Redefining Property Rights in India

Context:

• The Supreme Court of India recently delivered a significant judgment concerning property rights and the government’s power to use private resources for the “common good.”
• This judgment revisited Article 39(b) of the Directive Principles of State Policy (DPSP), which outlines the government’s responsibility to distribute resources in a way that benefits society.
• The ruling marks a shift in the interpretation of this Article, moving away from an earlier socialist approach to a more market-oriented view, aligning with India’s current economic model.
• This decision also overturns previous judgments that broadly defined private resources as community assets under government control.

Detailed Breakdown:

1. Background of the Case:

• A nine-judge Constitution Bench of the Supreme Court issued a majority judgment (8:1).
• The judgment held that not all private resources can be considered as 'material resources of the community' for government use in serving the ‘common good.’
• This overturns the interpretation that had been followed by the Supreme Court since 1977.

2. What are Directive Principles and Article 39(b)?

• Part IV of the Constitution contains the Directive Principles of State Policy (DPSP), guiding the government to achieve social and economic justice.
• Article 39(b) states that ownership and control of material resources of the community should be distributed to best serve the common good.
• Initially, right to property was a Fundamental Right under Articles 19(1)(f) and 31.
• After the 25th amendment (1971), Article 31C allowed laws based on Articles 39(b) and (c) to override Fundamental Rights.
• In the Kesavananda Bharati case (1973), Article 31C was upheld but subject to judicial review.
• In 1978, the right to property was removed from Fundamental Rights and became a constitutional right under Article 300A.

3. Previous Judgments and Justice V.R. Krishna Iyer’s Interpretation

• In State of Karnataka vs. Ranganatha Reddy (1977), the Supreme Court upheld a Karnataka law nationalizing private bus transport services.
• Justice V.R. Krishna Iyer interpreted ‘material resources of the community’ in Article 39(b) to include all national wealth, not just natural resources.
• His interpretation influenced cases like Sanjeev Coke Manufacturing Company vs. Bharat Coking Coal Limited (1982) and Mafatlal Industries Ltd. vs. Union of India (1996), which supported nationalization based on this broad view.

4. The Current Ruling and Reversal of Justice Iyer’s Interpretation

• In Property Owners’ Association vs. State of Maharashtra, the Supreme Court reviewed Justice Iyer’s interpretation of Article 39(b).
• The majority opinion (8:1) ruled that not every private resource qualifies as a 'material resource' for the state to use.
• It was emphasized that India has shifted from a socialist to a market-based economy, limiting the government’s control over private resources.
• For a resource to qualify as a ‘material resource of the community,’ it must have:
  • Inherent characteristics valuable to the community.
  • A significant impact on community well-being.
  • Scarcity that affects distribution.
  • Impact due to concentration in private hands.
• Examples that may qualify under Article 39(b) include forests, ponds, spectrum, mines, and minerals, even if privately held.
• Justice Nagarathna partially agreed, suggesting that all private resources, except personal items like clothing and jewelry, could serve the community if acquired by the government.
• Justice Sudhanshu Dhulia dissented, supporting Justice Iyer’s broader interpretation, suggesting the legislature should decide on resource distribution.

5. Implications of the Judgment

• This judgment reflects India’s shift from a socialist to a market-oriented economy.
• It aims to protect small landowners and marginalized groups from forced property acquisitions.
• Emphasizes sustainable use and distribution of public resources.
• Recognizes the responsibility to manage resources for future generations, noting we "borrow" resources from them.