In the final act of former Chief Justice Sarosh Kapadia’s tenure, the Supreme Court delivered its opinion on the Presidential reference on auctions of natural resources that was motivated by the court’s 2G judgment earlier this year. It is an opinion that is both lucid and commendable, in that it lays to rest any fears or hopes that arose as a consequence of the 2G case that the court had declared that auctions were the only constitutional method to alienate scarce natural resources. Indeed, the court has questioned, with some asperity, how that impression could ever have taken hold. The operative parts of the judgment, the court points out, imply that only the 2G case is under consideration; no judgment would hold an entire range of laws unconstitutional without testing each individually. It is true, the court argued, that as natural resources are a matter of public trust, a high degree of judicial scrutiny is required. Yet reading auctions as a mandate into Article 14 of the Constitution – on equality – would be “completely contrary to the intent” of the Article. Auctions might be ideal, but courts cannot test laws “with reference to the essential elements of ideal democracy”.
Further, the court explicitly points out that “common good” has to be regarded as a constitutional reality to be served — and “revenue maximisation may not always be the best way to serve public good”. Other economic objections to auctions are also mentioned in the opinion, which concludes that “the manner in which the common good is best subserved is not a matter that can be measured by any constitutional yardstick — it would depend on the economic and political philosophy of the government”. The opinion then quotes a series of judgments to the effect that courts cannot and should not make economic policy. Justice Kapadia’s tenure has focused on judicial restraint and it is a fitting last act to make explicit that “there is no constitutional mandate in the matter of economic policies”.
Two points are worth noting in particular. The first is that the opinion states that “when policy is not backed by a social or welfare purpose, and scarce natural resources are alienated for the commercial purposes of profit-maximising private entrepreneurs, adoption of means other than those that are competitive and maximise revenue” may be unconstitutional. This may be too narrow. Why this focus on the private sector and not state-controlled enterprises? They may not be purely profit-maximising, but in post-1991 India many are listed, and serve private ends. The second point is that the political point-scoring after this judgment has served to diminish public discourse. The Congress has used it to criticise the Comptroller and Auditor General, though the CAG has nowhere claimed that auctions are the only correct policy. It has merely used them as what it claimed was the best benchmark. And the Bharatiya Janata Party has claimed that there are implications for the coal block allocations scandal, as the concurring opinion by Justice J S Khehar says that auctions are necessary to alienate coal. But Justice Khehar specifically says this is motivated by Section 11A of the Mines and Minerals (Development and Regulation) Act, which was only introduced by amendment in 2010 — well after the period of concern. This nuanced, sensible opinion by India’s highest court should be studied for what it is, not used for scoring political points.