Auction not only method to allocate natural resources: SC
New Delhi, Sep 27: 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
New Delhi, Sep 27: 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.
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.