The Supreme Court ruled on Monday that all coal block allocations since 1993 were illegal. The court said licenses issued to mining companies were unlawful.
"All allocations were done in an illegal manner and suffer from vice of arbitrariness," the court said, according to the Economic Times.
The fate of the coal blocks will come up for fresh hearing on 1 September, said the apex court.
CBI drops case against Birla:
The Central Bureau of Investigation (CBI) said on Monday that it would close a coal scam case against billionaire Kumar Mangalam Birla and a former top bureaucrat that surfaced in 2012 after a government auditor's report.
The CBI will file a closure report on the case against Birla and former coal secretary P.C. Parakh very soon, CBI spokeswoman Kanchan Prasad told Reuters.
The national auditor had alleged that the government's under-priced sale of coal blocks may have cost the exchequer revenues of $33 billion, although industry watchers and the previous government had cast doubts on the figure.
The CBI filed the case against Birla and Parakh late last year in relation to a block allocated in 2005 to Hindalco Industries as part of the $40 billion Aditya Birla Group.
The case had sparked widespread condemnation from industry leaders and politicians alike, given Birla's stature as a leading Indian entrepreneur.
Hindalco had denied any wrongdoings and even the then Prime Minister Manmohan Singh, who was in charge of the coal ministry when the allocation took place, defended the decision to award the block to Hindalco.
"The SC ruling has made uncertain and it is quite negative for many mining companies" Piyush Jain, Equity analyst at Morningstar to ET Now.
Stock of BSE Metals and BSE power plunged after the verdict of the Supreme Court.
At 3 pm on Monday, BSE Metal index slipped 271.24 points or 2.11 percent recording at 12578.15 points, whereas, BSE Power stocks recorded 0.32 percent lower at 2099.28 points.
"It may be good for mutual funds but do not get into these stocks currently", said an analyst.