'Coal block deallocation may have devastating consequences'

The coal block allocation may not go the 2G way is the word coming in from former Solicitor General Mohan Parasaran. Speaking to CNBC-TV18's Ashmit Kumar Parasaran said that the court will slap some harsh penalties to recover losses incurred by the exchequer.

RS Sodhi, former Judge, Delhi HC also joined in the conversation on the coal block allocation and according to him SC should not cross "lakshman rekha" by watering down coal ruling. Below is the transcript of Mohan Parasaran and RS Sodhi's interview with CNBC-TV18's Ashmit Kumar.

Ashmit: The coal block allocation since 1993 has been deemed as illegal. The big question that now follows is what next; that is what everyone is watching out for. So, in your assessment do you see the coal block allocation case going down the 2G route? We have seen the apex court in the 2G matter scrap licenses, is that something we can expect?

Parasaran: Now the matter has been posted for further arguments on September 1. I don’t think this will go exactly the 2G way because there have been many companies which have in fact commissioned the mines over the years and there are also many other companies which have invested and have made all arrangements to commence. The court might categorise those companies and possibly could also impose penalties on those persons who had got these largesse in a manner which the court calls it as illegal and arbitrary instead of a wholesale cancellation of licenses and only in cases where people have not taken any steps at all possibly the court will resort to cancellations. Otherwise this may have a devastating effect on the economy.Q: What is your assessment with such comments coming in that nothing less than de-allocation would suffice to meet the standards that have been set by the Supreme Court order?Parasaran: We have to also see larger public interest. If something is held as illegal and certain things have happened; for instance, suppose a judge has been appointed and after 10 years his appointment has been found to be illegal then the courts have actually applied the de facto doctrine which means that whatever judgements that have been rendered by him during that period they will still be valid but he will only cease to hold the office in the future. Therefore that principle may apply to some extent in cases where the companies have commenced operations where third parties rights have not crept in, and possibly they can be penalised to the extent of the losses which the state would have secured had the blocks been auctioned. The differences can possibly notionally be calculated.Q: As you had pointed out this is one issue that will have far reaching implications, the magnitude is very large as far as coal is concerned. You had spoken on the need for the via media solutions, as per your assessment which would be the ideal way of addressing this issue. As you had pointed out there are a number of stakeholders and that the need for a via media solution is pressing at this point?A: Actually, I said we will have to come out transparently and inform the Court, give a chart and say that which are the companies which are actually implementing the projects and how were they given the coal blocks. What was the amount which were collected from them, what could have been the market rate and that should be assessed in a proper manner, possibly the companies can be asked to shell out the difference. And in respect of companies who have done substantial progress also the same exercise can be done. In respect of applicants or companies who have not carried out any work at all then in those cases the government can go ahead for cancellation and inform the Court to approve that scheme.