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Leader of Opposition in Rajya Sabha Arun Jaitley has said that the allocation of blocks to private operators for commercial exploitation clearly falls in the category of arbitrary adoption of means, other than those that are competitive to maximise revenue, as enunciated in the verdict of the Supreme Court.
According to him, the apex court's verdict provides one more reason to cancel all coal block allocations.
Arun Jaitley said the government should not gloat over the Supreme Court neither prescribing nor proscribing any one method for the disposal of natural resources. He asserted that the verdict strengthened the Bharatiya Janata Party's demand to cancel all coal block allocations.
Pointing out that the Presidential reference sought the court's views under its advisory jurisdiction on a set of eight questions arising from the cancellation of 122 2G spectrum licences issued in 2008, Jaitley said essentially, the questions focused on whether auction is the only permissible method for disposal of natural resources under all circumstances.
The Supreme Court has chosen to answer the first five set of questions. It has refrained from responding to the rest of the questions on the ground that if answered, it may have a bearing on spectrum allocation itself, explained Jaitley, who is also a senior advocate.
He pointed out that the court thought "the purpose of this Reference would be best served if ...it gave a constitutional answer rather than an economic one."
As such, he said the court has clarified that the methodology pertaining to the disposal of natural resources is clearly an economic policy and it cannot mandate any one method, but it can test the legality and constitutionality of these methods and give a "constitutional answer".
Jaitley said the court has made it abundantly clear that if a policy is patently unfair to the extent that it falls foul of the fairness requirement of Article 14 of the Constitution, the courts will not hesitate to strike the policy down.
He said the most critical point in the apex court's opinion is to put curbs on the executive prerogative of policy decisions to alienate the natural resources, by ruling that "when scarce natural resources are alienated for commercial pursuits of profit maximising private entrepreneurs, adoption of means other than those that are competitive and maximise revenue may be arbitrary, and in such situation the policy may face the wrath of Article 14 of the Constitution."
The only leeway given to the Executive is that when policy decisions are backed by a social or welfare purpose, methods other than auction/competitive bidding and revenue maximisation may be adopted. But the court's rider is that even so, the objective criteria has to be stated and the reasons to be recorded, Jaitley explained.
He said the court has clearly stated that each case should be weighed on the basis of facts and circumstances.
"The case may depend on the principles of social or welfare purpose, or on the principle of revenue maximisation when the purpose is commercial pursuit through private entrepreneurs."
The court's opinion to the Presidential reference is quite clear that "an Executive action can be deemed as arbitrary, unfair, unreasonable and capricious and go against the spirit of Article 14, if revenue maximisation is not achieved when the purpose of the alienation of the scarce resource is commercial".
The BJP has been trying to make the same argument, while paralysing Parliament for weeks and seeking the cancellation of blocks given out for commercial use, Jaitley added.