The bench also unanimously held that  Article 31C to the extent it was upheld in Kesavanda Bharati remains in force. 

Justice Nagarathna's views

“Material resources” can in the first instance be divided into two basic categories, namely, (i) State owned resources which belong to the State which are essentially material resources of the community, held in public trust by the State; and (ii) privately owned resources. However, the expression “material resources” does not include “personal effects” or “personal belonging” of individuals, such as, clothing or apparel, household articles, personal jewellery and other articles of daily use belonging to the individuals of a household and which are intimate and personal in nature and use. Excluding “personal effects”, all other privately owned resources can be construed as “material resources”.

Thus, all resources whether they are public resources or privately owned resources which come within the scope and ambit of the expression “material resources” as stated above are included within that expression.

Private resources can be turned into material resources of the community by means such as (1) nationalisation; (2) acquisition; (3) operation of law ; (4) by purchase by state; (5) owner's donation.

The “material resources of the community” have to be “distributed as best to subserve the common good”. Distribution could be in two ways:

Firstly, by the State itself retaining the material resource for a public purpose and/or for public use; and

Secondly, privately owned material resources when converted as “material resources of the community” can be distributed to eligible and deserving persons either by way of auction, grant, assignment, allocation, lease, sale or any other mode of transfer known to law either temporarily or permanently depending upon the mode adopted and unconditionally or with conditions.

On merits it cannot be held that Sanjeev Coke violated judicial discipline. One cannot lose sight of the fact that in Sanjeev Coke this Court did not decide the case only on the basis of the opinion of Krishna Iyer, J. in Ranganatha Reddy but on merits on the validity of the Nationalisation Act. Therefore, Sanjeev Coke is good law insofar as on the merits of the matter is concerned.

Privately owned resources except “personal effects” as explained above can come within the scope and ambit of the phrase “material resources of the community” provided such resources get transformed as “resources of the community” as discussed by me above. To reiterate, it would not include personal effects.

Justice Dhulia's views 

The incorporation of Article 38 as well as Article 39(b) and (c) in Part IV of our Constitution was based on the prevalent philosophy of the time and the path of development India chose to follow. The interpretation given to the above provisions by this Court, particularly in Ranganatha Reddy and Sanjeev Coke also has its contextual relevance. Perhaps in some ways situations have changed. What has not changed, however, is the inequality. There is today a political equality and there is also an equality in law, yet the social and economic inequalities continue as cautioned by Dr. Ambedkar in his speech in the constituent Assembly on November 25, 194986.

The inequality in income and wealth and the growing gap between the rich and the poor is still enormous. It will therefore not be prudent to abandon the principles on which Articles 38 and 39 are based and on which stands the Three Judge opinion in Ranganatha Reddy and the unanimous verdict in Sanjeev Coke.

The broad and inclusive meaning given to the expression “material resources of the community” by Justice Krishna Iyer and Justice O. Chinnappa Reddy in Ranganatha Reddy and Sanjeev Coke respectively has stood us in good stead and has lost none of its relevance, or jurisprudential value, nor has it lost the audience which appreciates these values.

'Harsh, Unwarranted' : Justices Nagarathna & Dhulia Object To CJI Chandrachud's Remarks Against Justice Krishna Iyer

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 was taken for a hearing 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 main contention raised by the appellants and other intervenors was 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. 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.

The Union highlighted that the interpretation of Article 39(b) should be from the standpoint of the ever-expanding constitutional principles and not any ideology. In terms of understanding a resource, the Union urged that it is a community's dynamic interactions that mould the meaning of 'Material Resources'. In a community, different individuals have different interactions and business transactions. This makes the sum total of a community's wealth, to which each individual through its economic interactions contributes. Thus 'resource' under Article 39b means a common economic base.

Issue Involved & Reference Trajectory

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.

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.

Other reports about the judgment can be read here.

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

Citation : 2024 LiveLaw (SC) 855

Click Here To Read the judgment

Reports of the hearing :

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]

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]

Are Private Properties Included In "Material Resource Of Community" Under Article 39(b)? Supreme Court 9-Judge Bench Reserves Judgment