New Delhi: Citing US President Barack Obama's remarks on the issue of FDI in India, Attorney General G E Vahanvati Tuesday told the Supreme Court that the country will become a "laughing stock" if auction is made the only route for allocation of natural resources.
Arguing on the Presidential reference on allocation of natural resources arising out of 2G spectrum verdict, Vahanvati quoted Obama's comments (in an interview) to buttress his arguments.
"If all natural resources are auctioned, then India will become a laughing stock internationally. Foreign investors will say it is not safe to invest in India. Even the US President is saying it is not safe to invest in India," Vahanvati told a five-judge constitution bench headed by Chief Justice S H Kapadia.
The AG was referring to Obama's remarks that India prohibited foreign investment in too many sectors such as retail. Obama also cited concerns over deteriorating investment climate to endorse another "wave" of economic reforms.
The government contended that apex court's verdict on 2G case has created tremendous confusion and it would have huge implication on foreign investment in the country.
"It is not possible to adopt auctioning process for all natural resources. Why anybody will come to India if it is going to be challenged in the Supreme Court (if any other method is adopted for allocating resources)," Vahanvati said.
His arguments found support from various industries and corporate bodies.
The corporate bodies also contended that all natural resources in all sectors cannot be allocated by following the policy of auction.
The Federation of Indian Mineral Industries (FIMI) and Confederation of Indian Industry (CII) said that the Reference can by entertained by the apex court if it comes to the conclusion that the judgement was not clear on law and has been decided "per incuriam" (decided without referring to a statutory provision or earlier relevant judgement).
The bench, which also included justices D K Jain, J S Khehar, Dipak Mishra and Ranjan Gogai, was told that the February 2 judgement on 2G spectrum was only binding to the extent that it was limited to the scarce radiowaves and it has to be examined whether the remarks made by the court for allocating all natural resources by following the policy of auction was "obiter dicta" or not.
Senior advocates T S Andhyarujina and Harish Salve, appearing for FIMI and CII respectively, submitted that besides holding that the spectrum has to be sold by way of auction, other obervations made in the 2G judgement was "obiter" and "per incuriam" and the apex court can overrule the verdict in its advisory jurisdiction.
The court was told that the issue was limited to the spectrum but the judgement in the case covered all other natural resources which will have adverse impact on the mining industry which was regulated by a specific statute.
Taking note of the submission, the bench wanted to know whether the parties concerned in the matter, were given opportunity to respond on the issue of other natural resources or not.
"Were the parties given notices that the court was proceeding on other natural resources or only spectrum?" the bench asked.
Responding to the question, advocate Prashant Bhushan, appearing for the NGO, Centre for Public Interest Litigation (CPIL), argued that the policy of first-come-first-served (FCFS) was illegal and violative of Article 14 of the Constitution as far as scarce and valuable natural resources were concerned.
He said Government only gave general arguments about the FCFS policy when the matter was heard before the two-judge bench.
However, Andhyarujina continued with his arguments and said that the 2G spectrum verdict was "apparently not authoritative" and the apex court can go into the Reference.
The Reference covers various issues arising out of the apex court's 2G case verdict including whether auctioning of natural resources across all sectors is mandatory and whether the verdict can be given retrospective effect for radio waves granted since 1994.
The court had on May 11 issued notices and sought responses also from state governments and FICCI and CII on behalf of the private industries along with those of CPIL and Janata Party President Subramanian Swamy.
It was on the petitions by CPIL and Swamy that a bench of justices G S Singhvi and A K Ganguly (since retired) had delivered its February 2 verdict which cancelled 122 telecom licences holding that the policy was illegal and unconstitutional.