Delhi HC orders Coal India not to cancel Jindal Power’s coal block

Naveen Jindal-led Jindal Power Ltd on Wednesday secured a victory in the Delhi high court with a two-judge bench asking state-run miner Coal India Ltd (CIL) not to cancel an electronic auction won by the former.
A bench of justices B.D. Ahmed and Sanjeev Sachdeva asked CIL to keep its letter of cancellation on hold, a day after it questioned the centre’s motive in cancelling the auction.
Jindal Power, a subisidiary of Jindal Steel and Power Ltd, has accused CIL of cancelling the auction of coal from Gare Palma (IV/2 and IV/3) and entering into a long-term coal supply contract with state-run power generator NTPC Ltd.
The court order effectively means the state-run miner will have to supply coal from Gare Palma to Jindal Power once all clearances are received and mining starts.
The bench also incorporated in its order a submission by CIL counselSandeep Sethi stating there is no long-term arrangement between the firm and the NTPC.
The court noted that CIL had not begun mining in this block, for which it was earlier appointed custodian by the court.
Sethi told the court that CIL was waiting for certain permissions and clearances to start mining. On Tuesday, CIL told the court that it applied for environment clearances and consent to operate the mine in April, which hadn’t arrived yet. As it had not commenced mining pending the clearances, it cancelled the e-auction.
The court had told CIL that it had “not understood” the “logic for cancelling the auction”.
Jindal Power, through lawyer Kapil Sibal, claimed that the 16 May letter of CIL had cancelled an e-auction based on which it had won 49,000 tonnes of coal to fire its 2,000 MW power plant.
The court also told Jindal Power that it could approach the court in case CIL created any long-term third party rights in relation to the mine.
A lawyer, who did not wish to be named, said the order at an interim (temporary) stage means cancellation of the e-auction will not have effect while a final decision is pending.
The case was originally filed by Jindal Power against a 20 March order by the centre rejecting the closing bids for the Gare Palma (IV/2 and IV/3) block in Chhattisgarh. The firm claimed that the centre had cancelled the block arbitrarily and without giving any reason.
The case will be heard next on 11 August, when the main issue of cancelling the block will be argued. The centre will be commencing its arguments then.
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