Why All Private Properties Cannot Be Distributed For Common Good As Material Resources Of Community? Supreme Court Explains

The Supreme Court, by 7:2 majority, has overruled the judgment in Sanjeev Coke which held that all private properties can be distributed by the State as "material resources of the community" for the common good as per Article 39(b) of the Constitution.

The majority judgment authored by CJI DY Chandrachud listed out the following reasons.

a. The interpretation is inconsistent with the text of Article 39(b)

An interpretation of Article 39(b) which places all private property within the net of the phrase “material resources of the community” only satisfies one of the three requirements of the phrase, i.e. that the goods in question must be a 'resource'. However, it ignores the qualifiers that they must be “material” and “of the community”. The use of the words “material” and “community” are not meaningless superfluities. We cannot adopt a construction of the provision which renders these terms otiose. The words “of the community” must be understood as distinct from the “individual”. If Article 39(b) was meant to include all resources owned by an individual, it would state the “ownership and control of resources is so distributed as best to subserve the common good”. Similarly, if the provision were to exclude privately owned resources, it would state “ownership and control of resources of the state ...” instead of its current phrasing. The use of the word “of the community” rather than “of the state” indicates a specific intention to include some privately owned resources.

In essence, the text of the provision indicates that not all privately owned resources fall within the ambit of the phrase. However, privately owned resources are not excluded as a class and some private resources may be covered. The resource in question must meet the two qualifiers, i.e. it must be a “material” resource and it must be “of the community”.

There is a distinction between holding that private property may form part of the phrase 'material resources of the community' and holding that all private property falls within the net of the phrase. It is here that the judgment by Justice Krishna Iyer in Ranganatha Reddy, and the consequent observations in Sanjeev Coke fall into error. Justice Krishna Iyer cast the net wide, holding that all resources which meet “material needs” are covered by the phrase and any attempts by the government to nationalise these resources would be within the scope of Article 39(b). He clarified that not only the “means of production” but also the goods so produced fall within the net of the provision. The illustration which he provides in Ranganatha Reddy indicates the unworkable nature of such an interpretation. Justice Krishna Iyer observed, by way of an illustration, that not only do factories which produce cars fall within the net of Article 39(b), but even privately owned cars are covered by the provision. Similarly, even in Sanjeev Coke, the net is cast wide and this Court observed that “all things capable of producing wealth of the community” fall within the ambit of the phrase. In both decisions, it was observed that all resources of the individual are consequentially the resources of the community.

b. The interpretation amounts to endorsing a particular economic ideology

The judgments of Justice VR Krishna Iyer in (in State of Karnataka v. Ranganatha Reddy (1978) 1 SCR 641) and Justice O Chinnappa Reddy (in Sanjeev Coke Manufacturing Company vs. Bharat Coking Coal Ltd. and Anr. (1983) 1 SCR 1000) were endorsing a particular economic ideology. However, the Constitution is framed in broad and flexible terms, allowing for economic democracy. Detailed article on this aspect can be read here.

c. The interpretation is incompatible with the right to property

The right to property under Article 300A is a constitutional right.

The interpretation of Article 39(b), both as a pre-cursor to the protection of Article 31C and as an aspirational Directive Principle, cannot run counter to the constitutional recognition of private property. To hold that all private property is covered by the phrase “material resources of the community” and that the ultimate aim is state control of private resources would be incompatible with the constitutional protection.

CJI's judgment on behalf of the majority in the 9-judge bench answered the reference as follows :

"The direct question referred to this bench is whether the phrase 'material resources of the community' used in Article 39(b) includes privately owned resources. Theoretically, the answer is yes, the phrase may include privately owned resources. However, this Court is unable to subscribe to the expansive view adopted in the minority judgement authored by Justice Krishna Iyer in Ranganatha Reddy and subsequently relied on by this Court in Sanjeev Coke. Not every resource owned by an individual can be considered a 'material resource of the community' merely because it meets the qualifier of 'material needs."

The majority held that private property can come under the scope of Article 39(b) if it meets the condition of being a material resource of the community. The enquiry on whether a resource falls within the ambit of "material resource of community" must be based on the nature of the resource, the characteristics of the resource, the impact of the resource on the well-being of the community, the scarcity of the resource, and the consequence of such a resource being concentrated in the hands of private players. The public trust doctrine can also be applied here.

There are various forms of resources, which may be privately owned, and inherently have a bearing on ecology and/or the well-being of the community. Such resources fall within the net of Article 39(b). To illustrate, non- exhaustively, there may exist private ownership of forests, ponds, fragile areas, wetlands and resource-bearing lands. Similarly, resources like spectrum, airwaves, natural gas, mines and minerals, which are scarce and finite, may sometimes be within private control.

 Other reports about the judgment can be read here.