HC calls Coal India’s reason for cancelling e-auction of coal ‘absurd’

Citing lack of requisite permissions to operate the two mines in Chhatisgarh even after a month of applying for it, state-owned Coal India (CIL) on Tuesday told the Delhi High Court that it decided to cancel the e-auction as it did not want to keep Jindal Power in a loop.

A bench of justices Badar Durrez Ahmed and Sanjeev Sachdeva termed as “absurd” the CIL’s reason for cancelling an e-auction of coal, in which Jindal Power (JPL) had got 49,000 metric tonnes of the fuel, due to delay in getting consent to operate two Chhattisgarh mines.

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The Naveen Jindal-owned JPL, a subsidiary of Jindal Steel and Power, had emerged successful bidder for the Gare Palma IV/2, Gare Palma IV/3 and Tara coal blocks.

CIL told the court as per auction conditions, once it issued the sale order, coal had to be transported from the site by the successful bidder within 45 days, and since it did not know when the consent to operate would be granted, if at all, the state-run enterprise decided to cancel the e-auction.

“We did not want to keep it outstanding, in limbo. We did not know how long the consent will take. So we cancelled the e-auction,”” senior lawyer and CIL counsel Sandeep Sethi said.

Disagreeing with CIL’s contention, the bench observed: “There is no logic to your decision. You could have kept it (sale order) pending. The authorities may have granted consent any day. Your logic is not understandable. It was an absurd decision.”

JPL on Monday accused CIL of refusing to sell coal to it although it has emerged as the highest bidder in the recent auction for the two Gare Palma mines.

The Jindal group company had claimed that CIL, which is acting as a custodian for the block until the dispute is resolved, had cancelled its bid for purchasing coal through an e-auction. It had also termed as “unfair” government’s decision to annul the bids.

Jindal Power in an affidavit contended that while the 49,000 mt of non-coking coal won by it was cancelled citing production issues at the Gare Palma IV/2 and IV/3 mines, 2.5 lakh tonne per month of coal from same area was being offered to National Thermal Power Corporation (NTPCNational Thermal Power Corporation Limited, is an Indian Public Sector Undertaking, engaged in the business of generation of electricity and allied activities. It is a company incorporated under the Companies Act 1956 and a "Government Company" within the meaning of the act. The headquarters of the company is situated at New Delhi. NTPC's core business is generation and sale of...) on ‘as is where is basis’.

JPL said that much coal was being offered to NTPC for the PSU’s thermal power plant at Barh in Patna, Bihar and to transport this the state-run enterprise had invited bids.

The company contended that it had participated in the e-auction held on April 11 and had bid the highest price of R1,008 per tonne of coal and had paid R7.8 crore for the 49,000 mt coal won by it.

According to JPL, on May 22, it was informed by CIL that the e-auction was being cancelled owing to production issues and the amount of R7.8 crore was refunded. CIL had on April 3 invited bids for 4.05 lakh tonne of non-coking coal and 1.5 lakh tonne of coking coal, it said.

Of the 4.05 lakh tonne of non-coking coal, 60,000 mt was to be auctioned from the two Gare Palma mines, JPL has said in the affidavit filed by it.

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