Coal auction: HC sets aside Sesa Sterlite disqualification

The government on Friday suffered a setback in the coal block auction process as the high court here provided relief to several companies, which were disqualified from participating in the bidding process on one or the other ground.

The hearing on the issue was conducted in phases till late this evening before two separate benches, which heard the petitions filed by Jindal Steel and Power Ltd (JSPL) and Jindal Power Ltd (JPL), Sesa Sterlite, Sarda Energy and Minerals Ltd, Usha-Martin, Monet Ispat, Utkal Coal Ltd and Jayaswal Neco Industries Ltd.

The day began with the petitions of the Jindals in which the bench of Chief Justice G Rohini and judge Rajiv Sahai Endlaw sought the government’s response on their plea challenging the 2014 Coal Ordinance provisions regarding determination of compensation payable to previous allottees towards mining infrastructure and land value of the blocks.

Later, the bench of B D Ahmed and Sanjeev Sachdeva gave a major relief to Sesa Sterlite, Sarda Energy and Minerals and Usha-Martin by setting aside their disqualification from bidding in coal auction process.

This bench, while allowing Sarda to place its bids, said: “it appears subsidiaries which are not a joint venture cannot be considered for calculating coal requirements of a bidder.

“With this clarification, bids of the petitioner (Sarda) may be examined and only the end-use requirement of the end-use plant holder will be considered, unless there is a joint venture.”

Sarda had been disqualified from bidding for six blocks — Gare Palma IV/1, IV/4, IV/5, IV/7 in Chhattisgarh, Birchapur in Madhya Pradesh and Kathautia in Jharkhand by the Centre which said the company had clubbed its subsidiary company along with parent company to increase its coal requirement instead of making a joint venture.

The bench also allowed Utkal Coal to bid for a coal block which was earmarked for an independent power plant while the company had a captive power plant. “They (Utkal) are allowed to place their bid subject to the final outcome of their petition,” the bench said while seeking response of Centre by next date of hearing on February 23.

The bench, which heard the matters till 8.30 pm, said it would hear on Wednesday, the petitions filed by Monet Ispat and Jayaswal Neco Industries Ltd challenging the two-phased auction procedure in which 50 per cent of bidders are eliminated after the first round.

During the hearing of the Sesa Sterlite matter, the bench also observed “can’t understand what is happening with this coal auction.”

Monet and Jayaswal Neco have also challenged the auction rules which provide for multiple bidding by a company by bifurcating its subsidiary companies.

Jindals’ petition was related to the auction of Gare Palma IV/2, IV/3 and IV/4 blocks in Chhattisgarh, the allocation of which were cancelled by the Supreme Court. They have challenged the ordinance provisions regarding method of determining compensation of capital costs, including mining infrastructure.

Sesa Sterlite has challenged its disqualification from bidding for five blocks in Chhattisgarh and one in Jharkhand for their nine 135 mega watt captive power plants. The coal blocks include Gare Palma IV/1, IV/4, IV/5, IV/7 and Chotia in Chhattisgarh and Kathautia in Jharkhand.