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‘Landmark judgment’ is a clichéd expression that is often employed to qualify the orders of the apex court in matters of varying import. However, its verdict in the 2 G Spectrum PILs undoubtedly merits this qualification, not only because of the significance and impact of the issues resolved by it, but also due to the amplitude of the unresolved issues arising from some of its postulates.

The judgment pronounced by G. S. Singhvi and A. K Ganguli, JJ, in the PILs filed by Centre for Public Interest Litigation et al and Subramanian Swamy on February 2, 2012 has firmly established the principle that the cloak of government policy cannot shield arbitrary and motivated executive decisions from the glare of judicial review.

Building upon the jurisprudence of institutional integrity enunciated in P. J. Thomas, the Court has held that when it is shown that the policy framed by the executive or its implementation militates against the public interest or the constitutional principles, it is duty bound to intervene and 'ensure that the institutional integrity is not compromised by those in whom the people have reposed trust and who have taken oath to discharge their duties in accordance with the Constitution and the law without fear or favour, affection or ill will'.

The Court has also made it amply clear that the beneficiaries of arbitrary and unconstitutional decisions of the executive risk losing their stake when the decisions are set aside in review. It follows that their assignees and successors in interest have no better claim for indulgence. The plea of efflux of time or safeguarding the interest of investors and consumers shall be of no avail in such cases.

Answering the question whether the Government has the right to alienate, or distribute natural resources otherwise than by following a fair and transparent method consistent with the Constitutional tenet of equality, the Court has declared that the State is the legal owner of natural resources as a trustee of the people and, although it is empowered to distribute the same, the process of distribution must be guided by the constitutional principles, including the doctrine of equality and larger public good.

The first-come-first-served policy of the National Democratic Alliance government that A. Raja claimed to have followed, but in reality twisted and tweaked at will to meet his questionable ends, has been held to be fundamentally flawed since it involved an element of pure chance or accident. The Court has underlined the inherently dangerous implications of such a policy in matters involving award of contracts or grant of licence to use public property. Any person, who has access to the corridors of power, may be able to obtain privileged information in this regard and act on it immediately to earn the right to stand first in the queue, pre-empting all others who may have a better claim. Hence, the Court has called upon the State and its agencies invariably to adopt a rational and non-discriminatory method for disposal of public property. When it comes to alienation of scarce natural resources like spectrum, in the opinion of the Court, a duly publicized auction conducted fairly and impartially is the best option and the State is duty bound to adopt this method, taking care to give wide publicity to the proposed auction so that all eligible persons may participate in the process.

This pronouncement is bound to have far-reaching repercussions on the exercise of subjective power of the government in the allocation of scarce national resources, which function is sought to be kept out of the pale of public scrutiny and judicial review by invoking the doctrine of exclusive policy domain. The Court has served notice that as the guardian and trustee of national resources, the government must ensure that its allocation policies satisfy the criteria of public interest, rationality and transparency and do not discriminate between similarly placed parties. If taken in the right spirit, this admonition will help raise the standards of governance and restore public trust in policy formation.

The Supreme Court has been generous in acknowledging the role of the petitioners in exposing the scandal in the allocation of 2 G spectrum. To quote from the judgment,

“Before concluding, we consider it imperative to observe that but for the vigilance of some enlightened citizens who held important constitutional and other positions and discharged their duties in the larger public interest and Non Governmental Organisations, who have been constantly fighting for clean governance and accountability of constitutional institutions, unsuspecting citizens and the Nation would never have known how the scarce natural resource spared by Army has been grabbed by those who enjoy money power and who have been able to manipulate the system.

” The compliment is particularly soothing, coming as it does less than four years after Justice Markadey Katju’s gratuitous assault on the instrument of PIL and the community of public interest litigants while dismissing our indubitably public-spirited writ petition for ameliorating traffic safety and minimizing road accidents.1 One may hope that a visceral and indiscriminate distrust of public interest litigants will no longer be allowed to cloud the judgment of the intrinsic merit of a PIL and that they will not be dismissed as ‘busybodies, meddlesome interlopers, wayfarers or officious interveners’2.

Some of the postulates of this laudable judgment raise a number of pertinent questions that will have to be answered definitively, because any uncertainty about them will have an adverse impact on administrative jurisprudence. The first set of questions arises from the predilection for enlarging the sphere of rule-based decision-making and reducing the domain of executive discretion with a view to curbing arbitrariness. This preference is grounded in the context of a wanton abuse of discretionary powers by A. Raja, who had chosen to grant telecom licences and allocate spectrum in disregard of the established processes of decision-making as well as the dictates of equity and natural justice. Under the circumstance, there was every justification for judicial intervention to quash the arbitrary and motivated decisions of the Minister. Likewise, the prescription to allocate the available spectrum through public auction may be defended on the ground that it is the most expedient method of attribution of spectrum in a large, rapidly growing and highly competitive telecom market. But can one argue with equal force that public auction is necessarily the best method of allocation of scarce national resources in all situations? How is one to deal with factors like particularities of consumption and usage, tradability, maturity of the market and long-term impact on the economy? Is revenue maximization in the immediate term the principal objective to be subserved by a sectoral policy?

The crux of the matter lies in the integrity of the process of policy formation. The legitimacy of a policy is derived not from its conformity to any rigid rule, but from its demonstrable reasonableness given the specificities of its context. The occasions for exercise of discretion are bound to arise, especially when the executive is faced with a number of acceptable alternatives. While doing so, it has to ensure that all the stakeholders are taken on board in the process of policy formation and in the ultimate analysis assume the responsibility for the societal objectives and economic rationale of its policy.

The verdict castigates A. Raja for his egregious transgressions, which are meticulously catalogued, and pulls up the telecom regulator for the ambivalence of its recommendation of August 2007, which were selectively adopted by the Minister to serve his ends. In contrast, the reluctance of the Ministry of Finance to press its point on the pricing of spectrum and the Prime Minister’s meek acceptance of his Telecom Minister’s brazen defiance of his advice do not invite any rebuke. The judgment also glosses over the fact that the foundations of the 2 G Spectrum scam were laid during Dayanidhi Maran’s ministry, when at his instance the Prime Minister had agreed to amend the terms of reference of the Group of Ministers on telecom to exclude the issue of spectrum pricing from its purview.

By ascribing the entire blame for the perversion of the process of decision-making to A. Raja, the judgment undermines the principle of collective responsibility of the cabinet and condones the willing abdication of authority by the Prime Minister. Despite having full knowledge of the perfidy of A. Raja’s scheme, the Prime Minister chose not to overrule him and contented himself by sounding gentle notes of caution. Such acquiescence is inconceivable in the Westminster system, which envisages a dominant leadership role for the head of government, even if it were a coalition government.

The apex court will have an opportunity to revisit the issues thrown up by the 2 G verdict while deciding on the review petitions filed by the aggrieved parties. Let us hope that the ultimate decision will strengthen our institutions of governance and help improve their processes and outcomes.

1 Please see Mr. Prashant Bhushan’s analysis of the judgment in an article captioned ‘Courting Controversy’, which appeared in the April- June 2008 issue of COMMON CAUSE, and its full text in the July-September issue of the journal.


2 Words of Justice Arijit Pasayat, approvingly cited in the judgment by Justice Katju.