Auction need not be only route to allot resources: Apex Court

Thomas K. Thomas New Delhi | Updated on March 12, 2018


The Supreme Court opinion means that the Government can allocate natural resources like coal through administrative process. However, this will have no impact on the upcoming auctions for telecom spectrum.

SC opinion not to have any impact on spectrum auction

Auction is not the only way to allocate natural resources, the Supreme Court ruled on Thursday, giving the Government some relief.

Giving its opinion on queries raised by the Government through a Presidential Reference, the court said that auction may be the preferable method of allotment of natural resources but other modes cannot be struck down.

“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,” stated the opinion given by a five-judge Bench headed by Chief Justice S. H. Kapadia

The Government had submitted the Presidential Reference after the Supreme Court, in February, ruled that the spectrum allocated through first-come-first-served policy was flawed and that auction was the most transparent method of allocating natural resources.

Through the Presidential Reference, the Government had asked the court if auction was the only means to allocate all natural resources in all circumstances.

The opinion given by the apex court clarifies that the Government is free to decide the policy for allocating natural resources like coal. However, the court made it clear that this will have no impact on the auctions for telecom spectrum scheduled for November.

No move to stall spectrum auction: Sibal

Kapil Sibal, Minister for IT and Communications, said that the Government had never intended to stall the spectrum auction and the opinion of the Supreme Court was far reaching as it brings clarity on how to move forward. “The Government can now take decisions without fearing action by any other constitutional body,” the Minister said.

The Supreme Court also added that revenue maximisation may not always be the best way to subserve public good. It said that “common good” is the sole guiding factor for distribution of natural resources and if it does, irrespective of the means adopted, it is clearly in accordance with the principle enshrined in the Constitution. However, the court declined to answer some crucial questions related to the telecom sector.

The Government had asked if spectrum allocated to incumbent players from 1994 onwards should be revoked since it was not allocated through an auction process. There were also questions on the validity of giving both CDMA and GSM spectrum to some players. Sibal said that the Government is now free to take a decision on these issues.

Reacting to the court order, Sidharth Birla, Vice-President, FICCI, said: “We are now looking forward to a more predictable policy environment as many projects were pending for want of clear direction on allocation principles for natural resources in the wake of this Judgment.”


Published on September 27, 2012

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