"Careless & Casual" : Supreme Court Imposes Rs 1 Lakh Cost On Union Govt For Wrongly Mentioning Company As "Coalgate" Scam Allottee

The Supreme Court on Wednesday imposed a cost of Rupees one lakh on the Union Government for incorrectly mentioning the name of a coal mining company in the list of the illegal coal block allotments made in the "Coalgate" scam.

The Court noted that the petitioner-company, BLA Industries Pvt Ltd, had applied through the legal route, following the procedure under the Mines and Mineral (Development and Regulation) Act, 1957 (MMDR Act), and that it was granted the mining lease by the State of Madhya Pradesh, after the approval of the Central Government, on May 21, 1998.

The coal block allotments which were quashed by the Supreme Court in August 2014 were the ones which were allotted through the Screening Committee Route or the Central Government Dispensation Route. However, in the affidavit filed by the Central Government before the Supreme Court in the coal block allocation case, the petitioner company's name was mentioned in the list of allotments made through the Screening Committee Route. The petitioner's name was also included in the Schedule of the Coal Mines (Special Provisions) Ordinance 2014. This led to the cancellation of the mining lease granted to the petitioner.

The petitioner pointed out that it was not allotted the coal block through the Screening Committee Route and that its allocation was strictly as per the procedure under the MMDR Act.  It approached the Supreme Court by filing a writ petition under Article 32 challenging the demand of additional levy raised by the Central Government on the basis of the Supreme Court's judgment in the "Coalgate" scam case.

A bench comprising Chief Justice of India NV Ramana, Justice Krishna Murari and Justice Hima Kohli agreed with the petitioner's arguments. When the Centre placed reliance on the fact that the petitioner had participated in the Screening Committee meetings held on 26th-27th September, 1997, the Court held that mere participation in such meetings cannot mean that it had applied directly to the Central Government.

The Court noted that the affidavit by State of Madhya Pradesh made it clear that the mining lease in petitioner's favour was not based on any allocation letter issued directly by the Central Government and/or the Screening Committee, but was founded on an independent consideration of the petitioner's application made by the State government and done in accordance with the provisions of the MMDR Act read with the MC Rules.

In this backdrop, the Court held that the Centre should not have included the petitioner's name in the list of errant allottees. The Court held that the Centrecannot demand additional levy on the coal extracted by the petitioner and quashed the demand. Not stopping there, the Court made certain strong critical observations against the approach of the Union Government as follows :

"Before parting with this matter, we are constrained to make certain observations regarding the conduct of the respondent no. 1 – UOI. Here is a case where a private party followed all the rules and the law, as applicable, before investing large sums of money to undertake business. In fact, it appears from the facts of the case that it was the respondent no. 1 – 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. As a result of this callous, careless and casual approach of the respondent no. 1 – UOI, the present petitioner had to suffer loss and ignominy".

Case Title :BLA Industries Pvt Ltd versus Union of India

Citation : 2022 LiveLaw (SC) 683

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