Judiciary has right to scrutinise policy decisions: Experts

The Supreme Court on Thursday clarified that the auction order in the 2G scam was only restricted to telecom spectrum and not for all natural resources. It held the 2G Presidential Reference as maintainable and the verdict came as a major relief for the government.

Former CAG and Former Secretary of Coal, Petroleum & Chemicals VN Kaul hailed the judgment as a balanced verdict. He further added that it brings clarity between auction, revenue maximisation and public good. Therefore, the government can now decide whether to go opt for auction or not. Also read: 2G case: Govt cheers SC's opinion on Presidential reference
The apex court had also mentioned in its verdict that though, policy making is a prerogative of the government, the judiciary being the guardian of the constitution may scrutinise any policy decision that might violate the right to equality. With reference to this part of the judgment, Former Additional Solicitor General Raju Ramachandran said the judiciary has every right to look into any policy decision and it has only reiterated this well known fact.
Moreover, Kaul believes the present verdict is independent of the coal block allocation issue. Here is the edited transcript of the interview on CNBC-TV18. Q: While the apex court has opined that auction is not the only method for disposal of all natural resources, it hasn't gone into what should be the most efficient way of disposal of natural resources, but it has clearly said that in allocation or distribution of scarce and precious natural resources into private hands for commercial exploitation, there ought to be competitive process to achieve revenue process maximisation or else the process will fall foul of section 14. How do you read that? Kaul: I think it is a very clear and balanced judgment and in fact it introduces a degree of certainty into our economic life. I think it is a very good judgment. I will tell you why. The clarity comes from the fact that it distinguishes between auction, revenue maximization and public good and says that for public good, you need not follow the revenue maximisation route that means auction.
But auctions can be defined in a manner that you need not necessarily mean revenue maximisation, you can put in factors into auction. So auctions per se are not bad, but Supreme Court says that auctions are not an absolute must. You can deviate from auctions if you like it, leave the flexibility to government and ultimately it is the government who we elect to define the political, social and economic objectives to attain them. It is not the court that can attain those objectives.
The government therefore, must have the flexibility to be able to take either the auction route or not the auction route as long as the major objective is public good. Q: While the Supreme Court has very clearly said that policy-making is really the prerogative of the government, it has also re-emphasised the role of the judiciary as the guardian of the constitution saying that if there is a policy decision that is patently unfair or violative of the right of equality, which is guaranteed by article 14 then parameters of judicial examination of a policy decision will be taken by the judiciary, how do you read that? Ramachandran: That's absolutely correct because judicial review is a basic feature of our constitution and so any action, any policy if challenged will be scrutinised by the judiciary to make sure that it doesn't fall foul of the constitutional guarantees and requirements. That is just stating the well-settled position. The court has not said something new. Q: Does this mean that as Mr Kaul was pointing out that we have now entered into an era of perhaps more certainty, but does this not leave any sort of policy decision also open to judicial review and hence, the uncertainty in a sense continues? Ramachandran: In a society governed by the rule of law every executive action and every policy decision will have two phased judicial scrutiny if challenged. This is a fact of life in a society governed by the rule of law. This doesn't mean that there is going to be more uncertainty. Let's look at it positively. This means there will always be scrutiny and nobody should feel that he is above the law. Q: They have said very clearly that fairness, equality and common good should actually be the cornerstone or the guide process as far as policy making is concerned. But let's just look at the controversy as far as the coal block allocation is concerned. The government goes to town saying that we adopted a competitive process. There was a steering committee that looked into it. You know what the CAG has had to say about that. The process now seems to be an auction process as far as coal blocks are concerned. How does this fall into place given what we have heard from the Supreme Court this afternoon if we were just to take the coal block allocation as an example? Kaul: The coal block allocations could be done either through the auction route or first come first serve basis. I don't think that is the issue here. In other countries coal blocks are being auctioned on the basis of 'beauty parade', on the basis of other methods than auction.
That issue has been settled by the court and it is for the government to decide which route to take, but the objective must be public good. It should not be violative of rights of the people under the constitution. That issue is very clear.
The policy of coal block allocation was not so much flawed as its execution. The government itself is cancelling coal blocks where misrepresentation had been made to the government. It's the law taking its own course. I find that there is no contradiction between what happened and what is happening on coalgate and what the Supreme Court has said.
_PAGEBREAK_ Q: Does that in a sense mean that unless and until there is a very solid argument that a policy decision is going to lead to a development good or a greater good as far as the larger interest of the public is concerned, revenue maximization should not be the consideration? Kaul: I don't think that will be tested in courts of law down the years. But, the argument is the reverse. If a policy is not perverse or not violative of the law and the constitution, the government has the full right to frame policy within the boundaries of law. Q: Mr. Ramachandran, how will you actually read what the court has said, that the state must endeavour to get full value of its resources and how do you read that when you actually see what the CAG has had to say on this business of losses accrued to the exchequer because a certain policy was implemented in a certain way? Ramachandran: The Supreme Court makes it clear that revenue maximization is not the only goal when you are distributing resources. In the light of the principles laid down by the Supreme Court, one can infer that the CAG is clearly wrong in proceedings on the basis that auction is the only method and if auction hasn't been resorted to then this would be the amount of loss. That understanding or perception of the CAG must now stand corrected. Q: Mr. Kaul, would you agree with what Mr. Ramachandran has said as the former CAG? Kaul: No, I can neither agree or disagree with him because I haven't read the coal block report. I am not very fond of reading CAG reports. Q: A former CAG is saying he is not particularly fond of reading CAG reports? Kaul: I was required to give them, so I gave them, but I don't think they have very good literature. Unless I read the report, I cannot take a call on that. I suspect because the CAG has clarified before PAC and otherwise, he was well within his mandate.
Now if the CAG is within his mandate then he must be given full freedom to say what he likes and the way he likes it. The process requires that he should be examined and evaluated not by the general public, but by the Public Accounts Committee.
If there is a problem it will come out in the Public Accounts Committee because they will go word-by-word through the report. We are all assuming things and saying he has committed a breach, we really haven't read the reports. Q: Mr. Ramachandran, what happens now while the Supreme Court has very clearly said that this will not impact the 2G order? What happens now to the curative petitions for instance that have been filed by telecom companies because there are several questions which the Supreme Court has not answered in its opinion today? Ramachandran: Those petitions which have been filed by the telecom companies will still have to be answered by the bench. The Supreme Court’s opinion today steers clear of 2G completely and so when any question is raised with regard to the implications or fallout of the 2G judgment, those will be adjudicated absolutely independently. Q: If would ask for a lay person who is watching the show, let me start by asking you Mr. Ramachandran. In a sentence what is the bottom-line? What does this really mean to policy-making? What does this mean to future government decisions as far as allocation of natural resources are concerned? What does this mean for industry and the economy? Ramachandran: It means that the government is free to frame policy. The government is not constrained by any one particular method having to be adopted to distribute natural resources. But the government has been cautioned that whatever procedure it adopts will have to be a just procedure, a fair procedure, a transparent procedure, a reasonable procedure and if it is called into question it will always be open to judicial scrutiny. Q: What to you mind is the biggest takeaway as far as this opinion is concerned? Kaul: I think it restores ease of functioning. It restores the ability of the government to be flexible and frame whatever policies it likes if it is led by public good and public purpose and that is the intention. If they are good policies, the government is completely free to make them.
It can’t make perverse policies, it can’t make unfair policies. It has to make those policies within the four corners of the law and it has complete freedom to make those policies.
More to come.