NEW DELHI: In a major setback to the CBI probe into Coalgate, the government has denied investigators permission to question former coal secretary H C Gupta, a crucial link in alleged irregularities in allocation of coal mines when PM Manmohan Singh held charge of the portfolio.

The CBI had sought to question Gupta, who is currently a member of the Competition Commission of India (CCI), over the allocation process for captive mines that has been slammed by the federal auditor for causing a Rs 1.86 lakh crore revenue loss.

Sources said the ministry of corporate affairs turned down the request to question Gupta despite the agency arguing that his role as secretary between 2006 and 2009 is critical to its probe. CBI sources say that they will again send a request to the government to question Gupta.

The government decision is being seen as tantamount to stone walling the CBI and is bound to create fresh controversy with former law minister Ashwani Kumar losing his job over diluting a status report onCoalgate meant for the Supreme Court’s scrutiny.

CBI can also seek directions from the SC as Gupta is seen as a crucial witness having been an insider at the time coal mine allocations were made. Agency officials pointed out that the government’s resistance when CBI has only sought to query Gupta is telling. “This is hardly a request for prosecution,” said sources.

The agency intends to tell the court, whose critical comments had led to Ashwani Kumar’s resignation, that the government’s decision can impinge its probe.

Gupta can be asked about how the selection committee that allotted mines functioned and what criteria were adopted to select or reject applications. CBI has said it has failed to discover any reasoning on official files. The former secretary can also be quizzed on the delay in implementing an auction policy and the amendment of the Mines and Minerals (Development and Regulation) Act that were finally cleared by Parliament in mid-2010.

CBI has so far registered 11 FIRs related to alleged irregularities in the allotment coal blocks between 2006 and 2009.

During this period, 68 coal blocks were allotted to 151 companies and files of some of them had gone missing. CBI has questioned former Union Ministers Santosh Bagrodia and D Narayan Rao and Congress MP in Rajya Sabha MP Vijay Darda so far.

Bagrodia, a former minister of state, was questioned as he was part of the Coal Ministry during UPA-1 and it has been alleged that he did not act on reported misrepresentations and concealments by Nagpur-based AMR Iron and Steel Pvt Ltd (AMR) application.

The alleged role of Bagrodia, a former Rajya Sabha member, was stated in an FIR filed by CBI on September 3, 2012. However, the FIR did not name Bagrodia as an accused.

Vijay Dadra was also quizzed by CBI besides another former Minister of State D Narayan Rao.

CBI has been raising the issue of missing files from the Coal Ministry which finally deputed a joint secretary-level official to provide the agency with the missing files related to the probe in the coal block allocation scam.

The agency has booked Vinni Iron and Steel, Nav Bharat Steel, JLD Yavatmal, JAS Infrastructure and Power and AMR Iron and Steel, Vikash Metal and Power Ltd, Grace Industries Ltd, Green Infrastructure and Kamal Steel for alleged cheating, forgery and misrepresentation of facts in their applications for coal blocks. CAG had pegged the loss to the exchequer due to allocation of the coal blocks to the tune of Rs 1.86 lakh crore.