NEW DELHI (Reuters) - India's Central Bureau of Investigation (CBI) said on Monday 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 Mr Birla and former coal secretary P.C. Parakh very soon, CBI spokesman Kanchan Prasad told Reuters. "Obviously if a closure report is being filed there's no criminality (on the part of Birla and Parakh)," she said.

India's federal auditor had alleged that the government's underpriced sale of coal blocks may have cost the exchequer revenues of US$33 billion (S$41.22 billion), although industry watchers and the previous government had cast doubts on the figure. The Indian media has dubbed the controversy as "coalgate".

The CBI filed the case against Mr Birla and Mr Parakh late last year in relation to a block allocated in 2005 to Hindalco Industries, part of the US$40 billion Aditya Birla Group. Mr Birla is the chairman of the group.

The case had sparked widespread condemnation from industry leaders and politicians alike given Mr Birla's stature as a leading Indian entrepreneur.

Hindalco had denied any wrongdoing 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.

Hindalco shares were down 1.4 per cent in late morning trade in a wider market that was up 0.67 per cent.

Ms Prasad, however, said investigations against Jindal Steel and Power Ltd in a different coal block allocation will continue. Jindal, controlled by former Congress party lawmaker Naveen Jindal, has said it was cooperating with the CBI.

Accusations of crony capitalism in allocating India's resources from coal to mobile telephone bandwidth had dogged the former government of Dr Singh. His Congress party suffered its worst defeat in polls concluded about three months ago.