[Coal Scam] Top Court imposes costs on UOI for incorrectly including a company in list of errant mine owners

The Supreme Court has imposed costs of Rs 1 lakh on the Union of India (UOI) for its callous, careless and casual approach in incorrectly including the name of a Company, BLA Industries Private Limited, in the list of errant mine owners.

Court said that due to this act, the company had to suffer loss and ignominy.

Talking about the Centre's conduct, a Chief Justice of India led bench observed that while the private party followed all the rules and the law, as applicable, before investing large sums of money to undertake business, it was the UOI that did not follow the letter of the law.

"But ultimately, it was the private party that had to suffer the consequences of the careless and callous approach of the respondent no. 1 – UOI. To compound the petitioner’s woes, the respondent no. 1 – UOI filed an affidavit before this Court including the petitioner in the list of errant mine owners, based on its own unlawful conduct. It did not undertake the necessary due diligence to determine as to whether the petitioner had been allotted the mine through the lawful procedure...", added a bench also comprising Justices Murari and Kohli.

Court found that BLA Industries had followed the correct procedure of approaching the State government first with an application seeking a mining lease and that it was granted in accordance with the Mines and Mineral (Development and Regulation) Act, 1957 (MMDR Act).

"...allocation of the coal block made in form of the petitioner did not run foul of the procedure prescribed in the MMDR Act and the MC Rules. The petitioner was not allocated the coal block either through the Screening Committee Route or the Central Government Dispensation Route, which fact was not pointed out by the respondent No. 1 – UOI at the appropriate stage, that led to painting the petitioner with the same brush as the other allottee..", observed the bench.

BLA Industries had approached the Top Court under Article 32 of the Constitution of India raising a grievance against the Ministry of Coal, Union of India for having included its name and mining lease area in the Schedules appended to the Coal Mines (Special Provisions) Ordinance, 2014, even though, the Screening Committee constituted by the Ministry of Coal, Union of India had not allocated any coal block to it.

Court was told that BLA had submitted an application under Section 2 of the Forest (Conservation) Act, 1980 to the District Collector, Narsinghpur District, Narsingpur, Madhya Pradesh for permission to undertake coal mining on forest land.

Since BLA had also submitted an application to UOI under Section 5(2) of the Mines and Minerals (Development & Regulation) Act, 1957 for approval of the mining plan, it was called upon to appear before the Screening Committee by the UOI.

But finally, the mining lease for the area in question was executed by the State Government in favour of BLA, the court was told.

While going through the chronology of the events, the top court found that after the Collector (Mining) recommended grant of a mining lease for a period of 30 years to BLA in accordance with the Rules and the policy of the Government, the State Government wrote a letter to the UOI specifically stating inter alia that BLA had furnished all the relevant information as required under Rule 22 (3) (d) (e) (f) and (g) of the MC Rules, 1960 along with the coal mining plan of the specified area and after examination, and it was found to be eligible under the Rules for grant of a mining lease.

"Simply because the petitioner had participated in the meetings conducted by the Screening Committee cannot be held against it. Participation in the said meetings can also not be taken to mean that the petitioner had applied directly to the respondent No. 1 – UOI for grant of the mining lease. In fact, the records reveal that the letter dated 21st June, 1996 issued by the respondent No. 1 – UOI stating that the petitioner’s proposal for identification of the captive mining block for supply of coal to the 24 MW captive power plant in Madhya Pradesh was considered in the meeting of the Screening Committee and was approved, never found its way to the respondent No. 2 – State Government..." noted the bench.

Thus, the court held that BLA could not be asked to pay penalty as compensatory payment for getting a mining lease unlawfully. Court said,

"No parity can be drawn between the petitioner and the other allottees of the coal blocks when the petitioner followed the correct procedure of applying through proper channel for grant of a mining lease which application on being received, was routed by the Office of the Collector (Mines), Narsingpur to the Mineral Resource Department, Government of Madhya Pradesh and onwards to the respondent No. 1 – UOI, for prior approval."

Case Title: B.L.A. INDUSTRIES PRIVATE LIMITED vs. UNION OF INDIA AND ANOTHER