In The Supreme Court Of India Property Owners Association And Ors. …Appellants vs State Of Maharashtra And Ors …Respondents

Background facts*

• The State government of Maharashtra amended the Maharashtra Housing and Area Development Act, 1976 (“MHADA Act”) in 1986 and inserted Chapter VIII-A which allowed the Mumbai Building Repair and Reconstruction Board (“MBRRB”) to acquire certain “cessed properties” for restoration with the consent of 70 percent of residents. The amendment also included a declaration that the MHADA Act aimed to give effect to the principles enshrined in Article 39(b) of the Constitution of India, 1950 (“Constitution”).
• The Property Owners Association (“POA”), a body which represents more than 20,000 landowners in Mumbai challenged the constitutionality of the provisions in Chapter VIII A of the MHADA Act by filing proceedings under Article 226 of the Constitution before the Hon'ble High Court of Bombay (“Bombay HC”) as it was their case that the provisions conferred untethered power on MBRRB to take possession forcibly from residential complexes resulting in violation of Articles 14 and 19 (right to equality, freedom of speech and right to acquire hold and dispose of property) of the Constitution.
• The Division Bench of the Bombay HC dismissed the Writ Petitions filed by the POA and upheld the constitutionality of the provisions of Chapter VIII-A of the MHADA Act stating that the provisions were not violating Articles 14 and 19 of the Constitution. Further, the Bombay HC also held that Article 31C of the Constitution, bars any challenges on the grounds of Articles 14 or 19 of the Constitution, if the statute has been enacted in furtherance of Article 39(b) which mandates that the government should make policies to ensure that “material resources of the community” are distributed to serve public welfare.
• Aggrieved by the Order of the Bombay HC there were various Special Leave Petitions before the Hon'ble Supreme Court (“SC”). These petitions were first placed before a three-judge bench wherein the POA/petitioners contended that the striking off of the amendment to Article 31C done in Minerva Mills v. Union of India¹ (“Minerva Mills”), meant that Article 31 C did not survive anymore, therefore it could not exclude an attack on the constitutional validity of the MHADA Act on the grounds of Articles 14 and 19. It was contended by the POA/petitioners that the doctrine of revival would not apply to a constitutional amendment.
• The POA/petitioners argued that the decision in Minerva Mills proceeded on a wrong concession that Article 31C remained in force on an unexplained assumption that the unamended Article 31-C, to the extent that it was upheld in Kesavananda Bharati v. State of Kerela²(“Kesavananda Bharti”) stood revived. It was also argued that the question never arose nor was it decided in Minerva Mills or subsequently in Waman Rao v Union of India³(“Waman Rao”) or Sanjeev Coke Manufacturing Co vs. Bharat Coking Coal⁴(“Sanjeev Coke”). The three-judge bench of SC observed that since the aforesaid decisions were all rendered by a five-judge bench and the assumption that Article 31C was still in force was disputed, it decided to refer to the matter to a larger bench.
• Thereafter, the same was referred to a five-judge bench which examined the contentions raised by the three-judge bench on the revival of Article 31C and other significant issues, including the interpretation of Article 39(b). The bench noted the need to reconsider the interpretation of Article 39(b) adopted in the case of Sanjeev Coke, as a minority opinion authored by Justice Krishna Iyer in the case of State of Karnataka versus Ranganatha Reddy⁵ (“Ranganatha Reddy”) had been followed while giving the decision in the case of Sanjeev Coke. In the case of Ranganatha Reddy, the nexus between certain legislation and Article 39(b) was supported, thus granting it immunity under Article 31C. However, the majority opinion did not address Article 39(b), leading the five-judge bench in Sanjeev Coke to adopt Justice Iyer's view.
• Additionally, in Ranganatha Reddy, the SC also upheld the view that material resources of the community encompassed all resources, whether they be natural or man-made, and irrespective of whether they be publicly or privately owned. This interpretation was also affirmed by a Constitution Bench in Sanjeev Coke. The view expressed in Sanjeev Coke was cited in Mafatlal Industries vs Union of India⁶ (“Mafatlal”), where a Five-Judge Bench reiterated that the phrase "material resources of the community" extends beyond public resources to include all resources, both natural and man-made, whether publicly or privately owned.
• Given these complexities, the five-judge bench recommended that a larger bench re-evaluate these interpretations. Thereafter, when the matter was referred to the Seven-Judge Bench, the bench observed that this interpretation of Article 39(b) required reconsideration by a larger Bench of Nine Judges.

Issue(s) at hand*

 With regard to Article 31C (as upheld in the case of Kesavananda Bharati), whether the same remains operative in the Constitution following the Court's invalidation of the 42^nd amendment in Minerva Mills case.

 Whether the phrase "material resources of the community" as provided in Article 39(b) includes privately owned resources, as opposed to resources which are solely the ownership of the state.

Note: Other issues so raised before the Apex Court would be argued before a regular bench.

Findings of the Court

The SC found no constitutional defects in the original text of Article 31C, as affirmed in the case of Kesavananda Bharati and Waman Rao. It further ruled that the protection granted to laws for implementing any Directive Principles of State Policy which were introduced during the Emergency by way of the Forty-Second Amendment, remain unconstitutional and void, as established in the case of Minerva Mills. Therefore, Article 31C remains strictly limited to laws giving effect to Articles 39(b) and 39(c) of the Constitution.

The apex court rejected the appellants' contention that the invalidation of the Forty-Second Amendment did not restore the original text. The Court explained that the amendment represented a single and indivisible act of both repeal and substitution. The SC observed that in the case of Minerva Mills, Section 4 of the Forty-Second Amendment was held to be in violation of the principles that form the basic structure of the Constitution. The court opined that the result of the ruling in Minerva Mills is that the constitutional text must return within the fold of the basic structure. The invalidation of the amendment nullified the entire process of the amendment, thereby reviving Article 31C as it stood prior to the amendment.

The Court analysed the interpretation of Article 39(b) done by it in the case of Ranganatha Reddy and Sanjeev Coke. It held that in the case of Sanjeev Coke an erroneous approach was adopted by relying on the minority opinion in Ranganatha Reddy, which had been expressly rejected by the majority of the then bench. Furthermore, the Court ruled that the brief remark in Mafatlal concerning private property was obiter dicta and, therefore, not a binding precedent.

The court held that not all 'private properties' can be considered as part of the 'material resources of the community' under Article 39(b) of the Constitution. It held that determining whether a particular resource falls within the scope of Article 39(b) necessitates a proper examination, and requires taking into account several factors, including the nature and intrinsic characteristics of the resource, its significance to the welfare of the community, and its scarcity.

There was dissent by Justice Dhulia, who concurred with the majority regarding the survival of 31C, however he challenged the majority's interpretation regarding Article 39 (b). He supported the broad interpretation principles established in the case of Ranganatha Reddy and Sanjeev Coke and opined that all privately owned resources inherently constitute “material resources of the community”

There was also dissent by Justice Nagarathna who partially concurred with the majority's view, recognizing that some private resources, especially those essential to public welfare, might fit within the ambit of Article 39(b). However, she specified that personal belongings and ordinary possessions should not be included in this category.

Our viewpoint*

This case marks an important step in India's ever evolving constitutional jurisprudence, as it prompted the apex court to revisit and reflect on the enduring influence of various landmark rulings like Kesavananda Bharati and Minerva Mills.

The apex court has rightly held that Article 31C survives to the extent as upheld in Kesavananda Bharati. The judgment clarifies that any law enacted by the state which seeks immunity under Article 31C will need to establish a significant public purpose, rather than merely promoting a socialist ideal.

The apex court has also dismissed the view that Article 39(b) serves as a broad justification for the state to acquire private properties, emphasizing that such an interpretation is not envisaged by the Constitution, which also protects an individual's fundamental right to own property. It has rightly observed and held that its role is not to lay down economic policies, but to facilitate the intent of the framers to lay down the foundation for an 'economic democracy'.

Footnotes

1. (1980) 3 SCC 625

2. (1973) 4 SCC 225

3. (1980) 3 SCC 587

4. (1983) 1 SCC 147

5. (1977) 4 SCC 471

6. 1997 (5) SCC 536

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