In an 8:1 majority ruling, a nine-judge Constitution Bench of the Supreme Court on November 5, 2024 held that not all private property can be deemed “material resource of the community” under Article 39(b) of the Constitution for acquisition and redistribution by the government. Chief Justice of India (CJI) D.Y. Chandrachud authored the lead majority opinion for himself, and Justices Hrishikesh Roy, J.B. Pardiwala, Manoj Misra, Rajesh Bindal, Satish Chandra Sharma and Augustine George Masih. Justice B.V. Nagarathna partially concurred with it while Justice Sudhanshu Dhulia dissented.
What does Article 39(b) entail?
Part IV of the Constitution, which outlines the “Directive Principles of State Policy” (DPSP), includes Article 39(b), which mandates the State to adopt policies ensuring that “the ownership and control of the material resources of the community are so distributed as best to subserve the common good.” The court was tasked with interpreting the scope of “material resources” under Article 39(b).
Another crucial issue before the court was whether laws enacted to further the objectives of Article 39(b) could be shielded from constitutional challenges based on fundamental rights, such as the right to equality and freedom of expression. Fundamental rights, enshrined in Part III of the Constitution, and DPSPs have long been in conflict. While the Constitution expressly makes fundamental rights enforceable, DPSPs serve as guiding principles, outlining objectives the state is expected to strive towards.
Why was Article 31C introduced?
On July 19, 1969, former Prime Minister Indira Gandhi introduced the Banking Companies (Acquisition and Transfer of Undertakings) Ordinance, 1969, to the public through a radio broadcast. The ordinance aimed to nationalise fourteen commercial banks in the country and was later enacted as law by the Parliament. However, in the landmark case of R.C. Cooper v. Union of India (1970), the Supreme Court struck down the legislation by invoking the now-repealed Article 31(2) of the Constitution. The provision prohibited the government from acquiring private property under any law unless a fixed compensation was stipulated.
In 1971, in a bid to insulate such Emergency-era economic policies from judicial review, the Parliament introduced a new provision — Article 31C through the 25th Amendment. The provision outlined that any law giving effect to clauses (b) and (c) of Article 39 — which respectively urged the state to frame laws to secure the material resources of the community and to establish an economic system that prevents the concentration of wealth — could not be deemed void on grounds that they contravened Articles 14 (right to equality) and 19 (freedom of speech and expression). Additionally, it barred courts from assessing whether a law genuinely advanced the objectives outlined in Articles 39(b) and (c).
This amendment was subsequently challenged in the seminal Kesavananda Bharati case (1973) in which a narrow 7-6 majority found that an amendment which offended the Constitution’s basic structure would be void. Justice Khanna found that the amendment partially offended this doctrine. He held that, insofar as it barred any scrutiny of whether a law was enacted to further the objectives of Articles 39(b) and (c), it violated the principle of judicial review. However, he upheld the amendment to the extent that it shielded such laws from challenges based on Articles 14 and 19.
What was the amendment that followed?
Despite this, in 1976, Parliament introduced even more sweeping changes to Article 31C through the 42nd Amendment. They stipulated that a law made in furtherance of any DPSP — and not limited to those under Articles 39(b) and (c) — would enjoy immunity against a constitutional challenge. In 1980, the Supreme Court, in Minerva Mills v. Union of India, struck down the amendment, reinforcing the primacy of fundamental rights over DPSPs. The then-Chief Justice Y.V. Chandrachud famously noted that the amendment had “removed two sides of the golden triangle” formed by Articles 14, 19, and 21.
However, this ruling birthed a conundrum: Does Article 31C now exist in its entirety, as outlined in the 25th Amendment, or did the Supreme Court restore the post-Kesavananda Bharati position, wherein only Articles 39(b) and (c) remain protected?
How did the matter reach the top court?
The petitions before the top court concerned the constitutional validity of Chapter-VIIIA, introduced in 1986 as an amendment to the Maharashtra Housing and Area Development Act (MHADA) of 1976. It allowed the Mumbai Building Repair and Reconstruction Board (MBRRB) to acquire cessed properties with the consent of 70% of the residents for restoration purposes. Additionally, Section 1A was inserted into MHADA, invoking Article 39(b), enabling the MBRRB to acquire lands and buildings and transfer them to “needy persons” and the “occupiers of such lands or buildings.”
Aggrieved by this, the Property Owners’ Association, a body representing over 20,000 landowners in Mumbai, filed a lawsuit before the Bombay High Court, which dismissed the challenge. The court ruled that Article 31C of the Constitution bars any challenge on the grounds of Articles 14 or 19 if the statute has been enacted in furtherance of Article 39(b). The matter was appealed and initially heard by a three-judge bench of the Supreme Court. In 1996, it was referred to a five-judge bench, which then referred it to a seven-judge bench in 2001. Eventually, in 2002, the matter was put before a nine-judge bench.

What does the majority verdict stipulate?
The majority opinion underscored that not all private property would fall within the ambit of Article 39(b) for government acquisition to serve the “common good”. The Chief Justice reasoned that such an interpretation would echo a redundant “rigid economic dogma” that advocates for greater state control over private resources. He further noted that, due to a range of market reforms over the years, the Indian economy had transitioned from being predominantly public investment-driven to a model in which both public and private investments coexist.
Notably, the majority rejected Justice V.R. Krishna Iyer’s interpretation in State of Karnataka v. Shri Ranganatha Reddy (1977), which held that “material resources of the community” under Article 39(b) encompassed both public and private resources. Justice Iyer’s view shaped subsequent Constitution Bench decisions, including Sanjeev Coke Manufacturing (1982) and Mafatlal Industries (1997). The judges asserted that these rulings reflected a “particular economic ideology” premised on the notion that prioritising state acquisition of private property would best serve the nation’s interests.
The Chief Justice further clarified that assessment of whether a privately owned resource holds communal significance must be done on a “case-by-case basis.” He identified several “non-exhaustive factors” for consideration, including the resource’s inherent qualities, its impact on public welfare, its limited availability, and the potential consequences of its ownership being concentrated among a small group of private entities.
Addressing the question of whether laws enacted to implement Article 39(b) are shielded by Article 31C from constitutional challenges, the judges affirmed that such immunity does exist. They further clarified that the unamended Article 31C, to the extent held valid in Kesavananda Bharati, remains operative. However, the Chief Justice cautioned that any acquisition of private property for public use must adhere to constitutional guarantees, including Articles 14 and 300A (right to property).
What did Justices Nagarathna and Dhulia opine?
Justice Nagarathna offered a partial concurrence, recognising that certain private resources, particularly those essential to public welfare, could “theoretically” fall within the scope of Article 39(b). However, she clarified that personal effects and everyday possessions should be exempt from this categorisation. However, both she and Justice Dhulia took strong exception to the observations made by the Chief Justice in a “proposed judgment” regarding the doctrine espoused by Justice Iyer. According to the judges, the proposed opinion stipulated that the “Krishna Iyer doctrine does a disservice to the broad and flexible spirit of the Constitution”. This critique, however, does not appear in the published majority judgment authored by the Chief Justice. It is unusual for judges to quote from “proposed” judgments as draft opinions are typically circulated internally among members of a Bench.
Castigating the practice of decrying former judges, Justice Nagarathna underscored that one must not lose sight of the times in which judges like Justice Iyer discharged their duties including the socio-economic policies that the state pursued at that time. Echoing similar sentiments, Justice Dhulia termed the criticism in the proposed judgment as “harsh”.
In his lone dissent, Justice Dhulia observed that excluding privately- owned properties from the ambit of Article 39(b) fails to account for the reality that certain private resources, if equitably distributed, could benefit the public. He further cautioned that such a blanket exclusion risks undermining the broader objectives of the DPSPs, especially during times when the “growing gap between the rich and the poor is still enormous”.

What are the potential implications?
The majority ruling stands as a judicial acknowledgement of the evolution of the country’s economic policy over the years — from extensive state control over most resources to a more liberalised economy that fosters private wealth generation. By acknowledging the state’s role in promoting social welfare while respecting individual property rights, the apex court has carved a balanced approach that aligns with India’s broader economic growth aspirations. It however remains to be seen which economic policies on the acquisition of private resources pass judicial muster, particularly given the court’s stance that such determinations will be carried out on a case-to-case basis.
The verdict also assumes significance in light of the political rhetoric leading up to the Lok Sabha elections, where Congress leader Rahul Gandhi reportedly advocated for a comprehensive census followed by wealth redistribution among various socio-economic groups. In response, Prime Minister Narendra Modi sounded alarm bells over what he characterised as the Congress’s dubious attempt to confiscate private wealth and redistribute it among Muslims.
Published – November 07, 2024 09:40 pm IST