Delhi Court Discharges Hindalco in Coal Block Allocation Case Amid Allegations of Irregularities

Delhi Court Discharges Hindalco Industries and Executives in Coal Block Allocation Case

A Delhi court has discharged Hindalco Industries Limited and two of its former executives, S K Tamotia and P R S Mani, in a case regarding alleged irregularities in the utilisation of the Talabira-I coal block in Odisha.

The Central Bureau of Investigation (CBI) had failed to establish any illegal act by Hindalco Industries Limited, the court said. In the absence of evidence, there was no justifiable reason to infer that the company and its executives entered into a criminal conspiracy to commit any illegal act, including the offence of criminal breach of trust or cheating. Therefore, they are entitled to be discharged for the said offence.

The case stems from a 2015 FIR regarding the allocation of the Talabira-I coal block to Hindalco in 1994. The allocation letter stipulated that the coal was meant only for a proposed expansion unit. However, the court rejected this contention, noting that the stipulation was absent from the formal mining-lease deed executed in 2003.

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The CBI had alleged that the allocation letter constituted a concluded contract of entrustment of the Talabira-1 coal block for carrying out mining operations. However, the court said the letter was a mere expression of government intent subject to the fulfilment of statutory formalities and continued government discretion. The legal relationship giving rise to entrustment crystallised only upon the execution of the mining-lease dated June 3, 2003.

The court said that when the allottee (Hindalco) had not acquired any vested right to extract or utilise coal prior to the execution of the mining lease, it would be difficult to hold that a mere pre-lease allocation letter constituted 'entrustment of property' or 'dominion over the property' to attract the ingredients of criminal breach of trust.

Significantly, there is no allegation against the company that it defied, violated, breached or acted in derogation of any stipulation contained in the mining-lease deed, the court added. Rejecting the charge of criminal breach of trust, it said that an investigating agency cannot retrospectively convert matters of policy into allegations of criminal misconduct through inferential reasoning or hindsight scrutiny.

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The CBI had also alleged that Mani, on the company's behalf, addressed a communication in June 2006 to the Union Ministry of Coal, falsely representing that mining operations in the Talabira-1 coal block had commenced on October 29, 2003, after obtaining all other necessary statutory clearances. However, the court said that there is no evidence on record to demonstrate that the alleged misrepresentation induced anyone, including officials of the Ministry of Coal, Government of India, or any other public authority, to part with the property or undertake any act which it would otherwise not have undertaken.

The CBI had also alleged that Mani submitted a communication of April 2006 to the coal ministry, where answering the query of "the existing linkage should not be withdrawn", a false response was written to the effect that "status quo maintained". However, the court said that the record does not suggest that the approval of the revised mining plan would have been refused solely on account of discontinuance of coal linkage, particularly when the ministry itself was conscious of the prevailing factual position and had, by then, altered its approach in light of acute shortage of coal.

Consequently, the court said that by no stretch of reasonable imagination, the approval of the revised mining plan in the year 2006 can be held to have been procured through deception or inducement based upon the alleged misrepresentation.