Private Resources Cannot Fall Within the Definition of ‘Material Resources of the Community’ under Article 39(b): SC Judgment Overview

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After a five-day hearing in May 2024 on whether private resources fall within the definition of material resources of the community under Article 39(b) of the Constitution of India, the Supreme Court (SC) reserved its verdict on the issue. The judgment for the same was pronounced by a nine-judge bench of the SC on November 05, 2024. In this case, 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 SC bench 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. Article 39(b) states, “The State shall, in particular, direct its policy towards securing that the ownership and control of the material resources of the community are so distributed as best to subserve the common good.” Let us explore the key points of the judgment, Property Owners Association & Ors. vs. State of Maharashtra & Ors.

Recent Supreme Court Judgment

On November 05, 2024, the nine-judge bench of the Supreme Court constituting 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 its decision on an important issue, “Whether private resources fall within the definition of material resource of the community under Article 39(b) of the Constitution of India.” The verdict consists of a majority opinion authored by CJI Chandrachud and six other judges, the concurring opinion of Justice Nagarathna, and the dissenting opinion of Justice Dhulia. Overall this judgment of the top court runs into 429 pages. The Supreme Court held that all private properties can't be considered "material resources of the community" under Article 39(b) of the Constitution to be taken over by the State to subserve the "common good". 

Majority Opinion

CJI DY Chandrachud, Justice J.B. Pardiwala, Justice Rajesh Bindal, Justice Augustine George Masih, Justice Hrishikesh Roy, Justice Manoj Misra, and Justice Satish Chandra Sharma delivered the majority opinion, authored by the CJI. The majority 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.” He concluded, 

• “Article 31C to the extent that it was upheld in Kesavananda Bharati v Union of India remains in force;
• The majority judgment in Ranganatha Reddy expressly distanced itself from the observations made by Justice Krishna Iyer (speaking on behalf of the minority of judges) on the interpretation of Article 39(b). Thus, a coequal bench of this Court in Sanjeev Coke erred by relying on the minority opinion;
• The single-sentence observation in Mafatlal to the effect that ‘material resources of the community’ include privately owned resources is not part of the ratio decidendi of the judgment. Thus, it is not binding on this Court…
• 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”; and
• 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 BV Nagarathna’s Opinion (Concurring)

In her separate opinion, concurring with the CJI’s opinion, Justice Nagarathna said, “How does ownership and control of ‘material resources privately owned’ transform into the ‘material resources of the community’ for distribution as best to subserve the common good? This is the thrust of my opinion.” After going through the opinions of other judges, Justice Nagarathna opined, “The term ‘distribution’ has no doubt a wide connotation but vesting in the State of a particular privately owned ‘material resource’ or nationalization of the same are only conditions precedent to distribution which have to comply with Article 300A of the Constitution. Further, a resource which has vested in the State or a resource retained by a State on nationalization could be utilized by the State to subserve the common good as a material resource of the community. The public trust doctrine would apply to such material resources.” She concluded, “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.”

Justice Sudhanshu Dhulia’s Opinion (Dissenting)

In context with the decision of the CJI and Justice Nagarathna, Justice Dhulia opined, “The meaning which must be given to ‘material resources of the community’ is what has been given to it in Ranganatha Reddy by the Three Judges and what has been followed in the Constitution Bench decision in Sanjeev Coke. To my mind, this has been the correct interpretation of the phrase ‘material resources of the community’.” He reiterated what was said by Justice Krishna Iyer in Ranganatha Reddy as “… material resources of the community in the context of re-ordering 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. Everything of value or use in the material world is material resource and the individual being a member of the community his resources are part of those of the community.” Further, he 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.” Justice Sudhanshu Dhulia concluded, “The broad and inclusive meaning given to the expression ‘material resources of the community’ by Justice Krishna Iyer and Justice O. Chinnappa Reddy in Ranganatha Reddy and Sanjeev Coke respectively has stood us in good stead and has lost none of its relevance, or jurisprudential value, nor has it lost the audience which appreciates these values.”

To conclude, the nine-judge bench of the Supreme Court 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.