Supreme Court: State Cannot Acquire Every Private Property

Supreme Court: State Cannot Acquire Every Private Property

Sub: Polity

Sec: Constitution

Why in News

The Supreme Court of India, through a landmark judgment by a nine-judge Constitution Bench, ruled that the state does not have the right to acquire every private property by claiming it as a “material resource of the community” for the “common good.” This decision marks a significant stance on the extent of state power in the context of private property rights.

Key Points:

The Supreme Court ruled that the state does not have overarching authority over private property, rejecting such broad power as reminiscent of past state-controlled economic ideologies.

It was noted that India has transitioned from an era of public investment dominance to a balanced economy involving both public and private investments.

The decision was influenced by the need to revisit past interpretations stemming from the 1977 Ranganath Reddy vs. State of Karnataka case, which affected later rulings in the Sanjeev Coke Manufacturing (1982) and Mafatlal Industries (1997) cases.

The opinion highlighted that India’s economic policies have evolved from socialism to liberalization and market-driven reforms.

About Material resources of the community:

Material resources of the community in the context of reordering the national economy embraces all the national wealth, not merely natural resources, all the private and public sources of meeting material needs, not merely public possessions.

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

Article 39(c) of the DPSP states that the operation of the economic system does not result in the concentration of wealth and means of production to the common detriment.

About Right to private property:

In 1978, in order to avoid excessive litigation directly in the Supreme Court by the propertied class, the 44th amendment act omitted the right to property as a fundamental right and made it a constitutional right under Article 300A. 

The right to private property continues to be an important constitutional cum legal right. 

Any law to acquire private property by the state should be only for a public purpose and provide for adequate compensation.

Doctrine of Eminent Domain:

Eminent Domain is the power of the sovereign to acquire property of an individual for public use without the necessity of his consent. 

This power is based on sovereignty of the State.

Payment of just compensation to the owner of the land which is acquired is part of exercise of this power.

Constitutional Provisions Related to Property Rights in India:

Article 19(1)(f): Originally provided citizens the right to acquire, hold, and dispose of property.

Article 31: Protected individuals from being deprived of property without legal authority and ensured compensation for state acquisition.

Article 300A: Required the state to follow due procedure and authority of law to deprive a person of his or her private property.

The right to property is now considered to be not only a constitutional or statutory right, but also a human right.

Procedure is an integral part of the ‘authority of law’ in Article 300A. 

The phrase ‘authority of law’ in the Article should not be understood as merely the power of eminent domain vested in the state.

The requirement of a ‘law’ in Article 300A does not end with the mere presence of a legislation which empowers the state to deprive a person of his property.

Amendments Impacting Property Rights:

First Amendment (1951): Added agrarian reform laws to the Ninth Schedule, shielding them from judicial review.

Fourth Amendment (1955): Enhanced the state’s ability to acquire property for public purposes and limited challenges to compensation amounts.

Twenty-Fifth Amendment (1971): Replaced the term “compensation” with “amount,” allowing the state to determine the payment, which need not match market value.

Forty-Fourth Amendment (1978): Removed the Right to Property from Fundamental Rights, making it a legal right under Article 300A, which states that no person shall be deprived of their property except by lawful authority.

Protective Clauses:

Article 31A: Safeguards laws on agrarian reforms and estate acquisition from being invalidated for contravening Articles 14 and 19, thus promoting social welfare and land redistribution.

Article 31B: Protects acts in the Ninth Schedule from being challenged for violating Part III of the Constitution, subject to the basic structure doctrine as clarified in the I.R. Coelho v. State of Tamil Nadu (2007) case.

Judicial Interpretations:

The Kesavananda Bharati v. State of Kerala (1973) case introduced the “basic structure” doctrine, influencing the interpretation of property rights amendments.

In Jilubhai Nanbhai Khachar v. State of Gujarat (1995), the Supreme Court ruled that Article 300A protects property rights legally but does not guarantee compensation, only lawful deprivation.