New Delhi: The
Supreme Court Tuesday said the allocation of coal blocks prima
facie seemed to be arbitrary and the procedure adopted by the
government does not appear to be legal. It warned of cancelling
the blocks if procedures were not followed.
The court directed the CBI not to share information of its probe
into the scam with the "political executive" (central government).
The Comptroller and Auditor General (CAG) has estimated a loss of
Rs.1.86 lakh crore to the exchequer in the controversial
allocation of coal blocks by the government.
"If even among them (applicants for the coal blocks)... they
(government) have not followed any guidelines or procedures and a,
b, c was allocated and d, e, f, was excluded then the whole
allocation has to go," said an apex court bench of Justice R.M.
Lodha, Justice J. Chelameswar and Justice Madan B. Lokur.
The court said this while hearing a public interest litigation by
advocate Manohar Lal Sharma and NGO Common Cause, seeking
cancellation of all the coal blocks which have been negatively
commented upon by the CAG.
"The procedure the government is talking about prima facie does
not seem to be proper and legal," said Justice Lodha.
Pointing out that from 2006-09 the government received 2,100
applications out of which 160 applicants were allocated 368 coal
blocks, the court asked "in what circumstances 950 were not found
to be eligible".
The court inquired if a "well-defined and well-structured policy
was there on the basis of which applications were scrutinised".
"Even in small selections there are guidelines, short listing and
the scrutiny of the application before a decision is made," the
court said inquiring if the same were followed by the government
in the allocation of coal blocks.
The court pointed out that the Central Bureau of Investigation
(CBI) report said that there was no system to verify the
credentials of the companies that had applied for coal blocks
including their financial standing.
The apex court said it will first examine the legality of the
allocation of coal blocks and the CBI will look into the
criminality, if any, in the allocation.
The court directed the CBI director that the agency will not share
information of its probe into the scam with the political
executive (central government). It said that all the status
reports submitted to the court would be vetted by the CBI
Defending the allocation of the coal blocks and holding them
legal, Attorney General G.E. Vahanvati said all norms were
followed and the government did not want any large-scale
cancellation. He said that every allocation was examined by the
The statement by the attorney general assumes significance in the
back-drop of the apex court cancelling 122 2G licences that jolted
the telecom sector.
Vahanvati told the court that private players were brought in
because power sector was in a pathetic state and government was
short of resources to support new projects.
He took exception to the allegation of criminal conspiracy
levelled by Prashant Bhushan, who appeared for Common Cause.
Justice Lodha cautioned him saying: "Any of your comment must not
prejudice the ongoing inquiry by the CBI. If you are challenging
the criminal conspiracy charge that is begin examined by the CBI
then that would directly or indirectly influence the
"I just want to know how were you dealing with applications which
you were getting pursuant to your advertisement," Justice Lodha
told the attorney general.
Prashant Bhushan told the court that the allocation of coal blocks
was contrary to what the apex court said in the 2G verdict and
while answering the presidential reference on the methods of
allocating natural resources. He told the court that when scarce
resources are allocated to private players for commercial
exploitation then the criterion of allocation must be maximization