A landmark 7:2 verdict of the Supreme Court recently held that not all private properties form part of material resources of the community that can be taken over for distribution to serve the common good under the Constitution. It provided a definitive interpretation of Article 39(b), which specifies “that the ownership and control of the material resources of the community are so distributed as best to subserve the common good”. The verdict settled an important legal question on the rights of individuals against the state’s authority to control resources for public good.
The then Chief Justice D Y Chandrachud authored the 193-page majority judgment on behalf of six others - justices Hrishikesh Roy, J B Pardiwala, Manoj Misra, Rajesh Bindal, Satish Chandra Sharma and Augustine George Masih. Justice B V Nagarathna partially concurred with the majority view while Justice Sudhanshu Dhulia dissented.
The majority judgment did not agree with the erudite view expressed by Justice V R Krishna Iyer in the case of Ranganatha Reddy of 1978 wherein he held that private properties could be regarded as community resources. The words Justice Chandrachud chose to critique Justice Krishna Iyer’s verdict were quite loaded, drawing rather sharp criticisms from justices Nagarathna and Dhulia. More about that later.
Justice Chandrachud faulted the minority judgment authored by Justice Krishna Iyer in Ranganatha Reddy being relied upon by a subsequent coequal bench in the Sanjeev Coke case, though the majority verdict in the Reddy case specifically said “it must not be construed that it agreed with the observations of Justice Krishna Iyer.” He described it as a lapse of judicial discipline.
Whether or not a resource falls within the ambit of material resource of the community would depend on its nature, characteristics, impact on the well-being of the community, scarcity and the consequence of such a resource being concentrated in the hands of private players, he wrote.
For example, forests, ponds, fragile areas, wetlands, resource-bearing lands, spectrum, airwaves, natural gas, mines and minerals, which are scarce and finite, may sometimes be within private control. However, as the community has a vital interest in the retention of the character of these resources, they fall within the ambit of the expression “material resources of the community”.
The Public Trust Doctrine provides that the state holds all natural resources as a trustee of the public and must deal with them in a manner consistent with the nature of the trust. But that does not mean that the state cannot at times distribute such resources to private entities, like it does in spectrum allocation.
The material resources of the community refers to either natural resources (which are those of the nation) or those which in a large sense can be said to be of the community, even though they may be in private hands. The materiality of a privately owned resource and whether it has a community element cannot be determined in a vacuum and must be identified on a case-by-case basis, the verdict said.
The case arose from a challenge to a decades-old Maharashtra Act to take over dilapidated buildings in Mumbai for repairs and reconstruction as they had become unsafe. It underwent a few amendments following legal challenges. Subsequently, Section 1A was inserted invoking Article 39(B) to give legal teeth to the process. Section 1A read, “It is hereby declared that this Act is for giving effect to the policy of the State towards securing the principle specified in Clause (b) of Article 39 of the Constitution of India and the execution of the proposals, plans or projects therefor and the acquisition therefor of the lands and buildings and transferring the lands, buildings or tenements therein to the needy persons and the co-operative societies of occupiers of such lands or buildings.” Yet, the law got entangled in a legal labyrinth it is yet to fully extricate itself from.
Justice Krishna Iyer held in the Ranganatha Reddy case that the purpose behind Article 39(B) is to allow for the “restructuring of the social order”, adding each word in the provision contributes to this “social mission”. He warned against a “ritualistic construction” of the provision which would weaken this purpose. He observed: “The key word is “distribute” and the genius of the Article, if we may say so, cannot but be given full play as it fulfils the basic purpose of restructuring the economic order. Each word in the article has a strategic role and the whole article a social mission. It embraces the entire material resources of the community. Its task is to distribute such resources. Its goal is so to undertake distribution as best to subserve the common good. It re-organizes by such distribution the ownership and control.”
In Article 39(b) and (c), Justice Krishna Iyer saw a futuristic mandate to the state with a message of transformation of the economic and social order.
Dissecting Justice Krishna Iyer’s judgment, Justice Chandrachud observed that declaring that Article 39(b) includes the distribution of all private resources amounts to endorsing a particular economic ideology and structure. The judgment in Ranganatha Reddy, which was followed in Sanjeev Coke and Bhim Singhji, was influenced by a particular school of economic thought, he said. In Ranganatha Reddy, Justice Krishna Iyer observed that Article 39(b) constitutes “a directive to the State with a deliberate design to dismantle feudal and capitalist citadels of property”. In Bhim Singhji, he cited Karl Marx in his judgment to observe that taking over large conglomerations of land is necessary to make Article 39 a “constitutional reality”.
In the same decision, Justice Krishna Iyer also expressed his view about the nature of the economy and observed that our economy was “in the transitional stage … undergoing a fabian transformation”.
“In essence, the interpretation of Article 39(b) adopted in these judgements is rooted in a particular economic ideology and the belief that an economic structure which prioritises the acquisition of private property by the state is beneficial for the nation,” Justice Chandrachud pointed out.
He posited it against Dr B R Ambedkar’s opinion that if the Constitution laid down a particular form of economic and social organisation, it would amount to taking away the liberty of people to decide the social organisation in which they wish to live. “He (Dr Ambedkar) opined on several occasions that economic democracy is not tied to one economic structure, such as socialism or capitalism, but to the aspiration for a ‘welfare state’. Thus, the role of this Court is not to lay down economic policy, but to facilitate this intent of the framers to lay down the foundation for an ‘economic democracy’,” Justice Chandrachud said.
The doctrinal error in the Krishna Iyer approach, Justice Chandrachud concluded, was in postulating a rigid economic theory, which advocates for greater state control over private resources, as the exclusive basis for constitutional governance.
Disservice to Constitution
Justice Nagarathna in her verdict quoted Justice Chandrachud as observing that “The Krishna Iyer doctrine does a disservice to the broad and flexible spirit of the Constitution.” But that sentence is not there in the final order. She lit into him for the phrase, ‘disservice to the broad and flexible spirit of the Constitution’, saying a subsequent paradigm shift in the economic policies of the nation cannot result in labelling former judges that way.
Justice Dhulia, in his dissent judgment, recorded his strong disapproval to the remarks made by Justice Chandrachud on the Krishna Iyer Doctrine. The criticism is harsh and could have been avoided, he said. “It is a doctrine which has illuminated our path in dark times. The long body of their judgment (including Justice O Chinnappa Reddy) is not just a reflection of their perspicacious intellect but more importantly of their empathy for the people, as human being was at the centre of their judicial philosophy,” Justice Dhulia wrote.
Justice Nagarathna, who is set to take over as India’s first woman CJI in 2027, said, “It is a matter of concern as to how the judicial brethren of posterity view the judgments of the brethren of the past, possibly by losing sight of the times in which the latter discharged their duties and the socio-economic policies that were pursued by the State and formed part of the constitutional culture during those times.
“Merely because of the paradigm shift in the economic policies of the State to globalisation and liberalisation and privatisation, compendiously called the ‘Reforms of 1991’, which continue to do so till date, cannot result in branding the judges of this Court of the yesteryears ‘as doing a disservice to the Constitution,” she said. Such observations imply that luminaries like Krishna Iyer may not have been true to their oath of office as a judge of the Supreme Court, she rued.
Because of a paradigm shift in the economy, “akin to Perestroika in the erstwhile USSR, in my view, neither the judgments of the previous decades nor the judges who decided those cases can be said to have done a disservice to the Constitution,” Justice Nagarathna said.
Picking on the CJI’s choice of phrase is rare in the Supreme Court. But Justice Chandrachud gracefully took the rebuke on the chin, as he has gone on record to say his shoulders are broad enough to accept all criticism.
Who stands where
Justice V R Krishna Iyer
The taking over of large conglomerations of vacant land is a national necessity if Article 39 is a constitutional reality. “Law can never be higher than the economic order and the cultural development of society brought to pass by that economic order.” (Marx). Therefore, if Article 38 of the Constitution which speaks of a social order informed by economic justice, is to materialise, law must respond effectively and rise to the needs of the transformation envisioned by the founding fathers
Justice D Y Chandrachud
This Court must not tread into the domain of economic policy, or endorse a particular economic ideology while undertaking constitutional interpretation. To hold that the term “distribution” cannot encompass the vesting of a private resource would amount to falling into the same error as the Justice Krishna Iyer doctrine, i.e. to lay down a preference of economic and social policy.
Justice B V Nagarathna
Merely because of the paradigm shift in the economic policies of the State to globalisation and liberalisation and privatisation, compendiously called the “Reforms of 1991”, which continue to do so till date, cannot result in branding the judges of this Court of the yesteryear “as doing a disservice to the Constitution”.
