Nov 20, 2024 08:20 PM IST
The Supreme Court overruled a landmark judgment on property rights, clarifying definitions of community resources, impacting future property law interpretations.
The Constitution of India is a document of compromises, which was drafted by a Constituent Assembly whose members had diverse — and sometimes — competing sets of interests. One of the starkest examples of the compromise nature of the document — when it was enacted — could be found in its property rights clauses. The Constituent Assembly was aware of the deeply unequal property structures that the country was inheriting from its colonial history, and the urgent need for land reform. This is reflected in various provisions of the Directive Principles of State Policy, which mandate the State to undertake policies that would lead to a more egalitarian distribution of resources among the country’s people. At the same time, however, the Constituent Assembly was wary of radical change: They wanted incremental change that could be controlled from above. The Constitution, therefore, also contained a set of enforceable rights that would serve as guardrails within which the legislature could pursue its reformatory policies — but not beyond. These included a fundamental right to property, a requirement that land acquisition only be for a public purpose, and accompanied by compensation, and so on.
The initial years of the Constitution saw multiple amendments to the text, as Parliament saw its land reform laws often stymied by Supreme Court judgments that held that the property clauses had been violated. However, Parliament continued to keep the basic structure of the property clauses intact, even as it tried to exclude judicial review over its laws.
This position changed with the advent of the 1970s. There were two reasons for this. The first was the rise to power of Prime Minister Indira Gandhi, whose main plank was top-down economic populism, with little patience for institutions that stood in the way. The second was a change in the composition of the Supreme Court: The 1970s saw the appointment of judges who were either unwilling to confront Indira Gandhi, or were largely in agreement with her ideology. In this decade, therefore, the government-driven constitutional amendments grew broader and more sweeping, attempting to undo the property rights framework of the original Constitution; at the same time, the Court’s interventions grew more limited, although they did not die out (this was the decade when the Court articulated the famous basic structure doctrine).
The high water-mark of this era came in a judgment called State of Karnataka vs Ranganatha Reddy. In this case, Justice Krishna Iyer held that when Article 39(b) of the Constitution (a Directive Principle) directed the State to ensure “that the ownership and control of the material resources of the community are so distributed as best to sub serve the common good”, the term “material resources of the community” included all private property that served any material need. This holding was important because Article 31C of the Constitution stipulated that laws directed towards securing the purposes of Articles 39(b) and (c) of the Constitution were immune from scrutiny under Articles 14 (right to equality) and 19 (rights to freedom). In laypersons’ terms, this holding granted sweeping immunity to nationalisation – including the nationalisation of private property.
The irony, of course, is that Justice Krishna Iyer’s judgment was soon overtaken by events. Soon after, the Indian State began to move away from a command-and-control economy, a break that was formalised in 1991. Thus, Ranganatha Reddy stood as something of an anachronism: It vested broad powers in the State, but the State was no longer keen on using them.
Earlier this month, a nine-judge bench of the Supreme Court resolved the anachronism by formally overruling Ranganatha Reddy in Property Owners Association vs State of Maharashtra. Writing for the majority, the Chief Justice of India (CJI) Dhananjaya Y Chandrachud held that some private property could indeed amount to “material resources of the community”, but not all private property. CJI Chandrachud also laid down certain indicators to determine when “private property” would meet this test: These were the nature of the resource, its impact on the community, its scarcity, and the consequence of the resource being concentrated in the hands of private players. In an individual case, a court could apply this test to the facts at hand, and determine if Article 31A was attracted or not.
Justice Chandrachud framed his holding as being based on the premise that the Constitution did not encode any one economic ideology (such as that of socialism). This is no doubt correct. However, it is interesting to note that Justice Krishna Iyer’s judgment went much beyond even what socialist thinkers advocate. The distinction between personal property (such as, say, your toothbrush) and private property that serves as the means of production (such as, say, a factory) was made as far back as The Communist Manifesto. It is therefore unclear what ideology Justice Iyer was invoking to hold that all property could be presumptively nationalised, but very evidently, this was an unsustainable position in law — whether or not it would be ever acted upon by the State.
At the same time, reporting around the judgment has also tended to overstate its impact. As noted above, Justice Chandrachud was quite clear that certain kinds of private property would fall within the meaning of “material resources”. This judgment is not, therefore, a ringing endorsement of a privatised political economy – far from it. What remains to be seen now is how future courts will understand and apply the indicators to determine, on a case by case basis, which kind of property can be properly called a “material resource of the community”. These might be battles of the future.
Gautam Bhatia is a Delhi-based advocate.The views expressed are personal
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