Private Property: Material Resource or not?
- Author Credits- Tisha Vakharia and Payal Parikh-ANB Legal.
Brief Overview
Article 39(b) reflects a principle of distributive justice, suggesting that the ownership and control of a society's material resources should be structured in a way that maximizes benefits for the entire community. It says, “the ownership and control of the material resources of the community are so distributed as best to sub serve the common good.”
It constitutes a part of Part IV of the Indian constitution that outlines the Directive Principles of State Policy, placing proactive responsibilities on the state. These principles strive to achieve socio-economic justice for citizens and envision India as a welfare state. They embody the principles of social justice embedded in India's constitution. While not enforceable by courts, directive principles play a fundamental role in the governance of the nation.
Article 39(b) of the Indian Constitution suggests elements aligned with socialist principles. This concept implies that resources should be managed in a manner that prioritizes the collective welfare over individual interests. It reflects a socialist ideology by advocating for equitable distribution and communal benefit, rather than concentration of wealth or resources in the hands of a few. Socialist ideals emphasize societal ownership or regulation of key resources to ensure broader prosperity and social justice.
The Legal Perspective on Private Property and its Distribution
Articles 19(1)(f) and Article 31 initially guaranteed property as a fundamental right. However, in 1978, by the 44th Amendment, this right was removed from the list of fundamental rights and placed under Article 300A, which states that no individual can be deprived of their property except in accordance with the authority of law.
Article 31C is a part of the 9th Schedule of the Constitution which lists laws that are shielded from judicial scrutiny for violating fundamental rights. This Article protects laws enacted to implement certain directive principles (Articles 39(b) and 39(c)) from being challenged on the basis of violating the right to equality (Article 14) or the freedoms under Article 19 (such as freedom of speech and peaceful assembly).
The Kesavananda Bharati case of 1973 upheld Article 31C but made it subject to judicial review.
Previous judgments of the Supreme Court pertaining to Article 39(b)
In 1977, in the landmark case of State of Karnataka v. Shri Ranganatha Reddy, a five-judge bench of the Supreme Court deliberated whether privately owned resources could be classified as "material resources of the community." Justice Krishna Iyer, in a minority opinion, argued that private property fell within the ambit of Article 39(b).
Five years later, in the case of Sanjeev Coke Manufacturing Company v. Bharat Coking Coal Ltd. (1982), a five-judge bench led by Justice Chinnappa Reddy adopted Justice Iyer's minority view. This decision marked a pivotal shift, affirming that even privately held resources could be considered as contributing to the community's material resources under constitutional principles.
This interpretation gained further strength in subsequent years. In 1992, the case of Assam Sillimanite Ltd. v. Union of India provided clarity on the scope of "material resources of the community," emphasizing that it encompasses all resources capable of generating wealth for the community as a whole.
Additionally, the concept of "material resources of the community" includes not only resources owned by the state but also those held by private individuals, as established in the cases of Sanjeev Coke Mfg. Co. v. Bharat Coking Coal Ltd. (1982) and reaffirmed in Tinsukhia Electric Supply Co. Ltd. v. State of Assam (1989).
Further decisions in T.N v. L. Abu Kavur Bai (1983) and Jilubhai Nanbhai Khachar v. State of Gujarat (1994) underscored that material resources are comprised of both movable and immovable resources like land, building, etc. besides natural and physical resources.
Recent Development
Recently, a nine-judge bench of the Supreme Court of India, including Chief Justice D. Y. Chandrachud and Justices Hrishikesh Roy, B.V. Nagarathna, S. Dhulia, J.B. Pardiwala, Manoj Misra, R. Bindal, S.C. Sharma, and A.G. Masih, heard questions on legal issues concerning the government's authority to acquire and redistribute privately owned properties.
The issue presented to the Court is whether private properties can be categorized as "material resources of the community" according to Article 39 (b) of the Constitution, which falls under the Directive Principles of State Policy (DPSP).
The Supreme Court case originated from a legal challenge against the 1986 amendment to the Maharashtra Housing and Area Development Act (MHADA), 1976 by owners of 'cessed' properties located in Mumbai.
The 1986 amendment to the Maharashtra Housing and Area Development Act (MHADA) invoked Article 39(b) to facilitate plans for acquiring lands and buildings, with the goal of transferring them to individuals in need and to current occupants of those properties. The amendment includes provisions enabling the state government to acquire cessed buildings and their associated land if requested by 70% of the occupants.
Therefore, the primary issue before the Supreme Court was whether privately owned resources, such as cessed buildings, can be considered "material resources of the community" under Article 39(b) of the Constitution.
During the deliberation on community-owned private property, Justice Sudhanshu Dhulia emphasized the significance of context. He concurred with the Chief Justice that the Constitution had undergone evolution over time. Justice Dhulia highlighted the necessity to precisely define the term "community" in this context.
During the Supreme Court proceedings, the Chief Justice said that three pivotal questions arise while discussing the “context” of community: defining the nature of the resource and its characteristics, evaluating its impact on the general well-being of the community, and analysing the repercussions of the concentration of ownership and control of the common good. Solicitor General Tushar Mehta responded by asserting that "community" should be narrowly construed to denote a specific, identifiable group rather than encompassing the entire nation.
Senior Advocate Rakesh Dwivedi urged that there was no mandate stating that community resources must be owned by the State. To illustrate his point, he highlighted that Air India could not be categorized as a community resource solely because it was state-owned, and then cease to be one when Tata took over.
Mehta then emphasized that Article 39(b) of the Constitution outlines a national objective for the welfare state to strive towards an egalitarian society. He suggested that legislatures can utilize this provision to enact laws for the distribution of material resources—whether owned by the government, community, or individuals—to serve the greater common good of citizens, communities, or even villages.
Dwivedi argued that the clauses of Article 39 are intended to regulate the operation of the economic system, ensuring that all material resources contribute positively to the common good and do not result in harm to the public interest. He emphasized that these provisions are intended to operate with respect to privately held resources to ensure they benefit society as a whole rather than causing harm.
The Bench highlighted the importance of understanding the framers' intent when interpreting Article 39(b), “We must understand that 39(b) has been crafted in a certain constitutional ethos. The Constitution was intended to bring about social transformation. So, we should not therefore go as far as to say that the moment property is private property, 39(b) and (c) will not apply.”
The CJI added that at least in today’s times we cannot attribute article 39(b) as a definition which gives expression to the unbridled agenda of communism or socialism. That is not our Constitution today, we still protect private property and the right to carry on business. Therefore, the interpretation must be nuanced to take care of what India is today and what is moving towards tomorrow.
He also said, “It is difficult to outrightly categorize all private properties as material resources of the community but at the same time we cannot say that material resources can never include any private property.”
The Hon’ble Court said that the provision should not be interpreted in such a wide sense that there is no protection for private rights at all.
On May 1, the Constitution Bench of the Supreme Court reserved its judgement on whether privately owned resources constitute "material resources of the community" as defined in Article 39(b) of the Constitution.
Disclaimer: The content and information in this note should not be construed as legal advice. This is merely a summary of the applicable provisions and not meant for any specific situation. The above explanations are merely to provide an insight of the term in question. Specific situations in a legal scenario are subject to the golden words, i.e. “it depends”.-------
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