The Supreme Court has expressed its’ opinion  on a reference  of the President under Article 143(1) of the Constitution of India.  The Court’s opinion was sought on eight different questions.  Most of these  questions arose from the  observations and directions of the Court in the 2G Spectrum case wherein the Court had mandated  that whenever a contract is to be awarded,  a licence is to be given or a largesse are to be distributed, the public authority must  adopt a transparent and fair method to make selection so that all eligible persons get a fair opportunity.

The Court further mandated that when it came to allocation  of the scarce natural resources like the spectrum, the State must ensure that  a non-discriminatory method is  adopted for allocation.  The  Court opined  that a duly publicized auction is  conducted fairly is the best available  method  for distributing natural resources. Policies  like ‘First-come-first served’ whenever used are  likely to be misused by private parties  for  maximizing benefits.  The Court imposed a duty on the Government to adopt the method of auction by giving wide publicity for such alienation.

The Presidential reference sought opinion of the Court on eight questions.  The Court has expressed  two opinions  -  one on behalf of four Judges and authored by Justice D.K. Jain ; which has been referred to as the ‘main opinion’ and the other a broadly concurring opinion authored by Justice J.S. Khehar.  The main opinion only confines itself to the question whether auctions are the only method of disposal of natural resources (paragraph 150). 

It chose not to answer the other questions raised including some other sub questions which relate to the allocation of 2G spectrum.  The Court decided not to interfere with the spectrum judgement  in view of the concession made by the Government itself.he evolution of the right to equality  in India underwent a transformation in 1974 when the Supreme Court  in Royappa’s case decided to liberate Article 14 from the limited ‘cribbed, cabined and confined’ limits  of equality.  The Supreme Court observed – “From a positivistic point of view  equality is antithetic to arbitrariness.  In fact, equality and arbitrariness are sworn enemies; one belongs to the rule of law in a republic while the other to the whim and caprice of an absolute monarch.  Where an act is arbitrary it is implicit in it  that it is unequal both  according to political logic and constitutional law and therefore violative of Article 14” .

On behalf of my Party, the Bharatiya Janata Party,  I had   on 26th August, 2012 commented in an article put on the  Party website, on the Coal block  allocations and the reference pending before the Court, as under:  

“The whole process of allocation of coal blocks stinks.  This raises a larger question of how the Indian State should allocate natural resources.  A rudderless government suffering from policy paralysis has sought advisory opinion of the Supreme Court on this larger question.  Allocation of natural resources is an issue squarely  within the policy domain.  Formulation of policy is an Executive function; it is not a judicial function.  The Court can merely  strike down a policy if it is arbitrary or unconstitutional.  The Court cannot frame a policy.  Which tangible natural resources should be auctioned and which could be allotted on some alternative fair criteria is an issue to be decided by the Government.  The courts are an institution empowered to judicially review a decision of the Government.  If government formulates a policy which opens the flood gates for corruption , the courts can strike down the policy.  What would happen if the courts were to advice the formulation of such an arbitrary policy?”
 
The main opinion of the Court  has held  in paragraph 148 and 149 as under:

148. 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. 

149. Regard being had to the aforesaid precepts, we have opined that such auction as a mode cannot be conferred the status of a constitutional principle.  Alienation of natural resources is a policy decision, and the means adopted for the same  are thus,  executive prerogatives.  However, when such a policy decision is not backed by a social or a welfare purpose, and precious and scarce natural resources are alienated for commercial pursuits of profit maximizing private entrepreneurs, adoption of means other than those that  are competitive and maximize revenue may be arbitrary and face the wrath of Article 14 of the Constitution.  Hence, 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 which we have culled out above.  Failing which, the Court, in exercise of power of judicial revie, shall term the executive action as arbitrary, unfair, unreasonable and capricious due to its antimony  with Article 14 of the Constitution.”  
 
The ratio and meaning of the opinion as understood is as follows:  
•        There is no constitutional requirement that auction is the only methodology of allocating resources.
•        If allocation is made to individuals for commercial exploitation, auction and maximization of revenue is the rule .  
•        Deviation  from the rule of auction and revenue maximization is possible only when there is a social or welfare purpose.
•        Even when there is a social or welfare purpose the allocation can be made on basis of stringent guidelines and the same is required to be tested on a case to case basis. 

Some Government ministers have hailed this opinion on a question of law as Government’s victory against the CAG who had severally indicted the government in the 2G spectrum and coal block allocations.  Were not both these allocations entirely for a commercial purpose ?  Did not the Government follow a pick and choose policy and cause huge loss to the revenue?

The concurring  opinion of Justice Khehar further restricts the discretions for the social and welfare allocations which are made through a procedure other than auction.  The opinion realizes the danger of the allocation being on a case to case basis transforming to ‘suitcase to suitcase basis’.  Justice Khehar  advises a clear, transparent and objective criteria or procedure which furthers public interest, public good and public purpose.  A public authority is ordained to act reasonably and fairly.  The judge deals with a possible allocation of coal.  After analyzing the current  provisions he categorically opines that “no process other than auction can therefore be adopted for the grant of coal mining lease.”

The Supreme Court‘s opinion has incorporated the principles of fairness as antithetic  to arbitrariness in the allocation of natural resources.  This opinion is contrary to what the Government did  in the  2G spectrum and coal block allocations.  Yet some ministers call it a victory of the Government.