Not all private properties can be termed material resources of community for State takeover: Supreme Court

The Supreme Court on Tuesday held that all private properties can't be considered "material resources of the community" under Article 39(b) of the Constitution to be taken over by State to subserve the "common good" [Property Owners Association and ors v State of Maharashtra and Ors].

A Bench of Chief Justice of India (CJI) DY Chandrachud with Justices Hrishikesh Roy, BV Nagarathna, Sudhanshu Dhulia, JB Pardiwala, Manoj Misra, Rajesh Bindal, Satish Chandra Sharma and Augustine George Masih passed the ruling.

A total of three judgments have been written in the case - with CJI Chandrachud leading the majority with six other judges, Justice Nagarathna partially concurring with the majority and Justice Dhulia dissenting.

"We hold that not every resource owned by an individual can be considered a material resource of a community only because it meets the qualifier of material needs," the majority of the judges led by CJI Chandrachud said.

The Court held that for a privately-owned property to qualify as a material resource of the community, it must meet certain tests first.

"The enquiry about the resource in question falls under Article 39(b) must be contest specific and subject to a non exhaustive list of factors such as nature of resource, the characteristics, the impact of the resource on well being of community, the scarcity of resource and 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 under ambit of material resource of a community."

While reading her decision, Justice Nagarathna said she had concurred with CJI-led majority on certain issues and written some opinion as response to Justice Dhulia's judgment.

"How does ownership and control of material resources privately owned transform into material resources of the community for distribution as best to sub serve the common good. This is the crux of my judgment," Justice Nagarathna said.

Justice Dhulia in his dissent said it is the parliament's prerogative to see how to control and distribute material resources.

The reference in the present matter arose in the context of the two conflicting views taken by the top court in 1978, in cases which dealt with the nationalization of road transport services.

The nine-judge Constitution Bench had on May 2 reserved its judgment in the matter.

The case essentially dealt with Article 31C of the Indian Constitution, which protects laws enacted to secure the Directive Principles of State Policy (DPSPs) laid down in Part IV of the Constitution.

Article 31C was enacted by the 25th Amendment to the Constitution, in 1971. It served to secure the DPSPs specified in clauses (b) and (c) of Article 39 (certain principles of policy to be followed by the State).

The 25th Amendment was challenged in the famous Kesavananda Bharati case, in which a thirteen-judge bench of the Supreme Court held that the Constitution has a basic structure that cannot be altered by way of amendments.

Article 31C was later amended by the 42nd Amendment to the Constitution, enacted during the Emergency, to give precedence to all DPSPs and not just those under Article 39 (b) and (c).

In 1980, a Constitution Bench of the Supreme Court in Minerva Mills v. Union of India struck down clauses of the 42nd Amendment that gave effect to the change to Article 31 (c).

In the wake of that judgment, the question posed to the present Bench was whether the Court in Minerva Mills restored the post-Kesavananda Bharati position or struck down Article 31C as a whole.

The top court unanimously today ruled that Article 31C as upheld by Kesavananda Bharati remains in force.

"We hold that Article 31C to the extent upheld in Keshavanda Bharti remains in force and this is unanimous."

The Court explained that when an amendment substituting certain text with certain alternative text is invalidated, the effect is that the unamended text continues to remain 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 co-relate with legislative outcome," it added.

The lead petition in the instant case was filed by the Mumbai-based Property Owners' Association (POA) in 1992.

POA opposed Chapter VIII-A of the Maharashtra Housing and Area Development Authority (MHADA) Act. Inserted in 1986, the Chapter empowers state authorities to acquire cessed buildings and the land on which those are built, if 70% of the occupants make such a request for restoration purposes.

The MHADA Act was enacted in pursuance of Article 39(b) of the Constitution, which makes it obligatory for the State to ensure "that the ownership and control of the material resources of the community are so distributed as best to subserve the common good".