Not all private properties can be taken over by State: Supreme Court

In a landmark judgment, the Supreme Court ruled by an 8:1 majority that not all privately owned properties fall under the “material resources of the community” as defined in Article 39(b) of the Indian Constitution. This article, part of the Directive Principles of State Policy, calls for the equitable distribution of community resources to promote the common good.

The court clarified that only some private properties could potentially fall within the scope of Article 39(b), specifically if they are crucial to the community and fulfill a public need. The nine-judge bench was led by Chief Justice of India DY Chandrachud and included Justices Hrishikesh Roy, BV Nagarathna, Sudhanshu Dhulia, JB Pardiwala, Manoj Misra, Rajesh Bindal, Satish Chandra Sharma, and Augustine George Masih.

Majority Opinion
Chief Justice Chandrachud, authoring the majority opinion, acknowledged that while the term "material resources of the community" could technically extend to privately owned assets, not all private property should be seen as public resources simply because they fulfill certain material needs. The ruling stated that Justice Krishna Iyer’s view, expressed in the 1978 Ranganath Reddy case, which broadly included private resources within “material resources of the community,” should not be adopted as binding.

The judgment emphasised that determining whether a resource qualifies as a “material resource of the community” should involve careful consideration of factors such as the resource’s nature, community impact, scarcity, and the potential risks of private concentration. The concept of public trust could also apply in deciding if a privately held asset serves a larger societal role. According to the Court, distribution under Article 39(b) could involve various forms of state intervention, including vesting resources in the state or nationalization.

Further, the Court observed that previous interpretations by Justices Krishna Iyer and Chinnappa Reddy were influenced by specific economic ideologies, whereas the Constitution’s framers did not intend to impose any fixed economic doctrine on the nation.

Concurring and dissenting opinions
Justice BV Nagarathna offered a partially concurring view, arguing that private property—excluding personal belongings such as household items—could be classified as a community resource if acquired or nationalized by the state or if donated. Justice Sudhanshu Dhulia dissented, presenting a different perspective on the application of Article 39(b) but details of his reasoning are yet to be published.

Case background
This case has a long history, originating from a 1992 legal challenge and later referred to the nine-judge bench in 2002. At its core, the issue concerns whether “material resources of the community” as outlined in Article 39(b) encompasses privately owned resources. The appellants contended that the Constitution's drafters would have clearly included private property in the term “material resources” if that was the intent.

The Union government argued that the interpretation of Article 39(b) should be informed by evolving constitutional principles, not rigid ideologies. Resources, the government suggested, encompass the economic foundation shared by community members, which influences collective wealth and growth.

The issue at hand also pertains to the Maharashtra Housing and Area Development Act (MHADA) amendment of 1986, which introduced Chapter VIIIA authorising the state to acquire certain properties at below-market rates for public purposes, a move that invoked Article 39(b) as justification. However, the Supreme Court found ambiguity in past interpretations of Article 39(b), leading to today’s ruling. The final judgment details and Justice Dhulia’s dissent are expected to be published shortly.
(With inputs from LiveLaw.)