Supreme Court overruled Justices Krishna Iyer and Chinnappa Reddy’s opinion on private property, saying the Constitution allows for economic democracy

The Supreme Court, by a 7:2 majority, found erroneous its previous view that all private property can be considered “material resources of the community” that the state is obligated to distribute for the public good under Article 39(b) of the Constitution.

The majority judgment delivered by the Chief Justice of India D.Y. Chandrachud, held that the views expressed by Justice V.R. Krishna Iyer (in State of Karnataka v. Ranganatha Reddy (1978) 1 SCR 641) and Justice O Chinnappa Reddy (in Sanjeev Coke Manufacturing Company v. Bharat Coking Coal Ltd. and Anr. (1983) 1,1000 Syrian rupees) are wrong.

“To say that Section 39(b) includes the allocation of all private resources is tantamount to endorsing a particular economic ideology and the structure of our economy. Justice Krishna Iyer’s decision in the Ranganatha Reddy case, which followed in particular the Sanjeev Coke and Bhim Singhji cases, was influenced by a certain school of economic thought.” CJI Chandrachud wrote.

The CJI noted that in Ranganatha ReddyJustice Krishna Iyer observed that Section 39(b) is “a directive to the State with the deliberate purpose of destroying feudal and capitalist citadels of property.” Bhim SinghjiJustice Krishna Iyer quoted Karl Marx in his judgment, noting that the seizure of large land associations was necessary for Article 39 to become a “constitutional reality.” Likewise, in Sanjeev CoxJustice Chinappa Reddy states that “the words and thoughts of Article 39(b) merely reflect the familiar language and philosophy of society as expounded by all socialist writers.”

“Essentially, the interpretation of Article 39(b) adopted in these decisions is rooted in a particular economic ideology and the belief that an economic structure that gives priority to the acquisition of private property by the state is beneficial to the nation,” The CJI remarked.

The Constitution rejects dogma and allows for economic democracy

While Justices Krishna Iyer and Reddy cited the framers’ vision as the basis for promoting this view, the CJI said the Constitution does not lay down any specific economic ideology for future governments. To buttress this observation, the CJI referred to the view expressed by Dr. B.R. Ambedkar during the debates in the Constituent Assembly, who rejected any particular economic dogma. The Constitution was formulated in general terms to allow successive governments to experiment and adopt a structure of economic governance that was consistent with the policies for which it was held accountable to the electorate. According to Dr. Ambedkar, if the Constitution were to establish a particular form of economic and social organization, it would amount to depriving people of the freedom to choose the social organization in which they want to live. He has repeatedly expressed the view that economic democracy is not associated with a single economic structure such as socialism or capitalism, but with the pursuit of a “welfare state”.

“The role of this Court, therefore, is not to set economic policy, but to facilitate the framers’ intent to lay the foundation for ‘economic democracy,’” he said. The CJI said in the decision.

The decision noted that successive Indian governments have experimented with different economic models.

“At the time of independence in the 1950s and 1960s, given the early problems of our republic, the government’s main focus was on planning, mixed economy, heavy industry and import substitution policies. Subsequently, in the late 1960s and 1970s, there was a shift towards supposedly “socialist” reforms and policies. Since the decade of the 1990s or years of liberalization, there has been a shift towards pursuing market reform policies.150 Today, the Indian economy has moved away from market reforms. dominance of public investment for the coexistence of public and private investment”, CJI wrote.

“The doctrinal error of Krishna Iyer’s approach was that it postulated a rigid economic theory that advocates greater government control over private resources as the exclusive basis of constitutional governance,” This was stated by the CJI.

The visionary vision of our framers to create an “economic democracy” and trust in the wisdom of the elected government, the CJI added, has been the basis for the high growth rate of the Indian economy, making it one of the fastest growing economies in the world. world.

“To destroy this constitutional vision by imposing a single economic theory that views the acquisition of private property by the state as the ultimate goal would undermine the very fabric and principles of our constitutional system,” the verdict says.

The majority held that private property could be covered by section 39(b) if it met the condition that it was a material resource of the community. The question of whether a resource falls under the concept of a community material resource should be based on the nature of the resource, the characteristics of the resource, the impact of the resource on the well-being of the community, and the scarcity of the resource. resource and the consequences of concentrating such a resource in the hands of private players. The public trust doctrine can also be applied here.

There are various forms of resources that can be privately owned and have inherent impacts on the ecology and/or well-being of society. Such resources are subject to Article 39(b). By way of non-exhaustive illustration, there may be private ownership of forests, ponds, sensitive areas, wetlands and resource-rich lands. Likewise, resources such as spectrum, radio waves, natural gas, mines and minerals, which are limited and limited, can sometimes be under private control.

Also read – ‘Harsh, unjustifiable’: Justices Nagarathna and Dhulia object to CJI Chandrachud’s remarks on Justice Krishna Iyer’s doctrine

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Details of the case: Property Owners Association v. State of Maharashtra (CA No. 1012/2002) and other related matters