The Supreme Court handed the government a partial victory in its battle with opponents over telecom and coalfield licence awards on Thursday, saying that auction is not the only permissible method for allocating natural resources.
Prime Minister Manmohan Singh's government has been rocked by scandals over the non-competitive allocation of radio spectrum and coal blocks at below-market prices, which a state auditor has said together could have cost the exchequer as much as $67 billion in lost revenues.
The Supreme Court's view, which is not binding, came after the government sought clarity on an earlier ruling that ordered the cancellation of cellular permits awarded in 2008 because the sale process was "flawed".
However, it is likely to be only a small comfort to the government because it also held that auction was still the preferred route when allotting natural resources to private companies for commercial use.
"In our opinion, auction despite being a more preferable method of alienation/allotment of natural resources, cannot be held to be a constitutional requirement or limitation for alienation of all natural resources," the court said.
It added that it is the government's prerogative to decide on the allocation method, but if resources are distributed for private commercial purposes, methods that do not maximise revenues may be arbitrary.
Telecoms Minister Kapil Sibal said the government welcomed the court's view.
"It has brought clarity to the subject matter and we are very happy about it," he told a news conference.
In February the court had told the government to redistribute the revoked mobile radio airwaves through an open auction, which is scheduled to start in November.
Its latest view is not binding and does not affect its earlier order to cancel the 122 telecoms licences awarded in 2008 and auction off the airwaves, but it may be used as a reference for future government policy decisions.