Vikas Mahajan, J.:—
CM APPL. 30822/2023 (Application for interim relief)
1. Aggrieved by the inaction of respondents no. 1 and 2 in determining the compensation which is due and payable to the Petitioner towards its land and mine infrastructure in respect of the Parbatpur Coal Block, the petitioner has filed the present writ petition seeking the following reliefs:
“(a) Declare that the Respondent No. 2's decision to not classify ‘Pits’ as Mine Infrastructure is ultra vires the Act and accordingly declare that the ‘Pit’ is Mine Infrastructure in terms of Section 3(1)(j) of the Act.
(b) Declare that ‘Coal Washery’ is Mine Infrastructure in terms of Section 3(1)(j) of the Act.
(c) Declare that all costs (apart from the costs for statutory consents/permits) which form part of the entry of “Mine Planning and Design expenses” in the audited balance sheet of the Petitioner are to be compensated as Mine Infrastructure in terms of Section 3(1)(j) of the Act.
(d) Declare that the decision of Respondent No. 2 to not classify ‘movable’ assets that are meant for mining operations as Mine Infrastructure is ultra vires the Act.
(e) Declare that the list of assets, which form part of Annexure 28as Mine Infrastructure in terms of the Section 3(1)(j) of the Act.
(f) Declare that the quantum of ‘Land’ pertaining to the Coal Block should be considered in terms of Section 3(1)(p) of the Act and the same to be valued based on circle rates in the ‘Commercial category’.
(g) Consequently, issue a writ of Mandamus or any other appropriate writ(s)/order(s)/direction(s) directing the Respondent No. 1 and 2 to promptly determine and disburse the compensation due to the Petitioner for Land, Mine Infrastructure, costs for statutory consents/permits and costs for preparation of Geological Reports before the vesting of the Coal Block.”
2. Vide the present interim application, the petitioner is seeking a direction to respondents no. 1 and 2 to not vest the assets of the petitioner in favour of the respondent No. 3/successful bidder, primarily on the ground that determination and disbursal of compensation for the aforesaid assets have not been done till date. The prayer made by the petitioner in the application reads thus:
“(a) Direct the Respondent No. 1 and 2 to not vest any asset that has not been taken over and for which the determination of fair valuation and the consequent disbursement of compensation in favour of Petitioner is pending as the same would amount to violation of Article 300A of the Constitution of India;”
3. The brief facts relevant for adjudicating the present application is that on 07.07.2005, the petitioner in accordance with Section 3(3)(a)(iii) of the Coal Mines (Nationalisation) Act, 1973 was allocated the Parbatpur Central Coal Block situated in Jharkhand [in short ‘the coal block’] to meet the coal requirement of its 5.8 lakh tonne per annum capacity sponge iron project at Kardah in West Bengal and Kalahasti in Andhra Pradesh.
4. The said coal block was de-allocated by the Supreme Court in 2014 vide its judgment titled Manohar Lal Sharma v. Principal Secretary, (2014) 9 SCC 516. As a corollary to the de-allocation, a prior allottee is liable to be compensated for its Land and Mine Infrastructure. Thus, to compensate prior allottees for the investment made by them and to ensure continuity in coal mining operations, the Coal Mines (Special Provisions) Act, 2015 [in short ‘the Act’] was introduced.
5. To be noted, the coal block that was allotted to the petitioner and then de-allocated has been classified as a Schedule-I mine under the Act.
6. Under the Act, the petitioner is to be compensated in terms of Section 16 of the Act. Apt would it be to refer to Section 16 at this juncture, which reads as under:
“16. Valuation of compensation for payment to prior allottee.—(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.”
(emphasis supplied)
7. Initially, in terms of Section 16(2) of the Act, the petitioner claimed a sum of Rs. 1189.64 Crores for Mine Infrastructure, as per the written down value reflected in the statutorily audited balance sheet of the previous financial year being 2013-2014. Further, a sum of Rs. 31.07 Crores was claimed for the Land in accordance with Section 16(1) of the Act.
8. It is the case of the petitioner that after taking the petitioner's valuation into account, the respondents no. 1 & 2 declared a sum of Rs. 38.05 Crores only as compensation for the Mine Infrastructure.
9. The petitioner being aggrieved by the methodology provided for determination of compensation under Section 16 of Act, filed WP(C) 1565/2015 in this Court challenging the vires of Section 16 of the Coal Mines (Special Provisions) Second Ordinance and Rule 14 of the Coal Mines (Special Provisions) Rules, 2015. The said Ordinance was subsequently replaced by the Coal Mines (Special Provisions) Act, 2015. The provisions, however, remained the same.
10. The said petition was tagged with other petitions seeking similar relief and GVK Power (Goindwal Sahib) v. Union of India [(2017) 239 DLT 193 (DB)] was treated as the lead matter.
11. While the aforesaid writ petition was pending before this Court, the coal block was allotted to Steel Authority of India Ltd. (in short ‘SAIL’) and a sum of Rs. 20.95 Crores was released to the petitioner towards the cost of Geological Report vide sanction order dated 24.05.2016 and another sum of Rs. 62.40 Crores was released subsequently vide sanction order dated 20.06.2016 towards Mine Infrastructure and Land.
12. The petitioner's case is that only a sum of Rs. 38.05 crores was sanctioned towards Mine Infrastructure as merely 48 out of the petitioner's total 612 Mine Infrastructure Assets were vested in SAIL. The remaining amount was compensation towards Land.
13. Vide judgment dated 09.03.2017 passed in GVK Power (Supra), this Court whilst construing Section 16 of the Act held that the quantum of compensation for Land in relation to Schedule-I coal mines will be ‘based on’ the registered sale deeds together with 12% simple interest thereon per annum only as a benchmark. If the prior allottee is able to produce tangible evidence before the Nominated Authority that the fair market value of the land on the date of the execution of the vesting order was more than the said benchmark figure, then the prior allottee is entitled to the same.
14. In so far as determining quantum of compensation for Mine Infrastructure is concerned, it was directed that the valuation of mine infrastructure should be done as on the date of execution of the vesting order or the allotment order, as the case may be, for which the written down value as on 31.03.2014 shall form the basis.
15. It was thus, concluded that Section 16 of the Ordinance and Rule 14 of the Rules are to be interpreted and worked in the manner indicated in the judgment; and they cannot be held to be violative of Articles 14, 19(1)(g) and 300A of the Constitution. It was left open to the petitioners to raise a dispute with regard to the quantum of compensation if the same has not been done in the manner indicated in the judgment before the Tribunal specifically indicated for the purpose under Section 27 of the Act.
16. In terms of the legal position pronounced in the GVK Power (Supra), the petitioner submitted a revised claim of Rs. 1342.13 Crores for Mine Infrastructure and Rs. 189.63 Crores for Land to respondents no. 1 & 2. The petitioner's grievance is that against the aforesaid claims of the petitioner, only a sum of Rs. 38.05 Crores has been disbursed against Mine Infrastructure and Rs. 25.31 Crores against Land, which too was disbursed before 09.03.2017 i.e. prior to the date when this Court in GVK Power (Supra) laid down guidelines for valuation of compensation after construing Section 16 of the Act.
17. It is the petitioner's further case that it has been following up with the respondent no. 2 and as recently as 16.12.2022, the respondent no. 2 has stated that the claims of the petitioner are under examination. The petitioner has delineated its asset-wise claims in a tabulated chart, which is as under:
ASSET PETITIONER’S CLAIM AMOUNT RECEIVED AS ON DATE PRESENT STATUS LAND INR 207.31 Crores INR 25.31 Crores has been released towards land vide sanction letter dated 20.06.2016. Tender Notification dated 16.12.2022 states that claim of INR 189.63 Crores for land is under examination. MINE INFRASTRUCTURE PITS INR 345.19 Crores No amounts received Classification of ‘Pits’ as Mine Infrastructure denied on 04.05.20253. As explained below, this rejection has been challenged vide the instant Petition. SHAFTS AND INCLINES INR 516.53 Crores No amounts received Classified as Mine Infrastructure in the 3rd Decision. However, CMPDIL was tasked with ascertaining the value of the asset in 20 days (i.e. by 31.11.2019) which has not been determined till date. Petitioner has learnt through an RTI Application that CMPDIL engaged an expert - Adroit Consultants Private Ltd. - to ascertain the value of shafts and inclines, who assessed the same as INR. 474.30 Crores. However, compensation has not been declared to date. COAL WASHERY INR 168.82 Crores. No amounts received Under examination as per notification dated 16.12.2022. MINE PLANNING AND DESIGN INR 130.70 Crores No amounts received Under examination as per notification dated 16.12.2022. LIST OF ASSETS CLASSIFIED AS “UNCLASSIFIED”/“MOVABLE”/“NOT MINE INFRASTRUCTURE’ INR 78.07 Crores No amounts received Under examination as per notification dated 16.12.2022.
18. It is also to be noticed that SAIL surrendered the coal block on 05.12.2019 and subsequently, the allotment order and agreement in favor of SAIL were terminated.
19. Thereafter, the coal block was again auctioned. On 28.03.2023, the respondent no. 3 was declared as the successful bidder and the coal block has now been vested in the respondent no. 3 vide Vesting Order dated 08.06.2023. It was also brought to the notice of the Court that on 14.06.2023, a letter of even date (taken on record) was issued by respondents no. 1 & 2 under Section 23 of the Act requesting the petitioner to hand over all documents/files to the respondent no. 3 within seven days from the receipt of the letter. To be noted that when the matter was taken up for hearing, the vesting order had already been issued.
20. In this backdrop, the petitioner contends that without first ascertaining the compensation which is payable to the petitioner against its assets, the coal block not be vested in respondent no. 3.
SUBMISSIONS
21. Mr. Sandeep Sethi, learned senior counsel for the petitioner submits that the vesting of the Coal Block in favour of the respondent No. 3 without first determining the compensation payable to the petitioner towards its assets is in violation of Articles 14, 19(1)(g) and 300 of the Constitution of India.
22. He submits that the present petition was filed on 30.05.2023 and was listed before the Court on 01.06.2023, when this Court issued notice in the matter and directed the UOI/respondent no. 1 to file its reply and further listed the matter before the vacation bench on 14.06.2023. The attention of the Court is drawn to the vesting order dated 08.06.2023, to contend that instead of filing a reply to the petition, respondents no. 1 and 2 have issued a vesting order dated 08.06.2023 vide which the nominated authority, in accordance with Section 8(4) of the Act, has declared that the Coal Block is to fully and absolutely vest in the respondent no. 3.
23. It is the petitioner's contention that Section 10 mandates negotiations between the prior allottee and the successful bidder (respondent no. 3 in this case) in respect of non-vested movable assets but there is no clarity as to the specific assets which are being vested in the respondent no. 3 as Mine Infrastructure. In the absence of such clarity, the petitioner cannot engage in negotiations with respondent no. 3. It is contended that the hurried vesting of the coal block by the respondent no. 1 shall cause grave and irreparable injury to the petitioner inasmuch as it will deprive the petitioner of its bargaining power under Section 10 of the Act. Relevant would it be to reproduce Section 10 of the Act for ready reference, which reads as under:
“10. Utilisation of movable property used in coal mining operations.—(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 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.”
24. Mr. Sethi further submits that the aforesaid concerns of the petitioner were brought to the notice of the respondent no. 2 by the petitioner vide letter dated 01.05.2023 and a request was made to determine and disburse the compensation which was due and payable to the petitioner, but no response to the said letter was received.
25. He relies upon GVK Power (supra), to contend that the assets of the petitioner cannot be vested in respondent no. 3 in a manner which shall be prejudicial to the petitioner. He submits that vesting the assets of the petitioner in the successful bidder should not be at the expense of the petitioner and that the assets should not be given away ‘for a song’. The relevant paragraph of the judgment on which reliance was placed by Mr. Sethi, reads as under:—
“31. …….The point being that the successful bidder ought not to get the land for a song and, that too, at the expense of the prior allottee.
26. He submits that after the decision in GVK Power (supra) was pronounced, there was non-compliance on the part of the respondents no. 1 & 2, inasmuch as, the compensation which is due and payable to the petitioner was not assessed. Subsequently, on directions being reiterated by the Division Bench in the disposed of WP(C) 1565/2015, orders dated 15.02.2019 and 11.04.2019 came to be passed by the nominated authority computing the compensation which was payable to the petitioner. However, since the said orders had been passed without hearing all concerned, the Division Bench, on an application being filed by the petitioner in the disposed WP(C) 1565/2015, vide its order dated 16.05.2019 set aside the orders dated 15.02.2019 and 11.04.2019 and directed the nominated authority to take a fresh and reasoned decision on or before 31.08.2019 after hearing all concerned including SAIL.
27. The attention of the Court is drawn to the order dated 11.11.2019 (annexed as Annexure-24 to the paper-book) passed by the nominated authority pursuant to the directions of the Division Bench in its order dated 16.05.2019, whereby a sum Rs. 24.2269 Crore was computed as payable towards the land of the petitioner and a sum of Rs. 39.8526 Crore was determined towards mine infrastructure (total being a sum of Rs. 64.0795 Crores), to contend that the said compensation is not final as CMPDIL is yet to determine the value of “Underground Mines Development (Shaft & Incline)”. The relevant portion of the order dated 11.11.2019 on which reliance was placed by Mr. Sethi, reads as under:—
“14. The above is final determination of compensation for all the land and mine infrastructure in relation to Parbatpur Central coal mine except for the item “Underground Mines Development (Shaft & Incline)”. Regarding the item “Underground Mines Development (Shaft & lncline)”, as per above para 11B(ix), CMPDIL may determine the value on the basis of the practices it applies for valuation and planning of similar mine infrastructure in other coal mines and submit the same to Nominated Authority within 20 days.”
28. Premised on the above submissions, Mr. Sethi urges that respondents no. 1 and 2 be restrained from vesting in respondent no. 3 any asset of which determination of fair valuation and the consequent disbursement of compensation in favour of petitioner is pending.
29. Per contra, Mr. Neeraj Kishan Kaul, learned senior counsel appearing on behalf of the respondent no. 3 submits that under the provisions of the Act, the petitioner has a right to have its assets valued in terms of Section 16 and thereafter claim fair and just compensation from the Central Government/subsequent allottee. He submits that the prior allottee has no right to stall the vesting of the coal block in favor of the respondent no. 3 on the ground that just and fair compensation has not been paid.
30. He further submits that the Tribunal established under Section 27 of the Act is a specialized Tribunal competent to adjudicate any grievance of the petitioner as regards the valuation of its assets or payment of compensation, therefore, the remedy of the petitioner lies before the Tribunal and the present writ is not maintainable. In support, he also relied upon GVK Power (Supra).
31. He submits that under the terms of the tender, the respondent no. 3 is liable to compensate the petitioner at the rate the Central Government/Nominated Authority computes the compensation under Section 16 of the Act. If the petitioner is aggrieved by the said valuation, it can always approach the Tribunal under Section 27 of the Act and in the event of the Tribunal enhancing the compensation, the respondent No. 3 is bound to pay the enhanced compensation. In support of his contention, he invites the attention of the Court to Clause 3.3.2(h) of the tender document, which reads as under:
“(h) Payments by the successful Bidder:
On signing the Agreement, the Successful Bidder, within such period as prescribed in Clause 3.8, shall, to the Nominated Authority:
(i) furnish the Performance Security as specified in Clause 7;
(ii) [pay a fixed amount for the compensation for land and mine infrastructure; cost borne by the Prior Allottee for the preparation of geological report; cost borne by the Prior Allottee for obtaining all statutory licenses, permits, permissions, approvals, clearances or consents relevant to the mining operations; cost incurred by CMPDIL for preparation of the mine dossier including block boundary and financial valuation along with applicable taxes; (collectively the “Fixed Amount”). If the Successful Bidder is a Prior Allottee, then, the compensation payable to such Successful Bidder shall be set off or adjusted against the Fixed Amount payable by such Successful Bidder. The Fixed Amount is required to be deposited by the Successful Bidder in accordance with the relevant provisions of the Act and the Rules and as provided in the Agreement. The payment related to preparation of mine dossiers is required to be made directly to CMPDIL whereas, the remaining fixed amount is required to be deposited with the office of Nominated Authority. The Fixed Amount payable is based on the available information and the assessment made by the competent authority and will be uploaded as a part of this Tender Document. Any upward revision in the Fixed Amount on a subsequent date by the Government or the Nominated Authority consequent to any process or on the orders of any competent court of law, shall also be payable by the Successful Bidder. Additionally, in case of any downward revision in the Fixed Amount on a subsequent date by the Government or the Nominated Authority, the same would be refunded by the Nominated Authority to the Successful Bidder.][cost incurred by CMPDIL and other Government agencies, if any, in deriving detailed geographical boundary coordinates and in preparing geological report, if any; cost incurred by CMPDIL for preparation of the mine dossier including block boundary and financial valuation along with applicable taxes; (collectively the “Fixed Amount”). The Fixed Amount is required to be deposited by the Successful Bidder as provided in the Agreement. The Fixed Amount payable is based on the available information and the assessment made by the competent authority and will be uploaded as a part of this Tender Document. Any upward revision in the Fixed Amount on a subsequent date by the Government or the Nominated Authority consequent to any process or on the orders of any competent court of law, shall also be payable by the Successful Bidder. Additionally, in case of any downward revision in the Fixed Amount on a subsequent date by the Government or the Nominated Authority, the same would be refunded by the Nominated Authority to the Successful Bidder.]
(iii) For Fully Explored Mines, pay an amount equal to INR [•] (Indian Rupees ([•]) as the first instalment of the Upfront Amount.”
(emphasis supplied)
32. Mr. Kaul contends that the submission of the petitioner that the amount of compensation which is due and payable to the petitioner has not been computed is factually incorrect. He invites the attention of the Court to the order dated 11.11.2019 (Annexure P-24), to submit that compensation which is payable to the petitioner in respect of its assets has been computed.
33. It is also urged on behalf of the respondent no. 3 that the tender inviting bids for coal block was issued in November 2022 and the petitioner has never challenged the tender before any Court. Similarly, the respondent no. 3 was declared as a successful bidder on 28.03.2023, and the said declaration was also never called in question.
34. Mr. Kaul, further submits that the balance of convenience lies in favor of the respondent no. 3 and against the petitioner. He submits that pursuant to the coal block being awarded, the petitioner has deposited a sum of more than Rs. 400 Crore including a performance bank guarantee to show its bona fides.
35. Furthermore, the attention of the Court is drawn to Clause 3.3.2(i) to submit that the tender document itself states that once the performance bank security and other payments have been made, the vesting order shall be issued by the nominated authority in favor of the successful bidder. It is submitted that the said tender document remains unchallenged by the petitioner. Clause 3.3.2(i) reads as under:—
(i) Issuance of the [Vesting Order/Allocation Order]
Upon receipt of Performance Security and other payments mentioned in sub-clause (h) above, the [Vesting Order/Allocation Order] shall be issued, in duplicate, by the Nominated Authority to the Successful Bidder and the Successful Bidder shall, within 7 (seven) days of the receipt of the [Vesting Order/Allocation Order], sign and return the duplicate copy of the [Vesting Order/Allocation Order] in acknowledgement thereof. In the event that the duplicate copy of the [Vesting Order/Allocation Order] duly signed by the Successful Bidder is not received within the stipulated date, the Nominated Authority may, unless it consents to extension of time for submission thereof, appropriate the Performance Security and other payments made by the Successful Bidder as damages and also terminate the Agreement.
(emphasis supplied)
36. He also submits that the Act does not recognize any jural relationship between the petitioner and the respondent no. 3 and for this reason also, the vesting order ought not to be stayed. The attention of the Court is drawn to Section 8(15) of the Act, to contend that the successful bidder or allottee of the coal mine, whose vesting order has been cancelled, shall be deemed to be the prior allottee for the purposes of immediate next auction or allotment of the said coal mine. It is thus, urged that in the present case, it is SAIL and not the petitioner who is the prior allottee.
37. In rejoinder, Mr. Sandeep Sethi, learned senior counsel for the petitioner, referring to Section 27(4) of the Act, submits that the jurisdiction, powers or authority of the Supreme Court, as well as the High Court, is not circumscribed by Section 27(1) of the Act. Elaborating further, he submits that at this stage when the order dated 16.05.2019 of the Division Bench in WP(C) 1565/2015 has not been complied with and the determination of compensation is not final yet, there is no occasion for the petitioner to approach the Tribunal under Section 27 of the Act. Section 27 of the Act reads as under:
“27. Dispute settlement and Bar of Jurisdiction of civil courts.—(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 (20 of 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.
(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.”
ANALYSIS AND FINDINGS
38. I have considered the rival submissions of the parties as well as the material available on record.
39. The fundamental question which is required to be considered in the present application is whether the assets of the petitioner in the form of land and mine infrastructure used in connection with the mining operations could be vested in the successful bidder pending determination of the fair valuation of compensation and its consequent disbursal to the petitioner.
ALTERNATIVE EFFICACIOUS REMEDY
40. Before adverting to the question at hand, it is to be noticed that the Mr. Kaul, the learned senior counsel for the respondent no. 3 has raised an objection as to the maintainability of the writ petition on the ground that the remedy to redress the petitioner's grievance qua valuation of its assets or payment of compensation lies before the specialized Tribunal under Section 27 of the Act.
41. The issue of whether the petitioner has an alternative efficacious statutory remedy against the determination of the quantum of compensation need not detain this Court any longer as the Division Bench of this Court in GVK Power (Goindwal Sahib) Limited v. Union of India, (2017) 239 DLT 193 (DB), held that the determination of quantum of compensation for both land and mine infrastructure under Section 16 of the Act is subject to judicial review by the Tribunal under the adjudicatory process stipulated in Section 27 of the Act. It was further held that the controversy as regards which item is to be included as a constituent of mine infrastructure can also be a subject matter of a dispute to be adjudicated by the Tribunal under Section 27 of the Act. The relevant paragraphs of the said decision read as under:—
“32. Whenever there is a challenge to the validity of a provision on the ground that it is ultra vires the Constitution, it is well-settled that the courts must attempt to read the provision in such a manner which would uphold its validity and avoid an interpretation which would compel the court to declare it as invalid. In our view, all the arguments with regard to arbitrariness and discrimination vis-à-vis Section 16(1) of the said Ordinance can be put aside by interpreting Section 16(1) to mean that the quantum of compensation for the land in relation to Schedule-I coal mines would be ‘based on’ the registered sale deeds and together with 12% simple interest thereon per annum only as a bench mark. If the prior allottee is able to produce tangible evidence before the Nominated Authority that the fair market value of the land on the date of the execution of the vesting order was more than the said bench mark figure, then the prior allottee ought to be entitled to the same. Of course, the determination would be subject to review under the adjudicatory process stipulated in Section 27 of the said Act by the Tribunal and perhaps, ultimately, by the High Courts and the Supreme Court. The point being that the successful bidder ought not to get the land for a song and, that too, at the expense of the prior allottee. Interpreting in the above manner, we uphold the validity of Section 16(1).
33. Insofar as the quantum of compensation for mine infrastructure is concerned, this does not offer much difficulty because of the fact that the definition of mine infrastructure is an inclusive one and is not close-ended as rightly submitted by the learned counsel for the respondents. If certain items, which, according to the prior allottees, have not been specifically mentioned as constituents of mine infrastructure in the definition, it will always be open to them to raise an issue with regard to the same and get it adjudicated by the Tribunal under Section 27. Thus, leasehold rights in the land or surface rights qua the land, may have a value and could possibly be included in ‘mine infrastructure’.”
(emphasis supplied)
42. Indeed, when a statutory remedy is provided for adjudication of a dispute, the Writ Court would ordinarily be slow in entertaining such disputes in exercise of its jurisdiction under Article 226 of the Constitution of India, yet, the mere fact that the petitioner has not pursued the alternative remedy available to it cannot mechanically be construed as a ground for dismissal of the writ. It is trite law that the existence of an alternate remedy is not an absolute bar to the maintainability of a writ petition under Article 226 of the Constitution, but a writ petition can be entertained in exceptional circumstances, i.e. (i) a breach of fundamental rights; (ii) a violation of the principles of natural justice; (iii) an excess of jurisdiction; or (iv) a challenge to the vires of the statute or delegated legislation (2021) 10 Scale 665.
43. However, for now, I refrain from entering into the merit of the rival contentions of the parties on the question of maintainability of the Writ Petition on account of the availability of alternate statutory remedy and leave this substantive issue open to be decided at an appropriate stage since I propose to dismiss the present application for interim relief albeit for a different reason as discussed in the later part of this judgment.
WHETHER PETITIONER IS A PRIOR ALLOTTEE VIS A VIS THE RESPONDENT NO. 3
44. Before entering into the main controversy, it is also necessary to define the legal relationship between the parties since the respondent no. 3 has denied the jural relationship between the petitioner and itself.
45. To take his case forward on this aspect, Mr. Kaul has referred to Section 8(15) of the Act, which is reproduced herein below for ready reference:
“(15) The successful bidder or allottee of the coal mine whose vesting order or allotment order has been terminated shall be deemed to be the prior allottee for the purposes of immediate next auction or allotment of the said coal mine.”
46. To be noted that the coal block in question was reallocated to SAIL, but this allotment to SAIL came to be terminated in 2019. As a result, a tender for re-auction of the Coal Block was issued on 03.11.2022, in which the respondent no. 3 was declared as the successful bidder on 28.03.2023.
47. It is the contention of Mr. Kaul, the learned Senior Counsel for the respondent no. 3, that it is SAIL which is the prior allottee for the purpose of immediate next auction in which the respondent no. 3 was declared successful bidder; therefore, petitioner's prayer to interdict vesting in favour of the respondent no. 3 is legally misconceived.
48. It is apt to refer to the letter dated 14.06.2023 of the Nominated Authority whereby the petitioner as well as the SAIL, have been asked to hand over documents in respect of the Coal Mine to the respondent no. 3. Incidentally, a copy of this letter is also marked to the respondent no. 3. Clearly, the said letter which originates from the office of the Nominated Authority recognizes the petitioner as ‘prior allottee’. The text of the said letter reads as under:
“File No. NA-104/23/2023-NA
Government of India
Ministry of Coal
O/o Nominated Authority
*******
120, F-Wing, 1st Floor, Shastri Bhawan,
New Delhi, Dated : June 14, 2023
Prior Allottee : 1
The Managing Director,
M/s. Electrosteel Casting Limited,
G.K. Tower, 19 Camac Street,
Kolkatta, 700017
Prior Allottee : 2
The CMD
Steel Authority of India Limited
Ispat Bhawan, Lodhi Road,
New Delhi-110003
Subject : Handing over documents in respect of Parbatpur Central Coal Mine to M/s. JSW Steel Limited.
I am directed to refer to the Vesting order of Parbatpur Central Coal Mine vested to M/s. JSW Steel Limited on June 08, 2023 under the provisions of the Coal Mines (Special Provisions) Act, 2015.
2. Attention is invited to the Section 8 (4) of the Coal Mines (Special Provisions) Act 2015 vide which the Vesting order transfers and vests upon the Successful Bidder, all the rights, title and interest of the prior allottee, entitlement to mining lease to be granted by the State Government, any statutory license, permit, permission, approval or consent required to undertake coal mining operations in Schedule I coal mines, if already issued to the prior Allottees.
3. Further, as per clauses (a), (b), (c) and (d) of section 23 of CM(SP) Act, 2015, If any person obstructs or causes any impediment in taking possession or fails to deliver to the designated custodian any books of account, registers or any other document in his custody relating or destroys or misuses any mine infrastructure or coal stock or retains any property of such coal mine or removes or destroys it, he and any officer-in-default of the company shall be punishable with imprisonment for a term which may extend to two years, or with minimum fine of one lakh rupees per day and in case of continuing failure, with a maximum fine of two lakh rupees for every day during which failure continues or with both, depending upon the nature of the offence.
4. In view of the provisions defined in the CMSP Act, 2015 and rules made thereunder, it is requested that all the documents/files should be handed over to Successful allottee, M/s. JSW Steel within seven days from the receipt of this letter so that the scheduled development of the coal mine is not hampered.
Enclosure : Vesting Order dated 08.06.2023.
Yours faithfully,
(Manish Uniyal)
Under Secretary to the government of India
Tel. No. - 011 23384106
Copy to:
1. Senior Vice President (Coal Strategy) M/s. JSW Steel Limited JSW Centre Bandra Kurla Complex, Near MMRDA Grounds, Bandra Kurla Complex-Bandra East-400051. Email : - skumar.singh@jsw.in.”
(emphasis supplied)
49. Likewise, the Coal Mine Development Production Agreement (“CMPDA”) signed by the respondent no. 3 in unambiguous terms mentions the petitioner to be the prior allottee. The relevant part of the CMPDA reads as under:
“1.1.52. “Prior Allottee” shall have the meaning given to it in the Act and for the purposes of the Coal Mine, the Prior Allottee shall be Electrosteel Castings Ltd., incorporated in India under the Companies Act with corporate identity number L27310OR1955PLC000310, whose registered office is at Rathod Colony Rajgangpur Sundergarh, Orissa, 770017 and Steel Authority of India Ltd. incorporated in India under the Companies Act with corporate identity number L27109DL1973GOI006454, whose registered office is at Ispat Bhawan Lodhi Road New Delhi, Delhi 110003.”
(emphasis supplied)
50. This being the position, prima facie I do not find force in the submission of Mr. Kaul that the petitioner is not the prior allottee and there is no jural relationship between the petitioner and the respondent no. 3.
WHETHER THE DETERMINATION AND DISBURSAL OF COMPENSATION TO THE PETITIONER OUGHT TO PRECEDE THE VESTING OF THE COAL BLOCK
51. It is not in dispute that the petitioner's title and interest in the coal block stood terminated as a consequence of the judgment of Hon'ble Supreme Court in M.L. Sharma v. Principal Secretary, (2014) 9 SCC 516. After the termination of the allotment of the coal mine, the only right which the petitioner has under the Act is to claim compensation in terms of Section 16 of the Act for the investment made towards Land and Mine Infrastructure.
52. Admittedly, after the respondent no. 3 was declared as the successful bidder on 28.03.2023, it has deposited a total amount of Rs. 432.24 Cr. (approx.) towards - (i) performance security (Rs. 220.75 Cr.); (ii) First installment of upfront amount (Rs. 74.01 Cr.) and (iii) Fixed amount (amount payable towards compensation i.e. Rs. 137.58 Cr.), in terms of Clause 3.3.2(h) of the tender document. Pursuant to the said payment, a vesting order was issued by the nominated authority on 08.06.2023, in terms of Clause 3.3.2(i) of the tender document.
53. Clause 3.3.2(h) of the tender document also clearly stipulates that in case of any upward revision in the fixed amount on a subsequent date by the government or the nominated authority, the difference shall be payable by the successful bidder. Similarly, in case of any downward revision, the same would be refunded to the successful bidder. Therefore, the respondent no. 3 is bound to make payment to the government/nominated authority under the terms of the tender if there is an upward revision in the compensation determined as payable to the petitioner. The conditions of tender under which the Coal Block has been allocated to the respondent no. 3 thus, sufficiently secures the interest of the petitioner.
54. Having said that, the next logical question which arises for consideration in the present context is whether the determination of fair valuation and consequent disbursal of compensation to the petitioner should precede the vesting of assets (Land & Mine Infrastructure) in the respondent no. 3.
55. While dwelling on the methodology for computing the quantum of compensation for land, this Court in GVK Power (supra) has laid down that in terms of Section 16(1) of the Act, the quantum of compensation for land has to be determined with reference to the date of vesting order. The relevant part of the order reads as under:
“……..In our view, all the arguments with regard to arbitrariness and discrimination vis-à-vis Section 16(1) of the said Ordinance can be put aside by interpreting Section 16(1) to mean that the quantum of compensation for the land in relation to Schedule-I coal mines would be ‘based on’ the registered sale deeds and together with 12% simple interest thereon per annum only as a bench mark. If the prior allottee is able to produce tangible evidence before the Nominated Authority that the fair market value of the land on the date of the execution of the vesting order was more than the said bench mark figure, then the prior allottee ought to be entitled to the same………”
(emphasis supplied)
56. Similarly, in respect of the mine infrastructure, it was propounded that the valuation of mine infrastructure has to be done as on the date of the execution of the vesting order or the allotment order, as the case may be. The relevant part of the decision reads as under:—
“..….We feel that the valuation of the mine infrastructure should be done as on the date of execution of the vesting order or the allotment order, as the case may be The date of 31.03.2014 is to be taken only as the date for fixing the bench mark as that would be the date of the latest statutorily audited balance sheet. Whatever has transpired thereafter and goes towards affecting the quantum of compensation for mine infrastructure, must also be taken into account - whether it helps the prior allottee or not.…..”
(emphasis supplied)
57. The position that flows from the decision in GVK Power (supra) is that the compensation has to be determined with reference to the date of execution of the vesting order. In other words, the process of determination of compensation for the land and mine infrastructure does not become final till the issuance of the vesting order. Therefore, I am prima facie of the view that the petitioner's argument that the vesting order should be deferred till the compensation payable to the petitioner is determined and disbursed will have to give way and cannot be sustained.
IRREPARABLE INJURY
58. At this juncture, it is apposite to refer to sub-sections (3), (4), (6) and (7) of Section 8, which read as under—
“8. Nominated authority to issue vesting order or allotment order.—
xxxx xxxx xxxx xxxx
(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 [prospecting licence, mining lease or prospecting licence-cum-mining lease, as the case may be] 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).
xxxx xxxx xxxx xxxx
(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 Governments, the successful bidder shall be entitled to take possession of the Schedule I coal mine without let or hindrance.”
59. Section 8 of the Act lays down the procedure for the transfer of the rights, title and interest in Schedule-I Coal Mine. The vesting order drawn up in terms of sub-section (3) entitles the successful bidder to the vesting of coal mine and all rights, title and interest of the prior allottee, in Schedule-I Coal Mine, besides other rights as enumerated in sub-section (4). After issuance of the vesting order, the successful bidder is entitled to take possession of the coal mine without let or hindrance, in terms of sub-section (7). Conjoint reading of subsections (3), (4) and (7) of Section 8 of the Act leads to an inevitable conclusion that pursuant to the issuance of vesting order dated 08.06.2023, the respondent no. 3 is now vested with all rights, title and interest in the Coal Mine, including the right to take possession of the Coal Mine.
60. Concededly, the petitioner has not challenged the notice inviting bids, the tender document and the declaration whereby the respondent no. 3 was declared as the successful bidder on 28.03.2023. At this stage, when the respondent no. 3 has emerged as the Successful Bidder and has deposited an amount of Rs. 432.24 Cr. (approx.) in terms of sub-section (6) of Section 8 read with Clause 3.3.2(h) of the tender document, and a vesting order has also been issued, interfering with the vesting order will cause irreparable injury to the respondent no. 3.
BALANCE OF CONVENIENCE
61. The Preamble of the Act specifies that the Act has been enacted in the public interest to take immediate action to allocate coal mines to successful bidders keeping in view the energy security of the country and to minimize any impact on core sectors such as steel, cement and power utilities, which are vital for the development of the nation. Likewise, the statement of objects and reasons of the Act notes that the legislation has been enacted for allocating coal mines to successful bidders and allottees through a transparent bidding process with a view to ensure continuity in coal mining operations and production of coal, and for promoting optimum utilization of coal resources consistent with the requirement of the country in the national interest.
62. In case the vesting of land and mining infrastructure is stayed to await the determination of compensation payable to the petitioner, not only the investment made by the respondent no. 3 will get stuck but the Coal Mine will not be put to productive use. On the contrary, the interest of the petitioner to claim enhanced compensation in the event of any upward revision, is secure, in as much as the respondent no. 3 is bound by Clause 3.3.2 (h) of the tender document to pay the difference to the government or the nominated authority.
63. Staying the vesting order in favour of the respondent no. 3 may also affect the extraction of coal on a continuous basis, which will not be in accord with the statement of objects & reasons of the legislation. Therefore, the balance of convenience lies in favor of the respondent no. 3 and against the petitioner.
64. As regards the petitioner's contention that there is no clarity on what all assets are going to be vested as mine infrastructure in the respondent no. 3 on account of which the petitioner cannot engage in effective negotiations with respondent no. 3, suffice it to say that the movable property is not part of the vesting order. For utilization and disposal of the movable property, a separate procedure has been prescribed under Section 10 of the Act which is unrelated to the determination of the value of land and mine infrastructure under Section 16. Merely because the petitioner does not have some clarity as regards the movable property, the same cannot be a ground to interfere with the vesting process in favor of the successful bidder, especially when the vesting process is in terms of the mandate of Section 8 of the Act.
65. In view of the above discussion, no interdict can be placed on the vesting order. Consequently, the petitioner's application for interim relief is dismissed.
Comments