The far-reaching nature of implementing the 2G judgment insofar as it was extended to auctioning of all natural resources (other than spectrum) would have a huge impact on Foreign Direct Investment and other investments in this country, argued Attorney General G.E. Vahanvati in the Supreme Court on Thursday.

Justifying the Presidential Reference and the need for an advisory opinion from the Supreme Court, Mr. Vahanvati told a five-judge Constitution Bench, comprising Chief Justice S.H. Kapadia and Justices D.K. Jain, J.S. Khehar, Dipak Misra and Ranjan Gogoi that it was maintainable.

Giving an illustration, the AG said: “If it is decided to go in for development, of say, the petroleum sector, preference to international companies with proven technological superiority may have to be given. Also the investments already made by them in technology in discovering petroleum may have to be considered. Simple revenue maximisation can never be the sole consideration.”

Mr. Vahanvati said: “In such a case, if the potential investor before investing in this country were to seek an opinion as to whether he would run a subsequent risk of cancellation in participating in this project, it is likely that he would receive advice that having regard to the broad principle laid down in the 2G judgment it cannot be said that there is no risk involved.”

The CJI asked the AG: “What further explanation do you want when the government has understood the 2G judgment? Our explanation should not override the 2G judgment which has laid down a proposition of law, that is our anxiety. While exercising our powers under Article 143 of the Constitution, will it [2G judgment] not be an impediment for us? Can we not say we are not exercising our power in giving the opinion?”

The AG replied: “One can understand your difficulty if the result of the judgment is sought to be overturned. There is no question of this reference requiring this court to exercise the appellate jurisdiction. We have accepted the judgment and we are not seeking that to be overturned. What we are saying is the law declared insofar as spectrum is concerned, it is acceptable to us but the same cannot be extended to other natural resources.”

The AG told the Bench “if the court [in the 2G judgment] makes observations on questions which did not arise for consideration or which were never fully argued before the court, the reference court is not precluded from dealing with these observations.”

He rejected the arguments advanced on behalf of counsel for the Centre for Public Interest Litigation and the Janata Party president Subramanian Swamy that the reference was not maintainable as ‘no doubt’ had arisen from the 2G judgment.

He said the very fact that a question had been referred by the President showed that there was a doubt on which the opinion of the Supreme Court was sought. “The President of India has made this reference on the basis that there are doubts now with regard to the way forward for the development of the country in general and introduction of FDI in these sectors.”

Mr. Vahanvati said: “There is no question of outsourcing of executive functions to the Supreme Court. If the Supreme Court feels in its advisory jurisdiction that the broad, far-reaching and sweeping observations made with regard to all natural resources did not fall for consideration, then there is no question of the President seeking to overrule the said judgment. The President needs clarity as to the legal position.”

The AG said the objection that the reference should be returned as the same was mala fide, apart from being misconceived, could not be raised in law. He will continue the arguments on maintainability on July 17.

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