People's Democracy

(Weekly Organ of the Communist Party of India (Marxist)


No. 08

February 19, 2012




Supreme Court

Bats for the “People”

Nilotpal Basu


THE capital’s grapevine is buzzing. The Supreme Court has delivered a deadly blow to the credibility of the UPA-II government on the 2G spectrum scam.


The fundamental significance of the judgment lies in the confirmation by the court that there indeed was a scam. The court found the whole process unconstitutional and implicitly mala fide. Obviously, this has led the court to order cancellation of all 122 licenses and directing the government to auction afresh the licenses and the spectrum that will have to be vacated by companies which were clearly beneficiaries of the government’s ‘unconstitutional’ act.


This was truly a landmark judgment. It not only confirmed what had universally been accepted - that there was a scam - but it went further and laid bare that it was not just the criminal conduct of then telecom minister A Raja that resulted in this huge loss to the public exchequer. The court clearly spelt out that it was the First-Come-First-Served (FCFS) policy and the pricing of spectrum carried out in 2008 at 2001 levels that were jointly responsible for this outrageous loot. The court observed: “There is a fundamental flaw in the first-come-first-served policy in as much as it involves an element of pure chance or accident. In matters involving award of contracts or grant of license or permission to use public property, the invocation of first-come-first-served policy has inherently dangerous implications.  Any person who has access to the power corridor at the highest or the lowest level may be able to obtain information from the government files or the files of the agency/instrumentality of the State that a particular public property or asset is likely to be disposed of or a contract is likely to be awarded or a license or permission is likely to be given, he would immediately make an application and would become entitled to stand first in the queue at the cost of all others who may have a better claim.  This Court has repeatedly held that wherever a contract is to be awarded or a license is to be given, the public authority must adopt a transparent and fair method for making selections so that all eligible persons get a fair opportunity of competition”. It further observed: “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”.


On the question of pricing policy, the division bench of the court not only handed down the severest indictment to the government but also to the TRAI. They pointed out: “Being an expert body, it was incumbent upon the TRAI to make suitable recommendations even for the 2G bands especially in light of the deficiencies of the present system which it had itself pointed out. We do not find merit in the reasoning of TRAI that the consideration of maintaining a level playing field prevented a realistic reassessment of the entry fee.”


Of course, the court has unraveled the truly reprehensible nature of the exercise: “To say the least, the entire approach adopted by TRAI was lopsided and contrary to the decision taken by the Council of Ministers and its recommendations became a handle for the then Minister of Communications and Information Technology  and the officers of the DoT who virtually gifted away the important national asset at throw away prices by willfully ignoring the concerns raised from various  quarters including the Prime Minister, Ministry of Finance and also some of its own officers. This becomes clear from the fact that soon after obtaining the licenses, some of the beneficiaries off-loaded their stakes to others, in the name of transfer of equity or infusion of fresh capital by foreign companies, and thereby made huge profits. We have no doubt that if the method of auction had been adopted for grant of license which could be the only rational transparent method for distribution of national wealth; the nation would have been enriched by many thousand crores”. 




Spokespersons of the Congress and the government have been working overtime after the order. They have claimed that since the FCFS policy was not being put into use for the first time, the UPA government could not be blamed for it. This is a preposterous argument. Even a cursory reading of our Constitution will establish beyond any shred of doubt that policy formulation at any point in time is the exclusive prerogative of the government of the day.


It is quite strange that the same spokespersons, having accepted that it was policy failure along with Raja’s complicity that led to the most outrageous scam in free India, go onto argue that the court has not indicted either the prime minister or the then finance minister for the unconstitutional actions of the government. This is turning rationality upside down — accepting that a murder has been committed, yet refusing to accept responsibility for the factors that led to the crime.


In fact, the court has recorded the official policy of the government that enjoined both the finance minister and the telecom minister to jointly decide the pricing of spectrum. There is not an iota of evidence available to show that the finance minister acted against the criminal inclinations of the telecom minister to manipulate and selectively benefit some of his corporate cronies.

If anything, it is now well known that earlier the finance ministry, headed by Chidambaram,  had raised serious objections on FCFS and preferred the auction route. The ministry had also raised questions about the pricing at 2001 levels. These objections were recorded in the form of a formal letter written by the then finance secretary who is now governor of the Reserve Bank of India. This has also been brought on record in the Supreme Court order. With the evidence available of a consultation between Chidambaram and Raja, together with an absence of Chidambaram’s disagreement, how can anyone claim that the Supreme Court has given him a clean chit?




Now, with the dismissal by the trial court of Subramanian Swamy’s demand for making Chidambaram a co-accused and in turn, as a co-conspirator in the 2G case, as much as a sinking man tries to save himself clutching even to a straw, the media managers and spin masters are trying to project the order of the trial court as a complete clean chit to the erstwhile finance minister. Apart from the assessment of the inter-ministerial note of the very government to which he belongs, the trial court itself has not ruled out the question of Chidambaram’s failure in discharging responsibility: “As per Cabinet note dated 31.10.2003, the decision regarding spectrum pricing was to be taken by Finance Minister and MOC&IT and after this decision was taken, P Chidambaram agreed that it would be the price as discovered in the year 2001 and also told A Raja that there is no need to revisit the same.  This decision was subsequently conveyed to the Prime Minister also.  To that extent, there is material on record”. Therefore, the question arises –what was the provocation for the reversal of the earlier formally stated position of the finance ministry? Without a proper probe on this specific question - the current Congress claim will remain totally bereft of any credibility.


However, the legal battle on this question is likely to be protracted. But there is no way the former finance minister can be absolved, as it is.


The Supreme Court also pointed out that there was a suggestion from the then law minister to set up an Empowered Group of Ministers (EGoM) to deal with the issue of license and spectrum allocation. But that course of action was not adopted. The government’s business rules would suggest that such a decision is the exclusive prerogative of the prime minister. Who stopped him from exercising that prerogative? Dr Manmohan Singh owes an answer to the people. In fact, evidence shows, and some of it has been reproduced by the apex court in its order that Raja did keep the prime minister informed about what he did. The court, of course, has not stated in its order what the prime minister did to stop Raja. Therefore, it would be the people’s right to seek an explanation from the prime minister.




Justice Ganguly and Justice Singhvi must be complimented for doing what they did. They did not just indict the policy or specific actions of the government; they elevated and expanded the scope of the order to greater heights. They brought in the larger question of what is a natural resource. They observe: “….that even though there is no universally accepted definition of natural resources, they are generally understood as elements having intrinsic utility to mankind…” and “A natural resource’s value rests in the amount of the material available and the demand for it.  The latter is determined by its usefulness to production. Natural resources belong to the people but the State legally owns them on behalf of its people and from that point of view natural resources are considered as national assets, more so because the State benefits immensely from their value”. Pointing out this, they went on to lay down certain indicative criteria.


Further, they pointed out that there is no policy or legal framework to determine how ‘natural resources’ should be managed by the State, as it holds these resources in trust on behalf of the people. They have rubbed home the restricted nature of the government’s power to exercise discretion:  “The State is empowered to distribute natural resources. However, as they constitute public property/national asset, while distributing natural resources, the State is bound to act in consonance with the principles of equality and public trust and ensure that no action is taken which may be detrimental to public interest. Like any other State action, constitutionalism must be reflected at every stage of the distribution of natural resources.”

The two illustrious judges went on to refer copiously from international law and earlier case orders to evolve what they termed the ‘public interest doctrine’. They rightly pointed out that public interest alone would be the guiding principle for managing natural resources. The court’s pronouncement is emphatic: “Common Law recognises States as having the authority to protect natural resources insofar as the resources are within the interest of the general public. The State is deemed to have a proprietary interest in natural resources and must act as guardian and trustee in relation to the same. Constitutions across the world focus on establishing natural resources as owned by, and for the benefit of, the country. In most instances where constitutions specifically address ownership of natural resources, the Sovereign State, or, as it is more commonly expressed, `the people’, is designated as the owner of the natural resource.”

No policy that selectively benefits certain private corporations by the grant of concessional rights is acceptable. Their precise observation points out: “As natural resources are public goods, the doctrine of equality, which emerges from the concepts of justice and fairness, must guide the State in determining the actual mechanism for distribution of natural resources. In this regard, the doctrine of equality has two aspects: first, it regulates the rights and obligations of the State vis-à-vis  its people and demands that the people be granted equitable access to natural resources and/or its products and that they are adequately compensated for the transfer of the resource to the private domain; and second, it regulates the rights and obligations of the State vis-à-vis private parties seeking to acquire/use the resource and demands that the procedure adopted for distribution is just, non-arbitrary and transparent and that it does not discriminate between similarly placed private parties.”

Finally, the point – as some of us from the Left have been pointing out so vociferously – is that the current spate of scams is not just a moral aberration. It is more about rewriting policies to hand over our natural resources to corporations to facilitate the accruing of super profits through their commercial use.

Bravo! Justice Ganguly and Justice Singhvi must be congratulated for batting on behalf of the people. They have established that the natural resources of this country belong to the people — and the people alone. And the government is mere trustee of this ‘people’s asset’; it warrants utmost sensitivity, circumspection, transparency and principle of fairness in dealing with it.