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'Auction not sole method for allocating natural resources'

Supreme Court delivers opinion on Presidential reference, big relief for government

Piyali Mandal  |  New Delhi 

The five-judge constitution bench of Supreme Court headed by Chief Justice S H Kapadia today said that the judgment in the 2G scam was restricted to auction of telecom spectrum only. The court also clarified that auction is not the only permissible method of allocating natural resources.

The SC has maintained that auction is not the absolute principle for natural resource allocation, which implies that not all natural resources may be allocated through the auction route.

Besides, the SC has also said that revenue maximization is secondary to public good.

The government had on April 12 moved the reference signed by the then President Pratibha Patil in which eight questions have been raised, including whether there could be judicial interference in policy matters.

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spectrum acquired through the auction in 2010 by entities whose (2G) licences have been quashed in the judgment stands withdrawn," it asked.

A meeting of the Union cabinet, chaired by Prime Minister Manmohan Singh, had on April 10 cleared the telecom ministry's proposal to seek the Supreme Court's opinion on various issues arising out of the February 2 judgment.

The two-judge bench, in its verdict, had also observed that auction was best suited route for allocating natural resources like telecom spectrum because the policy of first-come-first-serve was flawed.

The bench had on May 11 issued notices to the state governments and industrial chambers FICCI and CII and sought their responses on behalf of the private industries.

The court had also issued notices to the NGO, Centre for Public Interest Litigation (CPIL) and Janata Party President Subramanian Swamy on whose petitions a bench comprising justices G S Singhvi and A K Ganguly (since retired) had delivered a judgement on February 2 cancelling 122 telecom licences by holding that the first-come-first-served policy was illegal and unconstitutional.

First Published: Thu, September 27 2012. 14:43 IST