Private property not outside state purview: Supreme Court

New Delhi Property held in private hands cannot be said to be outside the State’s control in the interest of sustainable development and intergenerational equity, a nine-judge Constitution bench of the Supreme Court observed on Wednesday, while examining a legal question whether the State can exercise control over privately held property or resources under the term “material resources of the community” in Article 39(b) of the Constitution.

A bench headed by chief justice of India (CJI) Dhananjaya Y Chandrachud said that Article 39(b) has been crafted with certain constitutional ethos intended to bring about social transformation, and to say that the moment the property is private Article 39(b) ends and has no application, will be “dangerous”.

The court was deciding this issue in a batch of cases from Maharashtra where property owners of Mumbai opposed the introduction of Chapter VIII-A to the Maharashtra Housing and Area Development Act (MHADA) in 1986 by which the State could acquire cessed properties constructed prior to September 1, 1940 which were now in dilapidated condition. The state relied on Article 39(b) and cited common good and public interest to justify its action. However, the owners disputed claiming material resources of community cannot include private property.

To be sure, the case is about acquiring property under certain defined conditions, and has nothing to do with redistribution.

Explaining the ethos guiding the constitution makers, the CJI said, “Our directive principles have their foundation in Gandhian ethos that regards something held in trust... and that concept of trust is in the context of sustainable development.” Identifying the two extremes presented by capitalist model, which treats property as individualistic, and the socialist model, which holds property to belong to community, he added, “Our concept of property has undergone a subtle change from either the extreme capitalistic perspective or the extreme socialist perspective.”

The bench, also comprising justices Hrishikesh Roy, BV Nagarathna, Sudhanshu Dhulia, JB Pardiwala, Manoj Misra, Rajesh Bindal, SC Sharma and Augustine George Masih, gave the example of taking over Zamindari land that was the basis for enacting the agriculture ceiling laws. “We hold the property in trust for succeeding generations in the family. But broadly we also hold the property in trust for the wider community as today’s generation holds it in trust of future society. That is what we call intergenerational equity,” said the bench.

The court said that it would be “extreme” and “dangerous” to suggest that any private property, be it airwaves, mines, water or forest will cease to be material resources of a community if it is privately held, as “societal demands, welfare of society and need for redistribution considering the social perspective” also play a role in deciding property as a material resource depending on the context, as such resources can be private mines, forests, airwaves or water.

The bench further agreed to expand the scope of consideration to examine a related question of whether the MHADA Act will enjoy the “safe harbour” protection under Article 31C of Constitution. This provision protected the validity of the enactment based on Article 39(b) and (c) on the grounds of violation of Articles 14 (right to equality) or 19 (rights regarding freedom of speech, etc) of the Constitution.

Although this issue was not referred to the nine judges, the bench felt that an area of uncertainty remained as Article 31C was later amended in 1978 to include laws based on all Directive Principles of State Policy. This amendment was struck down in July 1980 by a five-judge bench in the Minerva Mills case. The court agreed to examine whether Article 31C protection will still be available, as the unamended Article 31C (prior to Minerva Mill ruling) was upheld by a 13-judge bench in the landmark Kesavananda Bharati case of 1973.

Solicitor general (SG) Tushar Mehta, who represented the Maharashtra government, urged the court not to go into this issue as no challenge as been raised on this issue and neither has the order referring the matter to the nine-judge bench made any reference to it. He said that Minerva Mills only struck down the amendment extending it to all Directive Principles and the original form of 31C, which protected laws based on Article 39(b) remained intact in the Constitution. Mehta added that a later five-judge bench decision of the top court in Waman Rao (1980) upheld the unamended Article 31C, that Kesavananda Bharti had already upheld.

The court, however, questioned the “reluctance” on part of the state to get the law settled. “Why is there reluctance on your part? This will have to go back to a seven-judge bench as the court struck down the amended Article 31C on the ground that it violates basic structure. Instead of leaving it for future benches to decide, here a nine-judge bench can give finality as leaving things in constitutional uncertainty is not good for the nation,” it said.

Attorney general (AG) R Venkataramani told the court that even without the protection of Article 31C, the issue of Article 39(b) can be examined on the ground of public interest. Both the SG and the AG referred to the judgment of the top court in 2015 striking down national judicial appointments commission (NJAC), a law brought by Parliament to replace collegium. While striking down the new law, the court revived the earlier collegium system, Mehta said.

The bench sought to distinguish the NJAC judgment from Minerva Mills case, and said, “With NJAC gone, the judges realised there would be a constitutional breakdown if there is no procedure to appoint judges. But here with 31C gone, any law enjoying 31C protection does not become invalid as the state has to justify that it does not violate fundamental rights under Articles 14 and 19.”

The court permitted the petitioners to revive their arguments on Article 31C, and heard senior advocate Zal Andhyarujina, appearing for some of the owners, on this issue. As his arguments remained inconclusive, the matter was kept for Thursday to further examine this aspect.

The case before the court will impact close to 19,000 properties in Mumbai as under VIII-A of MHADA, the State had to only pay 100 times the monthly rent of the property to become owner. While enacting the law, the State cited Article 39(b) in the interest of preserving the dilapidated building or for carrying out structural reforms for reconstructing the building. However, the property owners opposed the state’s move by arguing that Article 39(b) cannot envisage private-owned property under the definition “material resources” and also challenged the Maharashtra Rent Control Act for fixing abysmally low standard rent.