Centre’s Coal Block Auction: Legal Angle

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Prime Minister Narendra Modi recently announced the launch of auction of coal mines for commercial purposes thus, inviting private companies to participate in the coal mining sector, which has been dominated by the State-owned Coal India Limited until now.

The auction process is for 41 coal blocks across Jharkhand, Madhya Pradesh, Chhattisgarh, Maharashtra and Orissa. The Prime Minister further added that this move was a step towards the goal of “Atma Nirbhar Bharat” (‘self-reliant’ India). However, the very next day Jharkhand Government approached the Apex Court in a challenge against the Centre’s decision on various grounds including, inadequate assessment of impact on people who are likely to be affected by such mining, destruction of forests and distortion of lives of adivasis and tribals who live and depend upon such forests. Following Jharkhand, the Maharashtra and Chhattisgarh Governments too moved the Supreme Court three days later opposing the auction on grounds of prevention of destruction of the abundant wildlife and biodiversity which is charatceristic of the locations of most of these coal blocks. The Supreme Court issued notice to the Centre against the Jharkhand Government’s plea challenging the auction and listed the matter after four weeks for further consideration.

Facts of the Issue

The Central Government launched the auction process of 41 coal blocks out of which 11 are located in Madhya Pradesh, 9 each in Chhattisgarh, Jharkhand and Odisha and the remaining 3 in Maharashtra. This step by the Prime Minister ends the State monopoly in the coal mining sector and also allows commercial mining for the first time. The decision has been justified by the Prime Minister on the grounds of potential investment, as well as employment generation for more than 2.8 lakh people both directly and indirectly, and upto Rs. 20,000 crores in revenue to State Governments annually. However, these incentives did not appease the State Governments, who instead, opposed the decision by pleading that the negative effect on the value of scarce natural resources outweighs the reasonable returns expected from the projects. Maharashtra’s Environment Minister Aaditya Thackrey strongly opposed the Centre’s proposed auction of mine sites located near Tadoba- Andhari tiger reserve located in Chandrapur District, and also cited the survey by ex- environment Minister Jairam Ramesh that led to scrapping of 2011 auction of the same mine site, for the reason that the site is unsuitable for mining. He further questioned the auction of the mentioned mine site on the ground that it can potentially destroy the wildlife corridor of Tadoba- Andhari. Chhattisgarh Environment Minister approached the Supreme Court seeking removal of 5 out of the 9 coal blocks citing rising human- elephant conflicts in these areas, which was identified as a ‘no-go’ zone in the past to preserve its biodiversity. The States also expressed concern over the displacement of tribals and destruction of their livelihood as reasons for opposition.

Legal Provisions Involved

Mines and Minerals (Development and Regulation) Act, 1957 deals with development and regulation of mines under the Union’s control. It provides that the union should take in its control, the regulation of mines if it is expedient in the public interest.

The Ministry of Environment and Forests (MoEF) issued the Environment Impact Assessment (EIA) Notification of 2006, to assess the impact of any mining project on the environment. The Rules are issued in accordance with the relevant provisions of the Environment (Protection) Act, 1986.

The Forest (Conservation) Act, 1980 was passed for the purpose of protection of forests from rampant deforestation. The Act prohibits deforestation by the States and other authorities, unless with the prior permission of the Central Government.

Critical Analysis

The Central Government’s ambitious decision has faced recurrent backlash from most of the States where the proposed auction sites are located. Besides, the former Environment Minister, Jairam Ramesh and the Jharkhand Janadhikar Mahasabha have criticized the decision.

India’s pledge under the Paris Agreement in 2015 to create a cumulative sink of 2.5-3 billion tonnes of carbon dioxide equivalent by 2030 and its goal of bringing the forest cover to 33% from the current 24% seems incompatible with the auction of sites, which comprises the densest forests of Hasdeo forest, known as the lungs of Chhattisgarh, spread over 1.7 lakh hectares. Similarly, 50% of the Chakla and Pilatund Tilaiya coal block in Jharkhand is forest area. The Chattisgarh Bachao Andolan has opposed the auction and 20 Gram sabhas in Chhattisgarh alone have written to the Prime Minister regarding the same.

Coal India has estimated that the number of mines that it has, with the current growth rate, is capable of meeting India’s energy requirement for a decade according to its Coal Vision Report. The monetisation of natural resources by the Prime Minister for an ‘Atma Nirbhar Bharat’ does not justify the negative impact that it would have on the environment and people who live and depend upon these forests. The decision is also violative of the Supreme Court’s decision in Samatha vs. State of Andhra Pradesh & Ors wherein it was held that all entities including the State are ‘non-Adivasis’, and Adivasi co-operatives alone have the right to undertake mining in their land, if they so wish. Later, in Orissa Mining Corporation Ltd vs. Ministry of Environment & Forest, the Apex Court upheld the constitutional right of Gram Sabhas to consider whether mining in their areas can be undertaken or not. Thus, the decision disregarding various judicial pronouncements, fifth schedule areas and environment protection laws has had the effect of negatively impacting the climate, forests, and people subsisting with it.


With the increasing importance of sustainable growth by nations and international organizations and the negative impact of climate change caused due to burning of fossil fuels, there is a need to reduce the dependence on such fuels and to increase the use and development of renewable sources of energy for meeting the growing energy requirements. However, the Centre’s decision to auction mining sites at the cost of destruction of forest cover and displacement of tribals, even when the energy demands can easily be met with current mines and other renewable resources, doesn’t seem to be in the general public interest. To capitalise the destruction of biodiverse areas should not be the stepping-stone for a ‘self-reliant’ India; rather the focus should be on growth and development of renewable sources of energy to shift towards a sustainable development policy.

Author: Ashray Singh from School of law, NMIMS Mumbai.

Editor: Astha Garg, Junior Editor, Lexlife India