Thursday, 5 June 2014

Nationalization of Coal Mines in India

The Parliament treated coal and coking coal separately for legislative purposes. The Coking Coal Mines (Emergency Provisions) Act, 1971 took over coking coal mines since coking coal was not being made available to the industry by the private sector. After further planning it was decided to take over all coal mines (including coking coal mines) under the Coking Coal Mines (Nationalization) Act, 1972 and the Coal Mines (Nationalization) Act, 1973 (“Nationalization Act”).

In 1972 the Central Government transferred the 226 (two hundred and twenty six) coking coal mines then existing to Bharat Coking Coal Limited, and a year later transferred the 711 (seven hundred and eleven) non-coking coal mines then existing to the Coal Mines Authority Limited, which later became Coal India Limited. [1]

The Coal Mines (Taking Over of Management) Act, 1973 : The Coal Mines (Taking Over of Management) Act, 1973 gave the Central Government right to take over the management of the coking and non-coking mines.

1976 Amendment: Termination of private lease, exemptions : Since many of the coal mines were located in remote places, in order to prevent the private sector from illegally mining, the Coal Mines (Nationalization) Amendment Act, 1976 was enacted. The amendment terminated all privately held leases in respect of coal mines, with the following exceptions:
a)      Captive mining by private companies engaged in production of iron and steel;
b)      Sub-lease for coal mining to private parties in isolated small pockets not amenable to economic development and not requiring rail transport.

1993 Amendment: Generation of power and washing of coal : Considering the need to augment thermal power generation and to create additional thermal power capacity during the VII Plan period, the Government decided to allow participation by the private sector. The Nationalization Act was further amended with effect from June 9, 1993 to allow coal mining for captive consumption for generation of power, washing of coal obtained from a mine and other end uses to be notified by the Government from time to time, in addition to the existing provision for captive coal mining for production of iron and steel. The amendment was carried out in section 3(3)(a)(iii) of the Nationalization Act by a Gazette notification dated June 9, 1993.  

1996 Amendment: Cement as an end use : Under the powers conferred on the Central Government by section 3(3)(a)(iv) of the Nationalization Act, another Gazette notification was issued on March 15, 1996 to allow cement as an end use for captive mining of coal.

Coal Mines (Nationalization) Amendment Bill, 2000 (“Nationalization Amendment Bill”)[2] : The Central Government decided to allow Indian companies, both in the public and private sectors to enter coal mining without the restriction of captive mining. The proposal of the Ministry of Coal to allow non-captive mining was approved by the Cabinet on February 11, 1997 and subsequently on May 27, 1997 after the change of Government in April 1997. However, this bill still hasn’t seen the light of the day due to disputes with trade unions.

Coal India (Regulation of Transfers and Validation) Act, 2000 : Ever since the nationalization of the private coal mines of the country took place during 1971-1973, though the rights, title and interest in relation to the coal mines was directed to be vested in CIL, its subsidiary companies were managing such land, mines, etc. In the absence of any specific legislation empowering them with formal rights, the subsidiary companies were exposed to litigation with respect to the land and coal mines. Thus, the Coal India (Regulation of Transfers and Validation) Act, 2000 was passed to empower the Central Government to direct the transfer of the land, or of the rights in or over land or of the right, title and interest in relation to a coal mine, coking mine or coke oven plant, vested in the CIL or in a subsidiary company to any subsidiary company of CIL or any other subsidiary company and to validate certain transfers of such land or rights.  




[1] Bharat Coking Coal Limited, became and still is, a subsidiary of Coal India Limited.

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