New Delhi: The Delhi High Court on Wednesday observed that while the 2014 Coal Ordinance is completely in sync with the national economic policy, the "executive decisions" with respect to auction of coal "are not".
"What now emanates is that the ordinance is completely in sync with your economic policy, but your executive decisions are not. That is what we have gathered," a bench of justices B D Ahmed and Sanjeev Sachdeva said.
It made the remark while noting that clubbing of core sectors like steel, cement and captive power plants under one head of unregulated sector, for the auctions, has resulted in lesser mines going to iron and steel companies.
The bench also questioned "what will happen to 'make in India' initiative" of the government if the steel companies will have to import coal for their production requirements.
The query was posed in response to Additional Solicitor General (ASG) Sanjay Jain's argument that steel companies can import coal to meet requirements if they were unable to win adequate number of mines.
The bench, during the proceedings, also observed that currently the government is not deciding where (sector) coal will go, but market forces are and remarked that revenue generation was not objective of the ordinance whose mandate was allocation and optimum utilisation of the resource.
It also said that while power has other sources, like solar, wind, water, nuclear, etc., steel requires coal and asked the government whether it wanted steel production of the country to go down.
The ASG, on the other hand, contended that the government did not intend to distinguish between steel and other sectors and added that maximisation of revenue generated from allocation of coal mines was an integral part of the ordinance as "the natural resource can't be given away for a song".
He said by clubbing them together under unregulated they have been given the opportunity to bid for more mines and added "we are not distinguishing between core sectors".
The bench, however, observed "It (distinguishing) is happening. It is wrong that it has happened as it is contrary to your economic policy."
The court, during the hearing, also questioned whether there was any application of mind by the government while deciding to club together the core sectors in one group, to ensure that the national economic policy is not affected.
"Impact of clubbing must have been considered then. Have the powers that be applied their mind? If yes, show us," the court said and listed the matter for further hearing tomorrow.
It also said that it is not concerned about them (the companies), but concerned only about national policy and that the infrastructure development of the country be not adversely impacted.
The court was hearing pleas of Bhushan Power and Steel Ltd, Utkal Coal Ltd and Monnet Ispat and Energy Ltd which have challenged the Coal Ministry's decision to club all other sectors, except power, under one category for coal auctions.
Bhushan, Monet and Utkal have also challenged auction rules of two-stage bidding in which 50 percent of the players are eliminated in round one as well as multiple bidding by a company.
They have said that the 50 percent elimination criteria combined with the classification of all sectors, except power, under unregulated sector, is "wrong".
"Both spirit and methodology of classification is wrong. Unequals being treated equally has lead to bidding process becoming skewed and that is why 50 percent cut-off is discriminatory," the companies have said.
They have contended that due to "wrong" classification core sectors like iron and steel, which are to be protected as per 2014 coal ordinance, are losing out to aluminium companies in the auction.