Coal Scam in India

COAL SCAM IN INDIA
A
FINAL PROJECT REPORT
ON
STUDY ON INDIAN COAL SCAM
A report submitted to Ishan Institute of Management & Technology, Greater Noida as

a partial fulfillment to full time Post Graduate Diploma in Management.
Under the Guidance of
Mr. Saurabh Kumar Singh (Sr. Area Business Manager) At Solvate Laboratory Pvt
Ltd.
SubmittedTo:
SubmittedBy:
Dr.D.K.Garg,
Randeep
Singh
Chairman,
ENRNo:
19016
19th Batch
IIMT.Gr..Noida
PGDM
Ishan Institute of Management & Technology

1A, Knowledge Park -1,Greater Noida, Dist.-G.B.Nagar (U.P.)
Website:www.ishanfamily.com
E-Mail: student@ishanfamily.com
COAL SCAM IN INDIA
COAL SCAM IN INDIA
PREFACE
Theoretical knowledge is the fundamental weapon for any management student. But
apart from theoretical studies we need to experience a deeper insight into the practical
aspects of those theories by working as a part of organization during our summer
training. Training is a period where a student can apply his theoretical knowledge on
practical field. Primarily practical knowledge and theoretical knowledge have a very
vast difference. So this training has high importance as to know how both the aspects
can be applied together.
The study of management acquires most crucial position in the business
administration. In order to be successful, it is necessary to give priority to the
management in an organization. But it cant be denied that the study of management
would be more educational, materialistic and even more interesting, if it is to be paired
with the work in organization as an employee.
The training session helps to get details about the working process in the organization.
It has helped me to know about the organizational management and discipline, which
has its own importance. The training is going to be a lifelong experience.
COAL SCAM IN INDIA
COAL SCAM IN INDIA

CERTIFICATE
This is to certify that the project work done STUDY ON INDIAN COAL SCAME
submitted to Ishan Institute of Management and technology, Greater Noida by
RANDEEP SINGH in partial fulfilment of the requirement for the award of the
degree of Post Graduate Diploma in Business Management is a bonafide work carried
out by him under my supervision and guidance. This project report is the original one
and has not been submitted any where else for any other degree/diploma.
Date:
Seal/Stamp of the guide
Name of the
guide
Mr. Saurabh Kumar
Singh (Sr.ABM)
Solavte
Pvt Ltd.
Laboratory
COAL SCAM IN INDIA
COAL SCAM IN INDIA
ACKNOWLEDGEMENT
Any attempt at any level can never be satisfactorily completed without expert
guidance. I would like to thank Mr. SAURABH KUMAR SINGH (Sr. AREA
BUSINESS MANAGER ) at Solvate Laboratory Pvt Ltd. for giving me a lot of
their precious time and inputs to make this project. His deep knowledge and
understanding of the topic is an inspiration to one and all. My study could not have
been completed if I had not been able to get all the valuable data and reference
materials from the company.
Also, I am very thankful to my chairman sir DR. D.K. Garg of my institute, for their
continued guidance and valuable encouragement.
RANDEEP SINGH (MM)
PGDM 19016
COAL SCAM IN INDIA
COAL SCAM IN INDIA
DECLARATION
The Final project report on Study on Indian Coal Scam under the guidance of
Mr.Saurabh Kumar Singh(Area Business Manager) is the original work done by me.
This is the property of the institute & use of this report without prior permission of the
institute will be considered illegal & actionable.
Date
RANDEEP SINGH
Place:
(BM)
PGDM
ENR 19016
19th
BATCH
COAL SCAM IN INDIA
10
COAL SCAM IN INDIA
Table of Contents
Particulars
Page No.
CHAPTER-1
INTRODUCTION
History of Coal Background
Guidelines and procedure For Allocation of Coal
Status of Captive Coal
CHAPTER-2
INDIAN COAL MINES IN STATES
CHAPTER-3
COAL MINES ALLOTMENT SYSTEM SINCE INDEPENDENCE
CHAPTER-4
INDIAN COAL SCAM
The Coal Allocation process
Coal Allocation guidelines
Result of Coal Allocation program
CHAPTER-5
DRAFT CAG REPORT ON COAL
First comptroller and auditor general charge
Second comptroller and auditor general charge
CHAPTER-6
AUGUST 2012 COALGATE GROWS
Allegation Against Political leaders
BJP response
CBI and Income Tax Investigation
Formation of Inter- Ministerial Group (IMG)
CHAPTER-7
AUGUST 2012. COALGATE REACH PARLIAMENT
The CAG Final Report
Role of Sonia Gandhi
Manmohan Singhs Rebuttal in Parliament
CHAPTER-8
COALGATE REACH SUPREME COURT OF INDIA
Role of Prime Mininster Manmohan Singh
Parliamentary Standing committee Report
Supreme court Hearing
CHAPTER -9
EFFECT OF SUPREME COURT ORDER
Speacial CBI Court
Supreme Court Verdict
11
COAL SCAM IN INDIA

Missing Files of Coal Blocks
CHAPTER-10
PEOPLE IN OFFICE DURING THE ALLOCATION
Ministers
Ministers of mines
CHAPTER-11
FINDING AND LIMITATIONS
CHAPTER-12
SUGGESTION AND CONCLUSION
CHAPTER-13
BIBLIOGRAPHY
12
COAL SCAM IN INDIA
CHAPTER 1
INTRODUCUTION
13
COAL SCAM IN INDIA
Introduction
Coal mining in India began in 1774 when John Sumner and Suetonius Grant Heatly of
the East India Company commenced commercial exploitation in the Raniganj
Coalfield along the Western bank of Damodar river. As on 31 March 2015, India had
estimated coal reserves of 306.6 billion metric tons (338.0 billion short tons), the fifth
largest coal reserves in the world. India is the fourth largest producer of coal in the
world, producing 536.5 million metric tons (591.4 million short tons) in 2014.
Due to high demand and poor average quality, India is forced to import high quality
coal to meet the requirements of steel plants. India imported 212.1 million metric tons
(0.2338 billion short tons) and exported 1.24 million metric tons (1.37 million short
tons) of coal in 2014-15.
The Black Gold as it may be rightly called, the coal is the most valuable, dependable
and reliable source of energy for the Indian Economy. The most important and
abundant fossil fuel in India, coal accounts for more than half, nearly 55% of the
country's total energy need. The country's industrial heritage was in fact built upon
indigenous coal.
1.2
During the last four decades, the commercial primary energy consumption in
India has grown by nearly 7 times. Driven by the rising population, expanding
economy and a quest for improved quality of life, energy usage in India was expected
to rise around 450 kgoe/year in 2010. Considering the limited reserve potentiality of
petroleum & natural gas, eco-conservation restriction on hydel project and geopolitical perception of nuclear power, coal continued to occupy centre-stage of India's
energy scenario.
1.3
The Geological Survey of India has estimated coal reserves in India up to the
depth of 1200 meters at 285.86 billion tonnes as on 1.4.2011. Coal deposits are chiefly
located in Jharkhand, Odisha, Chhattisgarh, West Bengal, Madhya Pradesh, Andhra
Pradesh and Maharashtra. The Lignite reserve in the country has been estimated at
around 40.91 billion tones as on 01.04.2011. The Coal production all over India during
the period April 2011 to December, 2011 has been 363.79 Million tonnes (Provisional)
as compared to the production of 373.58 million tonnes (MT) during the
corresponding period of the previous year showing a growth of -2.6%.
14
COAL SCAM IN INDIA
1.4
The production of coal assumed a greater significance after 2003 when
Government of India pronounced a mission power to all by 2012. Accordingly, the

GOI envisaged capacity addition of 100000 MW of power by 2012 and in order to
meet this increased capacity, corresponding increase in the coal production was
required in X-XI Plan periods (2002-12).The Ministry of Coal has the overall
responsibility of determining policies and strategies in respect of exploration and
development of coal and lignite reserves, sanctioning of important projects of high
value and for deciding all related issues. These key functions are exercised through its
public sector undertakings, namely Coal India Limited (CIL) and Neyveli Lignite
Corporation Limited (NLC) and Singareni Collieries Company Limited (SCCL), a
joint sector undertaking of Government of Andhra Pradesh and Government of India
with equity capital in the ratio of 51:49.
1.5
The Committee were informed that captive coal mining is a mechanism
envisaged to encourage private sector participation in coal mining on account of the

perceived limitations of the CIL to increase production to meet the growing demand
for coal. The very purpose of Captive coal mining was to ensure assured supply of
coal to the core infrastructure areas like power, steel and cement.
1.6
According to the Ministry of Coal the widening gap between the demand and
domestic supply of coal have led to allocation of captive coal blocks to private sector
companies. In this Report, the Committee have dealt with the functioning of Screening
Committee, guidelines on allocation of coal blocks, the monitoring mechanism, review
of coal blocks by IMG, etc. in the succeeding chapters leaving aside the Report of
C&AG which may be dealt by Public Accounts Committee of the Parliament.
History of Coal Background

Historical records show that even in ancient times people used metals and alloys for
their daily living. The Asoka-Pillar, the Pillar in the Kutub-Minar and development of
the Cannons in the early historical period provide ample proofs of the use of molten
iron in ancient times and medieval India. At that time coal was used for melting
metals. The ruins of smithy furnaces and slack hips close to the coal deposits in the
Eastern regions indicate that the coal was used in the metallurgical processing even as
15
COAL SCAM IN INDIA

early as 2000 years ago. Ancient scriptures suggest that the name of the Damodar, the
main river in the Eastern India, on the banks of which the reserve of coal is abundant
has its origin in the phrase Dam-Udare-Jahar, i.e. fire in the belly. The names of
some villages like Angarpathra (pot of burnt coal), Kalipahari (Black Mountain) near
Asansol in the Eastern region suggest the existence of coal deposits in these areas and
confirm previous knowledge of the people of these areas in the presence of
underground coal deposits long before the mining operations began. Thus, there are
evidences that coal was known as fuel resource in India. However, there was no record
or documentation regarding the coal industry until the middle of the18th century.
Some records show that as far back as in 1774-75 shallow mines were used to be
operated first in Raniganj fields of West Bengal, which is considered the birthplace of
coal mining in the Country.
A systematic survey of coalmines was conducted in 1845-46 and again in 1860, when
it was found that there were about fifty collieries in the area producing 28,200 tonnes
of coal. At first, coal mining was limited to the Raniganj Coalfields but during the
later part of the 19th Century, exploration started elsewhere in the country. At the
beginning of the 20th century, coal production in India reached 6 million tonnes.
During the First World War period, increased demand for coal gave impetus to the
development of coal industry. In 1919, the production of coal rose to 21 million
tonnes. In subsequent years, the industry suffered a setback due to great depression
just after the World War 1
The years from 1937 to 1942 constituted another important period, when international
demand for coal steadily rose. Meanwhile, quite a number of quarries and pits were
operated in the Raniganj, Orissa, and Madhya Pradesh Coalfields. The Coal Mining
Committee set up by the Imperial Govt., submitted their report in 1936 on the
measures for securing safety and preventing waste of available coal. In the year 1945,
the Singareni Collieries Company Limited (SCCL) was formed as the first
Government owned Coal Company in the country. In that year, Government of Nizam
of Hyderabad bought all the shares of the company and brought the company under
India Trust Fund of the Nizam Government. The said company actually started
production in 1889 at Yellandu area of present Andhra Pradesh and raised 60,000
tonnes of coal in that year.
16
COAL SCAM IN INDIA

In 1947, India achieved its independence. Subsequently Five Year Plans were
launched with ambitious targets of coal production. Realizing the importance of coal
to the development of India, our motherland, National Coal Development Corporation
(NCDC) was set up in 1956. Most collieries belonging to the Indian Railways were
transferred to the NCDC to bring about rationalization in coal industry. NCDC
brought a major change in the lives of the coal miners and their standard of living. In
1960, coal industry suffered a setback in as much as demand could not consume
supply. This was due to slippages in achieving targets by steel, power and other
industries. During the sixties, the coal industry passed through a period of cheap
availability of oil. The situation, however, took a radical turn in the seventies due to
spiraling up of oil prices resulting in hike in coal demand. The Central Government
took the decision to bring coalmines under the State Control. This was the last phase
of coal industry in the hands of the private owners. It is important to note that at that
time the private owners were producing nearly 75 percent of the total coal production.
There was a complete anarchy and chaos in the production and distribution of coal in
spite of increase in demand for coal.
Considering the above facts and for proper safety and security of the miners,
conservation of coal, and systematic mining to meet increasing demand of coal
especially from Iron and Steel companies and power (thermal) companies, the
Government of India, on October 16, 1971, promulgated the Coking Coal Mines
(Emergency Provisions) Act, 1971. Thereafter, Government of India took over the
management of all 226 coking coalmines except captive mines of IISCO, TISCO and
DVC, subsequently nationalized them on May 1, 1972, and brought under the control
of newly formed Bharat Coking Coal Limited (BCCL) to look after the coking
coalmines and for streamlining its production. Consequently, the private owners of
non-coking coalmines stopped further investment and started violating the safety laws
and underpaying workers for short-term gain, as they were afraid of further
nationalization of non-coking coal mines very soon. Thus, keeping all these factors in
consideration Government took over the management of all 711 non-coking coalmines
of the country, then operating, on January 30, 1973 and subsequently nationalized
them on May 1, 1973 and thus a new era began. In order to provide for a higher
growth in coal sector to meet the growing energy needs of the country, the
Government nationalized coalmines by enacting through the Parliament the Coal
17
COAL SCAM IN INDIA

Mines Nationalization Act in 1973. The section III of the Act says, No person, other
than the Central Government or a Government Company or a Corporation owned,
managed or controlled by the Central Government shall carry on coal mining
operation in India. Thereafter, pursuant to the nationalization of coalmines, all noncoking coalmines were brought under Coal Mines Authority Limited (CMAL),
which was incorporated as a government company under the Companies Act 1956, on
June 14, 1973, having three divisions, Eastern Division, Western Division and Central
Division. The CMAL was then under the administrative control of the Department of
Coal, Ministry of Energy, Government of India.
On November 1, 1975, the Department of Coal, Ministry of Energy, and Government
of India incorporated the present Coal India Limited (CIL) as a holding company.
The objective was to integrate and streamline the structural set up and to bring both
coking and non-coking coalmines in one controlling unit that was to be responsible for
the entire coal mining sectors owned and controlled by the Central Government.
all the three divisions of earlier CMAL were incorporated as Subsidiary companies of
CIL. Eastern Division of CMAL was converted into Eastern Coalfields Limited
(ECL), Western Division into Western Coalfields Limited (WCL) and Central
Division into Central Coalfields Limited (CCL). With that, one more subsidiary
company called Central Mine Planning and Design Institute Limited (CMPDIL) was
incorporated for planning, design and engineering consultancy services of the
coalmines. Again, for the better control of the mining operations and for enhancing
production, few mines were reorganized on January 1, 1986 and two new subsidiaries
came into sight, one from WCL called South Eastern Coalfields Limited (SECL) and
another from CCL named as Northern Coalfields Limited (NCL). Further
reorganization took place on April 1992 and again one more subsidiary came into
existence from SECL named as Mahanadi Coalfields Limited (MCL).This way, eight
subsidiaries of Coal India Limited came into existence.
3.2 The Chronological Sequence of Restructuring of Coal Industry in India
The Chronological sequence of restructuring of coal industry in India is presented in
Figure 3.1 in the next page showing the position of the present Coal India Limited
(CIL), the main coal producing public sector company in India and all the subsidiaries
including Eastern Coalfields Limited (ECL), the subsidiary selected for our research
18
COAL SCAM IN INDIA

study. 5 Figure 3.1 shows that there are certain mines, which are beyond the control of
CIL. These are:
1) Captive coking coal mines of Tata Iron & Steel Company Limited (TISCO),
2) Captive coking coal mines of Indian Iron & Steel Company Limited (IISCO),
3) Captive Non-coking coal mines of Damodar Valley Corporation (DVC),
4) Non-coking coalmines of Singareni Collieries Company Limited (SCCL), jointly
owned by Andhra Pradesh Government and Government of India with equity sharing
in the ratio of 51:49.
These are sequentially shown in the next page and necessary explanations
are given after presentation of the Figure.
19
COAL SCAM IN INDIA

Chronological Sequence of Restructuring of Coal Industry in India
Source: Glimpses of Coal India (2006), CIL, Kolkata
Chronological Sequence of Restructuring of Coal Industry in India

Private Sector Mines.
Singareni
Collieries
Company
Ltd. (SCCL)
State Railways
Collieries.
Coking Coal.
Non-Coking
Coal.
Captive
Mines of
National Coal
Develoupment
Corporation
(NCDC) 1956.
DVC.
Non-Coking
Coal.
May, 1972
Coking
Coalmines
Nationalized
Bharat
Coking Coal
Ltd. (BCCL)
May, 1973
Non-Coking
Coalmines
Nationalized
Coal Mines
Authority
Ltd. (CMAL)
November, 1975, Formation of Coal

India Limited as Holding Company
North Eastern Coalfields (NEC)
ECL, BCCL, CCL, WCL,
CMPDIL
January 1, 1986 Reorganization
NEC
Dankuni Coal Complex (DCC)
ECL, BCCL, CCL, NCL,
WCL, SECL, CMPDIL
April, 1992 Further Reorganization
NEC
DCC
1945, SCCL
TISCO /
IISCO
ECL, BCCL, CCL, NCL, WCL,

SECL, MCL, CMPDIL
20
COAL SCAM IN INDIA

3.3 Coal Deposits in India
India is rich in coal deposits and occupies fourth position in global coal reserve after the
USA, Russia and China. According to Geological Survey of India (GSI), as on April 1,
2008 reserves of coal in India up to a depth of 1200 meters was 264.54 billion tonnes, of
which 28.5 percent and 24.7 percent were in the states of Jharkhand and Orissa
respectively whereas the remaining reserves were in other states as are discussed in the
latter part of this section. There are different types of coal found in India and other
countries. In general, coal is classified into four categories. They usually range from
lignite, through sub bituminous and bituminous, to anthracite, reflecting the progressive
response of individual deposits of coal to increasing heat and pressure. The carbon
content of coal supplies most of its heating value, but other factors also influence the
amount of energy it contains per unit of weight. Lignite is a geologically young coal
which has the lowest carbon content, 25-35 percent, and a heat value ranging between
4,000 and 8,300 BTUs (British thermal units which is used to express the amount of
energy in coal) per-pound. Sometimes called brown coal, it is mainly used for electric
power generation. Bituminous coal is the most plentiful form of coal available in the
United States. This coal is used primarily to generate electricity and make coke for the
steel industry. Bituminous coal has a carbon content ranging from 45 to 86 percent carbon
and a heat value of 10,500 to 15,500 BTUs- per-pound. Ranking below bituminous is
subbituminous coal with 35-45 percent carbon content and a heat value between 8,300
and 13,000 BTUs-per-pound. Reserves are located mainly in a half-dozen Western states
and Alaska. Although its heat value is lower, this coal generally has a lower sulfur content
than other types, which makes it attractive for use because it is cleaner burning. The coal
that has the highest carbon content, between 86 and 98 percent, and a heat value of nearly
15,000 BTUs-per-pound is called Anthracite coal. This coal is frequently associated with
home heating and occupies a very small segment of the U.S. coal market. There are 7.3
billion tons of anthracite reserves in the United States and is found mostly in 11 North
Eastern counties in Pennsylvania.
The Indian coal deposits are primarily concentrated in the Gondwana sediments occurring
in the Eastern and Central parts of Peninsular India. The Indian coal mainly consists of
bituminous and sub-bituminous varieties that rank below anthracite variety, which is
regarded as the best kind of coal. In India, bituminous and sub bituminous coal is used
primarily to generate electricity and make coke for the steel industry. Further, the Tertiary
21
COAL SCAM IN INDIA

coal bearing sediments are also found in North-Eastern India, spreading over the states of
Assam, Arunachal Pradesh, Nagaland and Meghalaya of which the Assam Coalfields are
the prominent ones. Here coalfields are highly disturbed tectonically and with high
sulphur contents.
Based on availability, India mainly produces two types of coal. These are coking coal and
non-coking coal. Coking coals are those coals, when heated in the absence of air, form
coherent beads, free from volatiles, with strong and porous mass, called coke. Thus, these
coals have coking properties and are mainly used in steel making and metallurgical
industries. For that reason, these coals are also known as metallurgical coal. In contrast,
non-coking coals do not have such coking properties. These are mainly used as thermal
grade coal for power generation and also used for cement, fertilizer, glass, ceramic, paper,
chemical and brick manufacturing, and for other heating purposes.
Depending on the quality of coke produced from them, coking coal is sub-divided into
prime coking coal, medium coking coal and semi-coking coal. For example, semi-coking
coals have reasonably less coking properties than prime coking coals and moderately less
coking properties than medium coking coals. These coals are blended with coking coals
in adequate proportion to make coke. Thus, these are mainly used as blend-able coal in
steel making, merchant coke manufacturing and other metallurgical industries. Similarly,
non-coking coal is classified in seven grades (Grades A to G) depending on its caloric
values, which is exhibited in Table 3.1 below. Indian coal is, actually, categorized based
on Useful Heat Value (UHV) in case of non-coking (Steam) coal and based on ash
contents in case of coking coal. The useful value is calculated following the formula:
UHV= 8900-138 (A+M), where UHV means useful heat value in Kcal/Kg, A indicates
ash content in percentage and M indicates moisture content in percentage. Similarly,
gross calorific value (Kcal/Kg) is calculated following the formula, GCV = 91.7 F + 75.6
(V 0.1 A) 60M, where F, V, A and M denote moisture, ash, volatile matter and fixed
carbon all in percent air-dried, respectively. Price of coal, thus, varies according to their
coking properties and further according to the different grades of coal in case of noncoking coal. Prime coking coal fetches the highest value as compared to the medium and
semi-coking coal. Similarly, in case of non-coking coal, grade A gets the highest value
as compared to the other grades and so on. Thus, the subsidiaries, which have more
reserves of coking coal and higher grade of non-coking coal, are in a better position to
fetch better market price for their product. For example, BCCL gets better prices by
22
COAL SCAM IN INDIA

selling coking coal and ECL gets higher prices by selling non-coking coals from S.P
mines and Raniganj coalfields as compared to other subsidiaries.
Various Grades of Non-coking coals
Useful Heat Value (Kcal/Kg)

UHV= 8900-138 (A+M)
Exceeding 6,200
Gross Calorific Value (GCV) (Kcal/Kg)

(at 5% moisture level)
Exceeding 6,401
Exceeding 5,600 but not exceeding 6,200
Exceeding 4,800 but not Exceeding 5,401
Grade
Now before providing total reserve of Indian coal in detail we would like to explain three
terms that are used to categorize that reserve. These are Proved Reserve, Indicated
Reserve and Inferred Reserve. The coal reserves that are not only considered recoverable
but can also be recovered economically are called Proved Reserves. Thus, a proven
recoverable reserve is the tonnage of coal that has been proved by drilling etc. and is
economically and technically extractable. This means they take into account what current
mining technology can achieve and the economics of recovery. For that reason, proved
reserves will change according to the price of coal; if the price of coal is low, proved
reserves will decrease. The estimate of the quantity of coal available in an area, which is
considered good, and the depth at which coal can be exploited is reasonable, is termed as
Indicated Reserve. Indicated reserves differ from proved reserves in the way that
indicated reserves are estimated with a lower degree of confidence than proved reserves.
The term Inferred Reserve refers to the rough estimate of the quantity of available coal
made during a survey, which is called regional survey. However, total coal resources
indicate the amount of coal that may be present in a deposit or coalfield. This does not
take into account the feasibility of mining the coal economically. Not all resources are
recoverable using current technology.
We have already mentioned that as per GSI compilation of reserves data as on April 1,
2008, total reserve of coal in India up to a depth of 1200 meters is 264.54 billion tonnes,
comprising proved, indicated & inferred categories, of which 28.5 percent and 24.7
23
COAL SCAM IN INDIA

percent are in the states of Jharkhand and Orissa respectively whereas the remaining
reserves are in other states. However, total coal reserves, as on April 1, 2007 was 257.38
billion tonnes. Thus, there is an increase in the reserve of coal as on April 1, 2008.
Further, out of these total reserves as on April 1, 2008 only 101.83 billion tonnes are of
proved category, 124.22 billion tonnes are indicated and remaining 38.49 billion tonnes
are of inferred category. While 4.6 billion tonnes of proved reserves belong to prime
coking category, other coking reserves are 12.3 billion tonnes. Proved reserves of noncoking coal increased from 81.6 billion tonnes as on April 1, 2007 to 84.4 billion tonnes
as on April 1, 2008.
In addition, Neyveli Lignite Corporation (NLC) coordinates and reviews the regional
exploration work concerning lignite reserves. Lignite is a low grade brown coloured
geologically young coal that has the lowest carbon content, 25-35 percent, and a heat
value ranging between 4,000 and 8,300 BTUs-per-pound. Because of its colour,
sometimes, this coal is called brown coal. This coal is mainly used for electric power
generation. Total lignite reserve in the country as on April 1, 2007 was 38.76 billion
tonnes, which further increased to 38.93 billion tonnes as on April 1, 2008. Out of the
total lignite reserves, Tamilnadu accounts for 31.33 billion tonnes (80.83 percent) while
Rajasthan accounts for 4.48 billion tonnes (11.6 percent).
Detailed data on Coal reserves excluding lignite reserve, up to a depth of 1200 meters as
on April 1, 2008, by type of Coal and by different coal bearing States are provided in
Tables 3.2 and 3.3 respectively whereas detailed data on lignite reserves are available in
Table 3.4.
given below exhibits that Indian coal generally is of non-coking categories, which is
comparatively poorer than coking coal, but is mostly sought after item for power sectors.
Nonetheless, the country has a good amount of reserve in proved and indicated categories
giving a beneficial position for electricity generation.
Inventory of Coal by Type as on April 1, 2007 & 2008
Types of coal
As on
Reserve (Million Tonnes)

Proved
Indicated
Inferred
Total
Prime coking
01/04/2007
01/04/2008
4,614
4,614
699
699
0
0
5,313
5,313
Medium coking
01/04/2007
01/04/2008
11,853
12,308
11,601
12,136
1,880
1,880
25,334
26,324
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COAL SCAM IN INDIA

Blendable / Semi coking
01/04/2007
01/04/2008
482
482
1,003
1,003
222
222
1,707
1,707
Non coking
01/04/2007
01/04/2008
81,624
84,425
1,07,362
1,10,378
36,042
36,388
2,25,027
2,31,191
01/04/2007
01/04/2008
98,573
1,01,829
1,20,665
1,24,216
38,144
38,490
2,57,382
2,64,535
(including high sulphur)

Total
showing state wise reserve of Indian coal in the next page exhibits that Jharkhand
occupies the highest amount of coal reserve, Orissa occupies the second highest reserve
and Chhattisgarh has the third highest figure of coal reserve whereas West Bengal has the
fourth position as regard to the coal reserve. Further, Jharkhand is the only state that
occupies coking coal, which is mostly operated by BCCL and ECL.
Geological Resources of Indian Coal by State and Depth as on April 1, 2008.
State
West Bengal
Jharkhand
Madhya Pradesh
Chhattisgarh
Uttar Pradesh
Maharashtra
Orissa
A. Pradesh
Sikkim
Assam
Type of coal
Depth
Medium Coking
0-1200
Reserve (Million Tonnes)

Proved Indicated Inferred
210.00
18.50
0.00
Semi Coking
0-1200
188.05
432.49
168.23
788.77
Non Coking
0-1200
11186.04
11229.06
4902.47
27317.57
All
0-1200
11584.09
11680.05
5070.70
28334.84
Prime Coking
0-1200
4614.35
698.71
0.00
5313.06
Medium Coking
0-1200
11743.02
10557.60
1607.40
23908.02
Semi Coking
0-1200
223.34
471.55
53.45
748.34
Non Coking
0-1200
20912.21
19901.04
4677.47
45490.72
All
0-1200
37492.92
31628.90
6338.32
75460.14
Medium Coking
0-1200
354.49
1560.11
272.83
2187.43
Non Coking
0-1200
7541.47
8322.26
2508.80
18372.53
All
0-1200
7895.96
9882.37
2781.63
20559.96
Semi Coking
0-1200
70.77
99.25
0.00
170.02
Non Coking
0-1200
10348.55
29172.90
4442.57
43964.02
All
0-1200
10419.32
29272.15
4442.57
44134.04
All Non Coking

All Non Coking
All Non Coking
All Non Coking
All Non Coking
Non Coking
0-300
0-1200
0-1200
0-1200
0-300
0-1200
765.98
5004.26
19221.59
9007.13
0.00
0.00
295.82
0.00
1061.80
2821.66 1992.17 9818.09
31728.09 14313.66 65263.34
6710.65 2978.81 18696.59
58.25
42.98
101.23
2.79
0.00
2.79
25
Total
228.50
COAL SCAM IN INDIA

High Sulphur
All
Arunachal Pradesh All High Sulphur
Meghalaya
All High Sulphur
Nagaland
All High Sulphur
Prime Coking
0-1200
0-1200
0-300
0-300
0-300
0-1200
314.59
314.59
31.23
88.99
3.43
4614.35
24.04
26.83
40.11
69.73
1.35
698.71
34.01
34.01
18.89
300.71
15.16
0.00
372.64
375.43
90.23
459.43
19.94
5313.06
Medium Coking
0-1200
12307.51
12136.21
1880.23
26323.95
Semi Coking
0-1200
482.16
1003.29
221.68
1707.13
Non coking
0-1200
High sulphur
0-1200
Total
0-1200
Tertiary Coalfields
0-1200
438.24
135.23
368.77
942.24
Gondwana Coalfields
0-1200
101391.25
124080.73
38120.84
263592.82
GRAND TOTAL
0-1200
101829.49
124215.96
38489.61
264535.06
India
India (Total)
83987.23 110242.52 36018.93 230248.68

438.24
135.23
368.77
942.24
101829.49 124215.96 38489.61 264535.06
given below, showing state-wise reserve of Lignite, exhibits that Tamilnadu takes up the
highest position dominating other states so far as reserve of Lignite is concerned.
However, Rajasthan and Gujarat occupy second and third positions respectively. Further,
we also observe that there is slight improvement in reserve of Lignite as on April 1, 2008
and this is mainly due to improvement in reserve in Rajasthan.
State-wise Reserve of Lignite as on April 1, 2007 & 2008
State
Gujarat
J&K
Kerala
Pondicherry
Rajasthan
Tamilnadu
West Bengal
As on
Reserve (Million Tonne)

Proved
Indicated
Inferred
Total
1/4/2007
785.27
259.40
1618.08
2662.75
1/4/2008
785.27
259.40
1618.08
2662.75
1/4/2007
0.00
20.25
7.30
27.55
1/4/2008
0.00
20.25
7.30
27.55
1/4/2007
0.00
0.00
9.65
9.65
1/4/2008
0.00
0.00
9.65
9.65
1/4/2007
0.00
405.61
11.00
416.61
1/4/2008
0.00
405.61
11.00
416.61
1/4/2007
560.91
2620.60
1129.92
4311.43
1/4/2008
639.69
2568.30
1276.84
4484.83
1/4/2007
2831.00
23387.42
5108.60
31327.02
1/4/2008
3399.39
22819.03
5108.60
31327.02
1/4/2007
0.00
0.29
0.86
1.15
26
COAL SCAM IN INDIA

1/4/2008
0.00
0.29
0.86
1.15
All India
1/4/2007
4177.18
26693.57
7885.41
38756.16
All India
1/4/2008
4824.35
26072.88
8032.33
38929.56
Coal Reserve of ECL

Estimates of the total geological reserves down to a depth of 1200 metres from surface in
West Bengal and 600 metres from surface at Jharkhand as on April 1, 2010 (as per GSI)
stood at 29.723 billion tonnes in West Bengal and 16.396 billion tonnes in Jharkhand. The
total comes to 46.119 billion tonnes. Of these reserves, 15.837 billion tonnes are proved,
23.754 billion tonnes are indicated and 6.528 billion tones are estimated. The Raniganj
coal is the best type of non-coking coal reserves in the country. It has higher quality and
low ash content (less than 20%) and is most suited to Power Utilities. It can reduce the
import of coal to meet the demand of our power plants. Coal of Barakar generally is of
inferior quality, which occurs mainly in Jharkhand State. However, it is suitable for
modern powerhouses & other small-scale industries.
3.4 Global Scenario of Coal
3.4.1 Global Reserve
Although coal resources are widely distributed around the world, countries depending on
coal for domestic energy or export revenue are mostly blessed with the concentration of
proven coal reserves. While OECD-North America and the Transition Economy countries
controlled 40 percent and 23 percent of the proved coal reserves respectively, about 19
percent of proved coal reserves are in China and 11 percent in South Asia. Thus, almost
93 percent of proved coal reserves are concentrated in these four regions. Therefore, the
outlook for coal production in these four countries will dominate the future of global coal
production. As per latest study done in 2006 by German Federal Institute for Geosciences
and Natural Resource, proved coal reserves including anthracite, bituminous, sub
bituminous and lignite, stands at 1019 BT (Billion tonnes). The Region-wise detail of
reserve is shown below in Table 3.5 and in Figures 3.2 & 3.3 and 3.4 in the next
27
COAL SCAM IN INDIA

World Coal Reserve
Region
OECD-North America
Transition Economies
China
Asia Ex. China
L. America
Africa & M. East
Total
Hard coal
278,617
112,198
167,000
105,682
19,769
52,846
736,112
%
38
15
23
14
3
7
100
Reserve in 2006 (Mt)

Lignite
%
128,467
45
118,260
42
25,000
9
11,131
4
124
0
202
0
283,184
100
Total
%
407,084
0.40
230,458
0.23
192,000
0.19
116,813
0.11
19,893
0.02
53,048
0.05
1019,296 100.00
Graphical presentation of World Coal Reserve
Pie Chart showing Reserves of Hard Coal in 2006 (in %)

3%
14%
7%
OECD
38%
Tr. Economies
China
Asia Ex. China
L. America
Africa & M. East
23%
15%
Pie Chart showing Reserves of Lignite Coal in 2006 (in %)
0%
4%
9%
0%
OECD
Tr. Economies
45%
China
Asia Ex. China
L.America
Africa & M.East

42%
28
COAL SCAM IN INDIA

given in the previous page exhibits that OECD-North America occupies the highest
global reserve of hard coal containing 38 % of the reserve. China holds the second
position occupying 23 % of the global hard coal reserve, Transition Economy countries
occupy the third place containing 15 % of the reserve and Asia excluding China
occupies the fourth position holding 14 % of the global hard coal reserve and so on.
given in the previous page displays that almost all the reserves of Lignite are
concentrated in the four regions. OECD-North America again occupies the highest
global reserve of lignite containing 45 % of the reserve. Transition Economy countries
hold the second position occupying 42 % of the global lignite reserve, China occupies
the third place holding 15 % of the reserve and Asia excluding China occupies the fourth
position holding 14 % of the global lignite reserve and so on. given in the previous page
exhibits that while OECD-North America and the Transition Economy countries
controlled 40 percent and 23 percent of the proved coal reserves respectively, about 19
percent of the proved coal reserves are in China and 11 percent in South Asia. Thus,
almost 93 percent of proved coal reserves are concentrated in these four regions whereas
other countries occupy only 7 % of the total global coal reserve. Therefore, we
understand that the outlook for coal production in the stated four regions will dominate
the future of global coal production.
Global Coal Reserves as of 2010:
More recent study by World Coal Association reveals that there are over 847 billion
tonnes of proven coal reserves worldwide. The study estimates that the USA has the
largest share of the global resource (25.4%) followed by Russia (15.9%), and China
(11.6%). India is the fourth in the list with 8.6 % of the global resource. The study
further indicates that there is enough coal to last us around 118 years at current rates of
production. In contrast, proven oil and gas reserves are equivalent to around 46 years
and 59 years respectively at the current production level. Further, around 62 % of oil and
64 % of gas reserves are concentrated in the Middle East and Russia.
3.4.2 Production and Consumption of Coal A Global View.
In 2006, the production of global coal industry stood at 6142 MT, of which hard coal
stood at 5205 MT and brown coal was 937 MT. In 2010, production of hard coal rose to
6185 MT and brown coal to 1042 MT (Source: World Coal Association). The top four
coal producing countries are China, USA, Australia and India. Until 2006, the global
29
COAL SCAM IN INDIA

coal market saw some sort of equilibrium between demand and supply of coal because
China used to export coal. From the year 2007 onwards, Chinas own rising demand for
coal for its power plants saw the country enter into the global market as a buyer
aggressively. According to the International Energy Association (IEA), China has
become bigger consumer of electricity than the USA in the year 2009. China occupies
the first place in both production and consumption. Further, now instead of exporting, it
is importing coal. Consequently, it has become now one of the biggest importers of coal
after Japan. In India, too the rapid demand for coal is seeing an increasing dependence
on imports. We observe from the Tables that India occupies third position in both
production and consumption. This fact confirms a huge demand of coal that cannot be
met from indigenous production. The global position of different countries as of 2010
with regard to coal production and consumption is exhibited in the displays the names
of the top five countries with regard to production and consumption of hard coal as of
2010 whereas displays the names of the top five countries with regard to production of
brown coal. We find Germany occupies the highest position in producing brown coal;
Indonesia occupies the second position whereas Australia has the fifth position in
producing brown coal and so on.
Production and Consumption of Hard Coal of Top Five Countries as of 2010 (in
MT)
Production (Hard Coal)
Country
Quantity
Consumption
Position
Country
Quantity
Position
China
3162
First
China
3421
First
USA
932
Second
USA
1085
Second
India
538
Third
India
628
Third
Australia
353
Fourth
Russia
342
Fourth
South Africa
255
Fifth
Japan
187
Fifth
Production of Brown Coal of Top Five Countries as of 2010 (in Mt)

Country
Germany
Indonesia
Russia
Turkey
Australia
Quantity
169
163
76
69
67
Position
First
Second
Third
Fourth
Fifth
30
COAL SCAM IN INDIA

Objective of Coal Block Allocation for Captive Mining
1. About historical development towards captive mining and competitive bidding of coal
blocks allocation, the Ministry of Coal have informed the Committee as under:"Under the Coal Mines (Nationalisation) Act, 1973, coal mining was exclusively
reserved for the public sector. Coal India Ltd. (CIL) and Singareni Coal Companies Ltd.
(SCCL) had the main responsibility of supplying coal to all end users. However, in the
face of burgeoning demand, these companies were not able to meet the entire demand
due to resource constraints resulting in import of coal. This necessitated allotment of
captive blocks to specified end users mainly to augment availability and bridge the gap
between demand and supply of coal. Captive blocks are allocated only in some specific
priority sectors.
2. When asked under whose authority, the power to allocate coal blocks in private sector
was allowed, the Ministry of Coal have informed the Committee in a written reply as
under:-
"Note for the Cabinet for amending Section 2 & 3 of the Coal Mines Nationalisation
(CMN) Act 1973 to allow private sector participation in Coal mining was finalised in
consultation with the Planning Commission and Ministry of Law and Justice and after
obtaining approval of the then Minister of State for Coal was submitted for the
consideration of the Cabinet Committee on Economic Affairs on 30.1.1992.
The Cabinet had considered the note on 19.2.1992 and decided that the proposal to
amend the above Act may be brought up only when specific projects of private sector
participation in coal mining come to Government for consideration.
The Ministry of Coal had further stated that the note for the Cabinet for amendment of
the CMN Act was submitted on 23.4.1992, wherein it was mentioned that the following
proposals were received:
(a) One firm proposal from M/S Coleman Associates for captive lignite mine for a
thermal power station at Barsingsar, Rajasthan
(b) joint sector company, namely Jayamkondam lignite Power Corporation from Tamil
Nadu to implement integrated lignite based power project for allowing lignite mining for
captive use.
(c)
It was learnt that the State Government of West Bengal and Bihar have
31
COAL SCAM IN INDIA

recommend the proposal of RPG enterprises for setting up of 2 units of 2x250 MW (
proposal were not received in the Ministry).
The Cabinet approved the proposal for amendment of CMN Act on 5.5.1992 to:
(a) Allow private sector participation in coal mining operations for captive consumption
towards generation of power and other end uses which may be notified from time to
time.
(b)
Allowing private sector to invest in, install and operate coal washeries for the
purpose of washing coking and non-coking coal, etc. In view of urgency of the matter,
with the approval of MOS, it was thought to promulgate an ordinance. However
Ministry of Law did not accept the justification for promulgate the ordinance. As such,
the Bill was introduced in Rajya Sabha on 15.7.1992 and the same was passed by the
Rajya Sabha on 21.7.1992. However, the Bill was pending for consideration of Lok
Sabha. Since, approval for the amendment was taking time it was proposed on 14.1.1993
to bring an ordinance and the same was approved by the Ministry of Law (legal &
legislative) on25.1.1993. By that time the next session of Parliament was notified and as
such the idea of ordinance has been dropped and the Government decided to make
efforts to expedite the approval of the Lok Sabha. Finally, the Bill was approved by the
Lok Sabha on 19.4.1993 and got the assent of the President on 9.6.1993.
As regards the role of CIL/CMPDIL in identification and allocation of coal blocks for
captive mining, the Committee were informed that a D.O. letter No.47011/9/90-CPA
dated 18th June, 92 from the Ministry of Coal to Chairman, CIL was issued in this
regard. CIL/CMPDI was requested to carry out an exercise to identify potential mining
blocks which could be considered for operation by the private sector as captive mines to
run their own power plants.
The CMD, CIL vide his D.O.letter No.CH:22:746 dated 22.08.1992 in reply to Ministry
of Coal's D.O.letter No.47011/9/90-CPA dated 18thJune, 1992 had furnished the
decision of CIL Board which
considered the leasing of blocks to private sector and the Board's directions are as
under:-
(i) "The blocks in green field areas where basic infrastructure like road, rail links and
32
COAL SCAM IN INDIA

power lines are not immediately available, should only be given to private sector. The
areas where CIL has already invested in creating such infrastructures for opening new
mines should not be handed over to the private sector.
(ii)
The blocks offered to private sector should be away from the existing mines and
projects of CIL.
(iii)
Blocks already identified for development by CIL should not be offered to the
private sector.
(iv)
Private sector should be asked to bear the full cost of exploration in these blocks
which will be offered to them.
3. The Committee were further informed that the details of 40 coal blocks identified for
private captive mining for thermal power stations in various coalfields of CIL
subsidiaries was enclosed with the above letter of CIL. The Chairman, Coal India
Limited again vide his D.O.letter No.CH:93 dated 14.07.1993 enclosed the list of 40
blocks which can be offered for Captive Mining for the power sector. The Chairman,
Coal India Limited then informed the decision of CIL Board in its 123rd
Meeting held on 27th July, 1992 regarding identification and offer of 40 coal blocks
to private sector.
4. The Coal Mines (Nationalisation) Act, 1973 was then amended in 1993 to allow
coal mining for captive consumption for generation of power, washing of coal
obtained from a mine and other end uses to be notified by Government from time to
time, in addition to the existing provision for captive coal mining for production of
iron and steel.
5. As regards the eligibility to do coal mining in the country, the Committee were
informed that the provisions has been laid down in Section 3 (3) of the Coal Mines
(Nationalisation) Act, 1973. Coal Mining can be done by companies/undertakings of the
Central Government or State Governments without captive use restriction under the
Government dispensation under Section 3 (3) (a) (i) of the Coal Mines (Nationalisation)
Act, 1973. Companies in the private sector and public sector can undertake coal mining
for captive use under the captive mining dispensation under Section 3 (3) (a) (iii) of the
Coal Mines (Nationalisation) Act, 1973. The section 3 (3)
33
COAL SCAM IN INDIA

(a) of the Coal Mines (Nationalisation) Act, 1973 is reproduced below.
(3) On and from the commencement of Section 3 of the Coal Mines (Nationalisation)
Amendment Act, 1976:
(a) no person, other than
(i)
the Central Government or a Government company or a corporation owned
managed or controlled by the Central Government, or

(ii) a company engaged in
(1) the production of iron & steel,
(2) generation of power,
(3) washing of coal obtained from a mine, or
(4) such other end use as the Central Government may, by notification specify,
shall carry on coal mining operation, in India, in any form;
Under the powers vested with the Central Government by virtue of Section 3 (3)
(a) (iii) (4) of the Coal Mines (Nationalisation) Act, 1973, the following Gazette
Notifications were issued:
(a) On 15.03.1996, the production of cement was included as an approved end-use for
the purpose of captive mining of coal. Therefore, the cement producing companies are
now also eligible to undertake coal mining for captive consumption.
(b)
Production of syn-gas obtained through coal gasification (underground and
surface) and coal liquification has been notified as end uses for coal mining on
12.07.2007."
6. In 1999, 49 blocks were identified with the approval of CIL Board. As per the
records, the list of blocks identified used to be put in public domain for a reasonable
time before considering same for allocation. The blocks used to be included in the
list with the approval of CIL Board and also deletion / withdrawal from the list as
per their requirement. It was decided by the Screening Committee that the blocks
may be deleted/ withdrawn from the list by CIL with the approval of Screening
Committee.
7. Further, the Energy Coordination Committee (ECC), in its fifth meeting held on
10.02.2006, with the objective of improving the availability of power decided that
34
COAL SCAM IN INDIA

out of the coal blocks which were reserved for Coal India for production during
Twelfth Plan Period and beyond, Ministry of Coal would identify adequate number
of blocks, aggregating reserves of 20 BT, which could be de-reserved and allocated
for power developers for captive mining and the exercise of identification was to be
completed within one month. The ECC, in its seventh meeting held on 19.07.2006,
further decided that the Coal Ministry will immediately invite fresh applications for
the coal blocks for which detailed exploration has been completed. Accordingly, 81
blocks as identified by Coal India Ltd. were de-reserved in 2006.
1. Guidelines and procedure For Allocation of Coal
A. Screening Committee and Guidelines for Allocation of Coal Blocks
The Screening Committee under the chairmanship of Additional Secretary (Coal) with
representative from other Ministries, State Governments, was constituted on 14.07.1992
through an executive/administrative order of Ministry of Coal for processing and
screening of applications received for captive mining. The first meeting of the Screening
Committee meeting was held on 14.07.1993. The Screening Committee was a broad
based body with representation from State Governments, concerned Ministries of the
Central Government and the coal companies. As per the minutes, the procedure adopted
for allocation involved wide consultations with all stakeholders. All applicants were
called for making a presentation before the Screening Committee. Comprehensive
details about the applicant, the group, performance of the group, financial strength,
readiness of the end-use plant, etc. were placed before the committee so as to enable it to
make appropriate recommendation.
3.2 As per the approved minutes of the First Screening Committee meeting furnished
by the Ministry of Coal, the Guidelines were adopted for identification and offer of
blocks to eligible companies for captive mining. The proposed guidelines were used as
broad parameters in support of the new policy and not as rigid boundary lines for
excluding the entry of private investors.
35
COAL SCAM IN INDIA
3.3 The Ministry have informed the Committee that guidelines were first framed in
1993. Thereafter consolidated guidelines were framed and adopted in 2003. The
guidelines were further modified in 2005 and in 2006. In 2005, the Expert Committee on
Coal Sector Reforms provided recommendation on improving the allocation process,
and in 2010, the Mines and Minerals(Development and Regulation) Amendment Act
was enacted, providing for coal blocks to be sold through competitive bidding.
3.4 When asked about the details of guidelines for selection of captive blocks and
procedure for allocation of coal blocks, the Ministry of Coal apprised the Committee
as underBlocks already identified for development by CIL/ SCCL/ NLC where adequate
funding is on hand/in sight should not be offered to private sector.
(ii) The blocks offered to private sector should be at a reasonable distance from
existing mines and projects of CIL/ SCCL/ NLC in order to avoid operational
problems.
(iii) The areas where CIL/ SCCL/ NLC have invested in creating infrastructure for
opening new mines should not be handed over to the private sector, except on
reimbursement of costs.
(iv) Blocks that are explored in detail and where Geological Report with assessment
of extractable reserves is available should normally be put in the offer list.
Public/private sector company to whom the block is allotted shall bear the full cost
of exploration in blocks. However, now regionally explored blocks are also offered
for captive mining.
(v) For identifying blocks, the requirement of coal for about 30 years or such other
period as may be decided in the Ministry would be considered.
(vi)
The other requirements were:- Approval of mining plan as required under
the Mines and Minerals(Regulation and Development) Act, 1957.
(b) Inspection for an appropriate enforcement of conservation measures by the Coal

36
COAL SCAM IN INDIA

Controller under the Coal Mines(Conservation and Development) Act, 1974 with a
view to ensuring scientific mining.
(c) Enforcement of safety regulations by the Directorate General of Mines Safety."
3.5
On being asked about details of applications received for allocation of coal
blocks from 1993 to 2004 and the process/procedure followed for the allocation of
coal blocks, the following information was furnished to the Committee by the
Ministry of CoalFrom 1993 to 2004, the eligible companies used to identify the coal block and
apply to the Ministry of Coal for allocation. The applications received from time, to
time,
were
examined
and
screened
by
the
Screening
Committee
for
recommendation. Since the applications were few and in some cases only one
application against a block as identified by the applicant company were received, no
such separate data was maintained in terms of number of applications received.
However, details of applicants considered by the Screening Committee were
mentioned in the minutes of the Screening Committee.
3.6 As regards the procedure for allocation of coal blocks, the Ministry of Coal have
informed the Committee in a written reply as under:"(a) Presently coal blocks are allocated to private companies and Government
companies under the following three processes:
(a). Captive dispensation through Screening Committee:
Under this dispensation, blocks identified for allocation for approved end-use for captive
mining are advertised in the major National/Regional newspapers calling applications
from both public and private sector companies. The applications received are placed
before the Screening Committee for its recommendation. The Screening Committee is
chaired by the Secretary (Coal) and has representation from Ministry of Steel, Ministry
of Power, Ministry of Industry and Commerce, Ministry of Environment and Forest,
Ministry of Railways, Coal India Limited, CIL Subsidiaries, CMPDIL, NLC and the
concerned State Governments. Allocations are decided by the Govt. on the
recommendations of the Screening Committee taking into account, inter-alia, technoeconomic viability of end-use project, state of project preparedness, compatibility in
37
COAL SCAM IN INDIA

terms of quality and quantity of coal in a block with the requirement of the end user and
track record of applicant company, recommendations of the State Government and
Administrative Ministry concerned etc.
Coal blocks have also been allocated under Section 3(3)(a)(iii) of the Coal Mines
(Nationalisation) Act, 1973 for the Coal to Liquid Project(CTL). The selection
procedure was almost the same as followed in the Screening Committee route, with the
exception that the recommendation in this case was made by an Inter-Ministerial Group
(IMG) under the chairmanship of Member (Energy), Planning Commission. The rest of
the procedure was almost similar as followed in allocation made under the Captive
dispensation through the Screening Committee route.
(ii)
Government Company dispensation:
Under the Govt. Company dispensation route, the list of blocks identified is circulated to
all the Central Ministries/ State Governments applications are invited from the State
Governments/Central Govt. for Government companies. Under this route, only
Government companies are allocated coal blocks both for specified end use, and for
commercial mining by the Government companies, where there is no restriction of
captive use. Regarding coal produced from commercial mining, the use of the mined
coal is as per the discretion of the allocate company. Further, the coal produced from
such blocks can be supplied to any consumer by the allocatee company at the price
determined by them. However, monitoring the progress of development of coal blocks is
done as usual, as in the case of coal blocks allocated for specified end use projects. So
far, none of the coal blocks allocated under this category has come into production.
Under this arrangement, allocations are determined on the basis of, inter-alia, preference
to the States which have not been allocated any coal blocks earlier, priority to the host
States in order to encourage value addition
within the coal bearing State, past performance of applicants in developing coal blocks,
proximity of coal blocks to the proposed end use projects, recommendation / support of
State Government concerned etc. Allocation is decided by the Govt. without referring it
to the Screening Committee as provided in the Revised Coal Mining Policy 2001 under
Section 3(3)(a)(i) of the Coal Mines (Nationalisation) Act, 1973.
(iii) Tariff Based Competitive bidding:
Coal blocks have been earmarked for the power projects to be set up on the basis of
38
COAL SCAM IN INDIA

tariff based competitive bidding system. Under Tariff Based Bidding route, identified
coal blocks are placed at the disposal of the Ministry of Power which determines the
linkage of coal blocks with the power projects proposed to be awarded on the basis of
Tariff Based Competitive Bidding by calling applications from eligible companies. The
Ultra Mega Power Project (UMPP) is awarded to the successful bidder. For power
projects to be selected through tariff based bidding, coal blocks are allotted based on the
recommendations of the Ministry of Power under Section 3(3)(a)(iii) of the Coal
Mines(Nationalisation) Act, 1973. In allocation of coal blocks to UMPPs, Ministry of
Power is the nodal Ministry to decide the allocation of coal blocks in consultation with
the Ministry of Coal. The terms and conditions are the same as those applicable for
blocks allocated under the Captive dispensation through the Screening Committee
route."
3.7 The Committee were informed that the guidelines for allocation of captive blocks
were subsequentl consolidated and revised as under :i"List of coal blocks will be advertised and applications invited from eligible companies.
The application shall be made to the Director(CA-1) in the Ministry of Coal and shall be
accompanied by the following in addition to any other relevant documentation that the
applicant may submit : Certificate of registration showing that the applicant is a
company registered under Section 3 of the Indian Companies Act. Certified copy of
the Memorandum and Articles of Association of the applicant Company. (5 Copies)
Audited Annual Accounts/reports of last 3 years. (5 copies) Project report in respect of
the end use plant. If the report is appraised by a lender, the appraisal report shall also be
submitted. (5 copies) Detailed Schedule of implementation (milestones and time-lines
for each milestone) for the proposed end use project and the proposed coal mining
development project in the form of bar charts (5 copies). However, the overall
timeframe proposed should not exceed the normative time ceiling prescribed. Detailed
schedule of exploration (milestones and time-line for each milestone) in respect of
unexplored blocks. However, the overall timeframe proposed should not exceed the
normative time ceiling prescribed. Scheme for disposal of unuseables containing carbon
obtained during mining of coal or at any stage thereafter including washing. This
scheme must include the disposal/use to which the middlings, tailings, fines, rejects, etc.
from the washery are proposed to be put. (5 copies)
ii. In respect of fully explored blocks, geological data may be obtained from CMPDIL,
39
COAL SCAM IN INDIA

NLC or the State agency concerned, as the case may be, on nominal charges. The full
cost of exploration and geological reports would be reimbursed to the agency concerned
within six (6) weeks of date of issue of allotment letter.
iii. Where only regionally explored blocks are offered for allocation, the detailed
exploration/prospecting in the said blocks shall be done by the allocatee company under
the supervision of CMPDIL.
iv. In order to promote scientific and proper mining , larger blocks shall not be sub
blocked into smaller ones. Only natural sub-blocks will be formed.
v. Allotment of Captive blocks to a consortium or group of companies If requirement

of coal by an applicant does not match with the reserves in a natural block then clubbing
of requirements may be resorted to and in case a number of applicant companies form a
consortium for utilisation of a block for their captive use, the same may be considered
for allocation under a legally tenable arrangement.
vi. Mining of Coal by allottee companies The following dispensations are permitted for
mining of coal from captive blocks : Any of the companies engaged in approved enduses can itself mine coal from a captive coal block; or A company engaged in any of
the approved end-uses can mine coal from a captive block through a mining company
supplying the coal on an exclusive basis from the captive coal block to the end-user
company or to its subsidiary company, provided the end-user company has firm tie up
with mining company for supply of coal, supported by legally binding and enforceable
contract / agreement. An independent coal/lignite mining company can also be allocated
a captive block on the condition that the entire coal/lignite so mined would be
transferred to an end user company(ies) for their captive consumption in the specified
end uses, provided that the said mining company has firm back-to-back tie up with the
specified end user company(ies), supported by a legally binding and enforceable supply
contract/agreement.
vii. Inter-se priority for allocation of a block among competing applicants for a captive
block may be decided as per the following guidelines: Status (stage) level of progress
and state of preparedness of the projects; Net worth of applicant company (or in the case
40
COAL SCAM IN INDIA

of a new SP/JV, the net worth of their principals); Production capacity as proposed in
the application; Maximum recoverable reserve as proposed in the application;
Date of commissioning of captive mine as proposed in the application; Date of
completion of detailed exploration (for unexplored blocks) as proposed in the
application;
Technical experience (in terms of existing capacities in coal/lignite mining & specified
end use); Recommendation of the Administrative Ministry concerned; Recommendation
of the State Government concerned (i.e. where the captive block is located Track record
and financial strength of the company Preference will be accorded to the power and the
steel sectors. Within the power sector also, priority shall be accorded to projects with
more than 500MW capacity. Similarly, in the steel sector, priority shall be given to steel
plants with more than 1 million tonne per annum capacity."
3.8 The following general conditions of allocation are also considered by Screening
Committee before allocation of coal blocks for captive mining:-
(i) The allocation is made to an end user company, Joint Venture or a mining company,
which has firm back-to back tie up with specified end user company (ies) for meeting
the coal requirement of the permitted end use project. The mining company should have
a legally binding and enforceable supply contract agreement for the life of the mine.
(ii) The block is meant for captive use in their own specified end use projects or that of
associated/end use company (ies) in the case of a mining company.
(iii) The coal production from the captive blocks shall commence within 36 months (42
months in case the area is in forest land) of the date of allocation in opencast (OC) mine
and in 48 months( 54 months in case the area fall under forest land) from the date of
allocation in underground(UG) mine. The Company shall buy the geological report (in
respect of fully explored blocks) from CMPDIL within six weeks of the date of
allocation.
(iv)
In respect of an unexplored block, the allocatee company shall apply for a
prospecting license within three months of the date of issue of allotment. The
exploration shall be completed and geological report prepared within two years from the
date of issue of prospecting license.
(v) The company shall submit a mining plan for approval by the competent authority
41
COAL SCAM IN INDIA

under the Central Government within six months (in respect of explored blocks) from
the date of allocation letter.
(vi) In respect of an unexplored block, the mining plan shall be submitted for approval
by the competent authority within two years and six months from the date of issue of the
letter of allocation.
(vii) The company shall submit a bank guarantee equal to one year's royalty, amount
based on mine capacity as assessed by CMPDIL, and the weighted average royalty
within 3 months of the date of the allocation letter. Subsequently, upon approval of the
mining plan, the bank guarantee amount will be modified based on the final peak rated
capacity of the mine.
(viii) 50% of the bank guarantee shall be linked to the milestones (time schedule) set for
development of captive block, and the remaining 50% to' the guaranteed production.
The bank guarantee shall be liable to be encashed in the following eventuality: There
shall be an annual review of progress achieved by an allocattee company. In the event of
lapses, if any, in the achievement vis-a-vis the milestones set for that year, a
proportionate amount shall be encashed and deducted from the bank guarantee.
Once production commences, in case of any lag in the production of coal/lignite, a
percentage of the
bank guarantee amount will be deducted for the year. This percentage will be equal to
the percentage o
deficit in production for the year with respect to the rated/peak capacity of the mine,
e.g., if peak rated
capacity is 100, production as per the approved mining plan for the relevant year is 50
and actual
production is 35, then ( 50-35)/100 x100 =15% will lead to deduction of 15% of the
original bank
guarantee amount for the year. Upon exhaustion of the bank guarantee amount, the
block shall be liable
for de-allocation/cancellation of mining lease
The allocattee shall ensure that the bank
guarantee
remains valid at all times till the mine reaches its rated capacity or till the bank
guarantee is exhausted.
Any lapses on this count shall lead to de-allocation /cancellation of mining lease.
42
COAL SCAM IN INDIA

(ix) No coal shall be sold, delivered, transferred or disposed except for the stated
captive mining purposes except with the previous approval of the Central Government.
(x) Those of the above conditions relevant at the time of grant of mining lease shall be
included as additional conditions in the mining lease in addition to any further
conditions imposed by or agreed to by the Central Govt.
(xi) Allocation / mining lease of the coal block may be cancelled, inter-alia, on the
following grounds:
(a) Unsatisfactory progress of implementation of their end use plant,
(b) Unsatisfactory progress in the development of coal mining project,
(c) For breach of any of the conditions of allocation.

(xii) The de-allocation/cancellation of mining lease shall be without any liability to the
Government or
its agencies, whatsoever. Any expenses incurred by the allocatee or any right or liability
arising on the
allocatee out of the measures taken by him shall solely be to his account and in no way
be transferred to
or borne by the Government or its agencies.
(xiii) In case of coal blocks acquired under the CBA Act, the mineral rights shall be
surrendered by the
Government Company to the State Government. On payment of necessary
compensation/ considerations
by the allocatee company to the Government Company, the land shall be transferred to
them and the
State Government shall grant a mining lease over the area in favour of the allocatee
company under the
provisions of and as per the procedure prescribed under the Mines and Mineral
(Development &
Regulation)(MMDR) Act and Mineral Concession(MC) Rules. Any delay beyond 2
months by
Government Company in transferring the title /possession of land, as the case may be,
can be claimed as
43
COAL SCAM IN INDIA

grace period by the allocatee for the purposes of conditions (iv) & (vii) above. 3.9
When asked about
as to when did the Government issue advertisements for allocation of coal blocks and
what was the
response of public and private sector companies thereto informed the Committee as
under- The
advertisements calling for application for allotment of coal blocks were issued in 2005
and 2006. Before
this, no advertisements were issued calling for applications. An advertisement was
issued in 2008 for
allocation of coal blocks for Coal to Liquid (CTL) projects. 20 blocks were advertised in
2005 in
response to which 728 applications were received. In 2006, 38 blocks were advertised in
response to
which 1422 applications were received. For the blocks advertised for CTL projects in
2008, 28
applications were received.
3.10 Asked about whether guidelines were notified for information of public and ensure
that allocation
was done in transparent manner, the Secretary(Coal) informed the Committee as under:"As far as the
publicity of the issue is concerned, ......till 2005, individual applications were being
received. From
2006, ...... it was done through the advertisement procedure. When we went through the
advertisement
procedure, these guidelines were put on the website."
B. PROCEDURE FOR ALLOCATION OF LIGNITE BLOCKS
3.11 As regards allocation of lignite blocks the Ministry of Coal furnished following
information :a.
"Lignite blocks are also allocated through the Screening Committee route and
through Government company dispensation route. In case of Screening Committee

route, blocks are advertised for inviting applications from the eligible companies. In
44
COAL SCAM IN INDIA

case of lignite blocks, the list of blocks in Government dispensation is not circulated to
all the States. This is primarily because of the limited occurrence, the volatile nature of
lignite and associated transportation problems. Lignite deposits are concentrated mainly
in the States of Tamil Nadu, Rajasthan and Gujarat and the other States would not be
interested because of the problems associated with the transportation of lignite.
b. In case of allocation through the Screening Committee, applications for allocation of
lignite blocks, after receipt in the Ministry are forwarded to the administrative Ministries
concerned, who inter-alia, scrutinize them for track record of applicant company,
techno-economic viability of the project,
state
of
project
preparedness
and
assessment of coal requirement in terms of quality and quantity etc. and make their
recommendations to the Screening Committee.
c. From the point of qualitative and quantitative matching of the projected lignite
requirement with that available in the sought block and other associated matters, NLC
makes recommendations to the Screening Committee. The Screening Committee
decides each case on its relative merits, in its meetings with the benefit of these
recommendations, after giving an opportunity to the applicant for presenting their case.
d. So far, 29 lignite blocks have been allocated to Govt. as well as private companies.
Out of the total allocated blocks, 22 blocks have been allocated to the State Govts. of
Gujarat and Rajasthan and 7 blocks have been allocated to private companies. Out of
allocated blocks, one block i.e. South of Vellar allocated to M/s Tamil Nadu Industries
Captive Power Company Ltd. has been de-allocated based on recommendation of
Review meeting held in June, 2009. . Applications for allocation of coal blocks form
captive mining for the specified end uses shall be made to the Director (CA-I) in the
Ministry of Coal in five copies. The application shall be accompanied by
documentation that the applicant may submit: Certificate of registration showing that
the applicant is a company registered under Section 3 of the Indian Companies Act. This
document should be duly signed and stamped by the Company Secretary of the
Company. (1 copy). Document showing the person/s who has/have been authorised to
sign on behalf of the applicant company while dealing with any or all matters connected
with allocation of the sought coal block/s for captive mining with the Government/its
agencies. This document should be duly signed and stamped by the Company Secretary
of the Company. (5 copies) Certified copy of the Memorandum and Articles of
Association of the applicant Company. (5 Copies) Audited Annual Accounts/reports of
last 3 years. (5 copies) Project report in respect of the end use plant. If the report is
45
COAL SCAM IN INDIA

appraised by a lender, the appraised report shall also be submitted. (5 copies) Detailed
Schedule of implementation (milestones and time-line for each milestone) for the
proposed end use project and the proposed coal mining development project in the form
of bar charts (5 copies). However, the overall timeframe proposed should not exceed the
normative time ceiling prescribed.
Detailed schedule of exploration (milestones and time-line for each milestone) in
respect of unexplored blocks. However, the overall timeframe proposed should not
exceed the normative time ceiling prescribed. Scheme for disposal of unuseables
containing carbon obtained during mining of coal or at any stage thereafter including
washing. This scheme must include the disposal/use to which the middlings , tailings,
fines, rejects, etc. from the washery are proposed to be put. (5 copies) Demand draft for
Rs.10,000/- in favour of PAO, Ministry of Coal payable at New Delhi.
A Soft Copy of details, as filled in the Application Form , is also to be furnished in the
specified Database Form(in MS-Excel format) in a CD along with the Application.
Applications without the above accompaniments would be treated as incomplete and
shall be rejected.
2.
In respect of fully explored blocks, geological data may be obtained from
CMPDIL,NLC or the State agency concerned, as the case may be, on nominal charges.
However, full cost of exploration and geological reports would be reimbursed to the
agency concerned within six (6) weeks of date of issue of allotment letter.
3. Where only regionally explored blocks are offered for allocation, the detailed
exploration/prospecting in the said blocks shall be done by the allocattee company under
the supervision of CMPDIL
4. Replacement of linkage with coal to be produced from the allocated captive coal
block can be permitted by the Screening Committee subject to safeguarding the interest
of CIL and its subsidiaries.
5. Disposal of production during the development phase of the captive mine to the local
CIL Subsidiaries has been allowed at a price to be determined by the Government.
6. In order to promote scientific and proper mining the larger blocks shall not be sub
blocked into smaller ones. Only natural sub-blocks will be formed.
46
COAL SCAM IN INDIA

7. Allotment of Captive blocks to consortium of group of companies
(i) If requirement of coal by an applicant does not match with the reserves in a natural
block then clubbing of requirements may be resorted to and in case a number
ofapplicant companies form a consortium for utilisation of a block for their captive
use,the same may be considered for allocation under a legally tenable arrangement.
(ii) More than one eligible and deserving companies will be allowed to do captive
mining of coal by forming a joint venture coal mining company. The constituent
applicant companies would hold equity in the joint venture company in proportion to
their assessed requirement of coal and the coal produced would be exclusively
consumed in their respective end use projects. Distribution of coal would be in
proportion to their respective assessed requirements.
(iii) One or more companies (to be called leader companies) from amongst the selected,
could be allowed to do mining of coal in one or more captive blocks and the other
companies (to be called associate companies) would get coal from the captive block in
proportion to their assessed requirements. The local Coal India subsidiary could
facilitate this arrangement by taking a nominal service charge. Leader companies will
deliver coal to associate companies at a transfer prices to be determined by the Central
Government.
8. Mining of Coal by allottee companies
The following dispensations are permitted for mining of coal from captive blocks:
(i) Any of the companies engaged in approved end-uses can itself mine coal from a
captive coal block; or
(ii) A company engaged in any of the approved end-uses can mine coal from a captive
block through a mining company supplying the coal on an exclusive basis from the
captive
coal
block
to
the
end-user
company.
company has firm tie up with mining company for supply of coal, supported by
legally binding and enforceable contract / agreement.
iii) An independent coal/lignite mining company can also be allocated a captive block
on the condition that the entire coal/lignite so mined would be transferred to an end user
company(ies) for their captive consumption in the specified end uses; Provided that the
47
COAL SCAM IN INDIA

said mining company has firm back-to-back tie up with the specified end user
company(ies), supported by legally binding and enforceable supply contract/agreement.
9. Inter-se priority for allocation of a block among competing applicants for a captive
block may be decided as per the following guidelines:
Status (stage) level of progress and state of preparedness of the projects;
Networth of the applicant company (or in the case of a new SP/JV, the networth of their
principals);
Production capacity as proposed in the application;
Maximum recoverable reserve as proposed in the application;
Date of commissioning of captive mine as proposed in the application;
Date of completion of detailed exploration (in respect of unexplored blocks only) as
proposed in the application;
Technical experience (in terms of existing capacities in coal/lignite mining and specified
end use);
Recommendation of the Administrative Ministry concerned;
Recommendation of the State Government concerned (i.e. where the captive block is
located);
Track record and financial strength of the company
Preference will be accorded to the power and the steel sectors. Within the power sector
also, priority shall be accorded to projects with more than 500MW capacity. Similarly,
in steel sector, priority shall be given to steel plants with more than 1 million tonne per
annum capacity.
B. CONDITIONSOF ALLOTMENT
10.Upon allocation of captive coal block by the Screening Committee the applicant
would submit an affidavit in the prescribed format to the effect that all coal mined from
the captive block shall exclusively be used in the proposed end use project for which the
said block has been allocated and that in case of any slippage in implementation of the
end use project or the captive coal mine development project, as per the schedule of
48
COAL SCAM IN INDIA

implementation/bar charts submitted and agreed to by the Ministry of Coal, the said
block shall be deallocated without any liability to the Government /its agencies,
whatsoever.
11. The normative time limit ceilings have been provided to ensure that the coal
production from the captive blocks shall commence within 36 months (42 months in and
in 48 months (54 months in case the area fall under forest land) from the date of said
letter in UG mines.
12. In respect of an unexplored block, the allocattee company shall apply for a
prospecting license within three months of the date of issue of allotment. The
exploration shall be completed and geological report prepared within two years from the
date of issue of prospecting license.
13. Any slippage in meeting with the above time limits, unless previously agreed to by
the Screening Committee, for special reasons to recorded in writing, may lead to
forfeiture of bank guarantee, or/and cancellation of allocation, previous approval under
Section 5(1) of the MMDR Act, 1957 or mining lease, as the case may be.
14. The allocattee company shall be required to submit a bank guarantee equal to one
years royalty amount based on mine capacity as assessed by CMPDIL or NLC, as the
case may be, and the weighted average royalty within 3 months of the date of letter of
allotment. Subsequently, upon approval of the mining plan the Bank Guarantee amount
will be modified based on the final peak/rated capacities of the mine.
15. 50% of the bank guarantee shall be linked to the milestones (time schedule) set for
development of captive block, and the remaining 50% to the guaranteed production. The
bank guarantee shall be liable to be encashed in the following eventuality:
(i) There shall be an annual review of progress achieved by an allocattee company. In
the event of lapses, if any, in the achievements vis--vis the milestones set for that year,
a proportionate amount shall be encashed and deducted from the bank guarantee.
(ii) Once production commences, in case of any lag in the production of coal/lignite, a
percentage of the bank guarantee amount will be deducted for the year. This percentage
will be equal to the percentage of deficit in production for the year with respect to the
rated/peak capacity of the mine, e.g., if rated/peak capacity is 100, production as per the
approved mining plan for the relevant year is 50 and actual production is 35, then (5049
COAL SCAM IN INDIA

35)/100x100= 15% will lead to deduction of 15% of the original bank guarantee amount
for that year. Upon exhaustion of the bank guarantee amount, the block shall be liable
for de-allocation/cancellation of mining lease.
(iii) The allocattee shall ensure that the bank guarantee remains valid at all times till
the mine reaches its rated capacity or till the bank guarantee is exhausted. Any lapses on
this count shall lead to de-allocation/ cancellation of mining lease.
16. The Company shall obtain the geological report (in respect of fully explored
blocks), on payment of requisite charges, from CMPDIL, NLC or the State Government
agency concerned, as the case may be, within six weeks of the date of issue of allotment
letter.
17. In respect of a fully explored block, the company shall submit a mining plan for
approval by the competent authority under the Central Government within six months
from the date of issue of the letter of allocation.
18 .In respect of an unexplored block, the mining plan shall be submitted for approval
by the competent authority within two years and six months from the date of issue of the
letter of allocation.
19. Mine opening permission shall be considered only after financial closure for the
proposed end use project is achieved.
20. In case a captive block is offered/allocated for washing-cum-end-use all the
beneficiated coal from the washery would exclusively be used in the proposed end use
project of the allocatee company as approved by the Central Government and not for
commercial use or otherwise. All middlings, tailings, or rejects from the washery, as the
case may be, and all unusables containing carbon obtained during the mining of coal or
in any process thereafter, if any, shall be used for captive consumption only by the
allocattee in his proposed end use project or as per the scheme for disposal submitted by
the applicant and agreed to by the Screening Committee. In the event that disposal is
allowed by the Government, the modalities of disposal of surplus coal/ middlings/
rejects, if any, would be as per the prevailing policy/ instructions of the Government at
the relevant point in time and could also include handing over such surplus coal/
middlings/rejects to the local CIL subsidiary or to any person designated by it at a
transfer price to be determined by the Government.
50
COAL SCAM IN INDIA
Status of Captive Coal
The Committee have desired to know the details of number of coal blocks allocated and
their production status. In this regard, the Ministry of Coal have submitted the following
details to the
CommitteeSo far 218 coal blocks with geological reserves of about 50 billion tonnes have been
allocated to eligible public and private companies under the Coal Mines
(Nationalisation) Act, 1973. Out of that, 25 coal blocks have been de-allocated. Out of
de-allocated coal blocks, two coal blocks were re-allocated to eligible companies under
the said Act. Thus, the net allocated blocks are 195 coal blocks with geological
reserves(GR) of about 44.23 billion tonnes.
Sector-wise allocation of these coal blocks is as under :
Sl.
To Govt.
To Private
No.
Companies
Companies
To
UMPPs/Tariff
based
bidding
Total
Sector
No. of
Blocks
1.
GR (in No. of
MT) Blocks
3.
4.
5.
6.
GR (in blocks
MT)
Power
42 14330.14
2.
GR (in No. of
MT) Blocks
GR (in
MT)
27
4974.20
12
4846.26
81 24150.60
Commercia
l
Mining
Iron &
Steel
Cemen
t
Small
Isolate
d
CTL
40*
7369.86
40
7369.86
393.80
61
8670.55
63
9064.35
628.74
628.74
27.34
27.34
3000
3000
99 17300.83
12
4846.26
&
Total
84 22092.80
51
195 44239.89
COAL SCAM IN INDIA

Thus out of the 195 coal blocks which stand allocated, 81 coal blocks with
GR of 24.1 BT are allocated for power sector, 63 coal blocks with GR of 9
BT for iron and steel sector and 6 blocks with GR of 0.6 BT for cement
sector. According to the Ministry Coal, coal blocks are identified and
earmarked for allocation in consultation with Coal India Limited, CMPDIL,
Ministry of Power, Ministry of Steel etc. depending on the grade of coal,
geological reserves, location of coal block etc."
4.2 As reported by the Coal Controllers Organisaton, Kolkata, out of
allocated coal blocks, 30 blocks started production. Production for the year
2011-2012 was 36.24 million tonnes and 10.366 million tonnes for 2012-13
(Provisional). Details of production of coal from these blocks are given
below:-
Production of coal from captive blocks during 2007-08 to 2012-13 (Upto

June, 2012)
Com
Sl Name
No.
BLK name PRC GO PVT EUP

of
VT/
Production in Mill Tonnes

2007- 2008-
2009- 2010-
2011- 2012-
08
10
12
Min PS
09
11
13
e in U
(Upto
MT
June,
PA
12)
1 WBSEB Tara (East)
2 WBPDCL
4
5
JSPL
0 Power
0 Power
4.229
4.134
3.303
2.876 2.68
0.78
1 Iron &
Steel
5.994
5.998
5.999
5.999 5.997
1.465
3.5
1 Power
2.754
2.978
3.214
2.929 3.763
1.228
Talabira-I 1.5
1 Power
1.47
2.066
2.33
2.285 2.356
0.578
Tara
(West)
Gare
Palma
IV/1
RPG/CES
C
Sarshatali
HIL
52
COAL SCAM IN INDIA
BLA
MIL
PSEB
JNL
10
PIL
Gotitoria
(E
0.33
& W)
Gare
Palma
IV/5
Panchwara
Central
2 Pvt
Comm
ercial
0.329
0.236
0.299
1.1
1 Iron &
Steel
0.835
0.989
0 Power
3.797
6.175
1 Iron &
Steel
0.279
Gare Palma 0.48

IV/4
0.297 0.298
0.095
0.951
0.85
0.176
8.476
8.41 8.308
2.08
0.396
0.56
0.406 0.478
0.166
Chotia
1 Iron &
Steel
0.9
0.919
11 ANPMDL
Namchik
Namphuk
0.2
0 Govt
Comm
ercial
0.079
0.137
0.25
12
JPL
GarePalma 5.25
IV/2&3
2 Power
0.578
4.893
6.045
13
SIL
1 Iron &
Steel
0.001
0.051
14
KPCL
0 Power
15
UML
Kathautia
0.8
16
ESCL
Parbatpur 1.24
17
RAPL
Gare Palma 1.2

IV/7
18 WBPDCL
19
SAIL
Belgaon
0.27
Baranj IIV,
2.5
Kiloni and
Manora
Deep
1.00
0.257
0.299 0.222
0.069
5.688
5.25
1.624
0.14
0.114 0.161
0.055
0.991
2.252
2.275 2.189
0.682
1 Iron &
Steel
0.013
0.062
0.304 0.351
0.162
1 Iron &
Steel
0.013
0.055
0.034 0.105
0.003
1 Iron &
Steel
0.008
0.297
0.432 0.774
0.207
0.115
0.252 0.213
0.157
0.063
0.014
0.036
Barjore
0.5
0 Power
Tasra
0 Iron &
Steel
53
0.04
COAL SCAM IN INDIA
20
DVC
0 Power
0.021
1.13
0.394
0.33
1 Iron &
Steel
0.014 0.003
22 Virangana
0.21
Marki
Iron &
Steel
Mangli-III
Ltd.
1 Iron &
0 0.065
0.088
21 B.S.Ispat
23
WBMTDC
L
Barjora
North
Marki
Mangli-I
Trans
Damodar
Steel
14
0.064
16 Total 21.245 29.997
35.46
34.60 36.24 10.366
4.3 When enquired about the estimated value of coal extracted from 30 coal
blocks from where coal extraction has been started and approximate value of
coal blocks allocated for captive use by the Governments so far, the Ministry of
Coal in a written reply furnished to the Committee have stated that no estimation
has been made so far as to the value of the coal extracted and the value of coal
blocks allocated by the Ministry.
4.4 The Committee were keenly interested to know the details of the revenue earned by
the Central Government from coal blocks and royalty/cess by State Governments and
whether the rate of cess/royalty collected by State Government from public sector
companies was same as that collected from private sector companies. In this regard, the
Ministry of Coal have informed the Committee as underThe Central Government does not earn any revenue from the allocation of coal blocks
or thereafter. The coal block allocatee pay royalty/cess when the block starts producing.
The details of royalty / cess paid by various coal block allocatees as furnished by the
Coal Controller is as per Annexure-I. The royalty/cess payable by the Government
companies and the private companies is equal for the same grade of coal.
Guidelines for coal block allocatees to sell power at regulated rate
54
COAL SCAM IN INDIA

4.5 The Committee have desired to know from the Ministry of Coal if they have put in
place a Comprehensive Regulatory and Monitoring Mechanism to ensure that electricity
from coal blocks allocated is sold at regulated rates to State Electricity Distribution
Companies by the power generators benefitted from cheap coal from coal blocks
allocated to them. To a specific query in this regard the Ministry of Coal in a written
reply informed the Committee as under :"The Ministry of Power vide their letter dated 29th March, 2012, has pointed out that
As coal blocks were given for power sector, the developers must participate in the bids
for procurement of power by the discoms as per bidding guidelines issued by Ministry
of Power and offer the benefit of the government allotted coal blocks to the consumers.
and requested Ministry of coal that the coal block allocatees be advised to participate in
the bids for sale of power from end use projects as per the guidelines of Ministry of
Power or face cancellation of coal block allocation. This may be made a condition in
allocation letter even for already allotted coal blocks for power sector IPPs. The above
suggestion of the Ministry of Power was communicated by the Ministry of Coal vide
letter dated 28th June, 2012 to all the coal block allocatees of power sector and a copy of
the communication was sent to Ministry of Power. In response to the above letter the
Ministry of Power vide their letter dated 16th July, 2012 has once again requested
Ministry of Coal to incorporate in the coal block allocation letter the specific
condition enjoining upon the allocatees to participate in bids at the tariff based biding
invited by the discom even for already allocated blocks failing which coal block
allocation could be cancelled. They have requested Ministry of Coal also to evolve a
mechanism to monitor the compliance of this condition. In the light of the observation
of audit of CAG in their Report No. 7 of 2012-13 that the audit is of the strong opinion
that there is a need for strict regulatory and monitoring mechanism to ensure that the
benefit of cheaper coal is passed on to the consumers, Secretary (Coal) vide his D.O.
letter dated 4th September, 2012 has requested the Ministry of Power to have the matter
examined in detail so as to have a comprehensive scheme prepared. It was also stated
that the scheme may be prepared in consultation with law Ministry and effectively
implemented with the requisite conditionalities to ensure the above stated purposes. In
response to the above, Ministry of Power vide their letter dated 27.09.2012 has
requested the Ministry to issue orders without further delay, imposing the condition in
the allocation letters of IPPs/CPPs that they need to participate in the bids for power
procurements called by Discoms or their authorized state agency and enter into long
55
COAL SCAM IN INDIA

term PPA as per bidding guidelines issued by the MoP under section 63 of the
electricity Act, 2003 within a stipulated time period or face de-allocation of the block.
As the issue of incorporating a new condition in the allocation letter retrospectively
would have legal consequences, the same is being examined in consultation with
Ministry of Law & Justice."
4.6 On being asked about the latest progress in developing the coal blocks allocated
under Tariff based competitive bidding, the Ministry have stated the details as underOut of the 54 coal blocks identified for allocation, detailed exploration was carried out
in 12 blocks only. Detailed exploration needs to be carried out in other blocks, this
involves drilling of approximately 16 lakh mteres. For this purpose the CMPDIL needs
to enhance their drilling capacity and prepare plans. The CMPDIL in consultation with
Ministry of Coal has finalized the targeted production for the current year at 6.32 lakh
meters, to be enhanced to 9.34 lakh meters during 2013-14 to 12 lakh meters for 201415 and 15 lakhs meters during 2015-16 and 2016-17 subject to various clearances etc..
CMPDIL has planned to prepare 6 GRs during 2013-14, 11 GRs during 2014- (a)and 20
more GRs by 2016-17.
4.7
The Committee have desired to know as to why 138 coal blocks asked by CIL in
2007 for exploitation, the same were not allotted to them despite CIL having expert
manpower. In this regard, while deposing before the Committee on 19.10.2012,
Secretary(Coal) submitted as under:"116+3 from the deallocated list have been assigned to the Coal India by the Ministry of
Coal in the month of July, 2012 and after that. Coal India has got it and we also asked
Coal India to prepare a perspective plan for the development of those blocks. They have
given a preliminary report on 20th September, 2012 and as per that preliminary report,
they will be having sufficient blocks. Right now, what has happened is, out of the 119
blocks, project report has been prepared for two of them and work for preparation of
project report for 16 blocks is expected to be taken up during 12th Plan period where
Geological Report is already available. In 11 such blocks exploration has been
completed and for 24 blocks, exploration activities are still in progress."
4.8 Regarding allocation of coal blocks, Secretary, Ministry of Coal during evidence on
56
COAL SCAM IN INDIA

9th July, 2012 submitted as under :"No coal block was offered for allocation after introduction of the Amendment Bill in
the Parliament in 2008. Whatever allocations have been made after 2008 are the result of
the decisions taken before the introduction of the Bill. The intent of the Government was
to induce rapid development of infrastructure, which was essential to keep the economy
on a high growth trajectory"
57
COAL SCAM IN INDIA
Chapter 2
58
COAL SCAM IN INDIA

INDIAN COAL MINES IN STATES
Coal mining in India began in 1774 when John Sumner and Suetonius Grant Heatly of
the East
India Company commenced
commercial exploitation
in the Raniganj
Coalfield along the Western bank of Damodar river. As on 31 March 2015, India had
estimated coal reserves of 306.6 billion metric tons (338.0 billion short tons), the fifth
largest coal reserves in the world. India is the fourth largest producer of coal in the
world, producing 536.5 million metric tons (591.4 million short tons) in 2014.
Due to high demand and poor average quality, India is forced to import high quality coal
to meet the requirements of steel plants. India imported 212.1 million metric tons
(0.2338 billion short tons) and exported 1.24 million metric tons (1.37 million short
tons) of coal in 2014-15.
Pre-independence
Commercial exploitation of coal in India began in 1774 with John Sumner
and Suetonius Grant Heatly of the East India Company in the Raniganj Coalfield along
the Western bank of Damodar river. The growth of Indian coal mining remained slow
for nearly a century due to low demand. The introduction of steam locomotives in 1853
boosted demand, and coal production rose to an annual average of 1 million metric tons
(1.1 million short tons). India produced 6.12 million metric tons (6.75 million short tons)
of coal per year by 1900 and 18 million metric tons (20 million short tons) per year by
1920. Coal production received another boost during the First World War due to
increased demand, slumped again in the early 1930s. Production reached a level of
29 million metric tons (32 million short tons) by 1942 and 30 million metric tons
(33 million short tons) by 1946.
In the regions of British India known as Bengal, Bihar and Orissa, the Kutch Gurjar
Kshatriyas pioneered Indian involvement in coal mining from 1894. They broke the
previous monopolies held by British and other Europeans, establishing many collieries
at
locations
such as Khas
Jharia, Jamadoba, Balihari, Tisra, Katrasgarh, Kailudih,
Kusunda, Govindpur, Sijua, Sijhua, Loyabad, Dhansar, Bhuli, Bermo, Mugma, Chasnala
-Bokaro, Bugatdih, Putki, Chirkunda, Bhowrah, Sinidih, Kendwadih, and Dumka.
59
COAL SCAM IN INDIA

Seth Khora Ramji Chawda of Sinugra was the first Indian to break the British monopoly
in the Jharia Coalfields. Natwarlal Devram Jethwa says that The East Indian Railway in
1894-95 extended its line from Barakar to Dhanbad via Katras and Jharia. Messrs.
Khora Ramji in 1894 was working on railway lines contract of Jharia branch line and
with his brother Jetha Lira was also building Jharia Railway Station, when he discovered
coal in Jharia belt. The location of his three collieries named Jeenagora, Khas Jherria,
Gareria is mentioned also in 1917 Gazetteers of Bengal, Assam, Bihar and Orissa.
Other Indian communities followed the example of the KGK in the Dhanbad-JhariaBokaro
fields
after
the
1930s.
These
included
the Punjabis, Kutchis, Marwaris, Gujaratis, Bengalis and Hindustanis. Encyclopaedia of

Bengal, Bihar and Orissa -1920 mentions:- "Out of 92 collieries belonging
to Gujaratis in Jharia Coalfields Area during 1920s - 50 belonged to Mistris of
Kutch with Seth Khora Ramji as Head of them all." Seth Khora Ramji of Sinugra was
also honored by King of Kutch by giving him a
Post-independence
Following independence,
the
Government
of
India
introduced
several 5-year
development plans. Annual production rose to 33 million metric tons (36 million short
tons) at the beginning of the First Five Year Plan. The National Coal Development
Corporation (NCDC), a Government of India Undertaking, was established in 1956 with
the collieries owned by the railways. The NCDC aimed to increase coal production
efficiently by systematic and scientific development of the coal industry. The Singareni
Collieries Company Ltd.(SCCL) which was already in operation since 1945 and which
became a Government company under the control of Government of Andhra Pradesh in
1956. The coal industry in India was thus controlled by state-owned companies in the
1950s. Today, SCCL is a joint undertaking of Government of Telangana and
Government of India sharing its equity in 51:49 ratio.
Nationalisation of coal mines
Right from its genesis, the commercial coal mining in modern times in India has been
dictated by the needs of the domestic consumption. India has abundant domestic
reserves of coal. Most of these are in the states of Jharkhand, Odisha, West
Bengal, Bihar, Chhattisgarh, Telangana and Madhya
60
Pradesh. On
account
of
the
COAL SCAM IN INDIA

growing needs of the steel industry, a thrust had to be given on systematic exploitation
of coking coal reserves in Jharia coalfield. Adequate capital investment to meet the
burgeoning energy needs of the country was not forthcoming from the private coal mine
owners. Unscientific mining practices adopted by some of them and poor working
conditions of labor in some of the private coal mines became matters of concern for the
Government. On account of these reasons, the Central Government took a decision to
nationalize the private coal mines. The nationalization was done in two phases, the first
with the coking coal mines in 1971-72 and then with the non-coking coal mines in 1973.
In October, 1971, the Coking Coal Mines (Emergency Provisions) Act, 1971 provided
for taking over in public interest of the management of coking coal mines and coke oven
plants pending nationalization. This was followed by the Coking Coal Mines
(Nationalization) Act, 1972 under which the coking coal mines and the coke oven plants
other than those with the Tata Iron & Steel Company Limited and Indian Iron & Steel
Company Limited, were nationalized on May 1, 1972 and brought under the Bharat
Coking Coal Limited (BCCL), a new Central Government Undertaking. Another
enactment, namely the Coal Mines (Taking Over of Management) Act, 1973, extended
the right of the Government of India to take over the management of the coking and
non-coking coal mines in seven States including the coking coal mines taken over in
1971. This was followed by the nationalization of all these mines on May 1, 1973 with
the enactment of the Coal Mines (Nationalization) Act, 1973 which now is the piece of
Central legislation determining the eligibility of coal mining in India.
All non-coking coal mines were nationalized in 1973 and placed under Coal Mines
Authority of India. In 1975, Eastern Coalfields Limited, a subsidiary of Coal India
Limited, was formed. It took over all the earlier private collieries in Raniganj Coalfield.
Raniganj Coalfield covers an area of 443.50 square kilometres (171.24 sq mi) and has
total coal reserves of 8,552.85 million metric tons (9,427.90 million short tons). Eastern
Coalfields puts the reserves at 29.72 billion metric tons (32.76 billion short tons). That
makes it the second largest coalfield in the country (in terms of reserves).
The North East Indian states enjoys special privileges under constitution of India. The
Sixth Schedule of constitution and article 371 of constitution allows state governments
to formulate its own policy in order to recognize customary tribal laws. For example,
Nagaland has its own coal policy which allows its natives to mine coal from their
respective lands. Similarly, coal mining in Meghalaya was rampant till imposition of
61
COAL SCAM IN INDIA

ban on coal mining by National Green Tribunal. The Nagaland Coal[15] and Meghalaya
Coal has large buyers in North India, Central India and Eastern India.
ndia has the fifth largest coal reserves in the world. As on 31 March 2015, India had
306.6 billion metric tons (338.0 billion short tons) of the resource. The known reserves
of coal rose 1.67% over the previous year, with the discovery of an estimated
5.04 billion metric tons (5.56 billion short tons). The estimated total reserves of lignite
coal as on 31 March 2015 was 43.25 billion metric tons (47.67 billion short tons). The
energy derived from coal in India is about twice that of the energy derived from oil,
whereas worldwide, energy derived from coal is about 30% less than energy derived
from oil.
Reserve
Coal deposits are primarily found in eastern and south-central India. Jharkhand, Odisha,
Chhattisgarh, West Bengal, Madhya Pradesh, Telangana and Maharashtra accounted for
99.08% of the total known coal reserves in India. As on 31 March 2015, Jharkhand and
Odisha had the largest coal deposits of 26.44% and 24.72% respectively.
Distribution of coal reserve by states
Jharkhand
it leads in coal production and coal reserves in the country. The important coal fields are
(i) Jharia, (ii) Giridih, (iii) North Karanpura, (iv) South Karanpura, (v) Ramgarh, (vi)
Bokaro and, (vii) Daltonganj. The Jharia coalfield is the largest in India. It accounts for
over 50 per cent of the coal output of the state and produces the best variety of coking
coal.
(i) Jharia:
The coal field lies in the Damodar River Valley, and covers about 110 square miles (280
square km), and produces bituminous coal suitable for coke. Most of India's coal comes
from Jharia. Jharia coal mines are India's most important storehouse of prime coke coal
used in blast furnaces, it consists of 23 large underground and nine large open cast
mines.
62
COAL SCAM IN INDIA

The mining activities in these coalfields started in 1894 and had really intensified in
1925. The first Indians to arrive and break monopoly of British in Coal mining
were Gujarati railway contractors from Kutch some of whom decided to plunge into the
coal mining business and were thus the pioneers in starting coal mining in Jharia
coalfields belt around 1890-95. In Jharia-Dhanbad belt Seth Khora Ramji Chawdawas
the first Indian to break monopoly of Europeans and founded Khas Jharia, Golden
Jharia, Fatehpur, Balihari, Khas Jeenagora, East Bagatdih Collieries with their brothers
Teja Ramji Chawda, Jetha Lira Jethwa, Akhoy Ramji Chawda, Pachan Ramji Chowra
between 1894 and 1910. In Pure Jharia Colliery Khora Ramji and brothers were partners
with Diwan Bahadur D.D. Thacker. The Encyclopaedia of Bengal, Bihar & Orissa
(1920) by British Gazetteer mentions about Seth Khora Ramji as under :.at that time (in 1890s) the Jharia coal fields were being exploited by Europeans and
Seth Khora Ramji was first Indian to seize the opportunity. He purchased two collieries
to begin with. Gradually others from Kutch and Gujarat followed suit and now Jharia
has been changed into a Gujarati settlement with about 50 Kutchi out of
92 Gujaraticollieries proprietors with Seth Khora Ramji as head of them all. He is now
sole proprietor of two collieries and a financing member of about eight collieries.
Several district officials have remarked him as multi-millionaire, one of the first class
parties in Jharia.
The life sketch of Govamal Jivan Chauhan is also another miner mentioned by the
British in gazetter] who founded collieries at Teesra, Budroochuck and Pandeberra
around 1908-10, Jagmal Raja Chauhan owned Rajapore colliery with Manji Jeram
of Madhapar, while Khimji
Walji owned
Tisra
mines and Khimjee
&
Gangjee
Dossa owned mines at Kujama, Fettehpur, North Kujama, North Akashkinari,

Katrasgaarh, Central Jharia, Indian Jharia and Lower Upper Jharia, Khengar Trikoo
of Anjar at Khas Joyrampur There were more than 50 mines owner from Mistri
community of Kutch, who took on lease the coal mining fields from Raja of Jharia at
various
locations
to
start
collieries
at Khas
Jharia, Bhowrah, Jamadoba, Balihari, Tisra, Katrasgarh, Kailudih,

Kusunda, Govindpur, Sijua, Sijhua, Loyabad, Joyrampur, Bhaga, Matadih, Mohuda, Dh
ansar, Bhuli, Bermo, Mugma, ChasnalaBokaro, Bugatdih, Putki,Rajapur, Jeenagora, Gareria, Chirkunda, Sinidih, Kendwadih, D
umka, etc. The others of pre - World War I years were Khannas, Agarwallas, Kesabji
63
COAL SCAM IN INDIA

Pitamber, Haithibhai Patel, Chaturbhai Sangjibhai, Kalyanji Mavji, Roys, Banerjees and
Singhs. After World War I was over other communities from Kutch, Gujarat, Marwar
and Bengal followed notable among them were Amritlal Morarjee, Kriparshankar
Worah, Jatashankar Dossa Chanchani, Amritalal Ojha, Lala Karamchand Thapar,
Kalyanji Mavji, T.K. Khanna, Ramjush Agarwalla, J.K. Agarwalla, Kesabji Pitamber,
Haithibhai Patel, Chaturbhai Sangjibhai who made their name in Jharia coalfield post
World-War-I Amritlal Ojha & Karamchand Thapar later went on to become President of
International Chamber of Commerce. After World War II and independence of India,
Jharia coal mines owner prospered beyond imagination but in 1971 the coal mines were
nationalized by Indira Gandhi by an act of parliament. A major chunk of these coal
bearing region including Raniganj and Paraskole was with the Jharia miners like
Chanchani & Worah, Poddars, Agarwallas, Mistris of Kutch, etc. Rai Bahadur D D
Thacker started a Labour's School in Jharia to train labors for coalmines. While the
Gujrati Primary School at Jharia for children was started by Mestri Colliery owners,
who felt the need of a Primary School at Jharia Although, after nationalization of the
coal mines in 1971-73 all of them lost their mines and assets and a downturn in fortune
of coal mining community came. After the mines were nationalized in 1971, due to easy
availability of coal, many steel plants are set up in close proximity to Jharia. Many steel
companies such as Tata Steel, IISCO, SAIL have taken coal field on lease in Jharia.
Coal field fire
Jharia is famous for a coal field fire that has burned underground for a century. The first
fire was detected in 1916.[5] According to records, it was the Khas Jharia mines of Seth
Khora Ramji Chawda (18601923), who was a pioneer of Indian coalmines, whose
mines were one of the firsts to collapse in underground fire in 1930. Two of his
collieries, Khas Jharia and Golden Jharia, which worked on maximum 260-foot-deep
shafts, collapsed due to now infamous underground fires, in which their house and
bungalow also collapsed on 8 November 1930, causing 18 feet subsidence and
widespread destruction. The fire never stopped despite sincere efforts by mines
department and railway authorities and in 1933 flaming crevasses lead to exodus of
many residents. The Bihar 1934 earthquake led to further spread of fire and by 1938 the
authorities had declared that there is raging fire beneath the town with 42 collieries out
of 133 on fire.
64
COAL SCAM IN INDIA

In 1972, more than 70 mine fires were reported in this region. As of 2007, more than
400,000 people who reside in Jharia are living on land in danger of subsidence due to
the fires, and according to Satya Pratap Singh, "Jharia township is on the brink of an
ecological and human disaster".[24] The government has been criticized for a perceived
lackadaisical attitude towards the safety of the people of Jharia. Heavy fumes emitted by
the fires lead to severe health problems such as breathing disorders and skin diseases
among the local population.
(ii) Bokaro
The Bokaro coalfield lies between 23 45 and 23 50 North latitude and 85 30 and
86 03 East longitude. It spreads 65 km from east to west and 10 to 16 km from north to
south. Bokaro West and Bokaro East are two subdivisions of the field separated almost
in the middle by Lugu Hill (height 960.9 m).
Bokaro River passes through the West Bokaro and East Bokaro coalfields. West Bokaro
Coalfield covers an area of 259 square kilometres (100 sq mi) and has total coal reserves
of 4,246.30 million tonnes. Tata Steel owns and operates the open-cast West Bokaro
collieries. It has the distinction of commissioning the country's first coal washery in
1951.
(iii) Giridih:
The Giridih Coalfield is spread over an area of 28.5 km2 (11.0 sq mi). It has 20 seams.
The Lower Karhabari seam, 3 to 7.5 m (9.8 to 24.6 ft) thick, has the finest coking coal in
India. Other important seams are Upper Karhabari and Bandhua seams. The reserves are
estimated at around 17.3 million tonnes. The Giridih Coalfield is typical of Karhabari
formation. It has low moisture (1.40-1.80%), low ash content (9-12.6%), low in sulphur
(0.5%) and phosphorus (0.01%).The coalfield is located around Beniadih, in Giridih
block, south of Giridih
(iv) karanpura:
In 1917, L.S.S.OMalley described the coalfields in the upper reaches of the Damodar as
follows: "Near the western boundary of Jharia field is that of Bokaro, covering" 220
square miles (570 km2), "with an estimated content of 1,500 million tons; close by is
the Ramgarh field (40 square miles), in which, however, coal is believed to be of
65
COAL SCAM IN INDIA

inferior quality. A still larger field in the same district is that called Karanpura, which
extends over" 544 square miles (1,410 km2) "and has an estimated capacity of 9,000
million tons.
There are large numbers of seams in the North Karanpura Coalfield, some with
thicknesses over 72 feet. North Karnpura Coalfield covers an area of 1,230 square
kilometres (470 sq mi) and has total coal reserves of 13,110.84 million tonnes.
(v) Ramgarh:
In 1917, L.S.S.OMalley described the coalfields in the upper reaches of the Damodar as
follows: Near the western boundary of Jharia field is that of Bokaro, covering 220
square miles (570 km2), with an estimated content of 1,500 million tons; close by is
the Ramgarh field (40 square miles), in which, however, coal is believed to be of
inferior quality. A still larger field in the same district is that called Karanpura, which
extends over 544 square miles (1,410 km2) and has an estimated capacity of 9,000
million tons.
Ramgarh Coalfield covers an area of 98 square kilometres (38 sq mi) and has total coal
reserves of 1,059.20 million tonnes.
Orissa
it ranks second position in coal reserves. The important coalfields are (i) Talcher and (ii)
Rampur. They are situated on the Mahanadi basin.
(i) Talcher:
History
Coal was discovered in the Talcher Coalfields at Gopalprasad in 1837. Handidhua
Colliery was opened by M/s Villiers in 1921. NCDC opened several mines at South
Balanda in 1960, Nandira in 1962 and Jagannath in 1972. Production rose from 0.91
million tonnes in 1972-73 to 33.10 million tonnes in 2001-02. Talcher Coalfield is
subdivided into five production/ administrative areas: Talcher, Jagannath, Kalinga,
Lingaraj and Hingula
coal fild
66
COAL SCAM IN INDIA

According to Geological Survey of India, the Talcher Coalfield has reserves of 38.65
billion tonnes, the highest in India. Talcher Coalfield covers an area of
500 km2 (190 sq mi). The coal is of lower grade containing only about 35 per cent of
fixed carbon, 40 per cent volatile matter and 25 per cent ash content. As of 2011, nearly
one hundred thousand tonnes of coal is dispatched daily to power stations in Odisha,
Tamil Nadu, Andhra Pradesh, West Bengal and other parts of India.
(ii) Ib Valley:
history
In 1900, when Bengal Nagpur Railway was building a bridge across the Ib River, coal
was accidentally discovered. The first coalmine in the Ib Valley Coalfield was
established by Himgir Rampur Coal Company in 1909. Other underground collieries
were opened by private operators till nationalization of the coal industry in 1973, when
it was placed under Western Coalfields Limited. In 1986, it came under South Eastern
Coalfields
Limited and
in
1992
under Mahanadi
Coalfields
Limited.
With
nationalization came the age of open cast mines. Ib Valley Coalfield operates three
major open cast mines - Lajkura Opencast Mine, Samleswari Opencast Mine and Lilari
Opencast Mine. Production of the field has risen sharply from 0.55 million tonnes in
1972-73 to 15.51 million tonnes in 2002-2003
coalfild
Ib Valley Coalfield lies between latitudes 21 41N and 22 06N and longitudes 83
30E and 84 08E . It covers an area of 1,375 square kilometres (531 sq mi). According
to Geological Survey of India, the Talcher Coalfield has reserves of 38.65 billion tonnes,
the highest in India. Ib Valley Coalfield has reserves of 22.3 billion tonnes, the third
highest in India. This coalfield forms part of the large Gondwana basin that extends
across several districts in adjoining Chhattisgarh
Madhya Pradesh
it has large coal reserves. The major coal mines are (i) Umaria, (ii) Sohagpur, and (iii)
Singrauli.
(i) umaria
67
COAL SCAM IN INDIA

history
In 1886, W.W. Hunter wrote, Extensive coalfields have recently been discovered at
Umaria, within the native state of RewaUmaria Coalfield, which was owned by
Rewa Coalfields Limited, was nationalized in 1973
coalfield
Umaria Coalfield is a part of Central India Coalfields. The latter is spread over the
districts
of Surguja, Koriya (both
in
Chhattisgarh), Shahdol and Umaria (both
in
Madhya Pradesh). There are fourteen coalfields in this group, namely Korar, Umaria,
Johilla, Sohagpur, Sonhat, Jhilimili, Chirimiri, Sendurgarh, Koreagarh, Damhamunda,
Panchbahini, Hasdeo-Arand, Lakhanpur and Bishrampur. The group covers an area of
about 5,345 square kilometres (2,064 sq mi) with estimated reserves of 15,613.98
million tonnes. The deposits are at a depth of 0-1200 meters. Therefore, extraction is
mainly amenable to underground mining except a few blocks in eastern part of these
coalfields which have opencast potential. In Umaria Coalfield, the Lower Gondwana
rocks are well developed. The coalfield has an estimated reserve of 181.29 million
tonnes, spread across six coal seams. The coals are relatively high in moisture (7-10%)
and high in ash (18.6-29.4%). South Eastern Coalfields Limited operates eight mines.
According to Geological Survey of India reserves of non-coking coal up to a depth of
300 m in Umaria Coalfield was 181.29 million tonnes. [7] Kanchan Open Cast Mine is
being expanded from 0.32 million tonnes per annum to 0.65 million tonnes per annum,
with a peak capacity of 0.75 million tonnes per annum. The entire overburden would be
backfilled. There is 4 km metalled road connecting the mine to Vindhya Mine and
onwards to Nowrozabad Railway siding
(ii) sohagpur:
history
Coal was discovered in this region, first in Sohagpur Coalfield by a British geologist
named Franklin in 1830.[1] After the First World War, the first attempts at coal mining
failed, but around 1926 Burhar and Dhanpuri collieries were started. The AnuppurChirimiri line was opened in 1939 and mining operations were extended
subsequently. Sohagpur Coalfield is a remnant in the Son basin of Gondwana deposition
68
COAL SCAM IN INDIA

coaldfield
Sohagpur Coalfield is a part of Central India Coalfields. The latter is spread over the
districts of Surguja, Koriya (both in Chhattisgarh), Shahdol and Umaria (both in Madhya
Pradesh). There are fourteen coalfields in this group, namely Korar, Umaria, Johilla,
Sohagpur, Sonhat, Jhilimili, Chirimiri, Sendurgarh, Koreagarh, Damhamunda,
Panchbahini, Hasdeo-Arand, Lakhanpur and Bishrampur. The group covers an area of
about 5,345 square kilometres (2,064 sq mi) with estimated reserves of 15,613.98
million tonnes. The deposits are at a depth of 01200 meters. Therefore, extraction is
mainly amenable to underground mining except a few blocks in eastern part of these
coalfields which have opencast potential. Sohagpur Coalfield is spread over an area of
about 3,100 square kilometres (1,200 sq mi) and has an estimated reserve of 4,064
million tonnes.
There are four coal seams, about 14 m in thickness spread across three sub-basins:
Burhar-Amlai sub-basin located in the western part of the coalfield, Kotma sub-basin,
located on the Anuppur-Chirimiri branch line, 40 miles east of Burhar and the
Jhagrakhand-Bijuri sub-basin in the easternmost part of the coalfield. In general the coal
is of low rank, high moisture, high volatiles and non-coking type.
Sohagpur Coalfield is divided in two parts by the east-west running Barmni-Chilpa fault.
Coal found on the north of this fault is characteristically different from the coal
occurring south of the fault. Coking coal has been found in the north of the fault.
Sharda Opencast Mine is being expanded from 0.50 million tonnes per annum to 0.85
million tonnes per annum and the mining area from 242.847 ha to 871.205 ha. Highwall
mining has been introduced here. Normal open cast methods cannot be used as it is
uneconomical to develop the coal seam by such methods in a small, confined area. By
using this successful technology for the first time in India,the abandoned Sharda
opencast mine has been a landmark in the Indian mining industry
(iii) singareni
The Singareni Collieries Company Limited or SCCL is a government-owned coal
mining company in India. One of the public sector undertakings, the company is jointly
owned by the Telangana government (51 percent) and the Union Government (49
percent). The Union Government's administration of the company is through
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COAL SCAM IN INDIA

the Ministry of Coal. SCCL is currently operating 16 opencast and 32 underground
mines in 4 districts of Telangana with a manpower around 62,805
In the year 1871, Dr. King of the Geological Survey of India discovered coal near the
village of Yellandu in Khammam district and one of the important coal seams bore his
name. The Hyderabad (Deccan) Company Limited incorporated in England acquired
mining rights in 1886 to exploit coal found in Yellandu area. The present Company was
incorporated on 23rd December 1920 under the Hyderabad Companies Act as a public
limited company with the name 'The Singareni Collieries Company Limited' (SCCL). It
acquired all the assets and liabilities of the Hyderabad (Deccan) Co. Ltd. Best & Co.,
acted as Secretaries and Selling Agents. The State of Hyderabad purchased majority
shares of the Company in 1945. From 1945 to 1949, the Hyderabad Construction Co.,
Ltd., was acting as Managing Agent. In 1949 this function was entrusted to Industrial
Trust Fund by the then Government of Hyderabad. The controlling interest of the
Company devolved on the Government of Andhra Pradesh in 1956 pursuant to the
reorganization of States. Thus, the SCCL became a Government Company under the
Companies Act in 1956. It is named after the village Singareni in khammam district,
Telangana where the coal mines are first noticed . The manner of extending financial
assistance for expansion of SCCL by the Govt. of A.P., and the Govt. of India during V
plan period was agreed upon in the Four party Agreement executed on 10 June 1974.
Subsequently, the Govt. of India decided to control its equity directly in SCCL.
Accordingly, agreement was concluded on 13 December 1977. The SCCL, the
Government of A.P., the Government of India and Coal India Limited were parties to
the agreement. These two agreements are popularly called quadripartite agreements. For
financial and other assistance during VI, VII, VIII, IX & X Plan periods, separate
agreements were executed on 31 March 1985, 10 February 1989, 24 September 1994, 11
January 2002, 19 October 2004 and 11 June 2010 between the Government of India, the
Government of Andhra Pradesh and SCCL. These agreements are called tripartite
agreements.
The Company's accredited function is to explore and exploit the coal deposits in the
Godavari valley coalfield, which is the only repository of coal in South India. Mining
activities of SCCL are presently spread over four districts of Telangana Viz. Adilabad,
Karimnagar, Khammam and Warangal.
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COAL SCAM IN INDIA

The studies of Geological Survey of India attribute as much as 22,016 million tonnes of
coal reserves in the Godavari valley coalfield. The inventory covers up to a depth of
1,200 metres (3,900 ft) and it includes reserves proved, indicated as well as inferred.
The coal extracted by SCCL in the Godavari valley coalfield up to the year 2009-10 was
about 929.11 million tonnes.
Chhattisgarh
it has large coal reserves. (i) Corba coal mine is of great importance. Other mines of
notable importance are (ii) Chirimiri, (iii) Jhilimili and Bishrampur.
(i) Chirimiri
History
There are several other coalfields in the region. Kotma sub-basin of Sohagpur Coalfield is
14 kilometres (8.7 mi) from Chirimiri Coalfield. Jhilimili Coalfield is 48 kilometres

(30 mi) north of Chirimiri railway station. Sonhat Colliery lies north-east of Chirimiri .Tata
Iron and Steel Company initiated prospecting of coal but no mining was carried out by
them. The Chirimiri colliery was opened in 1930 (production started in 1932), New Chirimiri
colliery came up in 1942, Pure Chirimiri colliery in 1945, and North Chirimiri colliery in 1946.
Subsequently, New Chirimiri Pondi Hills, West Chirimiri, Duman Hill and Korea collieries
started operating. Coal production rose from 264,000 tonnes in 1933 to 3,162,500 tonnes in
1980. The collieries in Chirimiri Coalfield were owned by several companies and owners
such as Chirimiri Colliery Company Pvt. Ltd., Dababhoy's New Chirimiri Ponri Hill Company
(Private) Limited, United Collieries Limited, K.N. Dhady and Indra Singh & Sons (Private)
Limited. These were nationalized in 1973
Coalfield
Chirimiri Coalfield is a part of Central India Coalfields. The latter is spread over the districts
in
in
Madhya
Pradesh). There are fourteen coalfields in this group, namely Korar, Umaria, Johilla,
Sohagpur, Sonhat, Jhilimili, Chirimiri, Sendurgarh, Koreagarh, Damhamunda, Panchbahini,
Hasdeo-Arand, Lakhanpur and Bishrampur. The group covers an area of about 5,345
square kilometres (2,064 sq mi) with estimated reserves of 15,613.98 million tonnes. The
deposits are at a depth of 01200 meters. Therefore, extraction is mainly amenable to
underground mining except a few blocks in eastern part of these coalfields which have
opencast potential.
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COAL SCAM IN INDIA

Chirimiri coalfield is spread over 125 square kilometres (48 sq mi) of hilly country and
includes both the sections Kurasia and Chirimiri. Total reserves in Chirimiri coalfield have
been estimated to be around 312.11 million tonnes. According to Geological Survey of
India reserves of non-coking coal up to a depth of 300 m in Chirimiri Coalfield was 362.16
million tonnes
(ii) Corba
coalfield
Korba Coalfield is located between latitudes 220 15 N and 220 30 N and longitudes 820 15 E
and 82055 E. Korba Coalfield covers an area of about 530 square kilometres
(200 sq mi). According to Geological Survey of India, total reserves (including proved,
indicated and inferred reserves) of non-coking coal (as on 1.1.2004) in Korba Coalfield was
10,074.77 million tonnes, out of which 7,732.87 was up to a depth of 300 m and 2,341.90
million tonnes was at a depth of 300600 m. Coal mined at Korba coalfield generally has
the following characteristics moisture: 4.57.4 per cent, volatile matter: 27.939.2 per
cent, fixed carbon: 34.147.7 per cent, ash content: 11.231.6 per cent
Operations
Though coal has been mined in Korba coalfields since 1941, large scale production could
be initiated only on completion of the Champa-Korba rail link in 1955. Open cast
mining activities in the Korba Coalfield are now being carried out. Korba Coalfield
accounts for a major portion of coal mined by South Eastern Coalfields Limited. The
2010 production of SECL was 101.15 tonnes , out of which 73.35 tonnes came from
Korba Coalfield. Sub-areas of Korba Coalfield are: Korba, Surakachhar, Rajgamar,
Manikpur, Dhelwadih, Kushumunda and Gevra. The major working coalmines are:
Surakachhar, Banki, Balgi, Rajgamar, Pavan, Manikpur, Dhewadih, Singhali, Bagdeva,
Kusumunda, Laxman, Gevra and Dipka
Gevra Open Cast Mine

Gevra mine is an open cast mine complex at the town of Gevra that has been described as
the largest open cast mine in India and Asia, as well as the world's second-largest. As of
2011 it has a capacity of 35 million tonnes per annum. It was opened in 1981. During 1999
2000, it produced over 18 million tonnes of coal and removed 12 million m3of overburden. In
2000, Gevra mine had a plan to expand from 12 million tonnes per annum to 25 million
tonnes per annum. Actual production was raised from 18 million tonnes to 26 million tonnes
annually in 3 years. SECL reported that on 18 March 2007, Gevra Open Cast Mine
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COAL SCAM IN INDIA

produced 100,000 tonnes of coal, the highest quantity of coal ever produced by any mine or
coalfield in India on a single day. Expansion of capacity of Gevra mine from 35 million
tonnes annually to 43.75 million tonnes annually has been awaiting environmental
clearance since 2009
Pollution
In a paper on "Assessment of impact of Coal and Minerals Related Industrial Activities in
Korba Industrial Belt Through Spectroscopic Technique" by Rajesh Kumar, Gurdeep Singh
and Asim Kumar Pal, the authors highlighted, "Korba Coalfield has been identified as one of
the hot spots and the worst polluted area in India. There is widespread concern of air
pollution due to emission of particulates from various mining and allied activities." The main
sources of pollution in the Korba area are coal-based power plants, smelter and open cast
mines at Gevra, Dipka and Kusmunda. Large scale transportation of coal raises a pollution
problem. Amongst steps taken or underway to check pollution in the area are: widening and
repairs of roads in Gevra, Dipka and Kusmunda mines and procurement of Continuous
Ambient Air Monitoring Stations at Gevra and Dipka mines
Coal washries
There is a pronounced degree of contamination in the coal from open cast mines. Such coal
often has ash content averaging 40 per cent. Moreover, with multiple sources of supply, the
quality is inconsistent. Even 68 per cent reduction in ash improves coal quality
significantly. Coal preparation, or washing as it is commonly referred to, is both economical
and environmentally beneficial. Coal washeries are being established in Korba Coalfields.
ACB (India) had set up a washery at Dipka in 1999, gradually upgrading capacity from 1
million tonnes per annum to 12 million tonnes per annum. The KJSL Coal Washery at
Dhatura in Pali tehsil has an annual capacity of 2 million tonnes
Power Plants
There are several coal-based thermal power stations in the area consuming coal from
Korba Coalfield. Korba Super Thermal Power Plant of NTPC has installed capacity of
2,600 MW. It gets coal from Gevra and Kusmunda mines.[20] Chhattisgarh State Power
Generation Company Limited has three power stations in the area: Korba East Thermal
Power Station has installed capacity of 440 MW, Dr. Shyama Prasad Mukherjee Thermal
Power Station (Korba East) 500 MW, and Hasdeo Thermal Power Station (Korba West) 840
MW. The captive power plant of Balco (BCPP) has an installed capacity of 270 MW. It is
coming up with a 1,200 MW power expansion project
(iii) Jhilimili
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COAL SCAM IN INDIA

Jhilimili Coalfield is a part of Central India Coalfields. The latter is spread over the districts
in
in
Madhya
Pradesh). There are fourteen coalfields in this group: Korar, Umaria, Johilla, Sohagpur ,
Sonhat, Jhilimili, Chirimiri, Sendurgarh, Koreagarh, Damhamunda, Panchbahini, HasdeoArand, Lakhanpur and Bishrampur. The group covers an area of about 5,345 square
kilometres (2,064 sq mi) with estimated reserves of 15,613.98 million tonnes. The deposits
are at a depth of 01200 meters. Therefore, extraction is mainly amenable to underground
mining except a few blocks in eastern part of these coalfields which have opencast
potential.
Jhilimili Coalfield is spread over an area of 180 square kilometres (69 sq mi). Estimated
total reserves are 215.31 million tonnes, out of which about half have been indicated to be
Grade I. According to the Geological Survey of India, total reserves of non-coking coal (as
of 1 January 2004) in Jhilimili Coalfield (up to a depth of 300m) was 267.10 million tonnes
West Bengal
it ranks fourth in India in coal reserves. The important coalfields of this area are found in
Raniganj. Recently a large coalfield has discovered in (ii) Mejia in Bankura district. The
Raniganj coalfield is the second largest coalfield in India.
(i) Raniganj
History
Coalmining in India first started in the Raniganj Coalfield. In 1774, John Sumner
and Suetonius Grant Heatly of the British East India Company found coal near Ethora,
presently in Salanpur community development block. The early exploration and mining
operations were carried out in a haphazard manner
Regular mining started in 1820, led by an agency house, Alexander & Co. In 1835, Prince
Dwarkanath Tagore bought over the collieries and Carr and Tagore Co. led the field. For
the entire 19th century and a major part of the 20th century, Ranigunj coalfields was the
major producer of coal in the country.
At the behest of William Princep, Carr and Tagore Co. joined hands with Gilmore Hombray
and Co. in 1843 to form Bengal Coal Co., which opened up coal mining activities. Their
headquarters was at Sanctoria. Other mining companies included Birbhum Coal Co.,
Equitable Coal Co., Madhu Roy and Prasanna Dutta Co., Bird and Co., South Barakar
Coal Co., Andrew Yule and Company Ltd. and Balmer Lawrie
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COAL SCAM IN INDIA

In 1886, W.W.Hunter wrote, Raniganj Coalfield has been estimated at an area of 500
square miles. In this black country of India, which is dotted with tall chimney stalks, many
European companies are at work, besides many native firms. At first coal was raised from
open workings; but regular mining is now carried on, according to the system known as
pillar
and
stall
The
miners
are
all
drawn
from
the
aboriginal
races,
chiefly Santals and Bauris, who are noted for their endurance and docility
Present Status
All non-coking coal mines were nationalized in 1973 and placed under Coal Mines Authority
of India. In 1975, Eastern Coalfields Limited, a subsidiary of Coal India Limited, was
formed. It took over all the earlier private collieries in Raniganj Coalfield.
Raniganj Coalfield covers an area of 443.50 km2 (171.24 sq mi) and has total coal reserves
of 49.17 billion tonnes, spread across Indian states of West Bengal and Jharkhand.[2]That
makes it the second largest coalfield in the country (in terms of reserves). Out of the total
reserve, 30.61 billion tonnes is in the West Bengal and 18.56 billion tonnes is in Jharkhand.
Coal Scam
In the Raniganj Coalfield the coal seams can be divided into two blocks Raniganj
measures and Barakar measures. The following areas of ECL are covered by the Raniganj
measures: Raniganj-Pandaveswar, Kajora, Jhanjra, Bankola, Kenda, Sonepur, Kunustoria,
Satgram, Sripur, Sodepur and Salanpur (partly). Barakar measures cover two areas of ECL:
Salanpur and Mugma.
ONGCs preliminary assessment of coal-bed methane indicates that four Damodar Valley
coalfields Jharia, Bokaro, North Karanpura and Raniganj to be the most prospective.
Andhra Pradesh
it occupies the fifth position in coal reserves in India. The major coalfields are (i)
Singareni, (ii) Tandur, (iii) Kothagudem and (iv) Yellandu.
Maharashtra
it holds the sixth position in coal reserves in the country. The major coalfields are found
in Nagpur-Wardha region. The important mining areas are (i) Wardha, (ii) Ballarpur,
(iii) Chanda and (iv) Kampati.
Lignite or brown coal occurs in (i) Neyveli in Tamil Nadu, (ii) Pallu fields in Rajasthan
(iii) Masi in Kashmir and (iv) Parts of Assam, Meghalaya and other hilly tracts on the
75
COAL SCAM IN INDIA

foothills of the Himalayas. By far the largest deposits occur in Neyveli in South Arcot
district of Tamil Nadu.
(i) Wardha
Wardha Valley Coalfied covers an area of about 4,130 km2 in the valley of the Wardha,
a river in the Godavari basin. It extends in a North West South East direction for about
115 km. Wardha Valley Coalfield is spread across Bhandar, new majri, Rajur-wani,
Chandrapur, Balalarpur and Wamanpalli
Wardha Valley Coalfield mines coal in a large measure by open cast mining. However,
the availability of coal comparatively near to the surface is fast depleting. As a result,
either the open cast mines have to be deepened or the costlier underground mining
process resorted to
Coal-bearing areas in India are divided into two groups Gondwana measures and
tertiary measures.
Gondwana
coals
occur
in
valleys
of
rivers
such
as Damodar, Mahanadi, Godavari and Wardha. Tertiary coals are found in Assam and
the lignite occurring areas. According to the Geological Survey of India, Wardha Valley
Coalfield has total reserves of 5,343.60 million tonnes of non-coking coal, up to a depth
of 1,200 m, out of which 2,783.51 million tonnes are proved reserves and the rest being
indicated or inferred. Bulk of the coal lies up to a depth of 300 m
Production
The production of coal was 612.44 million metric tons (675.10 million short tons) in
2014-15, a growth of 8.25% over the previous year. The production of lignite was
48.26 million metric tons (53.20 million short tons) in 2014-15, 9% higher than the
previous fiscal. India is ranked 4th in world coal production.
The top producing states are:
Odisha - Talcher in Angul district
Chhattisgarh
Jharkhand
Other notable coal-mining areas include:
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COAL SCAM IN INDIA

Singareni collieries in Khammam district, Telangana
Jharia mines in Dhanbad district, Jharkhand
Nagpur & Chandrapur district, Maharashtra
Raniganj in Bardhaman district, West Bengal
Neyveli lignite mines in Cuddalore district, Tamil Nadu
Singrauli Coalfield and Umaria Coalfield in Madhya Pradesh
consumption
Industries in India consumed an estimated 827.57 MT of coal in 2014-15. The two
largest consumers of coal in India are electricity generation and steel industries.
Consumption of lignite stood at 49.57 MT in 2014-15. Electricity generation alone
accounts for 89.09% of the total lignite consumption.
Electricity generation
As on 31 October, the installed capacity of coal power in India was 186,492.88 MW,
accounting for 60.7% of the total installed capacity. India's electricity sector consumed
about 72% of the coal produced in the country in 2013.
A large part of Indian coal reserve is similar to Gondwana coal. It is of low calorific
value and high ash content. The carbon content is low in India's coal, and toxic trace
element concentrations are negligible. The natural fuel value of Indian coal is poor. On
average, the Indian power plants using India's coal supply consume about 0.7 kg of coal
to generate a kWh, whereas United States thermal power plants consume about 0.45 kg
of coal per kWh. This is because of the difference in the quality of the coal, as measured
by the Gross Calorific Value (GCV). On average, Indian coal has a GCV of about 4500
Kcal/kg, whereas the quality elsewhere in the world is much better; for example, in
Australia, the GCV is 6500 Kcal/kg approximately.[21] India imported nearly 95 Mtoe of
steam coal and coking coal which is 29% of total consumption to meet the demand in
electricity, cement and steel production
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COAL SCAM IN INDIA
Coal mafia
The state-owned coal mines of Bihar (now Jharkhand after the division of Bihar state)
were among the first areas in India to see the emergence of a sophisticated mafia,
beginning with the mining town of Dhanbad. It is alleged that the coal industry's trade
union leadership forms the upper echelon of this arrangement and employs caste
allegiances to maintain its power. Pilferage and sale of coal on the black market, inflated
or fictitious supply expenses, falsified worker contracts and the expropriation and
leasing-out of government land have allegedly become routine. A parallel economy has
developed with a significant fraction of the local population employed by the mafia in
manually transporting the stolen coal for long distances over unpaved roads to illegal
mafia warehouses and points of sale.
The coal mafia has had a negative effect on Indian industry, with coal supplies and
quality varying erratically. Higher quality coal is sometimes selectively diverted, and
missing coal is replaced with stones and boulders in railway cargo wagons. A human
corpse has been discovered in a sealed coal wagon. In June 2012, the Bollywood
epic Gangs of Wasseypur was released portraying the coal mafia in the area of Dhanbad.
The movie received overwhelming response and was declared a hit. Another Bollywood
movie Gunday was also loosely based upon coal mafia.
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COAL SCAM IN INDIA
CHAPTER-3
79
COAL SCAM IN INDIA

COAL MINES ALLOTMENT SYSTEM SINCE INDEPENDENCE
PRELIMINARY
1. (1) This Act may be called the Coal Mines (Special Provisions) Act, 2015.
(2) It extends to the whole of India.
(3) It shall be deemed to have come into force on the 21st day of October, 2014.
2. It is hereby declared that it is expedient in the public interest that Union should take
action for the development of Schedule I coal mines and extraction of coal on
continuous basis for optimum utilisation.
3. (1) In this Act, unless the context otherwise requires,
(a) additional levy means, the additional levy as determined by the Supreme
Court in Writ Petition (Criminal) No. 120 of 2012 as two hundred and ninety-five rupees
per metric tonne of coal extracted;
(b) allotment order means the allotment order issued under section 5;
(c) appointed date in relation to
(i) Schedule I coal mines excluding Schedule II coal mines, shall be the 24th day of
September, 2014 being the date on which the allocation of coal blocks to prior allottees
stood cancelled; and
(ii) Schedule II coal mines shall be the 1st day of April, 2015 being the date on which
the allocation of coal blocks to prior allottees shall stand cancelled, in pursuance of the
order of the Supreme Court dated the 24th September, 2014 passed in Writ Petition
(Criminal) No. 120 of 2012;
(d) bank shall have the same meaning as assigned to it in clause (c) of the
Securitisation and Reconstruction of Financial Assets and Enforcement of Security
Interest Act, 2002;
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COAL SCAM IN INDIA

(e) coal mining operations means any operation undertaken for the purpose of winning
coal;
(f) company shall have the same meaning as assigned to it in clause (20) of section 2
of the Companies Act, 2013;
(g) corporation shall have the same meaning as assigned to it in clause (11) of section
2 of the Companies Act, 2013;
(h) financial institution shall have the same meaning as assigned to it in clause (m) of
section 2 of the Securitisation and Reconstruction of Financial Assets and Enforcement
of Security Interest Act, 2002;
(i) Government company shall have the same meaning as assigned to it in clause (45)
of section 2 of the Companies Act, 2013;
(j) mine infrastructure includes mining infrastructure such as tangible assets used for
coal mining operations, being civil works, workshops, immovable coal winning
equipment, foundations, embankments, pavements, electrical systems, communication
systems, relief centres, site administrative offices, fixed installations, coal handling
arrangements, crushing and conveying systems, railway sidings, pits, shafts, inclines,
underground transport systems, hauling systems (except movable equipment unless the
same is embedded in land for permanent beneficial enjoyment thereof), land
demarcated for afforestation and land for rehabilitation and resettlement of persons
affected by coal mining operations under the relevant law; (k) nominated authority
means the authority nominated by the Central
Government under section 6;
(l) notification means a notification published in the Official Gazette;
(m) prescribed means prescribed by rules made under this Act;
(n) prior allottee means prior allottee of Schedule I coal mines as listed therein who
had been allotted coal mines between 1993 and 31st day of March, 2011, whose
allotments have been cancelled pursuant to the judgment of the Supreme Court dated the
25th August, 2014 and its order dated 24th September, 2014 including those allotments
which may have been de-allocated prior to and during the pendency of the Writ Petition
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COAL SCAM IN INDIA

(Criminal) No.120 of 2012. Explanation.In case a mining lease has been executed in
favour of a third party, subsequent to such allocation of Scheduled I coal mines, then,
the third party shall be deemed to be the prior allottee;
(o) Schedule means a Schedule appended to this Act;
(p) Schedule I coal mines means,
(i) all the coal mines and coal blocks the allocation of which was cancelled by the
judgment dated 25th August, 2014 and its order dated 24th September, 2014 passed in
Writ Petition (Criminal) No.120 of 2012, including those allotments which may have
been de-allocated prior to and during the pendency of the said Writ Petition;
(ii) all the coal bearing land acquired by the prior allottee and lands, in or adjacent to the
coal mines used for coal mining operations acquired by the prior allottee;
(iii) any existing mine infrastructure as defined in clause (j);
(q) Schedule II coal mines means the forty-two Schedule I coal mines listed in
Schedule II which are the coal mines in relation to which the order of the Supreme Court
dated 24th day of September, 2014 was made;
(r) Schedule III coal mines means the thirty-two Schedule I coal mines listed in
Schedule III or any other Schedule I coal mine as may be notified under sub-section (2)
of section 7;
(s) secured creditor shall have the same meaning as assigned to it in clause (zd) of
(t) secured debt shall have the same meaning as assigned to it in clause (ze) of section
2 of the Securitisation and Reconstruction of Financial Assets and Enforcement of
Security Interest Act, 2002;
(u) security interest shall have the same meaning as assigned to it in clause (zf) of
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COAL SCAM IN INDIA

(v) specified end-use means any of the following end-uses and the expression
specified end-user shall with its grammatical variations be construed accordingly,
(i) production of iron and steel;
(ii) generation of power including the generation of power for captive use;
(iii) washing of coal obtained from a mine;
(v) such other end-use as the Central Government may, by notification, specify;
(w) vesting order means the vesting order issued under section 8.
(2) Words and expressions used herein and not defined, but defined in the Coal Bearing
Areas (Acquisition and Development) Act, 1957, the Mines and Minerals (Development
and Regulation) Act, 1957 and the Coal Mines (Nationalisation) Act, 1973 including
any rules or regulations made thereunder, shall have the meanings, respectively assigned
to them in those Acts.
AUCTION AND ALLOTMENT
4. (1) Subject to the provisions of section 5, Schedule I coal mines shall be allocated by
way of public auction in accordance with such rules, and on the payment of such fees
which
shall not exceed five crore rupees, as may be prescribed.
(2) Subject to the provisions in sub-section (3) of this section and section 5, the Central
Government may, for the purpose of granting reconnaissance permit, prospecting
licence or mining lease in respect of any area containing coal, select any of the
following companies through auction by competitive bidding, on such terms and
conditions as may be prescribed
(a) a Government company or corporation or a joint venture company formed by such
company or corporation or between the Central Government or the State Government, as
the case may be, or any other company incorporated in India; or
(b) a company or a joint venture company formed by two or more companies, that carry
on coal mining operations in India, in any form either for own consumption, sale or for
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COAL SCAM IN INDIA

any other purpose in accordance with the permit, prospecting licence or mining lease, as
the case may be, and the State Government shall grant such reconnaissance permit,
prospecting licence or mining lease in respect of any area containing coal to such
company as selected through auction by competitive bidding under this section.
(3) Subject to the provisions of section 5, the following persons who fulfil such norms as
may be prescribed, shall be eligible to bid in an auction of Schedule II coal mines and
Schedule III coal mines and to engage in coal mining operations in the event they are
successful bidders, namely:
(a) a company engaged in specified end-use including a company having a coal linkage
which has made such investment as may be prescribed.
Explanation.A company with a coal linkage includes any such company whose
application is pending with the Central Government on the date of commencement of
this Act;
(b) a joint venture company formed by two or more companies having a common
specified end-use and are independently eligible to bid in accordance with this Act;
(c) a Government company or corporation or a joint venture company formed by such
company or corporation or with any other company having common specified end-use:
Provided that nothing contained in sub-section (2) shall apply to this sub-section.
(4) A prior allottee shall be eligible to participate in the auction process subject to
payment of the additional levy within such period as may be prescribed and if the prior
allottee has not paid such levy, then, the prior allottee, its promoter or any of its
company of such prior allottee shall not be eligible to bid either by itself or by way of a
joint venture.
(5) Any prior allottee who is convicted for an offence relating to coal block allocation
and sentenced with imprisonment for more than three years, shall not be eligible to
participate in the auction.
5. (1) Notwithstanding the provisions contained in sub-sections (1) and (3) of section 4,
the Central Government may allot a Schedule I coal mine to a Government company or
corporation or to a joint venture between two or more Government companies or
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corporations or to a company which has been awarded a power project on the basis of
competitive bids for tariff (including Ultra Mega Power Projects) from specified
Schedule I coal mines by making an allotment order in accordance with such rules as
may be prescribed and the State Government shall grant a reconnaissance permit,
prospecting licence or mining lease in respect of any area containing coal to such
company or corporation: Provided that the Government company or corporation may
carry on Coal Mining in any form either for its own consumption, sale or for any other
purpose in accordance with the permit, prospecting licence or mining lease, as the case
may be: Provided further that no company other than a Government company or
corporation shall hold more than twenty-six per cent. of the paid-up share capital in the
Government
company or corporation or in the joint venture between a Government company or
corporation,
either directly or through any of its subsidiary company or associate company: Provided
also that a joint venture of any two or more Government companies or corporations shall
be prohibited from alienating or transferring any interest, except the taking of loans or
advances from a bank or financial institution, in the joint venture of whatsoever nature
including ownership in favour of a third party.
(2) No allotment under sub-section (1) shall be made to a prior allottee, if that allottee
has not made the payment of the additional levy within the specified period.
6. (1) The Central Government shall appoint an officer not below the rank of a Joint
Secretary to the Government of India as the nominated authority who shall act for and
on behalf of the Central Government for the purposes of this Act and shall exercise such
powers as may be prescribed.
(2) The nominated authority may engage any expert having such qualifications and
experience and on such terms and conditions as may be prescribed to make
recommendations to the authority for the conduct of auction and in drawing up of the
vesting order or allotment order in relation to Schedule I coal mines.
(3) The Central Government shall act through the nominated authority for the following
purposes, namely:
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(a) conduct the auction process and allotment with the assistance of experts;
(b) execution of the vesting order for transfer and vesting of Schedule I coal mines
pursuant to the auction;
(c) executing the allotment order for any Government company or corporation in
pursuance of section 5;
(d) recording and mutating incorporeal rights of whatsoever nature including, consents,
permissions, permits, approvals, grants, registrations;
(e) collection of auction proceeds, adjustment of preferential payments and transfer of
amount to the respective State Governments where Schedule I coal mine is located in
accordance with the provisions of this Act.
(4) The nominated authority shall complete the auction or execute the allotment orders
of Schedule I coal mines within such time and in accordance with such rules as may be
(5) The Central Government may appoint such other officers and staff as it may think fit
to assist the nominated authority.
(6) The salaries and allowances and other terms and conditions of service of the
nominated authority and such other officers and staff appointed under this section shall
be
such as may be prescribed.
(7) The nominated authority shall be bound by the written direction given by the Central
Government on the quesiton of policy.
7. (1) The Central Government may, before notifying the particulars of auction, classify
mines identified from Schedule I coal mines as earmarked for the same class of
specified enduses.
(2) The Central Government may in public interest, by notification, modify Schedule III
coal mines by adding any other Schedule I coal mine for the purposes of specified enduse.
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8. (1) The nominated authority shall notify the prior allottees of Schedule I coal mines to
enable them to furnish information required for notifying the particulars of Schedule I
coal mines to be auctioned in accordance with such rules as may be prescribed.
(2) The information required to be furnished under sub-section (1) shall be furnished
within a period of fifteen days from the date of such notice.
(3) A successful bidder in an auction conducted on a competitive basis in accordance
with such rules as may be prescribed, shall be entitled to the vesting of Schedule I coal
mine for which it bid, pursuant to a vesting order drawn up in accordance with such
rules.
(4) The vesting order shall transfer and vest upon the successful bidder, the following,
namely:
(a) all the rights, title and interest of the prior allottee, in Schedule I coal mine
concerned with the relevant auction;
(b) entitlement to a mining lease to be granted by the State Government;
(c) any statutory licence, permit, permission, approval or consent required to undertake
coal mining operations in Schedule I coal mines if already issued to the prior allottee;
(d) rights appurtenant to the approved mining plan of the prior allottee;
(e) any right, entitlement or interest not specifically covered under clauses (a) to (d).
(5) The nominated authority shall, in consultation with the Central Government,
determine the floor price or reserve price in accordance with such rules as may be
prescribed.
(6) The successful bidder shall, prior to the issuance and execution of a vesting order,
furnish a performance bank guarantee for an amount as notified in relation to Schedule I
coal mine auctioned to such bidder within such time, form and manner as may be
prescribed.
(7) After the issuance of a vesting order under this section and its filing with the Central
Government and with the appropriate authority designated by the respective State
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Governments, the successful bidder shall be entitled to take possession of the Schedule I
coal mine without let or hindrance.
(8) Upon the execution of the vesting order, the successful bidder of the Schedule I coal
mine shall be granted a prospecting licence or a mining lease, as applicable, by the
concerned State Government in accordance with the Mines and Minerals (Development
and Regulation) Act, 1957.
(9) A Government company or corporation or a joint venture company formed by such
company or corporation or between the Central Government or the State Government, as
the case may be, or any other company incorporated in India, allotted a Schedule I coal
mine shall be granted a prospecting licence or a mining lease, as applicable, by the
concerned State Government in accordance with the Mines and Minerals (Development
and Regulation)
(10) In relation to Schedule II coal mines, the successful bidder which was a prior
allottee, shall continue coal mining operations after the appointed date in terms of the
approved mining plan, till the mining lease in terms of sub-section (8) is granted, upon
the grant of a vesting order and to that extent, the successful bidder shall be deemed to
have been granted a mining lease till the execution of the mining lease in terms of the
said sub-section.
(11) In relation to Schedule II coal mines, the Government company or corporation
which was a prior allottee can continue coal mining operations after the appointed date
in terms of the approved mining plan, till the mining lease in terms of sub-section (9) is
granted, upon execution of the allotment order and to that extent, the allottee shall be
deemed to have
been granted a mining lease till the execution of the mining lease in terms of the said
subsection.
(12) The provisions of sub-sections (1) and (2) and sub-sections (4) to (7) (both
inclusive) of this section as applicable to a vesting order, shall mutatis mutandis be also
applicable to an allotment order.
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9. The proceeds arising out of land and mine infrastructure in relation to a Schedule I
coal mine shall be disbursed maintaining, inter alia, the priority of payments in
accordance with the relevant laws and such rules as may be prescribed
(a) payment to secured creditors for any portion of the secured debt in relation to a
Schedule I, coal mine which is unpaid as on the date of the vesting order;
(b) compensation payable to the prior allottee in respect of the Schedule I coal mine.
TREATMENT OF RIGHTS AND OBLIGATIONS OF PRIOR ALLOTTEES
10. (1) A successful bidder or allottee in respect of Schedule I coal mines, may negotiate
with prior allottee to own or utilise such movable property used in coal mining
operations on such terms and conditions as may be mutually agreed to by them.
(2) Where a successful bidder or allottee is not vested with any movable property of a
Schedule I coal mine, then, he is not bound by any liabilities or obligations arising out of
such ownership or contractual rights, obligations or liabilities which shall continue to
remain with the prior allottee.
(3) In the event that the successful bidder or allottee is unable to satisfactorily negotiate
with the prior allottee or any third party who has a contract with the prior allottee for the
movable property, it shall be the obligation of the prior allottee or the third party to
remove such movable property within a period not exceeding thirty days from the date
of the vesting order, or the allotment order, as the case may be, and the successful bidder
or allottee shall not be liable for any damage to such property.
(4) A successful bidder or allottee which has elected not to purchase or transfer or
continue to use the movable property referred to in sub-section (1), shall prior to the
execution of the vesting order or the allotment order, as the case may be, declare to the
nominated authority that he intends to move and store such movable property of the
prior allottee or such third party and after the date of the vesting order or the allotment
order, as the case may be, the successful bidder or allottee shall be entitled to move and
store such movable property, so as not to cause any impediment for coal mining
operations.
(5) If a prior allottee or such third party which has contracted with the prior allottee for
its movable property, fails to remove the movable property which the successful bidder
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or allottee has elected not to purchase or use in accordance with sub-section (4), then,
after the period of seventy-five days from the vesting order or the allotment order, as the
case may be, a successful bidder or allottee shall be entitled to dispose of such movable
property which may be physically located within Schedule I coal mine, the successful
bidder or the allottee, shall, in such event be entitled to appropriate the sale proceeds of
such movable property disposed of to pay for any cost incurred by the successful bidder
or allottee, for the removal, storage, sale and disposal of such movable property, as a
first charge over the sale proceeds
of such movable property: Provided that the remaining sale proceeds after appropriation
of costs, shall be paid by the successful bidder or allottee to the Central Government
towards any compensation that
may be payable to the owner of such movable property sold, upon establishment of title
to such movable property in accordance with such rules as may be prescribed: Provided
further that if a third party contractor to the prior allottee owns such movable property,
then, such third party shall be entitled to prove its right to receive compensation from
the sale proceeds of the movable property sold as per this sub-section, in accordance
with such rules as may be prescribed.
11. (1) Notwithstanding anything contained in any other law for the time being in force,
a successful bidder or allottee, as the case may be, in respect of Schedule I coal mines,
may elect, to adopt and continue such contracts which may be existing with any of the
prior allottees in relation to coal mining operations and the same shall constitute a
novation for the residual term or residual performance of such contract: Provided that in
such an event, the successful bidder or allottee or the prior allottee shall notify the
nominated authority to include the vesting of any contracts adopted by the successful
bidder.
(2) In the event that a successful bidder or allottee elects not to adopt or continue with
existing contracts which had been entered into by the prior allottees with third parties, in
that case all such contracts which have not been adopted or continued shall cease to be
enforceable against the successful bidder or allottee in relation to the Schedule I coal
mine and the remedy of such contracting parties shall be against the prior allottees.
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12. (1) The secured creditors of the prior allottees which had any security interest in any
part of the land or mine infrastructure of a Schedule I coal mine shall be entitled to
(a) continue with such facility agreements and security interest with the prior allottee if
such prior allottee is a successful bidder or allottee; and
(b) in the event that the prior allottee is not a successful bidder or allottee, then the
security interest of such secured creditor shall only be satisfied out of the compensation
payable to such prior allottee, to the extent determined in accordance with such rules as
may be prescribed and the outstanding debt shall be recoverable from the prior allottee.
(2) The Central Government shall, taking into consideration the provisions contained in
section 9, prescribe the manner in which the secured creditor shall be paid out of the
compensation in respect of any prior allottee.
13. Any and all alienations of land and mine infrastructure and creation of any
encumbrances of whatsoever nature thereon which relate to Schedule I coal mines, made
by any prior allottee after the 25th day of August, 2014 shall be void, save and except
any registered security interest and charge over the land and mine infrastructure as
registered bya bank or a financial institution or any other secured lender.
14. (1) Notwithstanding anything contained in any other law for the time being inforce,
no proceedings, orders of attachment, distress, receivership, execution or the like, suits
for the recovery of money, enforcement of a security or guarantee (except as otherwise
provided for under this Act), prior to the date of commencement of this Act shall lie, or
be proceeded further with and no remedies shall be available against the successful
bidder, or allottee, as the case may be, or against the land and mine infrastructure in
respect of Schedule I coal mines.
(2) The proceedings as referred to in sub-section (1), shall continue as a personal remedy
against the prior allottee but shall not be maintainable or continued against the land or
mine infrastructure of Schedule I coal mine or the successful bidder or allottee, pursuant
to this Act.
(3) Every liability of any prior allottee in relation to a Schedule I coal mine in respect of
any period prior to the vesting order or allotment order, shall be the liability of such
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prior allottee and shall be enforceable against it and not against the successful bidder or
allottee or the Central Government.
(4) All unsecured loans shall continue to remain the liability of the prior allottee.
(5) The additional levy imposed against the prior allottees of Schedule II coal mines
shall continue to remain the liability of such prior allottees and such additional levy shall
bellected by the Central Government in such manner as may be prescribed.
(6) For the removal of doubts, it is hereby declared that
(a) no claim for wages, bonus, royalty, rate, rent, taxes, provident fund, pension, gratuity
or any other dues in relation to a Schedule I coal mine in respect of any period prior to
the date of vesting order or allotment order, as the case may be, shall be enforceable
against the Central Government or the successful bidder or the allottee, as the case may
be;
(b) no award, decree, attachment or order of any court, tribunal or other authority in
relation to any Schedule I coal mine passed prior to the date of commencement of this
Act, in relation to the land and mine infrastructure of Schedule I coal mines, shall be
enforceable against the Central Government or the successful bidder or the allottee, as
the case may be;
(c) no liability for the contravention of any provision of law for the time being in force,
relating to any act or omission prior to the date of vesting order or allotment order, as
the case may be, shall be enforceable against the successful bidder or allottee or the
Central Government.
15. (1) For the purposes of disbursing the amounts payable to the prior allottees of
Schedule I coal mines, the Central Government shall appoint an officer not below the
rank of Joint Secretary to the Government of India, to be the Commissioner of
payments.
(2) The Central Government may appoint such other officers and staff as it may think fit
to assist the Commissioner and thereupon the Commissioner may authorise one or more
of such officers also to exercise all or any of the powers exercisable by him under this
Act.
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(3) Any officer authorised by the Commissioner to exercise any powers may exercise
those powers in the same manner and with the same effect as if they have been
conferred on him directly by this Act and not by way of authorisation.
(4) The salaries and allowances and other terms and conditions of service of the
Commissioner and other officers and staff appointed under this section shall be such as
may be prescribed.
(5) The Central Government shall, within a period of thirty days from such date as may
be notified, pay to the Commissioner for payment to the prior allottee, an amount equal
to the compensation determined by the nominated authority.
(6) Separate records shall be maintained by the Commissioner in respect of each
Schedule I coal mine in relation to which payments have been made to him under this
Act.
16. (1) The quantum of compensation for the land in relation to Schedule I coal mines
shall be as per the registered sale deeds lodged with the nominated authority in
accordance with such rules as may be prescribed, together with twelve per cent. simple
interest from the date of such purchase or acquisition, till the date of the execution of the
vesting order or the allotment order, as the case may be.
(2) The quantum of compensation for the mine infrastructure in relation to Schedule I
coal mines shall be determined as per the written down value reflected in the statutorily
audited balance sheet of the previous financial year in accordance with such rules and in
such manner as may be prescribed.
(3) If the successful bidder or allottee is a prior allottee of any of the Schedule I coal
mines, then, the compensation payable to such successful bidder or allottee shall be set
off or adjusted against the auction sum or the allotment sum payable by such successful
bidder or allottee, as the case may be, for any of the Schedule I coal mines.
(4) The prior allottee shall not be entitled to compensation till the additional levy has
been paid.
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POWERS OF THE CENTRAL GOVERNMENT AFTER THE APPOINTED
DATE
17. (1) On and from the appointed date, the Central Government or a company owned
by the Central Government shall be deemed to have become the lessee or licensee of the
State Government in relation to each of the Schedule II coal mines, in respect of which a
mining lease or prospecting licence has been granted prior to the date of commencement
of this Act, as if a mining lease or prospecting licence in relation to such coal mine had
been granted to the Central Government or a company owned by the Central
Government and the period of such lease or licence shall be the maximum period for
which such lease or licence could have been granted by the State Government under the
Mineral Concession Rules,
1960, and thereupon all the rights under such mining lease, including surface,
underground and other rights shall be deemed to have been transferred to, and vested in,
the Central Government or a company owned by the Central Government.
(2) On the expiry of the term of any lease or licence, referred to in sub-section (1), such
lease or licence shall be renewed, by the State Government, in consultation with the
Central Government for the maximum period for which such lease or licence can be
renewed under the Mineral Concession Rules, 1960.
(3) As it is considered expedient and necessary in the public interest and in view of the
difficult situation which has arisen, the powers of the State Government, under the
Mines and Minerals (Development and Regulation) Act, 1957, to prematurely terminate
a prospecting licence or mining lease, shall stand suspended, in relation to Schedule I
coal mines, for a period of one year from the date of commencement of this Act or such
other period as may be notified by the Central Government.
18. (1) On and from the appointed date, if the auction or allotment of Schedule I coal
mines is not complete, the Central Government shall appoint any person as a designated
custodian to manage and operate such coal mines as may be notified by the Central
Government.
(2) The designated custodian shall act for and on behalf of the Central Government in
respect of the notified coal mines under sub-section (1) to operate and manage such
Schedule I coal mines in such manner as may be notified, till the completion of the
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auction of such coal mines or allotment under section 4 and section 5 read with section
8, as the case may be.
19. (1) The designated custodian appointed under sub-section (1) of section 18, shall be
entitled to take control and possession of all lands, in or adjacent to Schedule II coal
mines, and used for coal mining operations and the mine infrastructure in relation to
Schedule II coal mine, on behalf of the Central Government.
(2) The designated custodian may direct the prior allottees or any other persons in
charge of the management of the Schedule II coal mines and coal mining operations
immediately before the appointed date to provide the requisite manpower, as may be
necessary, to ensure continuity in coal mining operations and production of coal.
(3) The designated custodian shall receive, to the exclusion of all other persons, any
monies due to Schedule II coal mines, notwithstanding cases where such receipt pertains
to a transaction made at any time before the appointed date.
(4) The designated custodian may call for any information, records and documents in
relation to Schedule II coal mines and coal mining operations from any or all such
persons who were in charge of the management and operation of such Schedule II coal
mines prior to the appointed date, and such persons shall be bound to deliver to the
designated custodian all such documents in their custody relating to Schedule II coal
mines.
(5) The designated custodian may appoint such consultants or experts, as may be
necessary, in relation to the management and operation of Schedule II coal mines.
(6) The designated custodian shall transfer the management and operation of any
Schedule II coal mines to such person in such manner as may be prescribed.
(7) The designated custodian shall have rights, liabilities and obligations as a prior
allottee or a successful bidder in respect of coal mines entrusted to it under section 18, to
be exercised and discharged in such manner as may be prescribed.
(8) The designated custodian shall have the power to perform such other functions
which may be consequential or incidental to the functions specified under this section.
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(9) Notwithstanding anything contained in any other law for the time being in force, the
designated custodian shall, in exercise of its powers or the performance of its functions
under this Act, be bound by such directions on questions of policy, as the Central
Government may give in writing to it from time to time.
CERTAIN ARRANGEMENTS
20. (1) A successful bidder or allottee or coal linkage holder shall, with the prior
approval of the Central Government and in accordance with such rules as may be
prescribed, be entitled to enter into certain agreements or arrangements with other
successful bidder or allottee or coal linkage holder, as the case may be, for optimum
utilisation of coal mine for the same end-uses in the public interest and to achieve cost
efficiencies.
(2) A successful bidder or allottee may also use the coal mine from a particular Schedule
I coal mine for any of its plants engaged in common specified end-uses, in accordance
with such rules as may be prescribed.
MISCELLANEOUS
21. (1) All existing land acquisition proceedings under the Right to Fair Compensation
and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013, in
relation
to Schedule I coal mines, shall continue in respect of such areas of land in accordance
with the provisions of the said Act.
(2) All such areas of land which are not subject matter of land acquisition proceedings,
in relation to the coal mines, under the Right to Fair Compensation and Transparency in
Land Acquisition, Rehabilitation and Resettlement Act, 2013 may be proceeded with by
the Central Government in terms of the Coal Bearing Areas (Acquisition and
Development) Act, 1957.
(3) The State Governments which have initiated land acquisition proceedings under
provisions of the Right to Fair Compensation and Transparency in Land Acquisition,
Rehabilitation and Resettlement Act, 2013 and all such lands which are also subject
matter of the said Act in respect of Schedule I coal mines, shall
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(a) not transfer any land to the prior allottees which have been acquired under the said
Act;
(b) continue the land acquisition proceedings till the appointed date;
(c) for such Schedule I coal mines which have not vested in the successful bidder or the
allottee, as the case may be, by the appointed date, continue the land acquisition
proceedings for and on behalf of the Central Government;
(d) upon the vesting or the allotment, as the case may be, after the appointed date,
continue such land acquisition proceedings on behalf of the successful bidder or the
allottee.
22. If a prior allottee of Schedule II coal mine fails to deposit the additional levy with
the Central Government within the specified time, then, such additional levy shall be
realised as the arrears of land revenue.
23. If any person
(a) obstructs or causes any impediment in taking possession or in the management and
operation of the Schedule I coal mines by the Central Government or the designated
custodian; or
(b) fails to deliver to the designated custodian any books of account, registers or any
other document in his custody relating to Schedule I coal mines and coal mining
operations in respect of the management of which the designated custodian has been
appointed; or
(c) destroys or misuses any mine infrastructure or coal stock; or
(d) retains any property of such coal mine or removes or destroys it, he and any officerin-default of the company shall be punishable with imprisonment for a term which may
extend to two years, or with the minimum fine of one lakh rupees per day and in the case
of continuing failure, with a maximum fine of two lakh rupees for every day during
which the failure continues or with both, depending upon the nature of the offence.
24. If any person fails to comply, without reasonable cause, with a direction given by the
Central Government or nominated authority or the designated custodian, he shall be
punishable with a fine of one lakh rupees and in the case of continuing failure with a
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maximum fine of two lakh rupees for every day during which the failure continues,
depending upon thenature of the offence.
25. (1) Where an offence under this Act has been committed by a company, everyperson
who at the time the offence was committed was in charge of, and was responsible to, the
company for the conduct of business of the company as well as the company shall be
deemed to be guilty of the offence and shall be liable to be proceeded against and
punished accordingly: Provided that nothing contained in this sub-section shall render
any such person liable to any punishment, if he proves that the offence was committed
without his knowledge and that he had exercised all due diligence to prevent the
commission of such offence.
(2) Notwithstanding anything contained in sub-section (1), where any offence under this
Act has been committed by a company and it is proved that the offence has been
committed with the consent or connivance of, or is attributable to, any neglect on the
part of any director, manager, secretary or other officer of the company, such director,
manager, secretary or other officer shall be deemed to be guilty of that offence and shall
be liable to be proceeded against and punished accordingly.
26. No court shall take cognizance of any offence punishable under this Act or any rules
made thereunder except upon complaint in writing made by a person authorised in this
behalf by the Central Government or nominated authority or the designated custodian.
27. (1) Any dispute arising out of any action of the Central Government, nominated
authority or Commissioner of payment or designated custodian, or any dispute between
the successful bidder or allottee and prior allottee arising out of any issue connected
with the Act shall be adjudicated by the Tribunal constituted under the Coal Bearing
Areas (Acquisition and Development) Act, 1957
(2) Where the Central Government is of the opinion that any dispute arising out of any
issue connected with the Act exists or is apprehended and the dispute should be
adjudicated by the Tribunal referred to in sub-section (1), then, the Central Government
may by order in writing, refer the dispute or any matter appearing to be connected with,
or relevant to, the dispute, to the Tribunal for adjudication.
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(3) The Tribunal referred to in sub-section (1) shall, after hearing the parties to the
dispute, make an award in writing within a period of ninety days from the institution or
reference of the dispute.
(4) On and from the commencement of the Act, no court or other authority, except the
Supreme Court and a High Court, shall have, or be entitled to exercise, any jurisdiction,
powers or authority, in relation to matters connected with the Act.
28. No suit, prosecution or other legal proceeding shall lie against the Central
Government, nominated authority, commissioner of payment, or designated custodian or
any person acting on their behalf, in respect of anything which is done or intended to be
done in good faith under this Act.
29. The provisions of this Act shall have effect, notwithstanding anything inconsistent
therewith contained in any other law for the time being in force, or in any instrument
having effect by virtue of any such law.
30. On and from the date of commencement of this Act, the Coal Mines
(Nationalisation) Act, 1973 and the Mines and Minerals (Development and Regulation)
Act, 1957 shall stand amended in the manner provided in Schedule IV.
31. (1) The Central Government may, by notification in the Official Gazette, and subject
to the condition of previous publication, make rules for carrying out the provisions of
this Act.
(2) In particular, and without prejudice the generality of the foregoing power, such rules
may provide for all or any of the following matters, namely:
(a) the manner of allocation of Schedule I coal mines by way of public auction and
details of fees under sub-section (1) of section 4;
(b) the terms and conditions for granting reconnaissance permit, prospecting licence or
mining lease and the manner and conditions of competitive bidding under sub-section
(2) of section 4;
(c) norms to become eligible to bid in an auction and the amount of investment in
respect of a company having a coal linkage under sub-section (3) of section 4;
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(d) the period within which the payment of additional levy by the prior allottee under
sub-section (4) of section 4;
(e) the allotment order to make allocations to a Government company or corporation
under sub-section (1) of section 5;
(f) the powers of the nominated authority under sub-section (1) of section 6;
(g) the manner of auction or allotment of Schedule I coal mines and execution of the
vesting or allotment orders under sub-section (4) of section 6;
(h) the salaries and allowances and other terms and conditions of service of the
nominated authority and other officers and staff under sub-section (6) of section 6;
(i) the manner of notifying the particulars of Schedule I coal mines to be auctioned and
furnishing of required information by the prior allottees under sub-section (1) of section
8;
(j) the manner of conducting auction and drawing of a vesting order under sub-section
(3) of section 8;
(k) determination of floor price by the nominated authority under sub-section (5) of
section 8;
(l) the form and manner of furnishing of bank guarantee and the time within which such
furnishing of bank guarantee under sub-section (6) of section 8;
(m) the manner of disbursement of priority payments under section 9;
(n) the manner of establishing title of movable property by the prior allottee or third
party who has a contract with the prior allottee for the movable property under the first
proviso to sub-section (5) of section 10;
(o) the manner of receiving compensation from the sale proceeds of the movable
property under the second proviso to sub-section (5) of section 10;
(p) the manner in which the secured creditor paid out of the compensation in respect of
any prior allottee under sub-section (2) of section 12;
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(q) the manner of collection of additional levy by the Central Government from the prior
allottees of Schedule II coal mines under sub-section (5) of section 14;
(r) the salaries and allowances and other terms and conditions of service of the
Commissioner of payments and other officers and staff under sub-section (4) of section
15;
(s) the manner of determination of compensation payable to prior allottee and the
lodging of registered sale deeds with the nominated authority under sub-section (1) of
section 16;
(t) the method of determination of compensation for mine infrastructure in relation to
Schedule I and its reflection in the statutorily audited balance sheet under sub-section (2)
of section 16;
(u) the manner of transfer of the management and operation of any Schedule II coal
mines by the designated custodian under sub-section (6) of section 19;
(v) the manner of exercising and discharging the rights, liabilities and obligations by the
designated custodian under sub-section (7) of section 19;
(w) the manner of providing agreements or arrangements for optimum utilisation of coal
mine for specified end-uses under sub-section (1) of section 20;
(x) the manner of usage of coal mine by a successful bidder or allottee for any of its
plants under sub-section (2) of section 20;
(y) any other matter which is required to be, or may be, prescribed.
(3) Every rule made and every notification issued by the Central Government, under this
Act, shall be laid, as soon as may be after it is made, before each House of Parliament,
while it is in session, for a total period of thirty days which may be comprised in one
session or in two or more successive sessions, and if, before the expiry of the session
immediately following the session or the successive sessions aforesaid, both Houses
agree in making any modification in the rule or notification, or both Houses agree that
the rule or notification should not be made, the rule or notification shall thereafter have
effect only in such modified form or be of no effect, as the case may be; so, however,
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COAL SCAM IN INDIA

that any such modification or annulment shall be without prejudice to the validity of
anything previously done under that rule or notification .
32. (1) If any difficulty arises in giving effect to the provisions of this Act, the Central
Government may, by order published in the Official Gazette, make such provisions, not
inconsistent with the provisions of this Act, as appear to it to be necessary or expedient
forremoving the difficulty: Provided that no such order shall be made after the expiry of
a period of two years fromthe date of commencement of this Act.
(2) Every order made under this section shall, as soon as may be after it is made, be laid
before each House of Parliament.
33. (1) The Coal Mines (Special Provisions) Second Ordinance, 2014 is hereby repealed.
(2) Notwithstanding such repeal, anything done or any action taken under the said
Ordinance, shall, without prejudice to the judgment of the Supreme Court dated 25th
August, 2014 and its order dated 24th September, 2014 passed in Writ Petition
(Criminal) No. 120 of 2012, be deemed to have been done or taken under the
corresponding provisions of this Act
The responsibility of developing the coal block as per the prescribed guidelines and
milestones of allocation letter rests entirely with the allottees and in the event of willful
delay in the development of coal blocks/setting up of the end use project, the
Government reserves the right to take appropriate action to de-allocate the said block.
The Ministry of Coal have informed the Committee that the Government in line with
this, periodically monitors and reviews the development of coal blocks in the review
meetings. Wherever delays are noticed, show-cause notices and advisories are issued to
such allottees cautioning them, failing which de-allocation of the block is done. The
Coal Controllers Organisation(CCO) monitors the progress of allocated coal blocks and
associated end use projects on quarterly basis. At the level of Ministry, periodic reviews
are carried out by a Committee headed by Additional Secretary (Coal), where
representatives from the concerned State Governments also attend.
5.2 In order that development of all the blocks allocated till date does not get further
delayed, the Committee have desired to know the measures initiated by the Government
to speed up the development process. In this regard the Ministry of Coal in a note
furnished to the Committee have submitted as under:102
COAL SCAM IN INDIA

"It has been decided to provide normative time limit to start coal production from the
explored blocks within 36 months (42 months in case the area is in forest land) in case
of open cast mines and within 48 months (54 months in case the area is in forest land) of
the date of issue of letter of allocation in underground mines. Further, 2 years time is
given for completing detailed exploration and preparation of GR in case of unexplored
blocks.
ii.
A system of submission of bank guarantee by the private sector allocatees was
introduced from 2005. From 2007, it has been applicable for blocks allocated to public
sector companies as well. Under this, the allocatee is required to submit a bank
guarantee equivalent to one years royalty amount payable based on the final peak/rated
capacity of the mine and the weighted average royalty. 50% of the bank guarantee shall
be linked to the milestones (time schedule) set for development of captive block, and the
remaining 50% to' the guaranteed production. Loss of royalty to the exchequer due to
delay in achieving milestones (time schedule) set for development of captive block as
well as the rated yearly production level as per the approved mine plan is deductible
from the bank guarantee. Upon exhaustion of bank guarantee amount, the block is liable
to de-allocation/ cancellation of mining lease.
Systematic monitoring of the progress has been started since 2005 through a Committee
under the chairmanship of Addl. Secretary (Coal). Genuine problems of allocatees are
highlighted during this meeting and efforts are made to sort them out. Since State Govt.
representatives are also present during these meetings, they are also requested to provide
all possible help in expediting the process. Development of coal blocks involves a long
gestation of about 3 to 5 years to reach production stage and about another two years to
reach its optimal production capacity. The coal blocks, which have not come into
production so far, are in various stages of obtaining statutory clearances and mining
lease, preparing
mining plan, acquiring land, procuring machinery etc. for both mining as well as enduse projects. Specific milestones are laid down for development of coal blocks. In case
of willful delays, advisories and show cause notices are issued, leading to consideration
of de-allocation of coal blocks, where warranted. The minutes of review meeting are
placed on the website.
iv.
Decision has been taken to further strengthen the monitoring process by
reviewing the delays on yearly basis in the achievement of various milestones vis-a-vis
normative time schedule fixed for them. A system of calculating the overall yearly
slippage in project development based on slippage of the individual milestones is being
worked out so that equivalent amount could be deducted from the bank guarantee
submitted by the allocatee.
In the case of allocates found to be non-serious, notices are being issued and after due
consideration of their response, penalties or even de-allocation is also being
contemplated.
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Monitoring of Coal Blocks by Coal Controller
The Coal Controllers Organisation (CCO) is a subordinate Office of Ministry of Coal,
having it headquarters at Kolkata and field Offices at Dhanbad, Ranchi, Bilaspur,
Nagpur and Kothagudem. Each field office is headed by one GM/DGM level executive
working in the capacity of Officer on Special Duty being supported by other technical
officers. Apart from carrying out inspection for ascertaining quality in selected mines,
the field officers also carry out regular inspections to ensure compliance with specific
orders relating to coal quality and resolving statutory complaints . Besides looking after
the quality surveillance , the above field officers also entrusted with field assignments
associated with CCDA assistance under Coal Mines (Conservation & Development)
Rules1975, opening /re-opening permission of seams of mines under the Colliery
Control Rules, 2004 and co-ordination with the Coal Companies. In addition, one officer
on Special Duty is posted in the Coal Controllers Organisation in Kolkata for coordinating the field offices along with in charge of coal mines under Asansol, Sambalpur
and NEC Command area, monitoring of captive coal/lignite blocks and their associated
end use projects and rendering assistance to Coal Controller on all technical matters like
parliamentary questions, Budget & EFC Note etc.
According to Annual Report (2011-12) of Ministry of Coal under the Collection of
Statistics Act, 1953 [32 of 1953] and the Collection of statistcs (Central) Rules 1959,
Coal Controller being the statutory authority for collection, compilation, publication and
dissemination of data regarding different parameters of production and despatch of coal
and lignite it provides monthly data to Central Statistical Organisation, RBI, DIPP,
Indian Bureau of Mines and other national and international organizations. It also
publishes Annual Coal Directory and Provisional Coal Statistics. Coal Directory, 200910 and Provisional Coal Statistics, 2010-11 were published in 2010-11.
As regards the Monitoring and progress of captive Coal Blocks, according to Coal
Controller Organiasation production from these coal blocks in 2010-11 is 34.22 MT and
for the year 2011-12 (upto Dec, 2011) is 26.930 MT. Total 2 coal blocks were allotted
during the period Jan. 11 to Dec. 11 one to a public company and one to a private
company. One block has started coal production during the period April, 11 to Dec, 11.
Asked about the role of office of the Coal Controller in allocation, development and
approval of coal mining plan for captive coal blocks allocated, the Ministry of Coal in a
written reply informed the Committee as under :- "The Coal Controller has no role in
allocation of coal blocks and the approval of coal mining plan. However, the Coal
Controller Organisation (CCO) collects status reports on quarterly basis from the
allocates and submits the consolidate status report to the Ministry. The CCO undertake
inspections in specific cases as and when required. There are 528 Non-Captive mines
and 195 Captive Col Blocks. CCO Office has to maintain the details of all the mines
despite shortage of technical manpower. Data of coal production from Captive Blocks is
also collected by the Statistical Wing of the CCO on monthly basis and it is sent to
Ministry."
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Taking note of the enormous functions assigned to Coal Controller Organisation under
different statutory Acts/Rules and its role in inspection of mines and issue of
quality/grade certificates for coal produced, the Committee have desired to know the
strength of Coal Controller Organisation. In this regard, Coal Controller has informed
the Committee during evidence that he is the only technical man and that also is a
temporary post and the organisation has one Surveyor. Other personnel in the
organisation are LDCs, UDCs and promotees.
In this regard, the Secretary, Ministry of Coal submitted during evidence as under :"We are going to work on it very seriously. We have to strengthen the organisation. We
are working on it.He further added,"We have initiated the process of strengthening the
Coal Controllers Office. We have searched the records and we have found that there
was a report in 2006 about the Indian School of Mines, Dhanbad with regard to the Coal
Controllers Office. We are examining this issue. We may revisit this report."
In their Annual Report (2011-12), the Ministry of Coal have specifically highlighted the
Performance Evaluation and Monitoring System (PEMS) as under:- Action for
implementation of the system for monitoring and evaluation of performance was
initiated in the year 2009-10 in the Ministry of Coal under the aegis of Cabinet
Secretariat. The performance of the Ministry was evaluated for the 2010- 11 based on
the Results Framework Document. The Results Framework Document of the Ministry of
Coal for 2011-12 was submitted to the Cabinet Secretariat with main objectives of
achievement of annual action plan targets for coal production and coal off-take by CIL,
lignite production and power generation by NLC, to ensure adequate supply of coal to
the regulated power utilities, development and production from captive coal blocks,
thrust on exploration of resources, increase in coal washing capacities, improvement in
safety conditions in mines, development of rail and road infrastructure in coalfield areas
and other policy issues.
When asked by the Committee, whether some review has been made by the Ministry of
Coal to ascertain the reasons as to why only 29 coal blocks have been developed so far
out of allocated 218 blocks, the Ministry in a written reply informed as under:Monitoring of progress of allocated coal/lignite blocks and associated end-use projects
is done through a Review Committee under the Chairmanship of Additional Secretary
(Coal). The review is undertaken on periodical basis with all the coal block allocatees to
assess the development/progress achieved by them. Action is taken against the
companies where delay is found on their part by issuing necessary advisory and show
cause notices. In case of willful delays on the part of allocattees, appropriate action is
initiated for de-allocation of the block and deduction of bank guarantee as per the
recommendations of the Review Committee. In the review meeting held in June, 2009,
show cause notices were issued to allocatees of 48 coal/lignite blocks wherein progress
was less than satisfactory against the milestones set out and they were not able to
account for the delay in the development of blocks. Accordingly, 3 blocks were deallocated by the Ministry. In addition, the State Govts. were requested to form a
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Monitoring Committee headed by the Chief Secretary to facilitate expeditious
development of coal/lignite blocks. In the review meeting held on 20th and 21st July,
2010 with all the coal block allocattees to review the development of coal blocks and the
end use projects. Accordingly, based on the recommendations of the Review Committee
meeting held from time to time, 25 coal blocks have been de-allocated so far. In addition
to this, the mining lease in case of the Takli Jena Bellora(South) coal block allocated to
M/s Central Collieries Co. Pvt. Ltd. has been declared void. Out of the 25 de-allocated
blocks, two coal blocks namely, Utkal B-1 and Utkal-A, have been re-allocated. Further
a total of 03 lignite blocks have been de-allocated. The last such review meeting was
held on 11th and 12th January, 2012. The Review Committee reviewed the progress of
195 allocated coal blocks and 27 allocated lignite blocks and recommended for issue of
issue show cause notice as to why action should not be taken against them including deallocation. Show cause notices to 58 coal block allocatees and 2 lignite block allocatees
and caution / advisory letters to 90 coal block allocatees and 5 lignite block allocatees
were recommended. The show cause notices and caution / advisories have since been
issued.It further states: - A meeting of the Review Committee was held on January 1112, 2012. The allocatee companies gave presentations before the Review Committee
regarding the status of development of the block and the efforts made by them including
the constraints faced in development of the block. The Committee noted as follows:
The production was started in 29 blocks and 9 of them reached the peak capacity.
(ii)
58 blocks were under areas categorized as No-Go / Wild Life Corridor, etc. on
account of which there was delay in development of the blocks. Since, GoM has asked
Ministry of Environment & Forests (MoEF) to review. The concept of Go No-Go
areas, the allocatees have been asked to take up the matter again with MoEF / State
Governments.
(iii) In 18 cases, it was found that they are likely to produce during the year / as per
the milestones prescribed. In 32 cases the Review Committee was not satisfied with the
development of progress and the allocatees were advised to speed up the process of
development and take action to develop the blocks quickly as per the milestones
prescribed. In case of 58 blocks the committee found that the progress of development
was not satisfactory and it was recommended to issue show cause notice as to why
action should not be taken against them including de-allocation. Show cause notices
have been issued in all these cases. The replies received are under consideration of the
Inter-Ministerial Group. The list of 58 blocks where show cause notices were issued is at
Annexure-II.
When pointed out by the Committee that though Show Cause notices were issued to 58
coal blocks, only 25 were de-allocated and whether the Bank Guarantee from the coal
blocks allocate were deduced, the Ministry of Coal informed the Committee as under:Show cause notices were issued to the allocatee companies of 58 coal blocks based on
the recommendations of the Review Committee meeting held in January, 2012. The 25
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coal blocks so far de-allocated were decided before this Review Committee meeting
held in January, 2012 and were de-allocated based on the recommendations of the
Screening Committee/Review Committee meetings held earlier. It may be stated here
that review is a continuous and ongoing process. The same is undertaken by the Ministry
from time to time for the purpose of facilitating development of the block as well as
taking action as deemed fit. During evidence of representative of Ministry of Coal on
19th October, 2012, some Members pointed out that Shri R.V. Shahi, who held the
position of Power Secretary in Government of India is an independent Director of Jindal
Steel and Power Ltd. Further, Shri P.P. Sharma, Chief Secretary, Jharkhand and Shri
N.C. Jha, former Chairman, Coal India Ltd. have joined Abhijeet Group and Monnet
Energy and Ispat Ltd., having power and mining projects spread across the country. In
this connection, when enquired about whether the retired /voluntary retired personnel
from the Ministry of Coal, Coal India Ltd., CMPDIL etc. have joined the companies
which have been offered coal blocks, the Ministry of Coal in a post evidence reply has
informed the Committee as under :"The Ministry of Coal has not conducted any enquiry regarding the above. The Director
level officers of the coal companies are required to intimate / take permission from the
Government regarding employment after retirement/VRS. The detailed guidelines in this
regard are contained in DPE guidelines issued vide their letter DPE OM No. 2(22)/99GM-GL-91 dated 15th May, 2008 (Annexure-III). The below Board level officials seek
permission from the respective companies." When enquired whether the
Screening/Monitoring Committee has reviewed and found any of the irregularities
committed by these firms in their eligibility criteria, the Ministry of Coal has informed
the Committee in a post evidence reply as under:"No coal blocks have been de-allocated so far on the ground that the firms
misrepresented the eligibility criteria to get the blocks allocated. However, the CBI has
registered 3 Preliminary Enquiry cases regarding alleged irregularities in allocation of
coal blocks- relating to allocation of coal blocks to private companies during the period
2006-2009, relating to allocation of coal blocks to private companies during the period
1993-2004 and relating to allocation of coal blocks to Government Companies, as
evidenced by the documents/ files and details sought by them from the Ministry. In the
case related to allotments to private companies during 2006-2009, 9 FIRs have been
lodged by CBI so far and further investigation is reportedly under progress. Based on the
findings of the investigation action as required would be taken. A reference has been
made to Ministry of Law & Justice as to action which can be taken at this stage with
reference to the FIRs filed by the CBI."
CONSTITUTION OF INTER-MINISTERIAL GROUP
Budget Speech for the year 2012-13, an Inter-Ministerial Group (IMG) headed by
Additional Secretary, Ministry of Coal has been constituted on 21.06.2012 to undertake
periodic review of the development of coal ./ lignite blocks allotted by the Government.
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When asked if the, Inter Ministerial Group has reviewed the reasons for delay in
evacuation of coal blocks allocated to different companies, the Ministry of Coal in a post
evidence reply have informed the Committee as under: "IMG will decide on either de-allocation or forfeiting the Bank Guarantee of the
companies that did not develop allotted coal blocks. Additional Secretary, Coal Ministry
is Chairman of the IMG. Other IMG members include representatives from Power,
Steel, Department of Economic Affairs, Industrial Policy and Promotion and Law and
Justice.
The Terms of Reference (TOR) of the IMG are:
The IMG shall undertake periodic review and the progress of allocated coal/lignite
blocks and the end-use plants and to make recommendations on action to be taken
including de-allocations, if required.
The IMG may consider the replies where the show cause notices have been given and
recommend action against the allocate companies including de-allocation, wherever
necessary.
The IMG may make its own assessment and recommend action as to deduction of Bank
Guarantee, if required.
Any matter where a reference is made by the Competent Authority."
In a written reply the Ministry of Coal have informed the Committee that IMG in its
third meeting held on 03.09.2012 inter-alia formulated the policy on deduction of bank
guarantee as under:"The following guidelines / principles may be followed by the IMG while conducting its
business and making recommendations regarding the deduction of BG in accordance
with the terms of reference:The IMG will meet as and when required. The next date of the meeting may as far as
possible be fixed in the IMG itself; Minutes may be confirmed in the next meeting.
All relevant materials including the allocation letter and status report of the blocks may
be made available to each member of the IMG in advance. Copies of show cause notices
issued and replies to the same may be provided to the members.
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The weightages to various milestones on the basis of which proportionate deduction of
BG may be recommended are enclosed.
Where allocatee companies have exceeded their normative date of production and there
is no provision for BG related to development of coal block, then the IMG may, only in
cases where it finds that the company has made substantial progress and investment in
development of the block even though they have exceeded normative date of production,
recommend imposition of BG in addition to any other action.
The recommendations of the IMG regarding BG may be made on the basis of the above
guidelines after considering all relevant material and the facts and circumstances of the
case.
While the IMG has adopted above guidelines for its own recommendations, it is also
recommended that the Ministry may publish these guidelines on the website of the
Ministry for information of all concerned.
The IMG also formulated the following weightage for calculation of BG deduction:WEIGHTAGES FOR DIFFERENT MILESTONES
S.No.
Milestones
Weight (in %)
Purchase of Geological Report
2.
Submission of Bank Guarantee
3.
ML Application
Submission of Mining Plan
10
Approval of Mining Plan
10
Application for Previous Approval
Granting of Previous Approval
Application for Forest Clearance
9.
Grant of Forest Clearance
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10
Application of EMP Clearance
11
Grant of EMP Clearance
12
Obtaining of Mining Lease
13
Application of Land Acquisition
14
Completion of Land Acquisition
15
Application for Coal Controllers
Permission
16
Approval of Coal Controller
17
Commencement of Coal Production
Total
100
In the cases where 50% of the Bank Guarantee is linked to achievement of the
milestones, the amount deductible from such BG would be proportionately related to
non-achievement of the milestones.
The sum of the weightages assigned to the milestones which are not achieved would be
the percentage of the amount of deduction of the BG from the amount linked to the
achievement of milestones. Regarding the BG related to shortfall in production, the
same shall be calculated for shortfall in production from normative date of production as
per the formula provided in terms and conditions of allocation."
The Committee have desired to know as to when show cause notices to 58 coal blocks
and warning to 90 coal and 5 lignite blocks were issued. The Secretary, Ministry of Coal
informed the Committee during evidence that it was issued in March and April, 2012
and 20 days time was given to the companies.
The witness further added:"This is the exercise which is going on just now. Initially we thought that we will do the
examination within the Ministry itself. Then we got a reference from the Finance
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Ministry which brought to our notice a statement which was made by the hon. Finance
Minister during the Budget speech where he had said that there will be an
Interministerial Group which will examine all these issues and give a recommendation.
So, to give due honour to the statement of the hon. Finance Minister we immediately
deliberated upon it within the Ministry and rather than have these issues disposed of
within the Ministry, we immediately issued a formal notification constituting a
Interministerial Group. Earlier it was only the Ministry of Coal and the administrative
Ministries like Power and Steel in the Group but now we have the Finance Ministry in it.
We have the Ministry relating to Industrial Policy and Promotion."
The then existing committee for monitoring and Bank Guarantee stand subsumed in the
IMG. The IMG took up for review, the 58 cases where the show cause notices were
issued consequent to the Review / recommendations by the Review Committee held on
11th & 12 January, 2012. In addition 18 cases where a decision was taken, on the basis
of earlier reviews, to deduct BG and were pending were also taken up.
The IMG has held 14 meetings so far. The IMG has discussed and finalized the
guidelines/modalities for conduct of its business and also regarding computation of
deduction of BG. The IMG has also decided to give an opportunity of giving personal
hearing to the allocatee companies of coal blocks before giving its recommendations.
Accordingly, the IMG has heard allocatees of 18 blocks along with other cases and has
given recommendations regarding action to be taken. The IMG has recommended deallocation of 13 coal blocks allocated to 29 companies, deduction of Bank Guarantee in
the cases of 14 blocks allocated to 19 companies and imposition of BG in case of 1 coal
block. No action has been recommended in cases of 3 coal blocks allocated to 2
companies. keeping in view the substantial progress and investment made in one case
and in another case the block was not severable from the other block of the same
allocatee which was under No Go area.As regards the review undertaken by the IMG,
Secretary(Coal) while deposing before the Committee submitted as under:-"Now, there
were totally 58 companies to which show cause notices were issued. For five companies,
there were 27 bocks which were private blocks for which the Show Cause notices have
been issued to the concerned. There were 6 blocks covering five companies for which
we had issued notices for deduction of bank guarantee. So, a total of 33 blocks were first
considered by the IMG covering 55 companies. All of this was in the private sector. We
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first covered the private sector. The recommendations of the IMG had been accepted by
the Ministry, de-allocation has been done in respect of 13 blocks."
Regarding break up for 33 blocks considered by IMG, the Committee were informed as
under :"The witness further added de-allocation was recommended in respect of 13 blocks
covering 29 companies. No action was recommended in the case of 3 blocks. Bank
Guarantee was recommended in respect of 14 blocks covering 19 companies. Imposition
of fresh bank guarantee was recommended in the case of one block for one company.
So, this is the list of 33 blocks which were considered."
The Ministry of Coal have informed the Committee that the recommendations of the
IMG have been accepted by the Competent Authority and action is initiated accordingly
for implementation of the said decisions. The IMG has met on 9th and 10th October,
2012 for considering the cases of 33 coal blocks allotted to Government companies.
The details of the 13 coal blocks which have been recommended for de-allocation are
contained in the minutes of the meeting of IMG which are placed at
The Committee were also apprised that no permission by the Central Government has
been given to the coal block allocatees to sell the blocks at premium. Further, coal block
are allocated for captive consumption in the specified end uses. The terms and
conditions of the allocation letter are incorporated in the previous approval granted to
the mining lease to be executed between the State Government and concerned allocatee
company.
STATUS OF IMPLEMENTATION OF MINES AND MINERALS

(DEVELOPMENT
AND REGULATION) AMENDMENT ACT 2010
With a view to introduce a system of allocation of coal blocks which is more
objective and demonstrably transparent, the Government initiated process to amend the
Coal Mines(Nationalisation) Act, 1973, initially and Mines and Minerals(Development
and Regulation) Act, 1957, subsequently in consultation with Ministry of Law and
Justice. The Statement of Objects and Reasons for seeking amendment of MMDR Act in
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2008 to introduce auction by competitive bidding for allocation of coal blocks is as
under:
"The Coal Mines (Nationalisation) Act, 1993 (26 of 1973) allows private
companies engaged in generation of power, production of iron and steel, washing
of coal obtained from mines and such other end-uses as may be specified by the
Central Government by notification, to carry on coal mining for their captive
end-use.
With the progressive allocation of coal blocks, the number of coal blocks
available for allocation is declining, while the number of applicants per block is
increasing, as the demand for coal keeps increasing. This has made selection of
an applicant in respect of a block difficult and vulnerable to criticism on the
ground of lack of transparency and objectivity. The Ministry of Coal have
informed the Committee that while efforts were on hand to continuously add
blocks to the captive list, it was also expected that the demand for blocks would
remain far ahead of supply. Therefore, a necessity was arisen to bring in a
process of selection that is not only objective but also transparent. Auction
through competitive bidding for allocation of coal blocks to private companies
was one such applicable selection process. While the Coal Mines
(Nationalisation) Act, 1973, besides providing for nationalization and associated
provisions, specified who can and who cannot undertake coal mining in India,
the entities permitted to carry on coal mining under the said Act follow the
provisions of the Mines and Minerals(Development and Regulation) Act, 1957
and the rules made thereunder, for acquiring mineral rights, mining lease and
other matters related to mineral administration. Hence, selection process by
auction through competitive bidding for allocation of coal blocks to private
companies was sought to be introduced through an amendment in the Mines and
Minerals (Development and Regulation) Act, 1957.
In the proposed arrangement, auction by competitive bidding shall not be
applicable in respect of allocation of coal blocks to Government company or a
Central or State Public Sector Undertaking. Further, competitive bidding shall
not be applicable for allocation of coal blocks to a company or corporation that
has been awarded a power project on the basis of competitive bids for tariffs,
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including Ultra Mega Power Projects."
The Committee have been apprised that The Mines and Minerals (Development and
Regulation) Amendment Act, 2010 for introduction of competitive bidding system for
allocation of coal blocks for captive use, was passed by the both Houses of Parliament
on 17.08.2010 and notified in Gazette of India (Extraordinary) on 9th September, 2010.
The Amendment Act seeks to provide for grant of reconnaissance permit, prospecting
licence or mining lease in respect of an area containing coal and lignite through auction
by competitive bidding, on such terms and conditions as may be prescribed.
The following section was inserted in The Mines and Minerals(Development and
Regulation)Act, 1957(principle act) after section 11. Namely:The Central Government may, for the purpose of granting reconnaissance permit,
prospecting licence or mining lease in respect of an area containing coal or lignite,
select, through auction by competitive bidding on such terms and conditions as may be
prescribed, a company engaged in, -
(i)production of iron and steel;
(ii)generation of power;
(iii) washing of coal obtained from a mine; or
(iv)
such other end use as the Central Government may, by notification in the
Official Gazette, specify, and the State Government shall grant such reconnaissance
permit, prospecting licence or mining lease in respect of coal or lignite to such company
as selected through auction by competitive bidding under this section:
Provided that the auction by competitive bidding shall not be applicable to an area
containing coal or lignite,where such area is considered for allocation to a Government company or corporation
for mining or such other specified end use;
where such area is considered for allocation to a company or corporation that has been
awarded a power project on the basis of competitive bids for tariff (including Ultra
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MegaPower Projects).
The Committee have been further apprised that the Government has finalised Rules for
allocation of blocks through the competitive bidding and same were notified on
2.2.2012. The commencement of the Amendment Act has been notified on13.02.2012.
In this regard, Secretary, Ministry of Coal informed the Committee during evidence on
9th July, 2012 as under:-
"To operationalise the above provisions by considering various models and to

suggest an optimal structure, which would meet the requirements of the various
stakeholders, a Committee was constituted under the chairmanship of Secretary,
Coal and with representatives from various Ministries like Power, Steel etc.
After consultations, the Committee had made recommendations which were
considered by the Government; and the auctions by competitive bidding of Coal
mine Rules, 2012 were notified on the 2nd February, 2012. The above rules lay
down the procedure for allocation of the coal blocks and payment of floor
price/reserve price by the allocatee companies. The Government had notified 54
coal blocks with total geographical reserves of about 18.2 billion tonnes. M/s.
CRISIL has been appointed has a consultant in June 2012 to suggest the
methodology for fixing floor/reserve price, prepare model tender document and
prepare model agreements."
Taking note of the fact that The Mines and Minerals (Development and
Regulation) Amendment Act 2010, was passed in 2010 and the same was notified on
13.2.2012, the Committee have desired to know as to why there was such delay in
notifying the Amendment Act. In this regard the Ministry of Coal has informed the
committee in a written reply as under :A Committee under Secretary (Coal) was set up on 23.11.2009 to consider and
examine various structures and implementation models for implementing the
competitive bidding for auction of coal /lignite blocks and to suggest the optimal
structure for competitive bidding as selection process. The Committee had
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representatives from Ministries of Power, Mines, Petroleum & Natural Gas,
Steel, DIPP, Planning Commission and CEA. The Committee asked CMPDIL to
prepare draft model documents based on the policy of Ministry of Petroleum &
Natural Gas for
CBM. CMPDIL submitted draft bid documents on 14.12.2010 suggesting two
options:
Upfront payment of bid amount in installments
(ii)
Upfront payment of bid amount as fixed by Ministry of Coal +

production Capacity linked payment."
The Committee in its meeting held on 31.1.2011 discussed the options prepared by
CMPDIL and after detailed discussion, it was agreed that CMPDIL will prepare bid
documents containing different options (four options) as discussed in the meeting for
placing the same on Ministrys Website for inviting comments from the various
stakeholders. On 4.4.2011, four bidding options, as prepared by CMPDIL, were placed
on the website of Ministry of Coal seeking comments from stakeholders. The comments
were separately sought from the Ministries of Power, Steel, Mines, Petroleum & Natural
Gas, DIPP, Planning Commission and CEA. The comments received from the
stakeholders were examined in consultation with CMPDIL and a meeting with
stakeholders was held on 27.6.2011. The meeting was attended by the concerned
Ministries, representatives of State Govts. and most of the major companies engaged in
power, steel and cement sectors. This meeting was chaired by Minister for Coal.
Thereafter, the Committee under the chairmanship of Secretary (Coal) met again on
29.08.2011 and recommended as follows:
(i)
(ii)
The coal blocks to be auctioned would be earmarked sectorally.
The blocks for power sector would be allocated in consultation with and
as per the guidelines of the Ministry of Power.
(iii)
Option I, i..e upfront lump-sum bidding, is the best option, with least
subjectivity and not prone to errors in judgment / process.
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(i)
Reserve price would be determined under unambiguous criteria to be

developed by CMPDIL.
The qualifying criteria would be clearly defined and linked to net worth
(v)
and experience in development of EUP.

The net worth would be assessed as per the guidelines of Finance
(vi)
Ministry and SEBI. Bid amount can be recovered in 5 installments.

(vii)
Bank Guarantee/ Penalties would be stipulated in the NIT.
(viii)
A consultant would be appointed who would be entrusted with the work

of preparing bid documents as well as agreement to be signed in respect
of the allocation of blocks. CMPDIL would prepare TOR for
appointment of consultant. The appointment of consultant may be
completed in 2 months time.
Thereafter taking into consideration all factors involved the draft rules were prepared
and sent to Ministry of Law & Justice, Department of Legal Affairs for their legal
vetting and advice. The Department of Legal Affairs had held informal meetings/
discussions with the Ministry of Coal to understand the subject. On receipt of the Legal
Vetting / Advice, the draft rules were submitted for approval of the competent authority.
On approval, the same were sent for notification vide S.O. 207(E) dated 2nd February,
2012.
The Committee are further informed as under:The Rules lay down the procedure for allotment of blocks under different
dispensations i.e. through Auction to the Government Companies and to the
companies selected through tariff based bidding in power sector. The Rules
provide for notifying the floor price for the mines to be auctioned and fix a
reserve price for the blocks to be allotted under other dispensations. The Rules
also provide that the Government shall enter into an agreement with the
allocatee company.
The Government has decided to appoint a consultant for preparing
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(a) Methodology for calculation of floor price/reserve price tag for the captive
coal blocks;
(b) Preparation of Model Tender Document for selection of successful coal

block allocattee;
(c) Preparation of model agreement between Ministry of Coal and the successful
coal block allocattee.
The CMPDIL was asked to appoint consultant for this purpose through open tender. M/s
CRISIL has been appointed as Consultant accordingly. M/s CRISIL has been given 3
months time for the report. M/s CRISIL has submitted an inception report as to their
approach towards the allotted work. The progress of the work is being monitored from
time to time by Secretary (Coal). As M/s CRISIL was asked to seek views of the stake
holders and incorporate the same in the report, time has been extended by 5 weeks. The
draft report by M/s CRISIL was submitted on
8th October, 2012. An Inter-Ministerial meeting was convened on 16.10.2012 to discuss
the report of CRISIL.
In the meanwhile, the Ministry has been proceeding to finalize the terms and conditions
of allotment to the Government companies for the purpose of mining as well as
specified end uses. A draft terms conditions were prepared and were circulated to the
State Government for their comments. Thereafter a meeting for consultation was held
with State Governments on 10.8.2012. After taking into account the views expressed
and also to ensure additional safeguards especially with regard to transparency and
objectivity to be brought in the linkages, which will be granted by the State
Governments from the allocated coal blocks for the purpose of mining, the draft terms
and conditions are further modified. The modified terms and conditions have been
circulated again to the State Governments and the concerned ministries of Central
Government seeking their
comments. A meeting with all the stake holders was convened on 12th October 2012 for
further consultations in the matter. The Government shall be in a position to initiate the
process of allocation of blocks once the terms and conditions are finalized.
OBSERVATIONS/RECOMMENDATIONS OF THE COMMITTEE

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Extractable Coal and Lignite Reserves
The Committee have been informed that coal and lignite reserves in the country as on 1 st
April, 2011 are reported to be 285.86 billion tonne (upto 1200 meter depth) and 40.91
million tonne respectively. However, the Committee find that the focus of coal
companies is on open-cast mining for production of coal. The Committee, in this
connection, would like to know the actual depth from which the coal is now being
extracted. The Committee would also like to be apprised of the technological knowhow, economic viability, preparedness of the Government/coal and lignite companies to
extract coal and lignite beyond the present extractable depth of reserves. As the
production from underground mines at present is very small as compared to open cast
mines, the Committee recommend that an action plan be prepared by the
Government/coal companies for coal production from underground mines in the years to
come keeping in view the fact that the production of coal from the open-cast mines is
gradually decreasing due to exhaustion of available reserves which will result in
negative growth of coal production.
Need for Coal Mining by Private Sector
India, being one of the fast developing economies in the world needs production of
energy at a correspondingly faster rate as it is one of the main drivers of economic
development. With the rising economy coupled with the quest for improved quality of
life, the energy usage in India is bound to grow tremendously. Keeping in view the
growing needs of energy, unscientific mining practices and poor working conditions of
labour in some of the private coal companies, the Government took a conscious decision
to nationalize the private coal mines by enacting the Coking Coal Mines
(Nationalization) Act, 1972 under which the coking coal mines and coke oven plants
other than those with the Tata Iron and Steel Company Limited and Indian Iron & Steel
Company Limited, were nationalized on 01.05.1972 and brought under the Bharat
Coking Coal Limited (BCCL), a new Central Government Undertaking. Another
enactment, namely the Coal Mines (Taking Over of Management) Act, 1973, extended
the right of the Government of India to take over the management of the coking and
non-coking coal mines in seven States including the coking coal mines taken over in
1971. This was aimed at maximizing the coal production in the country which will in
turn meet the ever increasing demand for power. Therefore, it is all the more important
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for the Government to tap all the sources of energy including the production of coal for
their time bound exploration. Further, the pronouncement of the ambitious mission by
the Government of India 'Power to all by 2012' which envisaged capacity addition of
100,000 MW power by 2012, has necessitated the need to increase coal production. The
Committee are, however, constrained to observe that there was no corresponding
increase in the coal production during Xth and XIth Plan periods and the actual
production in these periods, fell much short of the target raising serious doubts on the
policies and strategies being pursued by the Government in this regard which is quite
evident from the mismatch between supply and demand of coal. The huge gap between
the demand and domestic supply of coal had prompted the Government to bring in
amendment in the Coal Mines (Nationalization) Act, 1973 allowing coal mining for
captive consumption for generation of power, washing of coal and other end uses. In
spite of this measure, the captive coal regime has remained virtually a non-starter given
the progress made in this direction. The Committee would like the Ministry to work on
war footing to make the captive coal regime an effective instrument in the furtherance of
energy generation at a desired level with increased coal production.
Acquisition of Coal Mines abroad by CIL
The Committee have been given to understand that initially the coal blocks were
allocated to private companies for captive use as the Government companies have failed
to cope-up with the increasing demand of coal in the country. The Committee are
surprised to find that Coal India Ltd. who could not undertake coal production within the
country is going abroad for acquiring mining concessions/assets. The Committee note
this ambiguous situation created by the Government due to the leasing out of coal mines
to the private companies on the one hand and simultaneously allowing the acquisition of
coal concessions by Coal India Ltd. abroad on the other hand. The only conclusion the
Committee can draw from this fact is that the Government coal companies have failed to
develop coal blocks
which ultimately led to captive coal block regime. At the same time, the Committee
desire that Ministry of Coal should have an appropriate road map for acquisition of coal
blocks abroad through Coal India Ltd., for which CIL should carry out a due diligence.
The Committee would also like to be informed of the detailed action plan of CIL for
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acquiring mining concessions abroad and desire that the data be made available to the
Committee.
The Committee feel that the States, wherein Coal Mines are available, can be asked to
use only Domestic Coal available within the State and the States having coastal areas
and also the requisite infrastructure for Coal Handling, can use certain quantum of
Imported Coal. This would only be possible if there is a mechanism of pooling of the
Coal Price for Domestic Coal as well as Imported Coal. This would help in saving
Freight Charges for Transportation of Coal. The Committee, therefore, recommend that
Ministry of Coal should also take steps to provide Coal throughout the country at a
uniform rate and the Coal Prices should be based on Calorific Value only and a policy
mechanism be evolved about the uses of domestic coal as well as imported coal by the
States.
Screening Committee
The Committee note that from 1993 to 2004, applicants used to identify a coal block and
approach the Ministry of Coal for allocation and their applications were considered by
Screening Committee consisting of Secretary(Coal) and representatives from Ministry of
Steel, Ministry of Power,
Ministry of Industry and Commerce, Ministry of Environment and Forest, Ministry of
Railways, Coal India Limited, CIL Subsidiaries, CMPDIL, NLC and the concerned
State Governments for allocation of coal blocks under certain broad guidelines framed
for selection of captive blocks whereas allocation to Government companies were made
by the Ministry of Coal on the basis of recommendation of the State
Government/Administrative Ministry. The Committee observe that most non-transparent
procedure was adopted from 1993 to 2010 for allocation and supply of coal blocks.
Several coal blocks were allocated to few fortunates without disclosing the same to the
public at large. The natural resources and state largesse were distributed to few
fortunates for their own benefit without following any transparent system, was total
abuse of power by the Government. The Government cannot give largesse on its
arbitrary discretion or its sweet will. The Government is still the Government when it
acts in the matter of granting largesse and it cannot act arbitrarily. It does not stand in
the same position as a private individual. It is unfortunate that no one who were
responsible to run the Ministry have even applied their mind to the aforesaid extent. The
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Committee are also surprised to note that between 1993 -2004, no data was maintained
by the Ministry regarding number of applications received by the Ministry of Coal and
only the minutes of the Screening Committee held to consider/reject the application of a
particular company were made available to them. Though, advertisement calling for
application of coal blocks were issued in 2005 and 2006 after putting the guidelines on
website of the Ministry of Coal, no bidding process or auction was held. It is unfortunate
that for allocating coal blocks neither any auction was held nor the Central Government
earned any revenue. Natural resources were distributed without following any
transparent system and without generating any revenue for the Government. Since the
Ministry, could not indicate how much coal resources (either in quantum or in value)
were distributed and since Committee observe that such distribution was done in a most
unauthorized manner, no one knows how much loss our country has suffered for that.
The Committee observe that whole procedure adopted by the Government for
distributing coal blocks betrays the confidence of the people of our country reposed in
the Government. The Committee feel that entire decision making process for
distribution of coal blocks needs investigation and necessary penal steps should be taken
against everyone who was directly or indirectly party to such decision making process.
Since Committee have come to conclusion that entire procedure for distribution of coal
was unauthorized, no one should enjoy the benefit of distribution/allocation and
therefore, recommend that all coal blocks allotted to the private coal companies, atleast
where coal production has not yet started, should be cancelled immediately and the State
and Central Government PSUs should be warned to start the mining work at the earliest.
The State and Central Government PSUs should not allow private parties to extract coal
from coal mines that are allocated to them. The Committee feel that the matter of
exploitation of coal blocks allocated to State/Central PSUs by any private party without
following any transparent procedure and bidding process should be thoroughly
examined and the Central Government may take appropriate action for that. The
Committee observe that distribution of coal block was greatest example of betraying
public trust by the Government. The Committee, therefore, recommend that Central
Government should frame a policy for which sectors coal block should be allotted to
private parties, and to ensure that Central/State PSUs get priority in the allotment.
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With regard to the procedure for allocation of coal blocks allocated for coal to liquid,
the Committee find that although the selection procedure was almost the same as was
followed in the Screening Committee route under Section 3(3)(A)(iii) of the Coal Mines
(Nationalization) Act, 1973, exception was made that the recommendation in this case
was to be made by the Inter-Ministerial Group under the chairmanship of Member
(Energy), Planning Commission. The Committee have failed to understand as to why
two coal blocks for coal to liquid with an estimated explorable reserves of 3000 million
tonnes were allocated to private companies by ignoring the Government Companies.
The Committee feel that the Inter-Ministerial Group(IMG) has not performed its duty
honestly. Even though the blocks were cleared by the Screening Committee, the IMG
should have studied the cases and cancelled the blocks allotted by the Screening
Committee. The Committee, therefore, recommend that the allocation of coal to liquid
blocks to 2 private companies be examined by the Government and the Committee may
be apprised of the details of the technology applied by these private companies to
exploit the reserves and also the present status of these projects. The Committee also
desire the Ministry of Coal to take necessary steps for coal gasification projects and
recommend that these projects should be given to State/Central PSUs only.
ANALYSIS OF STATUS OF CAPTIVE COAL BLOCKS
The Committee observe that though 40 coal blocks were identified by CIL in 1993 for
allocation to private captive mining and again in 1999, 49 blocks were identified, only
25 blocks were allocated for captive mining from October, 1993 to October, 2003. The
Committee are perturbed to note that although normative date of production from coal
blocks like Utkal B2(Talcher, Odisha) allotted to Monet Ispat Energy Ltd. on
16.08.1999 was 16th February, 2003, it is only the stage-II forest clearance that has been
obtained on 21.07.2011.
Another coal block Brahmadih (Jharkhand) allocated
on 01.09.1999 to Castron
Mining Ltd. for steel sector, though all milestones are
reported to be completed, there is synchronization problem between coal production and

End use steel plant, as the company does not have its own steel plant and is trying to
purchase or to acquire another steel project to synchronise with the coal production. The
question that why a coal block was allotted to a company who has failed to set up end
use projects for 13 years, needs to be answered. The Committee, therefore, like the
Ministry to offer an explanation to them and they would also like the Ministry to furnish
a list of such companies who have been allotted coal blocks without having any end use
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project. These instances speak volumes of the total failure on the part of the Ministry in
the entire process of allotment of coal blocks and their subsequent development. From
the analysis of status report of captive coal blocks and End use project linked with the
blocks allocated from August, 2004 to November, 2008, the Committee observe that for
138 coal blocks allocated for captive mining for power, iron and steel, commercial
purpose, etc., the normative date of production was kept more than 6 and 7 years i.e. 72
to 84 months though the guidelines provide that in respect of unexplored block, the
allocatee company shall apply for a prospecting license within 3 months of date of issue
of allotment. The Committee are further constrained to note that forest clearances/
Prospecting Licence has been obtained/granted only in 2010 and 2011 to those blocks
which were allocated in the years 2004-2005. The Committee further find that out of
195 coal blocks allocated so far for captive mining 30 blocks have started coal
production and out of 160, captive coal blocks allocated during 2004 to 2008, only 2
have started production. The Committee feel that though the guidelines and milestone
charts are attached with the allocation letters, there is willful delay in the development of
coal blocks and the question of setting up end use projects has been completely ignored
by the Review/Monitoring Committees giving credence to the fact that the entire
exercise was not objective and transparent . The Committee would therefore, like to
be apprised of the concrete action taken by the Government on all such cases and expect
that in future the Review Committee will function in more objective and transparent
manner for the timely development of coal blocks and necessary action should be
taken against non-serious coal block allottees.
The Review Committee should
complete their work as expeditiously as possible.Revenue loss to State Exchequer due to

non-development of coal blocks.
The Committee observe that due to a big gap in demand and supply of coal to meet
power demand, coal blocks were allocated to private companies for enhancing coal
production. The Committee feel that such allocation of huge natural resources has not
generated sufficient revenue for the Government and instead it had only benefited the
private players. Since the coal blocks allottees are requested to pay royalty /cess to the
concerned State on coal production, the non-development of coal blocks will mean a big
loss to the State exchequer as no royalty will be paid to the States. The commencement
of coal production only from 30 coal blocks out of total allocated 218, puts a question
mark over the performance and efficiency of allocatee companies, especially private
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companies which have a major share in allocation. In view of the inordinate delay in
commissioning of these captive projects, the Committee are concerned to note that not
only the delay has resulted in achieving the targets for power production and other end
use products but also caused revenue loss to the concerned State on account of royalty
payable to them. The Committee feel that the Screening Committee has failed to take
into account state of project preparedness, track record, etc. of applicant company,
which have resulted in major setback to the ambitious policy decision to exploit 44.23
BT of Coal by allocation of blocks for captive use. The Committee, therefore, strongly
recommend that the present status of coal blocks must be analysed by the Government
in terms of colossal failure to achieve the target set for enduse of coal that was targeted
to be exploited from these blocks, the resultant revenue loss to State Governments and
the Committee be apprised of the same.
Estimated value of coal produced from captive blocks
The Committee are astonished to know that although 195 coal blocks with geological
reserves of about 44.23 billion tonnes have been allocated by the Government for
captive mining, the Government have stated that no estimation has been made so far as
to the value of the coal extracted from 29 coal blocks and the total value of coal blocks
allocated for captive mining. The Committee, therefore, strongly recommend the
Ministry to put in place a proper process or mechanism for correct evaluation and
calculation of value of coal blocks with estimated geological and extractable
reserves and they be apprised of the same.
Coal Blocks offered to IPPs
The Committee are dismayed to note that although coal blocks were allocated to
private
sector
power
projects
without
any
monetary consideration by the
Government with the purpose of making available cheap power to the consumers, no
specific condition was included by the Screening Committee in the allocation letter to
ensure that benefit of allocating coal free of coast is passed on to the consumer. The
Committee are surprised to note that it was only in March, 2012, the Ministry of Power
has pointed out and desired that for all coal blocks given for power sector, the
developers must participate in the bids for procurement of power by the discoms as per
bidding guidelines issued by Ministry of Power and offer the benefit of the government
allotted coal blocks to the consumers failing which coal block allocation could be
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cancelled. The Committee have been given to understand that although, the Ministry of
Power in a communication dated 27.09.2012 has requested the Ministry of Coal to issue
orders without further delay, imposing the condition in the allocation letters of
IPPs/CPPs that they need to participate in the bids for power procurements called by
Discoms or their authorized state agency and enter into long term PPA as per bidding
guidelines issued by the Ministry of Power under section 63 of the Electricity Act, 2003
within a stipulated time period or face de-allocation of the block and the issue of
incorporating a new condition in the allocation letter retrospectively is reported to be
examined in consultation with the Ministry of Law & Justice. The Committee fail to
understand as to why this condition was not incorporated at the time of allocation of
captive coal blocks offered to IPPs. Since the very purpose of making available the
national property free of cost was to ensure that benefits should be passed on to the
consumers, the Committee feel that there should be no legal consequences even if the
condition is incorporated retrospectively. The Committee, therefore, strongly
recommend that the Government should immediately ensure that IPPs who have been
allocated coal blocks should participate in the bids for power procurements called by
Discoms or their authorized state agency and enter into long term PPA as per bidding
guidelines issued by the Ministry of Power.
Perspective Plan for Development of Coal Blocks by CIL
The Committee note that initially in 1993 and 1999, coal blocks were identified for
captive mining after being identified and taking approval of Coal India Ltd. Board.
Subsequently, in 2006 with the objective of improving the availability of power, 81 coal
blocks which were reserved for Coal India for production during 12th Plan Period and
beyond aggregating to 20 BT of reserves were de-reserved and allocated to power
developers for captive mining. The Committee further observe that though 138 coal
blocks were asked by CIL for exploitation in 2007, these were not allocated to them.
Instead, the Ministry of Coal allocated 119 coal blocks to CIL in July, 2012 only after
repeated recommendations made by this Committee (16th Report and 24th Report, 15th
Lok Sabha). The Committee are, however, dismayed to note that project report in
respect of only 2 blocks have been prepared and work for preparation of project report
for 16 blocks is reported to be taken up during 12th Plan period i.e. from 2012 to 2017.
With such a slow pace of work, the Committee are unable to understand when the actual
production from these coal blocks allocated to CIL will be started. While strongly
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urging the Ministry of Coal/CIL to act swiftly to ensure that these 119 blocks allocated
to CIL start production, the Committee would like to be apprised of a perspective plan
for development of these blocks.
The Committee are pained to note that the scarcity of indigenous coal is badly affecting
the power generation forcing the power utilities to go in for imported coal. The unduly
long time being taken by coal block allottees in the development of coal blocks is further
aggravating the demand and supply of coal. What is really needed is to develop those
blocks on fast track basis. The Committee, therefore, strongly recommend that Certain
Coal Mines should be allocated to the State Government / State PSUs for power
generation only, so that the power can be generated at a reasonable rate, on sustainable
basis. The Committee, therefore, would like the Ministry to put an effective mechanism
in place, as the present mechanism has abysmally failed to act in an effective and
objective manner. The Committee would also like the Ministry to facilitate the coal
block allottees in obtaining various statutory clearances and other requirements for the
early development of these blocks.
Monitoring of Coal Blocks
The Committee note that the responsibility of developing the coal blocks as per the
prescribed guidelines and milestones rests entirely with the allottees and in the event of
willful delay in the development of coal blocks/setting up of the end use project, the
Government reserves the right to take appropriate action to de-allocate the said block.
The Committee further note that systematic monitoring of the progress has been started
since 2005 through a Committee under the chairmanship of Addl. Secretary (Coal) and
genuine problems of allocatees are highlighted during the meeting and efforts are made
to sort them out. Since State Govt. representatives are also present during these
meetings, they are also requested to provide all possible help in expediting the process.
As regards the major constraints being faced by the coal block allottees, the Committee
have been given to understand that the coal blocks, which have not come into production
so far, the allottees are in various stages of obtaining statutory clearances and mining
lease, preparing mining plan, acquiring land, procuring machinery etc. for both mining
as well as end-use projects. The Committee are, however, perturbed to note that though
system of submission of bank guarantee by the private sector allocatees was introduced
from 2005 and under this system 50% of the bank guarantee has been linked to the
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milestones (time schedule) set for development of captive block, and the remaining 50%
to the guaranteed production, no bank guarantee was deducted from the defaulter
allocattees. It is only now, the IMG who has taken up review of the 58 cases referred to
it for review has recommended the deduction of bank guarantee in the case of 14 blocks
allocated to 19 companies. This clearly indicates that the monitoring committee has
failed to take action against the defaulter companies since 2005 and even the loss of
royalty to the exchequer due to delay in achieving milestones (time schedule) set for
development of captive block as well as the rated yearly production level as per the
approved mine plan which was required to be deducted from the bank guarantee were
never recovered. The Committee observe that the Ministry de-allocated some of the coal
blocks only recently after the receipt of C&AG Report in the matter. The Ministry,
however, choose to sleep over this controversial issue rather than acting on their own.
The Committee are of the firm opinion that this lackadaisical approach of the monitoring
committee has led to delay in development of coal blocks and loss to the State
Exchequer. Although, the committee feel that there is an urgent need to set up the
institution of Coal Regulator to ensure development and regulation of coal blocks, they
strongly recommend that the IMG which has now been constituted will expeditiously
and transparently review all the coal blocks allocated for captive mining that have not
been developed so far and take immediate and appropriate action to ensure that the
infrastructure projects based on coal are not further hampered due to slow progress of
development of these coal blocks.
Representation of States in the Inter-Ministerial Group(IMG)
The Committee observe that for allocation of coal blocks a Screening Committee was
constituted under the chairmanship of Additional Secretary (Coal) with representative
from other Ministries, State Governments for processing applications received for
captive mining. The Committee are, however, pained to note that though States are the
owner of minerals, their representatives are not associated/involved in de-allocation
process while constituting Inter-Ministerial Group (IMG) to review the development of
coal/lignite blocks allotted. While strongly urging that the advice and consent of
respective State Governments must be respected and made mandatory for allocation and
de-allocation of coal/lignite blocks, the Committee recommend that the concerned State
Governments must be associated in IMG meetings in future as they were associated in
the Screening Committee also. The Committee are surprised to note that though the
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Screening Committee to identify and approve the allocatees for coal blocks allocation
was headed by Secretary(Coal), the Inter-Ministerial Group constituted to review the
allocations and recommend de-allocation of coal and lignite blocks is headed by
Additional Secretary (Coal). The committee desire that the legality of implementation of
recommendation for cancellation of coal blocks by Inter-Ministerial Group be examined
by the Ministry of Coal before taking a final action in the matter as the Inter-Ministerial
Group is not headed by a Secretary level officer and they be apprised of the same.
As regards the coal blocks allocated for captive use based on wrong information and
data about eligibility criteria furnished by the allocatees or subsequently sold to the new
management, the Committee desire that the matter be enquired into and such coal blocks
be cancelled immediately and the companies be black-listed for future allocation of coal
blocks and other minerals.
Role of Coal Controllers Organisation(CCO) in monitoring the Captive Coal
Blocks
The Committee are dismayed to note that the enormous work such as permission for
opening and reopening of coal mines, disposal of cases under Coal Bearing
Areas(Acquisition and Development) Act, 1957, collection of excise duty, inspection of
coal samples, collection, compilation of coal statistics and monitoring and progress of
coal blocks has been entrusted to Coal Controllers Organisation(CCO) and the
organisation is having field offices at Dhanbad, Ranchi, Bilaspur, Nagpur and
Kothagudem and each field office is to be headed by one GM/DGM level executive
working in the capacity of Officer on Special Duty being supported by other technical
officers; yet there is only one technical officer posted in the organisation and he is
holding the post of Coal Controller. The Committee fail to understand as to how without
having adequate manpower, the organisation can carry out inspection for ascertaining
quality in selected mines. It will be difficult to undertake regular inspections to ensure
compliance with specific orders relating to coal quality and resolving statutory
complaints. The Committee also observe that though Indian School of Mines, Dhanbad
had reviewed the functioning of CCO and submitted a report in 2006 to strengthen the
organisation, nothing has been done by the Ministry of Coal in the matter. Although, the
Secretary, Ministry of Coal was candid enough to admit that the Ministry has taken note
of it and will take steps to strengthen the same, the Committee are surprised the way the
129
COAL SCAM IN INDIA

Government have entrusted so much work to the organisation without providing the
requisite staff. The Committee, therefore, strongly recommend the Government to take
immediate steps to strengthen the office of CCO to ensure that besides the various
statutory functions, the organisation could efficiently monitor the progress of work in
allocated captive coal blocks. Guideline regarding Government /PSU officials Joining
Private Companies after Retirement
The Committee have been given to understand that Shri R.V. Sahi, a former Union
Power Secretary, Shri NC. Jha, former Chairman, Coal India Ltd. and others have joined
private mining companies after retirement. The Committee express serious concern over
joining of former Officers of the Ministries of Coal, Power and Mines in the companies
which have been allocated coal blocks. The Ministry of coal has informed the
Committee that they have not conducted any enquiry regarding employees who have
retired/taken voluntary retirement from the Ministry of Coal, Coal India Ltd., CMPDIL
etc. and have joined the companies which have been offered coal blocks. The
Committee also find that according to the guidelines issued by Department of Public
Enterprises vide their letter DPE OM No. 2(22)/99-GM-GL-91 dated 15th May, 2008,
the Director level officers of the coal companies are required to intimate / take
permission from the Government regarding employment after retirement/VRS. The
Board level officials of PSUs are also required to seek permission from the respective
companies to join the private companies after retirement. The officers in the Ministries
and Public Sector Undertakings directly or indirectly connected with the allotment of
coal blocks joining the private mining companies after their retirement raises serious
doubt about their being impartial when they were associated with the process of
allotment of coal blocks. The Committee fail to understand as to why no inquiry has
been conducted so far to expose the unholy nexus between such bureaucrats and coal
companies who have been allotted captive coal blocks. The Committee, therefore,
strongly feel that to put a check and restraint over bureaucrat and coal companies nexus
in shareholding and profit making, a strong internal vigilance mechanism is required.
The Committee, therefore, desire that the Ministry of Coal should immediately conduct
an enquiry into the matter and furnish details of the officers of the Ministry of Coal, CIL
and its subsidiaries and CMPDIL who have joined private companies against the
guidelines set for the purpose and action may be initiated against those offices who have
joined the private mining companies without the prior permission of the Government or
130
COAL SCAM IN INDIA

the company as provided in Department of Personnel and Department of Public
Enterprises guidelines.
The Committee note that though no blocks were de-allocated on the ground that the
firms misrepresented the eligibility criteria to get the blocks allocated, CBI has lodged 9
FIRs in the case related to allotments to private companies during 2006-2009 and further
investigation is reportedly under progress. The Committee further observe that even the
sector-wise allocation shows that out of a total of 81 blocks allocated to power sector, 27
were allocated to private companies, 12 to UMPPs and 42 to Government companies.
Similarly, for iron and steel sector, only 2 blocks were allocated to Government
companies whereas 61 blocks were allocated to private sector companies which shows
that the allocation of coal blocks was tilted towards private sector. Taking note of the
guideline that captive blocks shall commence production within 36 months from the
date of allocation in respect of opencast mines and 48 months for underground mines,
the Committee are unable to accept the Government's contention that the Screening
Committee acted in a fair and transparent manner for allocating coal blocks during
2004-2009, as coal blocks allocatees approved by the Screening Committee have failed
to start production so far which raises apprehension that they were considered without
taking into account the techno-economic feasibility of the end use pro ects, past track
record of the developers in execution of projects and their technical and financial
capabilities. The Committee, therefore, recommend the Government to re-examine and
comprehensively review all the coal block allocations approved by the Screening
Committee and furnish a report on action taken on the defaulter allocatees.
Implementation of Mines and Minerals (Development & Regulation) Amendment
Act, 2010
In view of the unduly long time being taken by the Ministry in the allotment of coal
blocks by bidding system despite the Mines and Minerals(Development & Regulation)
Amendment Act, 2010 passed by Parliament for introduction of system of auction by
competitive bidding of coal blocks, the Committee in their earlier Report (15th Lok
Sabha)had desired the Ministry to immediately implement the Act in letter and spirit.
The Ministry have now informed the Committee that the Government has notified the
auction by Competitive Bidding of Coal Mines Rules, 2012 on 2nd February, 2012 and
Central Mine Planning and Design Institute Limited (CMPDIL) after calling bids has
131
COAL SCAM IN INDIA

selected M/s CRISIL to look into the whole process of competitive bidding. The
Committee observe that though draft Report was submitted by the M/s CRISIL on 8th
October, 2012, the Ministry of Coal is having consultation with State Governments and
stakeholders to ensure additional safeguards especially with regard to transparency and
objectivity to be brought in the linkages granted from the allocated coal blocks. The
Committee cannot but deplore these prolonged consultations delaying the allocation
through bidding system and strongly recommend the Government to complete the
process of consultation without any further delay to ensure early allocation of identified
coal blocks through competitive bidding process to boost coal production.
132
COAL SCAM IN INDIA
CHAPTER-4
INDIAN COAL SCAM
133
COAL SCAM IN INDIA

INDIAN COAL SCAM
Coal allocation scam (or Coalgate) is a major political scandal concerning the Indian
government's allocation of the nation's coal deposits to public sector entities (PSEs) and
private companies. In a draft report issued in March 2014, the Comptroller and Auditor
General of India (CAG) office accused the Government of India of allocating coal
blocks in an inefficient manner during the period 20042009. Over the Summer of 2012,
the
opposition BJP lodged
complaint
resulting
in
a Central
Bureau
of
Investigation probe into whether the allocation of the coal blocks was in fact influenced
by corruption.
The essence of the CAG's argument is that the Government had the authority to allocate
coal blocks by a process of competitive bidding, but chose not to.] As a result, both
public sector enterprises (PSEs) and private firms paid less than they might have
otherwise. In its draft report in March the CAG estimated that the "windfall gain" to the
allocatees was 10,673 billion (US$160 billion). The CAG Final Report tabled in
Parliament put the figure at 1,856 billion (US$28 billion) On 27 August 2012 Indian
prime minister Manmohan Singh read a statement in Parliament rebutting the CAG's
report both in its reading of the law and the alleged cost of the government's policies.
While the initial CAG report suggested that coal blocks could have been allocated more
efficiently, resulting in more revenue to the government, at no point did it suggest that
corruption was involved in the allocation of coal. Over the course of 2012, however, the
question of corruption has come to dominate the discussion. In response to a complaint
by the BJP, the Central Vigilance Commission (CVC) directed the CBI to investigate
the matter. The CBI has named a dozen Indian firms in a First Information Report (FIR),
the first step in a criminal investigation. These FIRs accuse them of overstating their net
worth, failing to disclose prior coal allocations, and hoarding rather than developing coal
allocations. The CBI officials investigating the case have speculated that bribery may be
involved.
The issue has received massive media reaction and public outrage. During the monsoon
session of the Parliament, the BJP protested the Government's handling of the issue
demanding the resignation of the prime minister and refused to have a debate in the
Parliament. The deadlock resulted in Parliament functioning only seven of the twenty
134
COAL SCAM IN INDIA

days of the session. The Parliamentary Standing Committee report on Coal and Steel
states that all coal blocks distributed between 1993 and 2008 were done in an
unauthorized manner and allotment of all mines where production is yet to start should
be cancelled. In 2015, Coal auction helped state government earned 80,000 Crore after
sales of
1972-2010. Background to Coalgate: history of coal allocations In India
Firms eligible for a coal allocation
Historically, the economy of India could be characterized as broadly socialist, with the
government directing large sectors of the economy through a series of five-year plans.
In
keeping with this centralized approach, between 1972 and 1976, India nationalized its
coal mining industry, with the state-owned companies Coal India Limited (CIL) and
Singareni Collieries Company (SCCL) being responsible for coal production.
This process culminated in the enactment of the Coal Mines (Nationalisation)
Amendment Act, 1976, which terminated coal mining leases with private lease holders.
Even as it did so, however, Parliament recognized that the nationalized coal companies
were unable to fully meet demand, and provided for exceptions, allowing certain
companies to hold coal leases:
1976. Captive mines owned by iron and steel companies.
1993. Captive mines owned by power generation companies.
1996. Captive.
The Coal Allocation process

In July 1992 Ministry of Coal, issued the instructions for constitution of a
Screening
Committee for screening proposals received for captive mining by private power generation
companies. The Committee was composed of government officials from the Ministry of
Coal, the Ministry of Railways, and the relevant state government. A number of coal
blocks, which were not in the production plan of CIL and SSCL, were identified in
consultation with CIL/SSCL and a list of 143 coal blocks were prepared and placed on the
website of the MoC for information of public at large.
135
Companies could apply for an
COAL SCAM IN INDIA

allocation from among these blocks. If they were successful, they would receive the
geological report that had been prepared by the government, and the only payment required
from the allocatee was to reimburse the government for their expenses in preparing the
geological report.
Coal allocation guidelines

The guidelines for the Screening Committee suggest that preference be given to the
power and steel sectors (and to large projects within those sectors). They further suggest
that in the case of competing applicants for a captive block, a further 10 guidelines may
be taken into consideration:
status (stage) level of progress and state of preparedness of the projects;
net worth of the applicant company (or in the case of a new SP/JV, the net worth
of their principals);
production capacity as proposed in the application; maximum recoverable

reserve as proposed in the application; date of commissioning of captive mine as
proposed in the application;
date of completion of detailed exploration (in respect of unexplored blocks only)

as proposed in the application;
technical experience (in terms of existing capacities in coal/lignite mining and

specified end-use);
recommendation of the administrative ministry concerned; recommendation of

the state government concerned (i.e., where the captive block is located);
track record and financial strength of the company.
Results of the coal allocation program

The response to the allocation process between 2004 and 2009 was spectacular, with
some 44 billion metric tons of coal being allocated to public and private firms By way of
comparison, the entire world only produces 7.8 billion tons annually, with India being
responsible for 585 million tons of this amount. Under the program, then, captive firms
were allocated vast amounts of coal, equating to hundreds of years of supply, for a
nominal fee.
Year
of
Government
Privat
Power Projects Tota

136
COAL SCAM IN INDIA

e
allocation
Companies
No. of
blocks
Companies
GR(in
MT)
No. of
blocks
GR(in
MT)
No. of GR (in No. of

blocks MT)
blocks
Up to 2005 29
6,294.72
41
3,336.88
70
9,631.6
2006
32
12,363.15
15
3,793.14
1,635.24
53
17,791.53
2007
34
8,779.08
17
2,111.14
972
52
11,862.22
2008
509.99
20
2,939.53
100
24
3,549.52
2009
337
12
5,216.53
1,339.02
16
6,892.55
2010
800
800
Total
99
28,283.94
105
17,397.22 12
4,846.26 216
GR(in
MT)
50,527.42
Out of the above 216 blocks, 24 blocks were de-allocated (three blocks in 2003, two
blocks in 2006, one block in 2008, one block in 2009, three blocks in 2010, and 14
blocks in 2011) for non-performance of production by the allocatees, and two deallocated blocks were subsequently reallocated (2003 and 2005) to others. Hence, 194
coal blocks, with aggregates geological reserves of 44.44 billion metric tons, stood
allocated as at March 31, 2011.
Source: Draft CAG Report
Given the inherent subjectivity in some of the allocation guidelines, as well as the
potential conflicts between guidelines (how does one choose between a small
capacity/late stage project and a large capacity/early stage project?) it is unsurprising
that in reviewing the allocation process from 1993 to 2005 the CAG says that "there was
no clearly spelt out criteria for the allocation of coal mines." In 2005 the Expert
Committee on Coal Sector Reforms provided recommendations on improving the
allocation process, and in 2010 the Mines and Minerals (Development and Regulation)
137
COAL SCAM IN INDIA

Act (MMDR Act), 1957 Amendment Bill was enacted, providing for coal blocks to be
sold through a system of competitive bidding.
The foregoing supports the following conclusions:
The allocation process priorto 2010 allowed some firms to obtain valuable coal
blocks at a nominal expense
The eligible firms took

up this option and obtained control of vast amounts of coal
in the period 2005-09
The criteria employed

for awarding coal allocations were opaque and in some
respects subjective.
March 2012. Coalgate explodes: the Draft CAG Report
138
COAL SCAM IN INDIA
CHAPTER-5
139
COAL SCAM IN INDIA

The CAG report, leaked to the press in March as a draft and tabled in Parliament in
August, is a performance audit focusing on the allocation of coal blocks and the
performance of Coal India in the 2005-09 period. The Draft Report, stretching to over
100 pagesfar more detailed and containing more explosive allegations than the toneddown Final Report of some 50 pageswas the document that sparked the Coalgate
furor. The Draft Report covers the following topics:
Overview (pp. 12)
2.
Audit Framework (pp. 34)
3.
Institutional Framework (p. 5-10)
4.
Gaps in Supply and Demand (p. 11-17)
5.
Coal Blocks-Allocation and Production Performance (p. 18-55)
Production Performance of CIL (p. 56-83)

7.
Conclusion and Recommendations (pp. 8488)
8.
Annexures (pp. 89110)
As far as Coalgate is concerned, the key passages of the Draft Report are in Chapter 5,
where the CAG charges that:
In 2005 the Government had the legal authority to allocate coal blocks by auction rather
than the Screening Committee, but chose not to do so.

As a result of its failure to auction the coal blocks, public and private companies
obtained "windfall gains" of
companies
obtaining
479,500
1,067,303 crore ( US$201.72 billion), with private
crore ( US$90.63 billion) (45%) and government companies
obtaining 507,803 crore ( US$95.97 billion) (55%).
140
COAL SCAM IN INDIA

First comptroller and auditor general charge: the Government had the legal
authority to auction coal blocks
The most important assertion of the CAG Draft Report is that the Government had the
legal authority to auction the coal, but chose not to do so. Any losses as a result of coal
allocations, then, between 2005 and 2009 are seen by the CAG as being the
responsibility of the Government. The answer to this question turns on whether the
Government could institute competitive bidding by anadministrative decision under the
current statute or whether it needed to amend the statute to do so.
The CAG devotes ten pages of its report to reviewing the legal basis for an auction, and
comes to the following conclusion:
"In sum there were a series of correspondences with the Ministry for Law and Justice for
drawing conclusion on the legal feasibility of the proposed amendments to the CMN
Act/MMDR Act or through Administrative order to introduce auctioning/competitive
bidding process for allocation of coal blocks for captive mining. In fact, there was no
legal impediment to introduction of transparent and objective process of competitive
bidding for allocation of coal blocks for captive mining as per the legal opinion of July
2006 of the Ministry of Law and Justices and this could have been done through an
Administrative decision. However, the Ministry of Coal went ahead for allocation of
coal blocks through Screening Committee and advertised in September 2006 for
allocation of 38 coal blocks and continued with this process until 2009."
Other parts of the report, however, suggest that while an administrative decision might
be sufficient legal basis for instituting competitive bidding, the "legal footing" of
competitive bidding would be improved if the statute were amended to specifically
provide for it. i.e. there were some questions around the legality of using an
administrative decision as the ground for an auction process under the current statute.
Quoting the Law Secretary in August 2006:
"there is no express statutory provision providing for the manner of allocating coal
blocks, it is done through a mechanism of Inter-Ministerial Group called the Screening
Committee ... The Screening Committee had been constituted by means of
administrative guidelines. Since, under the current dispensation, the allocation of coal
blocks is purely administrative in nature, it was felt that the process of auction through
141
COAL SCAM IN INDIA

competitive bidding can also be done through such administrative arrangements. In fact,
this is the basis of our earlier legal advice. This according to the administrative Ministry
has been questioned from time to time for legal sanction. If provision is made for
competitive bidding in the Act itself or by virtue of rules framed under the Act the
bidding process would definitely placed on a higher level of legal footing."
So while the CAG certainly makes the case that the Government had legal grounds on
which to introduce competitive bidding into the coal allocation process, saying that there
was "no legal impediment" to doing so perhaps overstates their case.
Second CAG charge:

"windfall gains" to the allocatees were
1,067,303 crore ( US$201.72 billion)
If the most important charge made by the CAG was that of the Government's legal
authority to auction the coal blocks, the one that drew the most attention was certainly
the size of the "windfall gain" accruing to the allocatees. On pp. 3234 of the Draft
Report, the CAG estimates these to be
1,067,303 crore ( US$201.72 billion) with
details in the following table:

Windfall Gains to Allocatees (in
Calend
ar
Government companies
crore)
Private companies
Government +private
companies
90%o
f GR
in
MT
90%
gain
histori
c
rates
year
90%O Windfa
f GR ll gain
in MT historic
rates
2004
1,709
Windfa
ll
gainma
r 2011
rates
45,807 56,949 0
Windfa
ll gain
historic
rates
142
Windfa
ll gain
mar
2011
rates
1,709
Winfal
l gain
histori
c rates
Windfal
l gain
mar
2011
rates
45,807 56,949
COAL SCAM IN INDIA
2005
1,388
34,056 45,561 1,776 39,146 85,523 3,163
73,203 131,084
2006
8,660
185,119 259,547 3,011 62,085 111,764
11,67
1
247,204 371,311
2007
7,000
64,066 207,098 1,747 38,284 51,502 8,746
102,350 258,599
2008
288
6,704
7,364
61,149 87,501
2009
303
2,438
11,285 4,605 99,735 150,574 4,908
102,174 161,859
Total
19,34
9
13,82
33,16
337,471 587,803
293,695 479,500
0
9
1,067,3
0
631,166
3
2,682 54,445 80,137 2,970
The table employs the following calculations for windfall gain:
windfall gain/ton = market price/ton - production cost/ton
windfall gain = windfall gain/ton x number of tons allocated x 90% (to reflect
90% confidence in the geology of the reserve)
Note that while the windfall gain/ton is fairly modest 322 ( US$6.09), because of
the vast size of the coal allocations, the total figure for the windfall gain is very
large. Note also that the figure stated as a windfall gain would in fact accrue to the
allocatee over the life of the reserve, which would likely exceed 100 years. Thus,
using any reasonable discount rate, the Present value of the windfall gain will be
dramatically smaller (perhaps one tenth) of the windfall gain stated in the CAG
.
Report
While the headline number of
1,067,303 crore ( US$201.72 billion) was sure to
attract the attention of the public, in the Annexures to the report the CAG listed the
windfall gains by company, allowing readers to see who exactly benefited from the
allocation program, and by how much. The resulting list, a veritable Who's Who of
Indian commerce, ensured that the topic of coal allocations would be one of the most
written about stories of
143
COAL SCAM IN INDIA
CHAPTER-6
144
COAL SCAM IN INDIA

NEW DELHI: The CAG is at it again. About 16 months after it rocked the UPA
government with its explosive report on allocation of 2G spectrum and licences, the
Comptroller & Auditor General's draft report titled 'Performance Audit Of Coal Block
Allocations' says the government has extended "undue benefits", totalling a mindboggling Rs 10.67 lakh crore, to commercial entities by giving them 155 coal acreages
without auction between 2004 and 2009. The beneficiaries include some 100 private
companies, as well as some public sector units, in industries such as power, steel and
cement.
The story listed the following companies as the leading beneficiaries of the coal
allocations:Windfall Gains to Allocatees (in
crore)
Private Sector
Public Sector
Company
Gain Company
s
Strategic Energy Tech System (Tata-Sasol)
33,06 NTPC Limited 35,0

0
24
Electro Steel Casting
26,32 TNEB
0
MSMCL
Jindal Steel and Power
21,22
6
Bhushan Power & Steel Ltd & others
Ram Swarup & others
NTPC
15,96
JSEB
7
BSMDC
15,63
3
145
Gain
s
MMTC
& 26,5
84
22,3
01
& 18,6
48
18,6
28
COAL SCAM IN INDIA
JSPL & Gagan Sponge Iron Ltd
12,76 WBPDCL
7
17,3
58
MCL/JSW/JPL & others
10,41
9
CMDC
16,4
98
Tata Steel Ltd
7,161
MSEB
GSECL
& 15,3
35
Chhattisgarh Captive Coal Co Ltd
7,023 JSMDCL
11,9
88
CESC Ltd & J&S Infrastructure
6,851 MPSMCL
9,94
7
Allegation Against Political leaders
Allegations against S Jagathrakshakan

In September 2012, several news reports alleged that family of S Jagathrakshakan, Minister of State for
Information and Broadcasting in the UPA government is a part of a company named JR Power Gen Pvt
Ltd which was awarded a coal block in Orissa in 2007. It was the same company which formed a joint
venture with a public sector company, Puducherry Industrial Promotion Development and Investment
Corporation (PIPDIC), on January 17, 2007. Barely five days after, PIPDIC was allotted a coal block.
According to the MoU, JR Power enjoyed a stake in this allotment. However, JR Power had no
expertise in thermal power, iron and steel, or cement, the key sectors for consumption of coal. Later, in
2010, JR Power sold 51% stake to KSK Energy Ventures, an established player with interests in the
energy sector. In this way, the rights for the use of the coal block ultimately passed on to KSK.
Reacting to this, Jagathrakshakan admitted to getting a coal block, and said that, "It is true that we got a
coal allocation but it was a sub-contract with Puducherry government and then we gave it away to KSK
company. Now, we have got nothing to do with the allocation but if the government wants to take back
the allocation it can do so."
146
COAL SCAM IN INDIA

Allegations against Subodh Kant Sahai
In September 2012, it was revealed that Subodh Kant Sahay, Tourism Minister in the UPA government
sent a letter to Prime Minister Manmohan Singh trying to persuade
him for allocation of a coal block to a company, SKS Ispat and Power which has Sudhir Sahay, his
younger brother, as honorary Executive Director. The letter was written on 5 February 2008. On the
very next day, Prime Minister's Office (PMO) sent a letter to the coal secretary on February 6, 2008,
recommending allotment of coal blocks to the company. However, Sahay denied these allegations, citing
that the coal block was allocated to SKS Ispat, where his brother was only an "honorary director".
On 15 September 2012, an Inter Ministerial Group (IMG) headed by Zohra Chatterji (Additional
Secretary in Coal Ministry) recommended cancellation of a block allotted to SKS Ispat and Power.
Allegations against Ajay Sancheti and his link with Nitin Gadkari
Ajay Sancheti's SMS Infrastructure Ltd. was allegedly allocated coal blocks in Chhattisgarh at low
rates. He is a BJP HYPERLINK "http://en.wikipedia.org/wiki/Rajya_Sabha" Rajya Sabha MP and is
believed to be in close relation with Nitin Gadkari. According to the CAG, the allocation of the coal
block to SMS Infrastructure Ltd. has caused a loss of Rs. 1000 crores.
Allegations against Vijay Darda and Rajendra Darda
Vijay Darda, a Congress MP and his brother Rajendra Darda, the education minister of Maharashtra,
have been accused of direct and active involvement in the affairs of three companies JLD Yavatmal
Energy, JAS Infrastructure & Power Ltd., AMR Iron & Steel Pvt. Ltd, which received coal blocks
illegally by means of inflating their financial statements and overriding the legal tender process.
Allegations against Premchand Gupta
UPA partner Rashtriya Janata Dal's leader Premchand Gupta's sons' company, new in the steel business
applied for a coal block when Premchand Gupta was the Union minister for corporate affairs and bagged
it about a month after his tenure ended along with that of his government. The company in question is
IST Steel & Power - an associate company of the IST Group, which is owned and run by Premchand
Guptas two sons Mayur and Gaurav. IST Steel, along with cement majors Gujarat Ambuja and Lafarge,
was allocated the Dahegaon/Makardhokra IV block in Maharashtra. The company, which applied for a
147
COAL SCAM IN INDIA

block on January 12, 2007, and was awarded it on June 17, 2009, is sitting on reserves of 70.74 million
tonnes. The reserves it controls are more than the combined reserves held by much larger companies Gujarat Ambuja and Lafarge. Gupta, who belongs to the Rashtriya Janata Dal headed by Bihar leader
Lalu Prasad Yadav, was the minister of state for corporate affairs in UPA-I when his party was a
constituent of the Congress-led coalition with 21 seats in Lok Sabha. However Mr Gupta maintains he
had no involvement in IST Steel and denies influencing the coal-block allocation process.
Allegations against Naveen Jindal
Congress MP, Naveen Jindal's Jindal Steel and Power got a coal field in February 2009 with reserves
of
1500
million
metric
tones
while
the
government-run
Navratna
HYPERLINK
"http://en.wikipedia.org/wiki/Coal_India_Ltd" Coal India Ltd was refused.

On February 27, 2009, two private companies got huge coal blocks. Both the blocks were in Orissa and
while one was over 300 mega metric tones, the other was over 1500 mega metric tones. Combined
worth of these blocks was well over Rs 2 lakh crore and these blocks were meant for the liquification of
coal. One of these blocks was awarded to Jindal. Naveen Jindal's Jindal Steel and Power was the
company which was allotted the Talcher coal field in Angul in Orissa in 2009, well after the selfimposed cut off date by the Centre on allocation of coal blocks.
The Opposition alleged that the Government violated all norms to give him coal fields. Naveen Jindal,
however, denied any wrongdoin. On 15 September 2012, an Inter Ministerial Group (IMG) headed by
Zohra Chatterji (Additional Secretary in Coal Ministry) recommended cancellation of a block allotted
to JSW (Jindal Steel Works), a Jindal Group company.
148
COAL SCAM IN INDIA
BJP response
Coal In The BJP State
CHATTISGARH
The State of Chhattisgarh relies heavily on the iron/steel, with the government engaged in several MOUs
for power and steel projects. the BJP-led state government, very responsibly tried to protect the interests
of the state and ensure that these projects are not adversely affected.
Of utmost importance is the Chief Minister, Dr Raman Singhs point that the Centre should implement
the change in policy after consultation with the state government, who have much at stake. (Dr Raman
Singhs letters to the Centre and the Prime Minister can be found in Annexure V).
Contrary to the government allegation that the State opposed the policy vehement-ly, Dr Raman Singh
merely asked for reasonable consultation between the States and the Centre. The CM also requested that
in case the policy of competitive bidding is imple-mented, that the coal mined be shared among the
centre and the state. This is hardly vehement opposition, as alleged by the Prime Minister and his
government.
JHARKHAND
Chief Minister Arjun Munda has also come under the vitriolic attacks of the Congress, and that too, for
doing his job. Under his leadership, the state of Jharkhand tirelessly campaigned for its interests by
regularly communicating with the Centre. Considering that more that 1/3 of Indias coal reserves lies in
Jharkhand, he rightly ensured that
Jharkhand comes as far as exploitation of coal is concerned.The government of Jharkhand did write to
the Centre about coal allocation- after all, the coal being allocated is within Jharkhand. Letters were sent
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COAL SCAM IN INDIA

to the PM asking for coal allocation to state enterprises that work for the direct benefit of the people,
such as Jharkhand Mining Development Corporation and the State Electricity Board. But more often
that not, the Centre was unhelpful. Shri Munda and his government have also done much to attract
investment to the economically backward state and entered into MOUs with companies. Attempts by the
state to inform the Centre about these MOUs are now being blatantly misconstrued as pressure. Unlike
certain Congress MPs, Shri Munda never wrote to the centre for alloca-tion of coal to friends and
cronies.
RAJASTHAN
Similarly, in case of Rajasthan, then Chief Minister, Vasundhara Raje, merely high-lighted the impact
the policy would have on the State of Rajasthan.
The Chief Ministers primarily concern was that lignite that would e mined within Rajasthan would be
used by the successful bidder for uses outside the State- similar to Jharkhands concern about coal being
used for out-of-state purpose. Once again, the state government was attempting to protect their interests,
rather than acting against public interest, as the UPA government has done.
MADHYA PRADESH
While the UPA has pointed fingers at other states, they have conveniently left out BJP-led Madhya
Pradesh, which actually conducted auction. The government would do well to learn from this state. Here
are some lessonsIn November 2008, the Madhya Pradesh State Mining Corporation auctioned 6 mines. This auction saw
152 bids made by 62 different companies.
2.
The government retained control of the mines by entering into a Joint Venture with the private
companies MPSMC held 51% share in the JV.

3.
No government guarantees for the amount invested by the private companies.
4.
The coal blocks were auctioned off for Rs. 700 to Rs. 2100 per tonne. This is several times
higher than what the CAG has estimated Rs 295 per tonne. Going by by this number, the loss
estimated should be even higher.
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COAL SCAM IN INDIA

Though Madhya Pradesh has done all it could to maximise revenue for the people (instead of
politicians), it is the Central Government that is proving to be a hindrance by stalling environmental
clearances.
Articles by BJP Leaders

PMs defence against coal block allocations dubious
Arun Jaitley
Leader of the Opposition, Rajya Sabha
As it appeared on The Pioneer, Aug 29 2012 http://dailypioneer.com/nation/90803-pms-defence-againstcoal-block-allocations-dubious.html

The parliamentary stalemate continues on one of the greatest corruption scandals in Indian history.
Allocation of natural resources has been a subject matter of public debate in the last two decades,
particularly with the entry of the private sector in infrastructure development. Minerals are an important
natural resource. The private sector has a great role to play in development of mineral-based industries.
However, the policy of allocation of these natural resources has been discretionary, thereby leaving
ample scope for allocation on account of corrupt and collateral motives. It is, therefore, important that
aware of the characters of polity and governance, discretions be eliminated and objective criteria be
introduced.
COMPETITIVE BIDDING
Most tangible resources such as minerals, spectrum, oil and gas must be allocated only through a
competitive bidding mechanism. The discretionary allocation of 2G spectrum resulted in a scam of
disproportionate magnitude. It is now proven that Rs.1,658 crore fixed for an all-India licence spectrum
in 2008 was not the market value of the spectrum then. Under adverse market conditions, the
government itself in 2012 has fixed the base price for 2G auction at Rs.14,000 crore.
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COAL SCAM IN INDIA

There has to be an equitable balance between the interests of the public exchequer and the optimum use
of natural resources for economic development.
Whispers about misdemeanours in the allocation of coal blocks have been rife in the last few years. The
government took a correct policy decision on June 28, 2004 that competitive bidding be introduced in
the coal block allocation policy. For most of the next five years, the Prime Minister was the Coal
Minister. The exploitation of coal blocks allotted between 2004 and 2012 is negligible. For most of these
coal blocks, statutory and environmental permis-sions have not been given.The Prime Minister's
argument that pending change of policy to competitive bidding, allocation was necessary for the growth
of GDP is eyewash. None of these coal blocks has contributed to the GDP. They have only contributed
to the huge valuation of the private sec-tor allottees and a corresponding opportunity and real cost to the
public exchequer.
The Prime Minister's alternative defence is that his government was handicapped by the Opposition
from the coal and lignite States to competitive bidding. In any federal polity, it is legitimate for the
States to be concerned about the development of power production in their own States. Mineralproducing States have always been concerned about the minerals mined in their States. The Prime
Minister overlooks the fact that coal as a major mineral is in the domain of the Central government. His
government admittedly overruled the States in 2006. The present Minister of State, Coal, Sriprakash
Jaiswal, admitted in Parliament on December 21, 2009 that the majority of States had agreed to the
competitive bidding process. Thus to shift the blame to the States is a very poor alibi. Federalism cannot
be blamed for the corruption of the United Progressive Alliance.
The Prime Minister's statement is an assault on constitutionalism and constitutional authority. Instead of
respecting the observations of the Comptroller and Auditor General of India (CAG) and taking remedial
action, the Prime Minister has evolved a logic which is in defiance of ethical governance. His
government's policy is to subvert the institutions but if they assert themselves, to attack them.
The Prime Minister has no answer for the fact that despite the initial policy decision of June 2004, it was
the Prime Minister's Office which circulated a parallel note on September 11, 2004 highlighting the
drawbacks in the decision of competitive bidding.
It was the Law Ministry that delayed the competitive bidding by first giving the opinion that
administrative instructions were enough to switch over to competitive bidding. They then suggested an
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COAL SCAM IN INDIA

alternative that the Mines and Minerals (Development & Regulation) Act (MMDR) be amended. Over
two valuable years were wasted and finally, when the MMDR (Amendment) Bill was approved by
Parliament on September 9, 2010, the UPA government took 17 months to notify it. The tenders of
competitive bidding have not been prepared yet as the government was so overenthusiastic in continuing
the discretionary process in allot-ment. When vested interests realised that the doors of discretion were
about to be closed, they queued up for allotments through the Screening Committee mechanism.
The Prime Minister's final defence that the Screening Committee mechanism was fair and transparent is
repelled by an observation of the CAG in Paragraph 4.1 of its report. The CAG has stated:
"It was also noted that the Screening Committee recommended the allocation of coal block to a
particular allottee/allottees out of all the applicants for that coal block by way of minutes of the meeting
of the Screening Committee. However, there was nothing on record in the said minutes or in other
documents on any comparative evaluation of the applicants for a coal block which was relied upon by
the Screening Committee. Minutes of the Screening Committee did not indicate how each one of the
applicant for a particular coal block was evaluated. Thus, a transparent method for allocation of coal
blocks was not fol-lowed by the Screening Committee."
Ordinarily, Parliament is the forum for debate on the issue. The Public Accounts Committee (PAC) is
the forum where CAG recommendations should be considered. Our experience of the recent past in
relation to the CAG recommendations in the 2G spectrum allocation have convinced us that the ruling
party has decided to subvert the parliamentary accountability available through the PAC. The PAC has
been effectively made non-function-al on that issue.
LEGITIMATE TACTIC
Parliamentary obstructionism should be avoided. It is a weapon to be used in the rarest of the rare cases.
Parliamentary accountability is as important as parliamentary debate.
Both must co-exist. If parliamentary accountability is subverted and a debate is intended to be used
merely to put a lid on parliamentary accountability, it is then a legitimate tactic for the Opposition to
expose the government through parliamentary instruments available at its command. Presently, a
national debate on allocation of natural resources is on. Left to this government, it would have
distributed these resources for collateral purposes to its own favourites.
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COAL SCAM IN INDIA

The Prime Minister must own full and real responsibility. Let him cancel these 142 dis-cretionary
allocations, put them on auction and test whether they had been allocated at a fair price.
Excerpts from: "The Allocation of 142 Coal Blocks"
Arun Jaitley
Leader of the Opposition, Rajya Sabha
Complete article on www.bjp.org, Aug 26 2012.
The arbitrary and discretionary allocation of 142 coal blocks is the latest albatross round the neck of the
UPA Government. The arrogant and despotic government did not realize when the allocations were
made that it would be held accountable for each of these coal block allocations.
The Comptroller and Auditor General has based its' report on the allocation of these coal blocks
primarily on the ground that after a decision was taken to switch over to the compet-itive bidding system
it took the government eight years to implement the said decision. During this eight year period 142 coal
blocks were allocated to private entrepreneurs most of whom were traders and not actual users. Since the
Screening Committee mechanism did not realize the actual value of the coal blocks a monumental loss
has been suffered by the Public Exchequer.
The eight year delay is on account of an objection raised by the Prime Minister's office, an incorrect
opinion given by the Law Ministry, inordinate delay in drafting an amendment to the law and an
inexplicable delay in implementing the amended law. Each of the reasons for delay does not appear to
be bonafide.
For almost five out of the eight years the Prime minister was the Coal Minister. He was assisted by a
Minister of State. The corridors of power in Delhi are full of information being provided by the then
bureaucrats, the successful applicants and more particularly the unsuccessful applicants. These
informations reflect a sad commentary on the functioning of the UPA Government. These information
reveal A case of inefficiency, lack of leadership, delay in the exercise of power for colorable pur-pose.
Over eight years were wasted in not implementing the competitive bidding policy so that 142 successful
entrepreneurs could be arbitrarily selected. The Screening Committee mechanism was a farce. Individual
154
COAL SCAM IN INDIA

writ of few people who were running the Government influenced the decision. Some of the Ministers of
State did not come out with any credit. Their role in these allot-ments appears to be dubious.
Successful applicants were asked to associate one or more co-allottees by the Ministry.
These were inevitably the political nominees.Disturbing information has surfaced that a valuable public
resource was being allocated arbitrarily with the underlying condition of political funding of the party in
power. The officials in the PMO who dealt with the Coal ministry files were not unaware of what was
going on. Many allottees were traders and not actual users. Several allotments have been made without
the recommendation of the State Governments. The whole process of allocation of coal blocks stinks.
This raises a larger question of how the Indian State should allocate natural resources. A rudderless
government suffering from policy paralysis has sought advisory opinion of the Supreme Court on this
larger question. Allocation of natural resources is an issue squarely within the policy domain.
Formulation of policy is an Executive function; it is not a judicial function. The Court can merely strike
down a policy if it is arbitrary or unconstitutional. The court cannot frame a policy. Which tangible
natural resources should be auctioned and which could be allotted on some alternative fair criteria is an
issue to be decided by the Government. The courts are an institution empow-ered to judicially review a
decision of the Government. If government formulates a policy which opens the flood gates for
corruption, the courts can strike down the policy. What would happen if the courts were to advice the
formulation of such an arbitrary policy?
Indian politics is passing through a crisis. The power of politics is immense but the stature of some of
the men administering polity is relatively small. It bears no nexus to the extent of power that the polity
exercises. As a part of the process of political and governance reforms discretions have to be minimized
and eliminated. Every decision of the government has to be based on reason and rationality. Mineral is a
valuable natural resource. It occupies an important space in the expansion and development of the Indian
economy. Its' allocation both in the Centre and the States through a discretionary process has led to
serious charges of corruption. Recent experiences are persuasive enough for the government to
legitimize the policy where such allotment of mineral as a tangible resource is made only through a
transparent and open bidding system. There is no substitute for such a policy today.It has been suggested
that since the Prime Minister himself was the Coal Minister we should assume that this decision was
fair. The Prime Minister's office is a sacred institution in Indian democracy. It has to be judged by
standards much harsher than those which would apply to Ministers like Shri A. Raja. If the process of
155
COAL SCAM IN INDIA

allocation by the Prime Minister as a Coal Minister smacks of arbitrariness it shakes our national
conscience. The onus is now on the Prime Minister to accept the responsibility for what has happened.
Some Question Ask by Bjp Leaders to UPA Government on Coal Scam
What is the BJP's position?
The BJP's position is very clear and simple.
The Prime Minister must assume moral and political responsibility for the coal scam. Having
failed to do so during the 2G scam, it is time for the Prime Minister to do so in this case, where
he was directly responsible. Unlike previous scams, he cannot transfer the blame to a scapegoat
in his administration.
All coal blocks allotted to private companies must be de-allocated and put up for a fair auc-tion.
An independent probe should be conducted to unravel the true nature and extent of the scam.
Why is the BJP demanding that the PM must resign?

The PM himself held the portfolio for the Coal Ministry during the relevant period. A Raja and
Dayanidhi Maran rightly resigned their Ministerial positions once the CBI's investigation of 2G began.
Unfortunately, the same standards don't seem to apply to the Prime Minister. As Shri Arun Jaitley has
said, "the Prime Minister's office is a sacred institution in Indian democ-racy. It must be judged on
standards higher and harsher than those that would apply to other ministers." Instead of being an icon of
unimpeachable honesty, the Prime Minister has contin-ued oversee scam after scam under his
governance. This time, it was Dr Manmohan Singh him-self who was responsible. There is no one else
to pass on the blame. The PM must assume responsibility.
Why is the BJP disrupting the Parliament? Why can't the BJP challenge the government through
the PAC?
After the appalling behaviour of the Congress Party during the 2G scam, the BJP has learnt its lesson.
The Congress treated the PAC like a joke and made a mockery of important Parliamentary proceedings.
Right now, there is a national debate on the allocation of coal, if not within the Parliament.
Parliamentary debate cannot occur with Parliamentary accounta-bility. The government should not be
allowed to evade responsibility by using the august insti-tution of the Parliament as a tool. Parliament
156
COAL SCAM IN INDIA

debated the 2G spectrum scam thrice. Each time the Prime Minister stoutly defended his then Cabinet
colleague A Raja, while his party mem-bers falsely accused the NDA Government having set the "First
come, first serve" principle, deliberately overlooking the fact that in 2001 the telecom market was in its
infancy and there were few takers for telecom circles. But to sell telecom circles in 2008 at 2001 prices
was a criminal conspiracy to deprive the Government and people of India their rightful claim to a share
of the massive revenues raked in by telecom operators. This time, the BJP won't be taken for a ride. So,
no meaningless debate and dithering can be permitted in the name of discus-sion in Parliament. The time
for action has come.
CBI and Income Tax Investigation
On 31 May 2012, Central Vigilance Commission (CVC) based on a complaint of two Bharatiya Janata
Party Member of Parliament Prakash Javadekar and Hansraj Ahir directed a CBI enquiry.Income Tax
Department also started an enquiry based on the reference by the two BJP MP'
There were leaks of the report in media in March 2012 which claimed the figure to be around 10,600
billion (US$160 billion).[47] It is called by the media as the Mother of all Scams. Discussion about the
issue was placed in the Parliament on 26 Aug 2012 by the prime minister Manmohan Singh with wide
protests from the opposition.According to the Comptroller and Auditor General of India, this is a leak of
the initial draft and the details being brought out were observations which are under discussion at a very
preliminary stage.[51] On 29 May 2012, Prime Minister Manmohan Singh offered to give up his public
life if found guilty in this scam
(1) The Supreme Court on Wednesday directed the central government to file an affidavit, along with
supporting material, explaining the procedure and methodology that was adopted for the allocation of
164 coal blocks.The status report submitted by the Central Bureau of Investigation or CBI in its probe
into the coal scam highlights the alleged lack of transparency and inadequate documentation in the coal
allocation process. In the report, the CBI said the procedure adopted by the coal ministry and the
screening committee for allocation of the coal blocks was arbitrary. The CBI in its report, extracts of
which were read in the court, said there was no material about the decision-making process and the
minutes were either not maintained or were sketchy. Here are the highlights of the CBI's status report:
There has been no system in place to verify the facts
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COAL SCAM IN INDIA
The lack of transparency in allocation continues
A point-based system was touched upon in 2006. But the matter was not considered further
The detailed discussion in the screening committees not recorded in the file
Application and feedback forms inadequately designed
There was no system of obtaining supporting documents
Allocation made in the absence of recommendations
In some cases recommendations of states/authority changed in the middle
(2) The CBI has closed its Preliminary Enquiry (PE) in a coal block allocation case against Jindal Steel
and Power Limited (JSPL) in which it had examined former prime minister Manmohan Singh last
year, highly placed sources told The Indian Express.Sources confirmed that the CBI and the Chief
Vigilance Commissioners office have separately informed the Supreme Court, which is hearing a clutch
of cases related to coal block allocations during the previous UPA government, about the agencys
decision to close the PE. Sources said that this case was related to the allocation of the Ramchandi
promotional coal block to JSPL owned by former Congress MP Naveen Jindal on February 28,
2009, a day before the Model Code of Conduct for the general elections came into effect.The allocation
had come under the scanner because applications were initially invited for one block West of
Radhikapur and the promotional block was added later, said sources.The PE revealed that the
additional block was approved by the then Principal Secretary to the PM, T K A Nair, and that
Manmohan Singh was in AIIMS for a check-up when the decision was taken, said sources.
During examination, sources said, Manmohan Singh told the CBI that he took full responsibility for the
decision that was taken to prevent any monopoly as the proposed coal-to-liquid project was new.
One of the complaints received by the CBI on this allocation was from Dharmendra Pradhan, then an
MP and now the Minister of Petroleum and Natural Gases. When contacted, Pradhan confirmed that he
had sent a complaint to the CBI.
The Ramchandi block lies next to another coal block Utkal B-1 owned by JSPL, sources said.
They said that during the PE, it was further found that the qualifying net worth of the block was Rs
4,000 crore but the JSPLs worth at the time was only Rs 3,722 crore.
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COAL SCAM IN INDIA

A CBI spokesperson said: As per directions of the Supreme Court of India, CBI is not in a position to
share any information relating to inquiry/investigation in coal cases. Sources said the decision to close
the PE was taken in December 2015 but was conveyed to the CVC only this March.
CVC K V Chowdry did not respond to queries from The Indian Express but sources confirmed that his
office had recently received files related to three PEs from the CBI, including the one tied to JSPL.
Sources said that in 2014, CBI officers had recommended the registration of a Regular Case in the
allocation but the then director Ranjit Sinha did not grant approval. The case was examined afresh after
Sinhas departure and the consensus was to close the PE.
(3) Four years after registering a preliminary enquiry, the CBI has lodged a fresh case in the coal scam
against Prakash Industries for illegally bagging Chotia coal block during the NDA government's tenure
in 2003. Based on a complaint by former Congress MP Sandeep Dikshit and others in 2012, the Central
Vigilance Commission had directed the CBI to register the case but it remained a preliminary enquiry
till now.
In its FIR, the CBI said its probe brought out facts against Prakash Industries which were punishable for
criminal conspiracy and cheating under Indian Penal Code.
The FIR registered on Friday said the coal ministry had issued allocation letter to Prakash Industries on
September 4, 2003 for Chotia coal block for expansion of its sponge iron plant in Champa, MP (now in
Chhattisgarh) with certain conditions. The agency alleged the company made "false claims" about
production figures of its sponge iron plant in several of its communications to the ministry while
applying for the block. The company had first applied in 1993.
Formation of Inter- Ministerial Group (IMG)
At the end of June 2012, coal ministry decided to form an Inter-Ministerial Group (IMG),
to decide on either de-allocation or forfeiting the Bank Guarantees (BG) of the companies
that did not develop allotted coal blocks. Zohra Chatterji, additional secretary, coal
ministry was named as Chairman of the IMG. Other IMG members include
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COAL SCAM IN INDIA

representatives from power, steel, departments of economic affairs, industrial policy and
promotion, and law and justice
Significantly, the decision was taken after the CVC had already ordered a CBI enquiry
into alleged irregularities
As of 26 September 2012, the IMG has reviewed 31 coal blocks. Out of these, it has
recommended de-allocation of 13 coal blocks and encashment of bank guarantees of 14
allottees
Name of
Company
Castro
n
Mining Ltd
Bramhadih,
Deallocate
part),
Maharashtra
Domc
o
Smokeless
theLalgarh
(North) West
Bokaro
,
Fuels Pvt. Ltd
Jharkhand
Monne
t
Ispat
Deallocate
Jharkhand
Chinor
a
and
Warora
Field Mining
(Southern
and Ispat Ltd
Location
Recommendatio
n
(Cancellation or
deduction of BG)
Utkal B2,
4
& Energy Ltd. Orissa
160
Deallocate
Remarks
Was allocated in
199
6
Was allocated in
200
3
Was allocated in
200
5
Asked to submit BG
of 3 years royalty,
failin
Was allocated in
g
which the 199
9
block may be deallocated
COAL SCAM IN INDIA
Name of
Company
Shri
Virangana
Steels Ltd
Location
Marki
Mangli-II, III
and IV blocks
in
Maharashtra
Adhunik
Metaliks,
Adhunik
Corporation,
Orissa Sponge
Iron,
New
Deepa
k
Steel Patrapara,
& Power,
Orissa
SMC Power
Generation
Ltd,
Metaliks Ltd,
Visa Steel Ltd.
SKS Ispat
Recommendatio
n
(Cancellation or
deduction of BG)
Rawanwar
a
North,
Madhya
Pradesh
Tata Sponge
Radhikapu
r
East,
Orissa
Bhushan Steel
Bijahan,
161
Deduction of BG
Deallocate
Deallocate
Deduction of BG
Deduction of BG
Remarks
COAL SCAM IN INDIA
Orissa
10
Himachal
EMT
Gourangdi
A Power
h
Ltd
&
ABC
JSW Steel Ltd
Name of
Company
Location
Deallocate
Recommendatio
n
(Cancellation or
deduction of BG)
11
Gupta
Metaliks &
Power Ltd &
Gupta
Coalfields Ltd
Nerad
Malegaon
Deduction of BG
12
Usha martin
Ltd
Lohari
Deduction of BG
13
Electrosteel
Castings
North Dhadu
Deallocate
Choritand
Telaiya
Deallocate
14
15
Maharashtra
Seamless
Gondkhari
Deallocate
16
ArcelorMittal
and GVK
Power
Seregarha
Deduction of BG
162
Was allocated in
2009
Remarks
COAL SCAM IN INDIA
17
18
19
20
Jayaswal Neco
Neelachal Iron
&
Steel
DB Power
Moitra
Deduction of BG
Dumri
Deduction of BG
Durgapur II/
Sariya
Deduction of BG
IST Steel and DahegaonPower Ltd, Makardhokra

Gujara
t
IV,
Deallocate
The block was

allocated on 17
June 2009. IST
The coal ministry on Thursday decided to de-allocate 11 captive coal blocks including three mines of
Jindal Steel and Power, besides forfeiting the bank guarantees of six firms and asking five to expressly
furnish bank guarantees. The ministry has been facing intense flak over alleged irregularities in
allocation of coal blocks since 1993 and the Central Bureau of Investigation (CBI) is currently
investigating the abnormalities and criminal conspiracy in their allotment. The agency has filed 14 FIRs
and two preliminary enquiries so far in this connection. In this backdrop, an inter-ministerial group
(IMG) of the coal ministry met on 24 October to consider the fate of 30 coal blocks, including those
being investigated by the CBI. Of the mines recommended for de-allocation, two blocks Amarkonda
Murgadangal and Ramchandi Promotional (coal-to-liquid mine) belongs to Naveen Jindal-promoted
JSPL and the Urtan North block also allocated to JSPL along with Monnet Ispat & Energy . All allottees
had been issued show-cause notices and were asked to furnish their views to the IMG. The decisions
have been taken after careful consideration, a top coal ministry official told The Indian Express. Coal
minister Sriprakash Jaiswal is learnt to have approved the recommendations of the IMG. Another coalto-liquid block North of Akrapal allocated to the Strategic Energy tech System Limited, which is a
joint venture between the Tata group and South African firm Sasol has also been de-allocated. The
Radhikapur (West) block allocated jointly to Rungta Mines, OCL India and Ocean Ispat, Bikram mine
allotted to Birla Corporation, Khappa and Extension block allocated to Sunflag Iron and Steel and
Dalmia Cement have been cancelled. The ministry has decided to de-allocate the Rajgamar Dipside
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COAL SCAM IN INDIA

(South of Pulakdih Nala) coal block jointly allotted to Monnet Ispat and Energy Ltd among others.[60]
With the fresh round of de-allocation, the total number of blocks cancelled stands at 51 as the
government had earlier de-allocated 40 blocks. The ministry is preparing to inform the companies
impacted by the decision. As per the IMG's recommendations steel maker SAIL is among the five
companies to lose bank guarantees for delay in developing allotted blocks. Other firms include Abhijeet
Infrastructure, Andhra Pradesh Mineral Development Corporation, Tenughat Vidyut Nigam and
Chaman Metaliks. DE-ALLOCATED BLOCKS - COMPANIES COAL BLOCKS STATE Jindal Steel
and Power Amarkonda Murgadangal Jharkhand, Jindal Steel and Power Ramchandi Promotional
Block(CTL) Orissa .Jindal Steel and Power & Urtan North Madhya Pradesh, Monnet Ispat and Energy
.Rungta Mines, OCL India Radhikapur (West) Orissa and Ocean Ispat, Strategic Energy tech System
North of Akrapal (CTL) Orissa Ltd (A Tata-Sasol JV company), Birla Corporation Bikram Madhya
Pradesh .Sunflag Iron and Steel Khappa & Extension Maharashtra & Dalmia Cement Monnet Ispat and
Energy Rajagamar Dipside Chhattisgarh & Shri Virangana Steels Ltd, Rathi Udyog Limited Kesla North
Chhattisgarh, Castron Brahmdiha Jharkhand, Maharashtra State Mining Corp Warora Maharashtra .
Meanwhile, Jindal Steel and Power Ltd (JSPL) intends to appeal in court against the government
decision to de-allocate the coal block allocated to it, a company source said.
A JSPL spokesperson earlier said the company sees no reason behind the de-allocation as environment
clearance for the coal block in Chhattisgarh was given on Feb 10.
Sources in the Coal Ministry said the IMG has sent a note to the Ministry recommending de-allocation
of 11 coal blocks of companies including JSPL, Monnet Ispat and Energy Ltd and either imposition or
deduction of bank guarantee in another 19 cases. A large of allottees of these blocks were issued show
cause notices by the IMG to show why they had failed to take the required action to develop these
blocks and why action should not be taken against them. Following this, the Coal Ministry had asked the
owners of these blocks to make a presentation before the IMG on achievement of milestones and reasons
for delays. Those who were asked to make a presentation before the IMG included state-owned Steel
Authority of India (SAIL), NTPC Ltd, JSPL, Abhijeet Infrastructure, Birla Corp and Rathi Udyog, Tata
Power and Monnet Ispat and Energy Ltd. JSPL was specifically asked to make a presentation with
regard to delay in production from its four coal blocks - Amarkunda Murgadangal in Jharkhand, Utkal
B1 and Ramchandi in Odisha and Urtan North in Madhya Pradesh. Similarly, SAIL was asked to make
presentation for Sitanala mine in Jharkhand and NTPC for Parki Barwadih mine in Jharkhand and
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COAL SCAM IN INDIA

Talaipalli mine in Chhattisgarh. During the presentation, a number of companies pointed to the
continued unending delays in land acquisition, getting environmental clearances and regulatory hurdles
for delays in development of the mines. The government had formed the IMG last year to review the
progress of coal blocks allocated to firms for captive use and recommend action, including de-allocation.
The panel has members from other Ministries including Steel and Power. The Supreme Court is
monitoring the Coalgate scam probe into coal block allocations since 1993 being conducted by CBI
following three public interest litigation petitions alleging that rules were flouted in giving away the
natural resources and favouring certain companies at a huge loss of crores to the national exchequer.
Slamming the decision to de-allocate their coal blocks, Jindal Steel and Power and Monnet Ispat and
Energy have blamed lack of government approvals and external factors like Naxal activities for not
making enough progress in their mines. The two companies, whose 4 blocks figure in the list of 11 to be
de-allocated, said that they are being punished for no fault of theirs. The de-allocation is seen as a major
setback to both as the blocks were supposed to be the captive raw material source for their
upcoming/existing steel and power plants. Jindal's Rs. 80,000-crore mega venture of Coal-to-Liquid
project is likely to be hit. The two companies have together invested over 110 billion so far on
development of their end-use plants. At the outset, we are shocked and surprised to hear the
recommendation made by IMG (Inter-ministerial group), it seems that everybody in the policy
making/monitoring wants to avoid a pragmatic decision in view of the media hype," Monnet Ispat
spokesperson said in a statement. The JSPL spokesperson said the company's coal blocks are being deallocated "despite best efforts made by the company and no fault on part of the company." Last week,
the Coal Ministry decided to de-allocate 11 captive coal blocks to various companies. JSPL's three
Ramchandi promotional block, Amarkonda Murgadangal and Urtan North (jointly with Monnet)
figure in the list. Monnet's one more block, Rajagamar Dipside (South of Pulakdih Nala) coal block
jointly allotted to Monnet Ispat and Energy Ltd among others, is also part of the list. The Monnet
spokesperson further said 450 hectares of the block, out of total 650 hectares, is over-lapping with a
block of the South Eastern Coalfields Ltd (SECL) and SECL needs to surrender title of the land and
transfer it to Monnet. He also accused the Coal Ministry of violating its own conditions (clause 17 of
General Condition of Allocation), saying that the caluse "clearly stipulates that any delay in transferring
the land by a government company to the coal block allocatee can be claimed as grace period." If IMG
has recommended for de-allocation, then they are violating the published guidelines of MoC," the
spokesperson said, adding that Monnet can start development of the block immediately as it needs "to
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acquire only 5 acre of land for making an entry." According to the JSPL spokesperson, the company has
made 4 attempts for carrying out exploration at Amarkonda Murgadangal block since April, 2009 but
could not do it due to "large amount of extremist/Naxal activities" and "illegal mining" supported by
extremists/anti-social elements. "State government had further agreed to extend the validity of PL
(prospective licence) by 2 years 4 months and 8 days under force majeure conditions on 5 June 2013 and
we are in the process of starting our fifth attempt to carry out drilling operations in this block," he said.
The spokesperson of Jindal Steel and Power (JSPL) said its employees, officials and contractors were
assaulted or made hostage many times at the site and equipment were damaged. He added that many
complaints and FIRs have been filed on these issues and state and central governments have been
informed about it. Talking about the to be de-allocated Ramchandi promotional block, he said JSPL's
application for prospecting licence is pending with Odisha government for more than three years and the
state government has not yet "executed PL on one pretext or the other in spite of a number of
reminders." In the circumstances, company could not start exploration activities for no fault of the
company," he said, while noting that the company has already completed various initial work, including
detailed feasibility study, for the project and has invested Rs. 740 million on it. The Ramchandi block,
which has estimated 1.5 billion tonnes of coal reserves, was allocated for ambitious Coal-to-Liquid
project in February, 2009 and JSPL had already announced investment Rs. 800 billion on the venture.
On Urtan North block, the third to be de-allocated block (jointly allocated with Monnet), JSPL
spokesperson said that its Mine Plan is pending for final approval from Coal Ministry for more than six
months now. The delay in Coal Ministry's approval has led to further delay in securing Environment
Clearance (EC) as well. "Expert Appraisal Committee (EAC) of MoEF, GoI has already considered
grant of EC and is mainly pending for submission of Mine Plan approval letter. The Mine Plan approval
letter is pending for issuance with Ministry of Coal for more than six months," the company said.
Monnet, which is also a partner in the block, also echoed the same. It the spokesperson said that grant of
EC is in the "final stage" and the company is hopeful that it will be cleared by EAC in their
"forthcoming meeting" to be held later this month. For Monnet, Urtan North and Rajagamar Dipside
blocks are supposed to be the captive raw material source for its over a million tonne steel plant in
Chhattisgarh's Raigarh, which is now in final stages of commissioning. The company said it has invested
over Rs. 60 billion to develop the end-use plant. The Urtan North block is also critical to JSPL's plans as
it was supposed to meet 10-12 per cent of the coking coal needs of its already operational Raigarh steel
plant in Chhattisgarh. The company said has invested Rs. 34.16 billion on its development
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Finding the progress of development a dozen-odd blocks not up to the mark, the Inter-Ministerial Group
(IMG) has recommended de-allocation of 11 captive coal mines including those of Jindal Ispat and
Power Limited (JSPL) and Monnet Ispat and Energy and imposition or deduction of bank guarantee in
case of 19 blocks.The IMG, headed by the Additional Secretary (Coal), has been reviewing the progress
of coal blocks and taking action against all those who have been sitting idle on the national assets
without any concrete progress. Sources in the Coal Ministry said the IMG has sent a note to the Ministry
recommending de-allocation of 11 coal blocks of companies including JSPL, Monnet Ispat and Energy
Ltd and either imposition or deduction of bank guarantee in another 19 cases. A large of allottees of
these blocks were issued show cause notices by the IMG to show why they had failed to take the
required action to develop these blocks and why action should not be taken against them. Following this,
the Coal Ministry had asked the owners of these blocks to make a presentation before the IMG on
achievement of milestones and reasons for delays. Those who were asked to make a presentation before
the IMG included state-owned Steel Authority of India (SAIL), NTPC Ltd, JSPL, Abhijeet
Infrastructure, Birla Corp and Rathi Udyog, Tata Power and Monnet Ispat and Energy Ltd. JSPL was
specifically asked to make a presentation with regard to delay in production from its four coal blocks Amarkunda Murgadangal in Jharkhand, Utkal B1 and Ramchandi in Odisha and Urtan North in Madhya
Pradesh.Similarly, SAIL was asked to make presentation for Sitanala mine in Jharkhand and NTPC for
Parki Barwadih mine in Jharkhand and Talaipalli mine in Chhattisgarh. During the presentation, a
number of companies pointed to the continued unending delays in land acquisition, getting
environmental clearances and regulatory hurdles for delays in development of the mines. The
government had formed the IMG last year to review the progress of coal blocks allocated to firms for
captive use and recommend action, including de-allocation. The panel has members from other
Ministries including Steel and Power. The Supreme Court is monitoring the Coalgate scam probe into
coal block allocations since 1993 being conducted by CBI following three public interest litigation
petitions alleging that rules were flouted in giving away the natural resources and favouring certain
companies at a huge loss of crores to the national exchequer.
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CHAPTER-7
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As the Opposition insisted on Prime Minister Manmohan Singhs resignation over coalgate, both Houses
of Parliament had to be adjourned for the fourth consecutive day on Friday.
Members of the Telugu Desam Party and the All India Anna Dravida Munnetra Kazhagam backed the
National Democratic Alliance in the Rajya Sabha.
Congress members countered the Opposition, waving documents to drive home their point that the Chief
Ministers of the BJP-ruled States also did not favour auction of coal blocks.
As soon as the Houses met for the day, Opposition members rushed to the well, raising slogans against
Dr. Singh, who held the coal portfolio when the blocks were allocated a process which the
Comptroller and Auditor-General said caused a presumptive loss of Rs. 1.86 lakh crore to the exchequer.
In the Lok Sabha, BJP and Shiv Sena members poured into the well, raising slogans to condemn undue
favours given to private firms.
Speaker Meira Kumar tried to take up question hour but, as chaos reigned, had to adjourn the House till
noon.
When the House reassembled, it was adjourned for the day immediately, after laying of papers.
In the Rajya Sabha, NDA members shouted slogans the moment Chairman Hamid Ansari took up the
listed business. The Treasury benches countered them with slogans hailing Dr. Singh.
Mr. Ansari adjourned the House until after noon, after his requests to allow question hour to proceed
were ignored by the Opposition. When the House reassembled, the scene was no better. Minister of
State V. Narayanasamy rose to speak but was disallowed. Deputy Chairman P.J. Kurien asked
Parshottam Khodabhai Ruapala of the BJP to put his listed short notice question but he declined to do
so.
Soon, BJP members were in the well, raising a steady chant of slogans, with members of the NDA,
including the JD(U), and the AIADMK and the TDP, expressing solidarity with them.
Mr. Kurien adjourned the House till 2.30 p.m. and finally for the day, when the BJP members
stormed the well even when private members bills were to be taken up.
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The CAG Final Report
On 17 August the CAG submitted its Final Report to Parliament. Much less detailed than the Draft
Report, the Final Report still made the same charges against the government:
The Government had the authority to auction the coal blocks but chose not to
As a result allocatees received a "windfall gain" from the program.
The Final Report had the following outline:
Preface (pp. i-ii).
Executive Summary (pp. iii-viii)
Chapter 1. CoalAn Overview (pp. 16)
Chapter 2. Audit Framework (pp. 78)
Chapter 3. Augmentation of Coal Production (pp. 920)
Chapter 4. Allocation of Captive Coal Blocks (pp. 2132)
Chapter 5. Productive Performance of Captive Coal Blocks (pp. 3342)
Chapter 6. Conclusion and Recommendation (pp. 4345)
First CAG charge: the Government had the legal authority to auction coal blocks
In Chapter 4 of the Final Report, the CAG continued its contention that the Government had the legal
authority under the existing statute to auction coal by making an administrative decision, rather than
needing to amend the statute itself. Pages 2227 chronicle key correspondence between the Secretary
(Coal), the Minister of State (Coal), the Prime Minister's Office, and the Department of Legal Affairs
from 2004 to 2012. From this record, the CAG draws the following conclusions:
The Government decided to bring transparency and objectivity in the allocation process of coal
blocks, with 28 June 2004 taken as the cutoff date.

The DLA advice of July 2006 was sufficient grounds upon which to introduce competitive
bidding, by means of an administrative decision.
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Despite this DLA advice, there was prolonged legal examination as to whether an administrative
decision or amendment of the statute was necessary for competitive bidding to be introduced.
This stalled the decision making process through 2009.
In the period between July 2006 and the end of 2009, 38 coal blocks were allocated under the
existing process of allocation, "which lacked transparency, objectivity, and competition."
Second CAG charge: "windfall gains" to the allocatees were 185,591 crore ( US$35.08 billion)
The biggest change from the Draft Report was the dramatic reduction in the windfall gains from
1,067,303 crore ( US$201.72 billion) to 185,591 crore ( US$35.08 billion) This change is due to:
windfall gain/ton decreased 8% from 322 ( US$6.09) in the Draft Report to 295 ( US$5.58) in
the Final Report
number of tons decreased 81% from 33.169 to 6.283 billion metric tons of coal. This is because
the Final Report considers "extractable coal" (i.e. coal that could actually be used in production)
as against the Draft Report, which considered coal
Pardticulars
Extractable
Average CIL
Average CIL
Financing
Net
Net Benefit
Reserves of
Sale
Cost
Cost/Tonne
Benefit/ton
OC
price/Tonne
Price/Tonne
OC Mines
3,970
1,028
583
150
295
117,275
Mixed Mines,
1,011
1,028
583
150
295
29,853
1,302
1,028
583
150
295
38,463
6,283
1,028
583
150
295
185,591
Mine Plan
avail
Mixed Mines,
Mine Plan
Unavail
Total
Source: CAG Final Report, p. 31.
Note, these are still huge coal volumes compared to India's annual production and represent many
decades of the actual coal needs of the captive firms. The headline number of 1,856
billion (US$28 billion) is the gain that would accrue to captive firms over these decades, and there is no
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attempt to derive a Present value of the gain. However, considering inflation rate equalling discount rate,
the gain calculated reflects the nearly accurate value.
Manmohan Singhs Rebuttal in Parliament
Typically once a CAG Report has been tabled (submitted to Parliament) it is received by the Public
Accounts Committee (PAC). The PAC then calls in the relevant minister to discuss the report, and the
PAC prepares its own report, which is then discussed in Parliament as a whole. In an unusual step, on 27
August, the Prime Minister bypassed this process and made a statement to Parliament directly,
addressing the findings of the Final CAG Report. Hereafter, Prime Minister's Statement.
Stretching to 32 paragraphs, Singh's argument makes three main points:
From a policy perspective, he agrees with CAG that all parties consented to a move from
allocation by screening committee to competitive bidding should begin.
From a legal perspective, he disputes the CAG's understanding of the law, and says, indeed, that
such a conclusion could only have been arrived at by a selective reading of the evidence.
From a practical perspective, he notes that even were the legal path clear, it was not simply
possible to introduce the competitive bidding process by fiat. There were multiple parties whose
consensus was required in the transition to competitive bidding with varied, and sometimes
divergent interests.
The major coal and lignite bearing states like West Bengal, Chhattisgarh, Jharkhand, Orissa and
Rajasthan that were ruled by opposition parties, were strongly opposed to a switch over to the process of
competitive bidding as they felt that it would increase the cost of coal, adversely impact value addition
and development of industries in their areas and would dilute their prerogative in the selection of lessees
The CAG, Singh argued, had simply ignored the practical realities of policy implementation in their
accusation that the Government did not move fast enough in transitioning to competitive bidding
First CAG charge: the Government had the legal authority to auction coal blocks
Singh addresses the question of legal authority in paragraphs 14-18 of his Parliamentary statement:
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14. The CAG says that competitive bidding could have been introduced in 2006 by amending the
existing administrative instructions. This premise of the CAG is flawed.
The observation of the CAG that the process of competitive bidding could have been introduced by
amending the administrative instructions is based on the opinion expressed by the Department of Legal
Affairs in July and August 2006. However, the CAG's observation is based on a selective reading of the
opinions given by the Department of Legal Affairs.
16. Initially, the Government had initiated a proposal to introduce competitive bidding by formulating
appropriate rules. This matter was referred to the Department of Legal Affairs, which initially opined
that amendment to the Coal Mines (Nationalisation) Act would be necessary for this purpose.
A meeting was convened in the PMO on 25 July 2005 which was attended by representatives of coal and
lignite bearing states. In the meeting the representatives of state governments were opposed to the
proposed switch over to competitive bidding. It was further noted that the legislative changes that would
be required for the proposed change would require considerable time and the process of allocation of
coal blocks for captive mining
could not be kept in abeyance for so long given the pressing demand for coal. Therefore, it was decided
in this meeting to continue with the allocation of coal blocks through the extant Screening Committee
procedure till the new competitive bidding procedure became operational. This was a collective decision
of the centre and the state governments concerned.
18. It was only in August 2006 that the Department of Legal Affairs opined that competitive bidding
could be introduced through administrative instructions. However, the same Department also opined that
legislative amendments would be required for placing the proposed process on a sound legal footing. In
a meeting held in September, 2006, Secretary, Department of Legal Affairs categorically opined that
having regard to the nature and scope of the relevant legislation, it would be most appropriate to achieve
the objective through
Second CAG charge: "windfall gain to the allocatees were 1,856 billion (US$28 billion
Let me humbly submit that, even if we accept CAG's contention that benefits accrued to private
companies, their computations can be questioned on a number of technical points. The CAG has
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computed financial gains to private parties as being the difference between the average sale price and the
production cost of CIL of the estimated extractable reserves of the allocated coal blocks.
Firstly, computation of extractable reserves based on averages would not be correct.
Secondly, the cost of production of coal varies significantly from mine to mine even for CIL due
to varying geo-mining conditions, method of extraction, surface features, number of settlements,
availability of infrastructure etc.
Thirdly, CIL has been generally mining coal in areas with better infrastructure and more
favourable mining conditions, whereas the coal blocks offered for captive mining are generally
located in areas with more difficult geological conditions.
Fourthly, a part of the gains would in any case get appropriated by the government through
taxation and under the MMDR Bill, presently being considered by the parliament, 26% of the
profits earned on coal mining operations would have to be made available for local area
development.
Therefore, aggregating the purported financial gains to private parties merely on the basis of the average
production costs and sale price of CIL could be highly misleading. Moreover, as the coal blocks were
allocated to private companies only for captive purposes for specified end-uses, it would not be
appropriate to link the allocated blocks to the price of coal set by CIL
Role of Sonia Gandhi
On 31 August, Manmohan Singh met UPA chairperson Sonia Gandhi and communicated to her that his
office had cleared the coal block allotment on the recommendation of her political secretary Ahmed
Patel. Washing his hands of the tainted coal block allotment, Dr Singh made it clear to Sonia Gandhi
that he had no role or interest in determining who the beneficiaries should be. PM explained that his then
principal secretary T K A Nair had merely coordinated the allotment decision as desired by Ahmed
Patel. Ahmed Patel is one of Sonia Gandhi's closest aides he has been her political secretary since
2000, and she is known to rely on him greatly in the running of the Congress Party
Congress President, Smt. Sonia Gandhi, other party leaders march to Manmohan Singhs
residence in solidarity A day after former Prime Minister Dr. Manmohan Singh was summoned
in the coal scam case, the Congress went on the offensive. Congress President, Smt. Sonia
Gandhi and more than 100 party Seniorsleaders walked in a large group to former Prime
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Minister Dr. Manmohan Singhs residence in a striking show of solidarity after a court summons
to him in a coal scam case on 12th March, 2015.He is known not just in India but throughout
the world as a person of integrity and probity. We offer our unstinting support and are fully
behind him. We shall fight this not only legally but with all our means at our command, Smt.
Gandhi, expressing outrage, told news reporters outside the former Prime Ministers
residence.We have no doubt whatsoever that he will be vindicated, she asserted.
Congress leaders gathered at the party headquarters before walking down the road to Dr.
Manmohan Singhs home.Party leaders who reached Dr. Singhs residence were greeted by the
former Prime Minister and his wife, Gursharan Kaur. In a short meeting, Ms. Gandhi emphasized
the need to support Dr. Singh with all the resources at their command; in turn, he thanked Ms.
Gandhi and the party for their faith in him.If this gesture of solidarity with Dr. Manmohan Singh
was a political act that galvanised the party on 12th March, 2015, the Congress party will take
appropriate decision in the wake of consultations in the party and is analyzing the order and
even on a first reading there appears to be gaping illegal irregularities. Despite the CBI saying
there is no prosecutable evidence, such an order has been passed. This itself is a major ground
for challenging the order.The Congress president has missed the last few days of Parliament
because of viral fever and her silence was noticed on 11th March, 2015, after a special CBI court
summoned Dr. Manmohan Singh as an accused in a case linked to the illegal allocation of coal
mining rights.I am upset, but this is a part of life. The truth will prevail, Dr Singh told
reporters. Former Union Minister Shri P. Chidambaram also a top lawyer said in a statement:
The CBI, after recording Dr. Singhs statement, concluded that there were no grounds to initiate
criminal proceedings against him. We respect our judicial system, we respect our judges. But I
may point out that, in the past, Courts have taken a misstep and stumbled. I am confident the
Court itself will review its decision and drop the proceedings against Dr. Manmohan
Singh.Earlier, addressing journalists, Ms. Gandhi stressed the partys unstinted support for
Dr. Singh. We will fight this legally with all the means at our command. I am sure we will be
vindicated.Former Union Law Minister M. Veerappa Moily described the summons to Dr.
Singh as reflective of a crisis of law for this country, something senior BJP leaders had said on
Wednesday off the record.
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COAL SCAM IN INDIA
The top leadership of Indias Congress party including its enigmatic president Sonia Gandhi
walked to former Prime Minister Manmohan Singhs home on Thursday in a unusual display of
support after he was summoned to court in the coal scam case.The most recognizable of the
ministers who served under Singh strode through the leafy streets of central Delhi to his colonialera bungalow where he stood outside smiling, his wife by his side.Gandhi, 68, who rarely speaks
in public off the campaign trail, rallied to Singhs cause in apparent recognition of his loyalty to
her family, which last year was replaced by Prime Minister Narendra Modi as Indias top
political force.
We are fully behind him, we will fight this legally and with all the means at our command, we
are sure that he will be fully vindicated, Gandhi said, flanked by the former defence and finance
ministers who dominated government for a decade.Elsewhere, in the heartland state of Uttar
Pradesh, hundreds of Congress workers briefly stopped trains in sit-in protests on railway
tracks.A judge on Wednesday ordered Singh to appear on April 8 to explain his role in the illegal
award of a coal field to a billionaire, a new blow for the Gandhi-led party that was engulfed by
graft scandals towards the end of its rule.The show of unity contrasted with the treatment of late
Prime Minister P.V. Narasimha Rao, who was kicked out of the Congress party after a 1996
election defeat and left to fight a corruption trial and other legal cases on his own.Rao, who with
Singh pushed through reforms credited for two decades of fast economic growth, is rarely
mentioned by Gandhi. He died in 2004.Rao was disowned almost in the way Communist parties
disowned purged leaders, veteran newspaper editor and commentator Shekhar Gupta told
Reuters.The judge who summoned Singh questioned which officials and politicians could have
gained financially from the decision to ignore guidelines and re-allocate a coal field in eastern
India to Hindalco Industries.Sonia-Gandhi-Tashi-1780 Congress leaders led by Sonia Gandhi on
a solidarity march to former PM Manmohan Singhs residence from the AICC office in New
Delhi on Thursday; the march was in support of former PM in the aftermath of summons issued
by a court in a coal scam case. Express Photo by Tashi Tobgyal Some commentators believe
Singhs loyalty to the Gandhis despite being at times overruled by Sonia and her son, Rahul,
during his time in office blemished his record.No matter how angry he may get with them, he
is not going to blame them or rat on them, Gupta said. He has put feudal family loyalty over
public trust.A globally respected economist known for his integrity and humble lifestyle,
Singhs premiership ended in ignominy as corruption scandals rocked the telecommunications,
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COAL SCAM IN INDIA

defence and coal ministries.He was seen as a personally honest but weak leader, and dominated
by party president Gandhi, the Italian-born widow of late Prime Minister Rajiv Gandhi.Their
son, Rahul, next in line to head a dynasty stretching back to Indias first prime minister, was
notable by his absence from the march.Rahul, who is expected to take over as party president
when his mother steps down, took a leave of absence from politics a few weeks ago and is
believed to be out of the country.
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CHAPTER-8
COALGATE REACH SUPREME COURT OF
INDIA
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COALGATE REACH SUPREME COURT OF INDIA
Advocate M L Sharma filed a Public Interest Litigation (PIL) in the Supreme Court seeking to cancel
the allotment of 194 coal blocks on grounds of arbitrariness, illegality, unconstitutionality and public
interest. Defending the CAG, a Supreme Court bench of Justices R M Lodha and A R Dave dismissed
the Solicitor General Rohinton Nariman's objections that petition relies heavily on the CAG report by
saying, the CAG is a "constitutional authority" and that its report is "not a piece of trash".
Moreover, the court ordered the government to inform it of reasons for not following the 2004 policy of
"competitive bidding" for coal block allocation. The apex court wanted to know not only the steps that
have been taken but also proposed against companies that have breached the agreement. On 13 March
2013 Supreme Court bench responded to rare display of divergence between center and premier
investigation agency CBI by asking its director not to share details of coal block scam investigations
with political executives and report only to the court. It further ordered the CBI DIRECTOR to file an
affidavit by 26 April stating that probe status report filed before it had been vetted by him and its
contents were not shared with the political masters and "the same arrangement shall follow in future".
Two applications were filed by NGO Common Cause and Manohar Lal Sharma on 13 April
2013.Activist lawyer Prashant Bhushan, sought creation of a special investigation team to probe the case
as it involved "very powerful personalities in the present government who were either in charge of the
allocation process or who influenced the process to get allocation to their favoured entities"."There has
been mounting evidence... for the last one year as to how major corporate groups like Jindals were able
to garner huge blocks with millions of tonnes of coal, as was the case with shady companies linked with
other politicians. Despite that CBI has neither filed any chargesheet nor made an arrest."the application
said.. The Naveen Jindal Group had allegedly "misrepresented" facts and was shown favour by the
Jharkhand Government which dropped other firms from its recommendation for allocation of coal
blocks in the state in 2007, the CBI has said in its FIR filed before a court here in Coalgate.The FIR is
categorical that Ministry of Power was against the proposal for allocating Amarkonda Murgadangal coal
block to Jindal Group firmsJindal Steel and Power Ltd (JSPL) and Gagan Sponge Iron Pvt Ltd
(GSIPL) -- which have been named as accused along with Congress MP Naveen Jindal. However,
former Minister of State for Coal Dasari Narayan Rao, also an accused in the FIR, had written a note to
the then Coal Secretary and showed "undue favour" to Jindal's firm which had misrepresented the facts
regarding its "preparedness in setting up their proposed end used plant (EUP)". "Enquiry further
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revealed that Government of Jharkhand vide its letter dated 20 June 2007 recommended the allocation of
Amarkonda Murgadangal coal block to three companies namely (1) M/s Lanco Infratech Ltd (40 per
cent), (2) M/s JSPL (30 per cent) and (3) M/s GSIPL (30 per cent). "However vide its letter dated 30
July 2007, Government of Jharkhand changed its recommendation and recommended the allocation of
Amarkonda Murgadangal block to only the two Naveen Jindal Group companies i.e. JSPL (70 per cent)
and M/s GSIPL (30 per cent)," the CBI said in its 12th FIR filed till date in the coal blocks allocation
scam before the Special CBI Court. The agency alleged that both SPL and GSIPL misrepresented the
facts to the Coal Ministry but the Screening Committee, which used to recommend for allocation of coal
blocks to the shortlisted applicant companies, in its meeting held on 13 September 2007, had
recommended allocation of Amarkonda Murgadangal coal block jointly to these two firms. "Enquiry
further revealed that both M/s JSPL and M/s GSIPL misrepresented in its application/feed back form on
the count of their preparedness in setting up their proposed EUP as well the previous allocation of coal
blocks to their group companies," it said. The FIR further said, "Despite not being recommended by the
Ministry of Power and the companies having misrepresented on the aforesaid counts, the Screening
Committee in its meeting held on 13 September 2007 recommended the allocation of Amarkonda
Murgadangal coal block jointly to M/s JSPL and M's GSIPL."The CBI said that Power Ministry had not
recommended allocation of coal blocks either to JSPL or GSIPL as they did not "meet the criteria of
preparation adopted by Central Electricity Authority which shortlisted the companies on behalf of
Ministry of Power." Regarding Rao, the agency said that in order to influence the decision of the
Screening Committee in favour of JSPL and GSIPL, the then Minister of State for Coal had written a
note on 27 July 2007 to the Coal Secretary, who was also Chairman of the Screening
Committee.Referring to the note, CBI said, "He (Rao) mentioned that he had come to know through the
media reports that Ministry of Power/CEA had been appraising various applications received in the
Ministry of Coal on the criteria of net worth of applicant, progress regarding land acquisition and water
tie up etc.""However, the Screening Committee should evaluate various applicants as per the past
practicesIt said on a representation by another firm Bhushan Energy Ltd (BEL) seeking 50 per cent
share in Amarkonda Murgadangal coal block, Rao "again showed undue favour" to Jindal's firms and
justified the decision of Screening Committee recommending the allocation of coal blocks to the two
companies.It said that JSPL had submitted its application for coal block allocation in January 2007 to
the Coal Ministry for securing few blocks earmarked for power sector, including Amarkonda
Murgadangal coal block in Jharkhand for its proposed 1000 MW captive power plant to be set up at
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Patratu.GSIPL also submitted its application dated 10 January 2007 to the ministry for its 1000 MW
independent power plant in Dumka district in Jharkhand, the CBI said, adding that the allocation letter
was issued to the two firms on 17 January 2008. Besides Jindal, Rao, JSPL and GSIPL, the accused
named in the FIR, lodged under provisions of the IPC dealing with the offence of conspiracy to cheat
and under the relevant sections of the Prevention of Corruption Act, aremembers of the 35th
Screening Committee, Jindal Realty Pvt Ltd, New Delhi Exim Pvt Ltd, Sowbhagya Media Ltd, Directors
of GSIPL and other unknown persons
Role of Prime Mininster Manmohan Singh

In 2004, coal secretary P C Parakh informed PM the potential fraud inherent in the discretionary
allocation of the captive coal fields and objected to it in writing. Still all the 142 coal blocks were
allocated without auction during the Prime Minister's tenure in the coal ministry.[78] BJP on 19 April
demanded the resignation of Prime Minister Manmohan Singh alleging that he was using the law
ministry to save himself from the probe.[79][80][81] The Supreme Court observations on 30 April are
undoubtedly harsh. No other government in India has been criticized in such words. The legalities of the
case have proved troublesome for Manmohan Singh and the UPA.[82] P C Parakh who is considered the
whistleblower for the coalgate said that he clearly pushed for auctions, but was overruled by the PM
Parliamentary Standing committee Report
Standing Committee on Coal and Steel tabled in Parliament on 23 April 2013 stated in its latest report
that all coal blocks distributed between 1993 and 2008 were done in an unauthorized manner and
allotment of all mines where production is yet to start should be cancelled. It recommended that all
"personnel" who have been involved "directly or indirectly" in the allocation process "should be
investigated for their role".There was no transparency in the allocation process and the exchequer did
not get any revenue from allocation of the blocks. It has pointed out that the allocations between 1993
and 2004 were done without any advertisement or public information It accused both the UPA and NDA
for perpetrating massive corruption
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Supreme court Hearing

On 26 April the CBI director Ranjit Sinha submitted an affidavit in the Supreme Court stating that the
coal scam status report prepared by the investigating agency was shared with the law minister Ashwani
Kumar "as desired by him", joint secretary-level officers from the Prime Minister's Office (PMO) and
the coal ministry before presenting it to the court on 8 March It contradicts the claim made by CBI
counsel in SC that the coal scam report was not shared with any member of the government.On 29 April,
CBI stated to SC that 20% if its original report was changed by Government. Additional SolicitorGeneral Harin Raval resigned for having misled the Supreme Court.
Ranjit Sinha said SC that CBI is part of government and hence not autonomous.The three-judge Bench
of Justices R.M. Lodha, Madan B. Lokur and Kurian Joseph directed the CBI to file an affidavit by 6
May regarding the changes that were made in the status report, at whose instance the changes were
made, and the effect of these changes on the entire investigation. Counsel Prashant Bhushan said there
were efforts to shield PM. He said "the Central Vigilance Commission can at least be asked to direct the
CBI to show the final report. If the CVC feels there are a few things left out and if there are things not
done then it can ask the CBI to change the Investigating officer. The reason why the CVC can interfere
is because of this administrative control. The CBI Director who has statutory status can be pressurised
by promising post retirement jobs etc. Thus government manage to control the CBI." Adv Prashant
Bhushan said "companies are trying to operationalise and then they can say so much investment is being
done. Every delay will lend them the contention of equity."
He requested court to appoint a retired judge and police officer of impeccable integrity to overlook the
investigation.SC said that it will liberate CBI from political interference to make CBI credible, impartial
and independent. on 24 September 2014 Supreme Court quashed allocation of 214 out of 218 coal
blocks which were allotted to various companies since 1993 and in which it was claimed that around Rs
2 lakh crores were invested.
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COAL SCAM IN INDIA
CHAPTER -9
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COAL SCAM IN INDIA

On 11 March 2015, Special CBI judge took cognizance of the offence under Sections 120-B and 409 of
Indian Penal Code, 1860 and Sections 13(1)(c), 13(1)(d)(iii) of Prevention of Corruption Act, 1988
against Dr. Manmohan Singh and five other accused namely M/s. HINDALCO, Subendhu Amitabh, D.
Bhattacharya, Kumar Mangalam Birla, P.C. Parakh. It further took cognisance of substantive offences
under Sections 409 of IPC and Sections 13(1)(c) and 13(1)(d)(iii) of Prevention of Corruption Act, 1988
against Singh and Parakh. Court then issued summons to the six accused.[91] Singh and Parakh then
approached the Supreme Court which on 1 April 2015 granted an interim stay against the order and
stayed further proceedings against them before the special CBI Court
Speacial CBI Court
In July 2014, Supreme Court of India decided to set up a special CBI court to try cases arising from coal
block allocation scam. It also appointed Rajinder Singh Cheema(Ex.Advocate General,Punjab)as the
special public prosecutor and Justice Bharat Parashar as the judge of the special court that will hear the
case on a day-to-day basis.The court also directed that all the matters pending in different court relating
to coal blocks allocation scam would stand transferred to the special court.
Supreme Court Verdict
On 24 September, Supreme Court of India decided to cancel 214 out of 218 coal blocks allocated since
1993. Apart from the cancellation, operational mines will have to pay a penalty of Rs. 295 for every
tonne of coal extracted since they started.
Missing Files of Coal Blocks
Coal Allocation (I & II) sections are responsible for maintaining all records pertaining to allocation of
coal blocks.The number of missing files was initially pegged at 157 the number of applications for
coal blocks allocation.Nearly 150 are related to the period between 1993 and 2004 in which 45 coal
blocks were allocated. Missing files benefit three sets of people the beneficiary companies (and
individuals) who received coal block allocations; the screening committee (based on its deliberations)
and the minister and his office (bureaucrats and officials).The BJP says that the bulk of the questionable
allocations took place while PM Manmohan Singh held charge of the coal ministry
184
COAL SCAM IN INDIA
CHAPTER-10
185
COAL SCAM IN INDIA

TKA Nair, Former Principal Secy, PM and now Adviser to PM DC Garg (Chief, Western Coalfields
Ltd) under CBI scanner
Ministers
Sriprakash Jaiswal (incumbent since 2012) Manmohan Singh (PM) (four months in 2004 and from 2007
to 2012) UPA-I coal minister Sibu Soren, May 2004 to 2007, except 24 July 27 November 2004
2003 Ministry of coal separated from ministry of mines
Ministers of mines
Mamata Banerjee (January 2004 May 2004) AITC Ram Vilas Paswan (September 2001 April 2002)
LJP Syed Shanawaz Hussain (2001 minister of coal) BJP Sunder Lal Patwa (2000-2001) BJP Naveen
Patnaik (minister of mines 1998 2000) BJD
186
COAL SCAM IN INDIA
CHAPTER-11
FINDING,SUGGESTION,CONCLUSION AND
BIBLIOGRAPHY
187
COAL SCAM IN INDIA
Conclusion
The landmark order dated September 24, 2014 reinforces the belief of fiat justitiaruatcaelum9. It
upholds the right of the public towards public property and protects the publics money from being
pocketed by a few rich, powerful and shady persons and organizations. While it brings along greater
transparency and certainty in the State, it also carries the length of various grave legal, social and
economical consequences which would have to be resolved by the Legislative, Judicial and Executive
bodies of the country without further ado. Firstly, while the fines as per the CAGs Report, inspired
from the losses it has incurred, have been solely levied on the allottees, the legal or financial liability
of the UPA and the NDA Governments (including the then-Prime Minister, Dr. Manmohan Singh), who
have been in power during the periods of the disputed coal block allocations, has not been determined.
The Court should have considered the strong possibility of collusion among the Government
officials and between them and the private corporations, at least to the extent of deciding the fines to be
imposed, regardless of the fact that the question of collusion was not raised in the writ petition (as it
would still be a relevant fact).
Secondly, as a corollary to the first consequence, the Coal Block Allocation case necessitates that in the
future, in acquiring public resources from the Government, one would have to take proper legal
precaution as even if it is the government authority which is primarily at fault for the allocation of a
public resource to a private individual, the private individual would be made to compensate for any
losses caused to the State as a result thereto.
Thirdly, even though legal justice to the public appears to have been done, yet such apparent legal
justice may come at the cost of compromised economic justice. All the stakeholders involved - be it the
Government, private companies, investors or banks and financial institutions, will in all likeliness bear
the financial brunt of this order. It is estimated that at the given rate, in the absenceof timely action by
the Central Government and its authorities in rectifying the situation, the Coal Import Bill might witness
an inflation of 3 billion US dollars. Immediately after the Judgment on August 25, 2014, the stock
market witnessed a massive downward movement, especially in respect of the stocks of steel, cement
and power companies (although it soon thereafter recovered)10. Insofar as the banks and financial
188
COAL SCAM IN INDIA

institutions are concerned, SBI and IDBI, among other banks and institutions, stand to possibly lose Rs.
50,000 crores and Rs.2,000 crores as a result of this order11.
Fourthly, this order is not consistent with the current Make in India ideology being floated by Prime
Minister, Mr. Narendra Modi for the reason that the multitude of losses which would be suffered by
various stakeholders would negatively affect the investors sentiment in India, thus shaking its faith in
the stability of the republic.
Lastly, what is keenly awaited is the action of the Central Government in execution of this Court order.
While the Court, placing faith in the Governments claims of being capable of handling the situation, has
left it to them to take further action, it will have to be seen as to what actions it takes in the existence
of only market-driven forces and no definitive Court directions. Excessive delay in undertaking of the
coal blocks would impact the socio-economic status of the country. Also, allocation to those companies
which are currently the allottees, and would also be eligible under section 3(3)(a)(iii) of the CMN Act to
operate coal mines, should ideally be given the coal blocks, as that also entails an opportunity to recover
the amount of money lost. However, as per the current law, since open auction must take place, the
scope of economic justice which can be done to the innocent allottees also remains to be seen. Also,
what is uncertain is the period when the auction for the 44 coal blocks shall take place
Finding
The Central Bureau of Investigation (CBI) and the Centre were at loggerheads on the coal scam in the
Supreme Court on Tuesday with the agency pointing out irregularities in the coal block allocation during
UPA-I tenure and the government vehemently refuting the allegations.
In a status report filed by CBI in the scam, the agency said that the coal block allocation during 2006-09
was done without verifying the credentials of companies which allegedly misrepresented facts about
themselves. A three-judge bench headed by justice R.M. Lodha, which went through the report filed in a
sealed cover, said that the report prima facie alleges irregularities, but the attorney general G.E.
Vahanvati aggressively hit back on the finding saying, CBI is not the final word on this. Vahanvati,
however, clarified that the government has no problem with CBI probe and pleaded the court to supply
him with some part of the probe report on which he would respond. I am not trying to pre-empt the
inquiry. I have no problem with it. Let CBI probe the allocation, the attorney general said.
189
COAL SCAM IN INDIA

The bench said the government should make a statement cautiously as it might affect the ongoing CBI
probe in the case. Any of your comments must not prejudice CBI inquiry in the case. If you are
challenging the very conspiracy angle of the controversy, then it would affect the probe, the bench, also
comprising justices J. Chelameswar and Madan B. Lokur, said.
The bench further directed the government to explain why a small group of companies have been
picked and chosen for allocation of coal blocks out of the large number of companies that applied for
it. The court also asked the CBI director to file an affidavit that the status report submitted by the agency
on 8 March was vetted by him and not shared with political executives and the same will be followed
in future.
SUGGESTION
Coal minister Sriprakash Jaiswal asserted vociferously on Monday that 'no coal block was given away
during his tenure'.
'I have said time and again that except the coal block allocations made in UPA-I, no allocations have
been made. If any Member of Parliament is making any such statement, then that MP is misleading the
media as well as the nation,' Jaiswal told the media, refuting the allegations made by BJP MP Hansraj
Ahir. But a Press Information Bureau (PIB) release dated November 28, 2011, gives the apparent lie to
his statement. According to the PIB release, Jaiswal had made as many as 15 allocations from May 28,
2009 - the day he took charge of the coal ministry - till November 1, 2011.
In fact, he had allocated coal blocks to Rungta Mines Limited and Kohinoor Steel in Mednirai
(Jharkhand) and Tata Steel Ltd and Adhunik Thermal Energy Ltd in Ganeshpur (Jharkhand) on his very
first day in office.
He allocated 410.41 million tonnes of coal reserves during his first week in office. In all, 3946.78 tonnes
of coal reserves were allocated by Jaiswal till November 1, 2011.
The PIB release only confirms the charges made by Ahir, whose petitions to the CAG and the CVC
blew the whistle on the scam.
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COAL SCAM IN INDIA

The minister refuted Ahir's allegations that he sanctioned coal blocks to three private companies - SKS
Ispat and Power, CG Sponge Manufacturers Consor- Hansraj Ahir tium Coalfield and API Ispat and
Powertech.
But the MP showed MAIL TODAY a list of 15 coal blocks allocated by Jaiswal, which corresponds
with the PIB list which names these companies. 'Jaiswal allocated the coal blocks to private parties
without clearance from the screening committee, which hasn't even met since 2009. He even allocated
four blocks after the MMDR Amendment Bill was passed on August 21, 2010. This is a criminal act,'
Ahir alleged.
Ahir, a member of the standing committee on mines, is MP from Chandrapur in Maharashtra, which has
27 coal reserves. 'Had the coal blocks been given to government-run companies like Coal India, lakhs of
people could have been provided employment,' Ahir said.
'Coal is a resource that belongs to the 1.2 crore people of India. It can't be given away to some 120
companies. What the government has done is shameful,' he added.
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THANKS
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A report submitted to Ishan Institute of Management & Technology, Greater Noida as

Ishan Institute of Management & Technology