# Property Owners Association & Ors v. State of Maharashtra & Ors

- **Citation:** 2024 INSC 835
- **Court:** Supreme Court of India
- **Decided:** 2024-11-05
- **Case number:** Civil Appeal No. 1012 of 2002
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/property-owners-association-ors-v-state-of-maharashtra-ors-37786
- **Pages:** 324

## Headnote

(1)
Whether Article 31C (as upheld in Kesavananda Bharati
case) survives in the Constitution after amendment to the
provision by the forty-second amendment was struck down
by the Supreme Court in Minerva Mills case; and
(2)
Whether the interpretation of Article 39(b) adopted by Justice
Krishna Iyer in Ranganatha Reddy case and followed in
Sanjeev Coke case must be reconsidered; and whether
the phrase 'material resources of the community' in Article
39(b) can be interpreted to include resources that are owned
privately and not by the State.
Headnotes†
A.
Constitution of India - Art.31C - Art.31C (as upheld
in Kesavananda Bharati case), if survives in the
Constitution after amendment to the provision by
the forty-second amendment was struck down by the
Supreme Court in Minerva Mills case - Held: Article 31C
to the extent that it was upheld in Kesavananda Bharati
case remains in force.
Held [per Dr Dhananjaya Y Chandrachud, CJI (for himself
and for Hrishikesh Roy, J. B. Pardiwala, Manoj Misra,
* Author
Ed. Note: There are three judgments. One judgment was pronounced by Hon'ble Dr Justice Dhananjaya
Y Chandrachud, Chief Justice of India, on behalf of himself, Hon'ble Mr Justice Hrishikesh Roy, Hon'ble Mr
Justice J B Pardiwala, Hon'ble Mr Justice Manoj Misra, Hon'ble Mr Justice Rajesh Bindal, Hon'ble Mr Justice
Satish Chandra Sharma and Hon'ble Mr Justice Augustine George Masih. Hon'ble Mrs Justice B V Nagarathna
and Hon'ble Mr Justice Sudhanshu Dhulia pronounced their separate judgments.
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Rajesh Bindal, Satish Chandra Sharma, and Augustine
George Masih, JJ.)]:
1.
Article 31C to the extent that it was upheld in Kesavananda
Bharati v Union of India remains in force. [Para 229(a)]
2.1. By Section 4 of the Forty-Second Amendment, the words
"the principles specified in clause (b) or clause (c) of
Article 39" in Article 31-C were replaced with the words "all
or any of the principles laid down in Part IV." This is a case
of substitution. Section 4 of the Forty-Second Amendment
was subsequently struck down in Minerva Mills. Where an
amendment substituting certain text with certain alternate
text is invalidated, the effect is that the unamended text
continues in force. This is because the legislative intent
of repeal and enactment in such cases is composite and
cannot be separated. To give effect to the repeal and not
the enactment would result in an outcome which does not
correlate with legislative intent, and, as Justice Hidayatullah
noted in Laxmibai "leave the original section truncated"
resulting in absurd outcomes. This would in effect invalidate
the original, valid and constitutional provision despite there
being no constitutional fault with it nor the legislature intending
to repeal it. Thus, the presumption would be that after Minerva
Mills, the unamended Article 31-C would continue in force.
Indeed, it is evident that cases such as Bhim Singh and
Sanjeev Coke proceeded on this presumption. [Para 69]
2.2. The only plausible exception to this presumption would be
if it could be demonstrated that Parliament, when enacting
the Forty-Second Amendment would have repealed the
words "the principles specified in clause (b) or clause (c) of
Article 39" independent of their enactment of the words "all
or any of the principles laid down in Part IV." In this case, no
reference to the broader legislative proceedings or external
aids is necessary to arrive at the inference that Parliament
would not have independently repealed these words. The
text of the amendment adopted by Parliament itself makes
it abundantly clear that there was no independent intention
to repeal. The effect of Section 4 of the Forty-Second
Amendment was to expand the scope of the immunity provided
by Article 31-C to legislation. Under the unamended Article
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Property Owners Association & Ors. v.
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31-C, immunity was only provided to legislation if it gave
effect to the Directive P

## Text

_Characters 0–39,973 of 733,133. This is a partial read: ask again with offset=39973 for what follows._

[2024] 11 S.C.R. 1 : 2024 INSC 835
Property Owners Association & Ors.
v.
State of Maharashtra & Ors.
(Civil Appeal No. 1012 of 2002)
05 November 2024
[Dr Dhananjaya Y Chandrachud,* CJI, Hrishikesh Roy,
B.V. Nagarathna,* Sudhanshu Dhulia,* J.B. Pardiwala,
Manoj Misra, Rajesh Bindal, Satish Chandra Sharma
and Augustine George Masih, JJ.]
Issue for Consideration
(1)
Whether Article 31C (as upheld in Kesavananda Bharati
case) survives in the Constitution after amendment to the
provision by the forty-second amendment was struck down
by the Supreme Court in Minerva Mills case; and
(2)
Whether the interpretation of Article 39(b) adopted by Justice
Krishna Iyer in Ranganatha Reddy case and followed in
Sanjeev Coke case must be reconsidered; and whether
the phrase 'material resources of the community' in Article
39(b) can be interpreted to include resources that are owned
privately and not by the State.
Headnotes†
A.
Constitution of India - Art.31C - Art.31C (as upheld
in Kesavananda Bharati case), if survives in the
Constitution after amendment to the provision by
the forty-second amendment was struck down by the
Supreme Court in Minerva Mills case - Held: Article 31C
to the extent that it was upheld in Kesavananda Bharati
case remains in force.
Held [per Dr Dhananjaya Y Chandrachud, CJI (for himself
and for Hrishikesh Roy, J. B. Pardiwala, Manoj Misra,
* Author
Ed. Note: There are three judgments. One judgment was pronounced by Hon'ble Dr Justice Dhananjaya
Y Chandrachud, Chief Justice of India, on behalf of himself, Hon'ble Mr Justice Hrishikesh Roy, Hon'ble Mr
Justice J B Pardiwala, Hon'ble Mr Justice Manoj Misra, Hon'ble Mr Justice Rajesh Bindal, Hon'ble Mr Justice
Satish Chandra Sharma and Hon'ble Mr Justice Augustine George Masih. Hon'ble Mrs Justice B V Nagarathna
and Hon'ble Mr Justice Sudhanshu Dhulia pronounced their separate judgments.
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Rajesh Bindal, Satish Chandra Sharma, and Augustine
George Masih, JJ.)]:
1.
Article 31C to the extent that it was upheld in Kesavananda
Bharati v Union of India remains in force. [Para 229(a)]
2.1. By Section 4 of the Forty-Second Amendment, the words
"the principles specified in clause (b) or clause (c) of
Article 39" in Article 31-C were replaced with the words "all
or any of the principles laid down in Part IV." This is a case
of substitution. Section 4 of the Forty-Second Amendment
was subsequently struck down in Minerva Mills. Where an
amendment substituting certain text with certain alternate
text is invalidated, the effect is that the unamended text
continues in force. This is because the legislative intent
of repeal and enactment in such cases is composite and
cannot be separated. To give effect to the repeal and not
the enactment would result in an outcome which does not
correlate with legislative intent, and, as Justice Hidayatullah
noted in Laxmibai "leave the original section truncated"
resulting in absurd outcomes. This would in effect invalidate
the original, valid and constitutional provision despite there
being no constitutional fault with it nor the legislature intending
to repeal it. Thus, the presumption would be that after Minerva
Mills, the unamended Article 31-C would continue in force.
Indeed, it is evident that cases such as Bhim Singh and
Sanjeev Coke proceeded on this presumption. [Para 69]
2.2. The only plausible exception to this presumption would be
if it could be demonstrated that Parliament, when enacting
the Forty-Second Amendment would have repealed the
words "the principles specified in clause (b) or clause (c) of
Article 39" independent of their enactment of the words "all
or any of the principles laid down in Part IV." In this case, no
reference to the broader legislative proceedings or external
aids is necessary to arrive at the inference that Parliament
would not have independently repealed these words. The
text of the amendment adopted by Parliament itself makes
it abundantly clear that there was no independent intention
to repeal. The effect of Section 4 of the Forty-Second
Amendment was to expand the scope of the immunity provided
by Article 31-C to legislation. Under the unamended Article
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Property Owners Association & Ors. v.
State of Maharashtra & Ors.
31-C, immunity was only provided to legislation if it gave
effect to the Directive Principles found in clause (b) or clause
(c) of Article 39. However, by Section 4 of the Forty-Second
Amendment, the scope of this immunity was significantly
expanded to immunise legislations that gave effect to any or
all of the Directive Principles in Part IV of the Constitution.
Thus, the intention of Parliament in enacting Section 4 of the
constitutional amendment was undoubtedly to expand the
scope of the immunity granted by Article 31-C. This being
the situation, it cannot be suggested that Parliament would
have repealed the words "the principles specified in clause (b)
or clause (c) of article 39" if it did not simultaneously enact
the broader language expanding the scope of Article 31-C.
If Parliament had independently repealed these words, it
would have not just reduced the scope of Article 31-C but
altogether eliminated the effect of the Article. Without the
words "the principles specified in clause (b) or clause (c) of
article 39" in Article 31- C, the provision would have been
rendered nugatory. Given Parliament's manifest intention
to expand the scope of Article 31-C by Section 4 of the
Forty-Second Amendment, it is not plausible to hold that
Parliament independently sought to repeal the words "the
principles specified in clause (b) or clause (c) of article 39"
from Article 31-C. Therefore, it is evident that the legislative
intent of Parliament when adopting Section 4 of the FortySecond Amendment was composite, to repeal and enact (i.e.,
to substitute) through one single action. This Court cannot
therefore disaggregate the steps of repeal and enactment
and give effect to the repeal even after invalidating the
enactment. After Minerva Mills invalidated Section 4 of the
Forty-Second Amendment, the composite legal effect of
Section 4 is nullified and the unamended text of Article 31-C
stands revived. [Para 70]
2.3. The text of the unamended Article 31-C was challenged,
and the first part of the Article was upheld by thirteenjudge decision in Kesavananda Bharati while the latter
half of the Article was invalidated. Therefore, the first half
of unamended Article 31-C, which is the subject matter of
the present controversy, was undoubtedly constitutional as
held by the thirteen-judge decision in Kesavananda Bharati
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and further by the Constitution Bench in Waman Rao.
Therefore, if as a consequence of the decision in Minerva
Mills, the unamended Article 31-C continues in force, there
can be no question of any unconstitutionality or adverse
consequences associated with the unamended Article 31-C.
Indeed, both the Constitution Benches in Minerva Mills and
Waman Rao expressly noted that the first half of Article 31-C
had been held to be constitutional in Kesavananda Bharati.
Further, given that the unamended Article 31-C has been
given effect for over four decades as demonstrated by the
decisions in Bhim Singh and Sanjeev Coke, no argument
can be raised concerning any legal or practical difficulties
with the operation of the unamended Article 31-C. Given
these findings, the unamended Article 31-C continues in
force. [Para 71]
2.4. An amendment can be invalidated when it modifies,
obliterates, or adds some feature to the Constitution that
is anathema to the principles that emerge upon a structural
reading of the constitutional text. If an amendment is
invalidated because it causes a drastic deviation from the
principles that govern our constitutional democracy, the
consequences must be a return to those principles. Article
31-C represented a delicate balance between the goals of
Part IV and the rights of Part III of the Constitution. This
balance was held to not impermissibly deviate from the
core principles that govern our Constitution by the thirteen
judges' decision of this Court in Kesavananda Bharati.
However, in Minerva Mills, Section 4 of the Forty-Second
Amendment was held to violate these core principles that
form the basic structure. The logical result of such a ruling
is that the constitutional text must return to within the fold of
the basic structure. To give effect to the repealing portions
of Section 4 of the Forty-Second Amendment while also
invalidating the enactment would not result in a return to
a constitutional text that is in conformity with the basic
structure. Rather, it would result in a novel third outcome,
the constitutionality of which would be uncertain, untested,
and may itself violate the basic structure. Therefore, the
consequence of invalidating Section 4 of the Forty-Second
Amendment must be that the unamended Article 31-C is
revived. [Para 72]
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Held (per B.V. Nagarathna, J.) (Concurring): I am in complete
accord with the reasoning that, in the absence of any indication that
Parliament intended a "repeal without substitution," the original text
of Article 31C as it existed before the Constitution (Forty Second)
Amendment Act, 1976 must be reinstated following the invalidation
of the said amendment. In Minerva Mills case, when the amendment
was struck down for deviating from constitutional principles, the
logical consequence that must follow the declaration of invalidity
of the amendment is to revert to those original principles which the
amendment deviated from. This is by giving effect to Article 31C,
to the extent it was upheld in Kesavananda Bharati case. This
represents a return to the Constitution's original text, aligning with
the basic structure of the Constitution. Consequently, invalidating
Section 4 of the Forty-Second Amendment should automatically
result in the restoration of the unamended Article 31C. I agree
that Article 31C to the extent that it was upheld in Kesavananda
Bharati remains in force. [Paras 3 and 23(a)]
Held (per Sudhanshu Dhulia, J.) (Concurring): The unamended
Article 31-C to the extent held valid in Kesavananda Bharati
survives. [Para 2]
B 1. Constitution of India - Art.39(b) - Whether the phrase
'material resources of the community' used in Art.39(b)
includes privately owned resources - Held [per Dr
Dhananjaya Y Chandrachud, CJI (for himself and for
Hrishikesh Roy, J. B. Pardiwala, Manoj Misra, Rajesh
Bindal, Satish Chandra Sharma, and Augustine George
Masih, JJ.)] (Majority opinion) - Theoretically, the
answer is yes, the phrase may include privately owned
resources - However, one cannot subscribe to the
expansive view adopted in the minority judgement
authored by Justice Krishna Iyer in Ranganatha Reddy
case and subsequently relied upon in Sanjeev Coke
case - Not every resource owned by an individual can
be considered a 'material resource of the community'
merely because it meets the qualifier of 'material needs' -
The inquiry about whether the resource in question falls
within the ambit of Art. 39(b) must be context-specific and
subject to a non-exhaustive list of factors such as the
nature of the resource and its characteristics; the impact
of the resource on the well-being of the community;
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the scarcity of the resource; and the consequences
of such a resource being concentrated in the hands
of private players - Public Trust Doctrine evolved by
Supreme Court may also help identify resources which
fall within the ambit of the phrase "material resource of
the community" - Held (per B.V. Nagarathna, J.) - Yes,
privately owned resources except "personal effects" can
come within the scope and ambit of the phrase "material
resources of the community" provided such resources
get transformed as "resources of the community" - Held
(per Sudhanshu Dhulia, J.) (Dissenting) - The view of the
learned Chief Justice in this case (i.e. the majority opinon)
ultimately holds that not all privately owned resources
are "material resources of the community" - Not only
this it further limits the hands of the legislature to a nonexhaustive list of factors to determine which resources
can be considered as "material resources" - There is no
need for this pre-emptive determination - The definition
of "material resources of the community" was purposely
kept in generalized and broad-based terms - Privately
owned resources are part of "material resources of the
community" - Provisions in Article 39(b) & (c) have to
be read in light of Art.38 of the Constitution - Once one
does that, one cannot but give an expansive meaning
to the phrase "material resources of the community".
B 2. Constitution of India - Art.39(b) - Interpretation of -
Whether interpretation of Article 39(b) adopted by Justice
Krishna Iyer in Ranganatha Reddy case and followed in
Sanjeev Coke case must be reconsidered - Held [per
Dr Dhananjaya Y Chandrachud, CJI (for himself and for
Hrishikesh Roy, J. B. Pardiwala, Manoj Misra, Rajesh
Bindal, Satish Chandra Sharma, and Augustine George
Masih, JJ.)] (Majority opinion) - The majority judgment
in Ranganatha Reddy expressly distanced itself from the
observations made by Justice Krishna Iyer (speaking on
behalf of the minority of judges) on the interpretation of
Art.39(b) - Thus, a coequal bench of this Court in Sanjeev
Coke erred by relying on the minority opinion - Held (per
B.V. Nagarathna, J.) (Dissenting) - On merits it cannot
be held that Sanjeev Coke violated judicial discipline -
One cannot lose sight of the fact that in Sanjeev Coke
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Property Owners Association & Ors. v.
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this Court did not decide the case only on the basis of
the opinion of Krishna Iyer, J. in Ranganatha Reddy -
Therefore, Sanjeev Coke is good law insofar as on the
merits of the matter is concerned - Held (per Sudhanshu
Dhulia, J.) (Dissenting) - In Sanjeev Coke, when the
Five Judge Constitution Bench unanimously followed
the minority judgement in Ranganatha Reddy, it did not
violate judicial discipline of not following the majority,
since in Sanjeev Coke, the Five Judges did not go against
the law laid down by the majority Judges in Ranganatha
Reddy but only adopted the logic of the Three Judges on
which the majority of Four Judges were silent - The five
learned judges in Sanjeev Coke relied upon the decision
of the minority judges in Ranganath Reddy as they were
persuaded by the logic and the interpretation given by
Justice Krishna Iyer to the phrase "material resources of
the community" - The broad and inclusive meaning given
to the expression "material resources of the community"
by Justice Krishna Iyer and Justice O. Chinnappa Reddy
in Ranganatha Reddy and Sanjeev Coke respectively has
lost none of its relevance, or jurisprudential value, nor
has it lost the audience which appreciates these values.
B 3. Constitution of India - Art.39(b) - Phrase 'material
resources of the community' in Article 39(b) - Meaning
of - Single-sentence observation in Mafatlal case to the
effect that 'material resources of the community' include
privately owned resources - Effect of - Held [per Dr
Dhananjaya Y Chandrachud, CJI (for himself and for
Hrishikesh Roy, J. B. Pardiwala, Manoj Misra, Rajesh Bindal,
Satish Chandra Sharma, and Augustine George Masih,
JJ.)] (Majority opinion) - The single-sentence observation
in Mafatlal case to the effect that 'material resources of
the community' include privately owned resources is not
part of the ratio decidendi of the judgement - Thus, it is
not binding on the Court - Held (per Sudhanshu Dhulia, J.)
(Concurring) - The majority opinion in Mafatlal constitutes
obiter dicta and is not binding on this Court - Held (per
B.V. Nagarathna, J.) - The single-sentence observation
in Mafatlal to the effect that "material resources of the
community" include privately owned resources may be
obiter but has great persuasive value.
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B 4. Words and Phrases - Term 'distribution' - Meaning and
connotation of - Distribution by the State - Whether
acquisition of private resources falls within the ambit
of the term 'distribution - Held [per Dr Dhananjaya
Y Chandrachud, CJI (for himself and for Hrishikesh
Roy, J. B. Pardiwala, Manoj Misra, Rajesh Bindal, Satish
Chandra Sharma, and Augustine George Masih, JJ.)] -
The term 'distribution' has a wide connotation - The
various forms of distribution which can be adopted by
the State cannot be exhaustively detailed - However, it
may include the vesting of the concerned resources in
the State or nationalisation - In the specific case, the
Court must determine whether the distribution 'subserves
the common good' - Held (per B.V. Nagarathna, J.): The
term "distribution" has no doubt a wide connotation
but vesting in the State of a particular privately owned
"material resource" or nationalisation of the same are
only conditions precedent to distribution which have to
comply with Article 300A of the Constitution - Further,
a resource which has vested in the State or a resource
retained by a State on nationalisation could be utilised
by the State to subserve the common good as a material
resource of the community - The public trust doctrine
would apply to such material resources - Alternatively,
the State could decide to actually distribute the "material
resources of the community" to eligible and deserving
persons by way of assignment, lease, allotment, grant,
etc. - The same would also come within the scope
and ambit of the expression "distribution" - Held (per
Sudhanshu Dhulia, J.): It is for the legislature to decide
how the ownership and control of material resources is to
be distributed in order to subserve common good - How
to control and distribute a material resource is also the
task of the Legislature, but while doing so what has to
be seen is that the control and ownership of the material
resource be so distributed that it subserves common
good of the community - If it does not, then such a
legislation can be struck down as the Judiciary is not
deprived of its powers of judicial review.
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Property Owners Association & Ors. v.
State of Maharashtra & Ors.
Held [per Dr Dhananjaya Y Chandrachud, CJI (for himself
and for Hrishikesh Roy, J. B. Pardiwala, Manoj Misra, Rajesh
Bindal, Satish Chandra Sharma, and Augustine George Masih,
JJ.)] (Majority Opinion):
1.
Article 39(b) is not a source of legislative power. The inclusion
or exclusion of 'privately-owned resources' from the ambit of
the provision does not impact the power of the legislature to
enact laws to acquire such resources. The power to acquire
private resources, in certain situations, continues to be
traceable to other provisions in the Constitution, including
the sovereign power of eminent domain. [Para 203]
2.
The interpretation of Article 39(b), i.e. that all private property
is covered within the ambit of Article 39(b) is inconsistent with
the text of Article 39(b). [Para 204]
3.
There is a distinction between holding that private property may
form part of the phrase 'material resources of the community'
and holding that all private property falls within the net of the
phrase. It is here that the judgment by Justice Krishna Iyer
in Ranganatha Reddy, and the consequent observations in
Sanjeev Coke fall into error. Justice Krishna Iyer cast the
net wide, holding that all resources which meet "material
needs" are covered by the phrase and any attempts by the
government to nationalise these resources would be within the
scope of Article 39(b). He clarified that not only the "means
of production" but also the goods so produced fall within the
net of the provision. The illustration which he provides in
Ranganatha Reddy indicates the unworkable nature of such
an interpretation. Justice Krishna Iyer observed, by way of an
illustration, that not only do factories which produce cars fall
within the net of Article 39(b), but even privately owned cars
are covered by the provision. Similarly, even in Sanjeev Coke,
the net is cast wide and this Court observed that "all things
capable of producing wealth of the community" fall within
the ambit of the phrase. In both decisions, it was observed
that all resources of the individual are consequentially the
resources of the community. [Para 209]
4.
An interpretation of Article 39(b) which places all private
property within the net of the phrase "material resources of
the community" only satisfies one of the three requirements
of the phrase, i.e. that the goods in question must be a
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'resource'. However, it ignores the qualifiers that they must
be "material" and "of the community". The use of the words
"material" and "community" are not meaningless superfluities.
One cannot adopt a construction of the provision which
renders these terms otiose. The words "of the community"
must be understood as distinct from the "individual". If
Article 39(b) was meant to include all resources owned by
an individual, it would state the "ownership and control of
resources is so distributed as best to subserve the common
good". Similarly, if the provision were to exclude privately
owned resources, it would state "ownership and control of
resources of the state ..." instead of its current phrasing. The
use of the word "of the community" rather than "of the state"
indicates a specific intention to include some privately owned
resources. [Para 211]
5.
In essence, the text of the provision indicates that not all
privately owned resources fall within the ambit of the phrase.
However, privately owned resources are not excluded as
a class and some private resources may be covered. The
resource in question must meet the two qualifiers, i.e. it must
be a "material" resource and it must be "of the community".
[Para 212]
6.
To declare that Article 39(b) includes the distribution of all
private resources amounts to endorsing a particular economic
ideology and structure for our economy. Justice Krishna
Iyer's judgment in Ranganatha Reddy, which was followed
inter alia in Sanjeev Coke and Bhim Singhji, was influenced
by a particular school of economic thought. 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. [Para 213]
7.
The Constitution was framed in broad terms to allow
succeeding governments to experiment with and adopt a
structure for economic governance which would subserve the
policies for which it owes accountability to the electorate. 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'. The doctrinal error in the Krishna
Iyer approach was, postulating a rigid economic theory, which
[2024] 11 S.C.R.
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Property Owners Association & Ors. v.
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advocates for greater state control over private resources,
as the exclusive basis for constitutional governance. The
foresighted vision of our framers to establish an 'economic
democracy' and trust the wisdom of the elected government,
has been the backbone of the highgrowth rate of India's
economy, making it one of the fastest-growing economies in
the world. To scuttle this constitutional vision by imposing a
single economic theory, which views the acquisition of private
property by the state as the ultimate goal, would undermine
the very fabric and principles of our constitutional framework.
[Paras 214, 215 and 216]
8.
The right to property was included in the Constitution as
a fundamental right under Articles 19(1)(f) and Article 31.
Subsequently, the right to property was deleted from Part III of
the Constitution by the Constitution (Forty-fourth Amendment)
Act, 1978. However, a modified version was inserted and the
right to property continues to be constitutionally protected
under Article 300A. Although no longer in the nature of a
fundamental right, the provision has been characterised
as a constitutional and human right. The interpretation of
Article 39(b), both as a pre-cursor to the protection of Article
31C and as an aspirational Directive Principle, cannot run
counter to the constitutional recognition of private property.
To hold that all private property is covered by the phrase
"material resources of the community" and that the ultimate
aim is state control of private resources would be incompatible
with the constitutional protection. [Paras 217, 220]
9.
A construction of Article 39(b) which provides that all private
property is included within the ambit of Article 39(b) is incorrect.
However, there is no bar on the inclusion of private property as
a class and if a privately owned resource meets the qualifiers
of being a 'material resource' and 'of the community', it may
fall within the net of the provision. "Material resources of the
community" refers to either natural resources (which are those
of the nation) or those resources which in a large sense can
be said to be of community, even though they may be in
private hands. [Para 221]
10. There are various forms of resources, which may be privately
owned, and inherently have a bearing on ecology and/or
the well-being of the community. Such resources fall within
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the net of Article 39(b). To illustrate, non-exhaustively, there
may exist private ownership of forests, ponds, fragile areas,
wetlands and resource-bearing lands. Similarly, resources
like 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". [Para 223]
11.
The majority judgment in Ranganatha Reddy expressly
distanced itself from the observations made by Justice
Krishna Iyer (speaking on behalf of the minority of judges)
on the interpretation of Article 39(b). Thus, a coequal bench
of this Court in Sanjeev Coke erred by relying on the minority
opinion. [Para 229(b)]
12. The single-sentence observation in Mafatlal to the effect that
'material resources of the community' include privately owned
resources is not part of the ratio decidendi of the judgement.
Thus, it is not binding on this Court. [Para 229(c)]
13. On the limited question of whether the acquisition of private
resources falls within the ambit of the term 'distribution',
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. The
term 'distribution' has a wide connotation. The various forms
of distribution which can be adopted by the state cannot be
exhaustively detailed. However, it may include the vesting
of the concerned resources in the state or nationalisation.
In the specific case, the Court must determine whether the
distribution 'subserves the common good'. [Paras 227, 228
and 229(f)]
14. The direct question referred to this bench is whether the
phrase 'material resources of the community' used in Article
39(b) includes privately owned resources. Theoretically,
the answer is yes, the phrase may include privately owned
resources. However, this Court is unable to subscribe to the
expansive view adopted in the minority judgement authored by
Justice Krishna Iyer in Ranganatha Reddy and subsequently
relied on by this Court in Sanjeev Coke. Not every resource
[2024] 11 S.C.R.
13
Property Owners Association & Ors. v.
State of Maharashtra & Ors.
owned by an individual can be considered a 'material resource
of the community' merely because it meets the qualifier of
'material needs'. [Para 229(d)]
15. The inquiry about whether the resource in question falls
within the ambit of Article 39(b) must be context-specific
and subject to a non-exhaustive list of factors such as the
nature of the resource and its characteristics; the impact of
the resource on the well-being of the community; the scarcity
of the resource; and the consequences of such a resource
being concentrated in the hands of private players. The Public
Trust Doctrine evolved by this Court may also help identify
resources which fall within the ambit of the phrase "material
resource of the community". [Para 229(e)]
Held (per B.V. Nagarathna, J.):
1.
Articles 37, 38 and 39 of the Constitution of India which are
part of the Directive Principles of State Policy have to be
interpreted by bearing in mind the changing economic policies
of the State and not in a rigid watertight compartment. The
flexibility of interpretation is having regard to the dynamic
changes in the Indian socio-economic policies meant for the
welfare and progress of the people of India. An interpretation
of the aforesaid Articles or for that matter any other provision
of the Constitution must be viewed in the historical backdrop
of the period in which the interpretation was made by this
Court during the course of adjudication. Any interpretation
which was found to be sound and in consonance with the
socio-economic policy of the State during a particular period
of time, cannot be critiqued at a later point of time in any
quarter including by a court of law merely because the
socio- economic policies of the State have changed over a
period of time or there is a paradigm shift in the thinking and
policies of the State. [Para 22(I)]
2.
Articles 37 and 38 of the Constitution have to be borne in
mind by the Courts while considering the validity of any
policy or statute which intend to further any of the Directive
Principles of State Policy. [Para 22(II)]
3.
Article 39(b) has to be read in the context of Article 39(c).
Articles 39(b) and (c) supplement and complement each other
and cannot be construed in silos. Article 39(b) comprises of
14
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following five components, namely, (i) ownership and control;
(ii) material resources; (iii) of the community; (iv) so distributed;
and (v) as best to subserve the common good.
(i)
The expression "ownership and control" must be given
its widest connotation in the context of "distribution
of" "material resources of the community" "as best to
subserve the common good".
(ii)
"Material resources" can in the first instance be divided
into two basic categories, namely, (i) State owned
resources which belong to the State which are essentially
material resources of the community, held in public
trust by the State; and (ii) privately owned resources.
However, the expression "material resources" does
not include "personal effects" or "personal belonging"
of individuals, such as, clothing or apparel, household
articles, personal jewellery and other articles of daily
use belonging to the individuals of a household and
which are intimate and personal in nature and use.
Excluding "personal effects", all other privately owned
resources can be construed as "material resources".
Thus, all resources whether they are public resources
or privately owned resources which come within the
scope and ambit of the expression "material resources"
as stated above are included within that expression.
(iii) "Material resources" which are privately owned could be
transformed as "material resources of the community",
inter alia, in the following five ways: a. by nationalisation,
which could be either by way of an enactment made
by the Parliament or a State legislature or in any other
manner in accordance with law; b. by acquisition,
which could be by way of a special enactment made
by the Parliament or a State legislature having regard
to Entry 42 - List III of the Seventh Schedule of the
Constitution. Alternatively, the acquisition could be
made under the extant Parliamentary or State laws
dealing with acquisition; c. by operation of law, such as
vesting of private resources in the State, which could
be by virtue of statutes dealing with land reforms, land
tenures, abolition of inams, village offices or any other
law where by operation of law there would be vesting
[2024] 11 S.C.R.
15
Property Owners Association & Ors. v.
State of Maharashtra & Ors.
of private material resources in the State or in any
other manner in accordance with law; d. by purchase
of the material resource from private persons by the
State, its agencies and instrumentalities in the manner
known to law; and e. by the private owner of the
material resource converting his "material resources"
as a "material resource of the community" by donation,
gift, creation of an endowment or a public trust or in
any other manner known to law.
(iv) In (a) to (d) above, the provision of Article 300A which is
a constitutional right to property has to be complied with.
(v)
The "material resources of the community" have to be
"distributed as best to subserve the common good".
Distribution could be in two ways: Firstly, by the
State itself retaining the material resource for a public
purpose and/or for public use; and Secondly, privately
owned material resources when converted as "material
resources of the community" can be distributed to eligible
and deserving persons either by way of auction, grant,
assignment, allocation, lease, sale or any other mode of
transfer known to law either temporarily or permanently
depending upon the mode adopted and unconditionally
or with conditions depending upon:(a) nature of the
resource and its inherent characteristics; (b) the impact
of the resource on the well-being of the community;
(c) the scarcity of the resource; (d) the consequences
of such a resource being concentrated in the hands of
the private owners; and (e) any such factors.
(vi) The expression "common good" would, inter alia, mean
that the distribution of the "ownership and control of
material resources of the community" would not lead
to concentration of the wealth and means of production
in the hands of few which is a Directive Principle in
clause (c) of Article 39. Thus, "distribution of material
resources of the community" cannot violate the Directive
Principle in clause (c) of Article 39 of the Constitution.
[Para 22(III)]
4.
The majority judgment of this Court in Ranganatha Reddy
and the judgment in Abu Kavur Bai relate to nationalisation of
contract carriages/State carriages which were upheld by this
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Court. Nationalisation of coking coal mines was upheld by this
Court in Sanjeev Coke. In Bhim Singhji and Basantibai, certain
provisions of the Urban Land Ceiling Act and the provisions of
MHADA respectively were upheld on the touchstone of Article
39(b) of the Constitution. The nine-Judge Bench in Mafatlal
referred to the judgments of this Court in Ranganatha Reddy,
Abu Kavur Bai etc. in the context of the submission made
before, i.e., the Indian Constitution envisages Justice - social,
economic and political, to all citizens of India as enshrined
in the preamble. This was by way of an obiter but having
persuasive value. [Para 22(IV)]
5.
The majority judgment in Ranganatha Reddy, no doubt, did
not concur with the views of Krishna Iyer, J. expressed in his
separate opinion. However, in Sanjeev Coke the Constitution
Bench of five-Judges independently upheld what was
challenged in the said case, namely, the Coking Coal Mines
(Nationalisation) Act, 1972 and while doing so in paragraphs
19 and 20 referred to the observations of Krishna Iyer, J. in
Ranganatha Reddy and made certain observations on the
majority judgment in Minerva Mills. However, A.N. Sen, J.
did not express any opinion on the judgment of this Court
in Minerva Mills. What is significant is that the judgments in
Ranganatha Reddy as well as in Sanjeev Coke upheld the
respective Nationalisation Acts. Therefore, on merits it cannot
be held that Sanjeev Coke violated judicial discipline. One
cannot lose sight of the fact that in Sanjeev Coke this Court
did not decide the case only on the basis of the opinion of
Krishna Iyer, J. in Ranganatha Reddy but on merits on the
validity of the Nationalisation Act. Therefore, Sanjeev Coke is
good law insofar as on the merits of the matter is concerned.
[Para 23(b)]
6.
The single-sentence observation in Mafatlal to the effect
that "material resources of the community" include privately
owned resources may be obiter but has great persuasive
value. [Para 23(c)]
7.
Yes, privately owned resources except "personal effects" as
explained above can come within the scope and ambit of the
phrase "material resources of the community" provided such
resources get transformed as "resources of the community"
as discussed by me above. [Para 23(d)]
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Property Owners Association & Ors. v.
State of Maharashtra & Ors.
8.
I agree that the inquiry about whether the resource in question
falls within the ambit of Article 39(b) must be context-specific
and subject to a non-exhaustive list of factors such as the
nature of the resource and its characteristics; the impact of
the resource on the well-being of the community; the scarcity
of the resource; and the consequences of such a resource
being concentrated in the hands of private players. The Public
Trust Doctrine evolved by this Court may also help identify
resources which fall within the ambit of the phrase "material
resource of the community". In addition, I also reiterate my
discussion and conclusion on how privately owned material
resource can be transformed as "material resource of the
community". [Para 23(e)]
9.
The term "distribution" has no doubt a wide connotation but
vesting in the State of a particular privately owned "material
resource" or nationalisation of the same are only conditions
precedent to distribution which have to comply with Article
300A of the Constitution. Further, a resource which has
vested in the State or a resource retained by a State on
nationalisation could be utilised by the State to subserve the
common good as a material resource of the community. The
public trust doctrine would apply to such material resources.
Alternatively, the State could decide to actually distribute the
"material resources of the community" to eligible and deserving
persons by way of assignment, lease, allotment, grant, etc.
The same would also come within the scope and ambit of
the expression "distribution". [Para 23(f)]
10. The judgments of this Court in Ranganatha Reddy, Sanjeev
Coke, Abu Kavur Bai and Basantibai correctly decided the
issues that fell for consideration and do not call for any
interference on the merits of the matters. The observations of
the Judges in those decisions would not call for any critique
in the present times. Neither is it justified nor warranted.
[Para 24]
Held (per Sudhanshu Dhulia, J.):
1.
The question as to whether privately owned resources are
part of "material resources of the community" as used in
Article 39(b), has been answered by the learned Chief Justice
as "yes", "the phrase may include privately owned resources",
but not in the expansive manner as held by the three learned
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judges in State of Karnataka v. Ranganatha Reddy and
later in Sanjeev Coke Mfg. Co. v. Bharat Coking Coal Ltd.
The judgment further sets limits on what could be "material
resources of the community". I am unable to accept the above
proposition as this view ultimately holds that not all privately
owned resources are "material resources of the community".
Not only this it further limits the hands of the legislature to a
non-exhaustive list of factors to determine which resources
can be considered as "material resources".