The Supreme Court on Wednesday said huge investment made by companies in coal blocks without getting clearance cannot be a ground for not cancelling licences and asked the Centre to respond whether it intends to de-allocate such allocations.

A three-judge bench headed by Justice R L Lodha said that the companies which invested money on blocks without getting all clearances took the decision at their own risk.

“They (companies) must suffer consequences no matter how much investment has been made by them. The alleged illegality cannot be compounded,” the bench said when the Attorney General contended that around Rs two lakh crore has been invested in such blocks and it will be difficult to cancel the licence for want of clearances.

“All such investments would go in drain and it cannot be a defence and no law would help them,” the bench said.

The apex court said any investment made in anticipation of clearances cannot be justified and such blocks cannot be protected if the companies fail to get clearances within a time frame fixed under the law.

“Such investments are made at their own risk if their rights have not matured. All such investments would be unauthorised,” the bench said.

The court asked the Centre to respond whether it intends to de-allocate such allocations.Meanwhile, in an embarrassment to the Centre, Maharashtra which is a Congress-ruled state also submitted before the apex court that coal blocks allocation is “entirely controlled and regulated” by the Union of India and the state government is just a subordinate party.

The state government’s stand assumes significance as it virtually puts the blame on the Centre for the alleged irregularities in the coal blocks allocation and contradicted the stand taken by Attorney General G E Vahanvati who had contended that Centre’s role is confined just to identification of coal block.

Andhra Pradesh Government also took a stand similar to Maharashtra. West Bengal, Madhya Pradesh, Jharkahand, Odisha and Chhatisgarh had earlier told the apex court that they played a minimal role in coal blocks allocation and had squarely blamed the Centre for alleged irregularities in coal blocks allocation.

Odisha government had also submitted that the central government had exercised “pervasive control” in allocation of coal blocks and framed its own guidelines for it.

“The allocation of coal blocks was made by the central government from 1993 to 2012 by evolving its own mechanism by constituting a screening committee which framed its own guidelines and also followed the guidelines framed by the Ministry of Coal from time to time,” the Odisha’s counsel had said.

West Bengal and Madhya Pradesh had also said they were merely following the Centre’s directions.

The apex court had sought responses from seven mining states– Madhya Pradesh, Andhra Pradesh, Odisha, Jharkhand, Maharashtra, Chhattisgarh and West Bengal– after it had observed that the Centre was giving “contradictory” stands on allocations.

The Centre had earlier termed allocation by it as just an exercise of identification of blocks and at the most a letter of intent given to the companies by it.

The Attorney General had in September 2013, submitted that coal blocks allocation was merely a letter of intent and does not confer any right to the companies over the natural resource which is decided by the state government.

He had contended that decision of coal block allocation to companies is only the first stage and firms get rights over coal only when they start mining for which they have to take various clearances.

The court is scrutinising coal block allocation since 1993 on three PILs seeking cancellation of blocks on the ground that rules were flouted in giving away the natural resources and that certain companies were favoured in this process.