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Tuesday, August 26, 2014

Coalgate ... Apex Court strikes down coal allocations between 1993 - 2009

The duration clause reads : ‘This insurance attaches as the subject-matter insured is loaded on board the oversea vessel at the port or place named herein for the commencement of the transit, continues during the ordinary course of transit and terminates as the subject-matter insured is discharged overside from the oversea vessel at the destination named herein’ …………. It is that of Institute Coal Clause.

Chennai Port has been handling tonnes of coal ….  In 1961, Jawahar Dock was inaugurated by the then prime minister of India, Lal Bahadur Shastri. In 1964, the Jawahar dock with capacity to berth 6 vessels to handle dry bulk cargoes such as coal, iron ore, fertiliser and non-hazardous liquid cargoes was created on the southern side changing the topography of the port.  There was some plan to convert Jawahar Dock (E) berth to a container terminal and in the beginning of the year, the Madras High Court  granted an interim stay.   There have been moves to shift handling of dusty cargo to Ennore. 

Coal  which means  "mineral of fossilized carbon" is a combustible black or brownish-black sedimentary rock usually occurring in rock strata in layers or veins called coal beds or coal seams. Coal is composed primarily of carbon along with variable quantities of other elements, chiefly hydrogen, sulfur, oxygen, and nitrogen. Throughout history, coal has been used as an energy resource, primarily burned for the production of electricity and/or heat, and is also used for industrial purposes, such as refining metals.  Coal is the largest source of energy for the generation of electricity worldwide.  Coal is king and paramount Lord of industry is an old saying in the industrial world. Industrial greatness has been built up on coal by many countries. In India, coal is the most important indigenous energy resource and remains the dominant fuel for power generation and many industrial applications.

~ it is dark and can leave black stains too……… the Supreme Court on Monday declared as "illegal and arbitrary" 218 coal block allocations between 1993 and 2009, ruling that the Central government of the day adopted a process which lacked transparency in the absence of competitive bidding.  United Progressive Alliance (UPA) governments bore the brunt of the apex court's order as 155 of the blocks nullified were allotted during their tenure, including 134 allocations made when former prime minister Manmohan Singh handled the coal ministry.  The remaining 63 allocations were made by the National Democratic Alliance (NDA) during its rule from 1999 to 2004.

The Supreme Court on Monday said it was evident that the allocation of blocks by the Centre was driven by the intention to "grant largesse".  The bench rejected the Govt's contention that it was only a first statutory "innocuous" step. "The allocation of coal block by the central government results in the selection of beneficiary, which entitles the beneficiary to get the prospecting licence or mining lease from the state government. Obviously, allocation of a coal block amounts to grant of largesse," said the bench headed by Chief Justice of India R.M. Lodha. The bench rejected former Attorney General G.E. Vahanvati's contention that "allocation itself did not confer any right on the allottees to mine the block, that it was just a letter of intent and a lot of procedures are to be followed thereafter, like securing environmental clearances, which are the responsibility of the state".  "It is true that allocation letter by itself does not authorise the allottee to win or mine the coal, but nevertheless the allocation letter does confer a very important right upon the allottee to apply for grant of prospecting licence or mining lease," said the bench.

How do you view that …. Sad over the occurrences or feeling happy of the judicial activism that has at last overturned the nefarious decisions of the Govt.  Coal allocation scam or Coalgate, is a political scandal concerning the Indian government's allocation of the nation's coal deposits to public sector entities (PSEs) and private companies by former Prime Minister Manmohan Singh.  In a draft report issued in March 2012, the Comptroller and Auditor General of India (CAG) office accused the Government of India of allocating coal blocks in an inefficient manner during the period 2004–2009. Over the Summer of 2012, the opposition BJP lodged a complaint resulting in a Central Bureau of Investigation probe into whether the allocation of the coal blocks was in fact influenced by corruption. The essence of the CAG's argument is that the Government had the authority to allocate coal blocks by a process of competitive bidding, but chose not to.  The CBI has named a dozen Indian firms in a First Information Report (FIR), the first step in a criminal investigation. These FIRs accuse them of overstating their net worth, failing to disclose prior coal allocations, and hoarding rather than developing coal allocations.

The issue has received massive media reaction and public outrage. During the monsoon session of the Parliament, the BJP protested the Government's handling of the issue demanding the resignation of the prime minister and refused to have a debate in the Parliament. The deadlock resulted in Parliament functioning only seven of the twenty days of the session. The Parliamentary Standing Committee report on Coal and Steel states that all coal blocks distributed between 1993 and 2008 were done in an unauthorized manner and allotment of all mines where production is yet to start should be cancelled.

The Supreme Court's 'Coalgate' verdict needs to be welcomed as it gives India a rare second chance to fix terrible decisions made by our politicians.  The coal allocations scandal is not an outrage merely because undeserving companies got coal blocks. It is an outrage because it concentrated the ownership of India's coal reserves among a handful of businesses.  Thank Apex Court for digging deeper in to the black mines…

With regards – S. Sampathkumar

26th Aug 2014.

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