Decisive judgement
The recent verdict by a nine-judge Constitution Bench of the Supreme Court has taken a decisive stance on the interpretation of property rights in India. It will reshape how individual ownership is viewed against community welfare in the country’s legislative framework. The Bench, led by Chief Justice of India DY Chandrachud, has ruled that not all private property can be deemed “material resources of the community” as referenced in Article 39(b) of the Indian Constitution. Article 39b, which is a part of the Directive Principles of State Policy (DPSP), outlines that resources should be distributed to serve the common good. However, the verdict in discussion has shed light on the limits on the government’s power to acquire and redistribute private property. In past cases, such as State of Karnataka vs Shri Ranganatha Reddy in 1977, Justice Krishna Iyer had argued that privately held resources could indeed qualify as community resources if their acquisition served the greater good of society. His minority opinion influenced later rulings. However, the new ruling overturns that interpretation.
Also central to this case is Article 31C, which was introduced in 1971 through the Constitution (Twenty-fifth Amendment) to shield certain laws from being challenged on the grounds of violating fundamental rights. Article 31C originally protected laws enacted to ensure that wealth and resources were used in ways that benefited society as a whole, and prevented their concentration in private hands. The provision faced challenges over the years, including in the landmark Kesavananda Bharati case, which introduced the doctrine of ‘basic structure’ barring Parliament from altering fundamental aspects of the Constitution, even through amendments. Since then, judicial interpretations have questioned whether Article 31C still exists in a modified form or not at all. The recent judgment reaffirms that Article 31C remains, but only as it was shaped by the Kesavananda decision, which limits its scope to Articles 39(b) and (c).
The Supreme Court has drawn clear boundaries by explaining that the application of Article 39(b) is not an all-encompassing right of the government to seize or redistribute privately owned resources. Chief Justice Chandrachud asserted that the nature and context of a property must be considered when assessing its community value. According to the ruling, the court must consider factors such as scarcity, public impact, and the potential consequences of concentration in private hands before labelling any resource as communal. This approach deviates from a rigid ideological stance on state control over private property, opting instead for a pragmatic, case-by-case method that is in sync with India’s mixed economy.
Justice BV Nagarathna, in her concurring opinion, underscored that while some private resources might serve the public good, items of personal use and small-scale assets should generally be excluded from state acquisition. Justice Sudhanshu Dhulia, dissenting, warned that the ruling’s limitations on what can be considered communal resources might restrict the state’s ability to bridge economic inequalities. In his view, maintaining the scope of community resources aligns with the spirit of the Constitution's Directive Principles.
This verdict can also be said to maintain a balance between individual rights and the broader social welfare objectives. By choosing to rule against an expansive interpretation, the Supreme Court has signaled that India’s economy has evolved beyond a state-centred approach to wealth redistribution. Eminent domain laws already allow for necessary land acquisitions, and the government can still justify resource redistribution by adhering to fair and transparent policies.
