JSPL gets breather from Delhi HC

Delhi High Court ordered ‘status quo’ on Government’s decision, which came after two weeks of re-examination, not to approve the bids of JSPL.

Jindal Steel & Power Ltd. (JSPL) gets breather from Hon. Delhi High Court, who ordered status quo to be maintained on the Tara mine block in West Bengal, and also asked the government to submit a reply for Gare Palma IV/2 and IV/3 blocks located in Jharkhand.

Last week, Government had announced that it had cancelled the bids for the Gare Palma IV/1,2,3 and Tara coal blocks on the grounds that the bids were too low indicating cartelization. The said mine would be allotted to Coal India Ltd. Reacting to the said decision JSPL had filed a petition in the court challenging the government’s decision.

JSPL’s Justification

Mr. Kapil Sibal along with Mr. Rajiv Nayar representing JSPL for the Gare Palma case argued that government’s decision rejecting JSPL as the successful bidder was arbitrary. It was argued that JSPL was the highest bidder and in case the government had not taken this step, mining operations would have started after March 31.

For Tara lock Gopal Subramanium representing JSPL argued that company which was the preferred bidder for the Tara mine, had been disqualified from participating in the e-auction for other coal mines. He also argued that “Bid for the Tara block was fair and much higher than the price and benefits offered by Coal India.

JSPL has maintained that it had followed “a consistent and prudent bidding strategy, through the coal block auction process, with a serious long-term business perspective”.

High Court Directions

Delhi HC directed government to file a reply within two days in Gare Palma case. For Tara coal mine, the court issued a notice and directed a reply to the petition be filed within two weeks, with additional one week to file rejoinder. HC instructed center to maintain status quo on the Tara coal mine.

Stock price movement

Panic reaction to weekend development reflected clearly as stock of JSPL opened with a Gap down and traded as low as 14% intra-day,  only to recover to Rs 154.4, down 6.17% from Friday’s close.

Whether JSPL will be able to retain the mines which are under dispute, depends upon how court view the participation of company’s bidding compared to overall participation. But, for the time being company is starring at long drawn court battle.