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New Delhi: Responding to a presidential reference
following the verdict on the 2G spectrum allocation, the Supreme
Court Thursday said the auction route was not the only method for
allocating natural resources.
A five-judge bench headed by Chief Justice S.H. Kapadia said
auction could be a better option where the aim is maximisation of
revenue, but then "every method other than auction of natural
resources cannot be shut down".
The majority opinion of the Chief Justice, Justice D.K. Jain,
Justice Dipak Misra and Justice Ranjan Gogoi was delivered by
Justice Jain.
Justice J.S. Khehar in a separate but concurring judgment said
that "no part of the natural resource can be dissipated as a
matter of largesse, charity, donation or endowment, for private
exploitation".
"Each bit of natural resource expended must bring back a
reciprocal consideration. The consideration may be in the nature
of earning revenue or may be to best subserve the common good."
The court's response came to the presidential reference seeking
its opinion on whether auction was the only method of allocating
scarce natural resources as held in its Feb 2, 2012 verdict in 2G
case.
Delivering the opinion that auction could not be the sole method,
Justice Jain said "auction could not be elevated as a
constitutional mandate".
"... reading auction as a constitutional mandate would be
impermissible because such an approach may distort another
constitutional principle embodied in Article 39(b). The said
article enumerating certain principles of policy," the court said
in its opinion.
It disagreed with Centre for Public Interest Litigation's (CPIL)
that auction of natural resources would maximise the revenue
realisation which in turn could get channelised for the common
good.
"... We are not persuaded to hold so. Auctions may be the best way
of maximising revenue but revenue maximization may not always be
the best way to subserve public good."
"... the submission that the mandate of Article 14 is that any
disposal of a natural resource for commercial use must be for
revenue maximization, and thus by auction, is based neither on law
nor on logic. There is no constitutional imperative in the matter
of economic policies - Article 14 does not pre-define any economic
policy as a constitutional mandate."
The court held "common good" is the sole guiding factor under
Article 39(b) for distribution of natural resources, and if a
policy serves this purpose, irrespective of the means adopted, it
is clearly in accordance with the principle enshrined in Article
39(b).
"The government has repeatedly deviated from the course of auction
and this court has repeatedly upheld such actions. The judiciary
tests such deviations on the limited scope of arbitrariness and
fairness under Article 14 and its role is limited to that extent."
"Essentially whenever the object of policy is anything but revenue
maximization, the executive is seen to adopt methods other than
auction."
It did not accept the contention that methods other than the
auction were susceptible to abuse of power. "This argument, in our
view, is contrary to an established position of law on the subject
cemented through a catena of decisions."
Having said so, the court said it cannot go into the wisdom of the
executive in policy matters and decide on which is the suitable
method of allocating natural resources, as it does not have the
expertise to decide which method is suitable for disposal of a
particular natural resource.
The economic policy of the government can only be struck down if
it is found to be arbitrary and capricious, the court said.
Justice Khehar, while concurring with the main opinion, said that
it "should not be understood to mean, that it (auction) can never
be a valid method for disposal of natural resources".
The court did not answer three questions relating to the 2G
verdict by which it had cancelled 121 2G licences, holding the
'first come, first served' policy as flawed.
The presidential reference was filed April 12 and hearing on it
began May 11.
Of the eight questions raised in the reference, the government
sought the court's opinion on whether auctioning was the only
permissible method for the disposal of all natural resources,
asking if this was not contrary to the Supreme Court's earlier
judgments.
The reference followed the 2G verdict Feb 2, wherein the apex
court said if scarce natural resources like spectrum were to be
alienated by the state, then the only legal method was transparent
public auction.
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