Coal Mines (Special Provisions) Act, 2015

For allocation of coal mines, etc., to successful bidders and allottees with a view to ensure continuity in coal mining operations and production of coal, etc.

Coal Mines (Special Provisions) Act, 2015

[Act 11 of 2015; amended up to Act 2 of 2020]      [30th March, 2015]

An Act to provide for allocation of coal mines and vesting of the right, title and interest in and over the land and mine infrastructure together with mining leases to successful bidders and allottees with a view to ensure continuity in coal mining operations and production of coal, and for promoting optimum utilisation of coal resources consistent with the requirement of the country in national interest and for matters connected therewith or incidental thereto

Whereas the Supreme Court vide judgment dated 25th August, 2014 read with its order dated 24th September, 2014 has cancelled the allocation of coal blocks and issued directions with regard to such coal blocks and the Central Government in pursuance of the said directions has to take immediate action to implement the said order;

And whereas it is expedient in public interest for the Central Government to take immediate action to allocate coal mines to successful bidders and allottees keeping in view the energy security of the country and to minimise any impact on core sectors such as steel, cement and power utilities, which are vital for the development of the nation;

And whereas Parliament is competent to legislate under Entry 54 of List I of the Seventh Schedule to the Constitution for regulation of mines and mineral development to the extent to which such regulation and development under the control of Union is declared by Parliament by law to be expedient in the public interest.

Be it enacted by Parliament in the Sixty-sixth Year of the Republic of India as follows—

Statement of Objects and Reasons.— Hon'ble Supreme Court in Manoharlal Sharma v. Union of India, (2014) 9 SCC 516 has held that allocations of the coal blocks made through Screening Committee and Government Dispensation route as arbitrary and illegal. The Supreme Court pronounced its order on 24th September, 2014 cancelling allocation of 204 coal blocks out of a total of 218 allocated since 1993. In case of 42 coal blocks (37 producing and 5 ready to produce), cancellation will take effect from 31st March, 2015 and in respect of the others, with immediate effect. The Court has also directed that an additional levy of Rs 295 per metric ton be paid by these 42 coal block allocatees for the coal extracted since commencement of production till 31st March, 2015.

Other Contents of Coal Mines (Special Provisions) Act, 2015
Sections 1 to 9 Sections 10 to 33 Schedules

2. In light of the judgment and order of the Hon'ble Supreme Court, it was considered expedient in public interest by the Central Government to take immediate action so as to ensure energy security of the country. The need for promulgation of the Ordinance was felt to overcome the acute shortage of coal in core sectors such as steel, cement and power utilities, which are vital for the development of the country. Further, to mitigate the hardships on household consumers, medium and small enterprises, cottage industries, as well as to overcome the overall shortage of coal in the country and augment its production by allocating coal mines to new allocatees, the Coal Mines (Nationalisation) Act, 1973 was amended by inserting Section 3-A and the Mines and Minerals (Development and Regulation) Act, 1957 was amended by substituting Section 11-A, thereby removing the restriction of end use from the eligibility to undertake coal mining, in the national interest.

3. In order to implement the judgment and order of the Supreme Court and to address the above objectives, an Ordinance namely, the Coal Mines (Special Provisions) Ordinance, 2014 was promulgated by the President on 21st October, 2014 under Article 123 of the Constitution. To replace the said Ordinance, the Coal Mines (Special Provisions) Bill, 2014 was introduced in the House of the People on 12th December, 2014. The said Bill has been passed by the House of the People on 12th December, 2014 and is pending in the Council of States.

4. In pursuance of the Coal Mines (Special Provisions) Ordinance, 2014, actions have been initiated by the Central Government including the framing of Rules for allocation of Coal Mines and therefore, it was considered necessary to give continuity to the provisions of the said Ordinance and save the actions taken thereunder.

5. Since Parliament was not in session and the President was satisfied that circumstances exist which render it necessary for him to take immediate action, the Coal Mines (Special Provision) Second Ordinance, 2014 was promulgated on 26th December, 2014 under clause (1) of Article 123 of the Constitution.

6. It is proposed to introduce the Coal Mines (Special Provisions) Bill, 2015, to replace the Coal Mines (Special Provision) Second Ordinance, 2014.

7. The Coal Mines (Special Provisions) Bill, 2015 provides for allocation of coal mines and vesting of the right, title and interest in and over the land and mine infrastructure together with mining leases to successful bidders and allottees through a transparent bidding process with a view to ensure continuity in coal mining operations and production of coal, and for promoting optimum utilisation of coal resources consistent with the requirement of the country in national interest. Further, the Bill, having regard to the coordinated and scientific development and utilisation of coal resources consistent with the growing requirement of the country, prescribed the condition to rationalise the coal sector for mining operations, consumption and sale.

8. The notes on clauses explain in details the various provisions contained in the Bill.

9. The Bill seeks to achieve the above objectives.

Chapter I

PRELIMINARY

1. Short title, extent and commencement.

1. Short title, extent and commencement.— (1) This Act may be called the Coal Mines (Special Provisions) Act, 2015.

(2) It extends to the whole of India.

(3) It shall be deemed to have come into force on the 21st day of October, 2014.

2. Declaration as to expediency of Union action.

2. Declaration as to expediency of Union action.— It is hereby declared that it is expedient in the public interest that Union should take action for the development of Schedule I coal mines and extraction of coal on continuous basis for optimum utilisation.

3. Definitions.

3. Definitions.— (1) In this Act, unless the context otherwise requires,—

(a) “additional levy” means, the additional levy as determined by the Supreme Court in Writ Petition (Criminal) No. 120 of 2012 as two hundred and ninety-five rupees per metric tonne of coal extracted;

(b) “allotment order” means the allotment order issued under Section 5;

(c) “appointed date” in relation to—

(i) Schedule I coal mines excluding Schedule II coal mines, shall be the 24th day of September, 2014 being the date on which the allocation of coal blocks to prior allottees stood cancelled; and

(ii) Schedule II coal mines shall be the 1st day of April, 2015 being the date on which the allocation of coal blocks to prior allottees shall stand cancelled,

in pursuance of the order of the Supreme Court dated the 24th September, 2014 passed in Writ Petition (Criminal) No. 120 of 2012;

(d) “bank” shall have the same meaning as assigned to it in clause (c) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (54 of 2002);

(e) “coal mining operations” means any operation undertaken for the purpose of winning coal;

(f) “company” shall have the same meaning as assigned to it in clause (20) of Section 2 of the Companies Act, 2013 (18 of 2013);

(g) “corporation” shall have the same meaning as assigned to it in clause (11) of Section 2 of the Companies Act, 2013 (18 of 2013);

(h) “financial institution” shall have the same meaning as assigned to it in clause (m) of Section 2 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (54 of 2002);

(i) “Government company” shall have the same meaning as assigned to it in clause (45) of Section 2 of the Companies Act, 2013 (18 of 2013);

(j) “mine infrastructure” includes mining infrastructure such as tangible assets used for coal mining operations, being civil works, workshops, immovable coal winning equipment, foundations, embankments, pavements, electrical systems, communication systems, relief centres, site administrative offices, fixed installations, coal handling arrangements, crushing and conveying systems, railway sidings, pits, shafts, inclines, underground transport systems, hauling systems (except movable equipment unless the same is embedded in land for permanent beneficial enjoyment thereof), land demarcated for afforestation and land for rehabilitation and resettlement of persons affected by coal mining operations under the relevant law;

(k) “nominated authority” means the authority nominated by the Central Government under Section 6;

(l) “notification” means a notification published in the Official Gazette;

(m) “prescribed” means prescribed by rules made under this Act;

(n) “prior allottee” means prior allottee of Schedule I coal mines as listed therein who had been allotted coal mines between 1993 and 31st day of March, 2011, whose allotments have been cancelled pursuant to the judgment of the Supreme Court dated the 25th August, 2014 and its order dated 24th September, 2014 including those allotments which may have been de-allocated prior to and during the pendency of the Writ Petition (Criminal) No. 120 of 2012.

Explanation.— In case a mining lease has been executed in favour of a third party, subsequent to such allocation of Scheduled I coal mines, then, the third party shall be deemed to be the prior allottee;

(o) “Schedule” means a Schedule appended to this Act;

(p) “Schedule I coal mines” means,—

(i) all the coal mines and coal blocks the allocation of which was cancelled by the judgment dated 25th August, 2014 and its order dated 24th September, 2014 passed in Writ Petition (Criminal) No. 120 of 2012, including those allotments which may have been de-allocated prior to and during the pendency of the said Writ Petition;

(ii) all the coal bearing land acquired by the prior allottee and lands, in or adjacent to the coal mines used for coal mining operations acquired by the prior allottee;

(iii) any existing mine infrastructure as defined in clause (j);

(q) “Schedule II coal mines” means the forty-two Schedule I coal mines listed in Schedule II which are the coal mines in relation to which the order of the Supreme Court dated 24th day of September, 2014 was made;

(r) “Schedule III coal mines” means the thirty-two Schedule I coal mines listed in Schedule III or any other Schedule I coal mine as may be notified under sub-section (2) of Section 7;

(s) “secured creditor” shall have the same meaning as assigned to it in clause (zd) of Section 2 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (54 of 2002);

(t) “secured debt” shall have the same meaning as assigned to it in clause (ze) of Section 2 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (54 of 2002);

(u) “security interest” shall have the same meaning as assigned to it in clause (zf) of Section 2 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (54 of 2002);

(v) “specified end-use” means any of the following end-uses and the expression “specified end-user” shall with its grammatical variations be construed accordingly,—

(i) production of iron and steel;

(ii) generation of power including the generation of power for captive use;

(iii) washing of coal obtained from a mine;

(iv) cement;

(v) such other end-use as the Central Government may, by notification, specify;

(w) “vesting order” means the vesting order issued under Section 8.

(2) Words and expressions used herein and not defined, but defined in the Coal Bearing Areas (Acquisition and Development) Act, 1957 (20 of 1957), the Mines and Minerals (Development and Regulation) Act, 1957 (67 of 1957) and the Coal Mines (Nationalisation) Act, 1973 (26 of 1973) including any rules or regulations made thereunder, shall have the meanings, respectively assigned to them in those Acts.

Chapter II

AUCTION AND ALLOTMENT

4. Eligibility to participate in auction and payment of fees.

4. Eligibility to participate in auction and payment of fees.— (1) Subject to the provisions of Section 5, Schedule I coal mines shall be allocated by way of public auction in accordance with such rules, and on the payment of such fees which shall not exceed five crore rupees, as may be prescribed.

(2) Subject to the provisions in sub-section (3) of this section and Section 5, the Central Government may, for the purpose of granting reconnaissance permit, prospecting licence or mining lease [i][or prospecting licence-cum-mining lease in respect of coal], select any of the following companies through auction by competitive bidding, on such terms and conditions as may be prescribed—

(a) a Government company or corporation or a joint venture company formed by such company or corporation or between the Central Government or the State Government, as the case may be, or any other company incorporated in India; or

(b) a company or a joint venture company formed by two or more companies,

[ii][to carry on coal reconnaissance or prospecting or mining operations, for own consumption, sale or for any other purpose as may be determined by the Central Government, and the State Government shall grant such reconnaissance permit, prospecting licence, mining lease or prospecting licence-cum-mining lease in respect of Schedule I coal mine to such company as selected through auction by competitive bidding under this section.]

[iii][* * *]

(4) A prior allottee shall be eligible to participate in the auction process subject to payment of the additional levy within such period as may be prescribed and if the prior allottee has not paid such levy, then, the prior allottee, its promoter or any of its company of such prior allottee shall not be eligible to bid either by itself or by way of a joint venture.

(5) Any prior allottee who is convicted for an offence relating to coal block allocation and sentenced with imprisonment for more than three years, shall not be eligible to participate in the auction.

5. Allotment of mines to Government companies or corporations.

5. Allotment of mines to Government companies or corporations.— (1) Notwithstanding the provisions contained in [iv][sub-sections (1) and (2)] of Section 4, the Central Government may allot a Schedule I coal mine to a Government company or corporation or to a joint venture between two or more Government companies or corporations or to a company which has been awarded a power project on the basis of competitive bids for tariff (including Ultra Mega Power Projects) from specified Schedule I coal mines by making an allotment order in accordance with such rules as may be prescribed and the State Government shall grant a reconnaissance permit, prospecting licence [v][, mining lease or prospecting licence-cum-mining lease in respect of such Schedule I coal mine] to such company or corporation:

Provided that the Government company or corporation may carry on Coal Mining in any form either for its own consumption, sale or for any other purpose [vi][as may be determined by the Central Government]:

Provided further that no company other than a Government company or corporation shall hold more than twenty-six per cent of the paid-up share capital in the Government company or corporation or in the joint venture between a Government company or corporation, either directly or through any of its subsidiary company or associate company:

Provided also that a joint venture of any two or more Government companies or corporations shall be prohibited from alienating or transferring any interest, except the taking of loans or advances from a bank or financial institution, in the joint venture of whatsoever nature including ownership in favour of a third party.

(2) No allotment under sub-section (1) shall be made to a prior allottee, if that allottee has not made the payment of the additional levy within the specified period.

6. Central Government to act through nominated authority.

6. Central Government to act through nominated authority.— (1) The Central Government shall appoint an officer not below the rank of a Joint Secretary to the Government of India as the nominated authority who shall act for and on behalf of the Central Government for the purposes of this Act and shall exercise such powers as may be prescribed.

(2) The nominated authority may engage any expert having such qualifications and experience and on such terms and conditions as may be prescribed to make recommendations to the authority for the conduct of auction and in drawing up of the vesting order or allotment order in relation to Schedule I coal mines.

(3) The Central Government shall act through the nominated authority for the following purposes, namely—

(a) conduct the auction process and allotment with the assistance of experts;

(b) execution of the vesting order for transfer and vesting of Schedule I coal mines pursuant to the auction;

(c) executing the allotment order for any Government company or corporation in pursuance of Section 5;

(d) recording and mutating incorporeal rights of whatsoever nature including, consents, permissions, permits, approvals, grants, registrations;

(e) collection of auction proceeds, adjustment of preferential payments and transfer of amount to the respective State Governments where Schedule I coal mine is located in accordance with the provisions of this Act.

(4) The nominated authority shall complete the auction or execute the allotment orders of Schedule I coal mines within such time and in accordance with such rules as may be prescribed.

(5) The Central Government may appoint such other officers and staff as it may think fit to assist the nominated authority.

(6) The salaries and allowances and other terms and conditions of service of the nominated authority and such other officers and staff appointed under this section shall be such as may be prescribed.

(7) The nominated authority shall be bound by the written direction given by the Central Government on the question of policy.

7. Power to classify certain Schedule I coal mines by Central Government.

7. Power to classify certain Schedule I coal mines by Central Government.— (1) The Central Government may, before notifying the particulars of auction, classify mines identified from Schedule I coal mines as earmarked for the same class of specified end-uses.

(2) The Central Government may in public interest, by notification, modify Schedule III coal mines by adding any other Schedule I coal mine for the purposes of specified end-use.

8. Nominated authority to issue vesting order or allotment order.

8. Nominated authority to issue vesting order or allotment order.— (1) The nominated authority shall notify the prior allottees of Schedule I coal mines to enable them to furnish information required for notifying the particulars of Schedule I coal mines to be auctioned in accordance with such rules as may be prescribed.

(2) The information required to be furnished under sub-section (1) shall be furnished within a period of fifteen days from the date of such notice.

(3) A successful bidder in an auction conducted on a competitive basis in accordance with such rules as may be prescribed, shall be entitled to the vesting of Schedule I coal mine for which it bid, pursuant to a vesting order drawn up in accordance with such rules.

(4) The vesting order shall transfer and vest upon the successful bidder, the following, namely—

(a) all the rights, title and interest of the prior allottee, in Schedule I coal mine concerned with the relevant auction;

(b) entitlement to [vii][prospecting licence, mining lease or prospecting licence-cum-mining lease, as the case may be] to be granted by the State Government;

(c) any statutory licence, permit, permission, approval or consent required to undertake coal mining operations in Schedule I coal mines if already issued to the prior allottee;

(d) rights appurtenant to the approved mining plan of the prior allottee;

(e) any right, entitlement or interest not specifically covered under clauses (a) to (d).

(5) The nominated authority shall, in consultation with the Central Government, determine the floor price or reserve price in accordance with such rules as may be prescribed.

(6) The successful bidder shall, prior to the issuance and execution of a vesting order, furnish a performance bank guarantee for an amount as notified in relation to Schedule I coal mine auctioned to such bidder within such time, form and manner as may be prescribed.

(7) After the issuance of a vesting order under this section and its filing with the Central Government and with the appropriate authority designated by the respective State Governments, the successful bidder shall be entitled to take possession of the Schedule I coal mine without let or hindrance.

(8) Upon the execution of the vesting order, the successful bidder of the Schedule I coal mine shall be granted [viii][prospecting licence, mining lease or prospecting licence-cum-mining lease], as applicable, by the concerned State Government in accordance with the Mines and Minerals (Development and Regulation) Act, 1957 (67 of 1957).

(9) A Government company or corporation or a joint venture company formed by such company or corporation or between the Central Government or the State Government, as the case may be, or any other company incorporated in India, allotted a Schedule I coal mine shall be granted [ix][prospecting licence, mining lease or prospecting licence-cum-mining lease], as applicable, by the concerned State Government in accordance with the Mines and Minerals (Development and Regulation) Act, 1957 (67 of 1957).

(10) In relation to Schedule II coal mines, the successful bidder which was a prior allottee, shall continue coal mining operations after the appointed date in terms of the approved mining plan, till the mining lease in terms of sub-section (8) is granted, upon the grant of a vesting order and to that extent, the successful bidder shall be deemed to have been granted a mining lease till the execution of the mining lease in terms of the said sub-section.

(11) In relation to Schedule II coal mines, the Government company or corporation which was a prior allottee can continue coal mining operations after the appointed date in terms of the approved mining plan, till the mining lease in terms of sub-section (9) is granted, upon execution of the allotment order and to that extent, the allottee shall be deemed to have been granted a mining lease till the execution of the mining lease in terms of the said sub-section.

(12) The provisions of sub-sections (1) and (2) and sub-sections (4) to (7)(both inclusive) of this section as applicable to a vesting order, shall mutatis mutandis be also applicable to an allotment order.

[x][(13) The vesting order or allotment order may be terminated by the nominated authority in such manner as may be prescribed.

(14) Upon termination of vesting order or allotment order, the nominated authority may auction the coal mine under Section 4 or allot the coal mine under Section 5 as may be determined by the Central Government.

(15) The successful bidder or allottee of the coal mine whose vesting order or allotment order has been terminated shall be deemed to be the prior allottee for the purposes of immediate next auction or allotment of the said coal mine.]

9. Priority of disbursal of proceeds.

9. Priority of disbursal of proceeds.— [xi][The compensation for land and mine infrastructure in relation to a Schedule I coal mine as valued in accordance with Section 16 shall be deposited by the successful bidder or allottee with the nominated authority and shall be disbursed maintaining, inter alia, the following priority of payments and in accordance with the relevant laws and such rules as may be prescribed]—

(a) payment to secured creditors for any portion of the secured debt in relation to a Schedule I, coal mine which is unpaid as on the date of the vesting order;

(b) [xii][amount payable] to the prior allottee in respect of the Schedule I coal mine.

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