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The Delhi High Court on Wednesday faulted the Centre’s decision to club the end uses, namely sponge iron and steel, cement, and captive power plants, within the non-regulated sector for coal block

auctions, saying it would “amount to arbitrariness”.

“The objective behind the ordinance is for best utilising the reserves of coal and for allocating the same in such a manner that there is no adverse impact on the core sectors of iron and steel, cement and power. Therefore, the clubbing of different specified end-uses together runs counter to the logic of classification itself. This is apart from the other difficulties of treating unequals equally which in itself would amount to arbitrariness.

“Therefore, in our view, the specified end-uses could not be clubbed together. Each coal mine had to be classified for a specific end-use,” a division bench comprising justices BD Ahmed and Sanjeev Sachdeva said, accepting the stand of various companies on the issue. Monnet Ispat and Energy, Uktal Coal, Jayaswal Neco Industries and Bhushan Power and Steel (BPSL) had challenged the government’s decision to clubbing of the end uses within the non-regulated sector, saying the move was against the provisions of the 2014 Coal Ordinance which state that core sectors -power, iron and steel and cement needed to be protected.

The companies argued that the auction process did not distinguish between what is the final use of the captive power plants and allows industries apart from the core sectors of iron, steel and cement, to bid for captive power plants.

As a result, the end use of a coal mine is altered on the basis of who bids the highest. A coal mine that was previously being used to produce captive power for a steel plant can thus be allotted to an aluminium producing company just because the latter is able to bid more, even though aluminium is not a specified end use under the coal ordinance, they stated.

However, the HC dismissed the petitions by the four companies for different reasons—like they had come to the court after delay and after participating in the tender/auction process.

Maintaining that such a decision had in many cases led to “cornering” of the mines by the aluminium companies like Hindalco Industries and Bharat Aluminium Company, BSPL had also challenged the two-round financial bidding process under the 2015 coal auction, saying such a method was “arbitrary and irrational” as the ordinance and the rules under it did not provide for such a procedure.

Source: Financial Express