Article 39(b): All Private Properties Cannot Form Part of the ‘Material Resources of the Community’, Supreme Court

On November 05, 2024 (Yesterday), the Supreme Court (SC) of India delivered a long-awaited decision on the question ‘whether private resources fall within the definition of material resource of the community under Article 39(b) of the Constitution of India (one of the Directive Principles of the State Policy)’. By an 8:1 majority, the SC held that all private properties cannot form part of the ‘material resources of the community,’ which the State should distribute as best to serve the common good as mentioned under Article 39(b) of the Indian Constitution. The nine-judge bench of Chief Justice of India (CJI) DY Chandrachud, Justice B.V. Nagarathna, Justice J.B. Pardiwala, Justice Rajesh Bindal, Justice Augustine George Masih, Justice Hrishikesh Roy, Justice Sudhanshu Dhulia, Justice Manoj Misra, and Justice Satish Chandra Sharma delivered the judgment. CJI Chandrachud authored the majority opinion including his and six other judge’s views, while Justice Nagarathna partially concurred and Justice Dhulia delivered a dissenting opinion. The CJI in his judgment said, “Not every resource owned by an individual can be considered a ‘material resource of the community’ merely because it meets the qualifier of material needs.” 

While hearing the matter, the view of Justice Krishna Iyer, in the 1978 judgment ‘State of Karnataka vs. Ranganatha Reddy’, that private properties can be regarded as community resources was addressed. The same decision was further endorsed in the 1983 judgment ‘Sanjeev Coke Manufacturing Company vs. Bharat Coking Coal Ltd.’ of the top court. The majority opinion opined, “The direct question referred to this bench is whether the phrase 'material resources of the community' used in Article 39(b) includes privately owned resources. Theoretically, the answer is yes, the phrase may include privately owned resources. However, this Court is unable to subscribe to the expansive view adopted in the minority judgment authored by Justice Krishna Iyer in Ranganatha Reddy and subsequently relied on by this Court in Sanjeev Coke. Not every resource owned by an individual can be considered a 'material resource of the community' merely because it meets the qualifier of material needs.” The CJI also said, “The inquiry about whether the resource in question falls within the ambit of Article 39(b) must be context-specific and subject to a non-exhaustive list of factors such as the nature of the resource and its characteristics; the impact of the resource on the well-being of the community; the scarcity of the resource; and the consequences of such a resource being concentrated in the hands of private players. The Public Trust Doctrine evolved by this Court may also help identify resources which fall within the ambit of the phrase material resource of the community.” 

Moreover, the majority opinion authored by the CJI also said that the interpretation of Article 39(b) adopted in the Ranganatha Reddy and Sanjeev Coke judgments is rooted in a particular economic ideology and the belief that an economic structure that prioritizes the acquisition of private property by the state is beneficial for the nation. The judgment further reads, “Justice Krishna Iyer (in Ranganatha Reddy and Bhimsinghji) and Justice Chinappa Reddy (in Sanjeev Coke) consistently referred to the vision of the framers as the basis to advance this economic ideology as the guiding principle of the provision.” The majority opinion also concluded, “The term ‘distribution’ has a wide connotation. The various forms of distribution which can be adopted by the state cannot be exhaustively detailed. However, it may include the vesting of the concerned resources in the state or nationalization. In the specific case, the Court must determine whether the distribution subserves the common good.” Justice Dhulia, in his dissenting opinion, observed, “what and when do the “privately owned resources” come within the definition of “material resources” is not for this Court to declare. This is not required. The key factor is whether such resources would subserve common good. Clearly the acquisition, ownership or even control of every privately owned resource will not subserve common good. Yet at this stage we cannot come out with a catalogue of do’s and don’ts. We must leave this exercise to the wisdom of the legislatures.”

On the other hand, Justice Nagarathna illustrated her concurring views regarding the matter. She said, “In my view, the judgments of this Court in Ranganatha Reddy, Sanjeev Coke, Abu Kavur Bai, and Basantibai correctly decided the issues that fell for consideration and do not call for any interference on the merits of the matters and as explained above. The observations of the Judges in those decisions would not call for any critique in the present times. Neither is it justified nor warranted.” Earlier in May this year, the SC bench reserved the judgment in the matter after hearing the matter for 5 days.