The ruling does well to point out that the role of the court is not to lay down economic policy, but to facilitate the “intent of the framers to lay down the foundation for an economic democracy.”
A nine-judge Constitution Bench of the Supreme Court has ruled on a matter concerning private property that was pending in courts for over three decades. The majority ruling by Chief Justice of India DY Chandrachud is an enormously welcome judicial acknowledgment of how far India has travelled from the state’s control over most resources to a more market-based economy since the early 1990s when it opened itself up not just to globalisation, but also unshackled its private sector, where wealth generation is not looked down upon. On Tuesday, the SC ruled that not all private property can be deemed “material resource of the community” for redistribution under Article 39(b) of the Constitution. The provision is part of the Directive Principles of State Policy, which mandates that the state 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 Court’s ruling is on two provisions. First, on Article 31C, the “safe harbour” provision that shielded laws enacted to give effect to Article 39(b). Second, and consequently, the interpretation of Article 39(b) and what comprises “material resources.” The history of these provisions can be traced to Emergency-era economic policies such as land ceiling, bank nationalisation, the court’s rulings on these issues and their political fallout. Article 31C was inserted through the Constitution (Twenty-fifth) Amendment, 1971, to ring-fence the socialist economic policy. It said that no such law can be challenged in courts on the grounds that it violates fundamental rights. However, this amendment was partially struck down in the landmark Kesavananda Bharati ruling in 1973 by a narrow 7:6 majority. Which laws get the safe harbour will be determined by the courts and not Parliament, the Court said. The SC has now provided much needed clarification that the Kesavananda position stands. The second aspect, the interpretation of Article 39(b) on what constitutes “material resources” is at the heart of how Indian economic policy has evolved. In a string of rulings since 1977, the apex court’s interpretation has flowed from a minority opinion of Justice VR Krishna Iyer who wrote that all resources which meet “material needs” are covered by the phrase and any attempts by the government to nationalise these resources would be within the scope of Article 39(b). The SC’s 8:1 majority opinion now offers a post-facto course-correction that such an 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. Justice Krishna Iyer’s judgment in Ranganatha Reddy, which was followed inter alia in Sanjeev Coke and Bhim Singhji, was influenced by a particular school of economic thought,” says the majority opinion.
The ruling does well to point out that the role of the court is not to lay down economic policy, but to facilitate the “intent of the framers to lay down the foundation for an economic democracy.” From data to space, the imagination of private property has drastically altered since the Constitution was framed, and since economic reforms. Given that the SC was not testing a particular legislation while laying down this crucial law on private property, there is much to look ahead for when the court has to apply the law.
