PRIVATE PROPERTY
1. Context
A nine-judge Constitution Bench of the Supreme Court, in a majority judgment (8:1), held that not every private resource can be considered a ‘material resource of the community’ to be used by the government to serve the ‘common good.’ This overturns the earlier interpretation formed in 1977 that has been followed by the Supreme Court till 1997.
2. What is Private Property?
Private property refers to assets or resources owned by individuals or entities (such as corporations) rather than by the state or community. This concept forms a fundamental part of many economic and legal systems, where the right to private property is protected by law. It includes physical possessions, real estate, intellectual property, and other forms of wealth that an individual or group can own, control, transfer, or sell at their discretion.
Key Characteristics of Private Property
- Exclusive Ownership: The owner has the exclusive right to use, manage, and enjoy the property. This includes the right to prevent others from accessing or using it.
- Transferability: Owners can transfer or sell their property to others. This characteristic supports market transactions and economic exchange.
- Economic Utility: Private property encourages economic growth by allowing owners to invest in and improve their assets, thereby contributing to the production of goods and services.
- Legal Protection: Private property rights are generally protected by law, and governments enforce these rights through the legal system. This protection can include restitution if property is stolen or wrongfully taken.
3. Constitutional Provisions
- Part IV of the Indian Constitution includes the Directive Principles of State Policy (DPSP), which outline guidelines for the government to promote social and economic justice within society. Article 39(b) in this section emphasizes that material resources should be managed and distributed in a way that serves the common good.
- Originally, the Constitution enshrined the right to property as a Fundamental Right under Articles 19(1)(f) and 31, including compensation for property acquisition.
- However, with the 25th Amendment in 1971, Article 31C was introduced, allowing laws aimed at implementing principles under Articles 39(b) and (c) to override Fundamental Rights, including the right to property.
- In the landmark Kesavananda Bharati case (1973), a 13-judge Supreme Court Bench upheld Article 31C but subjected it to judicial review.
- Later, in 1978, the right to property was removed from Fundamental Rights and reclassified as a constitutional right under Article 300A.
- Currently, any government acquisition of private property must serve a public purpose and provide adequate compensation
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Earlier Judgements
In the 1977 case of State of Karnataka v. Ranganatha Reddy, a seven-judge Supreme Court Bench upheld Karnataka’s law nationalizing private bus transport. Justice V.R. Krishna Iyer, in a separate commentary, offered an interpretation of "material resources of the community" under Article 39(b), expanding it to include not just natural resources but all national wealth, covering both private and public assets necessary for material needs. This interpretation, though a minority opinion, later influenced the 1982 Sanjeev Coke Manufacturing Company v. Bharat Coking Coal Limited case, which upheld the nationalization of coke oven plants, and was again referenced in the 1996 Mafatlal Industries Ltd. v. Union of India case
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4. Current Judgements
- In Property Owners’ Association v. State of Maharashtra, a seven-judge Supreme Court Bench referred the issue of interpreting Article 39(b) to a nine-judge Bench.
- The current majority view, supported by seven judges including the Chief Justice, rejected Justice V.R. Krishna Iyer’s interpretation that any private property could be used by the state as a "material resource" for the "common good," considering this as an inflexible economic stance promoting state control over private resources. The majority noted that India has transitioned from a socialist model to a liberalized, market-driven economy.
- According to the majority, for a resource to qualify as a "material resource of the community," it must indeed be both "material" and "of the community."
- Key factors such as the public trust doctrine, the resource's intrinsic qualities, its significance for community welfare, its scarcity, and the implications of its private ownership would determine if it falls within Article 39(b).
- This means certain resources like forests, water bodies, spectrum, and minerals might be covered, even if privately owned.
- However, not every private asset qualifies just because it meets material needs. Additionally, "distribute" in Article 39(b) has a broad interpretation, allowing both state acquisition and distribution to private parties when it serves the common good.
- Justice Nagarathna partially agreed with the majority, suggesting that all private resources, except "personal effects" such as clothing and jewelry, could potentially be designated as "material resources of the community" through nationalization or acquisition.
- Justice Sudhanshu Dhulia dissented, supporting Justice Iyer’s interpretation from Ranganatha Reddy and asserting that it is the legislature's role to determine how resources should be managed for the public good
5. Way Forward
Our economy has shifted from a socialist framework to a liberalized, market-driven model. This transition has led to substantial economic growth, helping lift many out of extreme poverty. Nonetheless, rising inequality remains a concern that requires attention. This judgment aims to safeguard small farms and forest lands owned by marginalized groups from forcible government acquisitions. Equally essential is the sustainable management and distribution of public resources under government authority
Source: The Hindu
