Another telecom storm is brewing on the horizon. This time, the bone of contention is the manner in which the Central government allocates E and V-band spectrum. The government has sought the Attorney General’s opinion on whether it can allot spectrum on a first come first serve basis (FCFS) instead of auctioning all spectrum as a consequence of the Supreme Court’s judgment in 2012, cancelling the allocation of 2G spectrum on a FCFS basis on the grounds that it should have been allocated. The implications of the final policy will be significant for the telecom industry and Indian consumers. If the spectrum is auctioned, telecom operators will have to outbid each other in an expensive bidding war, the costs of which they will recover from you, the consumer. The proceeds of the auction will, however, fatten the government exchequer. On the other hand, if the spectrum is given on a FCFS basis, the government does not make money but the advantage is that the telecom operators who receive spectrum at a low cost will pass on the benefits to consumers in the form of lower call rates and data charges. The judiciary and its approach to reviewing economic policy The question at the heart of the debate is whether the Supreme Court can dictate to the executive the manner in which it can exercise its discretion while making economic policies? The answer to that question often depends on how we perceive the role of the judiciary in modern day India. Classical theories of rule of law call for a strict separation of powers wherein the political executive is voted into power and is accountable to the people for the manner in which they exercise their discretion. In this setting, the judiciary can review administrative decisions of the government on very limited grounds. For example, the standard in the United Kingdom used to be one that prevented judges from going into the merits of the decision arrived at by the government. Judges would have to limit their review to the procedure followed by the government in arriving at the decision. For example, if the administrative authority exercises its discretion in a manner that exhibits bias or denies legitimate expectations, the English courts could merely set aside the decision on the grounds of a flawed decision-making process. Once the administrative authority corrected the procedural flaw, it could proceed with the same policy. English judges would interfere with the merits of the decision itself only if it violated the Wednesbury standard of review i.e. the decision was no unreasonable that no reasonable man would have arrived it. It is a much criticized and rarely used doctrine that has since given way to the proportionality test which offers a more structured review of administrative decision making, while also giving judges an opportunity to become more activist. The Indian debate on the role and power of the judiciary vis-à-vis the executive has evolved differently. The invention of public interest litigation (PILs) in the eighties led to a very activist Supreme Court which had absolutely no qualms going much further than their English counterparts when it came to reviewing administrative decision making. This new Indian conception of ‘Rule of Law’ allowed Indian judges to examine not just the manner in which decisions were arrived at but also the merits of the decision itself. In other words, judges could substitute the opinion of the executive with their own opinion. There are instances from the eighties and early nineties where Indian judges would set aside economic decisions of the government and instruct the government to conduct certain transactions in a particular manner. Post liberalisation, when the political executive began the process of liberalization, the Supreme Court became the last hope of the Indian left who used PILs to challenge the government’s decision to liberalise certain sectors or privatise government run industries. For example, in 1996, in the case of Delhi Science Forum v. Union of India a group of NGOs sought to restrain the liberalization of the telecom sector which was otherwise controlled by the government. Similarly, the privatisation of BALCO by the NDA government was challenged by labour unions before the Supreme Court. In both cases, the Supreme Court declined to intervene on the grounds that the executive was best placed to make economic policy and the courts would interfere only on very limited grounds. The 2G judgement – are auctions constitutionally mandated? The 2G judgment in 2012 represented a rare break in the court’s reluctance to interfere in the government’s power to make economic policy. As with the cases against telecom privatization in the 90’s and the Balco privatization, the 2G case was instigated by the left leaning Centre for Public Interest Litigation and was targeted at not just corruption but also the perceived neo-liberal policy of FCFS which deprived the exchequer of valuable money that would have accrued to the government by auctioning public resources like spectrum. The Supreme Court bench that heard the 2G challenge fell back on the environmental doctrine of ‘public trust’ to rule that the central government was holding spectrum in trust for the Indian people thereby requiring it to dispose those resources in a manner that deliver the maximum benefit to the Indian people. In the court’s opinion, only a public auction could ensure the maximum revenue and hence the government was required to auction the spectrum. The court also quashed the FCFS policy on the grounds that it was discriminatory and violative of the equality mandate of Article 14 since it was a process that open to favoritism of the kind seen in the 2G allocation wherein persons with inside information would get undue benefit. There was no engagement by the court with the benefits of the FCFS or the drawbacks of an auction, when it decided to order the central government to auction 2G spectrum.When it was delivered the 2G judgment caused a political earthquake and set the ground for the UPA’s defeat in 2014. The judgment also meant that auctions would have to be the only route of allocating natural resources not just spectrum. In a rare moment of clarity at the time, the UPA government requested the President to refer to the Supreme Court for its opinion a series of questions on allocation of natural resources. This had the effect of having a bench other than the 2G bench deciding the issue. While the constitutional bench constituted to hear the matter declined to get dragged into the issues regarding the 2G policy, it did deliver a conclusive judgment rebuffing the 2G court on several points, including its contention that Article 14 mandated auctions. The relevant paragraph is reproduced below:……. can auction as a method of disposal of natural resources be declared a constitutional mandate under Article 14 of the Constitution of India? We would unhesitatingly answer it in the negative since any other answer would be completely contrary to the scheme of Article 14.The constitutional bench also made it clear that the 2G judgment did not mandate the auctioning of natural resources, including spectrum, in the future. The contentious paragraph of the 2G judgment that is now being bandied about to push the government to auction spectrum is as follows: 96: In our view, a duly publicised auction conducted fairly and impartially is perhaps the best method for discharging this burden and the methods like first come- first-served when used for alienation of natural resources/public property are likely to be misused by unscrupulous people who are only interested in garnering maximum financial benefit and have no respect for the constitutional ethos and values. In other words, while transferring or alienating the natural resources, the State is duty-bound to adopt the method of auction by giving wide publicity so that all eligible persons can participate in the process.The constitution bench in the presidential reference interpreted that paragraph from the 2G judgment in the following manner: Our reading of these paragraphs suggests 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.” We are conscious that a judgment is not to be read as a statute, but at the same time, we cannot be oblivious to the fact that 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 learned Judges considered situations requiring a method other than auction as conceivable and desirable.Therefore, to use paragraph 96 of the 2G judgment to push for the auction of spectrum is disingenuous. There is little doubt that the present cabinet, and the many lawyers serving on it, are fully aware that they have the power to decide the future policy on spectrum allocation. Yet they are referring the matter to the Attorney General for a legal opinion and making promises of seeking the blessings from the Supreme Court because they know very well that they made some rather exaggerated arguments during the 2G scandal to completely rubbish the FCFS policy despite the policy’s obvious benefits. Rather than emasculate itself before the Supreme Court, the government should show some political spine by introducing a law in Parliament to determine the mode of allocation of future spectrum and in the process demonstrate to the Indian people that Parliament and not the Supreme Court is supreme when it comes to economic policy. Prashant Reddy is an Asst. Professor at the National Academy of Legal Studies & Research, Hyderabad where he teaches administrative law and intellectual property law.