SC raises questions on granting State control over private property

A nine-judge bench of the Supreme Court, faced with an argument that the State can take over private property under Article 39(b) to serve common good, on Thursday raised questions on whether such a stand can be accepted in an era of privatisation and liberalisation, where efforts are made by governments to encourage private enterprise and where an increase in private wealth is seen as a measure of the nation’s wealth.
Dealing with the submissions by attorney general (AG) R Venkataramani that private property is included in the definition of “material resource of the community” occurring in Article 39(b), and is based on the principle of distributive justice, the bench headed by chief justice of India (CJI) Dhananjaya Y Chandrachud said that, if this is so, it stands as a “caveat” against privatisation and liberalisation.
Justice BV Nagarathna, one of the members on the bench, asked: “Isn’t this a caveat against privatisation and liberalisation which is the order of the day today where private enterprise is being encouraged and as a result, the increase in private wealth would ultimately lead to the increase in the nation’s wealth?”
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The AG was appearing for the Maharashtra Housing and Area Development Authority (MHADA) which is defending a 1986 amendment to the MHADA Act that allowed the State to take over dilapidated building s in Mumbai under certain specified conditions. The state law relied on Article 39(b) of the Constitution which states: “The State shall, in particular, direct its policy towards securing that the ownership and control of the material resources of the community are so distributed as best to subserve the common good.” The action of the state was challenged by the property owners association of Maharashtra who said that Article 39(b) which talks of “material resources of community” does not include private property.
To be sure, the case is about acquiring property only under certain defined conditions, and has nothing to do with redistribution.
Friday was the third day of arguments before the bench, also comprising justices Hrishikesh Roy, Sudhanshu Dhulia, JB Pardiwala, Manoj Misra, Rajesh Bindal, SC Sharma and Augustine George Masih.
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Responding to the bench, Venkataramani said, “I am not saying in the classic Marxist sense, you regulate everything. Such constitutional provision will receive the wisdom and maturity in an evolving framework. Even we have an expansive private market. But this provision will still have relevance.”
The petitioners challenging the Maharashtra law relied on a 1977 Ranganath Reddy case rendered by a seven-judge bench where the majority opinion of four judges held that Article 39(b) cannot take within its sweep private property. A minority view authored by Justice VR Krishna Iyer took a contrary view that material resource will include private property as well.
“Justice Krishna Iyer seems to be warning against what is the scenario of today,” justice Nagarathna said. “Each word of the Constitution can have a different meaning at a different point of time. We cannot only think of what was there in 1950 (when Constitution came into force). The same words can be interpreted in the 21st century,” she added.
The AG replied that while Article 39(b) may have come in at a time of a socialist, economic, or ideological understanding, and will receive an expansive meaning if it remains part of the Constitution. Commenting on justice Iyer’s view in Ranganath Reddy case, he added, “He wrote at a time in his own understanding and reading of Article 39(b). That is only one index of looking at Article 39(b).”
The AG, while agreeing with the bench that the Constitution evolves over time, maintained that the Article 39(b) must be given a broad interpretation without limiting it just to public resources. According to him, material resources of community embraces all resources, public and private sources of meeting material needs.
“The principle embodied in Article 39(b) is one of the essential directives to bring about the distribution of material resources. It gives full play to the distributive justice as it fulfils the basic purpose of restructuring the economic order,” he said.
The object sought to be achieved by Article 39(b) is the “realisation of common good by recourse to the resources of the community” where the State is called upon to explore common good, and for that purpose, deal with the ownership and control of resources in the hands of citizens. “The distinction between public or private resources, or natural vs human-made resources is alien to the spirit of Article 39 (b),” the AG said.
The court also heard the petitioners on a related question: whether the MHADA Act will enjoy the “safe harbour” protection under Article 31C of Constitution. This provision protected the validity of the enactment based on Article 39(b) and (c) on the grounds of violation of Articles 14 (right to equality) or 19 (rights regarding freedom of speech, etc) of the Constitution.
Senior advocate Zal Andhyarujina, appearing for the property owners from Maharashtra, said that Article 31C protection will not be available to the MHADA law as this provision was struck down by a five-judge bench in Minerva Mills case in July 1980. The State had contended that Minerva Mills dealt with the 42nd (Amendment) Act which expanded protection under 31C to any laws based on all directive principles and not just restricted to 39(b) and (c). It further said that after Minerva Mills judgment, another five-judge bench in Waman Rao case upheld the original unamended 31C as this provision was protected by a 13-judge bench in the landmark Kesavananda Bharati case of 1973.
Andhyarujina said that once a substituted provision of the Constitution was declared unconstitutional, it remained a dead letter and the court cannot revive the unamended provision as this power to revive or repeal a constitutional provision can be exercised only by Parliament under exercise of its constituent powers. According to him, 31C was rendered unenforceable after the Minerva Mills case.
However, the CJI said: “Here, Parliament did not want to obliterate the original Article 31C. It only wanted to expand the scope of protection. Section 4 of the 42nd Amendment Act was held to be invalid on the ground that such expansion was invalid while the earlier (unamended) provision was declared valid by Kesavanada Bharati…It will be a formalistic reading of Article 31C to say it was struck down in entirety. We are a constitutional court and we have to pay deference to prior predecessors. Irrespective of Waman Rao judgment, we are bound by Kesavananda judgment.”
The court will continue hearing in the case on Tuesday when solicitor general (SG) Tushar Mehta will respond to the submissions of petitioners appearing for the state of Maharashtra.