Delhi High Court issues notice to Union Coal Ministry on Jindal Steel & Power Ltd.'s petition challenging change of end-use of coal blocks under Coal Ordinance and Ministry's Dec 18 order

The Delhi High Court on Monday sought to know the Centre’s response on a writ petition filed by Jindal Steel & Power Ltd. challenging a Coal Ministry order of December 18 and provisions of the Coal Mines (Special Provisions) Ordinance, 2014 "which allow change of end-use" of coal blocks in Chattisgarh and Odisha from sponge iron and steel to power.

Logo of Jindal Steel Power Ltd.

 Under the Coal Mines (Special Provisions) Ordinance, 2014, promulgated after the Supreme Court cancelled the coal block allocations, the end-use was changed with the provision for auction of blocks.

Senior advocates Kapil Sibal, Rajiv Nayar and Abhishek Manu Singhvi, appearing for JSPL, submitted that pursuant to the Coal Ordinance, the Coal Mines Rules were notified and under the same the ministry passed an order on December 18 changing end-use of their coal blocks from sponge iron and steel to power.

They contended that the December 18 order was passed arbitrarily and is in violation of the Ordinance as well as the Constitution.

JSPL contended that change of end-use has also resulted in making the company ineligible for participating in the ongoing auction process which is expected to culminate on February 14.

The company also alleged that while changing the end-use, captive power plants were also excluded from the power sector, hence, they are unable to bid for the blocks even for that.

Senior Counsels appearing for JSPL in the case said that the company has set up steel and sponge iron units in Odisha and Chhattisgarh for over Rs 24,000 crore and the entire investment would be "rendered fruitless" if they are unable to bid for the blocks which were earlier allocated to them and based on which the units were set up after obtaining all necessary environment and forest clearance.

During the proceedings, the ASG said that JSPL can purchase the tender document and submit it any day before February 14, 2015.

He also said there are other coal blocks available for JSPL, including those which have been put up for non-regulated end-use like steel and sponge iron.

Senior Advocate Mr. Kapil Sibal, however, was not in agreement with the ASG’s contention, saying that very few blocks have been put up for non-regulated end-use.

He also said that bidding for a far away block would not help them as they set up their units based on the Utkal and Gare Palma blocks in Odisha and Chhattisgarh respectively.

A Division Bench of the Delhi High Court comprising of Justice Badar Durrez Ahmed and Justice Sanjeev Sachdeva thereafter issued notice to the Coal Ministry seeking its response as to why and where end-use was changed, and posted the matter for hearing on Thursday, January 15, 2015. 

(Sonika Nair contributed in the reporting of this news story)