Tata Power secures favourable opinion on coal diversion by Reliance Power

Close on the heels of Reliance Power obtaining a favourable opinion over a government decision's legality over diversion of coal from captive mines associated with its Sasan ultra mega power project in MP, Tata Power, too, has independently secured a favourable opinion from the country's top legal brains, including retired chief justice of India M N Venkatchaliah as also former solicitor general Dipankar Gupta.

The opinion, which Tata Power has obtained, runs counter to what legal experts have told Reliance Power in its private initiative aimed at strengthening the case on coal diversion. The two companies are fighting a legal battle with Tata Power challenging the government's decision in the Supreme Court. They would likely use the legal opinion they secured to strengthen their respective cases ahead of Saturday's ministerial panel meeting, according to reports.

The empowered group of ministers (EGoM) has convened a meeting to examine the official opinion from the attorney general. At its December meeting, the group headed by finance minister Pranab Mukherjee had decided to go for fresh legal opinion from AG Goolam E Vahanvati to defuse the controversy stemming from the group's earlier in-principle decision in 2009 to allow Reliance Power to divert surplus coal. This came in the face of adverse remarks made in a draft report of the Comptroller and Auditor General (CAG) saying the decision came as a windfall gain for Reliance Power.

In the opinion given to Tata Power, legal experts have called the EGoM permission as `ultra vires' as the decision with regard to diversion of coal went against stated policy for allocation of coal blocks.

Both Venkatchaliah and Gupta have also said that changing the terms and conditions of the bid for UMPP in the immediate aftermath of the completion of the bidding process amounted to changing the terms and conditions of the bidding process itself, which was also a violation of Article 14 of the Constitution besides being arbitrary and unreasonable.

"Tender documents should not be designed to encourage speculation. The allocation of the coalmines is intertwined with the Sasan project and cannot be used for any other project. The permission given by EGoM has augmented the right of the successful bidder for incremental coal. It is ultra vires of the specific provisions of the statute, rules, and the policy governing allocation of coal, and also altered the bid conditions," Venkatchaliah said in his opinion given to Tata Power.