At the heart of the Supreme Court’s nine-judge bench decision in the Property Owners Association v State of Maharashtra (2024) case is an old conflict: Property rights versus the state’s power of eminent domain.
This was one of the defining constitutional issues in the first three decades of the republic, resulting in a long tussle between the court and the legislature. Courts kept striking down laws which infringed on the right to property and Parliament kept amending the Constitution to narrow the right further. In 1971, Parliament introduced Article 31-C, which said that if a law was intended to further the Directive Principles contained in Article 39 (b) and (c) of the Constitution, it could not be held to violate the Right to Equality or the freedoms guaranteed under Article 19 of the Constitution.
The specific question before the nine-judge bench was the meaning of the term “material resources of the community” found in Article 39(b). Though not binding, Article 39(b) exhorts the State to make policies which ensure “that the ownership and control of the material resources of the community are so distributed as best to subserve the common good.” In the context of a 1986 amendment to the Maharashtra Housing and Development (MHADA) Act, which allowed the state government to take over dilapidated buildings from their owners and hand it to tenants, the question was — do “material resources of the community” necessarily include private property? If they did, building owners could not challenge the law claiming that it violated their rights under Article 14 or Article 19.
No judgment had definitively answered this question so far, but one line of cases seemed to suggest that “material resources” included all private property as well. However, these cases were doubted by the Supreme Court in the 1990s resulting in the need for a nine-judge bench to settle the matter once and for all.
The majority judgment, authored by CJI DY Chandrachud (on behalf of himself and six other judges) holds that “material resources of the community” may include private property but do not include all forms of private property. The majority holds that whether private property would amount to “material resources” is “context-dependent” and lists out a non-exhaustive set of factors to decide whether such private property is a “material resource”. These factors include the nature of the resource, its impact on “the well-being of the community”, its scarcity, etc.
Justice Sudhanshu Dhulia disagrees with this finding in a dissenting opinion holding that “material resources” necessarily include all private property. However, Justice B Nagarathna agrees with the majority opinion but adds the nuance that the personal effects of an individual cannot become “material resources”.
Superficially it might seem that the Court has turned away from the “socialist” interpretation of Article 39 (b) favoured by judges such as Justices V R Krishna Iyer and O Chinnappa Reddy. The majority opinion disagrees with what was taken for granted in earlier judgments — that all private property would constitute “material resources” for the purposes of Article 39(b). The old view, one might argue, has been rejected keeping in view the shift in the dominant economic policies followed by the government: That the imperatives of nationalisation and redistribution have now been replaced by the imperatives of a welfare state, which compensates those left out of the lightly regulated market economy.
However, in my view, the Supreme Court’s judgment in Property Owners Association is actually about the power of judicial review. Article 31C tried to reduce the scope of judicial review over laws limiting the right to property. The majority judgment in this case has expanded judicial review over such laws in a different way by leaving it to the court to decide, on a case-by-case basis, whether a law redistributing private property violates fundamental rights or not. Earlier, a simple invocation of Article 39 (b) was enough to put the law out of the reach of judicial review. Now, the court will decide what 39(b) itself means in each case before deciding whether the law is outside its reach. Article 31C’s effort to ban judicial review of certain kinds of laws has been effectively skirted by the court
The minority view of Justice Dhulia argues that the Constitution does in fact have a certain idea of how wealth should be distributed in society, what constitutes wealth and how it should be distributed should be left to Parliament to figure out. “Material resources of the community,” in Justice Dhulia’s view, cannot be interpreted in any way to exclude private property because the framers of the Constitution meant to include private property. Justice Dhulia wants Parliament to have the final say on these matters since an elected legislature knows best what resources should be in whose hands.
Given that the Property Owners Association judgment only lays down principles, it remains to be seen if and to what extent courts review or strike down laws on acquiring and redistributing private property.
When reading the Supreme Court’s narration of the facts in Property Owners Association, one is reminded of Saeed Akhtar Mirza’s immortal satire, Mohan Joshi Hazir Ho. Mohan Joshi is an old man living in a dilapidated building that is almost falling apart. His landlord refuses to renovate, hoping the dangerous building will convince the tenants to leave and allow him to redevelop and sell it at a higher price. Joshi approaches the court, where his real saga begins as the judicial process only adds to his misery and provides little resolution.
The 1986 Amendment to the MHADA Act was the perfect solution to Mohan Joshi’s problem but that is not the comparison I am making.
When challenged by aggrieved landlords, the Bombay High Court in 1991 upheld the 1986 amendment. The matter then travelled to the Supreme Court in 1992 and has languished there since. It has been referred by a three-judge bench to a larger bench of five judges, then to a bench of seven judges and finally to a nine-judge bench. The nine-judge bench judgment delivered this week does not end the matter — it will go before another, smaller bench to decide the constitutional validity of the 1986 Amendment. The twist in the tale here is that the landlords, not the tenants, have now spent 32 years (and counting) in the Supreme Court awaiting final judgment.
The writer is a co-founder of the Vidhi Centre for Legal Policy. Views are personal
