A Constitution Bench of the Supreme Court hearing the presidential reference on 2G case verdict on Wednesday, for the first time, spoke its mind rather candidly on the 'first come first served' policy for allocation of natural resources, saying there was nothing 'wrong' in the policy as such but it was 'distorted' while allocating the 2G licences during the tenure of UPA-I.

The major element of 'distortion' pointed out by the bench, headed by Chief Justice of India S.H. Kapadia, was change in the cut-off date from October 1, 2007 to September 25, 2007, by the then communications minister A. Raja for accepting of the applications from private companies and asking for bank drafts for licence fee before issuing of the letters of intent (LOI) on January 10, 2008.

“If you (government) change the cut-off date principle and make a criteria of payment first that is not the FCFS policy. You are obliterating the queue of those who had applied and make first payment as the basis; it is not FCFS but ‘an out of turn’ policy. You have distorted FCFS policy as it was said that who ever makes the payment is eligible for the LOIs,” CJI told attorney-general G.E. Vahanvati, who was especially called to explain the entire background on processing of the 2G spectrum licences allocation in 2007.

The policy laid down during the NDA tenure, provided for processing the applications first to establish the eligibility criteria of a telecom player, then issuing the LOI and receiving the payment for licence fee only at the time of confirming the licence.

While finding nothing wrong in the FCFS policy, the bench comprising Justices D.K. Jain, J.S. Khehar, Dipak Misra and Ranjan Gogoi as other judges besides the CJI, said “The moment you (government) brings the criteria (of payment first) it ceases to be the FCFS policy because it is not only distorted in modality but in the criteria, therefore, we can say the FCFS policy is fine but implementation (in 2G licences) was flawed.”

A division bench of Justices G.S. Singhvi and A.K. Ganguly (now retired) in its verdict given on February 2 had quashed all the 122 licences for 2G spectrum while declaring the FCFS policy as “flawed” and had ordered re-allocation through auction.

The top court bench also had said that henceforth the government is “duty bound” to allocate all precious natural resources to private parties only through auction.

The government had “accepted” the verdict so far as cancellation of the 2G licences and their allocation through auction was concerned, but it had “objected” to a sweeping order for auctioning all natural resources and sent a presidential reference to seek clarification on the verdict on the question of “policy issue”, saying judiciary has no power to direct the executive how it should frame its policies.

The Wednesday’s comments on the “validity” of FCFS policy, which the AG in his arguments had justified to allocate certain resources for the welfare of people without auction, should be seen as a big “encouraging” development for the government though the real view of the SC on the crucial issue would only be known when the bench would frame the “final answers” to each of the questions mentioned in presidential reference.

In response to a specific query by the CJI why the Prime Minister had suggested the “auction” of 2G spectrum when the process was set in motion in 2007 despite the FCFS policy being followed since 2001, the AG merely said, “It (PM’s suggestion) was based on a note of the then finance secretary”.