It is reported that Shyam Sel & Power has taken the Bengal government to court over the allocation of coal mines to two big companies, alleging total lack of transparency and raising questions on how long firms can sit on natural resources when a project gets delayed.

Shyam Sel & Power has filed a writ petition in Calcutta High Court calling into question the handover of mines to Sajjan Jindal’s JSW Bengal and the Calcutta based Jai Balaji Group.

The case is unusual as few investors have sued the government on a policy issue such as resource allocation. The legal outcome will be keenly watched by investors as several players like Jindal, Bhushan, Kalyani and Videocon had shown interest in metal and power in Bengal, throwing up proposals valued at nearly INR 100,000 crore.

The petition, which has been admitted by the court, has sought a directive to cancel the distribution of five coal blocks to JSW and Jai Balaji and redistribute them afresh. The two groups have seven blocks but two have been allocated by the Centre.

Shyam Sel a mid sized player with an annual turnover of INR 3,500 crore has proposed a steel cum power project in Burdwan. The company said it had started construction at the Burdwan site but it had not been allocated coal blocks, essential for running the plants.

The company’s case hinges on the contention that Jindal and Balaji have been allocated coal blocks but they have not yet used the fuel reserves.

In its reply, the government said the mine allocation was done in line with its coal policy, mainly on the ground that Balaji and Jindal approached the state ahead of Shyam Sel. Shyam Sel had signed an agreement with the Bengal government in February 2008, while Balaji had done so in October 2007 and Jindal in January 2007.

But a Shyam Sel official said that “We have made actual investment and are readying to commence production but we have no coal. Balaji and Jindal have done nothing on the ground but have got mines.”

Bengal industries minister Mr Nirupam Sen said that “They want us to take away the mines from Jindal and Balaji and give these mines to them. If the state does that, the other two will also go to court. The government cannot go back on the agreements with Jindal and Balaji even though I feel for Shyam Sel.”

The minister said Jindal had delayed its projects by a year because of the global slowdown. He said that “I had to be lenient with them. One must also look at the profile of the investors. Jindal is one of India’s largest. Moreover, they plan to build India’s largest plant in our state.”

(Sourced from www.telegraphindia.com)