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Auction not the only route for resource allocation: SC

Last updated on: September 27, 2012 17:38 IST

Law booksAuctions are not the only permissible method for disposal of natural resources across sectors, the Supreme Court on Thursday said holding that the 2G verdict was confined to allocation of spectrum and is not applicable to other resources.

Giving its opinion on the Presidential reference arising out of 2G verdict, a five-judge constitution bench headed by Chief Justice S H Kapadia also ruled that common good is the touchstone for any policy and if it meets that then any means adopted is in accordance with the constitutional principles.

Auction despite being a more 'preferable method' of allotment of natural resources cannot be held to be a constitutional mandate, observed the bench also comprising justices D K Jain, J S Khehar, Dipak Misra and Ranjan Gogoi.

"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," the bench said.

The bench said that auctions may be the best way of maximising revenue but revenue maximisation may not always be the ultimate motive of the policy and natural resources can be allocated to private companies by other methods for the purpose to subserve public good.

"Common good is the sole guiding factor under Article 39(b) for distribution of natural resources.

"It is the touchstone of testing whether any policy subserves the common good and if it does, irrespective of the means adopted, it is clearly in accordance with the principle enshrined in the Article," the bench said.

The apex court referred to various judgements delivered by it earlier while upholding government's decision to allocate natural resources through means other than auction.

"It is manifest that there is no constitutional mandate in favour of auction under Article 14.

"The government has repeatedly deviated from the course of auction and this Court has repeatedly upheld such actions," the bench said.

It said 'whenever the object of policy is anything but revenue maximization, the Executive is seen to adopt methods other than auction'.

Justice Khehar, who wrote a separate but concurring judgement, said that natural resource should not be dissipated as a matter of charity, donation or endowment, for private exploitation.

"No part of the natural resource can be dissipated as a matter of largess, charity, donation or endowment, for private exploitation.

"Each bit of natural resource expended must bring back a reciprocal consideration.

The consideration may be in the nature of earning revenue or may be to best subserve the common good. It may well be the amalgam of the two.

"There cannot be a dissipation of material resources free of cost or at a consideration lower than their actual worth.

"One set of citizens cannot prosper at the cost of another set of citizens, for that would not be fair or reasonable," Justice Khehar said.

The court disagreed with the contention that auction should be the only means of allocation as other methods can be abused by the private companies in connivance with government authorities as happened in 2G case.

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