Nature of private property | Day 4: “Material resource of the community” cannot be restricted to what is owned by the State, argue respondents

Nature of private property

Judges: D.Y. Chandrachud CJI, Hrishikesh Roy J, B.V. Nagarathna J, Sudhanshu Dhulia J, J.B. Pardiwala J, Manoj Misra J, Rajesh Bindal J, S.C. Sharma J, A.G. Masih J

On 30 April 2024, a nine-judge Constitution Bench led by Chief Justice D.Y. Chandrachud resumed hearings in the case to determine whether private property falls under the ambit of Article 39(b), a Directive Principle of State Policy. Article 39(b) obligates the state to direct its policy towards securing that “the ownership and control of the material resources of the community are so distributed as best to subserve the common good.” 

The present case first reached the Supreme Court 32 years ago, when a bunch of property owners in Mumbai challenged the insertion of Chapter VIII-A to the Maharashtra Housing and Area Development Act, 1976 (MHADA) in 1986. This Chapter allows the Mumbai Building Repair and Reconstruction Board (MBRRB) to acquire certain “cessed properties” for restoration purposes with the consent of 70 percent of the residents. Section 1A, that was introduced through the amendment, declared that  the Act aims to implement the principles enshrined in Article 39(b).

The case also involves the question of the constitutional position of Article 31C . Introduced through the 25th Constitutional Amendment, Article 31C was a saving clause that did two things. First, it declared that laws enacted to advance Article 39(b) and (c) cannot be void on the grounds that they are inconsistent with Articles 14 and 19. Second, it saved such a law from being challenged in court on the ground that it did not “give effect” to the two DPSPs. 

In Kesavananda Bharati v State of Kerala (1973), a 13-judge bench struck down the second part. Then came the 42nd Constitutional Amendment which widened the scope of Article 31C to the whole of Chapter IV instead of just Articles 39 (b) and (c). A five-judge bench in Minerva Mills v Union of India (1980) struck down this Amendment. The question before the Court is whether the narrower Article 31C continues to exist in the Constitution. 

Yesterday, the Bench heard submissions from Solicitor General Tushar Mehta and Senior Advocates Harish Salve and Rakesh Dwivedi for the respondents’ side.


Article 39(b), a Directive Principles of State Policy, obligates the State to ensure the distribution of “material resources of the community” to “subserve the common good.”

In State of Karnataka v Shri Ranganatha Reddy (1977), five judges of the Supreme Court debated whether privately owned resources fell under the ambit of “material resources of the community.” A minority opinion by Justice Krishna Iyer stated that private property fell in the ambit of Article 39(b).

Five years later, a five-judge bench in Sanjeev Coke Manufacturing Company v Bharat Coking Coal Ltdled by Justice Chinnappa Reddy, adopted Justice Iyer’s minority view. In 1997, a nine-judge bench in Mafatlal Industries Ltd. v Union of India, followed the Sanjeev Coke precedent.

The challenges of the present case arose in 1986, when the Maharashtra government amended the Maharashtra Housing and Area Development Act, 1976 (MHADA) to insert Chapter VIII-A and Section 1A. Chapter VIII-A allowed the Mumbai Building Repair and Reconstruction Board to acquire certain “cessed properties”—primarily old, dilapidated buildings in Mumbai—for restoration purposes with the consent of 70 percent of the residents. Section 1A declared that the Act was aimed at implementing the principles enshrined in Article 39(b).

In December 1991, the Bombay High Court dismissed the petitions challenging Chapter VIII-A. The Court reasoned that the government was only trying to protect “the shelter of the occupiers in the old dilapidated buildings and saving life and property by preventing collapse of such buildings.” Further, the High Court 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 petitioners moved the Supreme Court.

As the case lay pending, in 2019, subsequent amendments to the MHADA precipitated a new set of challenges. According to the new amendment, if landowners failed to restore property within a deadline, the state government could take over the property. The Property Owners Association (POA) alleged malicious intent on the state government.

The dispute, which first reached the Supreme Court in 1992, now has several petitions tagged to it. After several references to larger benches, a nine-judge bench started hearing the case on merits on 24 April 2024. This bench is also hearing arguments on the constitutional position of Article 31C.

Can an individual be considered “community”?

Opening the arguments for the day, Mehta first submitted that “each word [in Article 39(b)] is pregnant with the meaning of making a welfare state.” To this end, he contended that “material resources of the community” could include public as well as private property if they subserve the “common good.” 

To buttress his argument, Mehta also pointed out that if the framers wanted to include only public or government-owned properties, they would not have used the phrase “ownership” and “control” as the state already had ownership and control over properties it owned. 

Mehta then stated that the phrase “community” in the Article further established that it was intended to further the “welfare state.” At this junction, Justice B.V. Nagarathna asked whether ownership of the ‘community’ also includes ownership of an individual. Mehta responded that “It would have to be so read based on the facts and circumstances of the case.” 

Mehta gave the following example: If a mineral was discovered in a house, it would be a private resource, not communal property. In this context, the phrases “material” and “common good” gain importance. If the private resource was a material resource which can be distributed for the common good, then it could be a resource of the community. 

The Chief interjected to add that what Mehta’s example showed was that there may be instances “where in respect of private property there is a community interest.” For example, if uranium was found on a private property, there is a community interest. Therefore, the Chief said, there cannot be a “strict dichotomy between private and public.” At the same time, the Chief also cautioned that the formulation by Justice Krishna Iyer in State of Karnataka v Shri Ranganatha Reddy (1977) was “too extreme.” That formulation, the Chief elaborated, suggested that since the community comprises individuals, “material resources would also mean the resources of the individual.” 

“We can’t ascribe to 39(b) and (c), at least in today’s times, a definition which gives expression to an unbridled agenda of Communism or Marxism…that’s not our Constitution today, we still protect private property,” the Chief remarked. 

The Chief also pointed out that in the last hearing, Attorney General R. Venkataramani had relied on Justice Iyer’s interpretation. Agreeing with the Chief, Mehta submitted that he was not arguing contrary to the Attorney General, but that the “nuances of his submissions were different.” 

When the Chief asked whether they could note down that Mehta was not in support of either of the extreme propositions, Mehta replied in the affirmative. 

It’s all about ‘context’

In this discussion about private property of the community, Justice Sudhanshu Dhulia stated that the “context” was important. He agreed with the Chief that the Constitution had evolved over time. Therefore, he pointed out that it was important to define what “community” was. He gave the example of a rare herb found on the private land of a tribal community. In this context, he asked whether “community” meant just that tribe or the whole nation. 

The Chief Justice said three questions emerged while discussing the “context” of community: 

  1. What is the nature of the ”resource” and its characteristics? 
  2. What is the impact of the “resource” on the general well-being of the community?
  3. What is the consequence of the concentration of the ownership and control of the common good? 

Mehta responded that “community” had to be an “identifiable class.” It could not mean the whole nation.

‘The framers had a futuristic understanding of economic democracy’

Mehta also took the Bench through several Constituent Assembly Debates to highlight that the understanding of “material resources” was never meant to remain static or adopt a wholly socialist approach. He referred to an amendment proposed by Prof K.T. Shah to insert the following in the clause iii of the draft Article 31 which later became Article 39(c): 

“That there shall be no private monopolies in any form of production of material wealth, social service, or public utilities nor shall there by any concentration of means of production and distribution in private hands and the State shall adopt every means to prevent such concentration or accumulation.”

In response, Dr B.R. Amedkar had responded that it was “necessary” to accept this amendment as socialist principles were already embodied in Part IV of the Constitution.

In Part IV, Mehta submitted that the framers used “flexible” and “futuristic language” so that it could evolve with time. The goal of this section was to secure “economic democracy.” In this context, Dr Ambedkar had remarked that they had “deliberately introduced” language that was not “fixed and rigid” in the Directive Principles.

Earlier, citing other debates, Mehta argued that while the slogans back then were to “municipalise utilities and nationalise industries and means of production,” focus had now shifted to privatisation and free trade. 

During his submissions, Dwivedi also echoed Mehta’s view that the makers intended for the language of Part IV to be amenable to the “needs of future generations.” 

The observations of the Court in Mafatlal are binding

In Mafatlal Industries v Union of India, 1996, a nine-judge Constitution Bench had adopted the observations made in Sanjeev Coke Manufacturing Company v Bharat Coking Coal Ltd. (1982) on the nature of private property. In Sanjeev Coke, a seven-judge bench had adopted Justice Krishna Iyer’s view in Ranganatha Reddy that private property fell under the ambit of Article 39(b). 

In the previous hearings, the petitioners and the Bench had remarked that the observations about private property made in Mafatlal were not the ratio or the binding part of the judgement. 

Today, Mehta argued that Mafatlal was indeed binding and not just a passing remark because observations about it were made in the majority, concurring as well as dissenting opinions. 

‘Preservation’ is part of Article 39(b)

On Day 1 of the hearings, the petitioners had submitted that Article 39(b) only contemplated distribution of material resources and not their “preservation” as the MHADA sought to do. Mehta responded to that contention by submitting that securing and preserving a resource for distribution in service of the common good was part of the purpose of Article 39(b). 

In support of the argument, he relied on principles of environmental law evolved in cases such as T.N. Godavarman v Union of India (1996). He submitted that we had borrowed resources from future generations and that their preservation was part of the common good. 

In the afternoon, Dwivedi echoed Mehta’s argument that ‘distribution’ was a wider term. He drew attention to State Of Tamil Nadu v L. Abu Kavur Bai (1983), where Court had noted that “it will not be correct to construe the word ‘distribution’ in a purely literal sense so as to mean only division of a particular kind or to particular persons. The words- apportionment, allotment, allocation, classification, clearly fall within the broad sweep of the word ‘distribution’.”

‘Ownership and control’ means ‘ownership or control’ 

Mehta also submitted that though Article 31C used the phrase ownership and control, it could be interpreted to mean and/or control. This was because the State might not always want ownership of a material resource. Sometimes, like in the case of private mines, it could leave the ownership to the private entity and merely gain control over it to “subserve the common good.”

Dwivedi also adopted Mehta’s argument and stated that this view was adopted in Jindal Stainless Ltd. v State of Haryana (2016). The Court had observed “‘And’ is always conjunctive in the sense that it always signals the cumulation of the possibilities listed before and after the ‘and’…”

‘There cannot be a constitutional vacuum’

Mehta then shifted the focus of his arguments to Article 31C. First, he submitted that the Constitution was different from regular statutes and therefore had to be interpreted differently. While a gap or vacuum was not too damaging in a statute, a vacuum in the Constitution would have grave ramifications. 

If the petitioner’s argument of Article 31C being inoperative in its entirety after Minerva Mills was to be accepted, Mehta said that it would lead to a situation where there is a vacuum in the Constitution, impacting several laws.

Further, Mehta urged that with the 42nd Amendment, Parliament never intended to delete or obliterate 39(b) and (c) from the scope of Article 31C. In Mehta’s telling, the Court found fault with this wide expansion and not the protection accorded to clauses (b) and (c) of Article 39. Therefore, when the Court struck down the amendment, the expanded protection lapsed but the original or pre-amended Article 31C remained on the books. 

In support of his arguments, Mehta said that the Court’s decision in Waman Rao v Union of India (1980) made it clear that the narrow version of Article 31C survived. Given that Justice V.Y. Chandrachud was part of the bench in all three cases, Mehta pointed out that it would be logical to assume that there was a commonality in the reasoning in relation to Article 31C. 

Lastly, Mehta also responded to an argument by the petitioners that after the 42nd Amendment substituted the words of Article 31C with new ones, the original Article 31C ceased to exist altogether. He argued that the same amendment also added the words ‘socialist’ and ‘secular’ to the preamble of the Constitution. If the petitioners’ argument was to be accepted, had the Court struck this down also, the Constitution would have been rendered preamble-less. When the Bench pointed out that the words ‘socialist’ and ‘secular’ were in the form of additions and not substitutions, Mehta responded that the Amendment Act used the words ‘substitution’ to describe itself.

In his brief submissions, Salve also asserted that the Article 31C that existed before the 42nd Amendment was inserted in the Constitution. He also submitted that rules of statutory interpretation could not be applied to the Constitution. 

“Material resource” must have a wide interpretation

During his arguments, Dwivedi contended that the phrase “material resource” had to be given a wide interpretation to include all resources that produce income. The only property excluded, Dwivedi said, was “that private property which is not productive, which is not a resource but is purely for personal benefit.” It should be left to Parliament to decide which should be touched or which could be excluded, he said, as it was too enormous a task for the Court to take on. 

Justice Dhulia interjected to point out that it had to be determined to what extent private property could be considered a “material resource,” especially if it could be extended to intangible property. Dwivedi reiterated that this had to be left to the Parliament to decide. For instance, if a person found a cure for cancer, he pointed out that though it was the person’s intellectual property, Parliament could state that it was a “material resource” as the “country needs it.”

‘Resources of the “community” need not be merely of the State’

The discussion then moved to the word “community” under Article 39(b). The Chief stated that ‘community’ did not “necessarily mean the entirety of the population of the country or the state.” Rather, it would be “relative to the resource.” Dwivedi submitted that simply put, even two people could form a “community.”

Justice Dhulia reiterated that the phrase was dependent on the context of the resource. For instance, in UP, there was a law which gave fishermen primary access to a pond. In his sense, the community was the fishing community. However, in another context, it could be the whole country, he added. 

Dwivedi, while agreeing with Justice Dhulia, added that in many instances, the locality of the resource and its size determined the nature of the community. Adapting Justice Dhulia’s example, Dwivedi said fishermen from other states would not be part of the ‘community’ if the pond was in West Bengal. If the petitioners’ argument was accepted, Dwivedi said, a pond on a private property would not serve anyone. “Nobody was born with lands and ponds and rivers…ultimately, private property was a concept of law,” he said. 

Further, Dwivedi urged that there was no rule that resources of the community had to be State-owned. To illustrate, he stated that it could not be said that Air India was a community resource when it was state-owned and stopped being one when Tata took over. 

The Chief added that “community” was formed when people engaged with each other—this kind of interaction could be “social, professional, religious or economic.” 

‘An amendment that violates Basic Structure never existed in the Constitution’

On the question of Article 31C, Diwedi adopted Mehta’s submissions on the connection between the decisions in Minerva Mills and Waman Rao. Like Mehta, he also argued that after Minerva, the post-Kesavananda Bharati version of Article 31C survived. 

He further added that according to Article 368, any amendment to the Constitution by way of “addition, variation or repeal” had to be done in accordance with the “procedure laid down” in the Article. This ‘procedure’, Dwivedi said, had to follow the dictum of Kesavananda Bharati which stated that the Basic Structure of the Constitution could not be amended. An amendment that contrevened this dictum was void from the get-go and therefore never entered the Constitution, he said. 

In this backdrop, he suggested that since Minerva Mills struck down the relevant section of the 42nd Constitutional Amendment for being violative of the Basic Structure, the effect was that it never existed or entered into force in the first place. Therefore, the version of the Article that existed prior to the amendment continued to be in force. 

Dwivedi will continue arguments on 1 May 2024.