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A 9-judge Constitution Bench of the Supreme Court held Tuesday (November 5) that the government cannot acquire and redistribute all privately owned properties deeming them “material resources of the community”, as mentioned in Article 39(b) of the Constitution.
There were two key issues for consideration before the Bench, comprising Chief Justice of India DY Chandrachud, Justices Hrishikesh Roy, BV Nagarathna, Sudhanshu Dhulia, JB Pardiwala, Manoj Misra, Rajesh Bindal, Satish Chandra Sharma, and Augustine George Masih.
First, whether Article 31C, the key constitutional provision that deals with the right to property, exists despite subsequent amendments and court rulings striking down the amendments.
Second, the interpretation of Article 39C of the Constitution.
The crucial ruling has implications for how we understand property, the right to own property and its relationship with the society at large.
Justice Chandrachud has written a judgement for himself and seven other judges, Justice Nagarathna has penned a concurring opinion, while Justice Dhulia has dissented.
Article 31C originally stood to protect laws enacted to ensure the “material resources of the community” are distributed to serve the common good (Article 39(b)) and that wealth and the means of production are not “concentrated” to the “common detriment” (Article 39(c)).
However, in the pre-emergency era, in the aftermath of the Court striking down the government’s socialist policies such as the Bank Nationalisation Case, Article 31C was amended by The Constitution (Twenty-fifth) Amendment Act, 1971.It said: “…no law giving effect to the policy of the State towards securing the principles specified in clause (b) or clause (c) of article 39 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, article 19 or article 31; 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”.
This amendment was challenged in the seminal Kesavananda Bharati case (1973) in which 13 judges held by a narrow 7-6 majority that the Constitution has a “basic structure” that cannot be altered, even by a constitutional amendment.
Again, in 1976, Parliament enacted The Constitution (Forty-second) Amendment Act, which expanded the protection under Article 31C to “all or any of the principles laid down in Part IV of the Constitution”, under clause 4. As a result, every single directive principle (Articles 36-51) was protected from challenges under Articles 14 and 19 of the Constitution.
This too, was struck down by the Supreme Court in 1980 judgment in Minerva Mills v. Union of India.
In 2024, the question before the SC was whether the SC between 1978-1980 struck down Article 31C as a whole, or did it restore the post-Kesavananda Bharati position wherein Articles 39(b) and (c) remained protected. The SC has said that the post-Kesavananda position is restored.
The second question before the Court was whether the government can acquire and redistribute privately owned properties if they are deemed as “material resources of the community” — as mentioned in Article 39(b) of the Constitution.
Falling under Part IV of the Constitution titled “Directive Principles of State Policy” (DPSP), Article 39(b) places an obligation on the state to create policy towards securing “the ownership and control of the material resources of the community are so distributed as best to subserve the common good”. DPSP are meant to be guiding principles for the enactment of laws, but are not directly enforceable in any court of law.
Since 1977, the apex court has weighed in on the interpretation of Article 39(b) on multiple occasions — most notably, in State of Karnataka v Shri Ranganatha Reddy (1977). This case saw a seven-judge Bench, by a 4:3 majority, holding that privately owned resources did not fall within the ambit of “material resources of the community”. However, it was Justice Krishna Iyer’s minority opinion which would become influential in years to come.
Article 39(b) was later affirmed by a five-judge Bench in Sanjeev Coke Manufacturing Company v Bharat Coking Coal (1983), where the court upheld central legislation that nationalised coal mines and their respective coke oven plants relying on what Justice Iyer had ruled. It held that the provision “takes within its stride the transformation of wealth from private-ownership into public ownership and is not confined to that which is already public-owned”.
The SC has now effectively held against Justice Iyer’s position. While a fine print of the judgement is awaited, the majority opinion has taken the view that not every property owned by an individual can be ‘material resource of community’.
