Every private property not a community resource: SC

NEW DELHI: A nine-judge Supreme Court bench Tuesday rescinded a 46-year-long socialist interpretation of Article 39(b) of Constitution to authoritatively rule that community resources cannot encompass every private property.

By a seven-to-two majority judgment, authored by CJI D Y Chandrachud for himself and Justices Hrishikesh Roy, J B Pardiwala, Manoj Misra, Rajesh Bindal, S C Sharma and A G Masih, the apex court said it cannot subscribe to an expansion of the definition of community-owned material resources to bring in its ambit privately owned assets. Justice B V Nagarathna partially agreed with the CJI but Justice Sudhanshu Dhulia penned a dissent, adopting a socialist interpretation of Article 39(b).

Article 39(b) says the State shall "direct its policy towards securing that the ownership and control" of material resources of the community "are so distributed as best to subserve the common good".

The CJI said theoretically, material resources of the community may include privately owned resources. But he discarded the expansive socialist interpretation of Article 39(b) by Justice Krishna Iyer in the 1978 judgment to mean material resources of the community subsumed all privately owned resources.

1978 judgment reiterated by a five-judge bench ruling in 1982

The 1978 judgment was reiterated by a five-judge bench ruling in 1982. In his 194-page opinion, the CJI said, "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 majority verdict laid down a guideline to inquire whether a private property could be construed as 'material resources of the community' under Article 39(b).

It said the inquiry must be context-specific and subject to a non-exhaustive list of factors - nature of the resource and its characteristics, impact of the resource on the well-being of the community, scarcity of the 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 within the ambit of the phrase 'material resource of the community'," SC said.

Discussing the meaning of 'distribution' of material resources of the community so as to subserve common good, as mandated by Article 39(b) in the Directive Principles of State Policy chapter of the Constitution, the bench said though the state can adopt various means, including nationalisation of assets, constitutional courts will determine whether such distribution 'subserves the common good'.

Though the concept of community ownership went out of vogue after the pursuit of liberalisation by successive govts, it continues to find adherents and muscled its way into the public discourse in April when Congress's Rahul Gandhi had mooted "jitni aabadi, utna haq" principle and explained, "First, we will conduct a caste census... to know the exact population and status of backward castes, SCs, STs, minorities and other castes. After that, financial and institutional survey will begin. Subsequently, we will take up the historic assignment to distribute the wealth of India, jobs and other welfare schemes to these sections based on their population," he had said.

During the arguments on the issue, Mehta had referred to Rahul's suggestion and told the SC, "It would be a rustic and juvenile method to propose computing the nation's wealth by totalling the wealth of every citizen and distributing it equally among a particular section. Such ideas reflect a lack of understanding of economic development, governance, social welfare and the nation." The bench discussed the transition of economic policy in India through the decades. It said the interpretation of Article 39(b) by Justices Iyer (1978) and O C Reddy (1982) were "rooted in a particular economic ideology and the belief that an economic structure which prioritises acquisition of private property by the state is beneficial to the nation".

Justice Iyer, a known communist, had even cited Karl Marx in his 1980 judgment in Bhim Singhji case to observe that (state) taking over of large conglomerates of the land is necessary to make Article 39(b) a "constitutional reality". Referring to the vision of framers of the Constitution on the economic policies to be adopted by the country, the CJI said, "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."

Frowning at the SC adopting a particular economic structure for interpretation of the Constitution, the majority opinion said, "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 SC said during the nascent years of the nation, there was a mixed economic policy, which in the 1960s and 70s shifted to a socialist pattern. "Since the decade of the 1990s, or the liberalisation years, there has been a shift towards pursuing a policy of market-based reforms," it said. "Today, the Indian economy has transitioned from the dominance of public investment to the co-existence of public and private investment. The doctrinal error in the Krishna Iyer approach was postulating a rigid economic theory, which advocates for greater state control over private resources, as the exclusive basis for constitutional governance," it said.