Re: Special Reference No.

1 of 2012
(2012) 9 S.C.R. 311
Submitted by
Katyayani Singh
Roll number: 22010223094
Division “E” BA LL.B.
Symbiosis Law School, NOIDA
Symbiosis International (Deemed University), PUNE
In
September, 2023
Under the guidance of
Dr. Sakshi Parashar
(Course-in-Charge, Constitutional Law I)
Symbiosis Law School, NOIDA
 INDEX
S No. TOPIC Pg No.
1. INTRODUCTION 3
2. ISSUE 3
3. RULE 4
4. ANALYSIS 4
5. CONCLUSION 6
 INTRODUCTION
The Supreme Court got asked by the president to provide its opinion on the distribution of
natural resources in 2012. The Centre for Public Interest Litigation v. Union of India 1 case, often
known as the 2g spectrum case, served as the impetus for the president's reference to this issue.
A few questions that the president believed should be addressed for the benefit of the citizenry as
a whole were left unanswered by the judgement in that instance.
There are many different sorts of natural resources, such as petroleum, minerals, and gas, in
addition to the distribution of radio and spectrums. Therefore, while allocating natural resources
to the market's private actors, the legislation shouldn't be confusing. Natural resource distribution
by the state cannot be arbitrary or biased; states are required to uphold article 14 of the
constitution when allocating natural resources. Because of the fiduciary connection that exists
between citizens and the government for the safety of natural resources, the government is
unable to simply distribute resources so that they benefit only one individual.
There are several examples presented in the case which indicate how reasonably a law should be
enforced. When it comes to the classification at the time of resource distribution, it must also be
non-discriminatory and there must be reasonable grounds for distinction. The president also
holds that there are still some outstanding concerns regarding the distribution of natural
resources that require a specific resolution in order to avoid any uncertainty on the part of the
state regarding the distribution of natural resources.
Although this ambiguity existed in the government's thinking at all times, it became more
pronounced following the judgement in the 2G spectrum case, which held that perhaps auction is
the best possible method of resource allocation. As a result, the president raises some concerns
and exercises the authority provided by Article 143 of the Indian Constitution. The Supreme
Court chose to respond to the first five of the inquiries and declined to respond to the final three
since they were related to the dispute involving the 2G spectrum. The Supreme Court has
received the questions below from the president. 2
ISSUE
• Whether the conduct of auctions is the only permissible method for disposal of natural
resources under all sectors and their conditions? Whether a broad legal proposition that
only auctions can be used to dispose of natural resources is in conflict with other supreme
court rulings, including those from the large benches?
• Whether it is permissible for courts to articulate broad constitutional principles that could
potentially unsettle long-standing government policies and approaches, taking into

1 Public Interest Litigation v. Union of India, 1995 Supp. (3) SCC 382
2 https://main.sci.gov.in/pdf/SupremeCourtReport/2012_v9_pii.pdf
 account factors like limited public resources and the necessity for innovative economic
development strategies?
• Whether, in the event that a court determines, within the confines of judicial review, that
a policy is flawed, the court has an obligation to consider the investments made under
that policy, including those by foreign investors through international agreements?

RULE

Even though a lot of articles have been referred to in the case, the main focus of the judgement
stays on Article 143 and its implementation in the context of allocation of natural resources. This
Article of the Indian Constitution deals with the equality before law.
Under Article 143 of Indian Constitution4 the President has the power to consult the Supreme
Court.
Article 32 of the Indian Constitution5 was also invoked by the petitioner to approach the
Supreme Court.

ANALYSIS

In this instance, the president is worried about how the nation's population would be distributed
its natural riches. Natural resource distribution must be equitable, open, and devoid of
discrimination, and no one person may profit at the expense of other citizens. It has been said in
this instance that the distribution of any form of resource must be evaluated using the equality
principle.

Any allocation that does not follow the equality principle is invalid. Additionally, it was
determined in this instance that any classifications made by the state at the time of resource
distribution must be reasonable and cannot prevent a certain group of people from participating
in the bidding. And it is important to check the violation of Article 14 that a judge must look
deeply into each case for considering here as matter of law and not just one fact that do these
laws which have been called in question offend a still greater law before which they must even
bow.

When considering auction as the only option for allocating natural resources, the Supreme
Court's judges stated that while auction would aid in maximizing profits for the government, it
would be very inappropriate if we made auction a constitutional requirement because doing so

3 Article 14 of the Constitution of India

4 Article 143 of the Constitution of India

5 Article 32 of the Constitution of India

would render all other methods of allocating resources null and void and mandatory auction
might also be economically unfavourable.

Auction as a method of disposal of natural resources cannot be declared a constitutional mandate

under Art.14 of the Constitution of India. Firstly, Art.14 may imply positive and negative rights
for an individual, but with respect to the State, it is only couched in negative terms; like an
admonition against the State which prohibits the State from taking up actions that may be
arbitrary, unreasonable, capricious or discriminatory. Art. 14, therefore, is an injunction to the
State against taking certain types of actions rather than commanding it to take particular steps.
Reading the mandate of auction into its scheme would thus be completely contrary to the intent
of the Article apparent from its plain language. Secondly, a constitutional mandate is an absolute
principle that has to be applied in all situations; it cannot be applied in some and not tested in
others. The absolute principle is then applied on a case-by-case basis to see which actions fulfill
the requirements of the constitutional principle and which do not.

The uncertainty of the judgement of Centre for public interest litigation v. Union of India which
talks about auction being the only option for the situation of disposal of all natural resources and
under all circumstances the uncertainty of the 2G Spectrum case applies. The Supreme Court
was of the opinion that the best way to dispose of the natural resources is probably through a fair,
well-publicized auction. Even though it wasn't stated that the only legal and intra-governmental
method of disposing of natural resources was through auction and that the findings only applied
to the case of spectrum, labelling one method as the best among others gives the impression that,
if the highest judicial bench has determined that it is the best method for allocating resources,
why would the state disagree with it at the time of allocation?
The government cannot be so reckless as to distribute resources on a first come, first serve basis
as the union had done. The "First come, first serve" strategy the union had chosen could have
disastrous ramifications. The judgment's definition of auction as possibly the best method for
disposing of natural resources presented a difficulty, and the state felt obligated to dispose of
resources through an auction as a result.
Justice J.S. Khehar stated that the true effect of article 14 in Indian constitution is equal
protection of laws not only with the reference to individual rights but by ensuring that the rights
of the citizens on the other side shall not be deprived which clearly means that an individual
cannot be beneficiary at the cost of all the other remaining citizens. The judge has also taken care
of the rights of businesspeople who engage in government commerce with the remaining
citizens. J.S. Khehar has ensured in this presidential reference that the executive should provide
equal opportunity to all qualified individuals and that the executive should employ a reasonable
approach that is fair and non-discriminatory while awarding the contracts.
Regarding the President's query, which asks if judicial interference in resource distribution
decisions made by the administration is legal. Justice Khehar has argued forcefully that the court
can only determine if a strategy chosen by the government is legal and whether it is within the
bounds of the law or not. The court will not assess which policy is more equitable than the other
available policies. When evaluating this case's verdict, we should contrast it with Centre for
Public Interest Litigation v. Union of India. In contrast to the case of Centre for Public Interest
Litigation v. Union of India, this case does not provide the "best" technique for resource
allocation and completely cedes this responsibility to the government. In this decision, the
Supreme Court determined that the optimal method for allocating natural resources may be by
auction, which in some way obliged the state government to do so.
When handling this matter, Justice Khehar took a liberal stance and left it up to the government
to decide on the optimal distribution of resources strategy. In his ruling, Justice Khehar
effectively shuts down all avenues for state misconduct by stating that every citizen has a right to
the state's resources and that even a small portion cannot be donated to anyone. This decision
outlaws policies that encourage favouritism and nepotism and, amazingly, provides an answer to
the president's queries.
If the government is classifying the populace, the classifications must also be logical, and every
action performed by the government in terms of resource allocation must be profit-oriented and
focused on maximising profits that will be put to use for the common benefit. The case makes
clear that while every person has an equal claim to the resources, the government has no power
to distribute them to anyone.
CONCLUSION
The court in this case held that there is no prescribed method to choose for the allocation of
resources and that it will only be evaluated for legality when it goes before a court of law,
clearing up any confusion that existed in the nation regarding the best method to do so by citing
various judgements regarding resource allocation. The Union of India, the licensor, is not
permitted to take irrational actions. The authority of the Union is constrained by two
constitutional provisions, as stated by this Court in the 2G Case [Centre for Public Interest
Litigation v. Union of India, (2012) 3 SCC 1] in the above-quoted excerpt: first, that any
decision of the State to grant access to natural resources, which belong to the people, must ensure
that the people are adequately compensated; and second, that the process by which such access is
granted must be just, nonarbitrary, and transparent. In this case, Article 14 of the Indian
Constitution received the most attention, and it was decided that there must be equity when
resources are allocated and no one person can benefit at the expense of other citizens. In this
instance, a few tests were administered to make sure the violation of Article 14. Referring to the
findings in the 2G case, the Court also emphasised that the State must act in accordance with the
principles of equality and public trust, ensure that no action is taken that may be detrimental to
the public interest, and always adopt a rational method for disposing of public property. The
Court also emphasised that the State must ensure that a nondiscriminatory method is adopted for
distribution and alienation, which would necessarily result in national/public interest.