Most mineral block allocations violate the Doctrine of Public Trust


Shri Rajiv Gauba
Cabinet Secretary
Government of India

Subject:- Many coal and other mineral block allocations are non-transparent and violate the Doctrine of Public Trust, raising concerns about propriety as they circumvent the laws and regulations in force.

It is reported that the Coal and Mines Ministries have auctioned 190 blocks during the last 8-9 years to private miners ( The value of the deposits contained in those blocks may run into hundreds of thousands of crores of rupees.

In Civil Appeal No. 4591 OF 2014, in their judgement dated 17-4-2014, reiterating their earlier observations in several other cases, the Hon’ble Supreme Court observed “Natural resources constitute public property/ national asset. The State is empowered to distribute natural resources. However, while distributing natural resources the State is bound to act in consonance with the principles of equality and public trust and ensure that no action is taken which may be detrimental to the public interest“.

In the specific case of coal block allocations, the apex court in their judgement on 25-8-2014 in WP No. 120/2012 directed the government to revoke all coal block allocations made through any procedure other than the competitive bidding route, including coal blocks allotted to the States through the “government dispensation route” but in turn farmed out by the States to private companies through a non-transparent procedure.

2014-15 Coal Block auctions: CAG Report No. 20/2016:

The NDA government that came to power in 2014 rightly introduced a competitive auction procedure and conducted the initial tranches of auctions during 2014-15. However, the CAG, in their report No 20/2016, pointed out that at least in the case of 11 out of 29 coal blocks auctioned at that time, the competitive procedures appeared to have been circumvented. The CAG, in Para 5 of their report, illustrated through a Case Study, without naming the bidders, explained how some bidders circumvented competition by bidding through “shell companies”. The names and the other details of the errant bidders in this case must be available with the CAG.

In addition, the government at senior levels has apparently tweaked the rules to allow one private company, to whom the Rajasthan government had farmed out its coal mines, Parsa East and Kanta Basin non-transparently, to continue mining activity, in violation of the apex court’s directions. This was despite objections raised by the Cabinet Secretariat and other officers.

The Ministry of Coal, instead of responding positively to CAG’s findings by taking consequential corrective action, surprisingly adopted a defensive stance, wrongly justifying the outcome of the 11 coal block auctions cited in the CAG report. To the best of my knowledge, the Coal Ministry did not revoke the coal allotments made irregularly nor did it take action against those responsible, both officials and the bidding companies. It looked as though the Ministry had tried to whitewash the wrongs done.

Inadequate competition would have adversely affected price discovery, causing considerable loss to the public exchequer.

An investigative news report brought to light in more detail how the Ministry of Coal had failed to act meaningfully on CAG’s findings and how those at the highest levels of the government deliberately chose to deviate from the path of transparency, despite the objections raised by the senior officers, a deviation that resulted in favouring one particular business conglomerate, namely, the Adani Group. The relevant investigative reports of Reporters’ Collective are readily accessible at the following weblinks in the public domain:

The CAG report, followed by the investigative reports cited above, raised serious concerns about the government’s resolve to uphold transparency in the allotment of coal blocks and also concerns about the propriety of tweaking the rules in a way that had the effect of an undue favour being extended to the Adani Group, in deviation from the apex court’s direction.

I had earlier written to the Coal Secretary on this vide my letter dated 1-3-2023 ( but I am not sure whether the Coal Ministry is serious at all to act on it.

One would have expected the Ministry of Coal and the government at senior levels to have come clean on CAG’s findings, undertaken a thorough investigation into the acts of malfeasance, if any, committed by the officers and the private agencies, revoked coal allotments wrongly made and taken deterrent action against all concerned. It is a matter of concern that such action is yet to be taken, though more than 5 years have elapsed.

2023 Coal Block auctions:

SCROLL, an E-Journal, recently investigated ( a few coal block auctions conducted as recently as in March 2023. Its finding is as follows:

One of the blocks it won, namely North West of Madheri, saw only one other bidder, Cavill Mining Private Limited…A Scroll investigation has found that the owner of Cavill Mining is also the main promoter of Adicorp Enterprises, a small privately held company that American investment firm Hindenburg Research alleged was used to funnel funds between Adani companies to avoid mandatory related party disclosures“.

According to the details available in the public domain, Cavill Mining was set up as recently as on 25-4-2022 with a paid-up capital of only Rs 1 lakh.

In the matter of mineral block auctions, Rule 9 of Mineral (Auction) Rules, 2015 lays down the following stipulation.

Provided that where the total number of technically qualified bidders is less than three, then no technically qualified bidder shall be considered to be a qualified bidder and the auction process shall be annulled

For reasons best known to it, the Ministry of Coal apparently violated this rule, which must have caused considerable loss to the public exchequer, as the coal block in question would have been undersold.

How did the Ministry of Coal consider a single bid, that too, from a company set up hardly a year ago, with a meagre paid-up capital of only Rs 1 lakh, without any domain experience whatsoever, considering that the block in question has 200 million tonnes of coal, which on a highly conservative basis, is valued at more than Rs 6,000 Crores?

The bidder that successfully cornered this coal block is alleged to have links to companies referred to in the recent Hindenburg report that has become a subject of widespread public debate in recent times. The Ministry of Coal cannot pretend to be unaware of it.

A more distressing aspect of this particular coal block allocation is that it is not any internal checks and balances which form part of the auction process that brought this matter to light, but an independent investigation carried out by a public-spirited journal.

Out of the 190-odd mineral block auctions, already there is evidence of irregularities and improprieties in several cases cited above. This casts a shadow on the remaining mineral block auctions. It is possible that several among them suffer from irregularities and improprieties similar to the above. Only a comprehensive, objective, block-wise investigation will bring the factual position to light.

The following questions need to be answered in this context:

  1. Was there an outright collusion between the authorities and the bidder in this case?
  2. Was there any extraneous pressure that forced the concerned authorities in the Ministry of Coal to violate the relevant provision of the Mineral (Auction) Rules and forced them to ignore the technical and financial background of the bidder?
  3. Has the Ministry of Coal initiated action to annul the auction and take punitive action against the promoter of the company that bid for the coal block?
  4. How many cases of mineral block auctions are there during the last 8-9 years in which Rule 9 of the Mineral (Auction) Rules was infringed? Should not the Ministry reopen all those cases, annul the auctions and make a fresh start?
  5. Should not a forensic review be undertaken in the case of auctions conducted during the last 8-9 years to identify all those bidders who adopted unethical practices to corner mineral blocks?
  6. Should not the concerned authorities initiate punitive action against all those companies indulging in unethical practices, including blacklisting them for all future transactions with the government?

Violation of other laws and regulations in mineral block auctions:

Most mineral blocks are located in areas notified under the Fifth Schedule to the Constitution and/or in forest tracts, where the protecting laws, namely, the Panchayats (Extension to the Scheduled Areas) Act [PESA] and the Forest Rights Act [FRA] mandate prior consent from the local Gram Sabhas as a condition to be fulfilled, before a decision to mine is taken. This requirement by and large stands violated. There are regulations in force in some States like AP and Odisha which prohibit private agencies from mining in the Scheduled Areas (Apex court’s judgement in the Samatha case). Apparently, the Centre has ignored the same, while going ahead with mineral block auctions.

In Tamil Nadu, mining is not permitted in certain notified protected agricultural zones under the Tamil Nadu Protected Agricultural Zone Development Act, 2020. The Tamil Nadu Chief Minister rightly questioned the Ministry of Coal for unilaterally deciding to auction three lignite blocks to private parties in the fertile Cauvery delta area.

However expedient the Centre may consider mineral block auctions to be, it cannot violate the Constitutional provisions and the laws and regulations in force.

Any responsible government would respect the laws in force, and evaluate the adverse impacts of mining on tribal communities, forest resources, the local environment, degradation of the river catchments etc., before proceeding to take up mining. The haste in which the concerned Ministries are auctioning mineral blocks, without consulting the States, gives one the inevitable impression that it is part of an orchestrated deliberate effort to hand over scarce mineral deposits to private conglomerates at highly concessional prices, with little competition. If this premise is correct, it constitutes an outright breach of public trust.

If one were to go by the globally accepted UNFC approach to the assessment of mineral deposits, the minerals covered by the above-cited auctions, including coal, iron ore, bauxite etc., which are critically required by the country, may last less than 15 years at the present production levels and it would not be prudent to subject their mining to private control, as private companies driven by the profit maximisation objective may not be the appropriate agencies to conserve those minerals and subject them to sustainable mining.

More recently, the government made an inexplicable U-turn by reopening beach sand mining to private players by amending the Mines & Minerals (Development & Regulation) Act (MMDRA), though the same government apprised the apex court in a PIL [WP (Civil) No.500/2018] filed by me that it would revoke all private mining leases for beach sand mining, considering the strategic nature of atomic minerals that beach sands contain. It is not clear whether the government made such an abrupt volte-face at the instance of the Adani Group, as a month before the government circulated the draft of the amendment for public consultation, the Adani Group informed the Bombay Stock Exchange (BSE) about the incorporation of two wholly owned subsidiaries named Alluvial Heavy Minerals Limited in Andhra Pradesh and Puri Natural Resources Limited in Odisha that would process and manufacture beach sand minerals, especially titanium dioxide (TiO2) (,As%20government%20reconsiders%20ban%2C%20Adani%20forays%20into%20beach%20sand%20mining,in%20beach%20sand%20mineral%20mining.)

My letter dated 7-10-2022 addressed to you on the subject refers (

Scuttling competition in the privatisation of public assets in other sectors:

CPSE privatisation:

DIPAM’s bidding documents for CPSE disinvestment explicitly preclude other CPSEs from bidding for a CPSE to be privatised, which severely limits competition. In addition, DIPAM has also permitted companies without prior experience to bid. The outcome of such a mindless exercise can be seen in the two failed cases of disinvestment, that of Central Electronics Ltd (CEL) and Pawanhans.


The Centre privatised the airports at Ahmedabad, Lucknow, Jaipur, Mangaluru, Guwahati and Thiruvananthapuram, and Guwahati in 2019. The Adani group won the right to operate them for 50 years, surpassing even established players like GMR in the bidding process. The Department of Economic Affairs in the Finance Ministry suggested in a note that not more than two airports be given to the same bidder because of the huge financial risk involved in the project. “These six airports projects are highly capital-intensive projects, hence it is suggested to incorporate the clause that not more than two airports will be awarded to the same bidder duly factoring the high financial risk and performance issues,”  ..Awarding them to different companies would also facilitate yardstick competition” Ignoring this, the concerned authorities went ahead with the auctions that resulted in the Adani Group gaining an unevenly dominant position in the airport business.(


The Adani Group runs 12 ports today ( having a near monopoly on port operations. The norms of competition, crucial for any economic activity, seem to fall by the wayside in this case. Some policy decisions taken by the government, for example, altering the cabotage policy, seem to have extended undue benefits to that group and foreign MNCs, at the cost of the government-run ports and the domestic shipping industry (

Is the government deliberately promoting a few private conglomerates at the cost of the smaller players?

Annex 7 to the Receipts Budget for 2023-24 presented to the Parliament shows that out of the 9,61,279 companies considered, the effective tax rate on 3,85,907 companies whose Profit before tax (PBT) is less than Rs 1 Crore was 24.82% during 2021-22. In contrast, in the case of 517 companies whose PBT is in excess of Rs 500 Crores, the effective tax rate is lower, only 19.14%! This shows how the government is pampering a few large businesses. Niti Ayog’s proposal is perhaps to groom five or six private “global champions”, which seems to fit into the above-cited orchestrated effort in different sectors to extend undue benefits to one or two big businesses, at the cost of transparency and competition.

We have seen from recent investigations by Hindenburg, Forbes and Financial Times how the Adani Group is possibly roundtripping funds through overseas shell companies and even influencing the stock market to its advantage, at the cost of lakhs of small investors. As if to help them in their questionable operations, the Ministries of Finance and Corporate Affairs have deliberately acquiesced for years in not defining “overseas shell companies” in the Companies Act, the SEBI Act and the other connected laws, leaving the doors open to some of these conglomerates stashing their wealth in overseas tax havens and using them to hurt the domestic economy at will.

It is the Adani Group that seems to figure prominently when references are made as above to coal block auctions, beach sand mining, ports and airports. That group seems to be gaining dominance across the infrastructure sectors which have a crucial role to play in the economy.

Through their monopolistic hold on the economy, these conglomerates are also in a position to manipulate domestic prices to their advantage (,

In addition to the concerns I have raised in the case of mineral block auctions, this raises a much larger question, whether the authorities at the highest level are deliberately working in tandem with the Adani Group and a few other conglomerates against the public interest. If it is so, it calls for a high-level independent enquiry.

Keeping in view the far-reaching public interest implications of a few private conglomerates gaining undue political advantage and dominance in the economy, it perhaps calls for a wider debate in the Parliament and among the public.


Yours sincerely,

E A S Sarma
Former Secretary to the Government of India


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