Nature of private property

Property Owners Association v State of Maharashtra

The Supreme Court will decide if private property can be considered “material resources of the community” under Article 39(b) of the Constitution

Pending

Parties

Appellants: Property Owners Association

Lawyers: Gagrat and Co.

Respondents: State of Maharashtra

Lawyers: Attorney General R. Venkataramani, Solicitor General Tushar Mehta, Advocate M. Chirag

Case Details

Case Number: W.P.(C) No. 934/1992

Next Hearing:

Last Updated: March 30, 2024

Key Issues

1

Does “material resources of the community” under Article 39(b) of the Constitution include private property?

Case Description

In 1986, the State government of Maharashtra amended the Maharashtra Housing and Area Development Act, 1976 (MHADA) to insert Chapter VIII-A. This chapter allowed the Mumbai Building Repair and Reconstruction Board (MBRRB) to acquire cessed properties for restoration purposes with the consent of with the consent of 70 percent of the residents. The amendment also introduced Section 1A which stated that the Act aims to implement principles enshrined in Article 39(b) of the Indian Constitution. This provision provides that the state shall direct its policies towards securing that “the ownership and control of the material resources of the community are so distributed as best to subserve the common good” 

Challenges to the amendment

The Property Owners’ Association (POA), a body representing over 20,000 landowners in Mumbai, filed this lawsuit challenging the amendments to the MHDA. They claimed that it conferred untethered power on MBRRB to forcibly take possession of residential complexes.

On 13 December 1991, the Bombay High Court dismissed the petitions. The Court reasoned that the government was duty bound to provide shelter to the common people. Further, they also held that Article 31C of the Constitution, bars any challenges on the grounds of Articles 14 or 19, if the statute has been enacted in furtherance of Article 39(b).

The POA then moved the Supreme Court. The case was first heard by a three-judge bench. However, on 1 May 1996, the bench referred the case to a five-judge bench for adjudication. 

Conflicting judgements

On 21 March 2001, a five bench of the Supreme Court referred the case to be decided by a larger bench of at least seven judges. The reason—conflicting judgement in two prior seven-judge bench decisions of the court. 

In State of Karnataka v Ranganatha Reddy (1978), a bench led by former Chief Justice M.H. Beg in a 4:3 majority held that privately owned resources did not fall within the ambit of “material resources of the community.” The majority opinion authored by Justice Krishna Iyer however had observed that both public and private fell within the ambit of “material resources of the community” under Article 39(b). 

Subsequently, in Sanjeev Coke Manufacturing Company v Bharat Coking Coal Ltd. (1983) a five-judge bench decision authored by Justice Chinaapa Reddy affirmed Justice Iyer’s minority view in Ranganatha Reddy. 

On 19 February 2002, a seven-judge bench led by Chief Justice S.P. Barucha referred the case to a nine-judge bench. The bench found issue with the decision in Mafatlal Industries Ltd. v Union of India (1996). In Mafatlal, a nine-judge bench of the Supreme Court led by CJI A.M.Ahmadi had held that “material resources of the community” included privately owned resources and were not confined to public resources only.

The CJI Barucha-led bench held that the view in Mafatlal had to be reconsidered. “We have some difficulty in sharing the broad view that material resources of the community under Article 39(b) covers what is privately owned,” they said. 

2019 amendments to the MHDA

While the challenges lay pending, the state of Maharashtra amended the law again on 28 August 2019. This time, they made time-bound re-development projects a mandate. Per the new amendment, if landowners failed to restore property within a deadline, the state government would take over the property. While the state has maintained that this was a welfare legislation, landowners assert a malicious intent on behalf of the state, of taking away property and giving it to wealthy contractors. 

A batch of petitions challenging the amendments of the MHADA are tagged together and currently lie pending before the Supreme Court.

Case listed for hearing 

On 7 October 2023, the Court announced that it would list pending nine-judge bench cases for hearing. The case is scheduled to be heard by a bench led by CJI D.Y. Chandrachud in April 2024.