By Vikram Kilpady
The times have changed, it is way too late to say they are a-changin’. As expected by many, the Supreme Court has recently overturned a seminal observation by Justice VR Krishna Iyer that the State could take over any private property if it formed part of the “material resource of the community”.
In the partial takedown of the thinking that gave public welfare primacy over private good, the nine-judge Constitution bench, led by outgoing Chief Justice of India (CJI) Justice DY Chandrachud, decided 8:1 that not all private property can be termed a community’s material resource. The Directive Principles of State Policy under Article 39(b) of the Constitution mandated the State to equitably redistribute resources for public welfare.
Apart from the CJI, the bench comprised Justices Hrishikesh Roy, BV Nagarathna, Sudhanshu Dhulia, JB Pardiwala, Manoj Misra, Rajesh Bindal, Satish Chandra Sharma and Augustine George Masih. The CJI authored the verdict with Justice Nagarathna partially concurring while Justice Dhulia gave a dissenting opinion. In departing from Justice Iyer’s ruling that made all private property open for State takeover, the majority judgment, however, was not unanimous in declaring all private property outside the scope of Article 39(b). Instead, it said, some private properties could be taken over by the State if they were material and belonged to the community.
The bench led by the CJI said some private property may come under the material resources of the community and it rejected Justice Iyer’s expansive view in his minority judgment in the Ranganatha Reddy case which was about privatisation of a bus service. The bench also rejected the reasoning of Justice Chinnappa Reddy in the Sanjeev Coke case which was a reading in line with Justice Iyer’s point of view. The Court said not every resource could be considered a material resource of the community without considering its nature and characteristics and its concentration with private parties. Further, the verdict noted that the orders of both Justice Iyer and Justice Reddy were rooted in a particular economic ideology, i.e., socialist, and that the founding fathers of the Constitution did not wish to bind the country to any dogma.
Agreeing on the points made by the CJI on the material resources of the community, Justice Nagarathna differed with the majority verdict’s views on Justice Iyer and Justice Reddy. “While considering the metamorphosis of the Indian economy from the early challenges to the transition towards liberalisation and market-based reforms and from the dominance of public investment to the co-existence of public and private investment, it has been observed by the learned Chief Justice that 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… a single economic theory, which views the acquisition of private property by the state as the ultimate goal, would undermine the very fabric and principles of our constitutional framework.” She said the above comments on Krishna Iyer were unwarranted and unjustified.
In her opinion, Justice Nagarathna further said: “I again have no cavil to the aforesaid discussion but what follows is the observation of the learned Chief Justice that the interpretation given by Krishna Iyer, J. in Ranganatha Reddy and Chinappa Reddy, J. in Sanjeev Coke, endorse a particular economic ideology and structure for our economy. That in substance the authors of those judgments namely, Krishna Iyer, J. in Ranganatha Reddy and Bhim Singhji vs Union of India, AIR 1981 SC 234 (“Bhim Singhji”) and Chinappa Reddy, J. in Sanjeev Coke were influenced by a particular school of economic thought, which prioritised the acquisition of private properties by the State being beneficial for the nation. That these two judges consistently referred to the vision of the framers of the Constitution as the basis to advance their economic ideology as the guiding principle of the provision.
“As opposed to the above, Dr. Ambedkar has been quoted by the learned Chief Justice to state that economic democracy in India is not tied to one economic structure, such as Socialism or Capitalism, but to the aspiration of a welfare state. The learned Chief Justice further opines ‘thus, 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 Krishna Iyer doctrine does a disservice to the broad and flexible spirit of the Constitution,” she said.
Justice Nagarathna said it was a matter of concern if judges of the future end up criticising their predecessors’ verdicts and opinions without having a sense of the times when such judgments were made. “It is a matter of concern as to how the judicial brethren of posterity view the judgments of the brethren of the past, possibly by losing sight of the times in which the latter discharged their duties and the socio-economic policies that were pursued by the State and formed part of the constitutional culture during those times,” she said in her opinion. Noting the change in economic discourse within the country from the late 1970s to the 1990s when India forsook its links to socialism for liberalisation, the judge said: “Merely because of the paradigm shift in the economic policies of the State to globalisation and liberalisation and privatisation, compendiously called the ‘Reforms of 1991’, which continue to do so till date, cannot result in branding the judges of this Court of the yesteryears as “doing a disservice to the Constitution”.
Justice Dhulia, who wrote his opinion opposed to the majority verdict, argued that many provisions in the Directive Principles are based on the socialist philosophy of a welfare State. He notes that Article 39 of the Constitution should be read in light of Articles 37 and 38. Article 37 says: The provisions contained in this Part shall not be enforceable by any court, but the principles therein laid down are nevertheless fundamental in the governance of the country and it shall be the duty of the State to apply these principles in making laws. Similarly, Article 38 says: “State to secure a social order for the promotion of welfare of the people.
(1) The State shall strive to promote the welfare of the people by securing and protecting as effectively as it may a social order in which justice, social, economic and political, shall inform all the institutions of the national life.
(2) The State shall, in particular, strive to minimise the inequalities in income, and endeavour to eliminate inequalities in status, facilities and opportunities, not only amongst individuals but also amongst groups of people residing in different areas or engaged in different vocations.”
Continuing in this vein, Justice Dhulia says many provisions in the statute are modelled on the socialist outlook. Like the provisions for equal justice and free legal aid (Article 39A), the right to work, to education and to public assistance in certain cases (Article 41), provision for just and humane conditions of work and maternity relief (Article 42), living wage, etc., for workers (Article 43), duty of the State to raise the level of nutrition and the standard of living and to improve public health (Article 47). “Directive Principles of State Policy lay down the goals which can only be achieved in a welfare economy. The philosophy behind Directive Principles is the welfare of the community, that is removal of poverty, inequality and ensuring fair distribution of wealth. These are some of its governing features. It has never been its aim to generate profit and wealth for individuals,” Justice Dhulia noted.
It is ironical that while the Supreme Court ruled in favour of private rights, the verdict came on the eve of the US presidential election where Republican Donald Trump is set to take America into a greater protectionist sphere to keep jobs from moving abroad.