Natural resources cannot be dissipated as charity: SC judge

The Supreme court brings out nuances that separate a scam from honest business.

Raman Kirpal September 27, 2012 22:35:44 IST
Natural resources cannot be dissipated as charity: SC judge

Does coalgate qualify as a scandal of 2G proportions?

Yes, if the government has given away coal mines as a matter of largess, charity, donation or endowment for private exploitation. Yes, if the government has allowed one set of citizens prosper at the cost of another set of citizens. And yes, if the coal mines are not allocated to best serve the common good.

Justice Jagdish Singh Khehar, one of the five Supreme Court judges who delivered their unanimous opinion on the Presidential reference on Thursday, made it amply clear in an addendum as to what makes a scam in a given situation.

And for this, Justice Khehar took coal sector as a hypothetical illustration to explain where it might lead the government to arbitrariness and be unfair in disbursement of natural resources.

Natural resources cannot be dissipated as charity SC judge

The Supreme Court.

"One is compelled to take judicial notice of the fact that allotment of natural resources is an issue of extensive debate in the country, so much so, that the issue of allocation of such resources had recently resulted in a washout of two sessions of Parliament. The current debate on allotment of material resources has been prompted by a report submitted by the Comptroller and Auditor General, asserting extensive loss in revenue based on inappropriate allocations. The report it is alleged, points out that private and public sector companies had made windfall gains because the process of competitive bidding had not been adopted. The country witnessed a similar political spat a little while earlier, based on the allocation of the 2G spectrum,’’ says Justice Khehar.

By picking up coal sector as a hypothetical situation, Justice Khehar explicitly demonstrates how "a forthright legitimate legislative policy may take the shape of an illegitimate stratagem.’’

Let’s assume that the government decides to allocate coal lots without any reciprocal favour or monetary gain or any other consideration from a private player engaged in power generation. The law of the land allows it only when the private player is awarded the power project on the basis of 'competitive bids for tariffs’.

Elaborating the same situation further, Justice Khehar says: "If the bidding process to determine the lowest tariff (of power) has been held, and the said bidding process has taken place without the knowledge that a coal mining lease would be allotted to the successful bidder, yet the successful bidder is awarded a coal mining lease. Would such a grant be valid?... Grant of a mining lease for coal in this situation would therefore be a windfall, without any nexus to the object sought to be achieved.’’

When the government makes such discretions or grants, such grants will stand to the test of being fair, reasonable equitable and impartial, Justice Khehar argues.

"No part of the natural resource can be dissipated as a matter of largess, charity, donation or endowment, for private exploitation. Each bit of natural resource expended must bring back a reciprocal consideration,’’ concludes Justice Khehar.

This is one clear reason why the Central Government, especially Telecom Minister Kapil Sibal, should not go gaga over the Supreme Court’s opinion that 'auction’ does not have a Constitutional mandate as the only method for disbursement of natural resources.

Justice Khehar warns that the government should not be under erroneous impression that it is 'not’ necessary to dispose of natural resources by way of auction. "Surely, the Presidential reference has not been made to seek such an innocuous advice,’’ Justice Khehar says.

Quoting and adding special emphasis to the cases cited by respective lawyers during the debate, Justice Khehar sums up some cardinal rules that any public authority or the government should follow while disbursing natural resources.

· Government should remain alive to the fact that disposal of some natural resources have to be made only by auction.

· A rightful choice, would assure maximization of revenue returns. The term “auction” may therefore be read as a means to maximize revenue returns.

· For a country like India, the pendulum must be understood to balance the rights of one citizen on the one side, and 124,14,91,960 (the present estimated population of India) citizens of the country on the other. An individual citizen cannot be a beneficiary, at the cost of the country (the remaining 124,14,91,960 citizens) i.e., the plurality.

· The man on the street should know why the decision has been taken in favour of a particular party.

· The Government must act as a prudent businessman, and that, the profit earned should be for public benefit and not for private gains.

· The State has the right to trade. In executing public contracts in its trading activity the State must be guided by relevant principles, and not by extraneous or irrelevant consideration.

· Every holder of public office is accountable to the people in whom the sovereignty vests.

· But where the public functionary exercises his discretion capriciously, or for considerations, which are mala fide, the public functionary himself must shoulder the burden of compensation held as payable. This Court felt that when a court directs payment of damages or compensation against the State, the ultimate sufferer is the common man, because it is tax payers money out of which damages and costs are paid.

· Article 14 of the Constitution of India 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.

· The wealth of nation slips away every time when the assets belonging to the citizens are given at a discount.

· Every limb of the government is required to be oriented to public good. Thus, the question of unfettered discretion in an executive authority, just does not arise.

Justice Khehar hopes that the Presidential reference was made to iron out the creases so that such controversies are avoided in future.

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