The CBI on Tuesday told the Supreme Court that it registered an FIR against Kumar Mangalam Birla and former coal secretary P C Parakh because the reversal of an earlier decision not to allocate the Talabira II coal block to Hindalco indicated commission of a cognizable offence warranting registration of an FIR.

The statement, part of the latest status report on its investigation into Coalgate that CBI submitted in court, reads like an explanation in the light of Prime Minister Manmohan Singh endorsing the decision to allocate the coal block to Birla’s company Hindalco as “appropriate” and “based on merits”.

PMO’s strong defence of the deal has raised questions about the fate of CBI’s FIR with intense speculation about what the agency might do if one of the aggrieved parties approach a court seeking quashing of the probe.

Events following registration of the FIR against Birla and Parakh – protests by industry, bureaucrats and the defence of the Prime Minister’s Office (PMO) – are sure to attract the notice of the Supreme Court bench comprising Justices R M Lodha, Madan B Lokur and Kurian Joseph which is scheduled to hear PILs on the coal scam on October 29.

Attorney general G E Vahanvati will also have to defend the government on an application filed by petitioner-advocate M L Sharma questioning the CBI’s “double standards” in registering FIR against an industrialist and an ex-bureaucrat but leaving out the coal minister who approved allocation of Talabira II coal block to the joint venture after Hindalco was drafted into it.

Annexing letters exchanged last year between then minister of state for rural development Sisir Kumar Adhikari and coal minister Sriprakash Jaiswal over Bengal Sponge Manufacturers Mining Ltd’s request for allotment of coal block, Sharma in his fresh application alleged that it was a general practice among ministers to write to the coal minister for allocation of blocks.

He said in the FIR on allocation of coal block to Hindalco, it would have been relevant for the CBI to secure a statement from the coal minister during whose tenure the allocation was made.

“Then coal minister is a necessary party to the said alleged conspiracy and is liable to be named in the FIR, he being a public servant involved in the decision-making process (in allocation of Talabira II coal block in Jharsuguda district of Odisha to a project of Hindalco),” Sharma said.

The screening committee in early 2005 had faulted Hindalco for failing to utilize the coal linkage awarded to it from MCL and had decided to allot Talabira coal block exclusively to the joint venture between MCL and NLC.

However, acting on a representation from Birla and recommendation from the Odisha CM, the coal ministry, when the PM was holding charge of it, altered the screening committee’s decision and gave Hindalco a 15% stake in the joint venture after getting the earlier decision reconsidered by the coal ministry. The CBI’s fresh status report filed through counsel Amit Anand Tiwari said a detailed investigation was necessary on this issue.

The bench of Justices Lodha, Lokur and Joseph has been questioning the Centre’s stand that allocation of coal blocks by it meant only identification of the mines to be operated by the allottee and that all subsequent steps and formalities, including signing of lease, were to be done by the states. The Centre had said coal block allocations by it were mere letters of intent.

That is the reason why the bench had on September 27 issued notices to seven states – Madhya Pradesh, Andhra Pradesh, Odisha, Jharkhand, Maharashtra, Chhattisgarh and West Bengal – asking them to file their response by October 29 on four crucial issues.

The issues included how they understand the issue of allocation, role played by them in allocation of coal blocks by the Centre and what subsequent steps were taken by them under Mines and Minerals (Development and Regulation) Act after the Centre allotted the coal blocks.

The bench had also directed the states to file details of agreement entered by the state PSUs, which were allocated coal blocks, with private companies.