Karela Fry

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The common good

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A nuanced statement by the Supreme Court is bound to be the cause of much complication later. ET reports:

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

Govt appeared to caution the CAG asking it to keep in mind the court's view that auction is not the only way to allocate natural 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 maximizing 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 ruling that “common good” is the principle that governs the allocation of natural resources might in future lead to attempts to define this notion more precisely.

Even more importantly, the judgement re-iterates the separate powers of the executive and the judiciary by clearly stating that the choice of the method of allocation of a resource is with the executive, and the judiciary comes into the picture only if someone challenges this decision as arbitrary.

An unsigned editorial in the Hindu parses this part of the judgement in detail:

Senior Ministers are now hailing the court’s acknowledgment that the government has the right to allocate natural resources and that auctions, though preferred, are not mandatory. But even as they toast their “victory,” government managers ought to realise what the court has handed them is a poisoned chalice. Indeed, its opinion has placed new riders that will make it harder for discretionary powers to be abused. From now on, the state’s actions have to “be fair, reasonable, non-discriminatory, transparent, non-capricious, unbiased, without favouritism or nepotism, in pursuit of promotion of healthy competition and equitable treatment. It should conform to the norms which are rational, informed with reasons and guided by public interest, etc. All these principles are inherent in the fundamental conception of Article 14,” the judgment says, invoking the constitutional guarantee of equality.

This language makes it virtually impossible for the government to resort to any arbitrary process of allocating scarce, valuable resources, since methods like first-come-first-served, lotteries and beauty parades cannot even begin to pass the new tests.

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