Justice Krishna Iyer's View On Private Property 'Little Extreme'; Can't Adopt Unbridled Communist Or Socialist Agenda To Define Article 39(b): Supreme Court [Day 4]

The Supreme Court Constitution bench, on its 4th day of hearing the issue of whether private resources form part of the 'material resource of the community' under Article 39(b) of the Constitution, analysed the present and changing economic dynamics of the nation in the background of increased globalisation and how the provision shold be interpreted keeping in mind the contemporary needs of the society. The definition of 'community' was argued to be seen from a contextual lens and various social and practical factors involving the nature and location of a resource. The Union also proposed to understand the post-Minerva Mills impact on Article 31C from the standpoint of Blackstone's Declatary Theory.

The bench hearing the issue comprises Chief Justice of India DY Chandrachud, Justices Hrishikesh Roy, B.V. Nagarathna, Sudhanshu Dhulia, J.B. Pardiwala, Manoj Misra, Rajesh Bindal, Satish Chandra Sharma and Augustine George Masih.

The CJI at the outset observed that Article 39(b) cannot be given an interpretation which is on the two extreme ends of a spectrum. Taking the example of how there could be private land but beneath it could be underlying precious minerals like uranium which is a material resource for the community at large, the CJI opined that the concept of material resources cannot be put in air-tight compartments of private and public.

He further expressed that accepting Justice Krishna Iyer's decision in State of Karnataka v. Ranganatha Reddy & Anr. (1978) would be too extreme. Justice Krishna Iyer in his decision held that the expression 'Material Resources of the Community' included “all the private and public sources of meeting material needs, not merely public possessions.”

“Therefore there cannot be a strict dichotomy between private and public. At the same time, the formulation by Justice Krishna Iyer is a little too extreme, what it says is since the community consists of individuals and therefore every individual is a part of the community, then the material resources of the community will also mean resources of the individual ....”

With the changing socio-economic set-up of the Country's policies, especially in light of the increased effect of globalisation and open market economy across the world, CJI analyzed that giving Article 39(b) and(c) a "communist" or "socialist" colour would go against the presently evolved fabric of the Constitution. It is the duty of the court to balance both collective as well as individualistic interests. In terms of individualistic interests, one cannot overlook the concept of private property and the right to carry business, both of which are intrinsic in the Fundamental Rights

“We cannot attribute to Article 39(b) and (c) at least in today's times a sort of a definition which gives an unbridled agenda of communism or socialism. That is not our constitution today, we still protect private property, and we still protect the right to carry on business.”

Referring to India's decades of efforts towards liberalization of the economy and welcoming foreign investments for growth opportunities in India, the CJI opined that Article 39(b) cannot be interpreted in a way that is counterproductive to the Country's national and international trade and investment policies. He highlighted that the decision in the present case would have far-reaching impacts on the present and future economic dynamics of the Country and the court will need to be cautious of maintaining the balance between social and personal rights under the constitution.

“We (India) have expressly adopted a policy of encouragement of investment by the private sector, realising that until then it was alright that governmentt was involved at high levels of investment in the industry, but now if we truly want to have a productive enterprise, we will have to encourage private investment. Therefore our interpretation also has to be nuanced of what India is today and what India is moving towards tomorrow….what we write will send a message of what India is what India aspires to be ...look we don't want to dilute the constitution and social significance of 39(b),(c). It is sent for us, it's given to us. At the same time, we should not be sending a message by interpreting 39(b) and (c) in such a wide sense that there is no protection of private rights in the society at all.”

The Idea Of Community Is Contextual: Bench Brainstorms

On the discussion of understanding what is meant by 'community', Justice Dhulia pointed out that it was necessary to understand community from a contextual sense. He gave the example of how there may be a tribal community knowing of a particular herb, which may be grown on a private farm or land, but the herb would belong to the entire 'community'. However, how does one determine what would constitute a community?

“But will the community will only be that tribal community or will it be the people of the entire country ?”

The CJI weighed in to add that he observed three aspects of the context which decides a 'community' : (1) what is the nature of the resource and characteristics; (2) the impact of the resource on the general well-being and common good; (3) the consequence of ownership and control of the common good.

Solicitor General(SG) Mr Tushar Mehta further added that to constitute a 'community' a class or group of individuals should be identifiable with certain common traits. Interpreting the community to include all the persons in the country in unison would be an immature approach, unaligned with the intention of the framers of the Constitution.

“Class should be an identifiable class, community doesn't mean the entire country, that is not the juvenile way in which the constitution framers have understood it.”

At a later stage in the hearing, Senior Advocate Mr Rakesh Dwivedi emphasized that the distribution of a resource across different regions of a country depends on the type of resource and its location. For instance, only local fishermen in Bengal might benefit from specific local resources, as others may not travel there. Additionally, the concept of community resources extends beyond state boundaries.  

“Community cannot be limited to the state. It's not like Air India when owned by state was a material resource, now when it is owned by TATA it seizes to be a material resource.”

To which the CJI added that people form a community when they interact with each other socially, economically, and politically. A community is built on shared interests, which make it a valuable resource for its members.

“People become a community when an engagement is drawn, social, economic, political interaction etc. Some engagement within human beings is implicit in the concept of it. There has to be some element of interest in the community in order to make it a material resource for the community.”

Blackstone's Declaratory Theory Applicable To Understand The Effect Of Decision In Minerva Mills: Article 31C Survives In Its Orginal Form

On the key issue of the effect of the Minerva Mills decision and whether it would lead to the revival of Article 31C in its unamended form, the SG proposed that Blackstone's doctrine as accepted since the ruling of Golaknath v. State of Punjab would apply to resolve the present confusion.

Article 31C, as amended by the 42nd Amendment of 1976, was struck down in the case Minerva Mills v. Union of India. The Court pondered whether, after the Minerva Mills judgment, the unamended version of Article 31C was revived. A detailed understanding of this 'conundrum' revolving around Article 31C can be read here.

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.

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 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.” (The italicized part was struck down in Kesavananda Bharati)

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.”

Subsequently, the 42nd Amendment Act, 1976 introduced by the Parliament further amended Article 31C. Herein the expression “The principles specified in clause (b) or clause (c) of article 39", was substituted with "all or any of the principles laid down in Part IV" (section 4 of the 1976 Amendment Act)

The said amendment when put to challenge in the case of Minerva Mills was struck down completely. In the same year, after deciding Minerva Mills, the Court in Waman Rao v. Union of India held that the unamended version of Article 31C as upheld by Kesavananda Bharati remains valid.

Blackstone's declaratory theory, as propounded by Sir William Blackstone in his influential work named "Commentaries on the Laws of England," emphasized the idea that the role of the judiciary is primarily to declare the law as it already exists, rather than to create new law. Put simply, the Court's elemental duty is to declare a particular law either as valid or invalid and not to dwell in the framing of laws, which forms the core job of the legislature.

Blackstone's declaratory theory says that judges do not have the authority to make or enact laws but rather to interpret and apply existing laws to specific cases brought before them. According to Blackstone, the law already exists in the statutes enacted by the legislature and in the common law tradition, and it is the duty of judges to ascertain and declare what the law is, not to invent it anew.

Applying the above principle to the present issue of Article 31C post Minerva Mills, SG argued that the moment the Court in Minerva declare S.4 of the 42nd Amendment Act as invalid, the unamended version automatically survives, and it is not the role of the Court to expressly clarify the position of law which would encroach the ambit of the legislature.

SG's key formulations were : (1) the principles of interpretation in the case of a statute and constitution would be different. Thus it would be incorrect to mechanically apply those rules of interpretation when dealing with the Constitution; (2) The Parliament while amending 31C never meant to delete it or obliterate 39 b and c and merely expanded the protection under articles 39b and c to the entire part 4; (3) What was found fault with was the expansion not article 39b and c; (4) Therefore the moment Minerva comes, the expansion goes and not article 39 b and c; (5) the learned judge, CJI YV Chandrachud who decided Waman Rao and who possibly was in the process of deciding Minerva, makes a positive declaration which is not under challenge

Senior Advocate Mr Harish Salve further expanded on the concern of applying standard rules of interpretation on constitutional matters. An important point in constitutional law is that Parliament can't just change the Constitution any way it wants; there are limits. Only the judges explain how this limitation works.

“Article 368's construction that there is a limit on the power of the parliament to amend the constitution is one of the most dramatic developments of constitutional law jurisprudence in the world. How that power is utilised that only your lordships can say.”

Applying usual rules like substituting or repealing doesn't merit effectiveness in dealing with Constitutional questions. When a court makes a declaration of a law being invalid, it doesn't cancel an existing law; it prevents the law from having any effect from the start. Thus applying the same proposition to the present case, the declaration of holding S.4 of the 42nd Amendment as invalid relates to the law that the Parliament introduced in substituting Article 31C and not Article 31 C in its unamended form.

“So reading rules of substitution, repeal etc are all completely misplaced....a declaration by the court doesn't repeal a law, a declaration by the court results in the law being stillborn. The declaration given in para 75 of Minerva Mills relates to S.4, not Article 31C.”

Mr Salve stressed that one can't use the general principles of interpreting laws to manoeuvre around the boundaries set by Article 368 of the Constitution because it's the court's role to outline these limits. If a state law goes against certain constitutional directives (like Articles 39b and 39c), the court wouldn't even consider it valid. Similarly, if something contradicts the limits set by Article 368 (on amending the constitution), it should be ignored as if it doesn't exist. Making the analogy of how one ignores the inconsistencies of life and moves on to the correct path, Mr Salve urged the court to move on with the unamended version of Article 31C as the final position

“ One cannot superimpose rules you apply to statutory interpretation and general clauses act to article 368 as the powers of this court to determine the contours of 368. What your lordships do is when you say that it is beyond amending power...if state assembly passes a law which violates 39b and c, would lordships take cognizance of it? you won't. So when you say this violates 368, don't take cognizance of this Section 4, life goes on.”

Article 39(b) An Extended Form Of Fundamental Right? Mr Dwivedi Explains

While emphasizing the close interplay between the origins of Fundamental Rights and DPSPs, Mr Dwivedi recalled the Lahore Declaration of 1929 and the Karachi Resolution of 1931, pivotal moments in India's pre-independence movement where the emphasis on fundamental rights and DPSPs emerged simultaneously. Drawing from these historical events, he underscored the importance of maintaining equilibrium between individual liberties and the state's duty to ensure social and economic justice.

Dwelling further, Mr Dwivedi argued that Article 39(b) can be seen as a valid extension of Fundamental Rights by virtue of its presence in the phrasing of Article 31C.

Mr Dwivedi asserted that Article 39(b), when read in conjunction with Article 31C, virtually transforms into a fundamental right, enabling the state to prioritize the welfare of marginalized sections of society over individual property rights. He emphasized the need for Parliament to have the discretion to determine which properties are essential for public welfare, rather than engaging in a cumbersome process of delineating each instance. Justice Nagarathna also pointed out that 31C itself is in the Fundamental Rights Chapter. Agreeing to this the senior counsel urged the court to view Article 39(b) as an intrinsic part of the larger scheme of fundamental rights.

“ That's right, it is part of the scheme, it is as fundamental now… Read 39b when in the context of 31C virtually takes the shape of a fundamental right ...it is a fundamental right because some people should not enjoy fundamental rights, while with equalisation we take the fundamental rights and make them real for the poor people. So that is to be realised. everybody must enjoy fundamental rights.”

Background

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.

A three-judge bench first heard this matter. 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 of a nine-judge bench 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.

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

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

Supreme Court Doubts Argument That Private Property Isn't Included In 'Material Resources Of Community' As Per Article 39(b) [Day 2]

Private Property Is Community Resource? Article 39(b) Can't Be Seen Through Economic Prism Or Political Ideology, AG Tells Supreme Court [Day 3]

Should Legislature Specifically Delete Provisions Which Are Struck Down By Courts? Supreme Court Discusses [Day 3]