Under a presidential reference, the Supreme Court was asked a series of questions that flowed from its judgement in the 2G spectrum allocation case. The basic question before it was whether auction as a method of distributing natural resources under the government’s control enjoyed a constitutional mandate. On Thursday, a five judge bench of the court gave a negative opinion.
The court’s logic is, of course, impeccable. It said that “the repercussion of holding auction as a constitutional mandate would be the voiding of every action that deviates from it, including social endeavours, welfare schemes and promotional policies…” (Para 110, Special Reference No 1 of 2012).
Importantly, the court said that revenue maximization (something expected from auctions) may not lead to common good. “Auctions may be the best way of maximizing revenue, but revenue maximization may not always be the best way to subserve public good. ‘Common good’ is the sole guiding factor under Article 39(b) for distribution of natural resources.” This is an important re-iteration of constitutional values enshrined in the Directive Principles of State Policy in the Constitution.
The court also delivered a warning to the executive that “…We have opined that 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 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.” (Para 149).
It is nobody’s case that public policy—especially economic policies—be framed by courts. Constitutionally, that is the task for the executive. When the courts intervene (as the apex court did in the 2G case), it is either due to abuse of power by the executive or its abdication of its responsibilities. The danger lies in the use of discretionary power that masquerades as policymaking. The 2G spectrum case and the ongoing coal block allocation controversy prove this amply. To that end, the court has delivered a balanced judgement that respects the executive’s right to frame policy, but also issued a warning that if it indulges in malafide use of power, then it will have to face judicial wrath.
Can governments be trusted to allocate natural resources in a fair manner?