Does Coal Ordinance give power to change end-use, HC asks Govt

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New Delhi: Delhi High Court today asked how the coal ordinance gave government the power to change the end-use of coal blocks and questioned the “tearing hurry” to hold their auction.

It also sought to know whether the auction process could be kept on hold till it examines the issues raised by JSPL and its promoter Naveen Jindal.

“Does Coal Ordinance give power to change end-use of block? It (Ordinance) does not appear to give them power to change the end-use,” a bench of justices Badar Durrez Ahmed and Sanjeev Sachdeva observed and questioned, “Why can’t we hold back auction till we examine it? What is the tearing hurry?”

The bench has also questioned the Coal Ministry on why captive power use has been excluded when the same has been included in the ordinance.

The bench made the observations and asked questions while hearing the pleas of Jindal Steel and Power Ltd (JSPL) and Naveen Jindal who have opposed the government’s decision to change end use of two coal blocks in Chhattisgarh and Odisha which had been earlier allotted to them.

The bench listed the matter for further hearing tomorrow when Additional Solicitor General (ASG) Sanjay Jain would inform the court about the government’s stand and the reason why they changed the end-use of the coal blocks.

The Coal Ministry through its December 18, 2014, order had changed the end-use of various coal blocks, including Utkal B in Odisha and Gare Palma IV/6 in Chhattisgarh, which had been earlier allocated to JSPL for steel and sponge iron production, respectively.

The government by its order had changed end-use of these two blocks from steel and iron to power, excluding captive power use as well.

During the proceedings, senior advocates Kapil Sibal, A.M. Singhvi and Jayant Bhushan, who appeared for JSPL, said the ordinance does not provide for change of end-use and if it does, then to that extent it is unconstitutional.

“We are challenging the exercise of power and not the ordinance,” Sibal said and added that JSPL is unable to participate in the ongoing auction process due to change of end-use.

He said the company is currently suffering a loss of Rs 250 crore per month and if it does not get the block then over 30,000 of its workers will become jobless.

Sibal also said the company would have to import coal at a cost of Rs 2500 per metric tonne when it could have got the same for Rs 500.

Sibal claimed that if it could participate in the auction, JSPL would win it as it has already set up a steel unit.

On January 12, the High Court had sought the government’s response on the plea of former Congress MP Naveen Jindal’s company JSPL challenging a Coal Ministry order and the ordinance provisions “which allow change of end-use” of coal blocks in Chattisgarh and Odisha to power from steel.

The petitioners have sought setting aside of the December 18 order of the ministry as well as the provisions of the Coal Ordinance “which provide for change of end-use from steel to power”.

JSPL in its plea has contended that it was allocated coal blocks in Odisha and Chhattisgarh for the purpose of setting up steel and sponge iron production units, respectively.

After the allocations were cancelled by the Supreme Court through its orders of August 25 and September 24 last year, the Coal Mines (Special Provisions) Ordinance, 2014, was promulgated mandating the government to auction or tender the coal blocks, it has said.

According to the plea, change of end-use has also resulted in making JSPL ineligible for participating in the ongoing auction process which is expected to culminate on February 14.

It said that JSPL has set up steel and sponge iron units in Odisha and Chhattisgarh for over Rs 24,000 crore.

The entire investment would be “rendered fruitless” if JSPL was unable to bid for the blocks, which were earlier allocated to them and based on which the steel units were set up after obtaining all necessary environment and forest clearance.

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