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Economy Sep 27, 2012

Prez reference: Govt stands vindicated, but clouds remain

By Akshaya Mishra

Courts have no business deciding policy matters. It should be the exclusive domain of the government of the day. If that is what the government wanted to hear from the Supreme Court while moving the Presidential reference on allocation of natural sources, then it has some reason to smile after the court came out with its opinion today.

Is the government the final authority in policy matters regarding allocation of natural resources? That was the primary understated question from the government in the Presidential Reference. The court today clarified that indeed it is. It held that auction is not a must for all natural resources and accepted that the government was free to frame policies for allocations. The reference was necessitated by the cancellation of all 2G spectrum licences issued in 2008 by a Supreme Court bench. The bench had asked the government to go for the auction of scarce natural resources.

Union Telecom Minister Kapil Sibal. Image courtesy PIB

The court held that consideration of public good gets priority over profit maximisation while framing policies. The government could interpret it as subtle disapproval of the Comptroller and Auditor General's (CAG's) estimation of loss from different allocations made by it. The national auditor had put it in a serious political crisis after throwing up fantastic presumptive loss figures in 2G allocations as well as coal allocations - Rs 1.76 lakh crore and Rs 1.86 lakh crore respectively. The government has been alleging that CAG is making policy prescriptions through auditing tools and is transgressing its constitutional role in the process.

Communications Minister Kapil Sibal is gloating already. Addressing the press today, he said the court's opinion meant that no constitutional authority had the right to tell the government that natural resources should have been auctioned when auction was not the method in use at the time of making allocations.

"The judgement is applicable to all constitutional authorities, including CAG. We have been saying that policy making comes under the purview of the government. First-come-first served policy was good at that time when it was implemented. Policy prescription has to be set up by the government. A judgement stands for what it decides," he said. His reference was to the 2G spectrum and coal allocations. The court, however, kept the verdict of one of its benches on spectrum allocations untouched. The government can find relief from the court's opinion in the coal allocation irregularities.

The Supreme Court's opinion also redrew the line between the roles of the executive and the judiciary. In the 2G verdict there was clear indication that the bench was overstepping its constitutional role. "Which policy is the best is the wisdom of the executive, since the judiciary doesn't have the expertise to decide which method is suitable for disposal of a particular natural resource," the judges held.

This should have been the ideal arrangement from the beginning itself. The courts should have concerned themselves with acts of illegality in allocations of coal blocks and spectrum and helped shatter the wall of opacity concealing the dirty secrets of the well-entrenched politician-crony capitalist nexus which flourished under the discretionary allocations regime. It seems at some point the judges got overwhelmed by the public mood against against corruption and lost sight of their original duty.

The court's decision will bring sobriety back to the relationship between the executive, judiciary and the legislature. The government's stand is vindicated-at least on matters of policy-but does it have the right to be happy? The court by no means absolves it of guilt in allocations reeking of favouritism, misuse of power and illegality. It's still a long, long way before it starts looking good.

Read the full judgement below

SC Advisory Jurisdiction

by Akshaya Mishra

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