The Supreme Court (SC) shot down Tuesday the argument by the Centre that it always keeps in mind the interest of public sector undertakings while deciding economic policies, including private participation in coal blocks allocation.
On one hand you say public sector undertakings should act as an engine of growth but you are allowing them to die a premature death, said a Bench led by Justice R M Lo-dha as the Attorney General sought to convince it that amendments in Coal Mines (Nationalisation) Act were necessary and the government had a balanced approach.
G E Vahanvati said the changes in law to allow private participation in coal blocks allocation for captive consumption were required after the country saw a severe economic crisis in 1991. There was a grave power crisis and Coal India was on the brink of bankruptcy. Laws were amended to deal with the situation, he said.
The Bench questioned the way government dealt with the situation. You said there was a grave crisis but you took a year to amend the law. Moreover, the first private company you gave it to for captive consumption took 4-5 years to start production. Is this the way to tide over a crisis? it said.
The Bench asked Vahanvati to establish the validity of the procedure followed by the Centre in granting approvals to state governments to execute leases with private players for coal blocks.
According to the law, the state governments had to receive applications from private companies and send them to the central government. However, in practice, the central government received all applications and sent them to state governments for executing the lease. It was like putting the cart before the horse, said the court. It also questioned the exact role of the screening committee when, according to a cabinet note, Central Mine Planning & Design Institute Limited (CMPDIL) was asked to identify blocks for allocation for scientific mining.
Cabinet has given the powers to CMPDIL to identify blocks and hence, the screening committee becomes an extra player and played the role of the former, said the Bench, asking Vahanvati to adduce all booklets of CMPDIL identifying blocks for allocation to private parties.
The court also questioned the rules framed by the screening committee. It asked if the government framed rules for the committee or the committee did so. When the Bench asked the government why the policy of competitive bidding was not followed