Beyond the Headlines of the 2G Reference Opinions

In last month’s 2-G presidential reference, the Supreme Court ruled that, while auctions for natural-resource allocations aren’t mandatory, the government must act fairly when allocating these resources. There was something for everyone in the Court’s opinions. It’s not difficult to see why. Unlike regular cases, the Court did not issue a binding decree or order. With no declared winner or loser, virtually every party to the proceedings claimed vindication.

The reference arose from Article 143 (1) of our Constitution. That provision authorises the President to consult the Court on legal or factual questions of “public importance.” Its inclusion was based on an experts’ committee report and over the Calcutta bar’s apparent objections. The Constituent Assembly, however, spent hardly anytime debating the provision. In response to a question, Ambedkar clarified that the Court was not bound to accept a reference.

Yet, with only one exception, the Court has either wholly or partially answered every reference. Indeed, nine of our thirteen presidents have sought the Court’s guidance on major political controversies such as the Kerala communists’ sweeping education reforms; proposed special courts for the Emergency’s excesses; and the Cauvery dispute. Through other references, the Court resolved a constitutional crisis in Uttar Pradesh; formulated procedures for Indo-Pak border adjustments; and cleared the holding of two elections (the 1974 presidential and 2002 Gujarat assembly polls). What makes the 2-G reference noteworthy is that the Court was confronted with a situation of its own creation. It arose from the Court’s February judgment cancelling 122 2-G telecom licenses and ordering fresh auctions. For this reason, the reference verdict, particularly Justice DK Jain’s “main opinion,” must receive respectful, but careful, scrutiny.

The 2-G reference’s opponents asserted that what the government really intended was for the Court to reverse its February judgment. This strategy, they argued, was unacceptable because the government had withdrawn its review petition against that judgment. The Court was un-persuaded by this preliminary objection. It ruled that it could legitimately revisit the February judgment’s legal reasoning without disturbing its ultimate result, which the government had accepted anyway.

At first blush, this logic seems rather attractive. However, it required the Court to depart from its established practice of reconsidering recently delivered decisions only through reviews. There is no denying that the government seemed deeply troubled by the February judgment’s far-reaching domestic and international implications. Even so, the Court could have been persuaded to assemble a larger bench to reexamine a ruling, whose ink had barely gone dry.

The main opinion’s clarity quickly disappears as it reaches the reference’s merits. After insisting that the February judgment applies only to spectrum, the Court addresses certain questions, which do not appear to have been directly raised in the reference. The first such question involved the so-called public-trust doctrine, which the Court itself had fashioned over many years. Under this doctrine, as the people’s trustee, the government must act fairly and transparently when dealing with natural resources. During the hearing, the Attorney General complained that this doctrine was causing considerable confusion. Yet, after reviewing its precedents and two American articles (whose relevance to India seems unclear), the Court seems a bit puzzled about what to do. Therefore, the Court abruptly drops the issue and continues onward.

The main opinion’s next halt is Article 14. This constitutional provision enjoins the government to ensure that every person is treated equally. In a 1974 case, citing Macbeth the Court announced that, to ensure equal treatment of all persons, the government must avoid any arbitrary actions. This “anti-arbitrariness” principle has been repeated in so many cases that it is now settled law. Yet, without any discernible provocation, the Court decides to reevaluate the principle. Without offering a single example, it asserts that the principle has been “loosely applied.” It then goes on to hold that arbitrariness, by itself, is an inadequate ground to strike down an enacted law. While this proposition is debatable, its inclusion seems a bit redundant since no law had been questioned in either the February judgment or the reference.

The main opinion concludes its Article 14 discussion with a somewhat unexpected u-turn. Even while criticising the reckless use of anti-arbitrariness, the opinion insists that government actions must remain “fair, reasonable, non-discriminatory, transparent, non-capricious, unbiased, [and] without favouritism or nepotism.” The opinion does not explain how this principle substantially or practically differs from anti-arbitrariness. When applied, the two principles appear likely to return the same outcome in most cases.

The opinion then rambles on for several pages before holding that natural-resource auctions are not a constitutional requirement. While it is difficult to quarrel with this broad proposition, its salience is undermined by the absence of a clear definition of an "auction". In fact, as justice J S Khehar’s separate opinion (which reads more like a dissent) points out, there are several different types of auction methods. Indeed, the term “auction” generally covers various competitive processes through which the government awards contracts, concessions, or licenses. Thus, as justice Khehar hinted, the main opinion’s thesis that auctions aren’t constitutionally necessary could unwittingly erode transparency, fairness, and the common good in natural-resource allocations, which the main opinion emphasised, are overriding imperatives.

Finally, although the main opinion appropriately acknowledges the executive’s primacy over economic-policy formulation, it could have highlighted the legislature’s oversight responsibilities. It could have also discussed the possibility of more fully codifying the natural-resource licensing framework following the example of the proposed public procurement bill. In addition, the Court overlooked the importance of sectoral regulators, such as the Petroleum and National Gas Board. Although these regulators lack licensing powers, they could promote fairness and accountability in government decisions affecting natural resources.

In closing, the main opinion discusses several cases regarding the judiciary’s ability to review economic policy. Delhi Science Forum is one such case. In that decision, the Court ignored well-documented corruption allegations in early telecom auctions. Through its February judgment, the Court atoned for that previous omission. Happily, this atonement remains unaffected by the reference opinions.