But alienating scarce natural resources by other means for private gain may be arbitrary

Auction, despite being a more preferable method of alienation/allotment, cannot be held to be a constitutional requirement or limitation for alienation of all natural resources, the Supreme Court said in its advisory opinion on the ‘2G Presidential Reference’ matter.

A five-judge Constitution Bench, including Chief Justice S.H. Kapadia and Justices D.K. Jain, Dipak Misra and Ranjan Gogoi, on Thursday held that every method other than auction “cannot be struck down as ultra vires the constitutional mandate.” Justice J.S. Khehar, in his concurring opinion, gave additional reasons on two issues.

The Bench answered five of the eight questions and declined to answer the other three (relating to 2G spectrum) following the submission made by Attorney-General G.E. Vahanvati that the government had accepted the court directions in the judgment.

Writing the opinion for the Bench, Justice Jain said: “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 welfare purpose, and precious and scarce natural resources are alienated for commercial pursuits of profit maximising private entrepreneurs, adoption of means other than those that are competitive and [will] maximise revenue may be arbitrary and may face the wrath of Article 14 [equality before law].”

The methodology of disposal of natural resources “is clearly an economic policy. It entails intricate economic choices and the court lacks the necessary expertise to make them. It cannot, and shall not, be the endeavour of this court to evaluate the efficacy of auction vis-à-vis other methods. The court cannot mandate one method to be followed in all facts and circumstances. Therefore, auction, an economic choice of disposal of natural resources, is not a constitutional mandate.”

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