Chhattisgarh joins Centre to oppose natural resources' auction

The Bench said the February 2 judgement of the apex court on the 2G spectrum made observations about the FCFS policy as it was distorted for allocating the radiowaves.

Last Updated: Aug 01, 2012, 21:14 PM IST

New Delhi: The BJP government in Chhattisgarh on Wednesday agreed with the Centre in the Supreme Court that auction is not the only route to allocate natural resources and that the policy of first-come-first serve (FCFS) could not be brushed aside.

The state government, which opposed the proposition of "auction" as the only route for allocation of natural resources, said it could alienate or transfer such natural resources by "implementing the FCFS policy or a lottery system".

While senior advocate Ravindra Shrivastava was making the submission against auction, a five-judge Constitution Bench headed by Chief Justice S H Kapadia said that perhaps the FCFS policy was distorted in the allocation of 2G spectrum.

The Bench said the February 2 judgement of the apex court on the 2G spectrum made observations about the FCFS policy as it was distorted for allocating the radiowaves.

Attorney General G E Vahanvati said FCFS policy has been there since 2001 but telecom players were limited.

He said the entry fee of Rs 1600 crore was insisted on along with applications in 2007 and the allocation was done on the basis of who paid first, which was not done earlier.

"Then it's ceased to be FCFS policy. If you say at the last minute - payment instead of date of application - then it is not FCFS, it is out of turn. It not only changed the modality but criteria also," the bench also comprising justices D K Jain, J S Khehar, Dipak Mishra and Ranjan Gogai said.

The court was hearing the submissions on the Presidential reference arising out of the 2G spectrum verdict in which a two-judge bench of the apex court had held as illegal and unconstitutional the FCFS policy and favoured allocation of natural resources in all sectors through the route of auction.

Continuing with his submissions, Shrivastava said "auction cannot and ought not to be the only permissible method for disposal of natural resources".

"There is only complacent presumption that the auction is the only righteous method in the distribution of natural resources," he said.

The senior advocate further said "it would be wholly unwise to insist upon auction as the only mode and exclude all other alternative methods of distribution, which are known to law and practice, and have not only withstood the test of time but also the test of judicial scrutiny from time to time and case to case."

He also said "the application of public trust doctrine, however, does not mandate that any allocation or transfer of natural resources must necessarily be by public auction in as much as policy of allocation of natural resources cannot be viewed only from the angle of augmentation of revenue and its maximisation.

Earlier, various state governments too had supported the Centre's stand that all natural resources cannot be allocated to private firms only through auction as directed by the apex court in the 2G spectrum verdict.

The reference covers various issues arising out of the apex court's 2G spectrum case verdict and they include whether auctioning natural resources across all sectors is mandatory and if the verdict in the 2G case can be given retrospective effect for radio waves granted since 1994.

The court had on May 11 issued notices and sought replies from various parties, including the state governments and the FICCI and the CII on behalf of the private industries, besides the NGO, Centre for Public Interest Litigation (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, cancelling 122 telecom licences holding that the first-come-first-serve policy was illegal and unconstitutional.