing anybody’s cause. If your lordship says all (allocation) must go, we are ready to accept it. The court may also consider differentiating between different types of allocations,” Attorney General Mukul Rohtagi told the bench led by Chief Justice R M Lodha.

The government said these 46 blocks can be considered for exemption provided they compensate for the loss of Rs 295 per tonne caused to the public exchequer and also enter into a power purchase agreement at Rs 95 per tonne to make up for the loss. The Comptroller and Auditor General (CAG) had estimated that the government suffered a loss of Rs 1.86 lakh crore by not going for competitive bidding to allot coal blocks, that could earn a net profit of Rs 295 per tonne.

The bench, also comprising Justices Madan B Lokur and Kurian Joseph, agreed to consider the government’s suggestion on safeguarding these 46 blocks on September 9.

Opposing the idea of setting up a committee to decide the future course of action, the AG said: “We want this court to decide, not a committee. If the court says all allocations are to be cancelled, then everything goes in one stroke.

We can then go out and auction it. Power situation is very bad in the country and so our endevaour is to resolve this issue fast. We want to finish this chapter and move ahead,” he said.

Accepting that the allocation of coal blocks had resulted in “loss to the public money”, he said “some amount of hardship will have to be borne by everyone concerned.”

When the bench asked Rohtagi about the recovery of bank loans given to the entities whose allocations have been held to be illegal, he said, “Whatever has to happen will happen.”

Rohtagi also rejected a contention that the banking sector would be hit hard, considering that bank credit to the tune of over Rs 100,000 crore in just the power sector rides on the fate of the coal blocks. “It is a mistaken belief. Nothing will happen to our banks,” he said.

On August 25, the court declared allocation of all coal blocks since 1993 as illegal. During the hearing on Monday, which revolved around the consequences of the court ruling, the bench said the peculiarities of the case had called for departure and exception, and it wanted to balance equities in the larger interests.

While making it clear that its judgement was not open to be argued now, it said it would consider how relief could be provided for certain category of coal blocks and asked the government to file an affidavit on its stand. It gave liberty to three associations, Coal Producers Association, Sponge Iron Manufacturers Association and Independent Power Producers Association of India, as well petitioners M L Sharma and NGO Common Cause to submit their responses too.

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