Judgment sc-2012-9-311-514

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RE: SPECIAL REFERENCE N0.1 OF 2012 A [Under Article 143(1) of the Constitution of India] SEPTEMBER 27, 2012

B

CONSTITUTION OF /NOIA, 1950:

Art 143(1) - Power of President to consult Supreme Court - Scope of - It is not necessary that the question on which the c opinion of Supreme Court is sought must have actually arisen - The President can make a reference even at an anterior stage, namely, at the stage when the President is satisfied that the question is likely to arise - The satisfaction whether the question meets pre-requisites of Art. 143(1) is essentially a 0 matter for the President to decide - Upon receipt of a reference under Art. 143(1), the only discretion Supreme Court has is either to answer the reference or respectfully decline to send a report to the President - In the instant Reference, Question no. 1 involves interpretation of a constitutional principle inherent under Art. 14 of the Constitution and it is of great public importance as it deals with allocation/alienation! disposal! distribution of natural resources.

Art. 143(1) - Presidential Reference subsequent to decision of Supreme Court in "2G Case" - Maintainability of 311 H

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Art.14 - Auction despite being a more preferable method of A alienation/allotment of natural resources, cannot be held to be a constitutional requirement or limitarion for alienation of all natural resources and, therefore, every method other than auction cannot be struck down as u/tra-vires the Constitution - Market price, in economics, is an index of the value that a B market prescribes to a good - However, this valuation is a function of several dynamic variables; it is a science and not a law - Auction is just one of the several price discovery mechanisms - Since multiple variables are involved in such valuations, auction or any other form of competitive bidding, c cannot constitute even an economic mandate, much Jess a constitutional mandate - Therefore, auction, as an economic choice of disposal of natural resources, is not a constitutional mandate - Alienation of natural resources is a policy decision, and the means adopted for the same are thus, executive 0 prerogatives - However, when such a policy decision is not backed by a social or welfare purpose, and precious and scarce natural resources are alienated to private entrepreneurs for commercial pursuits of profit maximizing, adoption of means other than those that are competitive and maximize revenue may be arbitrary and face the wrath of Art. 14 of the Constitution.

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A maximization may not always be the best way to subsetVe public good - "Common good" is the sole guiding factor and a norm under Art. 39(b) for distribution of natural resources - Where revenue maximization is the object of a policy, being considered qua that resource at that point of time to be the B best way to subsetVe the common good, auction would be· one of.the preferable methods, though not the only method - Where revenue maximization is not the object of a policy of distribution, the question of auction would not arise - Revenue considerations may give way to developmental considerations c - Public interest litigation - Judicial notice. Arts. 298 and 299 read with Art. 14 - Power of State to trade and execute contracts - Discussed.

After the decision of the Supreme Court in the case of Centre for Public Interest Litigation & Ors.1,( 2G Case) the instant Reference was made by the President of India, in H exercise of powers under Clause (1) of Art. 143 of the

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Constitution of India, for consideration and report of the A Supreme Court on the following questions:

Q.1 "Whether the only permissible method for disposal of all natural resources across all sectors and in all circumstances is by the 8 conduct of auctions?

Q.2 Whether a broad proposition of law that only the route of auctions can be resorted to for disposal of natural resources does not run contrary to several judgments of the Supreme C Court including those of Larger Benches?

Q.3 Whether the enunciation of a broad principle, even though expressed as a matter of constitutional law, does not really amount to 0 formulation of a policy and has the effect of unsettling policy decisions formulated and approaches taken by various successive governments over the years for valid considerations, including lack of public E resources and the need to resort to innovative and different approaches for the development of various sectors of the economy?

Q.4 What is the permissible scope for interference by courts with policy making by the F Government including methods for disposal of natural resources?

Q.5 Whether, if the court holds, within the permissible scope of judicial review, that a G policy is flawed, is the court not obliged to take into account investments made under the said policy including investments made by foreign investors under multilateral/bilateral agreements? H

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A Q.6 If the answers to the aforesaid questions lead to an affirmation of the judgment dated 02.02.2012 then the following questions may arise, viz.

B (i) whether the judgment is required to be given retrospective effect so as to unsettle all licences issued and 2G spectrum (800, 900, and 1800 MHz bands) allocated in and after 1994 and c prior to 10.01.2008?

(ii) whether the allocation of 2G spectrum in all circumstances and in all specific cases for different policy considerations would nevertheless have D to be undone?

And specifically

(iii) Whether the telecom licences granted in 1994 would be affected? E (iv) Whether the Telecom licences granted by way of basic licences in 2001 and licences granted between the period 2003-2007 would be affected? F (v) Whether it is open to the Government of India to take any action to alter the terms of any licence to ensure a level playing field among all existing licensees? G (vi) Whether dual technology licences granted in 2007 and 2008 would be affected?

(vii) Whether it is necessary or obligatory for the Government of India to withdraw the

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Spectrum allocated to all existing licensees or to charge for the same with retrospective effect and if so on what basis and from what date?

Q.7 Whether, while taking action for conduct of 8 auction in accordance with the orders of the Supreme Court, it would remain permissible for the Government to:

(i) Make provision for allotment of Spectrum from time to time at the auction C discovered price and in accordance with laid down criteria during the period of validity of the auction determined price?

(ii) Impose a ceiling on the acquisition of 0 Spectrum with the aim of avoiding the emergence of dominance in the market by any licensee/applicant duly taking into consideration TRAI recommendations in this regard? E (iii) Make provision for allocation of Spectrum at auction related prices in accordance with laid down criteria in bands where there may be inadequate or no competition (for e.g. there is expected to be a low level of competition for CDMA in 800 MHz band and TRAI has recommended an equivalence ratio of 1.5 or 1.3X1.5 for 800 MHz and 900 MHz bands depending upon the quantum of spectrum held by the licensee that can be applied to auction price in 1800 MHz band in the absence of a specific price for these bands)? H

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A Q.8 What is the effect of the judgment on 3G Spectrum acquired by entities by auction whose licences have been quashed b~i the said judgment?"

8 Notice was issued to the Attorney General for India, and after hearing him, it was directed that notice be issued to all the States through their Standing Counsel, the petitioners in 2G Case, the Federation of Indian Chamber of Commerce and lndt•st!"y, and the C Confederation of Indian Industry.

Answering the reference in part, the Court

D MAINTAINABILITY OF THE REFERENCE:

1.1 Art. 143 of the Constitution of India is couched in broad terms; and from its language, it is plain that it is not necessary that the question on which the opinion of the Supreme Court is sought must have actually arisen. The President can make a reference under the said Article even at an anterior stage, namely, at the stage when the President is satisfied that the question is likely to arise. The satisfaction whether the question meets the pre-requisites of Art. 143(1) is essentially a matter for the President to decide. Upon receipt of a reference under Art. 143(1), the function of this Court is to consider the reference, the question(s) on which the President has made the reference, on the facts as stated in the reference and report to the President its opinion thereon. Nevertheless, the usage of the word "may" in the latter part of Art. 143(1) implies that this Court is not bound to render advisory opinion in every reference and may refuse to express its opinion for strong, compelling and good reasons. [Para 23-24) (373-E-F, G-H; 374-B-C]

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Special Reference No.1 of 1964("Keshav Singh'~ [1965) A 1 S.C.R. 413; and Re: The Kera/a Education Bill, 1957 In Reference under Article 143(1) Of the Constitution of India [1959) S.C.R. 995 - relied on.

In re: A/location of Lands and Buildings Situate in a Chief Commissioner's Province and in the matter of Reference by 8 the Governor-General under S. 213; Government of India Act, 1935 A.l.R. (30) 1943 FC 13; and Dr. M. Ismail Faruqui & = Ors. vs. Union of India & Ors. 1994 (5) Suppl. SCR 1 (1994) 6 sec 360 - referred to. c 1.3 As far as the allegation of mala fide is concerned, it is trite that this Court is neither required to go into the truth or otherwise of the facts of the recitals nor can it go into the question of bona tides or otherwise of the authority making a reference. The constitutional power to o seek opinion of this Court rests with the President. The only discretion this Court has is either to answer the reference or respectfully decline to send a report to the President. Therefore, the challenge on the ground of mala fide, as raised, is unsustainable. [Para 34] (379-A-C] E

Re: Presidential Po// 1975 (1) SCR 504 =(1974) 2 SCC 33 - referred to.

1.4 From the judgment in The Special Courts Bill, 1978, three broad principles emerge: (i) a reference F should not be vague, general and Undefined, (ii) this Court can go through the written briefs and arguments to narrow down the legal controversies, and (iii) when the question becomes unspecific and incomprehensible, the risk of returning the reference unanswered arises. (para G 30) [377 -D-E]

Re: The Special Courts Bill, 1978 1979 (2) SCR 476 = (1979) 1 SCC 380; Special Reference No.1 of 1964 ("Keshav Singh'?,(1965) 1 S.C.R. 413 - referred to H

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A 1.5 There is no denying the fact that in the entire Reference the word 'doubt' has not been used. Nor does Art. 143(1) use the term 'doubt'. No specific format has been provided in any of the Schedules of the Constitution as to how a reference is to be drawn. The use of the word B 'doubt' in a reference is also not a constitutional command or mandate. Thus, it cannot be said that use of the word 'doubt' is a necessary condition for a reference to be maintainable under Art. 143(1). That apart, Question No.1 of the instant Reference is neither vague c nor general nor unspecific, but is in the realm of comprehension which is relatable to a question of law. It expresses a 'doubt' and seeks the opinion of the Court on that question, besides others. [Para 27 and 32) [374- G-H; 375-A; 378-B] D P. Ramanatha Aiyar's, The Major Law Lexicon, 4th Edn.; Concise Oxford Dictionary (Tenth Edn.); and Black's Law Dictionary-referred to. 1.6 In so far as the impact of filing and withdrawal of E the review application by the Union of India, against the decision in the 2G Case* on the maintainability of the instant Reference is concerned, there is a dff~erence between the jurisdiction exercised by this Court in a review and the discretion exercised in answering a F reference under Art. 143(1) of the Constitution. A review is basically guided by the well-settled principles for review of a judgment and a decree or order passed inter se parties. But, when an opinion of this Court is sought by the Executive taking recourse to a constitutional power, the same stands on a different footing altogether. G A review is lis specific and the rights of the parties to the controversy are dealt with therein; whereas a reference is answered keeping in view the terms of the reference and scrutinising whether the same satisfies the requirements inherent in thetanguage employed under H Art. 143(1) of the Constitution. Therefore, merely because

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a review had been filed and withdrawn and in the recital A the narration pertains to the said case, the same would not be an embargo or impediment for exercise of discretion to answer the Reference. [Para 33] [378-C-H]

*Centre for Public Interest Litigation & Ors. vs. Union of 8 India & Ors. (2012) 3 SCR 147=(2012) 3 SCC 1 - referred to.

1Copy pinpoint1. 7 As regards the objection to the maintainability of the Reference that it is an indirect endeavour to unsettle and overturn the verdict in the 2G Case, at the outset it may be noted that it has been stated on behalf of the Government of India that it is not questioning the correctness of the directions in the 2G Case, in so far as the allocation of spectrum is concerned and, in fact, the Government is in the process of implementing the same, in letter and spirit. [Para 35- 36] (379-C-D; E-F]

1.8 As regards reconsideration of a decision, there are two limitations - one jurisdictional and the other self- imposed. The first limitation is that a decision of this Court can be reviewed only under Art. 137 or a Curative Petition E and in no other way. Once a lis between parties is decided, the operative decree can only be opened in review. Overruling the judgment - as a precedent - does not reopen the decree. The second limitation, a self- imposed rule of judicial discipline, was that overruling the opinion of the Court on a legal issue does not constitute sitting in appeal, but is done only in exceptional circumstances, such as when the earlier decision is per incuriam or is delivered in the absence of relevant or material facts or if it is manifestly wrong and capable of causing public mischief. In fact, the overruling of a . principle of law is not an outcome of appellate jurisdiction but a consequence of its inherent power. This inherent power can be exercised as long as a previous decree vis- a-vis lis inter partes is not affected. (Para 45-47] (386-D- H

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A H; 387-A-C]

Bengal Immunity Company Ltd. v. State of Bihar (1955) 2 SCR 603; In the matter of: Cauvery Water Disputes Tribunal 1991 (2) Suppl. SCR 497 = 1993 Supp (1) SCC 96 (II) ("Cauvery-11"); State of Tamil Nadu vs. State of 8 Kamataka & Ors. 1991 (2) SCR 501 = 1991 Suppl (1) SCC 240 ("Cauvery 1'1 & Rupa Ashok Hurra vs. Ashok Hurra & = Anr. 2002 (2) SCR 1006 (2002) 4 SCC 388 - referred to

1.9 From the decisions of this Court, it is C demonstrable that while entertaining the reference under Art. 143(1), this Court can look into an earlier decision. For the purpose of validity of a reference, suffice it to say, dwelling upon an earlier judgment is permissible. That apart, one cannot be oblivious of the fact that the scope o of limited judicial review, in the Second Judges Case, which otherwise is quite restricted, was slightly expanded in the Court's opinion to th_e Presidential reference. [Para 58] [395-D-E]

In re: The Special Courts Bill, 1978 1979 (2) SCR 476 E = (1979) 1 SCC 380, In Re: The Delhi Laws Act, 1912, the Ajmer-Merwara (Extension of Laws) Act, 1947 And The Part C States (Laws) Act, 1950 [1951] S.C.R. 747, Jatindra Nath Gupta vs. The Province of Bihar & Ors. [1949-50] F.C.R. 595, Special Reference No. 1 of 1964 [1965] 1 S.C.R. F 41 ("Keshav Singh"), Gunupati Keshavram Reddy vs. Nafisul Hasan & the State of U.P. AIR 1954 SC 636, Pandit M. S. M. Sharma vs. Shri Sri Krishna Sinha & Ors. [1959] Supp. 1 S.C.R. 806 ("Sharma"), Supreme Court Advocates- on-Record Association and Ors. vs. Union of India (1993) 4 G SCC 441, Special Reference No. 1 of 1998 Re. 1998 (2) Suppl. SCR 400 = (1998) 7 SCC 739 ('Second Judges Case'1, & Dr. M. Ismail Faruqui & Ors. vs. Union of India & Ors. (1994) 6 SCC 360 - referred to.

H 1.10 From the analysis of the decisions of this Court,

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it is quite vivid that this Court would respectfully decline to answer a reference if it is improper, inadvisable and undesirable; or the questions formulated have purely socio-economic or political reasons, which have no relation whatsoever with any of the provisions of the Constitution or otherwise are of no constitutional significance; or are incapable of being answered; or would not subserve any purpose; or there is authoritative pronouncement of this Court which has already decided the question referred. [Para 60] [395-H; 396-A-B] 1.11 In the case at hand, the Reference states that in the current circumstances, certain questions of law with far reaching national and international implications have arisen, including in relation to conduct of the auction and the regulation of the telecommunications industry in accordance with the judgment (2G Case) that may affect the flow of FOi in the telecom industry and otherwise in other sectors into this country. The Reference also states that the questions of law that have arisen are of great public importance and are of far reaching consequences for the development of the country and, therefore, it is thought expedient to obtain the opinion of this Court. Question No. 1 of the Reference involves interpretation of a constitutional principle inherent under Art. 14 of the Constitution and it ls of -great public importance as it deals with allocation/alienation/disposal/ distribution of natural resources. [Para 28 and 61] [375-H; 376-A-C] 1.12 This Court is, therefore, of the view that as long as the decision with respect to the allocation of spectrum licenses is untouched, this Court is within its jurisdiction to evaluate and clarify the ratio of the judgment in the 2G G Case. Therefore, the fact that the Reference may require the Court to say something different to what has been enunciated in the 2G Case as a proposition of law, cannot strike at the root of the maintainability of the Reference. Consequently, this Court holds that the Reference is H

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A maintainable, notwithstanding its effect on the ratio of the 2G Case, as long as the decision in that case qua lis inter partes is left unaffected. [Para 62] [396-E-G]

ON MERITS B 2.1 Art. 141 of the Constitution lays down that the 'law declared' by the Supreme Court is binding upon all the courts within the territory of India. The 'law declared' has to be construed as a principle of law that emanates from a judgment, or an interpretation of a law or judgment by the Supreme Court, upon which, the case is decided. Therefore, the 'law declared' is the principle culled out on the reading of a judgment as a whole in the light of the questions raised upon which the case is decided. Thus, the 'law declared' in a judgment, which is binding upon courts, is the ratio decidendi of the judgment. It is the essence of a decision and the principle upon which, the case is decided, which has to be ascertained in relation to the subject-matter of the decision. [Para 66] [397-E-H; 398-A] E Fida Hussain & Ors. Vs. Moradabad Development Authority & Anr. 2011 (9) SCR 290 = (2011) 12 SCC 615; Ambica Quarry Works Vs. State of Gujarat & Ors. 1987 (1) SCR 562 = (1987) 1 SCC 213 and Commissioner of Income Tax Vs. Sun Engineering Works (P) Ltd. 1992 (1) Suppl. SCR F 732 = 1992 (4) SCC 363; Islamic Academy of Education & Anr. Vs. State of Karnataka & Ors. (2003) 6 SCC 697 - relied on Union of India Vs. Amrit Lal Manchanda & Anr. (2004) 3 G SCC 75; State of Orissa & Ors. Vs. Md. /lliyas 2005 (5) Suppl. SCR 395 = 2006 (1) SCC 275 - referred to. ''The Nature of Judicial Process" by Justice Benjamin Cardozo - referred to. H 2.2 On a reading paragraphs 85 and 89 of the

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judgment in 2G Case, it can be noticed that while referring to the concept of 'public trust doctrine', emphasis was laid on the doctrine of equality, larger public good, adoption of a transparent and fair method, opportunity of competition; and avoidance of any occasion to scuttle the claim of similarly situated applicants. While dealing with alienation of natural resources like spectrum, it was stated that it is the duty of the State to ensure that a non- discriminatory method is adopted for distribution and alienation which would necessarily result in the protection of national/public interest. Paragraphs 94 and c 95 suggest that the Court was not considering the case of auction in general, but specifically evaluating the validity of those methods adopted in the distribution of spectrum from September 2007 to March 2008. It is also pertinent to note that reference to auction is made in the subsequent paragraph (96) with the rider 'perhaps'. It has been observed that "a duly publicized auction conducted fairly and impartially is perhaps the best method for discharging this burden." It is true that a judgment is not to be read as a statute, but at the same time, when it is argued with vehemence that the judgment lays down auction as a constitutional principle, the word "perhaps" gains significance. This suggests that the recommendation of auction for alienation of natural resources was never intended to be taken as an absolute or blanket statement applicable across all natural resources, but simply a conclusion made at first blush over the attractiveness of a method like auction in disposal of natural resources. The choice of the word 'perhaps' suggests that the Court considered situations requiring a method other than auction as conceivable and desirable. Further, the final conclusions summarized in paragraph 102 of the judgment (SCC) make no mention about auction being the only permissible and intra vires method for disposal of natural resources; the findings are limited to the case of spectrum. In case the Court had H

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A actually enunciated, as a proposition of law, that auction is the only permissible method or mode for alienation/ allotment of natural resources, the same would have found a mention in the summary at the end of the judgment. [Para 75,76,78 and 79] [402-G; 403-A-B; 404-G- B H; 405-A-E]

2.3 The 2G Case does not even consider other laws and judgments that prescribe methods, other than auction, for dispensation of natural resources; something that it would have done, in case, it intended to make an assertion as wide as applying auction to all natural resources. Therefore, the observations in Paras 94 to 96 could not apply beyond the specific case of spectrum, which according to the law declared in the 2G Case, is to be alienated only by auction and no other method. Thus, 2 G case does not deal with modes of allocation for natural resources, other than spectrum. [Para 80-81] [405-H; 406-A-C] H

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3.1 By the Reference this Court's opinion is sought A on the limited point of permissibility of methods other than auction for alienation of natural resources, other than spectrum. [Para 82] [406-D-E]

3.2 As regards the objection pertaining to the 8 classification of resources made in the 2G Case, suffice it to say that the judgment itself does not carve out any special case for scarce natural resources only meant for commercial exploitation. However, this Court has the jurisdiction to classify the subject matter of a reference, C if a genuine case for it exists. [Para 83] [406-G-H; 407-A- B-D]

3.3 In the 2G Case, two concepts namely, "public trust doctrine" and "trusteeship" have been adverted to. This Court in M.C. Mehta vs Kamal Nath, as explained in D Intellectuals Forum, has held that when the affirmative duties are set out from a nugatory angle, the doctrine does not exactly prohibit the alienation of property held as a public trust, but mandates a high degree of judicial scrutiny. [Para 85 and 87] [407-G-H; 409-E; 410-8] E

The Illinois Central Railroad Co. Vs. The People of the F State..JJfJJ/inois 36 LED 1018: 146 U.S. 387 (1892) - referred to

3.4 The public trust doctrine is a specific doctrine with a particular domain and has to be applied carefully. G [Para 90] [411-C]

"The Public Trust Doctrine in Natural Resource Law: Effective Judicial Intervention" by Joseph. L. Sax; and Changing Conceptions of Property and Sovereignty in Natural Resources: Questioning the H L

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A Public Trust Doctrine" by Richargd J. Lazarus, - referred to

3.5 The legislature and the Executive are answerable to the Constitution and it is there where the judiciary, the 8 guardian of the Constitution, must find the contours to the powers of disposal of natural resources, especially Art. 14 and Art. 39(b). [Para 92] (413-A-B]

Municipal Corporation of Delhi Vs. Bir/a Cotton, Spinning and Weaving Mills, Delhi & Anr. [1968] 3 SCR 251 - relied C on.

Raja Ram Pal Vs. Hon'b/e Speaker, Lok Sabha & Ors. (2007) 3 sec 184- referred to.

·In Re: Delhi Laws Act, 1912- referred to D MANDATE OF Art. 14:

4.1 The underlying object of Art. 14 of the Constitution of India is to secure to all persons, citizens or non- E citizens, the equality of status and opportunity referred to in the preamble to Constitution. The right to equality before law is secured from all legislative and executive tyranny by way of discrimination since the language of Art.14 uses the word "State" which as per Art.12, includes the executive organ. Besides, Art.14 is expressed in absolute terms and its effect is not curtailed by restrictions like those imposed on Art.19(1) by Arts.19(2)- (6). However, notwithstanding the absence of such restrictions, certain tests, e.g. classification test, 'arbitrariness' doctrine have been devised through judicial decisions to test if Art.14 has been violated or not. The expressions 'arbitrariness' and 'unreasonableness' have been used interchangeably and in fact, one has been defined in terms of the other. [Para 94 and 101] [413- D-F; 414-A; 418-B-C] H

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Basheshar Nath Vs. The Commissioner of Income Tax, A Delhi & Rajasthan & Anr. 1959 Supp (1) SCR 528; Budhan Chaudhry & Ors. Vs. State of Bihar AIR 1955 SC 191; Shri Ram Krishna Dalmiya Vs. Shri Justice S.R. Tendolkar and Ors. [1959) 1 SCR 279; E.P. Royappa Vs. State of Tamil Nadu & Anr. 1974 (2) SCR 348 = (1974) 4 SCC 3; Maneka B Gandhi vs. Union of India & Anr. 1978 (2) SCR 621 = (1978) 1 SCC 248 Sharma Transport Vs. Government of A.P. & Ors. 2001 (5) Suppl. SCR 390 = (2002) 2 SCC 188; Om Kumar & Ors. Vs. Union of India 2000 (4) Suppl. SCR 693 = (2001) 2 SCC 386; Air India Vs. Nergesh Meerza 1982 (1) SCR 438 c = (1981) 4 SCC 335; Ajay Hasia & Ors. Vs. Khalid Mujib = Sehravardi & Ors. 1981 (2) SCR 79 (1981) 1 SCC 722; and Ramana Dayaram Sheffy Vs. International Airport Authority = of India & Ors. 1979 (3) SCR 1014 (1979) 3 SCC 489: AIR 1979 SC 1628 - referred to. D 4.2 From a scrutiny of the trend of decisions it is clearly perceivable that the action of the State, whether it relates to distribution of largesse, grant of contracts or allotment of land, is to be tested on the touchstone of Art.14. A law may not be struck down for being arbitrary without pointing out a constitutional infirmity. Therefore, a State action has to be tested for constitutional infirmities qua Art.14. The action has to be fair, reasonable, non- discriminatory, transparent, non-capricious, unbiased, without favouritism or nepotism, in pursuit of promotion of healthy competition and equitable treatment. It should conform to the norms which are rational, informed with reasons and guided by public interest, etc. All these principles are inherent in the fundamental conception of Art.14. This is the mandate of Art.14. [Para 105) [421-B-E] G State of A.P. & Ors. vs. McDowell & Co. & Ors. 1996 (3) SCR 721 = (1996) 3 SCC 709 - referred to. WHETHER 'AUCTION' A CONSTITUTIONAL MANDATE:

4.3 Auction as a method of disposal of natural H

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A resources cannot be declared a constitutional mandate under Art.14 of the Constitution of India. Firstly, Art.14 may imply positive and negative rights for an individual, but with respect to the State, it is only couched in negative terms; like an admonition against the State which B prohibits the State from taking up actions that may be arbitrary, unreasonable, capricious or discriminatory. Art. 14, therefore, is an injunction to the State against taking certain type of actions rather than commanding it to take particular steps. Reading the mandate of auction into its c scheme would thus, be completely contrary to the intent of the Article apparent from its plain language. Secondly, a constitutional mandate is an absolute principle that has to be applied in all situations; it cannot be applied in some and not tested in others. The absolute principle is then applied on a case by case basis to see which 0 actions fulfill the requirements of the constitutional principle and which do not. [Para 106-107] [421-F-H; 422- A-C] "Some Constitutional Problems" by Justice K. Subba E Rao; "Democracy, Equality and Freedom" by Justice K. K. Mathew - referred to

4.4 Equality cannot be limited to mean only auction, without testing it in every scenario. One cannot test the F validity of a law with reference to the essential elements of ideal democracy, actually incorporated in the Constitution. [Para 11 O] [423-0-E] His Holiness Kesavananda Bharti Sripadagalvaru Vs. State of Kera/a & Anr. 1973 Suppl. SCR 1 = (1973) 4 SCC G 225; The State of West Bengal Vs. Anwar Ali Sarkar 1952 SCR 284; Indira Nehru Gandhi Vs. Raj Narain 1976 SCR 347 = 1975 (Supp) SCC 1 - referred to Kotch Vs. Pilot Comm'rs 330 U.S. 552 - referred to. H

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4.5 Courts are not at liberty to declare a statute void, because in their opinion it is opposed to the spirit of the Constitution. Courts cannot declare a limitation or constitutional requirement under the notion of having discovered some ideal norm. Further, a constitutional principle must not be limited .to a precise formula but ought to be an abstract principle applied to precise situations. [Para 11 O] [423-F]

4.6 The repercussion of holding auction as a constitutional mandate would be the voiding of every action that deviates from it, including social endeavours, welfare schemes and promotional policies. It would be odd to derive auction as a constitutional principle only for a limited set of situations from the wide and generic declaration of Art.14. The strength of constitutional adjudication lies in case to case adjudication and, therefore, auction cannot be elevated to a constitutional mandate. [Para 110] [423-F-G; 424-A-B]

4.7 Finally, reading auction as a constitutional mandate would be impermissible because such an approach may distort another constitutional principle embodied in Art.39(b), which mandates that the ownership and control of natural resources should be so distributed as to best subserve the common good. Art.37 provides that the provisions of Part IV shall not be enforceable by any court, but the principles laid down therein are nevertheless fundamental in the governance of the country and it shall be the duty of the State to apply these principles in making laws. "[Para 111] [424-C- · G] G 4.8 Therefore, Art.39(b) in a sense, is a restriction on 'distribution' built into the Constitution. But the restriction is imposed on the object and not the means. The overarching and underlying principle governing 'distribution' is furtherance of common good. But for the H

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A achievement of that objective, the Constitution uses the generic word 'distribution'. Distribution has broad contours and cannot be limited to meaning only one method i.e. auction. It envisages all such methods available for distribution/allocation of natural resources which ultimately subserve the "common good". [Para 112] [424-H; 425-A-B]

4.9 The term "distribute" undoubtedly, has wide amplitude and encompasses all manners and methods of distribution, which would include classes, industries, regions, private and public sections, etc. Having regard to the basic nature of Art.39(b), a narrower concept of equality under Art.14 may frustrate the broader concept of distribution, as conceived in Art. 39(b). There cannot, therefore, be a cavil that "common good' and "larger public interests" have to be regarded as constitutional reality deserving actualization. [Para 115] [425-H; 426-A- C] State of Tamil Nadu & Ors. Vs. L Abu Kavur Bai & Ors. = E 1984 (1) SCR 725 (1984) 1 SCC 515 - referred to

4.10 Auctions may be the best way of maximizing revenue but revenue maximization may not always be the best way to subserve public good. "Common good" is the sole guiding factor and a norm under Art. 39(b) for distribution of natural resources. It is the touchstone of testing whether any policy subserves the "common good" and if it does, irrespective of the means adopted, it is clearly in accordance with the principle enshrined in Art. 39(b). The norm of "common good" has to be understood and appreciated in a holistic manner. It is obvious that the manner in which the common good is best subserved is not a matter that can be measured by any constitutional yardstick - it would depend on the economic and political philosophy of the government. H Revenue maximization is not the only way in which the

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common good can be subserved. Where revenue maximization is the object of a policy, being considered qua that resource at that point of time to be the best way to subserve the common good, auction would be one of the preferable methods, though not the only method. Where revenue maximization is not the object of a policy of distribution, the question of auction would not arise. Revenue considerations may assume secondary position to developmental considerations. [Para 116 and 119] ·[426-D-F; 427-F-H; 428-A]

The State of Karnataka and Anr. Vs. Shri Ranganatha C Reddy and Anr. 1978 (1) SCR 641 = (1977) 4 SCC 471; Bennett Coleman & Co. and Ors. Vs. Union of India and Ors. 1973 (2) SCR 757 = (1972) 2 SCC 788 - referred to.

4.11 There is no constitutional imperative in the matter of economic policies. Art. 14 does not pre-define any economic policy as a constitutional mandate. Even the mandate of 39(b) imposes no restrictions on the means adopted to subserve the public good and uses the broad term 'distribution', suggesting that the methodology of distribution is not fixed. Economic logic establishes that alienation/allocation of natural resources to the highest bidder may not necessarily be the only way to subserve the common good, and at times, may run counter to public good. Therefore, it needs little emphasis that disposal of all natural resources through auctions is clearly not a constitutional mandate. [Para 120] [430-8-D]

4.12 Finally, market price, in economics, is an index of the value that a market prescribes to a good. However, this valuation is a function of several dynamic variables; it is a science and not a law. Auction is just one of the several price discovery mechanisms. Since multiple variables are involved in such valuations, auction or any other form of competitive bidding, cannot constitute even an economic mandate, much less a constitutional H

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A mandate. [Para 147) [444-G-H]

4.13 Auction despite being a more preferable method of alienation/allotment of natural resources, cannot be held to be a constitutional requirement or limitation for alienation of all natural resources and, therefore, every 8 method other than auction cannot be struck down as ultra-vires the constitutional mandate. [Para 148) [445-A- B]

LEGITIMATE DEVIATIONS FROM AUCTION: c 5.1 The Government has repeatedly deviated from the course of auction and this Court has repeatedly upheld such actions. The judiciary tests such deviations on the limited scope of arbitrariness and fairness under 0 Art.14 and its role is limited to that extent. Essentially whenever the object of policy is anything but revenue maximization, the Executive is seen to adopt methods other than auction. [129) [434-E-F]

Sachidanand Pandey & Anr. Vs. State of West Bengal E & Ors. (1987) 2 SCC 295; M.P. Oil Extraction and Anr. Vs. State of M.P. & Ors. (1997) 7 SCC 592; Netai Bag & Ors. Vs. State of WB. & Ors. (2000) 8 SCC 262; M & T Consultants, Secunderabad Vs. S. Y. Nawab (2003) 8 SCC 100; Haji T.M. Hassan Rawther Vs. Kera/a Financial Corpn. 1988 (1) SCR F = 1079 (1988) 1 SCC 166; Vilfianur lyarkkai Padukappu Maiyam Vs. Union of India & Ors. 1997 (1) Suppl. SCR 671 = (2009) 7 sec 561 - referred to para 128.

5.2 A fortiori, besides legal logic, mandatory auction may be contrary to economic logic as well. Different resources may require different treatment. Very often, exploration and exploitation contracts are bundled together due to the requirement of heavy capital in the discovery of natural resources. A concern would risk undertaking such exploration and incur heavy costs only

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if it was assured utilization of the resource discovered; A a prudent business venture, would not like to incur the high costs involved in exploration activities and then compete for that resource in an open auction. The logic is similar to that applied in patents. Firms are given incentives to invest in research and development with the B promise of exclusive access to the market for the sale of that invention. Such an approach is economically and legally sound and sometimes necessary to spur research and development. Similarly, bundling exploration and exploitation contracts may be necessary to spur growth c in a specific industry. Similar deviation from auction cannot be ruled out when the object of a State policy is to promote domestic development of an industry. Thus, auction cannot be the sole criteria for alienation of all natural resources. [Para 130-131) [434-G-H; 435-A-D] D Mis Kasturi Lal Lakshmi Reddy Vs. State of Jammu & Kashmir & Anr. 1980 (3) SCR 1338 = (1980) 4 SCC 1 - referred to

PLEA OF POTENTIAL ABUSE: E 5.3 A potential for abuse cannot be the basis for striking down a method as ultra vires the Constitution. It is the actual abuse itself that must be brought before the Court for being tested on the anvil of constitutional provisions. In fact, it may be said that even auction has F a potential of abuse, like any other method of allocation, but that cannot be the basis of declaring it as an unconstitutional methodology either. [Para 135) [437-D- E] G R.K. Garg Vs. Union of India & Ors. 1982 (1) SCR 947 = (1981) 4 SCC 675; D. K. Trivedi & Sons & Ors. Vs. State of Gujarat & Ors. 1986 SCR 479 = (1986) Supp SCC 20 - referred to. H

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A JUDICIAL REVIEW OF POLICY DECISIONS:

6.1 The wisdom and advisability of the policies are ordinarily not amenable to judicial review unless the policies are contrary to statutory or constitutional provisions or arbitrary or irrational or an abuse of power. 8 Court cannot strike down a policy decision taken by the Government merely because it feels that another decision would have been fairer, or more scientific or logical, or wiser. Further, it is validity of a law and not its efficacy that can be challenged. In the context of the instant C Reference, it needs to be emphasized that this Court cannot conduct a comparative study of the various methods of distribution of natural resources and suggest the most efficacious mode, if there is one universal efficacious method in the first place. It respects the mandate and wisdom of the executive for such matters. 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-a-vis other methods of disposal of natural resources. 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. [para 139, 144 and 146] [440-F; 443-D; 444-B-D]

Rustom Cavasjee Cooper Vs. Union of India 1970 (3) SCR 530 = (1970) 1 SCC 248; R.K. Garg Vs. Union of India G & Ors. 1982 (1) SCR 947 = (1981) 4 SCC 675; Delhi Science Forum & Ors. Vs. Union of India & Anr. 1996 (2) SCR 767 = (1996) 2 SCC 405; Peerless General Finance and Investment Co. Ltd. & Anr. Vs. Reserve Bank of India 1992 (1) SCR 406 = (1992) 2 SCC 343; Premium Granites & Anr. Vs. State of T.N. & Ors. 1994 (1) SCR 579 = (1994) 2 sec 691 Delhi I; Science Forum & Ors. Vs. Union of India & Anr. 1996 (2) SCR

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767 = (1996) 2 SCC 405; BALCO Employees' Union (Regd.) A Vs. Union of India & Ors. 2001 (5) Suppl. SCR 511 = (2002) 2 SCC 333; Mis Prag Ice & Oil Mills & Anr. Vs. Union of India [1978) 3 SCC 459; and State of Madhya Pradesh Vs. Narmada Bachao Ando/an & Anr. 2011 (6) SCR 443 = (2011) 7 SCC 639 - referred to B

6.2 However, courts can test the legality and constitutionality of these methods. When questioned, courts are entitled to analyse the legal validity of different means of distribution and give a constitutional answer as C to which methods are ultra vires and intra vires the provisions of the Constitution. Nevertheless, it cannot and will not compare which policy is fairer than the other, but, if a policy or law is patently unfair to the extent that it falls foul of the fairness requirement of Art.14 of the Constitution, court would not hesitate in striking it down. D [Para 146) [444-D-F]

6.3 Alienation of natural resources is a policy decision, and the means adopted for the same are thus, executive prerogatives. However, when such a policy decision is not backed by a social or welfare purpose, and precious and scarce natural resources are alienated for commercial pursuits of profit maximizing private entrepreneurs, adoption of means other than those that are competitive and maximize revenue may be arbitrary and face the wrath of Art. 14 of the Constitution. Therefore, rather than prescribing or proscribing a method, a judicial scrutiny of methods of disposal of natural resources should depend on the facts and circumstances of each case, in consonance with the principles culled out in the instant opinion. Failing which, the Court, in exercise of power of judicial review, shall term the executive action as arbitrary, unfair, unreasonable and capricious due to its antimony with Art. 14 of the Constitution. [Para 149) [445-C-E] H

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A 7.1 In conclusion, answer of this Court to the first set of five questions is that auctions are not the only permissible method for disposal of all natural resources across all sectors and in all circumstances. [Para 150) [445-F] B 7.2 As regards the remaining questions, the answer to the same would have a direct bearing on the mode of alienation of Spectrum and, .therefore, in light of the statement made on behalf of the Government that it is not questioning the correctness of judgment in the 2G Case, C this Court respectfully declines to answer the said questions. [Para 151) [445-G-H] PER JAGDISH SINGH KHEHAR. J( Concurring): 1.1 It is obvious, that the Government is alive to the 0 fact that disposal of some natural resources have to be made only by auction. Therefore, the first question in the Presidential Reference must be understood to seek this Court's opinion on whether there are circumstances in which natural resources ought to be disposed of only by auction. [Para 2) [447-C-D] 1.2 The term "auction" expressed in the instant opinion may be read as a means to "maximize revenue returns", irrespective of whether the means adopted should technically and correctly be described as tender, tender-cum-auction, or auction. [Para 3) [448-A-B] 1.3 The concept of equality before the law and the equal protection of the laws, emerges from the fundamental right expressed in Art.14 of the Constitution G of India. The true effect of Art.14 is to provide equality before the law and the equal protection of the laws not only with reference to individual rights, but also by ensuring that its citizens on the other side of the balance are likewise not deprived of their right to the equality before the law, and their right to equal protection of the

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laws. An individual citizen cannot be a beneficiary, at the cost of the country i.e., the plurality. Enriching one at the cost of all others would amount to deprivation to the plurality i.e., the nation itself. The gist of the first question in the Presidential Reference, raises the issue whether ownership rights over the nation's natural resources, vest in the citizens of the country. [Para 4] [448-B-C-G-H; 449- A-B]

1.4 Natural resources are the nation's collective wealth. Public interest litigation as a jurisprudential concept brings into focus the rights of the plurality (as against individual's right) specially when the plurality is, for one or the other reason, not in a position to seek redressal of its grievances. [Para 5] [449-E-F; 449-D]

2.1 An analysis of the decisions of this Court would lead to the inference that the State has the right to- trade. Government must act as a prudent businessman and the profit earned should be for public benefit and not for private gains. In executing public contracts in its trading activity, State must be guided by relevant principles, and not by extraneous or irrelevant consideration. The same should be based on reasonableness and rationality as well as non-arbitrariness. The State while entering into a contractual relationship is bound to maintain the standard or principle which meets the test of reasonableness and non-discrimination. And any departure from the said standards would be invalid unless the same is supported by good reasons. [Para 6(b) and (c)] [456-E-F; 459-A-C]

Ramana Dayaram Shetty Vs. International Airport G Authority of India & Ors., 1979 (3) SCR 1014 = (1979) 3 SCC -< 489; Rashbihari Panda etc. Vs. State of Orissa 1969 (3) SCR 374 = (1969) 1 SCC 414; S.G. Jaisinghani Vs. Union of India & Ors., 1967 SCR 703 =AIR 1967 SC 1427; Kasturi Lal Lakshmi Reddy Vs. State of Jammu & Kashmir & Anr. 1980 H

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A (3) SCR 1338 = (1980) 4 SCC 1; Dwarkadas Marfatia and Sons Vs. Board of Trustees of the Port of Bombay, 1989 (2) SCR 751 = (1989) 3 SCC 293; Mahabir Aauto Stores & Ors. vs. Indian Oil Corporation & Ors. (1990) 3 SCC 752; Kuman Shrilekha Vidyarthi & Ors. Vs. State of UP. & Ors. 1990 (1) B Suppl. SCR 625 = (1991) 1 SCC 212; Lucknow Development Authority Vs. MK. Gupta, 1993 (3) Suppl. SCR 615 = (1994) 1 SCC 243; Common Cause, A Registered Society Vs. Union of India & Ors., 1996 (6) Suppl. SCR 719 = (1996) 6 SCC 530; Meerut Development Authority vs. Association of c Management Studies & Anr. etc. 2009 (6) SCR 663 = (2009) 6 SCC 171, Reliance Natural Resources Ltd. Vs. Reliance Industries Ltd. etc. 2010 (5) SCR 704 = (2010) 7 SCC 1; Akhil Bhartiya Upbhokta Congress Vs. State of Madhya Pradesh & Ors., 2011 (5) SCR 77 = (2011) 5 SCC 29- referred to D Council of Civil Service Unions vs. Minister for the Civil Service, (1984) 3 All ER 935, 950 - referred to Wade: Administrative Law (6th edn.) - referred to 2.2 All powers vested in a public office, even in the field of contract, are meant to be exercised for public good and for promoting public interest; and Art. 14 of the Constitution applies also to matters of governmental policy even in contractual matters, and if the policy or any action of the government fails to satisfy the test of reasonableness, the same would be unconstitutional. [para S(g)] [476-C-D] Kumari Shrilekha Vidyarlhi & Ors. Vs. State of UP. & Ors. 1990 (1) Suppl. SCR 625 = (1991) 1 SCC 212 - referred to. G 2.3 In Centre for Public Interest Litigation, it was affirmed, that the State was duty bound to adopt the method of auction by giving wide publication while .,. alienating natural resources, so as to ensure that all eligible persons can participate in the process. [para 6] H (501-G]

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Centre for Public Interest Litigation & Ors. vs. Union of A India & Ors. (2012) 3 SCC 1 - referred to.

2.4 This Court in its judgments has laid down the parameters as regards the scope of applicability of Art.14 of the Constitution, in matters where the State, its 8 instrumentalities, and their functionaries, are engaged in contractual obligations. For an action to be able to withstand the test of Art.14, it has already been expressed in the "main opinion" that it has to be fair, reasonable, non-discriminatory, transparent, non-capricious, unbiased, without favouritism or nepotism, in pursuit of promotion of healthy competition and equitable treatment. The judgments of this Court endorse all those requirements where the State, its instrumentalities, and their functionaries, are engaged in contractual transactions. Therefore, all "governmental policy" drawn with reference to contractual matters, it has been held, must conform to the said parameters. While Art.14 permits a reasonable classification having a rational nexus to the object sought to be achieved, it does not permit the power of pick and choose arbitrarily out of several persons falling in the same category. Therefore, a criteria or procedure has to be adopted so that the choice among those falling in the same category is based on reason, fair play and non-arbitrariness. Even if there are only two contenders falling in the zone of consideration, there should be a clear, transparent and objective criteria or procedure to indicate which out of the two is to be preferred. It is this, which would ensure transparency. [Para 7) [501-H; 502-A-E] 2.5 Another aspect which emerges from the judgments of this Court is that, the State, its instrumentalities and their functionaries, while exercising their executive power in matters of trade or business etc. including making of contracts, should be mindful of public interest, public purpose and public good. This is H

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A so, because every holder of public office by virtue of which he acts on behalf of the State, or its instrumentalities, is ultimately accountable to the people in whom sovereignty vests. As such, all powers vested in the State are meant to be exercised for public good s and in public interest. Therefore, the question of unfettered discretion in an executive authority, just does not arise. The fetters on discretion are - a clear, transparent and objective criteria or procedure which promotes public interest, public purpose and public good. A public authority is ordained, therefore, to act reasonably and in good faith and upon lawful and relevant grounds of public interest. [Para 8] [502-F-H; 503- A-B] 2.6 Observations recorded by this Court on the subject of revenue returns, during the course of the State's engagements in commercial ventures are being summarized: It has been held, where the State is simply selling a product, there can be no doubt that the State must endeavour to obtain the highest price, subject of course to any other overriding public consideration. The validity of a trading agreement executed by the Government has to be judged by the test, that the entire benefit arising therefrom enures to the State, and is not used as a cloak for conferring private benefits on a F limited class of persons. In Reliance Natural Resources Ltd.'s case, the Union of India has adopted the position, that natural resources are vested in the State as a matter of trust, for and on behalf of the citizens of the country and is the solemn duty of the State, to protect those G natural resources. More importantly, it was accepted, that natural resources must always be used in the common interest of the citizens of the country, and not for private interest. [Para 9] [503-C-H; 504-A] 3.1 When natural resources are made available by the H State to private persons for commercial exploitation

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exclusively for their individual gains, the State's A endeavour must be towards maximization of revenue returns. This alone would ensure, that the fundamental right enshrined in Art.14 (assuring equality before the law and the equal protection of the laws), and the directive principle contained in Art.39(b) (that material resources B of the community are so distributed as best to subserve the common good), have been extended to the citizens of the country. Article 14 does not permit the State to pick and choose arbitrarily out of several persons falling in the same category. A transparent and objective criteria/ c procedure has to be evolved so that the choice amongst those belonging to the same class or category is based on reason, fair play, and non-arbitrariness. If the participation of private persons is for commercial exploitation exclusively for their individual gains, then the 0 State's endeavour to maximize revenue alone, would satisfy the constitutional mandate contained in Arts. 14 and 39(b) of the Constitution. [para 10-12] [504-E-G; 505- B-D]

Common Cause, A Registered Society Vs. Union of India E & Ors. 1996 (6) Suppl. SCR 719 = (1996) 6 SCC 530 - referred to.

3.2 Auction is certainly not a constitutional mandate in the manner expressed, in the "main opinion", but it can F surely be applied in some situations to maximize revenue returns, to satisfy legal and constitutional requirements. It is, therefore, that in the instant opinion it has been chosen to express the manner of disposal of natural resources by using the .words "maximization of revenue" G in place of the term "auction". Further, auction by way of competitive bidding is certainly an indisputable means, by which maximization of revenue returns is assured. It is reiterated that disposal of assets by process of tender, tender-cum-auction and auction could assure maximization of revenue returns. Thus, if the State arrives H

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A at the conclusion, in a given situation, that maximum revenue would be earned by auction of the natural resource in question, then that alone would be the process which it would have to adopt. [Para 3 and 12] [447-G-H; 505-F-H; 506-A-B] B 3.3 One is compelled to take judicial notice of the fact, that allotment of natural resources is an issue of extensive debate in the country. In Centre for Public Interest Litigation, extensive revenue loss, in the course of allocation of the 2G spectrum was duly noticed. On C each occasion when the issue of allocation of natural resources results in an alleged loss of revenue, it is portrayed as a loss to the nation. The Presidential Reference is aimed at invoking this Court's advisory jurisdiction to iron out the creases, so that legal and constitutional parameters are correctly understood. This would avoid such controversies in future. Therefore, an opinion is also being rendered, on the fourth question. The mandate contained in the Art.39(b) envisages that all material resources ought to be distributed in a manner which would "best sub-serve the common good". It is, therefore, apparent that governmental policy for distribution of such resources should be devised by keeping in mind the "common good" of the community i.e., the citizens of this country. It has been expressed in the "main opinion" that matters of policy fall within the realm of the legislature or the executive, and cannot be interfered with, unless the policy is in violation of statutory law, or is ultra vires the provision(s) of the Constitution. It is not within the scope of judicial review for a court to suggest an alternative policy, which in the wisdom of the court could be better suited in the circumstances of a case. Thus far, the position is clearly unambiguous. [Para 13] [506-C-D; 507-A-B-H; 508-A-C] 3.4 The legality and constitutionality of policy is one matter, and the manner of its implementation quite

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another. Even at the implementation stage a forthright and legitimate policy, may take the shape of an illegitimate stratagem. The policy of allocation of natural resources for public good can be defined by the legislature. Likewise, policy for allocation of natural resources may also be determined by the executive. The parameters for determining the legality and constitutionality of the two are exactly the same. Thus, there can be no doubt about the conclusion recorded in the "main opinion" that auction which is just one of the. several price recovery mechanisms, cannot be held to be the only c constitutionally recognized method for alienation of natural resources. That should not be understood to mean, that it can never be a valid method for disposal of natural resources. [para 13) [514-C-E; 508-D]

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1994 (5) Suppl. SCR 1 referred to Para 9

[1934] A.C. 586 referred to Para 12 c [1959] Supp. 1 S.C.R. 806 referred to para 17 A.LR. (30) 1943 FC 13 referred to Para 25 1991 (2) SCR 501 referred to Para 37 D 2002 (2) SCR 1006 referred to Para 45 (1955) 2 SCR 603 referred to Para 47 [1949-50] F.C.R. 595 referred to Para 50

E AIR 1954 SC 636 referred to Para 51

(1993) 4 sec 441 referred to Para 56

2011 (9) SCR 290 relied on para 66

1987 (1) SCR 562 relied on para 66 F 1992 (1) Suppl. SCR 732 relied on para 66

2005 (5) Suppl. SCR 395 referred to para 68 (2004) 3 sec 75 referred to para 69 G (2003) 6 sec 697 relied on para 70 36 L ED 1018 : 146 referred to para 74 U.S. 387 (1892) 1996 (10) Suppl. SCR 12 referred to para 74 H

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2004 (1) SCR 483 referred to para 74 A

2006 (2) SCR 419 referred to para 74 2009 (3) $CR 1 referred to para 74 2010 (5) SCR 704 referred to para 74 B 2011 (5) SCR 77 referred to para 74 1987 (2) SCR 223 referred to para 74 (2007) 3 sec 184 referred to para 91 c [1968] 3 SCR 251 relied on Para 92 1959 Supp (1) SCR 528 referred to para 94 AIR 1955 SC 191 referred to para 95 D [1959] 1 SCR 279 referred to para 95 1974 (2) SCR 348 referred to para 96 1978 (2) SCR 621 referred to Para 97 1981 (2) SCR 79 referred to Para 98 E 1979 (3) SCR 1014 referred to Para 99 2001 (5) Suppl. SCR 390 referred to Para101 2000 (4) Suppl. SCR 693 referred to Para 102 F 1996 (3) SCR 721 referred to Para 103 1982 (1) SCR 438 referred to Para 104 1973 (0) Suppl. SCR 1 referred to para 109 G 1952 SCR 284 referred to para 110 330 U.S. 552 referred to para 110 1976 SCR 347 referred to para 11 H

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A 1984 (1) SCR 725 referred to para 113 1978 (1) SCR 641 referred to para 117 1973 (2) SCR 757 referred to para 118 1980 (3) SCR 1338 referred to para 118 B 1988 (1) SCR 1079 referred to para 122 1988 (1) SCR 1079 referred to para 124 1997 (1) Suppl. SCR 671 referred to para 125 c (2000) 8 sec 262 referred to para 126 (2003) 8 sec 100 referred to para 127 1997 (1) Suppl. SCR 671 referred to para 128 D 1982 (1) SCR 947 referred to Para 133 1986 SCR 479 referred to para 134 1970 (3) SCR 530 referred to para 137 1994 (1) SCR 579 referred to para 139 E 1996 (2) SCR 767 referred to para 140

2001 (5) Suppl. SCR 511 referred to para 141

1992 (1) SCR 406 referred to para 142 F 19781 3 sec 459 referred to para 143

2011 (6) SCR 443 referred to para 144 As Per Khehar, J. G 1967 SCR 703 referred to para 6(a)

1969 (3) SCR 374 referred to para 6(b)

1979 (3) SCR 1014 referred to para 6(c)

H 1980 (3) SCR 1338 referred to para 6(d)

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1989 (2) SCR 751 referred to para 6(e) A (1984) 3 All ER 935, 950 referred to para 6(e) (1990) 3 sec 752 referred to para 6(f) 1990 (1) Suppl. SCR 625 referred to para 6(g) B 1993 (3) Suppl. SCR 615 referred to para 6(h) 1996 (6) Suppl. SCR 719 referred to para 6(i) 2009 (6) SCR 663 referred to para 60) c 2010 (5) SCR 704 referred to para 6(k) (2012) 3 sec 1 referred to para 6(1) (2012) 3 sec 1 referred to para 13

ADVISORY JURISDICTION : Special Reference No. 1 of D 2012.

[Under Article 143(1) of the Constitution of India]

[Regarding 2G Spectrum] E Goolam E. Vahanvati, D.J. Khambata, A. Mariarputham, AGs, Indira Jaising, ASG, Shanti Bhushan, Soli J. Sorabjee, Biswajit Deb, Vivek K. Tankha, Ravindra Shrivastava, C.A. Sundaram, Harish N. Salve, T.R. Andhyarujina, Shyam Divan, M.N. Krishnamani, Vikas Singh, Dr. Manish Singhvi, Manjit F Singh, Guru Krishna Kumar, AAGs., Devadatt Kamat, Anoopam N. Prasad, Rohit Sharma, Nishanth Patil, Anandh Kannan, T.A. Khan, D.S. Mahra, Supriya Jain, Sonam Anand, Jhuma Sen, Nizam Pasha, Prashant Bhushan, Pranav Sachdeva, Shakil Ahmed, Gaurav Dhingra, A. Subhashini, G.N. Reddy, M. G Rambabu, S. Nagarajan, Ashoka Thakur, Anil K. Chopra, Khwairakpam Nobin Singh, Sapam Biswajit Meitei, Navnit Kumar, Deepika Ghatowar (For Corporate Law Group), Pragyan Sharma, Rupesh Gupta, Mandakini Sharma, Gautam Dhamija, Heshu Kayina, B.S. Banthia, Vikas Upadhyay, H

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A Sameer Sodhi, Avijit Singh, Rachana Srivastava, Utkarsh Sharma, Gopal Singh, Manish Kumar, Chandan Kumar, Radha Shyam Jena, lrshad Ahmad, Milind Kumar, Ramesh Babu M.R., Sushrut Jindal, Madhavi Divan, Sanjay Kharde, Asha G. Nair, Sunil Fernandes, Vernika Tomar, V.N. Raghupathy, P.V. B Yogeswaran, C.D. Singh, Dr. Indra Pratap Singh, Sunny Choudhary, Himinder Lal, Anil Shrivastav, Rituraj Biswas, Edward Belho, K. Enatoli Serna, Nimshim Vashum, Jagjit Singh Chhabra, Aruna Mathur, Yusuf Khan, Kamal Mohan Gupta, B. Balaji, A. Prasanna Venkat, Hemantika Wahi, Jayesh Gaurav, C S. Chandra Shekhar, Pallavi S. Shroff, Manu Nair, Kirat Singh Nagra, Rohini Musa, Saanjh N. Purohit, Monika Singhal, Mohit Auluck, A.P. Medh (For Suresh A. Shroff & Co.), Rohit Kumar Singh, Anupam Bharti, Ruchi A. Mahajan, Binsy Susan, Anannya Ghosh, Samarika Singh (For Suresh A. Shroff & Co.), D Sunil Dogra, Kiran Suri, S.J. Amith, Jayna Kothari, Shruthi Ramakrishna, Vasuman Khandelwal, Mohit Kumar Shah, Dr. Subramanian Swamy (ln-Peson), Dipak Kumar Jena, Minakshi Ghosh Jena, Rajesh Singh, Gautam Narayan, T.G.N. Nair for the Appearing Parties.

E The opinions of the Court were delivered by

D.K. JAIN, J. [FOR S.H. KAPADIA, CJ, HIMSELF, DIPAK MISRA & RANJAN GOGOi, JJ.]

In exercise of powers conferred under Article 143(1) of the F · Constitution of India, the President of India has on 12th April, 2012, made the present Reference. The full text of the Reference (sans the annexures) is as follows:

"WHEREAS in 1994, the Department of G Telecommunication, Government of India ("GOI"), issued 8 Cellular Mobile Telephone Services Licenses ("CMTS Licenses"), 2 in each of the four Metro cities of Delhi, Mumbai, Kolkata and Chennai for a period of 10 years (the "1994 Licenses"). The 1994 licensees were selected H based on rankings achieved by them on the technical and

RE: SPECIAL REFERENCE N0.1 OF 2012 351 [D.K. JAIN, J.] financial evaluation based on parameters set out by the A Gol in the tender and were required to pay a fixed licence fee for initial three years and subsequently based on number of subscribers subject to minimum commitment mentioned in the tender document and licence agreement. The 1994 Licenses issued by Gol mentioned that a B cumulative maximum of upto 4.5 MHz in the 900 MHz bands would be permitted based on appropriate justification. There was no separate upfront charge for the allocation of Spectrum to the licensees, who only paid annual Spectrum usage charges, which will be subject to c revision from time to time and which under the terms of the license bore the nomenclature "licence fee and royalty". A copy of the 1994 Licenses, along with a table setting out the pre-determined Licence Fee as prescribed by DoT in the Tender, is annexed hereto as Annexure I (Colly). D WHEREAS in December 1995, 34 CMTS ·ucenses were granted based on auction for 18 telecommunication circles for a period of 10 years (the "1995 Licenses"). The 1995 Licenses mentioned that a cumulative maximum of up to 4.4 MHz in the 900 MHz bands shall be permitted to E the licensees, based on appropriate justification. There was no separate upfront charge for allocation of spectrum to the licensees who were also required to pay annual spectrum usage charges, which under the terms of the license bore the nomenclature "licence fee and royalty" F which will be subject to revision from time to time. A copy of the 1995 Licenses, along with a table setting out the fees payable by the highest bidder, is annexed hereto as Annexure II (Colly). G WHEREAS in 1995, bids were also invitet. for basic telephone service licenses ("BTS Licenses") with the license fee payable for a 15 year period. Under the terms of the BTS Licenses, a licensee could provide fixed line basic telephone services as well as wireless basic H

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A telephone services. Six licenses were granted in the year 1997-98 by way of auction through tender for providing basic telecom services (the "1997 BTS Licenses"). The license terms, inter-alia, provided that based on the availability of the equipment for Wireless in Local Loop B (WLL), in the world market, the spectrum in bands specified therein would be considered for allocation subject to the conditions mentioned therein. There was no separate upfront charge for allocation of spectrum and the licensees offering the basic wireless telephone service c were required to pay annual Spectrum usage charges, which under the terms of the license bore the nomenclature "licence fee and royalty". A sample copy of the 1997 BTS Licenses containing the table setting out the license fees paid by the highest bidder is annexed hereto as Annexure Ill (Colly). D WHEREAS in 1997, the Telecom Regulatory Authority of India Act, 1997 was enacted and the Telecom Regulatory Authority of India (the "TRAI") was established.

E WHEREAS on 1st April, 1999, the New Telecom Policy 1999 ("NTP 1999") was brought into effect on the recommendation of a Group on Telecom ("GoT") which had been constituted by Gol. A copy of NTP 1999 is annexed hereto as Annexure IV. NTP 1999 provided that F Cellular Mobile Service Providers ("CMSP") would be granted a license for a period of 20 years on the payment of a one-time entry fee and licence fee in the form of revenue share. NTP 1999 also provided that BTS (Fixed Service Provider or FSP) Licenses for providing both fixed and wireless (WLL) services would also be issued for a G period of 20 years on payment of a one-time entry fee and licence fee in the form of revenue share and prescribed charges for spectrum usage, appropriate level of which was to be recommended by TRAI. The licensees both cellular and basic were also required to pay annual H Spectrum usage charges.

RE: SPECIAL REFERENCE N0.1 OF 2012 353 [D.K. JAIN, J.] WHEREAS based on NTP 1999, a migration A package for migration from fixed license fee to one time entry fee and licence fee based on revenue share regime was offered to all the existing licenses on 22nd July, 1999. This came into effect on 1st August 1999. Under the migration package, the licence period for all the CMTS B aod FSP licensees was extended to 20 years from the date of issuance of the Licenses.

WHEREAS in 1997 and 2000, CMTS Licenses were also granted in 2 and 21 Circles to Mahanagar Telephone Nigam Limited ("MTNL"} and Bharat Sanchar C Nigam Limited ("BSNL") respectively (the "PSU Licenses"). However, no entry fee was charged for the PSU Licenses. The CMTS Licenses issued to BSNL and MTNL mentioned that they would be granted GSM Spectrum of 4.4 + 4.4 MHz in the 900 MHz band. The PSU D Licensees were also required to pay annual spectrum usage charges. A copy of the PSU Licenses is annexed hereto as Annexure V (Colly).

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A spectrum upto 1.8 MHz + 1.8 MHz making a total of 6.2 MHz + 6.2 MHz, may be considered for assignment, on case by case basis, on payment of additional Licence fee. The bandwidth upto maximum as indicated i.e. 4.4 MHz & 6.2 MHz as the case may be, will be allocated based B on the Technology requirements (e.g. CDMA@ 1.25 MHz, GSM @ 200 KHz etc.). The frequencies assigned may not be contiguous and may not be same in all cases, while efforts would be made to make available larger chunks to the extent feasible. A copy of the 2001 Cellular Licenses, c along with a table setting out the fees payable by the highest bidder, is annexed hereto as Annexure VL

WHEREAS in 2001, BTS Licenses were also issued for providing both fixed line and wireless basic telephone services on a continual basis (2001 Basic D Telephone Licenses). Service area wise one time Entry Fee and annual license fee as a percentage of Adjusted Gross Revenue (AGR) was prescribed for grant of BTS Licenses. The licence terms, inter-alia, provided that for Wireless Access System in local area, not more than 5 + E 5 MHz in 824-844 MHz paired with 869-889 MHz band shall be allocated to any basic service operator including existing ones on FCFS basis. A detailed procedure for allocation of spectrum on FCFS basis was given in Annexure-IX of the 2001 BTS license. There was no F separate upfront charge for allocation of spectrum and the Licensees were required to pay revenue share of 2% of the AGR earned from wireless in local loop subss;ribers as spectrum charges in addition to the one time entry fee and annual license fee. A sample copy of the 2001 Basic G Telephone License along with a table setting out the entry fees is annexed hereto as Annexure VII.

WHEREAS on 27th October, 2003, TRAI recommended a Unified Access Services Licence ("UASL") Regime. A copy of TRAl's recommendation is annexed hereto as Annexure VIII.

RE: SPECIAL REFERENCE N0.1 OF 2012 355 [D.K. JAIN, J.]

WHEREAS on 11.11.2003, Guidelines were issued, specifying procedure for migration of existing operators tc the new UASL regime. As per the Guidelines, all applications for new Access Services License shall be in the category of Unified Access Services Licence. Later, based on TRAI clarification dated 14.11.2003, the entry fee for new Unified Licensee was fixed same as the entry fee of the 4th cellular operator. Based on further recommendations of TRAI dated 19.11.2003, spectrum to the new licensees was to be given as per the existing terms and conditions relating to spectrum in the respective c license agreements. A copy of the Guidelines dated 11.11.2003 is annexed hereto as Annexure IX.

WHEREAS consequent to enhancement of FOi limit in telecom sector from 49% to 74%, revised Guidelines for grant of UAS Licenses were issued on 14.12.2005. D These Guidelines, inter-alia stipulate that Licenses shall be issued without any restriction on the number of entrants for pr.ovisior'I of Unified Access Services in a Service Area and the applicant will be required to pay one time non- refundable Entry, annual License fee as a percentage of E Adjusted Gross Revenue (AGR) and spectrum charges on revenue share basis. No separate upfront charge for allocation of spectrum was prescribed. Initial Spectrum · was allotted as per UAS License conditions to the service providers in different frequency bands, subject to F availability. Initially allocation of a cumulative maximum up to 4.4 MHz + 4.4 MHz for TOMA based systems or 2.5 MHz + 2.5 MHz for CDMA based systems subject to availability was to be made. Spectrum not more than 5 MHz + 5 MHz in respect of CDMA system or 6.2 MHz + G 6.2 MHz in respect of TOMA based system was to be allocated to any new UAS licensee. A copy of the UASL Guidelines dated 14.12.2005 is annexed hereto as Annexure X. H

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A WHEREAS after the introduction of the UASL in 2003 and until March 2007, 51 new UASL Licenses were issued based on policy of First Come-First Served, on payment of the same entry fee as was paid for the 2001 Cellular Licenses (the "2003-2007 Licenses") and the B spectrum was also allocated based on FCFS under a separate wireless operating license on case by case basis and subject to availability. Licensees had to pay annual spectrum usage charges as a percentage of AGR, there being a no upfront charge for allocation of spectrum. A c copy of the 2003-2007 License, along with a table setting out the fees payable, is annexed hereto as Annexure XI (Colly).

WHEREAS on 28th August 2007, TRAI revisited the issue of new licenses, allocation of Spectrum, Spectrum D charges, entry fees and issued its recommendations, a copy of which is annexed hereto as Annexure XII. TRAI made further recommendations dated 16.07.2008 which is annexed hereto as Annexure XIII.

E WHEREAS in 2007 and 2008, Gol issued Dual Technology Licences, where under the terms of the existing licenses were amended to allow licensees to hold a license as well as Spectrum for providing services through both GSM and CDMA network. First amendment was issued in December, 2007. All licensees who opted for Dual Technology Licences paid the :>ame entry fee, which was an amount equal to the amount prescribed as entry fee for getting a new UAS licence in the same service area. The amendment to the license inter-alia mentioned that initially a cumulative maximurri of upto 4.4 MHz+ 4.4 MHz was to be allocated in the case of TOMA based systems(@ 200 KHz per carrier or 30 KHz per carrier) and a maximum of 2.5 MHz + 2.5 MHz was to be allocated in the case of CDMA based systems(@ 1.25 MHz per carrier), on case by case basis subject to availability. It was also, inter-alia, H

RE: SPECIAL REFERENCE N0.1 OF 2012 357 [D.K. JAIN, J.] mentioned that additional spectrum beyond the above A stipulation may also be considered for allocation after ensuring optimal and efficient utilization of the already allocated spectrum taking into account all types of traffic and guidelines/criteria prescribed from time to time. However, spectrum not more than 5 + 5 MHz in respect of B CDMS system and 6.2 + 6.2 MHz in respect of TOMA based system was to be allocated to the licensee. There was no separate upfront charge for allocation of Spectrum. However, Dual Technology licensees were required to pay Spectrum usage charges in addition to the license fee on c revenue share basis as a percentage of AGR. Spectrum to these licensees was allocated 10.01.2008 onwards.

WHEREAS Subscriber based criteria for CMTS was prescribed in the year 2002 for allocation of additional spectrum of 1.8 + 1.8 MHz beyond 6.2 + 6.2 MHz with a D levy of additional spectrum usage charge of 1% of AGR. The allocation criteria was revised from time to time. A copy of the Do T letter dated 01.02.2002 in this regard is annexed hereto as Annexure XIV. E WHEREAS for the spectrum allotted beyond 6.2 MHz, in the frequency allocation letters issued by DoT May 2008 onwards, it was mentioned inter-alia that allotment of spectrum is subject to pricing as determined in future by the Gol for spectrum beyond 6.2 MHz + 6.2 MHz and F the outcome of Court orders. However, annual spectrum usage charges were levied on the basis of AGR, as per the quantum of spectrum assigned. A sample copy of the frequency allocation letter is annexed hereto as Annexure xv. G WHEREAS Spectrum for the 3G Band (i.e. 2100 MHz band) was auctioned in 2010. The terms of the auction stipulated that, for successful new entrants, a fresh license agreement would be entered into and for existing licensees who were successful in the auction, the license H

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A agreement would be amended for use of Spectrum in the 3G band. A copy of the Notice inviting Applications and Clarifications thereto are annexed hereto and marked as Annexure XVI (Colly). The terms of the amendment letter provided, inter alia, that the 3G spectrum would stand B withdrawn if the license stood terminated for any reason. A copy of the standard form of the amendment letter is annexed hereto and marked as Annexure XVII.

WHEREAS letters of intent were issued for 122 Licenses for providing 2G services on or after 10 January c 2008, against which licenses (the "2008 Licenses") were subsequently issued. However, pursuant to the judgment of this Hon'ble Court dated 2nd February, 2012 in Writ Petition (Civil) No.423 of 2010 (the "Judgment"), the 2008 Licenses have been quashed. A copy of the judgment is annexed hereto and marked Annexure XVIII.

WHEREAS the Gol has also filed an Interlocutory Application for clarification of the Judgment, wherein the Gol has placed on record the manner in which the auction is proposed to be held pursuant to the Judgment and sought appropriate clarificatory orders/directions from the Hon'ble Court. A copy of the Interlocutory Application is annexed hereto and marked as Annexure XIX.

WHEREAS while the Gol is implementing the directions set out in the Judgment at paragraph 81 and proceeding with a fresh grant of licences and allocation of spectrum by auction, the Gol is seeking a limited review of the Judgment to the extent it impacts generally the method for allocation of national resources by the State. G A copy of the Review Petition is annexed hereto and marked as Annexure XX.

WHEREAS by the Judgment, this Hon'ble Court directed TRAI to make fresh recommendations for grant H of licenses and allocation of Spectrum in the 2G band by

RE: SPECIAL REFERENCE N0.1 OF 2012 359 [D.K. JAIN, J.] holding an auction, as was done for the allocation of A Spectrum for the 3G licenses.

WHEREAS, in terms of the directions of this Hon'ble Court, Gol would now be allocating Spectrum in the relevant 2G bands at prices discovered through auction. B WHEREAS based on the recommendations of TRAI dated 11.05.2010 followed by further clarifications and recommendations, the Gol has prescribed in February 2012, the limit for spectrum assignment in the Metro Service Areas as 2x1 OMHz/2x6.25 MHz and in rest of the C Service Areas as 2x8MHz/2x5 MHz for GSM (900 MHz, 1800 MHz band)/CDMA(800 MHZ band), respectively subject to the condition that the Licensee can acquire additional spectrum beyond prescribed limit in the open market should there be an auction of spectrum subject to D the further condition that total spectrum held by it does not exceed the limits prescribed for merger of licenses i.e. 25% of the total spectrum assigned in that Service Area by way of auction or otherwise. This limit for CDMS spectrum is 10 MHz. E

WHEREAS, in view of the fact that Spectrum may need to be allocated to individual entities from time to time in accordance with criteria laid down by the Gol, such as subscriber base, availability of Spectrum in a particular circle, inter-se priority depending on whether the Spectrum F comprises the initial allocation or additional allocation, etc., it may not always be possible to conduct an auction for the allocation of Spectrum.

AND WHEREAS in view of the aforesaid, the G auctioning of Spectrum in the 2G bands may result in a situation where none of the Licensees, using the 2G bands of 800 MHz., 900 MHz and 1800 MHz would have paid any separate upfront fee for the allocation of Spectrum. H

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A AND WHEREAS the Government of India has received various notices from companies based in other countries, invoking bilateral investment agreements and seeking damages against the Union of India by reason of the cancellation/threat of cancellation of the licenses. B AND WHEREAS in the circumstance certain questions of law of far reaching national and international implications have arisen, including in relation to the conduct of the auction and the regulation of the telecommunications industry in accordance with the c Judgment and FDI into this country in the telecom industry and otherwise in other sectors.

Given that the issues which have arisen are of great public importance, and that questions of law have arisen of public importance and with such far reaching consequences for the development of the country that it is expedient to obtain the opinion of the Hon'ble Supreme Court of India thereon.

NOW THEREFORE, in exercise of powers conferred upon me by clause (1) of Article 143 of the Constitution of India, I, Pratibha Devisingh Patil, President of India, hereby refer the following questions to the Supreme Court of India for consideration and report thereon, namely: F Q.1 Whether the only permissible method for disposal of all natural resources across all sectors and in all circumstances is by the conduct of auctions? G Q.2 Whether a broad proposition of law that only the route of auctions can be resorted to for disposal of natural resources does not run contrary to several judgments of the Supreme Court including those of Larger Benches? H

RE: SPECIAL REFERENCE N0.1 OF 2012 361 [D.K. JAIN, J.] Q.3 Whether the enunciation of a broad principle, even though expressed as a matter of constitutional law, does not really amount to formulation of a policy and has the effect of unsettling policy decisions formulated and approaches taken by various successive governments over the years for valid considerations, including lack of public resources and the need to resort to innovative and different approaches for the development of various sectors of the c economy?

Q.4 What is the permissible scope for interference by courts with policy making by the Government including methods for disposal of natural resources? D

Q.5 Whether, if the court holds, within the permissible scope of judicial review, that a policy is flawed, is the court not obliged to take into account investments made under the said policy including investments made by foreign investors under multilateral/ bilateral agreements?

Q.6 If the answers to the aforesaid questions lead to an affirmation of the judgment dated 02.02.2012 then the following questions may arise, viz.

(i) whether the judgment is required to be given retrospective effect so as to unsettle all licences issued and 2G spectrum (800, 900, and 1800 MHz bands) allocated in and after 1994 and prior to 10.01.2008?

(ii) whether the allocation of 2G spectrum in all H

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A circumstances and in all specific cases for different policy considerations would nevertheless have to be undone?

And specifically B (iii) Whether the telecom licences granted in 1994 would be affected?

(iv) Whether the Telecom licences granted by way of basic licences in 2001 and licences c granted between the period 2003-2007 would be affected?

(v) Whether it is open to the Government of India to take any action to alter the terms of any licence to ensure a level playing field among D all existing licensees?

(vi) Whether dual technology licences granted in 2007 and 2008 would be affected?

E (vii) Whether it is necessary or obligatory for the Government of India to withdraw the Spectrum allocated to all existing licensees or to charge for the same with retrospective effect and if so on what basis and from what date? F Q.7 Whether, while taking action for conduct of auction in accordance with the orders of the Supreme Court, it would remain permissible for the Government to: G (i) Make provision for allotment of Spectrum from time to time at the auction discovered price and in accordance with laid down criteria during the period of validity of the H auction determined price?

RE: SPECIAL REFERENCE N0.1 OF 2012 363 [D.K. JAIN, J.] (ii) Impose a ceiling on the acquisition of A Spectrum with the aim of avoiding the emergence of dominance in the market by any licensee/applicant duly taking into consideration TRAI recommendations in this regard? B

(iii) Make provision for allocation of Spectrum at auction related prices in accordance with laid down criteria in bands where there may be inadequate or no competition (for e.g. C there is expected to be a low level of competition for CDMA in 800 MHz band and TRAI has recommended an equivalence ratio of 1.5 or 1.3X1 .5 for 800 MHz and 900 MHz bands depending upon the quantum of spectrum held by the licensee that can be D applied to auction price in 1800 MHz band in the absence of a specific price for these bands)?

Q.8 What is the effect of the judgment on 3G Spectrum E acquired by entities by auction whose licences have been quashed by the said judgment?

NEW DELHI; DATED: 12 April 2012 PRESIDENT OF INDIA" F

2Copy pinpoint2. A bare reading of the Reference shows that it is occasioned by the decision of this Court, rendered by a bench of two learned Judges on 2nd February, 2012 in Centre for Public Interest Litigation & Ors. Vs. Union of India & Ors. 1 (for brevity "2G Case"). G

3Copy pinpoint3. On receipt of the Reference, vide order dated 9th May, 2012, notice was issued to the Attorney General for India. Upon hearing the learned Attorney General, it was directed vide order

1. c2012) 3 sec 1. H

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A dated 11th May, 2012, that notice of the Reference shall be issued to all the States through their Standing Counsel; on Centre for Public Interest Litigation (CPIL) and Dr. Subramanian Swamy (petitioners in the 2G Case); as also on the Federation of Indian Chambers of Commerce and Industry B (FICCI) and Confederation of Indian Industry (Cll), as representatives of the Indian industry. On the suggestion of the learned Attorney General, it was also directed (though not recorded in the order), that the reference shall be dealt with in two parts viz. in the first instance, only questions No. 1 to 5 C would be taken up for consideration and the remaining questions shall be taken up later in the light of our answers to the first five questions.

4Copy pinpoint4. At the commencement of the hearing of the Reference on 10th July, 2012, a strong objection to the maintainability of D the Reference was raised by the writ petitioners in the 2G Case. Accordingly, it was decided to first hear the learned counsel on the question of validity of the Reference.

SUBMISSIONS ON MAINTAINABILITY: E

5Copy pinpoint5. Mr. Soli Sorabjee, learned senior counsel, appearing for CPIL, strenuously urged that in effect and substance, the Reference seeks to question the correctness of the judgment in the 2G Case, which is not permissible once this Court has pronounced its authoritative opinion on the question of law now sought to be raised. The learned counsel argued that reference under Article 143(1) of the Constitution does not entail appellate or review jurisdiction, especially in respect of a judgment which has attained finality. According to the learned counsel, it is evident from the format of the Reference that it does not express or suggest any 'doubt' as regards the question of fact or law relating to allocation of all natural resources, a sine-qua- non for a valid reference. In support of the proposition, learned counsel placed reliance on observations in earlier references - In Re: The Delhi Laws Act, 1912, the Ajmer-Merwara H (Extension of Laws) Act, 1947 And The Part C States (Laws)

RE: SPECIAL REFERENCE N0.1 OF 2012 365 [D.K. JAIN, J.] Act, 1950 2, In Re: The Berubari Union and Exchange of A Enclaves Reference Under Article 143(1) of the Constitution of lndia 3 , In Re: The Kera/a Education Bill, 195, 7 In Reference Under Article 143(1) Of The Constitution of lndia 4, Special Reference No.1 of 19645 (commonly referred to as "Keshav Singh"), In Re: Presidential Po/16 , In Re: The Special B Courts Bill, 19787, In the Matter of: Cauvery Water Disputes Tribuna/8 (hereinafter referred to as "Cauvery-11") and Special Reference No. 1 of 1998 Re. 9

6Copy pinpoint6. Next, it was contended by the learned senior counsel that if for any reason, the Executive feels that the 2G Case does C not lay down a correct proposition of law, it is open to it to persuade another bench, before which the said judgment is relied upon, to refer the issue to a larger bench for reconsideration. In short, the submission was that an authoritative pronouncement, like the one in the 2G Case, D cannot be short circuited by recourse to Article 143(1 ).

7Copy pinpoint7. Learned counsel also contended that the Reference as framed is of an omnibus nature, seeking answers on hypothetical and vague questions, and therefore, must not be E answered. Commending us to In Re: The Special Courts Bill, 1978 (supra) and several other decisions, learned counsel urged that a reference under Article 143(1) of the Constitution for opinion has to be on a specific question or questions. It was asserted that by reason of the construction of the terms of F Reference, the manner in which the questions have been

2. [1951] S.C.R. 747.

3. (1960) 3 S.C.R. 250.

4. [1959) S.C.R. 995. G

5. [1965] 1 S.C.R. 413.

6. (1974) 2 sec 33.

1. (1979) 1 sec 380.

8Copy pinpoint8. 1993 Supp (1) sec 96 (II).

9Copy pinpoint9. (1998) 1 sec 739. H

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A framed and the nature of the answers proposed, this Court would be entitled to return the Reference unanswered by pointing out the aforesaid impediments in answering it. Lastly, it was fervently pleaded that if the present Reference is entertained, it would pave the way for the Executive to circumvent or negate the effect of inconvenient judgments, like the decision in the 2G Case, which would not only set a dangerous and unhealthy precedent, but would also be clearly contrary to the ratio of the decision in Cauvery II.

8. Mr. Prashant Bhushan, learned senior counsel, while adopting the arguments advanced by Mr. Soli Sorabjee, reiterated that from the format of questions No.1 to 5, as well as from the review petition filed by the Government in the 2G Case, it is clear that the present Reference seeks to overrule the decision in the 2G Case by reading down the direction that allowed only 'auction' as the permissible means for allocation of all natural resource, in paragraphs 94 to 96 of the 2G Case, to the specific case of spectrum. It was argued by the learned counsel that it is apparent from the grounds urged in the review petition filed by the Government that it understood the ratio of the 2G Case, binding them to the form of procedure to be followed while alienating precious natural resources belonging to the people, and yet it is seeking to use the advisory jurisdiction of this Court as an appeal over its earlier decision. It was contended that even if it be assumed that a doubt relating to the disposal of all natural resources has arisen on account of conflict of decisions on the point, such a conflict cannot be resolved by way of a Presidential reference; that would amount to holding that one or the other judgments is 1n.correctly decided, which, according to the learned counsel, is beyond the scope of Article 143(1). Learned counsel alleged that the language in which the Reference is couched, exhibits mala fides on the part of the Executive. He thus, urged that we should refrain from giving an opinion.

9. Dr. Subramanian Swamy, again vehemently objecting H

RE: SPECIAL REFERENCE N0.1 OF 2012 367 [D.K. JAIN, J.] to the maintainability of the Reference, on similar grounds, A added that the present Reference is against the very spirit of Article 143(1 ), which, according to the constituent assembly debates, was meant to be invoked sparingly, unlike the case here. It was pleaded that the Reference is yet another attempt to delay the implementation of the directions in the 2G Case. B Relying on the decision of this Court in Dr. M. Ismail Faruqui & Ors. Vs. Union of India & Ors. 10, Dr. Swamy submitted that we will be well advised to return the Reference unanswered.

10Copy pinpoint10. Mr. G.E. Vahanvati, the learned Attorney General for C India, defending the Reference, submitted that the plea regarding non-maintainability of the Reference on the ground that it does not spell out a 'doubt', is fallacious on a plain reading of the questions framed therein. According to him, Article 143(1) uses the word 'question' which arises only when there is a 'doubt' and the very fact that the President has sought the opinion of this Court on the questions posed, shows that there is a doubt in the mind of the Executive on those issues. It was stressed that merely because the Reference does not use the word 'doubt' in the recitals, as in other cited cases, does not imply that in substance no doubt is entertained in relation to the mode of alienation of all natural resources, other than spectrum, more so when the questions posed for opinion have far reaching national and international implications. It was urged that the content of the Reference is to be appreciated in proper perspective, keeping in view the context and not the form.

11Copy pinpoint11. It was urged that maintainability and the discretion to decline to answer a reference are two entirely different things. The question of maintainability arises when ex-facie, the G Presidential reference does not meet the basic requirements of Article 143(1), contrastive to the question of discretion, which is the power of the Court to decline to answer a reference, for good reasons, once the reference is maintainable. In support

10. (1994) 6 sec 360. H