Auction of natural resources not mandatory: SC. Govt is free to act

mangaloretoday.com/ CNN-IBN

New Delhi, Sept 27: In a huge relief to the Central government, the Supreme Court on Thursday held the Presidential reference on 2G as maintainable and said that the auction route is not mandatory for allocation of every natural resource.

The apex court also clarified that its order on 2G spectrum auction was only restricted to the telecom sector and not for any other resource.

While the government welcomed the judgement of the Supreme Court, the Bharatiya Janata Party (BJP) pointed that policy making was the job of the government, not the apex court.

 

Union HRD Minister Kapil Sibal claimed that the ruling confirmed the stand of the government, saying, "The Supreme Court has confirmed what the government had been saying, that policy making should be left exclusively to the government. The order has brought Constitutional clarity."

Addressing a press conference, he further said, "We welcome the judgement of the Supreme Court. It has made it clear that it is not for the court to lay down the method of allocation of natural resources. We are happy that the government can now take decisions without fearing the consequences from other Constitutional authorities."

The BJP, however, hit out at the Congress-led UPA government saying using the Supreme Court order to justify the allocation of coal blocks by it is "very unfortunate".

While pointing that the legal position on the issue has been known, BJP chief spokesperson Ravi Shankar Prasad said that the party would give a considered view on the order after going through it.

Senior BJP leader Arun Jaitley pointed that it was not the job of the Supreme Court to make policies, instead, its job was to strike the policies that were "arbitrary and unfair", adding that his party favoured the process of auction.

He said, "Job of policy making is that of the government, courts do not make policy. Its job is to strike policy which is arbitrary and unfair...we favour auction."

Speaking on similar lines, Janata Party chief Subramanian Swamy said the government did not have the right to make policy without having the right to be challenged in the court.

Meanwhile, judicial expert Soli Sorabjee did not find the judgement to be bringing much relief for the government, saying the court still has the power of judicial review if the allocation is done in an arbitrary manner.

Sorabjee said that if a particular allocation is not done in fair manner, the court will interfere, adding that the relief can only be to the extent that if they were not done by auction, that by itself won’t render the allocations illegal. However, the manner of allocation would be open to judicial review.

A five-judge Constitution Bench headed by Chief Justice SH Kapadia on Thursday clarified that its opinion has no bearing on the 2G order. Apart from Chief Justice Kapadia, the Constitution Bench also consisted of justices DK Jain, JS Khehar, Dipak Misra and Ranjan Gogoi. While upholding the Presidential Reference the court said that public good was above revenue maximisation.

The court, however, refused to answer all the eight questions raised in the Presidential Reference and answered only two questions.

The apex court bench also said that the policy of auction has not got a Constitutional mandate. The court said that it cannot prescribe a method of allocation of natural resources but can undertake judicial scrutiny on a case to case basis.

Auction despite being a more "preferable method" of allotment of natural resources cannot be held to be a constitutional mandate, observed the bench.

"In our opinion, auction despite being a more preferable method of alienation/allotment of natural resources, cannot be held to be a constitutional requirement or limitation for alienation of all natural resources and therefore, every method other than auction cannot be struck down as ultra-vires the constitutional mandate," the bench said.

The bench said that auctions may be the best way of maximizing revenue but revenue maximisation may not always be the ultimate motive of the policy and natural resources can be allocated to private companies by other methods for the purpose to subserve public good.

"Common good is the sole guiding factor under Article 39(b) for distribution of natural resources. It is the touchstone of testing whether any policy subserves the common good and if it does, irrespective of the means adopted, it is clearly in accordance with the principle enshrined in the Article," the bench said.

The Centre had moved the Presidential Reference on whether auctioning of natural resources is mandatory in line with its 2G spectrum judgement. The Centre had sought clarity on which resources needed to be auctioned and which ones could be allotted on a first-come-first-serve basis.

The court had on February 2, 2012, cancelled 122 2G licences and had said natural resources should be distributed through a public auction.

The government had on April 12 moved the Reference signed by the then President Pratibha Patil in which eight questions were raised, including whether there could be judicial interference in policy matters, vis-a-vis disposal of natural resources and investments made by foreign investors under multi and bilateral agreements.

"Whether the judgement lays down that the permissible method for disposal of all natural resources across all sectors and in all circumstances is by the conduct of auction," the Reference had stated.

"Whether the court holds that within the permissible scope of judicial review that the policy is flawed, is the court not obliged to take into account investment made under the said policy including the investment made by foreign investors under the multi and bilateral agreements," it said.

It sought the court’s opinion on "whether the judgement is required to be given retrospective effect so as to unsettle the licences issued for 2G spectrum and allocated after 1994 till 2008."

The Reference also touched upon the 3G spectrum allocated through "auction" and wanted to know the implications of the judgement on it.

"Whether 3G spectrum acquired through the auction in 2010 by entities whose (2G) licences have been quashed in the judgement stands withdrawn," it asked.