New Delhi: With the Supreme Court’s reply to the presidential reference on the allocation of natural resources expected on Thursday, the question whether this can be done fairly only through auction may be resolved.
The Supreme Court had said that all natural resources should be allocated through auction in its 2 February verdict that cancelled 122 telecom licences allocated to nine companies that had been granted second-generation (2G) spectrum in 2008.
The two-judge bench headed by Justice Singhvi had said that the policy of first-come-first-served (FCFS) was flawed.
The verdict led to the government submitting a presidential reference on 12 April under Section 1, Article 143(1) of the constitution seeking clarity from the apex court on the consequences of the verdict. The reference is being examined by a five-member constitution bench headed by Chief Justice S.H. Kapadia and consisting of justices D.K. Jain, J.S. Khehar, Dipak Misra and Ranjan Gogoi.
The bench will also decide whether the reference is maintainable as senior advocates Soli Sorabjee and Prashant Bhushan made submissions before the court alleging that the government was trying to overrule the 2G verdict through the reference.
The reference essentially raises eight questions, including whether there could be judicial interference in policy matters, vis-a-vis disposal of natural resources and investments made by foreign investors under multi and bilateral agreements as well as the impact on telecom licences and spectrum allocated before January 2008 and also the 3G spectrum allocated in 2010.
“Whether the judgement lays down that the permissible method for disposal of all natural resources across all sectors and in all circumstances is by the conduct of auction,” said the Presidential reference, reviewed by Mint. “Whether the court holds that within the permissible scope of judicial review that the policy is flawed, is the court not obliged to take into account investment made under the said policy including the investment made by foreign investors under the multi and bilateral agreements,” it added, in relation to the issue of so-called judicial over-reach.
The reference also asked about the impact on resources allocated and retrospective changes, without confining itself to telecom licences. The reference also touched upon the 3G spectrum allocated through “auction” and wanted to know the implications of the judgement on that.
“Whether 3G spectrum acquired through the auction in 2010 by entities whose (2G) licences have been quashed in the judgement stands withdrawn,” the reference has queried the court.
On 11 May, the five -member bench issued notices to state governments as well as the Federation of Indian Chambers of Commerce and Industry (Ficci) and Confederation of Indian Industry (CII) lobby groups. Notices were also issued to NGO Centre for Public Interest Litigation (CPIL) and Janata Party president Subramanian Swamy, based on whose petitions the bench comprising justices G.S. Singhvi and A.K. Ganguly (the latter has since retired) had delivered the judgement on 2 February.
The ruling on the reference will be issued a day before Justice Kapadia is to retire and hand over the reins as chief justice to Altamas Kabir.
“Knowing justice Kapadia and the scope of presidential reference under the constitution, we need to be clear that it is going to work as an opinion and not a judgment. The constitution very clearly defines that the government, rather the president, can move a reference to the SC and the SC can give opinion but it is not in the form of judgment or decision,” said DSK Legal’s Delhi-based partner Balbir Singh, who has consulted on behalf of several telecoms companies in the 2G reference case.
It’s “quite well settled that opinion is not binding,” he said. “The only window I see for the government is if Kapadia is going to decide something which is going to help the government in interpreting Singhvi’s judgment in a positive manner, that is retrospectively (the judgment is) not applicable and that there is mandatory auction applicable in all natural resources (allocations).”
The government could file a “curative petition of Singhvi’s judgment on (the) basis of opinion,” Singh said.
This means the government could approach the Supreme Court for a review of justice Singhvi’s original judgment to bring it in line with the opinion, depending on what the constitution bench says.
“The presidential reference has no force of law. It is just a point of view and we will still be able to litigate in case there is an adverse ruling,” said Rajan Mathews, director general, Cellular Operators Association of India. “In the worst-case scenario that the court opines that the (2 February) ruling should apply retrospectively, then the bottom falls out of the sector. There will be a number of questions raised, including what happens to all the revenue that the government has earned from the sector. The licences were always bundled with the spectrum and nobody would have paid that much for the licence and not the spectrum.”