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SC gives relief to ‘tainted’ govt on auction policy

The Supreme Court on Thursday gave huge relief to the central government, which is facing tough questions on the allocation of natural resources, like spectrum and coal, saying that the auction was not the only method for allocating natural resources.

A five-judge constitution bench of the court gave its opinion on the presidential reference arising out of the 2G spectrum case. The bench, headed by the chief justice S H Kapadia, said that common good was the touchstone for any policy and if this goal was met, then any means adopted was in accordance with the constitutional principles.

The court, however, also said that the it could strike down any policy if there was any arbitrariness in the decision. It also made clear that the apex court's ruling on 2G case was limited to spectrum and not to other natural resources.

'Rather than prescribing or proscribing a method, we believe, a judicial scrutiny of methods of disposal of natural resources should depend on the facts and circumstances of each case, in consonance with the principles. Failing which, the Court, in exercise of power of judicial review, shall term the executive action as arbitrary, unfair, unreasonable and capricious,' the court said.

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 judgements.

The court observed that auction, despite being a more preferable method of allotment of natural resources, could not be held to be a constitutional mandate. '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 court said.

The bench, which also comprised the justices D K Jain, J S Khehar, Dipak Misra and Ranjan Gogoi, said that auctions might be the best way of maximising revenue, but revenue maximisation might not always be the ultimate motive of the policy and natural resources could be allocated to private companies by other methods for the purpose to subserve public good.

The court observed that 'a potential for abuse cannot be the basis for striking down a method as ultra vires the Constitution. It is the actual abuse itself that must be brought before the Court for being tested on the anvil of  constitutional provisions. In fact, it may be said that even auction has a potential of abuse, like any other method of allocation, but that cannot be the basis of declaring it as an unconstitutional methodology either'.
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