Business Today

Delhi High Court relief for firms is setback to coal block auction

Companies who were disqualified by the  government from bidding get Delhi High Court respite.

Mail Today Bureau | February 14, 2015 | Updated 11:30 IST
Delhi High Court relief for firms is setback to coal auction
Photo: Reuters

In a major setback to the coal block auction, the Delhi High Court (HC) gave relief to several companies like Jindal Steel and Power Limited (JSPL), Jindal Power Limited (JPL) and Sesa Sterlite disqualified from participating in the bidding on Friday.

The HC conducted hearing on the issue in phases till late Friday evening before two separate Benches that heard the petitions filed by JSPL and JPL, Sesa Sterlite, Sarda Energy and Minerals Limited, Usha-Martin, Monet Ispat, Utkal Coal Limited and Jayaswal Neco Industries Limited.

A Bench of Chief Justice G Rohini and Justice Rajiv Sahai Endlaw sought the government's response to the plea of the Jindals challenging the 2014 Coal Ordinance provisions regarding determination of compensation payable to allottees towards mining infrastructure and land value of the blocks.

Later, another Bench of Justices BD Ahmed and Sanjeev Sachdeva gave a major relief to Sesa Sterlite, Sarda Energy and Usha-Martin by setting aside their disqualification from bidding.

The Bench, while allowing Sarda to place its bids, said that it appears subsidiaries which are not a joint venture (JV) cannot be considered for calculating coal requirements of a bidder.

With this clarification, bids of the petitioner (Sarda) may be examined and only the end-use requirement of the end-use plant holder will be considered unless there is a JV.

Sarda had been disqualified from bidding for six blocks- Gare Palma IV/1, IV/4, IV/5, IV/7 in Chhattisgarh, Birchapur in Madhya Pradesh and Kathautia in Jharkhand-by the Centre, which had said that the company had clubbed its subsidiary company along with parent company to increase its coal requirement instead of making a JV.

The Bench also allowed Utkal Coal to bid for a coal block which was earmarked for an independent power plant while the company had a captive power plant.

"They (Utkal) are allowed to place their bid subject to the final outcome of their petition," the Bench said while seeking response of the Centre by next date of hearing on February 23.

During the hearing of the Sesa Sterlite matter, the Bench also observed, "Can't understand what is happening with this coal auction." Monet and Jayaswal Neco have also challenged the auction rules which provide for multiple bidding by a company by bifurcating its subsidiary companies.

Jindals' petition was related to the auction of Gare Palma IV/2, IV/3 and IV/4 blocks in Chhattisgarh, the allocation of which were cancelled by the Supreme Court.

They have challenged the ordinance provisions regarding method of determining compensation of capital costs, including mining infrastructure. Sesa Sterlite has challenged its disqualification from bidding for five blocks in Chhattisgarh and one in Jharkhand for their nine 135 mega watt captive power plants.

The coal blocks include Gare Palma IV/1, IV/4, IV/5, IV/7 and Chotia in Chhattisgarh and Kathautia in Jharkhand.

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