Manas Dasgupta
NEW DELHI, Nov 5: In a landmark judgement that could impact the right of a citizen to hold property, the Supreme Court on Tuesday ruled that not all privately owned properties qualify as community resources that the State can take over for the common good.
The nine-judge Constitution bench led by Chief Justice of India DY Chandrachud delivered the judgment on the vexed issue with an 8-1 majority. Three judgments were authored — the Chief Justice wrote one for himself and six colleagues Justice Hrishikesh Roy, Justice JB Pardiwala, Justice Manoj Misra, Justice Rajesh Bindal, Justice SC Sharma and Justice AG Masih, while Justice BV Nagarathna wrote a concurrent but separate judgment and Justice Sudhanshu Dhulia dissented.
The case relates to Article 31C of the Constitution that protects laws made by the State to fulfill directive principles of state policy — guidelines the Constitution lays down for governments to follow while making laws and policies. Among the laws that Article 31C protects is Article 39B. Falling under Part IV of the Constitution titled “Directive Principles of State Policy” (DPSP), Article 39(b) places an obligation on the state to create policy towards securing “the ownership and control of the material resources of the community are so distributed as best to sub serve the common good”. DPSP are meant to be guiding principles for the enactment of laws, but are not directly enforceable in any court of law.
On this, the Chief Justice remarked, “Does material resource of a community used in 39B include privately owned resources? Theoretically, the answer is yes, the phrase may include privately owned resources. However, this court is unable to subscribe itself to the minority view of Justice Iyer in Ranganath Reddy. We hold that not every resource owned by an individual can be considered a material resource of a community only because it meets the qualifier of material needs.”
“The enquiry about the resource in question falls under 39B must be contest-specific and subject to a non-exhaustive list of factors such as nature of resource, the characteristics, the impact of the resource on well-being of the community, the scarcity of resource and consequences of such a resource being concentrated in the hands of private players, the public trust doctrine evolved by this court may also help identify resources which fall under the ambit of material resource of a community,” he added.
A line of judgement in 1977 holding that both public and private resources fell within the ambit of “material resources of the community” under Article 39(b) stem from a minority opinion by Justice Krishna Iyer in State of Karnataka vs Shri Ranganath Reddy. A 1982 constitution bench ruling in case of Sanjeev Coke Manufacturing Company vs Bharat Cooking Coal Ltd had affirmed Justice Iyer’s view.
The majority opinion of the SC has now disagreed with Justice Iyer’s views and said he “cast the net wide, holding that all resources which meet material needs are covered by the phrase, and any attempts by the government to nationalize these resources would be within the scope of article 39(b).”
In 1977, the seven-judge bench had ruled with a 4:3 majority that all privately owned property did not fall within the ambit of material resources of the community. In a minority opinion, however, Justice Krishna Iyer held that both public and private resources fell within the ambit of “material resources of the community” under Article 39(b).
In her separate judgment, Justice Nagarathna disagreed with the Chief Justice on his observations on the ruling by Justice Iyer. “Justice Krishna Iyer adjudicated on the material resources of a community in the backdrop of a constitutional and economic structure which gave primacy to the State in a broad sweeping manner. As a matter of fact, the 42nd amendment had included socialist in the Constitution. Can we castigate former judges and allege them with disservice only because of reaching a different interpretative outcome?”
“It is a matter of concern as to judicial brethren of posterity view the judges of the brethren of past… possibly by losing sight of time when the latter discharged duty and socio-economic policies pursued by the state… merely after liberalisation, paradigm shift after 1991 reforms, it cannot lead to branding the judges of this court of yesteryears as to doing disservice to the Constitution… at the outset I may say that such observations emanating from this court and calling that they were not true to their oath of office… but just by having a paradigm shift in economic policies… judges of posterity should not follow the practice. I do not concur with the opinion of the Chief Justice in this regard,” she said.
The majority was of the view that Justice Iyer’s “interpretation amounts to endorsing a particular economic ideology. To declare that article 39 b includes the distribution of all private resources amounts to endorsing a particular economic ideology and structure for our economy.” It said that Iyer’s judgement which was followed in Sanjeev Coke “was influenced by a particular school of economic thought. This is evident from various observations made in these judgments.”
The majority said that “an interpretation of article 39(b), which places all private property within the net of the phrase material resources of the community, only satisfies one of the 3 requirements of the phrase. That is that the goods in question must be a resource. However, it ignores the qualifiers that they must be material and of the community. The use of the words material and community are not meaningless superfluities…The words of the community must be understood as distinct from the individual.”
It said ‘if Article 39(b) was meant to include all resources owned by an individual, it would state that the ownership and control of resources is so disputed as best to sub serve the common good. Similarly, if the provision were to exclude privately owned resources, it would state ownership and control of resources of the state instead of its current phrasing. They use the words of the community rather than of the state indicates a specific intention to include some privately owned resources.
“In essence, the text of the provision indicates that not all privately owned resources fall within the ambit of the place. However, privately owned resources are not excluded as a class, and some private resources may be covered.” It added, “thus the judgments doubted in the reference before us are incorrect to the extent that they hold that all resources of an individual are part of the community, and thus all private property is covered by the phrase material resources of the community.”
The SC said that its role “is not to lay down economic policy, but to facilitate this intent to the framers to lay the foundation for an economic democracy. Indeed, it is this spirit and its all-encompassing nature of the constitution, which has allowed elected governments since independence to pursue economic reforms and policies based on domestic conditions, international requirements, and political exigencies of the time”.
The CJI Chandrachud, while reading his majority opinion referred to India’s economic growth trajectory, and said “at the time of independence in the 1950’s and 60’s, given the earlier challenges of our Republic, the focus of the government was on planning a mixed economy, heavy industries, and import substitution policies. Subsequently, in the late 1960’s and 90’s, there was a shift towards purportedly socialist reforms and policies. Since the decade of the 1990’s or the liberalisation years, there has been a shift towards post pursuing a policy of market based reforms.”
“Today, the Indian economy has transitioned from the dominance of public investment to the coexistence of public and private investment. The doctrinal error in the Krishna Iyer approach was postulating a rigid economic theory, which advocates for greater state control over private resources as the exclusive basis for constitutional governance. India’s economic trajectory indicates that the constitution and the custodians of the constitution, the electorate, have routinely rejected one economic dogma as being the exclusive repository of truth.”
The court said “as participants in a vibrant, multiparty economic democracy, the people of India have voted to power governments which have adopted varied economic and social policies based on the country’s evolving development strategies and challenges. The foresight vision of our framers to establish an economic democracy and trust the wisdom of the elected government has been the backbone of the high growth rate of India’s economy, making it one of the fastest growing economies in the world.”
It added that “to scuttle this constitutional vision by imposing a single economic theory, which views the acquisition of private property by the state as the ultimate goal, would undermine the very fabric and principles of our constitutional framework.”