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REPORTABLE

IN THE SUPREME COURT OF INDIA

CRIMINAL/CIVIL ORIGINAL JURISDICTION

WRIT PETITION (CRL.) NO. 120 OF 2012

Manohar Lal Sharma    ….Petitioner

Versus

The Principle Secretary & Ors.  …Respondents

WITH

WRIT PETITION (CIVIL) NO. 463 OF 2012

WITH

WRIT PETITION (CIVIL) NO. 515 OF 2012

AND

WRIT PETITION (CIVIL) NO. 283 Of 2013

O R D E R

1. On 25th August, 2014 judgment was delivered in these  

cases and it was held, inter alia, that the allotment of coal  

blocks  made  by  the  Screening  Committee  of  the  

Government of India, as also the allotments made through  

the  Government  dispensation  route  are  arbitrary  and  

illegal.  Since  the  conclusion  arrived  at  would  have  

W.P. (Crl.) Nos.120 of 2012 etc.                                          Page 1 of 27

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potentially  had  far-reaching  consequences,  on  which  

submissions were not made when the case was heard, the  

question  of  what  should  be  the  consequences  of  the  

declaration was left open for hearing.  

2. The  relevant  paragraphs  of  the  judgment  dated  25th  

August, 2014 read as follows:- “155. The allocation of coal blocks through Government  dispensation route, however laudable the object may be,  also is illegal since it is impermissible as per the scheme of  the  CMN  Act.  No  State  Government  or  public  sector  undertakings  of  the  State  Governments  are  eligible  for  mining coal for commercial use.  Since allocation of coal is  permissible  only  to  those  categories  under  Section  3(3)  and (4), the joint venture arrangement with ineligible firms  is also impermissible.  Equally, there is also no question of  any  consortium/leader/association  in  allocation.  Only  an  undertaking satisfying the eligibility criteria referred to in  Section 3(3) of the CMN Act, viz., which has a unit engaged  in  the  production  of  iron  and  steel  and  generation  of  power, washing of coal obtained from mine or production  of  cement,  is  entitled  to  the  allocation  in  addition  to  Central Government, a Central Government company or a  Central Government corporation.

156. In  this  context,  it  is  worthwhile  to  note  that  the  1957  Act  has  been  amended  introducing  Section  11-A  w.e.f. 13.02.2012. As per the said amendment, the grant of  reconnaissance  permit  or  prospecting  licence  or  mining  lease in respect of an area containing coal or lignite can be  made  only  through  selection  through  auction  by  competitive bidding even among the eligible entities under  Section  3(3)(a)(iii),  referred  to  above.  However,  Government  companies,  Government  corporations  or  companies  or  corporations,  which  have  been  awarded  power projects on the basis of competitive bids for tariff  (including Ultra Mega Power Projects) have been exempted  of allocation in favour of them is not meant to be through  the competitive bidding process.  

157. As  we  have  already  found  that  the  allocations  made, both under the Screening Committee route and the  

W.P. (Crl.) Nos.120 of 2012 etc.                                          Page 2 of 27

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Government dispensation route, are arbitrary and illegal,  what  should  be  the  consequences,  is  the  issue  which  remains to be tackled.  We are of the view that, to this  limited extent, the matter requires further hearing.”

3. Accordingly,  we  heard  several  learned  counsels  

appearing  for  a  very  large  number  of  interveners,  

impleadment  applicants  and  State  Governments.  

Substantive submissions were made, amongst others, by  

the  Coal  Producers  Association,  the  Independent  Power  

Producers  Association  of  India  and  the  Sponge  Iron  

Manufacturers  Association.  These  associations  had  also  

been heard on an earlier occasion well before judgment  

was delivered on 25th August, 2014.

4. For the purposes of these “consequence proceedings”,  

the Union of India filed an affidavit dated 8th September,  

2014. It is stated in the affidavit that coal is actually being  

mined  from  40  coal  blocks  listed  in  Annexure  I  to  the  

affidavit. This list includes two coal blocks allotted to an  

Ultra  Mega  Power  Projects  (Sasan  Power  Ltd.  [UMPP]  

allotted  the  coal  blocks  Moher  and  Moher  Amroli  

Extension). Coal blocks allotted to UMPPs have not been  

disturbed in the judgment. The list of the 40 coal blocks is  

attached to this order as Annexure 1.  

5. In addition to the above 40 coal blocks, it is stated in  

the  affidavit  that  6  more  coal  blocks  are  ready  for  

W.P. (Crl.) Nos.120 of 2012 etc.                                          Page 3 of 27

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extraction of coal in 2014-15 and this list is Annexure II to  

the affidavit. These 6 coal blocks have obtained the Mine  

Opening  Permission  from  the  Coal  Controller’s  

Organization  under  Rule  9  of  the  Colliery  Control  Rules  

20041 (framed  under  the  Mines  and  Minerals  

(Development and Regulation) Act, 1957). This permission  

is granted subsequent to the execution of a mining lease.  

The list of these 6 coal blocks is attached to this order as  

Annexure 2.

6. Therefore, the affidavit is quite clear that 40 coal blocks  

are  already  producing  coal  and  6  coal  blocks  are  in  a  

position to produce coal virtually with immediate effect.  

The question is whether the allotment of these coal blocks  

should be cancelled or not.  

7. It was submitted by the learned Attorney General that  

after the declaration of law and the conclusion that the  

allotment of coal blocks was arbitrary and illegal, only two  

consequences  flow  from  the  judgment.  The  first  is  the  

natural  consequence,  that  is,  the  allotment  of  the  coal  

blocks  (other  than  those  mentioned  in  the  judgment)  

should be cancelled and the Central Government is fully  1 9. Requirement of prior permission to open a coal mine, seam or section of a seam.--

(1) No owner of a colliery shall open a coal mine, seam or a section of a seam without the   prior permission in writing of the Central Government.

(2) No owner of a colliery shall also commence mining operations in a colliery or seam or a   section of a seam, in which the mining operation has been discontinued for a period exceeding one   hundred and eighty days, without the prior permission in writing of the Central Government.

W.P. (Crl.) Nos.120 of 2012 etc.                                          Page 4 of 27

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prepared to take things forward. The second option is that  

46 coal blocks (as above) be left undisturbed (subject to  

conditions) and the allotment of the remaining coal blocks  

should be cancelled.  

8. Expounding  on  the  alternative  consequence,  it  was  

submitted  that  Coal  India  Limited  (CIL)  a  public  sector  

undertaking can take over and continue the extraction of  

coal from these 44 coal blocks without adversely affecting  

the  rights  of  those  employed  therein.  However,  it  was  

submitted that CIL would require some time to take over  

the coal blocks and manage its affairs for continuing the  

mining  process.  Effectively  therefore,  it  was  submitted  

that  even  if  the  allotment  of  these  44  coal  blocks  is  

cancelled, the Central Government can ensure that coal  

production will not stop.

9. Learned  Attorney  General  submitted  that  all  the  

allottees  of  coal  blocks  should  be  directed  to  pay  an  

additional levy of Rs. 295/- per metric ton of coal extracted  

from  the  date  of  extraction  as  per  the  Report  of  the  

Comptroller  and Auditor  General  (CAG) dealing with the  

financial loss caused to the exchequer by the illegal and  

arbitrary allotments. It was further submitted that in the  

case of allottees supplying coal to the power sector, they  

W.P. (Crl.) Nos.120 of 2012 etc.                                          Page 5 of 27

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should  be  mandated  to  enter  into  Power  Purchase  

Agreements  (PPAs)  with  the  State  utility  or  distribution  

company  (as  the  case  may  be)  so  that  the  benefit  is  

passed on to the consumers.  

10. By  way  of  abundant  precaution,  the  learned  

Attorney  General  pointed  out  that  in  respect  of  the  

allotment of 6 coal blocks, a First Information Report has  

been lodged by the Central Bureau of Investigation (CBI).  

Therefore,  investigations  are  in  progress  to  ascertain  

whether  any  criminal  offence  has  been  committed  in  

respect of the allotment of 6 coal blocks. In addition, it is  

pointed  out  that  the  CBI  has  on  3rd September,  2014  

informed that a final decision with regard to any alleged  

criminality or otherwise in the allotment of 6 other coal  

blocks  is  pending  consideration.  In  other  words,  the  

alleged criminality in the allotment of 12 out of the 46 coal  

blocks identified by the learned Attorney General is under  

scrutiny by the CBI.  

11. To  put  the  suggestions  of  the  learned  Attorney  

General in perspective, they are summarized below:

(1)  All  coal  block  allotments  (except  those  

mentioned in the judgment) may be cancelled.  

(2)  Alternatively,  

W.P. (Crl.) Nos.120 of 2012 etc.                                          Page 6 of 27

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(a) Extraction of coal from the 40 functional and 6  

“ready” coal blocks may be permitted and the  

remaining coal blocks be cancelled;  

(b) The allottees of all 46 coal blocks be directed  

to pay an additional levy of Rs.295/- per metric  

ton  of  coal  extracted  from  the  date  of  

extraction; and

(c) The  allottees  of  coal  blocks  for  the  power  

sector be also directed to enter into PPAs with  

the State utility or distribution company as the  

case may be.  

12. Learned Attorney General made two supplementary  

submissions, not directly connected with the suggestions  

made.  It  was  submitted  that  though  all  the  allotments  

made  by  the  Screening  Committee  and  through  the  

Government  dispensation  route  were  held  illegal  and  

arbitrary,  the  allotment  of  lignite  blocks  was  not  the  

subject matter of discussion in the judgment delivered on  

25th August, 2014.  This is correct and it is made clear that  

the  judgment  delivered  on  25th August,  2014  does  not  

concern lignite blocks at all and their allotments are not  

covered by the said judgment.

13. Secondly, the figure of Rs. 295/- per metric ton of  

W.P. (Crl.) Nos.120 of 2012 etc.                                          Page 7 of 27

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coal extracted as additional levy (based on the Report of  

the Comptroller and Auditor General) has been calculated  

on the basis of open cast mines and mixed mines, while  

underground mines were not taken into calculation. Of the  

coal blocks sought to be “saved” from cancellation, it has  

not been pointed out by any learned counsel whether any  

one of the 46 coal blocks contains an underground mine or  

not.  Therefore,  there  is  no  occasion  to  deal  with  a  

hypothetical case.

14. In  response  to  the  submissions  of  the  learned  

Attorney  General,  Mr.  K.K.  Venugopal,  Senior  Advocate,  

appearing  on  behalf  of  the  Coal  Producers  Association  

submitted that  cancellation of  all  the coal  blocks would  

have very serious and far reaching consequences.

15. The consequences of cancellation of the coal blocks  

were categorized by Mr. Venugopal under various heads  

and these are detailed below.  

(1)There  would  be  a  serious  adverse  impact  on  the  

economy  of  the  country:  It  was  submitted  that  

Government companies are not in a position to supply the  

required  quantity  of  coal;  in  fact,  a  large  number  of  

applications are pending with the Ministry of Coal for long  

term coal linkages; power stations have a supply of less  

W.P. (Crl.) Nos.120 of 2012 etc.                                          Page 8 of 27

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than one week of coal and therefore there are possibilities  

of  power  outages;  as  many  as  10  power  plants  of  the  

National  Thermal  Power  Corporation  (NTPC)  and  the  

Damodar Valley Corporation (DVC) have been shut down  

because of shortage of coal supply by Coal India Ltd. (CIL);  

there is an issue of poor quality of coal supplied by CIL;  

huge investments up to about Rs. 2.87 lakh crores have  

been  made in  157  coal  blocks  as  on  December,  2012;  

investments  in  end-use  plants  have  been  made  to  the  

extent  of  about  Rs.  4  lakh  crores;  the  employment  of  

almost  10 lakh people is  at  stake;  end-use plants  have  

been designed keeping in mind the specification of coal in  

the allocated coal block and cancellation of the coal blocks  

would  result  in  the  end-use  plant  becoming  redundant;  

loans to the extent of about Rs. 2.5 lakh crores given by  

banks  and  financial  institutions   would  become  non-

performing assets; the State Bank of India may suffer a  

loss of up to Rs. 78,263 crores which is almost 7.9% of its  

net worth for the financial year 2013; other Public Sector  

Banks such as the Punjab National  Bank and the Union  

Bank  will  receive  a  massive  set  back;  Public  Sector  

Corporations like Rural Electricity Corporation and Power  

Finance Corporation have an even higher exposure than  

W.P. (Crl.) Nos.120 of 2012 etc.                                          Page 9 of 27

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banks;  there  will  be  global  ramifications  of  the  de-

allotments  such  as  a  negative  impact  on  investor  

confidence;  acute  distress  in  some  industries;  the  

country’s  dependence on  coal  as  a  primary  fuel  source  

with  up  to  60%  for  power  generation  may  result  in  

inflationary trends; 28,000 MW of power capacity will be  

affected due to de-allocation; closure of coal mines would  

result in an estimated loss of Rs. 4.4 lakh crores in terms  

of  loss  of  royalty,  cess,  direct  and  indirect  taxes;  coal  

imports  (already very high)  will  go up even more in  FY  

2016-17 to the extent of Rs.1.44 lakh crores (without de-

allocation); and on the other hand, the production of coal  

would  substantially  increase  in  case  all  coal  blocks  are  

made operational after the grant of necessary permission.

(2)The  cancellation  of  coal  blocks  would  set  back  the  

process (of extraction and effective utilization of coal) by  

about 7 to 8 years: It was submitted that the auction of  

coal blocks would take at least 1-2 years and from past  

experience,  it  is  unlikely  that  the  auction  would  be  

successful due to lack of bids or proper participation; it  

would take at least  5-6 years for  making the auctioned  

coal blocks operational; in any event (based on the time  

lines given by the Ministry of Coal in the allocation letters)  

W.P. (Crl.) Nos.120 of 2012 etc.                                          Page 10 of 27

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it would take 36-42 months to develop an open cast mine  

and about 48-54 months to develop an underground mine;  

and the commissioning of end-use plants after obtaining  

various clearances would take a minimum of 3-4 years.

(3)If the coal blocks are not cancelled, the allottees could  

continue  their  contribution  towards  corporate  social  

responsibility  and  socio-economic  development  of  the  

country:   It  was  submitted  on  a  positive  note  that  the  

allottees  have invested in  basic  infrastructure like road,  

rail links etc. since the coal blocks allotted to them were in  

areas  where  CIL  was  not  interested  in  making  an  

investment; the allottees have made huge investments in  

setting up other infrastructure such as schools, hospitals,  

facilities for clean and potable water, residential colonies,  

community centers, playground etc. and in creation of job  

opportunities; thousands of crores of rupees have already  

been paid by the coal block allottees by way of direct and  

indirect taxes and in the form of royalty, cess etc.; and if  

the coal blocks are cancelled, the development activities  

initiated by the allottees would come to a standstill.

(4)Many of the allottees have problems peculiar to them  

which need to be examined along with ground realities: It  

was  submitted  that  the  delay  in  development  of  coal  

W.P. (Crl.) Nos.120 of 2012 etc.                                          Page 11 of 27

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blocks is not attributable to the allottees who are actually  

victims of the faults of the Screening Committee; delays  

are attributable to various reasons such as administrative  

delays  on  the  part  of  the  Ministry  of  Environment  and  

Forest and Ministry of Coal, the consent by the Pollution  

Control  Boards  was  not  given  on  time,  Court  orders,  

Naxalite  issues  in  some  areas,  State  Governments  

directing  that  mining  lease  should  not  be  executed,  

introduction  of  go/no  go  areas  or  without  statutory  

permission  etc.;  this  Court  has  tacitly  acknowledged  

administrative delays in grant of clearances in an order  

passed  on  1st September,  2014  in  Samaj  Parivartana  

Samudaya  v.  State  of  Karnataka;2 the  appropriate  

course  of  action  to  adopt  would  be  for  this  Court  to  

appoint a Committee to examine the peculiar facts of each  

individual allotment.

(5) The additional levy of Rs. 295/- per metric ton of coal  

extracted  (described  as  a  penalty)  is  unjustified:  The  

figure of loss of revenue to the exchequer to the extent of  

Rs. 295/- per metric ton of coal extracted is borrowed from  

the Report of the CAG which Report is contested by the  

Government of India and is pending consideration before a  

2 I.A. No.201 & 219, 223 in I.A. No.204 and I.A. Nos. 224 in I.A. No.215 in WP(C) No. 562/2009  

W.P. (Crl.) Nos.120 of 2012 etc.                                          Page 12 of 27

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Parliamentary  Committee  on  Public  Undertakings;  the  

Report  itself  suggested that  only a part  of  the financial  

gain could have accrued to the national  exchequer;  the  

Government  of  India  has  not  applied  its  mind  while  

suggesting the figure of Rs. 295/- per metric ton and it has  

only considered the average price of coal as given by CIL  

for the year 2010-11 (being Rs.1028/- per metric ton) and  

that cannot be adopted for earlier financial years; the coal  

extracted from the blocks allotted are of an inferior quality  

and the sale price thereof is much lower than the average  

sale price of CIL; the CAG has not taken into consideration  

underground mines while calculating the alleged financial  

loss; the cost of production of coal for CIL is less since CIL  

has economically viable mines as compared to the mines  

allocated to  the private sector  which lack infrastructure  

and have several other problems; and penalty cannot be  

imposed with retrospective effect since the coal extracted  

by the allottees has already been utilized for production of  

power, steel, cement etc.

16. Finally,  Mr.  Venugopal  relied on  Ashok Hurrah v.  

Rupa Ashok Hurrah3 to contend that the allottees are  

entitled to a hearing before the cancellation of their coal  

3 (2002) 4 SCC 388

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blocks in accordance with the well accepted principles of  

natural  justice  since  the  cancellation  adversely  affects  

their interests. Paragraph 51 of the Report was relied on  

and this reads as follows: “Nevertheless,  we  think  that  a  petitioner  is  entitled  to  relief  ex debito justitiae if  he establishes (1)  violation of  the principles of natural justice in that he was not a party  to the lis but the judgment adversely affected his interests  or,  if  he was a party to the lis,  he was not served with  notice of the proceedings and the matter proceeded as if  he had notice, and (2) where in the proceedings a learned  Judge failed to disclose his  connection  with  the subject- matter or the parties giving scope for an apprehension of  bias and the judgment adversely affects the petitioner.”

17. Mr. Harish Salve, Senior Advocate, appearing for the  

Sponge  Iron  Manufacturers  Association  generally  

supported  the  submissions  made  by  Mr.  Venugopal.  He  

emphasized  that  the  more  appropriate  course  for  this  

Court to adopt would be to appoint a Committee of three  

persons,  including  experts,  to  examine  each  individual  

allotment and consider the facts peculiar to each allottee  

and report to this Court whether the coal block allotment  

should be cancelled or not.  

18. Learned counsel  also emphasized the necessity  of  

granting  a  hearing  to  each  allottee  and  referred  to  a  

passage from National Textile Workers’ Union v. P. R.  

Ramakrishna4 wherein  the  Constitution  Bench  

4 (1983) 1 SCC 228

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emphasized the importance of natural justice in paragraph  

16  of  the  Report.   Particular  emphasis  was  laid  on  the  

following passage:  “….It will surely be a travesty of justice to deny natural  justice on the ground that courts know better.  There is a  peculiar and surprising misconception of natural justice,  in  some  quarters,  that  it  is,  exclusively,  a  principle  of  administrative  law.   It  is  not.   It  is  first  a  universal  principle and, therefore, a rule of administrative law.  It is  that part of the judicial procedure which is imported into  the administrative process because of its universality.  “It  is of the essence of most systems of justice – certainly of  the Anglo-Saxon System – that in litigation both sides of a  dispute  musts  be  heard  before  decision.  ‘Audi  Alteram  Partem’  was  the  aphorism of  St.  Augustine  which  was  adopted by the courts at a time when Latin Maxims were  fashionable”.  “Audi Alteram Partem is as much a principle  of African, as it is of English legal procedure : a popular  Yoruba  saying  is  “  ‘wicked  and  iniquitous  is  he  who  decides a case upon the testimony of only one party to it”  (T.O. Elias : The Nature of African Customary Law).  Courts  even  more  than  administrators  must  observe  natural  justice.”   

19. Mr.  Salve  also  referred  to  a  passage  from  

Administrative Law5 to contend that the principle of legal  

relativity  should be borne in  mind by the Court  so that  

“the law can be made to operate justly and reasonably in  

cases where doctrine of ultra vires, rigidly applied, would  

produce unacceptable results.”

20. Unfortunately, it is difficult to see relevance of the  

passage cited by learned counsel since it deals with the  

nullity and voidness of an Act or order which is ultra vires.  

5 Administrative Law by Sir William Wade, 9th Edn.

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The applicable principles are completely different and we  

are  not  dealing  with  such  a  case.  It  would  be  more  

apposite  to  refer  to  a  passage  from  Sheela  Barse  v.  

Union of India6 cited by Dr. A.M. Singhvi, Senior Advocate  

(appearing  for  the  Independent  Power  Producers  

Association  of  India)  wherein  this  Court  observed  the  

future is important (and that is what we are looking at).  

This Court said: “Again, the relief to be granted looks to the future and is,  generally,  corrective  rather  than  compensatory  which,  sometimes,  it  also  is.   The  pattern  of  relief  need  not  necessarily be derived logically from the rights asserted or  found. More importantly, the court is not merely a passive,  disinterested umpire or onlooker, but has a more dynamic  and  positive  role  with  the  responsibility  for  the  organization of the proceedings, moulding of the relief and  – this is important – also supervising the implementation  thereof.  The court is entitled to, and often does, seek the  assistance  of  expert  panels,  Commissioners,  Advisory  Committee,  amici etc.   This  wide  range  of  the  responsibilities necessarily implies correspondingly higher  measure of control over the parties, the subject matter and  the procedure. Indeed as the relief is positive and implies  affirmative  action  the  decisions  are  not  “one-shot”  determinations but have ongoing implications.  Remedy is  both imposed, negotiated or quasi-negotiated.”

21. Dr.  A.M.  Singhvi  also  submitted  a  note  which  

essentially  and  substantially  reiterates  some  of  the  

submissions made by Mr. Venugopal.  It is not, therefore,  

necessary to repeat those submissions. He also referred to  

Onkar Lal Bajaj v. Union of India7 to submit that in the  6 (1988) 4 SCC 226 7 (2003) 2 SCC 673  

W.P. (Crl.) Nos.120 of 2012 etc.                                          Page 16 of 27

Page 17

case  of  apparently  tainted  allotment  of  dealerships  for  

petroleum  products,  this  Court  felt  the  necessity  of  

appointing  a  Committee  and  therefore  we  should  also  

appoint a Committee of retired judges to examine each  

individual case of coal block allotment.

22. Dr.  Rajeev Dhavan,  Senior  Advocate appearing for  

one of the interveners referred to Chingleput Bottlers v.  

Majestic Bottling Company8 to emphasize the necessity  

of  applying  the  principles  of  natural  justice  before  

cancelling the allotments made in favour of the allottees.   

23. Other learned counsels more or less repeated and  

reiterated  the  submissions  made,  with  slight  variations  

and emphasis  depending upon the facts  of  the case of  

their respective clients, including State Governments.  

24. In  response  to  the  submissions  made  by  various  

learned counsels, it was submitted by the learned Attorney  

General  that  all  the  aspects  mentioned above including  

the economic implications or fall-out of the cancellation of  

coal block allotments and the possible adverse impact that  

it  may have on other socio-economic factors have been  

taken into consideration and it is only thereafter that the  

affidavit has been filed by the Union of India, which has  

8 AIR 1984 SC 1030

W.P. (Crl.) Nos.120 of 2012 etc.                                          Page 17 of 27

Page 18

been explained by him in his opening address.  In other  

words,  the  Union  of  India  is  fully  prepared  to  face  the  

consequences of the cancellation of all coal blocks, if need  

be, and is desirous of moving forward.

25. The learned Attorney General vehemently opposed  

the setting up of any committee as proposed by learned  

counsels.  He  categorically  and  emphatically  stated  that  

the Central Government has no difficulty in taking matters  

forward  consequent  upon  the  cancellation  of  the  coal  

blocks.     

26. Learned counsels for the allottees have essentially  

raised  two  contentions.  Firstly,  the  principles  of  natural  

justice require that they must be heard before their coal  

block  allotments  are  cancelled.  Secondly,  we  should  

appoint a committee to consider each individual case to  

determine whether  the  coal  block  allotments  should  be  

cancelled or not.

27. As far as the second contention is concerned, this is  

strongly opposed by the learned Attorney General and we  

think he is right in doing so. The judgment did not deal  

with any individual case. It dealt only with the process of  

allotment  of  coal  blocks  and  found  it  to  be  illegal  and  

arbitrary.  The  process  of  allotment  cannot  be  reopened  

W.P. (Crl.) Nos.120 of 2012 etc.                                          Page 18 of 27

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collaterally through the appointment of a committee. This  

would  virtually  amount  to  nullifying  the  judgment.  The  

process is a continuous thread that runs through all  the  

allotments. Since it was fatally flawed, the beneficiaries of  

the flawed process must suffer the consequences thereof  

and the appointment of a committee would really amount  

to permitting a body to examine the correctness of the  

judgment. This is clearly impermissible.  

28. It is true that this Court has taken the assistance of  

one committee or the other in several cases but that was  

where an inquiry was required to be conducted and this  

Court was obviously not in a position to conduct any such  

inquiry.  This  had happened,  for  example,  in  Onkar Lal  

Bajaj.  No  such  occasion  or  situation  has  arisen  in  the  

present  case  to  necessitate  the  appointment  of  a  

committee.  Therefore,  the  question  of  appointing  a  

committee simply does not arise.

29. The first contention relates to the applicability of the  

principles of natural justice. As far as this is concerned, it  

has  specifically  been  recorded  in  the  judgment  (in  

paragraph 11) to the following effect:  “Three  Associations,  viz.,  Coal  Producers  Association,  Sponge Iron Manufacturers Association and Independent  Power  Producers  Association  of  India  have  made  applications  for  their  intervention  stating  that  these  associations represented large number of  allottees who  

W.P. (Crl.) Nos.120 of 2012 etc.                                          Page 19 of 27

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have been allocated subject coal blocks. Accordingly, Mr.  K.K. Venugopal, learned senior counsel was heard for Coal  Producers  Association  and  Mr.  Harish  N.  Salve,  learned  senior counsel  was heard on behalf  of  the Sponge Iron  Manufacturers  Association  and  Independent  Power  Producers  Association  of  India.  They  commenced  their  arguments  on  09.01.2014,  which  continued  on  15.01.2014 and concluded on 16.01.2014.”

30. Therefore,  it  is  incorrect  to  say  that  these  

associations  which  represented  the  bulk  (if  not  all)  the  

allottees or beneficiaries of  coal  blocks were not heard.  

They presented their point of view, like any other party to  

a lis and it was only then that judgment was delivered.

31. Similarly, several States were also heard as recorded  

in paragraph 10 of the judgment.  In this  regard,  it  was  

said: “The arguments re-commenced on 05.12.2013. On that  day, arguments of the States of Jharkhand, Chhattisgarh  and Odisha were concluded and matters were fixed for  08.01.2014. On 08.01.2014, the arguments on behalf of  the  States  of  Maharashtra,  Andhra  Pradesh,  Madhya  Pradesh  and  West  Bengal  were  concluded  and  the  matters  were  fixed  for  09.01.2014.  On  that  day,  arguments of learned Attorney General were concluded.”

32. In effect, therefore, all parties likely to be adversely  

affected were given a hearing. The principles of natural  

justice,  though  universal,  must  be  realistically  and  

pragmatically applied.

33. In  Sheela Barse it was observed, and we endorse  

that view, that  the relief to be granted in a case always  

W.P. (Crl.) Nos.120 of 2012 etc.                                          Page 20 of 27

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looks to the future. It is generally corrective and in some  

cases it is compensatory. The present case takes within its  

fold all three elements mentioned in  Sheela Barse. Our  

judgment highlighted the illegality and arbitrariness in the  

allotment  of  coal  blocks  and  these  “consequence  

proceedings” are intended to correct the wrong done by  

the Union of India; these proceedings look to the future in  

that  by  highlighting  the  wrong,  it  is  expected  that  the  

Government will not deal with the natural resources that  

belong to the country as if they belong to a few individuals  

who  can  fritter  them  away  at  their  sweet  will;  these  

proceedings may also compensate the exchequer for the  

loss caused to it, in the manner suggested by the learned  

Attorney General, and which we now propose to consider.  

34. There are two categories of coal  block allotments:  

the  first  category  being  allotments  other  than  those  

mentioned  in  Annexure  1  and  Annexure  2;  the  second  

category being the 46 coal blocks mentioned in Annexure  

1  and Annexure  2  that  could  possibly  be  “saved”  from  

cancellation on certain terms and conditions, as submitted  

by the learned Attorney General.

35. As far as the first category of coal block allotments  

is  concerned,  they  must  be  cancelled  (except  those  

W.P. (Crl.) Nos.120 of 2012 etc.                                          Page 21 of 27

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mentioned in the judgment). There is no reason to “save”  

them  from  cancellation.  The  allocations  are  illegal  and  

arbitrary;  the  allottees  have  not  yet  entered  into  any  

mining  lease  and  they  have  not  yet  commenced  

production. Whether they are 95% ready or 92% ready or  

90% ready  for  production  (as  argued  by  some  learned  

counsel)  is  wholly  irrelevant.  Their  allocation was illegal  

and arbitrary, as already held, and therefore we quash all  

these allotments.  

36. Learned Attorney General identified 46 coal blocks  

that could be “saved” from the guillotine, since all of them  

have  commenced  production  or  are  on  the  verge  of  

commencing  production.  As  these  allocations  are  also  

illegal and arbitrary they are also liable to be cancelled.  

However, the allotment of three coal blocks in Annexure 1  

is  not  disturbed  and  they  are  Moher  and Moher  Amroli  

Extension allocated to Sasan Power Ltd. (UMPP) and Tasra  

(allotted to Steel Authority of India Ltd. (SAIL), a Central  

Government  public  sector  undertaking  not  having  any  

joint venture).  

As far the 6 coal blocks mentioned in Annexure 2 are  

concerned,  the  allocatees  have  not  yet  commenced  

production.  They  do  not  stand  on  a  different  or  better  

W.P. (Crl.) Nos.120 of 2012 etc.                                          Page 22 of 27

Page 23

footing  as  far  the  consequences  are  concerned.  These  

allotments are also liable to be cancelled. The allocation of  

the Pakri Barwadih coal block (allotted to National Thermal  

Power  Corporation  (NTPC),  being  a  Central  Government  

public sector undertaking not having any joint venture) is  

not liable to be cancelled.  

37. Except the above two allocations made to the UMPP  

and the two allocations made to the Central Government  

public  sector  undertaking  not  having  any  joint  venture  

mentioned  above,  all  other  allocations  mentioned  in  

Annexure 1 and Annexure 2 are cancelled.    

38. It  was submitted by the learned Attorney General  

that on the cancellation of the coal block allotments, CIL  

would require some breathing time to manage its affairs.  

The Central Government is keen to move ahead but some  

time would be required to manage the emerging situation.  

Similarly, breathing time is also required to be given to the  

allottees to manage their affairs on the cancellation of the  

coal blocks.  

39. In view of the submissions made, although we have  

quashed the allotment of 42 out of these 46 coal blocks,  

we make it clear that the cancellation will take effect only  

after six months from today, which is with effect from 31st  

W.P. (Crl.) Nos.120 of 2012 etc.                                          Page 23 of 27

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March,  2015.  This  period  of  six  months  is  being  given  

since  the  learned  Attorney  General  submitted  that  the  

Central  Government  and  CIL  would  need  some time  to  

adjust to the changed situation and move forward.  This  

period  will  also  give  adequate  time  to  the  coal  block  

allottees to adjust and manage their affairs. That the CIL is  

inefficient  and incapable  of  accepting  the  challenge,  as  

submitted by learned counsel, is not an issue at all. The  

Central  Government  is  confident,  as  submitted  by  the  

learned Attorney General, that the CIL can fill the void and  

take things forward.    

40. In  addition  to  the  request  for  deferment  of  

cancellation, we also accept the submission of the learned  

Attorney General that the allottees of the coal blocks other  

than those covered by  the  judgment  and the  four  coal  

blocks covered by this order must pay an amount of Rs.  

295/-  per  metric  ton  of  coal  extracted  as  an  additional  

levy.  This  compensatory  amount  is  based  on  the  

assessment made by the CAG. It may well be that the cost  

of extraction of coal from an underground mine has not  

been taken into consideration by the CAG, but in matters  

of this nature it is difficult to arrive at any mathematically  

acceptable  figure  quantifying  the  loss  sustained.  The  

W.P. (Crl.) Nos.120 of 2012 etc.                                          Page 24 of 27

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estimated  loss  of  Rs.  295/-  per  metric  ton  of  coal  is,  

therefore, accepted for the purposes of these cases. The  

compensatory  payment  on  this  basis  should  be  made  

within  a period of  three months and in  any case on or  

before 31st December, 2014. The coal extracted hereafter  

till 31st March, 2015 will also attract the additional levy of  

Rs. 295/- per metric ton.  

41. It  is  made  clear  that  the  scrutiny  by  the  CBI  in  

respect  of  the  allotment  of  12  coal  blocks  out  of  46  

identified by the learned Attorney General  (and for  that  

matter  against  any  other  allottee)  will  continue and be  

taken  to  its  logical  conclusion.  Needless  to  say,  the  

observations  and  findings  in  this  order  shall  have  no  

bearing on the pending investigations. …......…………………….CJI.    ( R.M. Lodha )

….…………………………..J. ( Madan B. Lokur )

                                              …….………………………..J.    ( Kurian Joseph )

New Delhi; September 24, 2014

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Annexure 1 Details of 40 coal blocks which have come into production

Sl.  No.

Name of Coal Block Name of Allocatee  Company

1. Gare Palma IV/4 Jayaswal Neco Ltd.  2. Chotia Prakash Industries Ltd.  3. Namchik Namphuk Arunachal Pradesh Mining  

Corp. 4-5. GarePalma IV/2&3 JSPL 6. Belgaon Sunflag Iron &Steel Ltd.  7-12. Baranj I-IV, Kiloni and  

Manoradeep Karnataka Power Corp. Ltd.  

13. Kathautia Usha Martin Ltd.  14. Parbatpur Electrosteel Castings Ltd.  15. Gare Palma IV/7 RAPL

(Now Sarda Energy Ltd.) 16. Barjore WBPDCL 17. Tara (East) WBSEB 18. Tara (West) WBPDCL 19. Gare Palma IV/1 Jindal Power Ltd.  20. Sarshatali CESC 21. Talabira-I Hindalco Industries Ltd.  22-23. Gotitoria (East & West) BLA Industries 24. Gare Palma IV/5 Monnet Ispat Ltd.  25. Pachwara Central Punjab State Electricity  

Board 26. Tasra Steel Authority of India Ltd. 27. Barjora North DVC 28. Marki Mangli-I B.S. Ispat 29-30. Marki Mangli-III Shree Virangana Iron & Steel  

Ltd.  Marki Mangli-II

31. Trans Damodar WBMTCDL 32-33. Moher & Moher Amlori  

Extension  Sasan Power Ltd.  

34. Ardhagram Sova Ispat Ltd. & Jai Balaji  Industries Ltd.

35-36. Parsa (east) & Kanta Basan RRVUN Ltd. 37-38. Gangaramchak &  

Gangaramchak Bhadulia WBPDCL

39. Amelia North MPSMDC Ltd. 40. Pachwara North WBPDCL

W.P. (Crl.) Nos.120 of 2012 etc.                                          Page 26 of 27

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Annexure 2

Details of Coal Blocks which are likely come into production  during 2014-15

Sl.No . of  block

Company Name Name of Coal Block

1. GVK Power (Govindwal Sahib) Tokisud North 2. DVC Khagra Joydev 3. Prism Cement Sial Ghogri 4. Jaiprakash Associates Ltd. Mandla North 5. MPSMCL Bicharpur 6. NTPC Pakri Barwadih

W.P. (Crl.) Nos.120 of 2012 etc.                                          Page 27 of 27