Jindal Steel & Power Limited vide a release said that “We welcome the decision of Hon’ble High Court and are optimistic that the technical committee will consider the merits for end use of Coal Blocks as envisaged earlier. JSPL has already invested in excess of INR 30,000 crore in setting up end use plants in Odisha and Chattisgarh based on Utkal B1 and Gare Palma IV/6 mines respectively.”

The release added “JSPL in its endeavour to deploy indigenous natural resources in steel making has already set up the world’s largest DRI based Coal Gasification Plant in Angul, Odisha. We are confident that the Government under the distinguished and exemplary leadership of Prime Minister, Mr Narendra Modi will consider our end-use projects in Odisha and Chattisgarh on their merits - including the innovative use of indigenous coal as well as their huge potential of employment creation in the respective regions.”

Two writ petitions had been filed by JSPL challenging

1. Change of end use of Coal Block Utkal B1 from sponge iron/steel to power.

2. Consolidation of Utkal B1 with Utkal B2 Coal Blocks.

3. Change of end use of Coal Block Gare Palma IV/6 from sponge iron/steel to power.

Salient points of the Judgment passed by the Hon’ble Delhi High Court on 11.02.2015

Issues considered by the Hon’ble High Court

1. Whether the Supreme Court Judgment in Coal Block de-allocation matter had an effect on the Hon’ble High Court in considering the Writ Petitions as the Supreme Court Judgment had completely effaced the previous allotments and freed up all linkages with end use.

The Hon’ble High Court held that the Supreme Court Judgment and Order were only concerned with the legality of the allocation / allotment of coal blocks made by the Screening Committee route. The cancellation of coal block allocation cannot be regarded as a circumstance which would make the consideration of the earlier end use for the purposes of future allocation irrelevant. It held that the Hon’ble Supreme Court judgment does not come in the way of consideration of the writ petition by the Hon’ble High Court.

2. Whether while specifying an end use of the coal block, the earlier end use would be a relevant criteria.

The Hon’ble High Court has held that while specifying an end use for a coal mine which is different from its earlier end use, the classification must be based on some objective and palpable criteria which has a clear nexus with the very object of the ordinance. That is to say the specification for end use of a coal mine has to promote optimum utilization of coal resources and has to minimize adverse impact on the core sectors such as steal cement and power utility. In such sense the earlier end use is a relevant criteria.

3. Transfer of rights of prior allocattee to successful bidder under Section 8(4) of the Ordinance

The Hon’ble High Court has held that a change in end use would also render the earlier approvals, permissions, permits as useless as the entire process of obtaining them would have to be started all over again in case the end use of the Coal Blocks is changed. This would entail a delay in coal mining operation which would run counter to the objective of ensuring continuity in coal mining operations and production of coal.

4. The Ordinance does not give priority to the power sector over steel and other sectors, and rather all the core sectors have been placed at par.

5. Consideration of technical committee deliberation with respect of Coal Blocks Utkal B1 and Gare Palma IV/6.

It has been held by the Hon’bel High Court that the criteria adopted by the technical committee did not adequately take into consideration the concerns of the ministry of Steel which has recommended that the blocks which have earlier been earmarked for iron and steel should not be changed to any other end use, in view of the goal of the Ministry of Coal to achieve 300 Million Tones of capacity by 2025.

It was further held by the Court that there was no clarity as to whether the reserves adopted by the technical committee were geological reserves or extractable reserves. It was further observed by the Hon’ble Court that there was no reasoning for taking 100 Million tonnes as cut off figure for specifying the end use to power. In the words of the Hon’ble Court this figure could very well have been 150 Million Tonnes or even 200 Million tonnes and no reasons for adopting 100 Million Tones were given by the Technical Committee.

The Hon’ble High Court also noted that the criteria adopted by the technical committee was not uniformly followed. The examples of Mandla North, Gare IV/6, Talabira 1, Utkal B2 were not considered on mine specific basis. In fact, it has been observed by the Hon’ble Court that Utkal B1, Utkal B2 and Gare Palma IV/6 could very well fit in the criteria adopted by the technical committee for specifying the end use as sponge iron / steel.

The Hon’ble High Court also held that there is no rational or justification for amalgamation of Utkal B1 or Utkal B2 given by the technical committee.

It has also been held by the Hon’ble Court that while shifting from one end use to another such as from sponge iron / steel to power there would be an adverse impact on sponge iron / steel sector. This impact has to be minimized as per the Ordinance however this has not been considered while changing the end use of Utkal B1 Utkal B2 and Gare IV/6 from sponge iron/ steel to power.

5. Power includes generation of power by captive power plant:

The Hon’ble High Court has held that the specified end use stipulated by Ordinance by virtue of Section 3(i) (v) (ii) clearly provide the specified end use of generation of power to include generation of power for captive use. This being the legislative mandate the same cannot be altered by executive action. It was observed that exclusion of captive power from power would disentitle the petitioner from participating in respect of Utkal B1, Utkal B2 and Gare Palma Iv/6.

Conclusion

In conclusion the Hon High court has therefore held that

1. The change of end use for Utkal B1, Utkal B2 and Gare IV/6 are quashed

2. That Utkal B1 and Utkal B2 are directed to be demerged

3. The Utkal B1 and B2 are taken off from the auction

4. The specified end use as also issue of their merger is to be reviewed in light of the observation made in the judgment before they are put up for auction again.