Allowing the Centre to take over operation of 42 cancelled blocks which are functional, the Apex Court gave a six month breather to the remaining blocks to wind up their operations.
The Apex Court said that the beneficiaries of the illegal process ‘must suffer’ the consequences and refused to show sympathy to private companies which submitted that Rs 2.87 lakh crores have been invested in 157 coal blocks and Rs 4 lakh crores in end-use plants.
Wednesday's order covering allocations made by various governments including Congress, NDA and UPA between 1993 and 2010 will pave the way for the Centre to put the remaining 172 blocks for auction.
A bench headed by Chief Justice RM Lodha said that its judgement is intended to correct the wrong done by the Centre over the years and to send a message to Government not to deal with the natural resources as if they belong to a few individuals who can fritter them away at their sweet will.
It, however, saved from the "guillotine" four allocations one each to SAIL and NTPC and two blocks to Sasan Power Limited owned by Anil Ambani's Reliance Power and also gave a six months breathing time to rest of them to wind up their operations by March 31, 2015.
The bench, also comprising justices Madan B Lokur and Kurian Joseph, directed the the allottees of coal blocks to pay within three months an additional levy of Rs 295 per metric ton of coal extracted to compensate financial loss caused to the exchequer by the illegal and arbitrary allotments.
While the Government described the verdict as being in accordance with its stand, India Inc feels it could cause serious supply disruptions and accentuate the power crisis and jeopardize investments in the sector.
"The decision taken by the Supreme Court to cancel all but four coal blocks is likely to adversely impact the domestic coal supplies in the country and will erode investor confidence," CII president Ajay Shriram said.
A preliminary analysis by power sector experts has estimated a pay out of over Rs 7,900 crores by way of fines imposed on the corporates that would also stand to lose their allocation.

In its 27-page order, the Bench said, "Our judgement highlighted the illegality and arbitrariness in the allotment of coal blocks and these consequence proceedings are intended to correct the wrong done by the Union of India.”
"These proceedings look to the future in that by highlighting the wrong, it is expected that the Government will not deal with the natural resources that belong to the country as if they belong to a few individuals who can fritter them away at their sweet will; these proceedings may also compensate the exchequer for the loss caused to it," it said.
The NDA government had also favoured the cancellation of blocks before the Supreme Court but pleaded that 46 of them, which are operational or on the verge of being operational, be spared. It had also submitted that Centre is fully prepared to face the consequences of the cancellation of all coal blocks, if need be, and is desirous of moving forward.
The bench, after noting the Centre's stand, quashed 214 allocations and asked Coal India Limited (CIL) to fill the void and take things forward by taking over the operation of 42 blocks which are functional.
"Although we have quashed the allotment of 42 out of these 46 coal blocks, we make it clear that the cancellation will take effect only after six months from today, which is with effect from March 31, 2015,” the court said.
"This period of six months is being given since the Attorney General submitted that the Central Government and CIL would need some time to adjust to the changed situation and move forward," it said
It said this period will also give adequate time to the coal block allottees to adjust and manage their affairs.
The bench also turned down the plea of companies that a committee be appointed to go into legality of each allocation saying it would amount to permitting a body to examine the correctness of the judgement which is impermissible.
"The judgement did not deal with any individual case. It dealt only with the process of allotment of coal blocks and found it to be illegal and arbitrary. The process of allotment cannot be reopened collaterally through the appointment of a committee. This would virtually amount to nullifying the judgement. The process is a continuous thread that runs through all the allotments," it said.
The companies had urged the court not to quash the allocation saying that investments up to about Rs 2.87 lakh crores have been made in 157 coal blocks as on December, 2012 and investments in end-use plants have been made to the extent of about Rs 4 lakh crores and the employment of almost 10 lakh people is at stake.
They had also contended that loans to the extent of about Rs 2.5 lakh crores given by banks and financial institutions would become non-performing assets and SBI alone may suffer a loss of up to Rs 78,263 crores.

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