Auction not the only method to allot natural resources: SC

Responding to the presidential reference arising out of its 2G licences verdict of February, the Supreme Court Thursday ruled that "auctions are not the only permissible method for disposal of all natural resources across all sectors and in all circumstances" since this mode was merely an economic policy and "not a constitutional mandate" that could be applied in absolute terms.

A constitution bench led by Chief Justice S H Kapadia held that courts lacked the expertise to conduct a comparative study of different methods of distribution of natural resources to suggest the most efficacious mode, and hence it should be left to the wisdom of the executive to take such decisions on a case-by-case basis.

The presidential reference had sought clarity over the February 2 verdict which canceled 122 controversial licences given by the government. The apex court had then said that resources should be allotted through auctions, causing the government to question through the reference if the verdict implied that all natural resources, and not just spectrum, had to be mandatorily auctioned.

"The methodology pertaining to disposal of natural resources is clearly an economic policy. It entails intricate economic choices and the court lacks the necessary expertise to make them. As has been repeatedly said, it cannot, and shall not, be the endeavour of this court to evaluate the efficacy of auction vis-à-vis other methods of disposal of natural resources. The court cannot mandate one method to be followed in all facts and circumstances. Therefore, auction, an economic choice of disposal of natural resources, is not a constitutional mandate," the bench said.

The bench noted that the 2G case did not deal with modes of allotment for natural resources other than spectrum. It noted that if the 2G judgment was to be read as holding auction as the only permissible means of disposal of all natural resources, it would result in quashing of several laws that prescribed other methods and a court would not do so without allowing every law to be tested on merit.

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