MANOHAR LAL SHARMA v. THE PRINCIPAL SECRETARY & ORS.

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A (Writ Petition (Crl.) 120 of 2012) B AUGUST 25, 2014.

c CONSTITUTION OF /NOIA, 1~50:

G MINES AND MINERALS (DEVELOPMENT AND REGULATION) ACT, 1957:

s. 2 of 1957 ACt rlw s. 1-A of CM Act - Allocation of coal

MANOHAR LAL SHARMA v. PRINCIPAL SECRETARY 44 7

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A by a private company in production of steel, power or cement would not entitle such company to carry out coal mining operation.

D INTERPRETATION OF STATUTES:

In the instant writ petitions filed in public interest, the allocation of coal blocks for the period 1993 to 2010 made by the Central Government through the Screening F Committee route as well as the Government dispensation route was challenged as illegal and unconstitutional.

Disposing of the writ petitions, the Court

Natural Resources Allocation, In re, Special Reference H

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No. 1 of 2012, 2012(9) SCR 311= (2012) 10 SCC 1; Goa A Foundation v. Union of India and Others (2014) 6 SCC 590 - relied on.

Centre for Public Interest l..itigation & Ors. v. Union of B India &.Ors. 2012 (3) SCR 147 = (2012) 3 SCC 1; R.K. Garg vs. Union of India & Ors. 1982(1) SCR'947 = (1981) 4 SCC 675; D.K. Trivedi vs. State of Gujarat 1986 SCR 479 = 986 Suppl. SCC 20; Kasturi Lal Lakshmi Reddy & Ors. v. State of J&K & Anr. (1980) 4 SCC 1; Sachidanand Pandey & Anr. C v. State of West Bengal & )Ors. (1987) 2 SCC 295; Haji T.M. Hassan Rawther v. Kera/a Financial Corporation; (1988) 1 SCC 166; M.P. Oil Extraction & Anr. v. State of M.P. & Ors.; (1997) 7 SCC 592; Netai Bag & Ors. v. State of West Bengal D & Ors.; (2000) 8 SCC 262; Villianur /yarkkai Padukappu Maiyam v. Union of India & Ors. 2009 (9) SCR 225 = (2009) 7 sec 561- referred to.

1.2. By virtue of the two declarations -s.2 of the Mines E and Minerals (Development and Regulation) Act, 1957 ('1957 Act') and 1A of the Coal Mines (Nationalisation) Act, 1973 (CMN Act) -- the States have lost their jurisdiction to legislate to the extent to which the Union F had taken over control, regulation and development of coal mines as manifested by the two enactments. Thus, the requisite declarations have the effect of taking out regulation and development of coal mines from Entry 23 · G of List II of Seventh Schedule to the Constitution of India. [para 51] [481-A-B, E]

Baijnath Kadio v. State of Bihar 1970 (2) SCR 100 = H

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A (1969) 3 SCC 838; Hingir-Rampur Coal Co. Ltd. v. State of Orissa (1961) 2 SCR 537 =AIR 1961 SC 459; State of Orissa v. M.A. Tulloch and Co. (1964) 4 SCR 461 =AIR 1964 SC 1284; Sandur Manganese and Iron Ores Ltd. v. State of B Kamataka 2010 (11) SCR 240 = (2010) 13 SCC 1; State of Assam v. Om Prakash Mehta (1973) 1 SCC 584; Orissa Cement Ltd. v. State of Orissa 1991 (2) SCR 105 =1991 Supp. (1) SCC 430; Monnet /spat and Energy Ltd. v. Union C of India and Ors. 2012 (7) SCR 644 = (2012) 11 SCC 1 - referred to.

1.3. Power to regulate assumes the continued existence of that which is to be regulated and it includes D the authority to do all things which are necessary for the doing of that which is authorized including whatever is necessarily incidental to and consequential upon it, but this incidental power cannot be read to empower the E Central Government to allocate the coal blocks which is neither contemplated by the CMN Act nor by the 1957 Act. It is so because where a statute requires to do a certain thing in a certain way, the thing must be done in that way or not at all. Other methods of performance are. F necessarily forbidden. Allocation letter issued ~y the Central Government is not the procedure which regulates the exercise under r.22 of the Mineral Concession Rules,

1960. The source of power of the Central Government in G allocation of coal blocks is dependant upon whether such power exists in law or not. But once the letter allocating a coal block is issued by the Central Government, the statutory role of the State Government under the 1957 H Act to recommend or not to· recommend to the Central

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Government grant of prospecting licence or mining lease A for the coal mines, is reduced to completion of processual formalities only. The allocation of coal block by the Central Government results in the selection of beneficiary which entitles the beneficiary to get the 8 prospecting licence and/or mining lease from the State Government. Obviously, allocation of a coal block amounts to grant of largesse. [para 58,59, 66 and 70] [485- B-C, F-H; 486-A-B; 488-C-D; 494-D-E] c Nazir Ahmad v. King Emperor (1935-36) 63 IA 372 - referred to.

1.4. This Court is of the opinion that nothing should be read in the two Acts, namely CMN Act and the 1957 D Act, which results in- destruction of the policy, purpose- and scheme of the two Acts. It is not right to suggest that by virtue of declaration u/s 1A of the CMN Act, the power of the State u/s 10(3) of the 1957 Act has become E unavailable. [para 63] [489-D-E]

Tara Prasad Singh and others v. Union of India and others 1980 (3) SCR 1042 = (1980) 4 sec 179 - relied on. F 1.5. This Court holds that the exercise undertaken by the Central Government in allocating the coal blocks or, in other words, the selection of beneficiaries, is not traceable either to the 1957 Act or the CMN Act. No such G legislative policy (allocation of coal blocks by the Central Government) is discernible from these two enactments. [para 65] [490-C-D]

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A 1.6. Insofar as Art. 73 of the Constitution is concerned, the executive power of the Union extends to the matters with respect to which Parliament has power to make laws and the executive instructions can fill up the gaps not covered by statutory provisions but the 8 executive instructions cannot be in derogation of the statutory prpvisions. The practice and procedure for allocation of coal blocks by the Central Government through administrative route is clearly inconsistent with C the law already enacted or the rules framed. [para 65] [490-D-F]

1. 7. An interpretation to the statute received from 0 contemporary authority is not binding upon the courts and may have to be disregarded if such interpretation by the contemporary authority is clearly wrong. The process evolved by the Central. Government for allocation of coal blocks for captive use has significantly and effectively E reversed the scheme provided in the 1957 Act inasmuch as in most of the cases the applications have been made directly to the Central Government. [para 68] [492-F-G]

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pool" CMN Act places embargo on granting the leases for winning or mining coal to persons other than those mentioned in s.3(3)(a)(iii). The decision of the Screening Committee to recommend allocation of coal blocks to consortium of companies or formulation of groups or common pool and the procedure followed by it and finally issuing allocation letters to one leader company is in contravention of s.3(3)(a)(iii) of the CMN Act. The recommendation for allocation of blocks jointly in favour of two or three companies are in contravention to the .J CMN Act. Joint venture arrangement with ineligible firms is also impermissible. [para 138, 143 and 155] [544-G-H; 545-A-B; 557-A; 580-B] D 2.2. The expression "engaged in" occurring in s.3(3)(a)(iii) means that the company that was applying for the coal block must have set up an iron and steel plant, power plant or cement plant and be engaged in the production of steel, power or cement. The prospective engagement by a private company in the production of steel, power or cement would not entitle such private company to carry out coal mining operation. Most of the companies, which have been allocated coal blocks, were not engaged in the production of steel, power or cement at the time of allocation. Thus, the requirement of end-use project, as per s.3(3) of CMN Act, was not met at the time of allocation. [para 151] [574-F-H; 575-A] G

2.3. As regards the legality of the allocations made to the State/State PSUs through the Screening Committee route as well as Government dispensation route, the H

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A expression "Government company or a corporation owned, managed or controlled by the Central Government" occurring in s. 3(3)(a)(i) means Government of India Public Undertaking. It does not include State B Government Public Sector Undertaking. This is fortified by s.3(4), s.4 and ss.5, 6 and 7. Thus, commercial mining cannot be carried on by the State Government or the State PSUs; they became entitled only to obtain sub- C lease of reserves of coal in isolated small pockets under clauses (i) and (ii) of proviso to s.3(3)(c). The "isolated small pockets" are those which are away from the main coalfields and have limited known reserves which are not ·sufficient for scientific and economic development in a D coordinated and integrated manner and the coal produced from such areas would mainly be utilized for local consumption without 'transportation by railways. Therefore, allocation of coal blocks to the State PSUs E which ultimately on getting mining leases may enable them to win or mine coal commercially is clearly in breach of the provisions of the CMN Act. [para 150, 153 and 153] [575-D-E; 576-H; 577-A-C, E-F; 579-C-D] F 2.4. The entire allocation of coal block as per recommendations made by the Screening Committee from 14.07.1993 in 36 meetings and the allocation through the Government dispensation route suffers from the vice of arbitrariness and legal flaws. There was no objective criteria, nay, no criteria for evaluation of comparative merits. The approach had been ad-hoc and casual. There was no fair and transparent procedure, all resulting in unfair distribution of the national wealth. Common good

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and public interest have, thus, suffered heavily. Therefore, A the allocation of coal blocks based on the recommendations made in all the 36 meetings of the Screening Committee is illegal. [para 154] [579-D-E, F-G] B

3. It is clarified that no challenge was laid before in respect of blocks where competitive bidding was held for the lowest tariff for power for Ultra Mega Power Projects (UMPPs) and the same was stated to be in accord with the opinion given in Natural Resources Allocation C Reference and the benefit of the coal block is said to have passed on to the public. However, it has been pointed out that in some cases the Government has allowed diversion of coal from UMPP to other end uses i.e. for o commercial exploitation. Having regard to this, it is directed that the coal blocks allocated for UMPP would only be used for UMPP and no diversion of coal for commercial exploitation would be permitted. [para 158] E [580-H; 581-A-C]

Case Law Reference:

2012 (7) SCR 644 referred to para 49 F 1970 (2) SCR 100 referred to para 50 (1961) 2 SCR 537 referred to para 50 (1964) 4 SCR 461 referred to para 50 G 2010 (11) SCR 240 referred to para 53 (1973) 1 sec 584 referred to para 54 1991 (2) SCR 105 referred to para 56 (1935-36) 63 IA 372 relied on para 59 H

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A 1980 (3) SCR 1042 relied on para 63

1979 (3) SCR 373 referred to para 67

ILR 35 Calcutta 701 referred to para 67

B ILR 43 Calcutta 790 referred to para 67

2012 (3) SCR 147 referred to para 83

2012 (9) SCR 311 relied on para 83

c (1980) 4 sec 1 referred to para ,84

(1987) 2 sec 295 referred to para 84

(1988) 1 sec 166 referred to para 86

(1997) 1 sec 592 referred to para 87'" D (2000) 8 sec 262 referred to para 88

2009 (9) SCR 225 referred to para 89

1982 (1) SCR 947 referred to para 95 E 1986 SCR 479 referred to para 95 (2014) 6 sec 590 relied on para 99

CRIMINAL ORIGINAL JURISDICTION : Writ Petition F (Criminal) No. 120 of 2012.

WITH

W.P. (C) Nos. 463 and 515 of 2012 G W.P. (C) No. 283 of 2013.

Ranjit Kumar, SG., Maninder Singh ASG., K.H. Deshpande, Amrendra Sharan, H.N. Salve, Vivek Tankha, H Suman, Vipin K. Saxena, Prasant Bhushan, Pranav Sachdeva,

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Satyajit A. Desai, Anagha S. Desai, Swetab Kumar, Jyoti A Mendiratta, Arijit Prasad, Satya Siddiqui, Sarfr()j A. Siddiqui, S.K. Mishra, Anil Katiyar, D.S. Mahra, Amit Anand Tiwari Sanchit Guru, Mahesh Agarwal, Neena Nagpal, E.C. Agrawala, Asha Gopalan Nair, Ramesh Babu M.R., Anip Sachthey, Tapesh K. Singh, Mohd. Waquas, D. Mahesh Babu, Amjid B Maqbool, Sanjay Kharde, A.P. Mayee,, Prasanto Chander Sen, Sayuj Kumar Banerjee, C.D. Singh, Kirti Renu Mishra, Anip Sachthey, ·Shagun Matta, Saakar Sardana, Rishabti Sancheti, Mishra Saurabh, Vanshaje Shukla, A.N. Singh, Mamta Saxena, Milind Kumar, Gaurav Jeneja (For Khaitan & Co.), Aparna Bhat, c Braj Kishore Mishra, Kaimini Jaiswal, Manohar Lal Sharma Petitioner-In-Person for the appearing parties.

The Judgment of the Court was ~elivered by

R,M. LODHA, CJI. 1. Coal is king and paramount Lord D of industry is an old saying in the industrial world. Industrial greatness has been built up on coal by many countries. In India, coal is the most important indigenous energy resol:!rce and remains the dominant fuel for power g·eneration and many industrial applications. A number of major industrial sectors including iron and steel production depend on coal as a source of energy. The cement industry is also a major coal user. Coal's potential as a feedstock for producing liquid transport fuels is huge in India. Coal can help significant economic growth. India's energy future and. prosperity are integrally dependant upon mining arid using its most abundant, affordable.and dependant energy supply - which is coal. Coal is extremely important elemerrt in the industrial life of developing India. In power, iron and steel, coal is used as an input and in cement, coal is used .both as fuel and an input. It is no exaggeration that coal is regarded by many as the black diamond.

2. Being such a significant, valuable and important natural resource, the allocation of coal blocks for the period 1993 to 201 O is the subje9t matter of this'group of writ petitions filed in H

458 SUPREME COURT" REPORTS [2014] 8 S.C.R.

A the nature of Public Interest Litigation, principally one by Manohar Lal Sharma and the other by the Cammon Cause. The allocation of coal blocks made during the above period by the Central Government, according to petitioners, is illegal and unconstitutional inter alia on the following grounds: B (a) Non-compliance of the mandatory legal procedure under the Mines and Minerals (Development and Regulation) Act, 1957 (for short, '1957 Act').

(b) Breach of Section 3("3)(a)(iii) of the Coal Mines C (Nationalisation) Act, 1973 (for short, 'CMN Act').

(c) Violation of the principle of Trusteeship of natural resources by gifting away precious resources as largesse.

(d) Arbitrariness, lack of transparency, lack-of objectivity 0 and non-application of mind; and

(e) Allotment .tainted with ma/a fides and corruption and made in favour of ineligible companies tainted with ma/a fides and corruption. E

3. The first of these writ petitions was filed by Manohar Lal Sharma. When that writ petition was listed for preliminary hearing on 14.09.2012, the Court issued notice to Union of India and directed it to file counter affidavit through Secretary, F Ministry of Coal dealing with the following aspects:

(i) The details of guidelines framed by the Central Government for allocation of subject coal blocks.

(ii) The process adopted for allocation of subject coal G blocks.

(iii) Whether the guidelines contain inbuilt mechanism to ensure that allocation does not lead to distribution of largesse I unfairly in the hands of few private companies?

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[RM. LODHA, CJI.] (iv) Whether the guidelines were strictly followed and whether by allocation of the subject coal blocks, the objectives of the policy have been realised?

(v) What were the reasons for not following the policy of competitive biddin~ adopted by the Government of India way back in 2004 for allocation of coal blocks?

(vi) What steps have been taken or are proposed to be taken against the allottees who have not adhered to the terms of allotment or breached the terms thereof? c

4. Another PIL came to be filed by Common Cause after the above order was passed. PIL by Common Cause came up for preliminary hearing on 19.11.2012. Since, certain additional issues were raised and additional reliefs were also made in the PIL by Common Cause, this Court issued notice in that matter as well on 19.11.2012.

5. Principally, two prayers have been made in these matters, first, for quashing the entire allocation of coal blocks made to private companies by the Central Government between 1993 and 2012 and second, a court monitored investigation by the Central Bureau of Investigation (CBI) and Enforcement Directorate (ED) or by a Special Investigation Team (SIT) into the entire allocation of coal blocks by the Central Government made between the above period covering all aspects. F

6. The present consideration of the matter is confined to the first prayer, i.e., for quashing the allocation of coal blocks to private companies made by the Central Government between the above period. At the outset, therefore, it is clarified G that consideration of the present matter shall not be construed, in any manner, as touching directly or indirectly upon the investigation being conducted by CBI and ED into the allocation of coal blocks. H

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A 7. The first counter affidavit was filed by the Central Government on 22.01.2013 running into eleven volumes and 2607 pages. Thereafter, further/additional counter affidavit was filed by the Central Government. However, when the matters were listed on 10.07.2013, learned Attorney GeneraLsubmitted B that in the counter affidavits filed so far, the Union of India had focused on the six queries raised by the Court on 14.09.2012 in the writ petition filed by Manohar Lal Sharma. He sought some time to enable the Central Government to file appropriate counter affidavit justifying allocation of coal blocks. Thereafter, c further/additional counter affidavits have also been filed by the Central Government.

8. On 10.09.2013, the arguments with regard to challenge to allocation of coal blocks commenced which continued on 11.09.2013, 12.09.2013, 17.09.2013, 18.09.2013, 24.09.2013, D 25.09.2013 and 26.09.2013. On 26.09.2013, Attorney General in the course of his arguments submitted that allocation letter . ... by the Central Government was only a first step towards obtaining mining lease and that, by itself, did not confer any right on the allottee to work mines. He submitted that at1the E best, letter of allocation was a letter of intent and issuance of such allocation letter in no way impinges the rights of the State Governments under the 1957 Act. In light of the submissions of the learned Attorney General on 26.09.2013, we wanted to know from the counsel for the petitioners whether concerned F State Governments should be asked to explain their position in the matter to which Mr. Manohar Lal Sharma, petitioner-in- person and Mr. Prashant Bhushan agreed and, accordingly, the Court issued notice to the States of Jharkhand, Chhattisgarh, Odisha, Maharashtra, Andhra Pradesh, Madhya Pradesh and G West Bengal as the subject coal blocks, for which the allocation is in issue, were located in these States. The Court sought the views of the above States on the following:

(i) How did the State Government understand the allocation · of coal blocks by the Central Government? H

MANOHAR l:AL SHARMA v. PRINCIPAL SECRETARY 461 [R.M. LODHA, CJl.] (ii) What was the" role of the State Government in the A allocation of coal blocks ? I

(iii) What was the role of the State Government in the subseq!Jent steps having regard to the provisions of the 1957 Act? B (iv) The details of the agreements entered into by the State Public Sector Undertakings, which were allotted coal blocks, with private parties for the coal blocks located in the State.

9. In pursuance of the above, 7 States have filed their C responses.

10. The arguments re-commenced on 05.12.2013. On that day, arguments of the States of Jharkhand, Chhattisgarh and Odisha were concluded and matters were fixed for 08.01.2014. 0 On 08.01.2014, the arguments on behalf of the States of Maharashtra, Andhra Pradesh, Madhya Pradesh and West Bengal were concluded and the matters were fixed for 09.01.2014. On that day, arguments of learned Attorney General were concluded. E

11. Three Associations, viz., Coal Producers Association, Sponge Iron Manufacturers Association and Independent Power Producers Association of India have made applications for their intervention stating that these associations represented large number of allottees who have been allocated subject coal blocks. Accordingly, Mr. K.K. Venugopal, learned senior counsel was heard for Coal Producers Association and Mr. Harish N. Salve, learned senior counsel was heard on behalf of the Sponge Iron Manufacturers Association and Independent Power Producers Association of India. They commenced their arguments on 09.01.2014, which continued on 15.01.2014 and concluded on 16.01.2014. The arguments in rejoinder by Mr. Manohar Lal Sharma, petitioner-in-person and Mr. Prashant Bhushal'), learned counsel for Common Cause were also concluded on that day. The arguments of Mr. Sanjay Parikh, H

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A who had made an application for intervention on behalf of Mr. Sudeep Shrivastav were also heard and concluded. The judgment was reserved on that day.

12. It is appropriate that we first notice the statutory framework relevant for the issues under consideration. The 8 Mines and Minerals (Development and Regulation) Act, 1948 (for short, '1948 Act') was enacted to provide for the regulation of mines and oil fields and for the development of the minerals under entry 36 of the Government of India Act, 1935. It received the assent of the Governor General on 08.09.1948 and came C into effect from that date. •

13. 1948 Act was repealed by the 1957 Act. The introduction of the 1957 Act reads:

D "In the Seventh Schedule of the Constitution in Union List entry 54 provides for regulation of mines and minerals development to the extent to which such regulation and development under the control of the Union is declared by Parliament by law to, be expedient in the public interest. On account of this provision it became imperative to have E a separate legislation. In order to provide for the regulation of mines and the development of minerals, the Mines and Minerals (Regulation and Development) Bill was introduced in the Parliament."

F 14. 1957 Act has undergone amendments from time to time. Section 2 of the 1957 Act reads:

"Declaration as to the expediency of Union Control - it is hereby declared that it is expedient in the· public interest G that the Union should take under its control the regulation of mines and the development of minerals to the extent hereinafter provided."

15. Sections 3(a), (c), (d), (e), (f), (g) and (h) define: "minerals", "mining lease", "mining operations", "minor H

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[R.M. LODHA, CJI.] minerals", "prescribed", "prospecting licence·, and "prospecting 'A operations" 1, respectively.

16. Section 4 mandates that prospecting or mining operations shall be under licence or lease. Sub-section (2) provides that no reconnaissance permit, prospecting licence or mining lease shall be granted otherwise than in accordance with the provisions of the Act" and the rules made thereunder.

17. Section 5 is a restrictive provision. The provision mandates that in respect of any mineral specified in the First Schedule, no reconnaissance permit, prospecting licence or mining lease shall be granted except with the previous approyal . of the Central Government. Coal and Lignite are at item no.1 in Part A under the title "Hydro Carbons/Energy Minerals" in the First Schedule appended to the 1957 Act. D

18. Section 6 provides for maximum area for which a prospecting licence or mining lease may be granted. Section 7 makes provisions for the periods for-which prospecting licence may be granted or renewed and Section 8 provides for periods for which mining leases may be granted or renewed. E Section 10 provides that application for reconnaissance permit, prospecting licence or mining lease in respect of any land in

1. (1 "3(a) "minerals" includes all minerals except mineral oils; (c) "mining lease" means a lease granted for the purpose of undertaking mining operations, and includes a sub-lease granted for such purpose; F (d) "mining operations" means any operations undertaken for the purpose of winning any mineral; (e) "minor minerals" means building stones, gravel, ordinary clay, ordinary .sand other than sand used for prescribed purposes, and any oiher mineral which the Central Government may, by notification in the Official Gazette, G declare to be a minor mineral; (f) "prescribed" means prescribed by rules made under this Act; (g) "prospecting licence" means a licence granted for the purpose of undertaking prospecting operations; (h) "prospecting operations" means any operations undertaken for the purpose of exploring, locating or proving mineral deposit;" H

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A which the minerals vest in the Government shall be made to the State Government concerned, inter alia, it empowers the State Government concerned to grant or refuse to grant permit, licence or lease having regard to the provisions of the 1957 Act or the Mineral Concession Rules, 1960 (for short '1960 s Rules').

19. Section 11· provides for preferential right of certain persons. Sub-.section (1) of Section 11 makes a provision that where a reconnaissance permit or prospecting licence has been granted in respect of any land, the permit holder or the C licensee shall have a preferential right for obtaining a prospecting licence or mining lease, as the case may be, in respect of that land over any other person. This is, however, subject to State Government's satisfaction and certain conditions as provided therein. Sub-section (2) of Section 11 D says that where the State Government does not notify in the Official Gazette the area for grant of reconnaissance permit or prospecting licence or mining lease and two or more persons have applied for a reconnaissance permit, prospecting licence or a mining lease in respect of any land in such area, the applicant whose application was received earlier, shall have a preferential right to be considered for such grant over the applicant whose application was received later. This is, however, subject to provisions of sub-section (1). The first proviso appended thereto enacts that where an area is available for grant of reconnaissance permit, prospecting licence or mining lease and the State Government has invited applications by notification in the Official Gazette for grant of such permit, licence or lease, the applications received during the period specified in such notification and the applications which had been received prior to the publication of such notification in respect of the lands within such area or had not been disposed of, shall be deemed to have been received on the same day for the purpose of assigning priority under sub- section (2). The second proviso indicates that where such applications are received on the same day, the State

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[R.M. LODHA, CJI.] Government, after taking into consideration the matter specified in sub-section (3), may grant the reconnaissance permit, prospecting licence or mining lease to one of the applicants as it may deem fit. Sub-section (3) elaborates the matter referred to in sub-section (2), namely, (a) any special knowledge of, experience in reconnaissance operations, prospecting operations or mining operations, possessed by the applicant; (b) the financial resources of the applicant; (c) the nature and quality of the technical staff employed or to be employed by the applicant; (d) the investment which the applicant proposes to make in the mines and in the industry based on yie minerals; c and (e) such other matters as may be prescribed.

2-0. Section 13 empowers the Central Government to make rules in respect of minerals. By virtue of the power conferred upon the Central Government under Section 13(2), the 1960 Rules have been framed for regulating the grant of, inter alia, mining leases in respect of minerals and for purposes connected therewith.

21. By virtue of Section 17, the Central Government has been given special powers to undertake prospecting or mining operations in certain lands. Section 17-A authorises the Central Government to reserve any area not already held under any prospecting licence or mining lease with a view to conserve any mineral and after consultation with the State Government by notification in the Official Gazette. F

22. Section 18 indicates that it shall be the duty of the Central Government to take all such steps as will be necessary for the conservation and systematic development of minerals in India and for the protection of the environment by preventing or controlling any pollution which may be caused by prospecting ·G or mining operations and for such purposes the Central Government may, by notification in the Official Gazette, make such rules as it thinks necessary.

23. Section 18Pt empowers the Central Government to H

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A authorise the Geological Survey of India to carry out necessary · investigation for the purpose of information with regard to the availability of any mineral in or under any land in relation to which any prospecting licence or mining lease has been granted by a State Government or by any other person. The proviso that follows sub-section (1) of Section 18A provides that in cases of prospecting licences or mining leases granted by a State Government, no such authorisation shall be made except after consultation with the State Governm~nt.

24. Section 19 provides that any prospecting licences and mining leases granted, renewed or acquired in contravention of the 1957 Act or any rules or orders made thereunder shall be void and of no effect.

, 25. The 1960 Rules were framed by the Central D Government, as noted above, in exercise of the powers conferred by·Section 13.

26. Chapter IV of 1960 Rules deals with grant of mining leases in respect of land .in which the minerals vest in the E Government. Sub-rule (1) of Rule 22 provides that an application for the grant of a mining lease in respect of land in which the minerals vest in the Government shall be made to the State Government in Form I through such officer or authority as the State Government may specify in this behalf. Sub-rule (3) F provides for the documents to be annexed with the application and so also that such application must be accompanied by a non-refundable fee as prescribed therein. Sub-rule (4) of Rule 22 provides that on receipt of the application for the grant of mining lease, the State Government shall take decision to grant precise area and communicate such decision to the applicant. G The applicant, on receipt of communication from the State Government of the precise areas to be granted, is required to submit a mining plan within a period of six months or such other period as may be allowed by the State Government to the Central Government for its approval. The applicant is required H to submit the mining plan duty approved by the Central

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[R.M. LODHA, CJI.] Government or by an officer duly authorized by the Central A Government to the State Government to grant mining legse over that area. Sub-rule (5) of Rule 22 provides the details to be incorporated in the mining plan.

27. Rule 26 empowers the State Government to refuse to 8 grant or renew mining lease over the whole or part of the area applied for. But that has to be done after giving an opportunity of being heard and for reasons to be recorded in writing and communicated to the applicant.

28. Rule 31 provides for time within which lease is to be C executed where an order has been made for grant of such lease on an application. Rule 34 provides for manner of exercise of preferential rights for mining lease.

29. Rule 35 provides that where two or more persons have o applied for a reconnaissance permit or a prospecting licence or a mining lease in respect of the same land, the State Government shall, for the purpose of sub-section (2) of Section 11, consider besides the matters mentioned in clauses (a) to (d) of sub-section (3) of Section 11, the end use of the mineral by the applicant.

30. In short, the 1957 Act provides for general restrictions on undertaking prospecting and mining operations, the procedure for obtaining prospecting licences or mining leases in respect of lands in which the minerals vest in the government, the rule-making power for regulating the grant of prospecting licences and mining leases, special powers of Central Government to undertake prospecting or mining operations in certain cases, and for development of minerals. G

31. The Coal Mines (Taking Over of Management) Act, 15 of 1973, (for short, 'Coal Mines Management Act') was passed,

"to provide for the taking over, in the public interest, of the management of coal mines, pending nationalisation of H

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A such mines, with a view to ensuring rational and coordinated development of coal production and for promoting optimum utilisation of the coal resources consistent with the growing requirements of the country, and for matters connected therewith or incidental thereto." B

32. The Coal Mines Management Act received the assent of the President on 31.03.1973 but it was made effective from 30.01.1973 except Section 8(2) which came into force at once. Section 3( 1) provides that on and from the appointed day (that is, 31.01.1973) the management of all coal mines shaU vest in the Central Government. By Section 3(2), the coal mines specified in the Schedule shall be deemed to be the coal mines the management of which shall vest in the Central Government under sub-section (1). Under the proviso to Section 3(2), if, afte~ the appointed day, the existence of any other coal mine comes to the knowledge of the Central Government; it shall -by a notified order make a declaration about the existence of such mine, upon which the management of such coal mine also vests in the Central Government and the provisions of the Act become applicable thereto. E

33. Immediately after the Coal Mines Management Ad, the Parliament enacted the CMN Act. CMN Act was passed,

"to provide for the acquisition and transfer of the right, title and interest of the owners in respect of coal mines specified in the Schedule with a view to reorganising and reconstructing any such coal mines so as to ensure the rational, coordinated and scientific development and utilisation of coal resources consistent with the· growing requirements of the country, in order that the ownership and control of such resources are vested in the State and thereby so distributed as best to subserve the common good, and for matters connected therewith or incidental thereto."

H 34. Section 2(b) of the CMN Act defines a coal mine in

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[RM. LODHA, CJI.] the same manner as the corresponding provision of the Coal A Mines Management Act, namely, a mine "in which there exists one or more seams of coal". Section 3(1) provides that on the appointed day (i.e., 01.05.1973) the right, title and interest of the owners in relation to the coal mines specified in the Schedule shall stand transferred to, and shall vest absolutely B in the Central Government free from all encumbrances. Section 4(1) provides that where the rights of an owner under any mining lease granted, or deemed to have been granted. in relation to a coal mine, by a State Government or any other person, vest in the Central Government under Section 3, the Central c Government shall, on and from the date of such vesting; be deemed to have become the lessee of the State Government or such other person, as the case may be, in relation to such coal mine as if a mining lease in relation to such coal mine had been granted to the Central Government. The.period of such 0- lease is to be the entire period for which the lease could have been granted by the Cenfral Government or such other person under the 1960 Rules and thereupon all the rights under the · mining lease granted to the lessee are to be deemed to have been transferred to, and vested in, the Central Government.' By E Section 4(2) on the expiry of the term of any lease referred to in sub-section '(1 ), the lease, at the option of the C.entral Government, is liable to be renewed on the same terms and conditions on which it was held by the lessor for the maximum period for which it could be renewed under the 1960 Rules. · Section 5(1) empowers the Central Government under certain conditions to direct by· an order in writing ttiat the right, title and interest of an owner in relation to a coal mine shall, instead of continuing to vest in the Central Government, vest in the Government company. Such company, under Section 5(2), is to be deemed to have become the lessee of the coal mine as if the mining lease had been granted to it. By Section 6(1), the property which vests in the Central Government or in a government company is freed and discharged from all obligations and encumbrances affecting it. Section 8 requires

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A that the owner of every coal mine or group of coal mines specified in the second column of the Schedule shall be given by the Central Government in cash and in the manner specified in Chapter VI, for the vesting in it under Section 3 of the right, title and interest of the owner, an amount equal to the amount B specified against it in the corresponding entry in the fifth column of the Schedule. By Section 11(1), the general superintendence, direction, centre! and management of the affairs and business of a coal mine, the right. title and interest of an owner in relation to which have vested in the Central Government under Section c 3 shall vest in the Government company or in the Custodian, as the case may be.

35. The CMN Act came to be amended by the Coal Mines (Nationalisation) Amendment Ordinance which was promulgated on 29.04.1976. The Ordinance was replaced by the Coal Mines (Nationalisation) Amendment Act, 1976 (for short, '1976 Nationalisation Amendment Act'). A new section, Section 1-A was inserted by which it was declared that it was expedient in the public interest that the Union should take under its control the regulation and development of coal mines to the extent provided in sub-sections (3) and (4) of Section 3 and sub-section (2) of Section 30 of the CMN Act. By sub-section (2) of Section 1-A, the declaration contained in sub-section (1) was to be in addition to and not in derogation of the declaration contained in Section 2 of the 1957 Act. By Section 3 of the F 1976 Nationalisation Amendment Act, a new sub-section (3) was introduced in Section 3 of the principal Act. Under clause (a) of the newly introduced sub-section (3) of Section 3, on and from the commencement of Section 3 of the 1976 Nationalisation Amendment Act, no person other than (i) Central G Government or a Government company or a corporation owned, managed or controlled by the Central Government or (ii) a person to whom a sub-lease, referred to in· the proviso to clause (c) has been granted.by any such Government, company or corporation or (iii) a company engaged in the production of iron and steel, shf!ll carry on coal mining operation, in India in

MANOHAR LAL SHARMA v. PRINCIPAL SECRETARY 4 71 [R.M. LODHA, CJI.] any form. Under clause (b) of sub-section (3), excepting the mining leases granted before the 1976 Nationalisation. Amendment Act in favour of the Government company or corporation referred to in clause (a), and any sub-lease granted by any such Government, Government company or corporation, all other mining leases and sub-leases in force immediately before such commencement shall insofar as they relate to the winning or mining of coal, stand terminated. Clause (c) of the newly introduced sub-section (3) of Section 3 provides that no lease for winning or mining coal shall be granted in favour of any person other than the Government, Government company c or corporation referred to in clause (a). Under the proviso to clause (c), the Government, Government company or the corporation to whom a lease for winning or mining coal has been granted may grant a sub-lease to any person in any area if, (i) the reserves of coal in the area are in isolated small 0 pockets o.r are not sufficient for scientific and economical devel.opment in a coordinated and integrated manner, and (ii) the coal produced by the sub-lessee will not be required to be transported by rail. By sub-section (4) of Section 3, where a mining lease stands terminated under sub-section (3), it shall E be lawful for the Central Government or a Government company or corporation owned or controlled by the Central Government to obtain a prospecting licence or mining lease in respect of the whole or part of the land covered by the mining lease which stands terminated. Section 4 of the 1976 Nationalisation Amendment Act introduces an additional provision in Section F \30 of the principal Act by providing that any person who engages, or causes any other person to be engaged, in winning or mining coal from the whole or part of any land in respect of which no valid prospecting licence.or mining lease or sub-lease is in force, shall be punishable with imprisonment for a term G which may extend to two years and also with fine which may extend to Rs.10,000/-.

36. By the Coal Mines (Nationalisation) Amendment Act, 1993 (for short, '1993 Nationalisation Amendment Act'), the H

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A CMN Act was further amended. The Statement of Objects and· Reasons of the 1993 Nationalisation Amendment Act reads· thus:

"Considering the need to augment power generation and to create additional capacity during the eighth plan, the 8 Government have taken decision to allow private sector participation in the power sector. Consequently, it has become necessary to provide fOi coa! linkages to power generating units coming up in the private sector. Coal India Limited and Neyveli Lignite Corporation Limited, the major c producers of coal and lignite in the public sector, are experiencing resource constraints. A number of projects cannot be taken up in a short span of time. As an alternative, it is proposed to offer new coal and lignite mines to the proposed power stations in the private sector for the purpose of captive end use. The same arrangement is also considered necessary for other industries who would be handed over coal mines for captive end use. Washeries have to be encouraged in the private sector also to augment the availability of washed coal for supply to steel plants, power houses, etc.

Under the Coal Mines (Nationalisation) Act, 1973, coal mining is exclusively reserved for the public sector, except in case of companies engaged in the production of iron and steel, and mining in isolated small pockets not amenable to economical development and not requiring rail transport. In order to allow private sector participation in coal mining for captive use for purpose of power generation as well as for other captive end uses to be notified from time to time and to allow the private sector to set up coal washeries, it is considered necessary to amend the Coal and Coal Mines (Nationalisation) Act, 1973.

The Coal Mines (Nationalization) Amendment Bill, 1992 H seeks to achieve the aforesaid objectives."

MANOHAR LAL SHARMA v. PRINCIPAL SECRETARY 4 73 [R.M. LODHA, CJI.]

37. Section 3 of the CMN Act was amended and thereby A in clause (a) of sub-section (3) for item (iii), the following was substituted, namely,

(iii) a company engaged in -

(1) the production of iron and steel, B

(2) generation of power,

(3) washing of. coal obtained from a mine, or

(4) such other end use as the Central Government may, c by notification, specify.

38. By further Notification dated 15.03.199.6, the Central Government specified production of cement to be an end-use for the purposes of the CMN Act. D

39. By another Notification dated 12.07.2007, the Central Government specified production of syn-gas obtained through coal gasification (underground and surface) and coal liquefaction as end uses for the purposes of the CMN Act. E

40. The background in which Section 3(3) of the CMN Act was amended to permit private sector entry in coal mining operation for captive use has been sought to be explained by the Central Government. It is stated that nationalization of coal through the CMN Act was done with the objebtive of ensuring F "rational, coordinated and scientific development and utilization of coal resources consistent with the growing requirements of the. country" and as a first step in 1973, 711 coal mines ·specified in the Schedule appended to CMN Act were nationalized and vested in the Central Government. By 1976 G Nationalisation Amendment Act, the Central Government alone was permitted to mine coal with the limited exception of private compan'ies engaged in the production of iron and steel. In 1991, the country was facing huge crisis due to H

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A (a) the situation regarding balance of payments; (b) the. economy being in doldrums; (c) dismal power situation; (d) shortage in coal production; and (e) inability of Coal India Limited (CIL) to produce coal because of lack of necessary resources to maximize coal production amongst other reasons. B There was a huge shortage of power in the country. The State Electricity Boards were unable to meet power requirements. Post liberalization, in the 8th Five Year Plan (1992-1997) '\ renewed focus was placed on developing energy and infrastructure in the country. CIL was not in a position to c generate the resources-required. It was in this background that in a meeting taken by the Deputy Chairman of the Planning Commission on 31.10.1991, it was decided that "private enterprises may be permitted to develop coal and lignite mines as captive units of power projects". The approval of Cabinet was consequently sought vide a Cabinet note dated 0 30.01.1992 for "allowing private sector participation in coal mining operations for captive consumption towards generation of power and other end use, which may be hotified ' by Government from time to time", The Cabinet in the meeting held on 19.02.1992 considered the above Cabinet note and it was decided that the proposal may be brought up only when specific projects of private sector participation in coal mining come to the Government for consideration. Subsequently.another Cabinet note dated 23.04.1992 was placed before the Cabinet containing references to certain private projects tike the two 250 MW thermal power plants of RPG Enterprises, which had been recommended by the Government of West Bengal. The proposal contained in the Cabinet note dated 23.04.1992 was approved by the Cabinet on 05.05.1992. On 15.07.1992, the Bill for amendment of G Section 3(3) of CMN Act was introduced in Rajya Sabha and the same was passed on 21.07.1992. The Bill was passed in Lok Sabha on 19.04.1993 and got assent of the President on 09.06.1993 ..

H 41. The Central Government has highlighted that once

MANOHAR LAL SHARMA v." PRINCIPAL SECRETARY 4 75 [R.M. LODHA, CJI.] Section 3(3) of the CMN Act was amended to permit private sector entry in coal mining operations for captive u$e, it became necessary to select th~ coal blocks that could. be offered to the private sector for captive use. The coal blocks to be offered for captive mining were cfuly identified and a booklet containing particulars of 40 blocks was prepared which was revised from time to time.

42. Mr. Goolam E. Vahanvati, learned Attorney General with ~II persuasive skill and eloquence af his command has sought to justify the allocation of coal blocks by the Central C Government. He submits that the Central Government is not only empowered but is duty bound to take the lead in allocation of coal blocks and that is what it did, He traces this power to Sections 1A and 3(3) of the CMN Act. It is argued by the · learned Attorney General that in addition to the declaration contained in Section 2 of the 1957 Act, Parliament has mad3 D a further declaration in terms of Entry 54 of List I (Union List) of the Seventh Schedule in Section 1A of the CMN Act which makes specific reference to Section 3(3) of the CMN Act ancf' both have to be read in conjunction with each other. By virtue of Parliament having placed the regulation and development of E coal mines under the control of the Union, Section 1A of the CMN Act regulates coal mining operations under Sections 3(3) and 3(4). He argues that coal reserves are primarily concentrated in seven States, viz., Maharashtra, Madhya Pradesh, Chhattisgarh, Odisha, Jharkhand, Andhra Pradesh F and West Bengal and all these seven States have accepted and acknowledged the source of power of Government of India with respect to allocation of coal blocks.

43. It is argued by the learned Attorney General that by virtue of the bar contained in Section 3(3) of the CMN Act G. between 1976 and 1993, no private company (other than the company engaged in the production of iron and steel) could have carried out coal mining operations in India. Therefore, if no other company could have carried on coal mining H

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A operations, it follows that it could also not have applied to the State Government for grant of lease for mining of coal. Even if they did (post 1993) make an application for grant of prospective licence/mining lease directly to the -State Government, the State Government could not process the same until it received the letter of allocation from the Central Government.

44. Learned Attorney General argues that the consideration of proposals by the Central Government for allocation of coal blocks does· not contravene the provisions of the 1957 Act in any manner, firstly, because Section 1A of CMN Act is in addition to and not in derogation of the 1957 Act; secondly, an application for allocation of a coal block is not dealt with by the provisions of the 1957 Act; and thirdly, after allocation, the allocatee has to make an application for grant of mining lease or prospecting licence to the State Government in accordance with the 1957 Act and the 1960 Rules. It is for these reasons, he submits, that none of the States nor any private person ever challenged the grant of allocation by the Central Government on the ground that the Central Government was not empowered to allocate the coal blocks.

45. The above arguments of the learned Attorney General are vehemently contested by Mr. Prashant Bhushan, learned counsel for Common Cause. He submits that under the provisions of CMN Act only two kinds of entities (a) Central Government and undertakings/corporations owned by the Central Government; and

(b) companies having end-use plants in iron and steel, power, cement, etc., could work the coal mines. He submits that the CMN Act does not, in any way, give the power of calling applications, selection and allocation of coal blocks to the Central Government and Section 3 of the CMN Act only provides eligibility criteria for allocation of coal mines. The procedure for allocation continues to be governed by the 1957 H Act and it is for this reason that ultimately Section 11A

MANOHAR LAL SHARMA v. PRINCIPAL SECRETARY 4 77 [R.M. LODHA, CJI.] concerning allocation of coal mines was introduced in the 1957 A Act only.

46. Mr. Harish N. S<:!lve, learned senior counsel, who appeared for interveners, Sponge Iron Manufacturers Association and Independent Power Producers Association of B India, argues that Section 1A(2) of the CMN Act makes the declaration in addition to the existing declaration in Section 2 . of the 1957 Act. The additional declaration has done away with : any vestige of power in the State in the matter of selection of ; beneficiaries of the mineral and if Section· 1A had not been . inserted vide 1976 Nationalisation Amendment Act, it may have C : been possible to argue that the State, as the owner of the ' mineral, would nonetheless be required to grant the lease under Section 10 of the 1957 Act by exercising its discretion under Section 10(3) albeit subject to further "conditionalities" imposed by Section 3(2) of the CMN Act. The additional declaration, learned senior counsel for the interveners submits, is intended to denude the State of power under Entry 23 of List II of the Seventh Schedule and corresponding executive power under Article 162 of the Constitution of India. According to Mr. Harish N. Salve, the grant or refusal of the lease by State insofar as coal is concerned, is no longer governed by Section 11 of the 1957 Act and that it is governed by Sections 3(3) and 3(4) of the CMN Act and, thus, it is obvious that there has to be first a recommendation by the Central Government before the State can exercise its discretion under Section 10(3) of the 1957 Act F and that the converse would lead to conferring upon the State, in Section 10(3) of the 1957 Act, an unguided and un-canalised power to grant or refuse a lease. He submits that if Section 3(3) of the CMN Act is read as prescribing qualifications in addition to those in Section 5(1) of the 1957 Act, such position would G make the scheme of both the enactments - 1957 Act and CMN Act - unworkable.

47. Mr. Harish N. Salve argues that the allocation letter issued by the Central Government is the procedure which H

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A regulates the exercise under Rule 22 of the 1960 Rules (and Section 10(3) of the 1957 Act) by the State Government and that procedure is to ensure that a lease is granted to a company engaged in stipulated permissible activities by making it a two step process, viz., the issue of letter of allotment conditional B upon the end-use plant, followed by grant of a lease once end usage is achieved. He submits that Section 3(3) of the CMN Act is fully satisfied where a lease is granted to a company which engages in the permissible activity. Learned senior counsel for the interveners fully supports the arguments of the c learned Attorney General that the Central Government has the power to identify the beneficiary of an allotment and once the Central Government has identified the beneficiary of allotment, the State will be obliged to grant a lease if other conditions are satisfied.

D 48. Mr. K.K. Venugopal, learned senior counsel appearing for Coal Producers Association argues that having regard to the declaration made under Section 2 of the 1957 Act and the declaration under Section 1A of the CMN Act and so also Section 3(3) thereof, it is perfectly legitimate for the Central E Government to exercise its power.and jurisdiction in the manner it has done for the purpose of selecting the allottees for coal blocks. He contends that under Article 73 of the Constitution, the executive power of the Union extends to matters in regard to which the Parliament has legislative competence and this F power it undoubtedly possesses by reason of the declarations contained in the 1957 Act and the CMN Act enacted specifically for the regulation and development of coal and coal mines.

G 49. It shall have been noticed that the thrust of the arguments of the learned Attorney General and so also Mr. Harish N. Salve and Mr. K. K. Venugopal hinges around the premise that Sections 1A and 3(3) of the CMN Act clothe the C~ntral Government with power to allocate the coal blocks or, in other words, select the allottees for coal blocks. Is it so? The H

MANOHAR LAL SHARMA v. PRINCIPAL SECRETARY 4 79 [R.M. LODHA, CJI.] constit1,1tional philosophy about law making in relation to mines A and minerals and List I Entry 36 (Federal Legislative List) and List II Entry 23 (Provincial Legislative List) in Schedule VII of the Government of India Act, 1935 which correspond to List I Entry 54 (Union List) and List II Entry 23 (State List), in our Constitution has been noticed by this Court in M~nnet2 . B Speaking through one of us (R.M. Lodha, J., as he theh was) in Monnet2, this Court has noted the statement of the learned Solicitor General in the House of Commons made in the course of debate in respect of the above entries in the Government of India Bill that the rationale bf including only the "regulation of c mines" and "development of minerals" and that, too, only to the extent it was considered expedient in the public interest by a federal law was to ensure that the provinces were not completely cut out from the law relating to mines and minerals and if there was inaction at the Centre, then the provinces could 0 make their own laws. Thus, power in relation to the mines and minerals was accorded to both, the Centre and the States. The Court in Monnet2 said:

"130 ................ The management o{ the mineral resources has been left with both the Central Government E and the State Governments in terms of List I Entry 54 and List II Entry 23. In the scheme of our Constitution, the State Legislatures enjoy the power to enact legislation on the topics of "mines and minerals development". The only fetter imposed on the State Legislatures under Entry 23 is by the latter part of the said entry which says, "subject to the provisions of List I with respect to regulation and development under the control of the Union". In other words, the State Legislature loses its jurisdiction to the extent to which the Union Government had taken over control, the regulation of mines and development of minerals as manifested by legislation incorporating the declaration and no more. If Parliament by its law has

2. Monnet !spat and Energy Ltd. v. Union of India and Ors.; [(2012) 11 SCC 1) H

480 SUPREME COURT REPORTS [2014] 8 S.C.R.'

A declared that regulation of mines and development of minerals should in the public interest be under the control of the Union, which it did by making declaration in Section 2 of the 1957 Act, to the extent of such legislation incorporating the declaration, the power of the State B Legislature is excluded. The requisite declaration has the effect of taking out regulation of mines and development of minerals from List II Entry 23 to that extent. It needs no elaboration that to the extent to which the Central Government had taken under "its control" "the regulation c of mines and development of minerals" under the 1957 Act, the States had lost their legislative competence. By the presence of the expression "to the extent hereinafter provided" in Section 2, the Union has assumed control to the extent provided .in the 1957 Act. The 1957 Act prescribes the extent of control and specifies it. We must D bear in mind that as the declaration made in Section 2 trenches upon the State legislative power, it has to be construed strictly. Any legislation by the State after such declaration, trespassing the field occupied in the declaration cannot constitutionally stand ....... " E . 50.. The declaration made by Parliament in Section 2 of the 1957 Act states that it is expedient in the public interest that the Union should take under its control the regulation of mines and the development of minerals to the extent provided in the F Act. Legal regime relating to regulation of mines and development of minerals is, thus, guided by the 1957 Act and the 1960 Rules. In addition to the above declaration in 1957 Act; a further declaration has been inserted by Section 1A of the CMN Act, insofar as coal mines are concerned. By this G provision, it is declared that it is expedient in the public interest that the Union should take under its control regulation and development of coal mines to the extent provided in sub- sections (3) and (4) of Section 3 and sub-section (2) of Section 30 of.the CMN Act. H

p. 481 Copy page pinpoint

[R.M. LODHA, CJI.] 5·1. The two declarations - Section 2 of the 1957 Act and A Section 1A of the CMN Act - have to be conjointly read insofar as the control and regulation of coal mines is concerned. As a consequence, the States have lost their jurisdiction to legislate to the extent to which the Union had taken over control, regulation and development of coal mines as manifested by the B two enactments. When the Parliament by its law contained in 1957 Act has declared that regulation of mines and development of minerals should, in the public interest, b~under the control of the Union and by an additional declaration in the CMN Act declared that regulation and development of mines c to the extent provided in sub-sections (3) and (4) of Section 3 and sub-section (2) of Section 30 of the CMN Act should, in the public interest, be under the control of the Uniolil, the power of the State legislature to legislate on the subject covered by these two enactments is excluded. In other words, the field 0 disclosed in the declarations under the 1957 Act and the CMN Act is abstracted from the legislative competence of the State Legislature. The requisite declarations have the effect of taking out regulation and development of coal mines from List II Entry

23. To that extent, the States have lost their legislative E competence.

52. In Baijnath Kadio 3 the Constitution Bench referred to two earlier decisions of this Court in Hingir-Rampur Coal Co. Ltd. 4 and M.A. Tulloch and Co. 5 . While dealing with declaration contained in Section 2 of the 1957 Act, the Court stated in para F 14, page 847 of tAe Report, as follows:

"14. The declaration is contained in Section 2 of Act 67 of 1957 and speaks of the taking undedhe control of the Central Government the regulation of mines and G

3. 3 Baijnath Kadio v. State of Bihar; ((1969) 3 SCC 838]

4. l'iingir-Rampur Coal Co. Ltd. v. State of Orissa; [AIR 1961 SC 459: (1961) 2 SCR 537]

5. State of Orissa v. M.A. Tulloch and Co.; (AIR 1964 SC 1284: (1964) 4 SCR 461] . H

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A development of minerals to the extent provided in the Act itself. We have thus not to look outside Act 67 of 1957 to determine what is left within the competence of the State Legislature but have to work it out from the terms of that Act. ......... " B

53. In Sandur Manganese and Iron Ores Ltd. 6 , this Court held that the declaration made in Section 2 of the 1957 Act had denuded the State of its legislatille power to make any law with respect to the regulation of mines and mineral development to C the extent provided in the 1957 Act. As a sequitur, it is also held that the State is also denuded of its executive power in regard to matters covered by the 195'7 Act and the 1960 Rules and there is no question of the State having any power to frame a policy de-hors the 1957 Act and the 1960 Rules.

D 54. Om Prakash Mehta 7 highlights 'that the 1957 Act and the 1960 Rules are a complete code in respect of the grant and renewal of prospecting licences as well as mining leases in lands belonging to the Government as well as lands belonging to private persons. E

55. In Monnet 2 , the scope and extent of the word 'regulation' occurring in Section 2 has been examined and it is stated that 'regulation' must receive wide interpretation but the extent of control by the Union as specified in the 1957 Act has to be construed strictly. The same meaning must apply to F the word 'regulation' occurring in Section 1A of the CMN Act. In other words, the extent of control by the Union as specified in the CMN Act has to be construed strictly.

56. In Orissa Cement Ltd. 8 a three Judge Bench of this G Court explained that in the case of a declaration under Entryl

6. Sandur Manganese and Iron Ores Ltd. v. State of Karnataka; [(2010) 13 sec 11

7. State of Assam v. Om Prakash Me_hta; ((1973) 1 SCC -584]

H 8. Orissa Cement Ltd. v. State of Orissa; [1991 Supp. (1) sec 430]

p. 483 Copy page pinpoint

[R.M. LODHA, CJI.] 54, the legislative power of the State Legislature is eroded only to the extent control is assumed by the Union pursuant to such declaration as spelt out by the legislative enactment which makes the declaration.

57. 1957 Act provides for general restrictions on undertaking prospecting and mining operations, the procedure for obtaining reconnaissance permits, prospecting licences and mining leases and the rule making power of regulating the grant of reconnaissance permit~. prospecting licences and mining leases. Clause (a) of sub-section (3) of Section 3 of the CMN Act enables persons specified therein only to carry on coal c mining operation. In clause (c), it is provided that no lease for winning or mining coal should be granted in favour of any person other than the Government, Government company or corporation referred to in clause (a). Under clause (b) of sub- section (3), excepting the mining leases granted before 1976 D in favour of the Government, Government company or corporation referred to in clause (a) and any sub-lease(s) granted by any such Government, Government company or corporation, all other mining leases and sub-leases in force immediately before such commencement insofar as they relate to the winning or mining of coal stand terminated. When a sub- lease stands terminated under sub-section (3), sub-section (4) of Section 3 provides that it shall be lawful for the Central Government or the Government.company or corporation owned or controlled by the Central Government to obtain a prospecting licence or a mining lease in respect of whole or part of the land covered by mining lease which stands so terminated. The above provisions in the CMN Act, as inserted in 1976, clearly show that the target of these provisions in the CMN Act is coal mines, pure and simple. CMN Act effectively places embargo on granting the leases for winning or mining of coal to persons other than those mentioned in· Section 3(3)(a). Does CMN Act for the purposes of regulation and development of mines to the extent provided therein alter the legal regime incorporated in the 1957 Act? We do not think so. What CMN Act does is that H

p. 484 Copy page pinpoint

A in regard to the matters falling under the Act, the legal regime in the 1957 Act is made subject to the prescription under Section 3(3)(a) and (c) of the CMN Act.1957 Act continues to apply in full rigour for effecting prescription of Section 3(3)(a) and (c) of the CMN Act. For grant of reconnaissance permit, s prospecting licence or mining lease in respect of coal mines, the MMDR regime has to be mandatorily followed. 1957 Act and so also the 1960 Rules do not provide for allocation of coal blocks nor they provide any mechanism, mode or manner of such allocation. c 58. Learned Attorney General submits that an application for allocation of a coal block is not dealt with by the 1957 Act and, therefore, consideration of proposals for allocation of coal blocks does not contravene the provisions of the 1957 Act. The submission of the learned Attorney General does not merit D ~cceptance for more than one reason. First, although the C'entral Government has pre-eminent role under the 1957 Act inasmuch as no reconnaissance permit, prospecting l[cence or mining lease of coal mines can be granted by the State Government without prior approval of the Central Government E but that pre-eminent role does not clothe the Central Government with the power to act in a manner in derogation to or inconsistent with the provisions contained in the 1957 Act. Second, the CMN Act, as amended from time to time, does not have any provision, direct or indirect, for allocation of coal F blocks. Third, there are no rules framed by the Central Government nor is there any notification issued by it under the CMN Act providing for allocation of coal blocks by it first and then consideration of an application of such allottee for grant of prospecting licence or mining lease by the State G Government. Fourth, except providing for the persons who could carry out coal mining operations and total embargo on all other persons undertaking such activity, no procedure or mode or manner for winning or mining of coal mines is provided in the CMN Acfor the 1960 Rules or by way of any notification. H Fifth, even in regard· to the matters falling under CMN Act, such

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[R.M. LODHA, CJI.] as prescriptive direction that· no person other than those provided in Sections 3(3) and 3(4) shall carry on mining operations in the coal mines,,the legal regime under the 1957 Act, subjecf to the prescription under Sections 3(3) and 3(4), continues to apply in full rigour. Mr. Harish N. Salve, learned senior counsel for the interveners, is not right in his submission that allocation letter issued by the Central Government is the procedure which regulates the exercise under Rule 22 of the 1960 Rules. Had that been so, some provisions to that effect would have been made in the CMN Act or the 1960 Rules framed thereunder but there is none. c

59. The submission of the learned Attorney General that the 7 States - Maharashtra, Madhya Pradesh, Chhattisgarh, Odisha, Jharkhand, Andhra Pradesh and West Bengal - which have coal deposits, have accepted and acknowledged the source of power of the Central Government with regard to allocation of coal blocks is not fully correct. Odisha has strongly disputed that position. Odisha's stand is that the system of allocation of coal blocks by the Central Government is alien to the legal regime under the CMN Act and the 1957 Act. It is true that many of these States have taken the position that allocation letter confers a right on such allottee to get mining lease and the only role left with the State Government is to carry out the formality of processing the application ~nd for execution of lease deed, but, in our view, the source of power of the Central Government in allocation of coal blocks is not dependant on the understanding of the State Governments but it is dependant upon whether such power exists in law or not. Indisputably, power to regulate assumes the continued existence of that which is to be regulated and it includes the authority to do all things which are necessary for the doing of that which is authorized including whatever is necessarily incidental to a.nd consequential upon it but the question is, can this incidental power be read to empower the Central Government to allocate the coal blocks which is neither contemplated by the CMN Act nor by the 1957 Act? In our opinion, the answer has to be in H

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A the negative. It is so because where a statute requires to do a certain thing in a certain way, the thing must be done in that way or not at all. Other methods of performance are necessarily forbidden 9 • This is uncontroverted legal principle.

60. It is argued by the learned Attorney General that the 8 allocation letter does not by itself confer the right to work mines and the identification of thb coal block does not impinge upon the rights of the State Government under the 1957 Act. Learned Attorney General argues that allocation of coal block is essentially an identification exercise where coal blocks selected by the CIL for captive mining were identified by the Screening Committee for development by an allocatee, after considering the suitability of the coal block (in terms of exercise and quality of reserve) vis-a-vis the requirements of the end-use plan of the applicant. It is submitted by the Attorney General that a letter of allocation is the first step. It entitles the allocatee to apply to the State Government for grant of prospecting licence/mining lease in accordance with the provisions of the 1957 Act. The right to apply for grant of prospecting licence/mining lease does not imply that with the issuance of allocation letter the allocatee automatically gets the clearances and approval required under the 1957 Act, the 1960 Rules, the Forest (Conservation) Act, 1980 and the Environment (Protection) Act, 1986, etc. According to the learned Attorney General, after allocation, the following steps are required to be complied with: F a. The allocatee is required to apply to the State Government for grant of Prospecting Licence in case of an unexplored block, or a Mining Lease in case of an explored block. G b. On receipt of the application for grant of Prospecting License or Mining Lease, as the case may be, the State Government, in the case of Prospecting Licence can process

H 9. Nazir Ahmad v. King Emperor; [(1935-36) 63 IA 372]

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[R.M. LODHA, CJI.] the application for Prospecting Licence in accordance with A Chapter Ill of the 1960 Rules.

c. In the case of application for Mining lease (in Form I), the State Government has to take a decision to grant precise area for the purpose of the lease and c9mmunicate such B decision to the applicant.

d. On receipt of the communication from the State Government of the precise area to be granted, the applicant is required to submit a mining plan to the Central Government for its approval. [Rule 22(4)] c · e. After the mining plan has been duly approved by the Central Government, the applicant submits the same to the State Government for grant of mining lease over the area.

f. After receipt of the duly approved mining plan, the State D Government makes a proposal for grant of prior consent by the Central Government in terms of the proviso to Section 5(1) of the 1957 Act.

g. In addition to the approved mining plan, the allocatee E is required to obtain permission under Section 2 of the Forest (Conservation) Act, 1980 if the coal block is located in a scheduled forest. Further, the allocatee is required to submit to the State Government, prior environmental clearance from the Ministry of Environment and Forests, Government of India F for the project. Forest Clearance and EIA clearance operate separately.

h. Mining Lease is thereafter granted by the State Government, after verifying that all statutory requirements have G been duly complied with by the allocatee.

61. There seems to be no doubt to us that allocation letter is not merely an identification exercise as is sought to be made out by the learned Attorney General. From the position H

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A explained by the concerned State Governments, it is clear that the allocation letter by the Central Government creates and confers a very valuable right upon the allottee. We are unable to accept the submission of the learned Attorney General that allocation letter is not bankable. As a matter of fact, the B allocation letter by the Central Government leaves practically or apparently nothing for the State Government to decide save and except to carry out the formality of processing the application and for execution of the lease deed with the beneficiary selected by the Central Government. Though, the c legal regime under the 1957 Act imposes responsibility and statutory obligation upon the State Government to recommend or not to recommend to the Central Government grant of prospecting licence or mining lease for the coal mines, but once the letter allocating a coal block is issued by the Central Government, the statutory role of the State Government is 0 reduced to completion of processual formalities only. As noticed earlier, the declaration under Section 1A of the CMN Act does not take away the power of the State under Section 10(3) of the 1957 Act. It is so because the declaration under Section 1A of the CMN Act is in addition to the declaration E made under Section 2 of the 1957 Act and not in its derogation. 1957 Act continues to apply with the same rigour in the matter of grant of prospecting licence or mining lease of coal mines but the eligibility of persons who can carry out coal mining operations is restricted to the persons specified in Section F 3(3)(a) of the CMN Act.

62. In Tara Prasad Singh 10 , a seven Judge Constitution Bench while dealing with the purposiveness of the CMN Act, as.amended in 1976, vis-a-vis the 1957 Act, stated that nothing G in this Act (CMN) could be construed as a derogation of the principle enunciated in Section 18 of the 1957 Act. The Court said:

10. Tara Prasad Singh and others v. Union of India and others; [(1980) 4 SCC H 179].

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[R.M. LODHA, CJI.] "Therefore. even in regard to matters falling under the A Nationalisation Amendment Act which terminates existing leases and makes it lawful for the Central Government to obtain fresh leases. the obligation of Section 18 of the Act of 1957 will continue to apply in its full rigour. As contended by the learned Solicitor General, I Section 18 B contains a statutory behest and projects a purposive legislative policy. The later Acts on the subject of regulation of mines and mineral development are linked up with the policy enunciated in Section 18."

(emphasis supplied by us) C

63. The observations made by this Court in Tara Prasad Singh 10 about interplay between the CMN Act and the 1957 Act with reference to the policy enunciated in Section 18, in our view, apply equally to the entire legal regime articulated in the D 1957 Act. We are of the opinion that nothing should be read in the two Acts, namely, CMN Act and the 1957 Act, which results ' in destruction of the policy, purpose and scheme of the two Acts. It is not right to suggest that by virtue of declaration under Section 1A of the CMN Act, the power of the State under E Section 10(3) of the 1957 Act has become unavailable. The submission of Mr. Harish N. Salve, learned senior counsel for the interveners that additional declaration under Section 1A of the CMN Act seeks to do away with any vestige of power in the State in the matter of selection of beneficiaries of the mineral is not meritorious. Had that been so, Rule 35 of the 1960 Rules would not have been amended to provide that where two or more persons have applied for reconnaissance . permit or prospecting licence or a mining lease in respect of the same land, the State Government shall, inter a/ia, consider the end-use of the mineral by the applicant. The declaration under Section 1A has not denuded the States of any power in relation to grant of mining leases and determining of those permitted to carry on coal mining operation. H

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A 64. The allocation of coal block is not simply identification of the coal block or the allocatee as contended by the learned Attorney General but it is in fact selection of beneficiary. As a matter of fact, Mr. Harish N. Salve, learned senior counsel for the interveners, has taken a definite position that allocation letter B may not by itself confer purported rights in the minerals but such allocation has legal consequences and confers private rights to the allocatees for obtaining the coal mining leases for their end-use plants.

C 65. In view of the foregoing discussion, we hold, as it must be, that the exercise undertaken by the Central Government in allocating the coal blocks or, in other words, the selection of. beneficiaries, is not traceable either to the 1957 Act or the CMN Act. No such legislative policy (allocation of coal blocks by the Central Government) is discernible from these two enactments. Insofar as Article 73 of the Constitution is concerned, there is no doubt that the executive power of the Union extends to the matters with respect to which the Parliament has power to make laws and the executive instructions can fill up the gaps not covered by statutory provisions but. it is equally well settled that the executive instructions cannot be in derogation of the statutory provisions. The practice and procedure for allocation of coal blocks by the Central Government through administrative route is clearly inconsistent with the law already enacted or the rules framed. F

66. The principle of Contemporanea Expositio was pressed into service by the learned Attorney General and the learned senior counsel for interveners. It is argued that the Ministries of Central Government, the State Governments and all concerned have understood the declaration under Section 1A read with Section 3 of the CMN Act recognizing that the selection of beneficiaries througtJ allocation letter is the task of the Union. The exposition of the legal position by them must be accepted as there is nothing to show that the' exposition in respect of allocation of coal blocks received by the Central

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[RM. LODHA, CJI.] Government, State Governments and all concerned was clearly A wrong. In this regard, reliance has been placed on the decision of this Court in Desh Bandhu Gupta 11 •

· 67. In Desh Bandhu Gupta 11 , this Court has dealt with the principle of Contemporanea Expositio. While doing so, this B Court referred to Crawford on Statutory Construction (1940 ed.) and the two decisions of the Calcutta High Court in Baleshwar Bagarti12 and Mathura Mohan Saha 13 and culled out the legal position in para 9 (page 572 of the Report) as under:

"9. It may be stated that it was not disputed before us that these two documents which came into existence almost simultaneously with the issuance of the notification could be looked at for finding out the true intention of the Government in issuing the notification in question, particularly in regard to the manner in which outstanding transactions were to be closed or liquidated. The principle of contemporanea expositio (interpreting a statute or any other document by reference to the exposition it h·as received from contemporary authority) can be invoked though the same will not always be decisive of the question of construction (Maxwell 12th ed.p. 268). In Crawford on Statutory Construction (1940 ed.) in para 219 (at pp. 393- 395) it has been stated that administrative construction (i.e. contemporaneous construction placed by administrative or executive officers charged with executing a statute) F generally should be clearly wrong before it is overturned: such a construction, commonly referred to as practical construction. although not controlling. is nevertheless entitled to considerable weight; it is highly persuasive. In Ba/eshwar Bagarti v. Bhagirathi Dass [ILR 35 Cal 701 at G

11. Desh Sandhu Gupta and Co. v.Delhi Stock Exchange Association ltd.; [(19~9) 4 sec 565).

12. Baleshwar Bagarti v. Bhagirathi Dass; [ILR 35 Calcutta 701].

13. Mathura Mohan Saha v. Ram Kumar Saha; [ILR 43 Calcutta 790) H

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A 713] the principle, which was reiterated in Mathura Mohan Saha v. Ram Kumar Saha [ILR 43 Cal 790 : AIR 1916 Cal 136] has been stated by Mookerjee, J., thus:

'It is a well settled principle of interpretation that courts in construing a statute will give much weight B to the interpretation put upon it, at the time of its enactment and sinee, by those whose duty it has been to construe, execute and apply it.. ... I do not suggest for a moment that such interpretation has by any means a controlling effect upon the courts; c such interpretation may, if occasion arises, have to be disregarded for cogent and persuasive reasons, and in a clear case of error, a court would without hesitation refuse to follow such construction.

D Of course, even without the aid of these two documents which contain a contemporaneous exposition of the Government's infention, we have come to the.conclui:lion that on a plain construction of the notification the proviso permitted the closing out or liquidation of all outstanding transactions by entering into a forward contract in accordance with the rules, bye-laws and regulations of the respondent."

68. The above is consistent view. In our view, an interpretation to the statute received from contemporary authority is not binding upon the courts and may have to be disregarded if such interpretation by the contemporary authority is clearly wrong. The process evolved by the Central Government for allocation of coal blocks for captive use has significantly and effectively reversed the scheme provided in the G 1957 Act inasmuch as in most of the cases the applications have been made directly to the Central Government. West Bengal has stated that in some cases, they had knowledg~ of such applications and in some cases the State Government had no such knowledge. Then once allocation letter has been H

MANOHAR LAL SHARMA v. PRINCIPALSECRE;TMV'. 493 [R.M. LODHA, CJt] · issued by the Central Government,' virtuaUym>''pOWer remams with the State Government in _objectiv~19·eol'lsiderlng thE! application for -reconnaissance permit,; prospecting licence or. mining lease. Maharashtra says; \:.the ro~ ··of _the State Government is limited in the·casepf coaJ,:mines as the discretion to reject once the Central (;ove.mment has issued an allocation letter is virtually non-existent.. .... -·". Odisha says, " .... ~.Once the beneficiaty'ha~ been 'idef'Jtifie.d by the Central Government by making the a/location o(coa/ block, there was nothing left out fotth~ State 'Government to decide ........... .". It must be noted wi~out an iota ofhesitation c that the process for allocation of coat blocks for. captive use has rendered the role of the State Government only mechanical and the concept.of 'previous approval' in Section·5'ofthe ~957 Act meaningless after recommendation has been m~de by the State Government. It is not without any reason that confronted .. 0 with this difficulty, the 1957 Act has been amended and Section 11A inserted in 2010 providing for allocation of coal blocks and also the mode and manner of such allocation.

69. Assuming that the Central Government has competence to make allocation of coal blocks, the next question is, whether such allocation confers any valuable right amounting to grant of largesse? Learned Attorney General argues that · allocation of coal blocks does not amount to grant of largesse since it is only the first statutory step. According to him, the question whether the allocation amounts to grant ct.largesse must be appreciated not .from the perspective·whether allocation confers any rights upon the allocatee bu~ whether allocation amounts to conferment of largesse upon the allocatee. An allocatee; learned Attorney General submits, does not get rigl:lt to win or mine the coal on allocation and, therefore, an allocation letter does not· result in windfall gain for the allocatee. He submits that div~rse steps, .as provided in Rules 22A, 220, and 22(5) of the.1960 Rules and ·the other statutory requirements, have to be followed and ultimately the grant of prospecting licence In relation to unexplored coal blocks or H

494 SUPREME .COURT· REPORTS [2014) 8 S.C.R.

A grant of mining lease with regard to explored blocks entitles the allocatee/licensee/lessee to win or mine the coal.

70. We are unable to accept tl'le submissi.on of the learned Attorney General that allocation.of coal block does not amount to grant of largesse. It is true that allocation letter by itself does 8 not authorize the allottee to win or mine the coal but nevertheless the allocation letter does confer a very important right upon the allottee to apply for grant of prospeqting licence or mining lease. As a matter of.fact, it is admitted by the interveners that allocation letter issued by the Central Government provides rights toJhe·allottees for obtaining the coal mines leases for their end-use plants. The !ranks, financial institutions, land acquisition authorities, -revenue authorities and various other entitles and so also the State Governments, who ultimately grant prospecting licence or mining lease, as the case may be, act on the basis of the letter of allQ.cation issued by the Central Government. As noticed earlier, the allocation of coal block by the Central Government results in the selection of beneficiary which entitles the beneficiary to get the prospecting licence and/ or mining lease from the State Government. Obviously, E allocation of a co~I block amounts to grant of largesse.

71. Learned Attorney General accepted the position that in the absence of allocation letter, even the eligible person under Section 3(3) of the CMN Act cannot apply to the State F Government for grant ·Of prospecting licence or mining lease. The right to o.btain prospecting licence or mining lease of the coal mine admi~edly is dependant upOf'! the allocation letter. The allocation letter, ,tnerefore, confers a valuable right in favour of the allottee. Obviously,, therefore, such allocation has to meet G the twin constitutional' tests, one,. the distribution of natural resources that vest in the State is to sub-serve. the common good and, two, the allocation Is not violative of Article 14.

·72: The PILpetitioners have~seriouslycriticized the entire allocation process by the Central Government. They submit that H

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[RM. LODHA, CJI.] allocations made on the recommendations of the Screening A Committee and through the government dispensation route after 1993 are in violation of statutory provisions contained in the 1957 Act. Moreover, the Central Government while making the allocations failed to even follow the basic statutory eligibility for ·grant of captive coal blocks. The power for grant of captive coal B block is governed by Section 3(3)(a) of the CMN Act. According to which, only two kinds of entities, viz., (a) Central Government, or undertakings/corporations owned by the Central Government or (b) a company having end-use plants in iron, steel, power, washing of coal or cement, can carry out coal mining c operations. The State Government undertakings are not included in the above provision and any allocation to them can only be made if they are engaged in any of the end-uses specified under that provision. Commercial mining by the State Public Sector Undertakings/companies is not eermitted, yet as 0 many as 38 coal blocks were allocated to State Public Sector Undertakings for commercial mining though these undertakings were .not engaged in any specified end-use activity. They submit .that allocation of coal blocks made by the Central Government, whether by way of Screening Com,mittee route or dispensation route, is ipso f~cto illegal and it is in total violation of the CMN E 'Act Moreover, it is submitted that almost all these State PSUs ·then· signed agreements with private companies wherein the right to mine coal was given to them which later Sold the coal to the State PSUs either at the .market price or at CIL price. F , 73. According to Mr. Prashant Bhushan, learned counsel for the petitioner-Common Cause and Mr. Manohar Lal Sharma, petitioner-in-person, the expression "engaged in" in Section 3(3)(a)(iii) means that the company that was applying ·for the coal block must have set up an iron and steel plant, G power plant or cement plant and be engaged in the production of steel, power or cement. Most companies were silent in their applications as to whether or not the power, steel or cement plant was operational. They only stated that they proposed to H

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A set up such plants. Moreover, from 2006 even the requirement of end-use project was done away with and the Central Government allowed companies to apply and obtain coal blocks, and it was stated that the coal mined from these biocks would be transferred to an end-user company. Thus, the basic minimum statutory requirements were not adhered to and followed in making allocation of coal blocks.

74Copy pinpoint74. It is submitted on behalf of the PIL petitioners that the allocation of those blocks which had reserves far in excess of requirement for the end-use project was made which demonstrates the total non-application of mind and arbitrariness in the decision making process. Mr. Prashant Bhushan, learned counsel for Common Cause and Mr. Manohar Lal Sharma, petitioner-in-person submit that the allocation of coal blocks constitutes a largesse as it confers very valuable benefit on the applicant to get mining lease. It is argued that the arbitrary and non-transparent allocation process has resulted in windfall gain to the allottees and the State has been deprived of the full value of its resources. Besides that the process of allocation was arbitrary and non-transparent, it is submitted by the PIL petitioners that the process also suffers from ma/a tides inasmuch as though a comprehensive note on competitive bidding on allocation of coal blocks was placed by the then Coal Secretary on 16.07.2004, the allocation process through the Screening Committee continued leading to windfall- F gain to the private companies and thereby corresponding loss to the public exchequer. In this regard, Mr. Prashant Bhushan, learned counsel for Common Cause and Mr. Manohar Lal Sharma, petitioner-in-person referred to Parliamentary Standing Committee Report submitted on 24.03.2013, Central G Empowered Committee Report made in I.A. f\lo.2167 to the Forest Bench regarding the loss from the allocation of coal mines in the State of Madhya Pradesh, the additional affidavit of the Government of Maharashtra filed on 09.01.2014 and the CAG Report. H

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[R.M. LODHA, CJI.]

75Copy pinpoint75. It is argued on behalf o~ the PIL petitioners that the A Screening Committee did not follow any objective criteria in determining ~s to whci" is to be selected or who is to be rejected. The ~minutes of the Screening Committee meetings dq not show that selection was made.after proper assessment. There is no evaluation of merit and no inter se comparison of B the applicants. No chart of evaluatton was prepared. The determination of t.he Screening Committee is apparently subjective. It is no co~incidence that a large number of allottees are ei.ttier powerful corporate groups :Or shady companies linked with politicians and ministers orihose who came with c high profile recommendations. Most of these allottees were in fact ineligible for allocation; they had misrepresented the facts and were not more meritorious than others whose claims have been rejected, but by serious manipulations and abuse, they were able to get the coal blocks. D

76Copy pinpoint76. With regard to Government dispensation route whereby public sector corporations and undertakings were alloeated coal. blocks, it is submitted by Mr. Prashant Bhushan, learned counsel for the Common Cause and Mr. Manohar Lal Sharma, petitioner:in-person that such allocations were violative of E Section 3 of the CMN Act. The State Government undertakings are not included in Section 3 and in any case allocation to them could have been made only if they were engaged in any of the end-uses specified under Section 3{3)(a)(iii) of the CMN Act. The State PSUs have signed agreements with private compariies under which substantial benefits or interest from the coal blocks had accrued to the private companies thereby causing ·huge loss to the public exchequer and windfall gain to the private companies. The PIL petitioners, therefore, vehemently argued that the allocation of coal blocks deserves to be quashed being non-transparent, arbitrary, illegal and unconstitutional.

77Copy pinpoint77. According to Central Government, the need for a Screening Committee was felt because development of coal H

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