Supreme Court Constitution Bench Upholds Survival of Article 31C and Reconsiders Scope of Article 39(b) on Private Property

In landmark judgment, Supreme Court affirms that Article 31C remains part of the Constitution post-Minerva Mills and narrows interpretation of 'material resources of the community' in Article 39(b), ruling that not all privately owned resources fall within its ambit.

In a significant constitutional verdict delivered on November 5, 2024, a nine-judge Constitution Bench of the Supreme Court of India clarified two pivotal issues concerning the Directive Principles of State Policy and protections afforded to certain legislations under Article 31C of the Indian Constitution.

The Court conclusively held that Article 31C, as upheld in the historic Kesavananda Bharati case, continues to survive as a valid constitutional provision despite the striking down of the Forty-Second Amendment’s expansion of Article 31C in the Minerva Mills case. This ruling affirms that laws enacted to give effect specifically to the principles in clauses (b) and (c) of Article 39 enjoy immunity from challenges under Articles 14 and 19 of the Constitution. The judgment brings finality to a long-standing legal debate, settling doubts raised by the appellants that the earlier version of Article 31C ceased to exist after Minerva Mills.

On the second critical question, the Court re-examined the expansive interpretation of Article 39(b) adopted by Justice Krishna Iyer in the Ranganatha Reddy case and followed in the Sanjeev Coke judgment, which had broadly included all privately owned resources as 'material resources of the community.' The Court noted that while the phrase may theoretically include some privately owned resources, it rejects the sweeping view that all private property is encompassed. The Court underscored that the term “material resources of the community” must be interpreted contextually, considering factors such as the nature and characteristics of the resource, its impact on the community’s wellbeing, scarcity, and the consequences of concentration in private hands.

The Court emphasized that not every resource owned by individuals qualifies as a “material resource of the community” merely because it meets material needs. It highlighted the utility of the Public Trust Doctrine in identifying community resources that warrant protection, such as natural resources, forests, wetlands, and scarce assets like spectrum or minerals, which may be privately owned but have a significant public interest element.

Further, the Court clarified the broad meaning of “distribution” in Article 39(b), which includes but is not limited to nationalization or vesting of resources in the State. Distribution could also mean retaining resources with the government for public use or allocating them to private parties under regulation that ensures the common good is served.

While the Court recognized the evolving socio-economic landscape of India—from the early post-independence planned economy to the liberalization and privatization era beginning in the 1990s—it reaffirmed the constitutional balance between fundamental rights and Directive Principles, noting that the Constitution is a living document that must be interpreted in light of changing times and values.

The Court expressly stated that the earlier expansive interpretation of Article 39(b), grounded in a particular economic ideology favoring state control, does not represent the only constitutional vision. It stressed that the Directive Principles were deliberately drafted in broad terms to allow flexibility for future governments to determine appropriate socio-economic policies responsive to changing needs.

This judgment arose from a batch of appeals challenging provisions of the Maharashtra Housing and Area Development Act, 1976, relating to acquisition and distribution of property, raising constitutional questions about Articles 31C and 39(b). The Court, however, has limited its ruling to the survival of Article 31C and the correct interpretation of Article 39(b), leaving other issues in the appeals for a regular bench.

The verdict provides clarity on the constitutional protection available to state legislation aimed at socio-economic justice and the extent to which private property can be subsumed within the Directive Principles. It also underscores the judiciary’s role in balancing individual rights with the state’s duty to achieve distributive justice.

Statutory provisions

Article 31C, Article 39(b), Article 14, Article 19, Article 300A, Articles 37, 38, 39, Constitution (Forty-Second Amendment) Act, 1976, Constitution (Forty-fourth Amendment) Act, 1978, Maharashtra Housing and Area Development Act, 1976, Land Acquisition Act, 1894 (repealed), Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013

Property Owners Association v. State of Maharashtra (SC)(Constitution Bench) : Law Finder Doc Id # 2661338