Coal ordinance lacks clarity, says Delhi high court

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26 Aug, 2025 12:21

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The Delhi high court on Thursday said there was lack of clarity in the Coal ordinance 2014 as the authorities who had drafted it were “totally unclear” about it.

“All that we can say is whosoever drafted it (ordinance) was unclear. This (ordinance) is totally unclear,” a bench of justices Badar Durrez Ahmed and Sanjeev Sachdeva observed.

It made these observations while hearing Jindal Steel and Power Ltd (JSPL) and its promoter Naveen Jindal’s petition challenging the change of end-use of two coal blocks in Odisha and Chhattisgarh, which were earlier allocated to it.

One of the two blocks has been put up for auction. JSPL has contended in its plea that it has been excluded from bidding for the blocks Utkal B1 in Odisha and Gare Palma IV/6 in Chhattisgarh, earlier allocated to it, by changing their end-use from iron and steel to power.

The bench during the hearing posed several queries, including on the purpose of segregation of coal blocks, whose allocation were cancelled by Supreme Court, into three schedules.

“Schedule one had all the cancelled blocks. Schedule two comprised those blocks of schedule one which were fully operational. Schedule three were the non-operational blocks. What was the purpose of schedule 3?” it asked the Central government and JSPL.

It also queried whether end-use was considered while allocating coal blocks earlier and if yes, then why should the end-use be allowed to exist independent of the allocation, which has been scrapped by the apex court.

The court posed the query as JSPL claimed that end-use should remain the same if the goals of continuity and optimum utilization of coal reserves, as mandated by the ordinance, were to be achieved.

The court also questioned whether during the earlier allocation, the authorities had carried out any study to find out the suitability of a particular block for an end-use. It will continue hearing arguments tomorrow.

During the proceedings, senior advocate Kapil Sibal, appearing for JSPL and Jindal, said the government’s 18 December 2014, notification by which it changed the end-use was “arbitrary and contrary” to the coal ordinance. He also said that the government had not framed any rational criteria for auction of the coal blocks.

He argued that the end-use criteria was made applicable only for allotment process and that too for public sector companies while private companies were excluded from the same.

Under the end-use criteria for allotment of coal blocks, proximity of the mine to the company’s unit was a factor which decided allotment of a block, he said and added that this criteria “has been thrown out of the window” where private entities are concerned.

Earlier, the attorney general had said that entertaining the pleas of JSPL and Naveen Jindal would “result in stunting the entire auction process undertaken subsequent to Supreme Court verdict (cancelling the coal block allocations).”

JSPL, in its plea, has contended that it has set up steel and sponge iron units in Odisha and Chhattisgarh for over Rs.24,000 crore and if it was not able to bid for either blocks, earlier allotted to it, this investment would go waste.