S
C JUDGMENT IN 2G - A STRIKING BLOW AGAINST CORRUPTION[i]
By
Dr T Padma., LLM., Ph D (Law)
LLD
Scholar (A P Law University)
kethepadma@gmail.com
"Earth provides
enough to satisfy every man's needs but not every man's greed."
-
Mahatma Gandhi
Background
The
recent Supreme Court's landmark judgment cancelling 122 telecom licenses in 2G
delivered on 2nd February, 2012 goes beyond telecom, spoiling the
party for corrupt politicians, bureaucrats and big business. The judgment came exactly
a year after former Telecom Minister A. Raja was arrested by the Central Bureau
of Investigation.
The
reverberations of the judgment actually extend far beyond telecom, crushing the
subjective power of the government to issue licences and contracts in any
sector like power, coal, minerals, mines, land, and even Special Economic Zones
(SEZ), that allocates scarce national resources. This
effectively attacks the fountainhead of all large corruption linked to
government contracts.
The
first irrefutable principle of the judgment is on the issue of ownership and
control of natural resources provided under Article 39(b) of the Constitution:
“The ownership and control of natural
resources of a community should be distributed so as to best sub-serve the
common good but no comprehensive legislation has been enacted to generally
define natural resources and a framework for their protection.” With the
government dithering on such specific legislation, the judgment has become the
de facto law in the matter.
Recognising
that while the state is deemed to have a proprietary interest in natural
resources, it must act as a guardian and trustee, the judgment affirms that the
people are the designated owners of natural resources in any country. Acknowledging
the high economic value of natural resources, the judgment recognises that
these national assets are scarce, finite, and susceptible to degradation in
case of inefficient utilisation.
Highlighting
the issue of “public trust,” the judgment quotes from several international
judgments, including the famous American one, of Illinois Central R. Co. vs Illinois[1],
and the ones in India such as M.C. Mehta
Vs Kamal Nath to make the point that: “Public
interest doctrine enjoins upon the government to protect the resources for the
enjoyment of the general public rather than permit its use for private
ownership or commercial purposes.” At the heart of the public trust
doctrine is the limits and obligations upon government agencies as
administrators on behalf of all people, especially future generations.
Natural Resources Means What?
Even though there is no universally
accepted definition of natural resources, they are generally understood as
elements having intrinsic utility to mankind. They may be renewable or non
renewable. They are thought of as the individual elements of the natural
environment that provide economic and social services to human society and are
considered valuable in their relatively unmodified, natural, form. 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. 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. Of course, environment laws enacted
by Parliament and State legislatures deal with specific natural resources,
i.e., Forest, Air, Water, Costal Zones, etc.
Natural Resources Belong to Whom?
The ownership regime relating to
natural resources can also be ascertained from international conventions and
customary international law, common law and national constitutions. In
international law, it rests upon the concept of sovereignty and seeks to
respect the principle of permanent sovereignty (of peoples and nations) over
(their) natural resources as asserted in the 17th Session of the
United Nations General Assembly (1962) and then affirmed as a customary
international norm by the International Court of Justice in the case opposing
the Democratic Republic of Congo to Uganda. Common Law recognizes States as
having the authority to protect natural resources insofar as the resources are
within the interests 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.
Spectrum has been internationally
accepted as a scarce, finite and renewable natural resource which is
susceptible to degradation in case of inefficient utilisation. It has a high
economic value in the light of the demand for it on account of the tremendous
growth in the telecom sector. Although it does not belong to a particular
State, right of use has been granted to States as per international norms.
What
is Public Trust Doctrine?
i)
American
Courts
The public
trust doctrine is the principle that certain resources are preserved
for public use, and that the government is required to maintain them for the
public's reasonable use. The American courts developed this ‘public trust doctrine’ to the effect
that the resources like air, sea, water and forests were of such great
importance to the people as a whole that it would be wholly unjustified to make
them a subject of private ownership.
These resources were the gifts of nature and they should be made freely
available to everyone irrespective of the status in life. State has the duty to protect the resources
for the enjoyment of the general public rather than to permit their
exploitation for commercial purposes by private owners. The American courts
emphasized that protection from ecological pollution was among the purposes of
public trust.
ii) Indian Courts
It is important to notice that
material resources of the community like forests, ponds, hillock, mountains
etc., are nature’s bounty. They maintain
delicate ecological balance. They need
to be protected for a proper and healthy environment which enables people to
enjoy a quality of life which is the essence of the guaranteed right under
Article 21 of the Constitution.
In India, the Courts have given an
expansive interpretation to the concept of natural resources and have from time
to time issued directions, by relying upon the provisions contained in Articles
38, 39, 48, 48A and 51A (g) of the Constitution of India, for protection and
proper allocation/distribution of natural resources and have repeatedly
insisted on compliance of the constitutional principles in the process of
distribution, transfer and alienation to private persons. The doctrine of public
trust, which was evolved in Illinois
Central Railroad Co. v. People of the State of Illinois[2],
has been held by the Apex Court to be a part of the Indian jurisprudence in M.C. Mehta v. Kamal [3]
and has been applied in Jamshed
Hormusji Wadia v. Board of Trustee, Port of Mumbai[4],
Intellectuals Forum, Tirupathi v. State
of A.P[5]
and Fomento Resorts and Hotels Limited v.
Minguel[6].
In Jamshed Hormusji Wadia’s case, the
Apex Court held that the State’s actions and the actions of its
agencies/instrumentalities must be for the public good, achieving the objects
for which they exist and should not be arbitrary or capricious. In the field of
contracts, the State and its instrumentalities should design their activities
in a manner which would ensure competition and not discrimination. They can
augment their resources but the object should be to serve the public cause and
to do public good by resorting to fair and reasonable methods. In Fomento Resorts and Hotels Limited case,
the Apex Court referred to the article of Prof. Joseph L. Sax[ii]
and made the following observations:
a) The
public trust doctrine enjoins upon the Government to protect the resources for
the enjoyment of the general public rather than to permit their use for private
ownership or commercial purposes. This doctrine puts an implicit embargo on the
right of the State to transfer public properties to private party if such
transfer affects public interest, mandates affirmative State action for
effective management of natural resources and empowers the citizens to question
ineffective management thereof.
b) The heart of the public trust doctrine is that
it imposes limits and obligations upon government agencies and their
administrators on behalf of all the people and especially future generations.
For example, renewable and non-renewable resources, associated uses, ecological
values or objects in which the public has a special interest (i.e. public lands,
waters, etc.) are held subject to the duty of the State not to impair such
resources, uses or values, even if private interests are involved. The same
obligations apply to managers of forests, monuments, parks, the public domain
and other public assets.
c) Professor Joseph L. Sax in his classic
article, “The Public Trust Doctrine in Natural Resources Law: Effective
Judicial Intervention” (1970), indicates that the public trust doctrine, of all
concepts known to law, constitutes the best practical and philosophical premise
and legal tool for protecting public rights and for protecting and managing resources,
ecological values or objects held in trust.
d) The public trust doctrine is a tool for
exerting long-established public rights over short-term public rights and
private gain. Today every person exercising his or her right to use the air,
water, or land and associated natural ecosystems has the obligation to secure
for the rest of us the right to live or otherwise use that same resource or property
for the long-term and enjoyment by future generations. To say it another way, a
landowner or lessee and a water right holder has an obligation to use such
resources in a manner as not to impair or diminish the people’s rights and the
people’s long-term interest in that property or resource, including down slope
lands, waters and resources.”
Natural Resources - Judicial
Approach
The consistent position adopted by
the Indian Courts as enunciated in one of its judgments has been that ‘there
can neither be development at the cost of the environment or environment at the
cost of development’.
In Secretary,
Ministry of Information & Broadcasting, Govt. of India v. Cricket Assn. of
Bengal[7],
the Court was dealing with the right of organizers of an event, such as a sport
tournament, to its live audiovisual broadcast, universally, through an agency
of their choice, national or foreign. In paragraph 78, the Apex Court described
the airwaves/frequencies as public property in the following words:
“There is no
doubt that since the airwaves/frequencies are a public property and are also
limited, they have to be used in the best interest of the society and this can
be done either by a central authority by establishing its own broadcasting
network or regulating the grant of licences to other agencies, including the
private agencies.”
In Reliance
Natural Resources Limited v. Reliance Industries Limited[8],
the Apex Court made the following
observations:
“It must be
noted that the constitutional mandate is that the natural resources belong to
the people of this country. The nature of the word “vest” must be seen in the
context of the public trust doctrine (PTD). Even though this doctrine has been
applied in cases dealing with environmental jurisprudence, it has its broader application.”
The Court in re Special Reference No. 1 of 2001
(2004) 4 SCC 489, M.C. Mehta v. Kamal
Nath [9]
and observed:
“This doctrine
is part of Indian law and finds application in the present case as well. It is
thus the duty of the Government to provide complete protection to the natural
resources as a trustee of the people at large.”
The Court also held that natural resources are
vested with the Government as a matter of trust in the name of the people of
India, thus it is the solemn duty of the State to protect the national interest
and natural resources must always be used in the interests of the country and
not private interests.
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.
In Akhil
Bharatiya Upbhokta Congress v. State of M.P[10],
the Apex Court examined the legality of the action taken by the Government of Madhya
Pradesh to allot 20 acres land to an institute established in the name of Kushabhau
Thakre on the basis of an application made by the Trust. One of the grounds on
which the appellant challenged the allotment of land was that the State
Government had not adopted any rational method consistent with the doctrine of
equality. The High Court negatived the appellant’s challenge. Before the Apex Court,
learned senior counsel appearing for the State relied upon the judgments in Ugar Sugar Works Ltd. v. Delhi
Administration[11],
State of U.P. v. Choudhary Rambeer Singh[12],
State of Orissa v. Gopinath Dash[13]
and Meerut Development Authority v.
Association of Management Studies[14]
and argued that the Court cannot
exercise the power of judicial review to nullify the policy framed by the State
Government to allot Nazul land without advertisement. However, the Apex Court
rejected the argument, referred to the judgments in Ramanna Dayaram Shetty v. International Airport
Authority of India[15],
S.G. Jaisinghani v. Union of India[16],
Kasturilal Lakshmi Reddy v. State of J
& K[17],
Common Cause v. Union of India[18],
Shrilekha Vidyarthy v. State of U.P[19],
LIC v. Consumer Education and Research
Centre[20],
New India Public School v. HUDA[21]
and held:
“What needs to
be emphasised is that the State and/or its agencies/instrumentalities cannot
give largesse to any person according to the sweet will and whims of the
political entities and/or officers of the State. Every action/decision of the
State and/or its agencies/instrumentalities to give largesse or confer benefit
must be founded on a sound, transparent, discernible and well-defined policy,
which shall be made known to the public by publication in the Official Gazette
and other recognised modes of publicity and such policy must be
implemented/executed by adopting a non-discriminatory and non-arbitrary method irrespective
of the class or category of persons proposed to be benefited by the policy. The
distribution of largesse like allotment of land, grant of quota, permit
licence, etc. by the State and its agencies/instrumentalities should always be
done in a fair and equitable manner and the element of favouritism or nepotism
shall not influence the exercise of discretion, if any, conferred upon the particular
functionary or officer of the State.”
In Sachidanand
Pandey v. State of West Bengal[22],
the Court referred to some of the precedents and laid down the following propositions:
“State-owned
or public-owned property is not to be dealt with at the absolute discretion of
the executive. Certain precepts and principles have to be observed. Public
interest is the paramount consideration. One of the methods of securing the
public interest, when it is considered necessary to dispose of a property, is
to sell the property by public auction or by inviting tenders. Though that is
the ordinary rule, it is not an invariable rule. There may be situations where
there are compelling reasons necessitating departure from the rule but then the
reasons for the departure must be rational and should not be suggestive of
discrimination. Appearance of public justice is as important as doing justice. Nothing
should be done which gives an appearance of bias, jobbery or nepotism.”
Conclusion
The Court concluded that “the State is the legal owner of the 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”.
This shatters the government's stand that the
allocation of natural resources is its sole preserve, and such ‘policy'
decisions should not be open to public or legal scrutiny. Traditionally, courts
have been reluctant to review ‘government policies' as they are considered an
exclusive prerogative of the executive and formed after considering expert
opinion.
Invoking the doctrine of equality deals the hardest
blow to the opaque allocation procedures for natural resources that are in use
for award of Central and State government contracts. The judgment states that
the doctrine of equality which emerges from the concept of justice and fairness
must guide the state in determining the actual mechanism of distribution of
natural resources. This has two aspects: first, it regulates the rights and
obligations of the state vis-a-vis its people and demands that the people be
granted equitable access to natural resources and/or its products, and that
they be adequately compensated for the transfer of resources to the public
domain. This considerably debilitates the government's line in applying
subjective criteria such as first come, first served when allocating natural
resources in the future. Further, it requires the national exchequer to place a
value on a natural resource before granting any party the privilege of using
it.
The second part of the equality doctrine is
explained as the need to regulate the rights and obligations of the state
vis-a-vis private parties seeking to acquire/use resources and demands that the
procedure adopted for distribution is just, non-arbitrary and transparent and
that it does not discriminate between similarly-placed parties. This
specifically addresses legacy issues of changing the goalpost after the game
has begun such as tampering with cut-off dates or altering the qualifying
criteria after applications have been submitted or bids placed.
Overall, it ensures that every party has an equal
chance of transparently acquiring the asset, based on the rational value that
it believes can be derived from the acquisition. The judgment specifically
tears apart the first come, first served system, firmly re-establishing auctions
as a preferred option.
Simply put, the judgment sends out a message that
from now on, offenders will be punished irrespective of political status,
financial power and the time or money that may have been invested in an act
that was illegal to begin with.
Striking a blow against
corruption by empowering all those - non-governmental organisations,
enlightened citizens and activists - fighting big corruption, this landmark
judgment carries the potential of fast-tracking the pace of administrative
reforms and governance in the country in a manner that was not witnessed in the
past.
[Published in Supreme Court Journal - February, 2012]
[This
material is put online to further the educational goals of ‘Study
in Law’. This material may be used freely for educational and academic
purposes. It may not be used in any way for profit.]
[1] Illinois Central Railroad v.
Illinois; 146 U.S. 387 (1892)
[2] Illinois Central Railroad Co. v.
People of the State of Illinois 146 U.S. 387 (1892)
[3] M.C. Mehta v. Kamal Nath (1997) 1
SCC 388
[4] Jamshed Hormusji Wadia v. Board of
Trustee, Port of Mumbai (2002) 3 SCC 214
[5] Intellectuals Forum, Tirupathi v.
State of A.P. (2006) 3 SCC 549
[6] Fomento Resorts and Hotels Limited
v. Minguel Martins (2009) 3 SCC 571
[7] Secretary, Ministry of Information
& Broadcasting, Govt. of India v. Cricket Assn. of Bengal, (1995) 2 SCC 161
[8] Reliance Natural Resources Limited
v. Reliance Industries Limited, (2010) 7 SCC 1
[9] M.C. Mehta v. Kamal Nath (1997) 1
SCC 388
[10] Akhil Bharatiya Upbhokta Congress
v. State of M.P. (2011) 5 SCC 29
[11] Ugar Sugar Works Ltd. v. Delhi
Administration (2001) 3 SCC 635
[12] State of U.P. v. Choudhary Rambeer
Singh (2008) 5 SCC 550
[13] State of Orissa v. Gopinath Dash
(2005) 13 SCC 49
[14] Meerut Development Authority v.
Association of Management Studies (2009) 6 SCC 171
[15] Ramanna Dayaram Shetty v.
International Airport Authority of India (1979) 3 SCC 489
[16] S.G. Jaisinghani v. Union of India
AIR 1967 SC 1427
[17] Kasturilal Lakshmi Reddy v. State
of J & K (1980) 4 SCC 1
[18] Common Cause v. Union of India
(1996) 6 SCC 530
[19] Shrilekha Vidyarthy v. State of
U.P. (1991) 1 SCC 212
[20] LIC v. Consumer Education and
Research Centre (1995) 5 SCC 482
[21] New India Public School v. HUDA
(1996) 5 SCC 510
[22] Sachidanand Pandey v. State of
West Bengal (1987) 2 SCC 295
[i] SC Judgment dated 02/02/2012 in Centre for Public Interest Litigation and
others Vs Union of India and others (Writ
Petition (Civil) No. 423 of 2010) and Dr. Subramanian Swamy Vs Union of India and others (Writ Petition
(Civil) No. 10 of 2011)
[ii] "The Public Trust Doctrine in Natural
Resource Law: Effective Judicial Intervention" by Sax, Joseph L. (Michigan Law Review, Vol.
68, No. 3) 68 (3): 471–566
