“The allocation of coal block by the Central Government results in the selection of beneficiary which entitles the beneficiary to get the prospecting licence or mining lease from the state government. Obviously, allocation of a coal block amounts to grant of largesse,” the bench headed by Chief Justice R M Lodha said.
The bench rejected the contentions raised by the then Attorney General G E Vahanvati who had submitted that allocation itself did not confer any right on the allottees to mine the block and lot of procedures are to be followed thereafter.
“We are unable to accept the submission of the learned Attorney General that allocation of coal block does not amount to grant of largesse,” the bench also comprising justices Madan B Lokur and Kurian Joseph said.
The bench said, “It is true that allocation letter by itself does not authorise the allottee to win or mine the coal but nevertheless the allocation letter does confer a very important right upon the allottee to apply for grant of prospecting licence or mining lease.”
The Centre had said that an allocatee does not get right to win or mine the coal on allocation and, therefore, an allocation letter does not result in windfall gain for the allocatee.
The bench, however, said that allocation letter issued by the Central Government provides rights to the allottees for obtaining the coal mines leases for their end-use plants.
“The banks, financial institutions, land acquisition authorities, revenue authorities and various other entities and so also the state governments, who ultimately grant prospecting licence or mining lease, as the case may be, act on the basis of the letter of allocation issued by the Central Government,” it said.
“The right to obtain prospecting licence or mining lease of the coal mine admittedly is dependent upon the allocation letter. The allocation letter, therefore, confers a valuable right in favour of the allottee,” it said.