Coal Policy in India

1. Status of the Coal Controller and its Functions vis-à-vis Coal Industry India
Coal Controllers Organisation is a subordinate office under the administrative control of
Department of Coal, Ministry of Coal, having its headquarters at Kolkata and five field offices
located at Dhanbad, Ranchi, Bilaspur, Nagpur and Kothagudem with their jurisdiction as
follows:
The Coal Controller has certain statutory functions to perform:
(i) Checking of quality of coal including settlement of complaints vis -a-vis grading and
quality of coal despatches, adjudicating claims on grade;
(ii) Regulatory authority to grant permission for opening and reopening of seams and mines;
(iii)Distribution of coking as well as non-coking coal;
(iv)Disposal of objections received under the Coal Bearing Areas (Acquisition &
Development) Act, 1957; and
(v) Collection and publication of statistical information on coal and lignite in pursuance to
Statistics Act, 1955.
Apart from the above statutory functions, Coal Controller also discharges the following
responsibilities:
a) To look after the residual work of erstwhile Coal Board.
b) To look after the residual work of World Bank loan relating to pre-nationalisation period.
Field Offices Jurisdiction
Dhanbad Collieries under BCCL, TISCO (Jharia), IISCO, BECML, ICML,
CML & PSEB
Ranchi Colieries under CCL, NCL, TISCO (W. Bokaro), JSMDCL & DVC
Bilaspur Collieries under SECL, MCL, HIL, JSPL, JPL, Prakash Industries &
Jayswal NEcco (Usha Project)
Nagpur Collieries under WCL, BLA and lignite mines in Gujrat & Rajasthan
Kothagudem Collieries under SCCL, lignite mines in Tamil Nadu

2. The Coal Controller also advises and assists the Department in the implementation of the Coal
Mines (Conservation and Development) Act, 1974 and the rules made thereunder viz. the Coal
Mines (Conservation and Development) Rules, 1975. Coal Controller is entrusted with the job of
collecting excise duty levied under this Act. He is Member-Secretary of and also provides
secretarial assistance to Coal Conservation and Development
Office of Coal Controller (earlier Coal Commissioner), established in 1916, is one of the oldest
office in Indian Coal sector. Main aim behind setting up this office was to have Government
control to adequately meet the coal requirement during First World War. Acute scarcity of coal
necessitated promulgation of Colliery Control Order, 1944 for effective control on production,
distribution and pricing of coal. Subsequently, it was revised by a more comprehensive order in
1945. Later in 1996, distribution and pricing of coal was deregulated. Therefore, Colliery
Control Order, 2000 superseded the previous order. As a result, functions of Coal Controller’s
Office remained more or less same except for the work of distribution and allotment of coal.
The Coal Controller is an officer of the Government of India and appointed under the provisions
of the Coal Controllers’ Organization (Group-A Post) Recruitment Rules, 1986 and is vested
with powers of the mining and gradation of coal in India, amongst others, by and under the
provisions of the Colliery Control Rules, 2004.
History of Coal Industry in India
In the year 1945, in exercise of powers under sub-rule 2 of rule 81 of the Defence of India Rules,
the respondent central government framed the Colliery Control Order, 1945. Under the said
Order, the production, distribution, sale, dispatch and price of coal became controlled by the
respondent central government. After promulgation of the Essential Commodities Act, 1955 by
the Central Government upon amending Entry 33 of the concurrent list of the Schedule VII of
the Constitution of India by 3rd
Constitutional Amendment, coal was specified as essential
commodity and was continued to be regulated under the Colliery Control Order, 1945 and
amendments thereto.

3. In the year 2000, in exercise of powers conferred under section 3 read with section 5 of the
Essential Commodities At, 1955, the Central government enacted the Colliery Control Order
2000 by virtue of which price and distribution of all grades of coal was allegedly deregulated.
During the subsistence of the Colliery Control Order, 2000, powers were vested upon the Central
Government to prescribe the classes, grade and sizes into which coal may be categorized
whereas, the Coal Controller was entrusted with the power to lay down procedure and method of
sampling and analysis of coal for the purpose of declaration and maintenance of the grades of
coal mined in a colliery on the basis of such categorization. Further, the owner, agent or manager
of a colliery was entrusted with the power to declare the classes, grades or sizes of the coal of
any seam or section of a seam in a colliery.
During the subsistence of the Colliery Control Order, 2000, the Central Government purportedly,
in exercise of power conferred by sub-sections (1) and (2) of Section 18 of the Mines and
Minerals (Development & Regulation) Act, 1957, promulgated Colliery Control Rules, 2004,
which was published in the Official Gazette on 25th
August, 2004. The provisions of the said
Colliery Control Rules, 2004 are virtually parameteria with the provisions of the Colliery Control
Order, 2000. Upon amendment of the Essential Commodities Act, 1955 by the Essential
Commodities (Amendment) Act, 2006 as had come into effect on 12th
February, 2007, coal
including coke and other derivatives were de-specified as an essential commodity and therefore,
completely brought outside of the coverage of the Essential Commodities Act, 1955 and
automatically outside the scope of entry 33 of the concurrent list by virtue of the provisions of
newly inserted Section 2A of the Essential Commodities Act, 1955. After the said amendment of
2006 in the Essential Commodities Act, the Colliery Control Order 2000 became virtually
become non-operative, inapplicable and void.
After the said amendment, coal including coke and other derivatives became non-essential
commodities. However, today, there are several coke derivatives manufacturers who are caught
in the red tape and policy decisions of various governments and they are yet to receive their
share of coal as yet. Under the New Coal Distribution Policy, collieries ought to enter into Fuel-
Supply Agreements (FSA) with the monopolistic government agencies, but there are a lot of
procedural glitches that requires immediate judicial intervention for fair dispensation of justice.
Functions of Coal Controller’s Organisation are listed as below-

4. Under Colliery Control Order, 2000 (Now Colliery Control Rule, 2004)–
 To lay down procedure and standard for sampling of coal
 Inspection of collieries so as to ensure the correctness of the class, grade or size of coal.
 To issue directives for the purpose of declaration and maintenance of grades of a seam
mined in a colliery.
 To act as the appellate authority in case of dispute between consumers and owner arising
out of declaration of grade and size of coal.
 To regulate disposal of stock of coal or the expected output of coal in the colliery.
 Quality surveillance with respect to loading of coal in wagons/ trucks according to laid
down procedures regarding grades and sizes.
 To grant opening /reopening permission of coal mine, seam or a section of seam or to
subdivide a mine.
Under Coal Mines (Conservation & Development) Act, 1974 and Coal Mines (Conservation and
Development) Rules, 1975, the Coal Controller has the following functions and duties:-
 Assessment and collection of excise duty levied on all raw coal raised and dispatched.
 Providing financial support to the coal operators for-
a. Ensuring the conservation of coal resources.
b. Undertaking the development of coal mines in a scientific manner.
c. Undertaking research in relation to conservation of coal, development of coal
mines and utilization of coal.
d. Protective works including blanketing, filling up of subsided areas, construction
of dams, cutting of trenches, artificial barriers etc.
e. infrastructure development in coalfields.
Under Collection of Statistics Act, 1953-
 Coal Controller has been made the statistical authority with respect to coal and lignite
statistics. Entrusted the responsibility of carrying out Annual Coal & Lignite survey.
 Submission of monthly coal data to different ministries of central and state Govt.,
national and international organization.

5.  Collection of Statistics relating to coal washeries.
Under Coal Bearing Area (Acquisition and Development Act, 1957-
Coal Controller is the competent authority under this act to hear any objection to the
Central Government’s Notification relating to acquisition of coal bearing land and to
furnish his reports to Central Govt.
Under the Coking Coal Mines (Nationalisation) Act, 1972 and the Non-coking Coal Mines
(Nationalisation) Act, 1973, the Coal Controller also functions as the Commissioner of Payment
to settle the claim cases of colliery owners of pre-nationalisation period under the above acts.
Certain Landmark Notifications
Ministry of Coal, G.S.R. 816(E): In exercise of powers conferred by clause (a) of sub-section
(1) of Section 26 of the Mines and Minerals (Development and Regulation) Act, 1957 (67 of
1957) read with rule 15 of the Colliery Control Rules, 2004, the Central Government hereby
specifies that the powers of the Central Government under rules 9 and 11 of the said Rules shall
also be exercised by the Coal Controller in the Government of India.
Note: The Colliery Control Rules, 2004 were published in the Gazette of India vide
G.S.R.No.540 (E) in Part-II, Section 3, Sub-section (i) dated 25th August, 2004 which have not
been amended so far.
Source: The Gazette of India, Extraordinary, Part II-Sec.3(i), dated 17.11.2011.
Ministry of Coal, G.S.R. 817(E): In exercise of powers conferred by sub-section (1) and (2) of
Section 18 of the Mines and Minerals (Development and Regulation) Act, 1957 (67 of 1957) the
Central Government hereby makes the following amendments to the Colliery Control Rules,
2004, namely:
(1) These rules may be called the Colliery Control (Amendment) Rules, 2011.

6. (2) They shall be deemed to have come into force on 25th August, 2004.
(3) In the Colliery Control Rules, 2004, in rule 15, for the words and figures “rules 6, 7 and 11”,
the words and figures “rules 6, 9 and 11”, shall be substituted.
Source: The Gazette of India, Extraordinary, Part II-Sec.3(i), dated 15.11.2011.
Ministry of Coal, G.S.R. 818(E): In exercise of powers conferred by Section 3 read with
Section 5 of the Essential Commodities Act, 1955 (10 of 1955) read with Section 21 of the
General Clauses Act, 1897 (10 of 1897), the Central Government hereby rescinds the Colliery
Control order, 2000, published in the Gazette of India, Part-II, Section 3, Sub-section(ii) dated
1.1.2000, with immediate effect; such rescission shall not affect anything done or omitted to be
done under the said Order before this Notification.
Note:- The Colliery Control Rules, 2004 were published in the Gazette of India vide
G.S.R.540(E) in Part-II, Section 3, Sub-section (i) dated 25th August, 2004 which have not been
amended so far.
Source: The Gazette of India, Extraordinary, Part II-Sec.3(i), dated 15.11.2011
Ministry of Coal, G.S.R. 902(E): The following draft of certain rules further to amend the Coal
Mines (Conservation and Development) Rules, 1975 which the Central Government proposes to
make in exercise of the powers conferred by Section 18 of the Coal Mines (Conservation and
Development) Act, 1974 (28 of 1974), were published as required by sub-section (1) of Section
18 of the said Act in the Gazette of India, Extraordinary, Part-II, Section 3, Sub-section (i) dated
the 27th
September, 2011 under the notification of the Government of India in the Ministry of
Coal vide number G.S.R. 722(E) dated the 27th September, 2011 inviting objections and
suggestions from all persons likely to be affected thereby on or before the expiry of a period of
forty-five days from the date of publication of the said notification in the Official Gazette;
And whereas the said Gazette was made available to the public on the 27th September, 2011;
And whereas no objections and suggestions have been received on the said draft within the
stipulated period of forty-five days.
Now, therefore, in exercise of the powers conferred by Section 18 of the Coal Mines

7. (Conservation and Development) Act, the Central Government hereby makes the following
rules, namely:
RULES
1. (i) These rules may be called the Coal Mines (Conservation and
Development) Second Amendment Rules, 2011.
(ii) They shall come info force on the date of their publication in the Official
Gazette.
2. In the Coal Mines (Conservation and Development) Rules, 1975, in sub-rule (2)
of rule 7, for the words “The Coal Controller shall furnish”, the words “Every
owner, agent or manager shall furnish”, shall be substituted.
Footnote: The principal rules were notified vide number G.S.R. 184(E), dated the 1st April, 1975
and subsequently amended vide numbers:
(1) G.S.R.801, dated the 2nd August, 1980,
(2) G.S.R.65, dated the 17th January, 1981,
(3) G.S.R.101, dated the 14th February, 1987,
(4) G.S.R.199(E), dated the 23rd April, 1998, and
(5) G.S.R.291(E), dated the 31st March, 2011.
Source: The Gazette of India, Extraordinary, Part II-Sec.3-Sub-section(i), dated 27.12.2011.
Ministry of Coal, S.O. 2920(E): In exercise of the powers conferred by sub-sections (1) and (2)
of section 18 of the Mines and Minerals (Development and Regulation) Act, 1957 (67 of 1957)
read with rule 3 of the Colliery Control Rules, 2004 and in supersession of the of the notification
of the Government of India, in the Ministry of Coal number S.O.453(E) dated the 16th June,
1994, except in respect of things done or omitted to be done before such supersession, the
Central Government on and from 01st January, 2012 hereby prescribes:
i. switch over from existing Useful Heat Value (UHV) based system of grading and pricing
of non-coking coals produced in the country to fully variable Gross Calorific Value
(GCV) based system.

8. ii. the classes into which Coal and Coke shall be categorised as prescribed in the Table as
followed :
TABLE
Sl.No. Classes Specification
1. Coking Coal Steel Grade Ash content not exceeding 15 per cent.
2. Steel Grade II Ash content exceeding 15 per cent but not exceeding 18 per cent.
3. Washery Grade I Ash content exceeding 18 per cent but not exceeding 21 per
cent.
4. Washery Grade II Ash content exceeding 21 per cent but not exceeding 24 per
cent.
5. Washery Grade III Ash content exceeding 24 per cent but not exceeding 28 per
cent.
6. Washery Grade IV Ash content exceeding 28 per cent but not exceeding 35 per
cent.
7. Semi Coking Coals I Ash plus moisture content not exceeding 19 per cent.
8. Semi Coking Coals II Ash plus moisture content exceeding 19 per cent but not
exceeding 24 per cents.
Notes:
1. Coking Coals are such coals as have been classified coking coals by such coals as have been
declared as coking coal by the Central Government under the Colliery Control Order,
1945 or the Coal Mines (Conservation and Development) Act, 1974 (28 of 1974) and the rules
made under the said Act.
2. ‘Semi-coking Coals’ and ‘Weakly Coking Coals’ are such coals as were classified as ‘Blended
coals’ as may be declared as ‘semi-coking’ or ‘weakly coking’ coals by the Central
Government under the Colliery Control Order, 1945 or the Coal Mines (Conservation and
Development) Act, 1974 (28 of 1974) and the rules made under the said Act.
3. Coals other than coking or semi-coking or weakly coking coals are non-coking coals.

9. 4. Ash percentage of coking coals and hard coke shall be determined after air-drying as per IS:
1350-1959. If the moisture so determined is more than 2 per cent, the determination shall be after
equilibrating at 60 per cent relative humidity at 40oc temperature as per IS: 1350-1959.
5. Determination of gross calorific value shall be carried out in accordance with procedure laid
down in IS: 1350 (Part II) 1970 dated April 1971 or any subsequent revision thereof.
6. The above classification shall not apply to coals other than Bituminous or Sub-bituminous
coals as specified under Indian Standard Specification No.IS:770-1964.
______________________________________________________________________________
Source: The Gazette of India, Extraordinary, Part II-Sec.3-Sub-section(ii), dated 30.12.2011.
Ministry of Coal, S.O. 207(E): In exercise of the powers conferred by clause (d) of sub-section
(2) of Section 13 of the Mines and Minerals (Development and Regulation) Act, 1957 (67 of
1957), the Central Government hereby makes the following Rules, namely:
1. Short title and commencement.-(1) These rules may be called the Auction by Competitive
Bidding of Coal Mines Rules, 2012.
(2) These rules shall come into force on the date of their publication in the Official Gazette.
2. Definition: (1) In these rules, unless the context otherwise requires,
(a) “Act” means the Mines and Minerals (Development and Regulation) Act, 1957 (No. 67 of
1957);
(b) “Coal” includes anthracite, bituminous, lignite, peat and any other form of carbonaceous
matter sold or marketed as coal and also coke;
(c) “floor price” means the minimum price fixed by the Central Government for an area
containing coal offered for auction by competitive bidding;
(d) “reserve price” means the price fixed by the Central Government for an area containing coal
which is to be allotted otherwise than through auction by competitive bidding.

10. (2) Words and expression used herein but not defined and defined, in the Act shall have the
meanings respectively assigned to them in the Act.
3. Procedure for allocation of area containing coal through auction by competitive bidding: (1)
The Central Government shall,
(a) identify area containing coal for allocation through auction by competitive bidding;
(b) earmark areas containing coal for each specified end use separately for the purpose of
auction;
(c) invite offers through auction from the companies engaged in the business of specified end
uses as mentioned in Section 11A of the Act for the allocation of Coal or lignite blocks in the
areas identified under clause (a);
(d) notify a floor price for each area, identified under clause (a).
(2) The companies as mentioned in clause (c) of sub-rule (1) shall be required to submit
their offer to the invitation in two parts, namely:
(i) technical bid; and
(ii) commercial bid.
(3) The successful bidder shall be allocated the area containing coal identified under clause (a) of
sub-rule (1).
4. Procedure for allocation of area containing coal to Government companies: (1) The Central
Government shall,
(a) identify area containing coal for allocation to the Government company or corporation as
mentioned in the clause (a) of proviso to section 11A of the Act;
(b) earmark area containing coal for mining or other specified end use, separately for the purpose
of allocation;
(c) fix a reserve price for each of the areas specified in clause (a).
(2) The Central Government shall circulate to the State Government and concerned Ministries of
the Central Government list of the areas containing coal identified inviting applications from the
Government companies or corporations for allocation.
(3) The applications received shall be considered in consultation with concerned State
Governments and the Ministries of the Central Government.

11. (4) The company or corporation for allocation of area containing coal shall be selected from
amongst the eligible applicants.
(5) The area containing coal shall be allocated to the selected Government company or
corporation.
5. Procedure for allocation of area containing coal to a company or corporation awarded a power
project on the basis of competitive bids for tariff:(1) The Central Government shall,
(a) identify area containing coal for allocation to a company or corporation awarded a power
project on the basis of competitive bids for tariff as mentioned in the clause (b) of proviso to
section 11A of the Act for the purpose of obtaining reconnaissance permit, prospecting licence or
mining lease from the State Government;
(b) fix a reserve price for each area specified in clause (a);
(c) Circulate to the State Governments and the Ministry of Power of the Central Government a
list of the areas in clause (a) for inviting applications from eligible Government companies and
corporations for allocation.
(2) The applications received shall be considered in consultation with the concerned State
Governments and the Ministry of Power of the Central Government.
(3) The Central Government thereafter shall earmark the area containing coal to the selected
State Governments for allocation to the company or corporation awarded a power project on the
basis of competitive bids for tariff.
(4) The State Governments shall select a company or corporation on the basis of competitive
bids for tariff and recommend for allocation of area containing coal to such company or
corporation.
(5) The area containing coal shall be allocated to the selected company or corporation.
6. Proceeds of auction: The proceeds of the auction under clause (c) of sub-rule (1) of rule 3 and
reserve price shall be transferred to the concerned State Government where the area is located.
7. Agreement with allocate company: The Company - Government shall enter into an agreement
with the allocate company.

12. 8. Action for contravention or non-fulfillment of obligations etc: In case of contravention or
nonfulfillment of the obligations under the agreement or the terms and conditions of allocation,
the Government reserves the right to take appropriate action including the right to de-allocate the
area containing coal after giving reasonable opportunity of being heard.
Source: The Gazette of India, Extraordinary, Part II-Sec.3-Sub-section(ii), dated 2.2.2012.