Do Private Properties Come Under 'Material Resources Of Community' To Be Distributed For Common Good? Supreme Court Starts Hearing On Article 39(b)

The batch of petitions initially arose in 1992 and was subsequently referred to a nine-judge bench in 2002. After more than two decades of being in limbo, it is finally being revisited in 2024. The main question to be decided is whether material resources of the community under Article 39(b) (one of the Directive Principles of the State Policy), which states that the government should create policies to share community resources fairly for the common good, includes privately owned resources. Article 39(b) reads as follows:

"The State shall, in particular, direct its policy towards securing-

(b) that the ownership and control of the material resources of the community are so distributed as best to subserve the common good;”

The issue in these petitions revolves around the constitutional validity of Chapter-VIIIA, introduced in 1986 as an amendment to the Maharashtra Housing and Area Development Act,(MHADA) of 1976. Chapter VIIIA deals with the acquisition of specific properties, wherein the State requires payment at a rate equivalent to one hundred times the monthly rent for the premises in question. Section 1A of the Act also incorporated through the 1986 amendment, states that the Act is designed to implement Article 39(b) of the Constitution.

This matter was first heard by a three-judge bench. In 1996, it was referred to a five-judge bench, which then referred to a seven-judge bench in 2001. Eventually, in 2002, the matter was put before a nine-judge bench.

The reference was with regard to the interpretation of Article 39(b) of the Constitution. Put shortly, in State of Karnataka v. Ranganatha Reddy & Anr. (1978), two judgments were delivered. The judgment delivered by Justice Krishna Iyer stated that material resources of the community covered all resources– natural and man-made, publicly and privately owned. The other judgment, delivered by Justice Untwalia, did not consider it necessary to express any opinion with regard to Article 39(b). However, the judgement stated that the majority of Judges did not subscribe to the view taken in respect of Article 39(b) by Justice Iyer. The view taken by Justice Iyer was affirmed by a Constitution Bench in the case of Sanjeev Coke Manufacturing v. Bharat Coking Coal Ltd. (1982). This was also affirmed by a judgment in the case of Mafatlal Industries Ltd. v. Union of India.

The seven-judge bench in the present matter stated that this interpretation of Article 39(b) required to be reconsidered by a Bench of nine learned Judges. It held–

"We have some difficulty in sharing the broad view that material resources of the community under Article 39(b) covers what is privately owned."

Accordingly, the matter was referred to a nine-judge bench in 2002.

Should Keshavananda Bharati Be Revisited? Bench Refuses To Unsettle The Law On Article 31C

At the outset of the hearing, one counsel submitted that to understand the nuances of Article 39(b), one has to dwell into the understanding of Article 31C. In doing so, the effectiveness of the law laid down in Keshavananda Bharati regarding Article 31C was spotlighted.

Article 31C of the Constitution, in its original form, was introduced through the Constitution (25th Amendment) Act, 1971. As per the Article, two key things were introduced, (1) Even if a law conflicts with articles 14 (equality before the law) or 19 (freedom of speech, etc.), as long as it is trying to implement the goals set out in Part IV, it won't be considered invalid; (2) if a law declares its objective is to fulfil these broader goals of public good under the DPSPs, the effectiveness of such a law cannot be scrutinized under the principles of Judicial review.

31C. Saving of laws giving effect to certain directive principles

Notwithstanding anything contained in Article 13, no law giving effect to the policy of the State towards securing all or any of the principles laid down in Part IV shall be deemed to be void on the ground that it is inconsistent with, or takes away or abridges any of the rights conferred by article 14 or article 19 and no law containing a declaration that it is for giving effect to such policy shall be called in question in any court on the ground that it does not give effect to such policy:

Provided that where such law is made by the Legislature of a State, the provisions of this article shall not apply thereto unless such law, having been reserved for the consideration of the President, has received his assent.

However, in the landmark case of Kesavananda Bharati v. State of Kerala, the second part of Article 31C namely providing immunity to the Centre's legislations made in furtherance of the DPSPs from the judicial review was struck down. It may noted that now the operative part of Article 31C reads :

“Notwithstanding anything contained in article 13, no law giving effect to the policy of the State towards securing all or any of the principles laid down in Part IV shall be deemed to be void on the ground that it is inconsistent with, or takes away or abridges any of the rights conferred by article 14 or article 19.

Provided that where such law is made by the Legislature of a State, the provisions of this article shall not apply thereto unless such law, having been reserved for the consideration of the President, has received his assent.”

Another counsel sprung a question that since the court in IR Coelho v. State of Tamil Nadu held Articles 14, 19,21 to be embedded and intrinsic part of the basic structure doctrine, would this not be at loggerheads with the existence of Article 31C?

Recalling Kesavananda Bharati, the Counsel stressed that while on the one hand, the landmark decision coined the 'basic structure doctrine' holding that Fundamentals Rights such as Article 14 cannot be violated by any law passed by the Parliament, on the other hand, it also partially upholds Article 31C. Article 31C, which analysed the Counsel, was perhaps a safety net for laws made under Article 39(b). Thus, it may be impending for the court to revisit the landmark case as the interpretation of Article 39(b) is interlinked to the safe harbour given by Article 31C.

Put simply, the main question posed to the bench was, if Article 14 constitutes a core, untouchable part of the Constitution, would laws made under Article 31C be considered valid?

Coelho's judgement entrenches Articles 14, 19 and 21 as part of the basic structure. 31C is the safe harbour provision. In the event that 39(b) &(c) stand attracted then they can no challenge on the ground of 14 and 19. If Article 14 has been held to be part of the basic structure, the real question that arises is how effective the validity of Article 31C ruled upon in Keshavananda Bharati remains.

Reverting to this, the CJI asserted that the present bench sitting in a combination of 9 judges would be bound by the decision of Kesavananda Bharati, a combination of 13 judges. Since the landmark case upheld the provision of Article 31 C giving safe harbour to laws made in light of Article 39(b) and (c) against Articles 14 and 19 of the Constitution. The CJI stressing the historical and legal eminence of Kesavananda Bharati, expressed that the bench would not be inclined to entertain an argument which requires the Court to reopen the law settled in the Landmark decision.

“ But we are a bench of 9 judges, we are bound by the decision of Keshavananda Bharati which upheld the provision of 31C as originally enacted. The originally enacted 31C gave a safe harbour provision in respect to the challenged laws given in the DPSPs 39(b) and (c) on the ground that it violates articles 14 and 19 of the Constitution.

Now that has been upheld by a larger bench of 13 judges, for us that is now a dictum, that is, given that 31C is valid and therefore we have no reason to go into the impact of the decision of Coelho in Keshavananda Bharati…….These walls (of courtroom 1) are witness to what happened after Keshavanand when a view was assembled in this very court and then abruptly it was discarded. Do not forget the history of our court. We will now allow Keshavananda to rest where it is. (smiles).... We will keep 31C as upheld in its original form by Keshavanad Bharati to be the position before the 9-judge bench and then we accept it.”

Breaking Down Article 39(b) To Its Key Facets- Interpretation Should Be Done From The Broader Contours Of The Law

The CJI analysed that Article 39(b) consists of 4 main facets : (1) the presence of all resources in the community; (2) the sharing of these resources within the community;(3) the resources in question are perhaps owned and controlled by different agencies; (4) the resources owned and controlled are distributed fairly and to everyone's benefit.

He further highlighted that the expression 'Ownership and Control' has to be seen with some depth. While ownership means having a legal title over something, 'control' however covers a larger picture. Control is not just about who owns but also about who has a say in using and maintaining such a resource.

“Now what is the object to subserve the common good and the fact the constitution uses the expression 'ownership and control' is very significant. Ownership refers to the vesting of the title, control is much broader in its understanding, its not confined to the title.”

The CJI also rebutted the main proposition of the Counsels that Article 39(b) cannot include privately owned resources. He analysed that accepting such an argument would be akin to narrowing down the scope of the Article. It was highlighted that the provision is silent on making an exception to the private ownership/title of a resource. Giving the example of mines, he explained that while a mineral mine could be privately owned but it also becomes a larger part of the material resource of a community.

“The dichotomy that 39b can never include private property, then it is a very artificial, because when it says material resources of community it is agnostic to title. It doesn't mean that distinction that a case where the title vests in a person as opposed to the title in that community…..mines for instance, they may be private mines but in the broader sense they are a resource to the community”

Brainstorming 'Material Resources' & Its Redistribution -What Was The Intent Of Justice Krishna Iyer's Minority Decision?

Another counsel emphasized that the term 'Material Resource' under Article 39(b) is to be interpreted as any resource which is capable of generating wealth - through goods or services for the larger good of the community. In the context of MHADA, he gave the example of an old dilapidated building, which according to him could not be considered a material resource.

However, Justice Hrishikesh Roy challenged this notion, analysing that such structures are indeed vital resources for the communities they house. He underscored the importance of considering the well-being of the inhabitants within the broader framework of community resources.

The discussion then veered towards the intention of the framers in drafting Article 39(b). The main argument of the Counsel was that if the intention of the law was to include private resources within the meaning of 'Material resources', the drafter would have done so in order to avoid any possible future misinterpretations.

“If it were intended to cover private resources, the Article 39b could have specified it. Rather than leaving it for interpretation by somebody who would misinterpret and interpret it in a different way.”

Relying on paragraphs 80-81 of the decision in State of Karnataka v. Ranganatha Reddy & Anr., the Counsels then contended that Justice Krishna Iyer intended to keep the notion of 'nationalisation' into focus. However, counsel 3 cautioned against misunderstanding nationalisation to mean taking one's private property and giving to another.

“I cannot leave out what Justice Iyer had in mind...he says you take private property for nationalisation. It is a case where you take private property and give it to the public at large, not a case where you take the private property and give it to another private person”

Justice B.V. Nagarathna, however, interjected, suggesting that nationalization was aimed at curbing the concentration of resources in the hands of a few.

The relevant portion of Justice Krishna Iyer's minority judgement is as follows :

“80. …..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 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 subserve the common good. It re-organizes by such distribution the ownership and control.

81. “Resources” is a sweeping expression and covers not only cash resources but even the ability to borrow (credit resources). Its meaning given in Black's Legal Dictionary is:

“Money or any property that can be converted into supplies; means of raising money or supplies; capabilities of raising wealth or to supply necessary wants; available means or capability of any kind.”

And material resources of the community in the context of re-ordering the national economy embraces 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 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. A directive to the State with a deliberate design to dismantle feudal and capitalist citadels of property must be interpreted in that spirit and hostility to such a purpose alone can be hospitable to the meaning which excludes private means of production or goods produced from the instruments of production….”

The CJI, while reading out the above paragraphs, however, invoked a different view on the possible intent of Justice Iyer. As per the CJI, Justice Iyer clearly linked Article 39(b) with the holistic concept of redistribution. He emphasized Justice Iyer's stance that the distinction between public and private resources should not impede the objective of equitable redistribution.

“He links it to the whole concept of redistribution and says that if the focus of article 39b is on redistribution, then whether that material resource is public or private should not make any difference. That's the logic of the judgement”

However, later when this discussion resurfaced, Counsel 1 raised concerns over the perceived extremity of Justice Krishna Iyer's advocacy for widespread acquisition and redistribution of private property. He cautioned against adopting an overly Marxist interpretation, emphasizing the need to balance redistribution objectives with property rights.

“What Justice Krishna Iyer does advocate is please acquire private property and distribute it. Now that is too extreme a view in my humble submission. It's too extreme a Marxist concept that you acquire somebody's land and give it to everybody else. That is not in our humble submission of the intent of 39b.”

The bench will continue with hearing the Union's arguments on April 24.

Case Details: Property Owners Association v. State of Maharashtra (CA No.1012/2002) & Other Connected Matters