Page 203 - ELT_15th July 2020_Vol 373_Part 2

2020 ] A.D. ENTERPRISE v. UNION OF INDIA 185

tional infirmities qua Article 14 of the Constitution. The action has to
be fair, reasonable, non-discriminatory, transparent, non-capricious,
unbiased, without favouritism or nepotism, in pursuit of promotion
of healthy competition and equitable treatment. It should conform
to the norms which are rational, informed with reasons and guided
by public interest, etc. All these principles are inherent in the fun-
damental conception of Article 14. This is the mandate of Article 14
of the Constitution of India.
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129. Hence, it is manifest that there is no constitutional mandate in
favour of auction under Article 14. The Government has repeatedly
upheld such actions. The judiciary tests such deviations on the lim-
ited scope of arbitrariness and fairness under Article 14 and its role
is limited to that extent. Essentially, whenever the object of policy is
anything but revenue maximisation, the executive is seen to adopt
methods other than auction.
130. A fortiori, besides legal logic, mandatory auction may be con-
trary to economic logic as well. Different resources may require dif-
ferent treatment. Very often, exploration and exploitation contracts
are bundled together due to the requirement of heavy capital in the
discovery of natural resources. A concern would risk undertaking
such exploration and incur heavy costs only if it was assured utili-
sation of the resource discovered: a prudent business venture
would not like to incur the high costs involved in exploration activi-
ties and then compete for that resource in an open auction. The log-
ic is similar to that applied in patents. Firms are given incentives to
invest in research and development with the promise of exclusive
access to the market for the sale of that invention. Such an approach
is economically and legally sound and sometimes necessary to spur
research and development. Similarly, bundling exploration and ex-
ploitation contracts may be necessary to spur growth in a specific
industry.
xxx xxx xxx
146. To summarise in the context of the present Reference, it needs
to be emphasised that this Court cannot conduct a comparative
study of the various methods of distribution of natural resources
and suggest the most efficacious mode, if there is one universal effi-
cacious method in the first place. It respects the mandate and wis-
dom of the executive for such matters. The methodology pertaining
to disposal of natural resources is clearly an economic policy. It en-
tails intricate economic choices and the Court lacks the necessary
expertise to make them. As has been repeatedly said, it cannot, and
shall not, be the endeavour of this Court to evaluate the efficacy of
auction vis-a-vis other methods of disposal of natural resources.
The Court cannot mandate one method to be followed in all facts
and circumstances. Therefore, auction, an economic choice of dis-
posal of natural resources, is not a constitutional mandate. We may,
however, hasten to add that the Court can test the legality and con-
stitutionality of these methods. When questioned, the courts are en-
titled to analyse the legal validity of different means of distribution
and give a constitutional answer as to which methods are ultra vires

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