Legally Speaking | A deep dive into the key legal battles over the right to property
From the noteworthy Reddy case to the ongoing apex court deliberations, these cases provide a backdrop to the evolving jurisprudence surrounding property rights
While the political row over wealth redistribution continues to rage, with sharp reactions from all sides of the political spectrum, the Supreme Court (SC) is presently deciding the ambit of the right to private property of a person in India. The decision of the nine-judge bench will determine the State’s power to acquire private property to redistribute wealth for the common good.
The right to property is not a fundamental right in India. The right was repealed by way of a Constitutional amendment in 1978. The amendment came two years after the introduction of the words “socialist” and “secular” in the preamble to the Constitution in 1976.
Judgments that led to Justice Krishna Iyer’s influential minority opinion
The bank nationalisation case, or the RC Cooper vs. Union of India, precipitated the 1978 amendment. The government introduced an ordinance to nationalise banks in 1969. The same was challenged by RC Cooper as being violative of fundamental rights, including the erstwhile Article 31: the right to property. The SC allowed the challenge and held the nationalisation to be unconstitutional in 1970. The Court held that no public purpose was served by the nationalisation and the forcible acquisition of banks was "illegal" and violated Article 31.
The next development instrumental in the present deliberation occurred in 1977, when the SC was called in to decide the legality of the nationalisation of contract carriages (A contract that is created between a carrier and a shipper for the transportation of goods or passengers.) In 1976, the Karnataka Contract Carriages (Acquisition) Ordinance was passed to acquire privately owned contract carriages and transfer them to the Karnataka State Road Transport Corporation. Contract carriage operators and others filed writ petitions in the Karnataka high court (HC). After hearing the petitioners in the State of Karnataka vs. Sri Ranganatha Reddy, the Karnataka HC struck down the state's action as being violative of the right to private property of the private carriage owners on three grounds: The acquisition was not for a public purpose; the compensation or amount provided in the Act in lieu of the vehicles, permits and other assets is wholly illusory and arbitrary; the acquisition of contract carriages with inter-state permits and other assets is beyond the competence of the state legislature.
The SC, however, reversed the HC order and held that the acquisition was for the public purpose of preventing the misuse of stage carriages and providing the public with better transport facilities. The Court also noted that fears regarding compensation were unfounded and that the state was competent to enact legislation as it fell within the domain of inter-state trade and commerce.
However, the difference came through the interpretation of Article 39(b) of the Constitution, which states: “The State shall, in particular, direct its policy towards securing the ownership and control of the material resources of the community are so distributed as best to subserve the common good.”
In his singular dissenting note, Justice Krishna Iyer underlined that while he agreed with the majority judgment in Sri Ranganatha Reddy, he felt it important to expand on the role of the public sector to strategically transform the society from “stark poverty to social justice.” In his dissent, he looked into the power of the State to acquire property with a specific focus on the redistribution of resources.
On Article 39(b), Justice Iyer said, “The key word is 'distribute' and the genius of the article, if we, may say so, cannot but be given full play as it fulfils the basic purpose of restructuring the economic order. Each word in the article has a strategic role and the whole article is a social mission. It embraces the entire material resources of the community. Its task is to distribute such resources. Its goal is so to undertake distribution as best to serve the common good. It re-organises by such distribution the ownership and control. 'Resources' is a sweeping expression and covers not only cash resources but even the ability to borrow. And material resources of the community in the context of reordering the national economy to embrace all the national wealth, not merely natural resources, all the private and public sources of meeting material needs, not merely public possessions. Everything of value or use in the material world is a material resource and the individual being a member of the community his resources are part of those of the community. To exclude ownership of private resources from the coils of Article 39(b) is to cipherise its very purpose of redistribution the socialist way.”
Stating that in consonance with the social philosophy of the Constitution, it was imperative to provide an opinion on the issue to aid future jurisprudence, the judge observed, “Constitutional problems cannot be studied in a socio-economic vacuum, since socio-cultural changes are the source of the new values and sloughing off old legal thought is part of the process of the new equity-loaded legality. A judge is a social scientist in his role as a constitutional invigilator and fails functionally if he forgets this dimension in his complex duties.”
Thus, Krishna Iyer provided an expansive interpretation of what came within the ambit of the term “material resources”, which could be acquired by the State to subserve the common good. The interpretation was in line with the development of the welfare state in India premised on socialism.
Supreme Court affirms Justice Iyer’s minority opinion
Five years later in 1982, a five-judge bench in Sanjeev Coke Manufacturing Company vs. Bharat Coking Coal Ltd adopted the interpretation put forth by Justice Krishna Iyer while upholding the nationalisation of coal mines and their coke oven plants.
Speaking for the majority, Justice O Chinnappa Reddy stated, “There is no warrant for interpreting the expression in so narrow a fashion as suggested by Shri Sen (counsel for petitioner Sunil Kumar Ray) and confine it to public-owned material resources and exclude private-owned material resources. The expression involves no dichotomy. The words must be understood in the context of the constitutional goal of establishing a sovereign, socialist, secular, democratic republic. Though the word 'socialist' was introduced into the Preamble by a late amendment of the Constitution, that socialism has always been the goal as is evident from the Directive Principles of State Policy.”
Fifteen years later in 1997, a nine-judge bench in Mafatlal Industries Ltd. vs. Union of India, upheld the Court’s view in Sanjeev Coke, further expanding on Justice Iyer’s opinion and held that the words "material resources" occurring in Article 39 (b) will take in, natural or physical resources and also movable or immovable property, including all private and public sources of meeting material needs, not merely confined to public possessions.
While the SC evolved the jurisprudence on Article 39 (b), there were legislative changes regarding acquisition in Maharashtra. In 1986, the Maharashtra Housing Development Act, 1976 was amended to allow the Mumbai Building Repair and Reconstruction Board to acquire certain properties for restoration purposes. This amendment was introduced under the ambit of Article 39(b). However, property owners saw it as a violation of their ownership rights and an unlawful acquisition by the State. They formed a Property Owners Association of over 20,000 landowners in Mumbai and challenged the amendment before the Bombay high court. The HC dismissed the petition, and an appeal was preferred before the apex court in 1992. The case was first referred to a five-judge bench in 1996.
Towards a judgment in the property rights case
However, in 2001, the bench noted that the view expressed in Sanjeev Coke required reconsideration and referred it to a seven-judge bench. Subsequently, while the seven-judge bench was hearing the matter in 2002, the Supreme Court noticed that the judgment in Mafatlal had been delivered by a nine-judge bench. Since it was delivered by a larger bench than the one hearing the matter at that time, the case was referred the case to a nine-judge bench to decide the matter. It is this referred case from 2002, which is being heard by the Court now in 2024.
As the gaps in the distribution of wealth continue to widen, the decision of the Court in this case will determine the fate of several citizens and will be responsible for shaping the contours of the economic and social policy of the country.
Parijata Bharadwaj, a lawyer and researcher based in New Delhi, co-founded the Jagdalpur Legal Aid Group that offered legal services to adivasis in Chhattisgarh. The views expressed are personal.
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