Coal Allocation Case

Filed by advocate Manohar Lal Sharma as a public interest litigation, this case challenged the arbitrary allocation of coal blocks to private companies between 1993 and 2010. The Supreme Court of India, in a historic ruling on August 25, 2014, declared all 218 allocations made through the government screening committee process since 1993 as illegal and arbitrary. The court found that no transparent, competitive bidding process was followed, violating the constitutional principle of equal distribution of natural resources. Former Prime Minister Manmohan Singh, who held the coal portfolio during key allocation periods, was a principal respondent. The judgment canceled 214 of 218 blocks, sparing only those allocated to public sector undertakings and those already producing coal. The court imposed a penalty of ₹295 per metric ton of coal extracted on private firms.

The Supreme Court declared all coal block allocations made through the screening committee route from 1993 to 2010 illegal and arbitrary. It cancelled 214 out of 218 allocations, exempting only four blocks operated by public sector undertakings or already in production. Private companies were ordered to pay a penalty of ₹295 per metric ton of extracted coal, totaling approximately ₹6,300 crore. The court prospectively allowed operational blocks to continue for six months before handover to Coal India Limited.

Whether the government screening committee process for coal block allocations was arbitrary, non-transparent, and violated the Mines and Minerals Act and constitutional mandates. Whether allocations without competitive auction caused wrongful loss to the public exchequer and constituted illegal disposal of natural resources. The extent of political accountability for the flawed process.

The judgment sent shockwaves through India's political and corporate sectors, reinforcing judicial oversight over natural resource distribution. It forced a fundamental shift from discretionary allocation to transparent auction-based systems. The ruling severely impacted power, steel, and cement industries dependent on captive coal blocks, leading to bank loan exposures and stock market volatility. Politically, it embarrassed the Congress-led UPA government and contributed to its electoral decline. The case established a legal precedent mandating competitive bidding for natural resource allocation, strengthening anti-corruption jurisprudence and public faith in judicial intervention for governance accountability.