Attorney General G E Vahanvati told the Constitution Bench of the Supreme Court hearing the Presidential reference today that certain statements made in the 2G spectrum judgment were likely to affect the inflow of foreign direct investment (FDI) and economic development of the country.
For instance, if the government wanted to develop the petroleum sector, in which international corporations with proven technology had to be invited to participate, they would seek legal opinion. The 2G judgment said auction was the only route for disposal of natural resources, and the government was in a straitjacket as far as the method of selection of partners was concerned. The foreign participants would be deterred by the legal risk involved because of the judgment, counsel said.
“This is a question of far-reaching importance,” Vahanvati submitted, and “the potential foreign investors will not look to India as a safe place to put their money”.
The Attorney General was answering the preliminary objections put forward by the Centre for Public Interest Litigation and its counsels, Soli Sorabjee and Prashant Bhushan. According to them, the Presidential reference should be rejected, as the Supreme Court has spoken the last word on disposal of scarce natural resources. The issue cannot be reopened through a Presidential reference, especially after the government filed a review petition and then withdrew it. According to them, a presidential reference should be rarely used, and when there is a doubt in law.
Answering this objection to the maintainability of the reference, the Attorney General submitted before the Bench, headed by Chief Justice S H Kapadia, that according to the Constitution, “if at any time it appears to the President that a question of law or fact has risen or is likely to arise, which is of public importance, he may refer it to the Supreme Court for its consideration.” In this case, doubts have risen about the impact of the judgment and, therefore, the President was justified in seeking the court’s opinion, the counsel said.
In the 2G judgment delivered by the court on February 2, a Bench had struck down 122 telecom licences as the first-come, first-served route followed by the ministry was illegal. While doing so, it also stated that the government was “duty-bound” to auction scarce natural resources after due publicity. Vahanvati clarified the President was not challenging or appealing against the order of the court. It will abide by the auction method in the next months. But what really troubles the government is the further direction that all natural resources should be auctioned.
This directive has “national and international implications, as inflow of FDI is not only in the telecom sector but also in other sectors, and it will has far-reaching consequences for the overall development of the country.”
The Attorney General argued that doubts over the correctness of judgments also have been subject of Presidential references in the past, starting from the first one in 1951 in the case of the Delhi Laws Act. Therefore, it is wrong to argue that after a Supreme Court judgment there should be no Presidential reference. The arguments were inconclusive and the hearing will resume next week.
