Analysing the Nature of Private Property: Dissecting the Property Owners Association v. State of Maharashtra Judgement

Authored by Noopur Yadav (Intern), a 2nd-year law student at Dr. Ram Manohar Lohiya National Law University, Lucknow

Analysing the Nature of Private Property

Introduction

The right to property in India has undergone significant transformation, moving from being a fundamental right under Article 19(1)(f) to a constitutional right under Article 300A. Despite this shift, the protection of property rights remains a critical issue for Indian citizens. After adopting the Constitution, individuals often rely on the judiciary to safeguard their property against potential encroachments by the government they elect, which operates under the very Constitution they uphold. Ironically, citizens may become victims of the governmental machinery they established. In such situations, the judiciary plays an essential role as the primary institution capable of addressing these sensitive matters effectively. The case of Property Owners Association v. State of Maharashtra examined legislative intent through the lens of public policy. On one side, the appellants aimed to safeguard their property rights, arguing that the acquisition was justified under the Directive Principles of State Policy outlined in Part IV of the Constitution. On the other hand, the State sought to act in the collective interest, using foresight to prevent potential harm to society caused by the actions of a few individuals, which could lead to broader consequences for all. 

In the words of J. M. Darhower, “The world is not black or white. Sometimes, it is grey, and sometimes that grey explodes into colors you never knew existed before”. 

This piece attempts to understand the grey as laid down by the majority judgment and bring forward the colors into which this grey can explode.

Description/ Background Information

The city has approximately 1,000 dilapidated buildings repaired by the Maharashtra Housing and Area Development Authority (MHADA) over the past decade, but many remain occupied despite being deemed unsafe.

Various laws were enacted to improve these buildings' conditions, such as the Bombay Housing Board Act 1948, the Bombay Repairs and Reconstruction Board Act 1969, and the Maharashtra Housing and Area Development Act 1976.

The Maharashtra Housing and Area Development Act ( herein referred to as MHADA Act) 1976 was enacted to unify, consolidate, and amend the laws relating to housing, repairing and reconstructing dangerous buildings, and carrying out improvement works in slum areas, and it repealed other such existing laws.

In the present case, the appellant challenged the constitutionality of the provisions of Chapter VIII-A of the MHADA Act. This Act involves acquiring the old buildings and transferring ownership and control to the occupiers. The Act was deemed violative of Articles 14 and 19 of the Constitution.

The judgment went through three reference orders in the Hon'ble Supreme Court before finally being decided by the nine judges' bench.

1. 3 Judge Bench: The appellant argued based on decisions in Minerva Mills Ltd. & Ors v. Union of India & Ors, Waman Rao v. Union of India and Sanjeev Coke Manufacturing Company v. Bharat Coking Coal and Another. Since these decisions were decided by a 5 judge bench, it seemed appropriate to refer it to a larger bench.

2. 5 Judge Bench: The arguments were heard from both sides. The bench concluded that this Court's interpretation of Article 39 (b) in Sanjeev Coke needs to be reconsidered. Hence, it referred the case to a larger bench.

3. 7 Judge Bench: Interestingly, the seven-judge bench also concluded that the interpretation of Article 39 (b) requires reconsideration by a larger bench of nine judges.

At last, the nine-judge bench consisting of Dr. Dhananjaya Y Chandrachud, former CJI, Hrishikesh Roy, B.V. Nagarathna, Sudhanshu Dhulia, J. B. Pardiwala, Manoj Misra, Rajesh Bindal, Satish Chandra Sharma and Augustine George Masih, JJ, gave the judgment and narrowed down the issues to 2 for further arguments. These issues, which are of significant legal complexity, are stated below:

1. Whether Article 31C (as upheld in the Kesavananda Bharati v. Union of India case) survives in the Constitution after an amendment to the provision by the Forty-Second Amendment was struck down by the Supreme Court in the Minerva Mills case.

2. Whether the interpretation of Article 39(b) adopted by Justice Krishna Iyer in Ranganatha Reddy case and followed in Sanjeev Coke case must be reconsidered; and whether the phrase ‘material resources of the community’ in Article 39(b) can be interpreted to include resources that are owned privately and not by the State.

What To Expect and What Not To?

Hon'ble former CJI D.Y. Chandrachud has beautifully written the judgment for himself and for Justice Hrishikesh Roy, J. B. Pardiwala, Manoj Misra, Rajesh Bindal, Satish Chandra Sharma and Augustine George Masih.

Issue (A): On the first issue, the majority held that Art. 31C is still applicable and in force by law to the extent it has been upheld in Kesavananda Bharati v. Union of India, even after the 42nd amendment was struck down by the Hon'ble Supreme Court in the Minerva Mills case.

Section 1A of the MHADA Act states that the Act is towards securing the principle specified in Clause (b) of Article 39, Part IV of the Constitution. Article 39 clauses (b) and (c) are protected under Article 31C, which states:

“31C. Notwithstanding anything contained in Article 13, no law giving effect to the policy of the State towards securing [all or any of the principles laid down in Part IV] shall be deemed to be void on the ground that it is inconsistent with, or takes away or abridges any of the rights conferred by [article 14 or article 19; and no law containing a declaration that it is for giving effect to such policy shall be called in question in any court on the ground that it does not give effect to such policy:…”

The legal position crystallises that allegations of statutory provisions contravening Articles 14 and 19 stand immunised under Article 31C, provided such provisions satisfy the substantive criteria under Article 39(b), (c), contingent upon acceptance of the doctrine that judicial invalidation of an amending provision results in automatic revival of its pre-amended form. The legal principle establishes that laws conflicting with Articles 14 and 19 are protected under Article 31C, as long as they align with the objectives outlined in Articles 39(b) and 39(c). This protection assumes the validity of the doctrine that nullifying an amendment automatically restores the original, unamended version of the law. The appellant contested this presumption, contending that the judicial annulment of Section 4 of the Forty-Second Amendment Act (1976) did not ipso facto resuscitate the unamended Article 31C, thereby framing the substantive constitutional question before the Court.

Central to the appellant's contention was the proposition that legislative substitution under the Forty-Second Amendment constitutes a bipartite process: (1) abrogation of the original text, followed by (2) insertion of modified provisions, as per the "pen and ink" doctrine of statutory interpretation. Under this construct, the Minerva Mills (1980) decision's invalidation of the substituted text would merely nullify the inserted provisions without reviving the excised original text, absent explicit legislative re-enactment. Under this construct, the Minerva Mills (1980) judgment’s decision to invalidate the substituted text would only nullify the inserted provisions. However, the original text that had been removed would not be reinstated unless explicitly re-enacted by the legislature.

The constitutional bench, through majority reasoning, repudiated this bifurcated analysis. Emphasising the holistic nature of legislative intent, the Court held that amendments through substitution must be treated as indivisible juridical acts. Judicial disaggregation of the deletion-insertion sequence would contravene Parliament's composite purpose evident in the Forty-Second Amendment's architecture. The analysis drew upon comparative jurisprudence, notably U.S. precedents, underscoring that legislative texts exist in binary states - either the original or amended version holds force, with invalidation of the latter reviving the former to prevent normative vacuums.

Constitutional Teleology

Parliament's manifest intent in amending Article 31C was to expand, not eliminate, the provision's protective ambit. Revival of the pre-amended text aligns with the Kesavananda Bharati (1973) doctrine's preservation of constitutional basic structure, whereas its obliteration would create jurisprudential dissonance with the validated first limb of original Article 31C. The bench thus concluded that the unamended Article 31C retains constitutional vitality within the parameters established by the Kesavananda majority, with subsequent amendments being severable to the extent of their invalidation.

Issue (B): The second issue asks for a structured jurisprudential analysis across four pivotal questions:

Inclusion of Privately Owned Resources under Article 39(b)

The majority opined that the phrase "material resources of the community" under Article 39(b) may theoretically encompass privately owned resources, contingent upon contextual socio-economic imperatives. However, private ownership per se does not ipso facto qualify a resource as communal; its classification hinges on whether its utilisation aligns with the constitutional objective of "subserving the common good". The Court underscored that the Public Trust Doctrine serves as a doctrinal filter to identify resources warranting communal classification, emphasising state stewardship over assets vital for public welfare.

Reassessment of Justice Krishna Iyer’s Interpretation in Ranganatha Reddy

While the reference to the 9-judge bench sought reconsideration of Justice Krishna Iyer’s expansive interpretation (which equated "community resources" with all private holdings), the majority declined to adopt this broad formulation. It critiqued the Sanjeev Coke decision (1983) for erroneously elevating a minority view in Ranganatha Reddy (1977) into binding precedent, observing that such an approach would constitutionalize unfettered state authority over private property. The Court clarified that while private resources may fall under Article 39(b), this requires case-specific scrutiny of factors like public benefit and proportionality, rejecting absolutist categorisations.

Precedential Value of Mafatlal Industries Ltd. v. Union of India Observation

The majority neutralised the precedential weight of the Mafatlal judgment’s solitary observation endorsing private resource inclusion, holding it non-binding due to its cursory, non-reasoned nature. This aligns with the doctrine of stare decisis, which mandates that only ratio decidendi—not obiter dicta—carry authoritative force.

Interpretation of "Distribution" under Article 300A

The Court construed "distribution" as a pliable constitutional concept encompassing diverse modalities, including regulation, nationalisation, or redistribution, provided such measures demonstrably advance the "common good." However, it circumscribed this authority by requiring strict adherence to Article 300A’s safeguards against arbitrary deprivation of property. A concurrent view emphasised that state intervention must balance collectivist objectives with individual property rights, ensuring proportionality and procedural fairness.

Judicial Reasoning

The majority’s analysis pivoted on textual fidelity to Article 39(b)’s phrasing, contrasting Justice Iyer’s teleological expansionism. It highlighted the perils of conflating Directive Principles with unqualified state power, noting that such an interpretation would destabilize the constitutional equilibrium between Part III (Fundamental Rights) and Part IV (DPSP). The judgment reaffirmed Kesavananda Bharati’s basic structure doctrine, cautioning against interpretations that erode foundational rights like property under Article 300A.

This delineation curtails blanket state acquisition of private assets under Article 39(b), mandating a nuanced, evidence-based approach to determine whether specific resources qualify as communal. The ruling reinforces judicial oversight to prevent ideological overreach, ensuring that "common good" rationalisations remain tethered to constitutional text and precedent.

Long Way Ahead

Too much reliance on Legislative intent

The majority has heavily relied on legislative intent to justify the revival of Article 31C, which poses few inherent problems. The Constitution is a living document, by which we mean that it is meant to evolve; herein, the application of historical legislative intent to a constitutional provision has mainly overshadowed the judicial reasoning for the revival of Article 31C. Such a presumption is bound to have an adverse effect on the future interpretation of constitutional provisions, more so in the context of judicial review as a precedent. Laws enacted by the legislature are sometimes struck down by the judiciary due to their being unconstitutional. Consider how in 2012, the Supreme Court struck down an Amendment to the Prevention of Money Laundering Act. These Acts are enacted by the Parliament itself, but time and again tested on the anvil of constitutional values. They either survive the test and are upheld or are struck down. Hence, the author believes that legislative intent can not be assumed to be in coherence with constitutional values, and the judiciary has to strike a balance between both. It is a necessary process which cannot be looked upon in a lax manner.

The Tension Between Fundamental Rights and Directive Principles Prevails

The court has focused on maintaining the balance that was struck in Kesavananda Bharati, but forgot to address the inherent tension between fundamental rights and Directive Principles. [While] Justice B.V. Nagarathna asserted that the distribution under Article 39 (b) of privately owned material resources has to comply with conditions precedent in Article 300A. This approach elevates 300A to constrain the broader objective of 39(b). This creates a potential imbalance. The right to property has gone from being a fundamental right to being a constitutional right. This judgment leaves another ambiguous reliance on the right to property on state utilisation. The judgment has essentially considered the state welfare or the common good, for which protecting the state action is key.

Consider that private property is of intrinsic value to the person, but can be better utilised through nationalisation and distribution. Private property holds intrinsic value for individuals, but at times, its potential can be maximised through nationalisation and equitable distribution. Considering such events, the benign judgment entails that a private resource can be acquired through the sovereign power of eminent domain, and the resource in question has to be subjected to a non-exhaustive list of factors. What about the right to property of the people from which the State derives its sovereignty? The administration can acquire the private property, and then the judiciary will subject such state action to a non-exhaustive list of factors justifying state action. If there is no list as to which privately owned resources have "personal effects", cases such as this are bound to again knock on the doors of the Hon'ble Supreme Court. Hence, it has given no conclusion on the root of the second issue.

No New Outcome

Answering the second issue, the court has said that private resources may be considered material resources, which reflects a particular economic ideology of limiting state control over private property, implicitly favouring privatisation and free-market principles. The majority itself criticized Justice Krishna Iyer for stating that all private resources come under the purview of material resources, and the majority in Sanjeev Coke has erred in following his view since it is based on one economic ideology. The majority went as far as naming it the Krishna Iyer doctrine. The judgment is on the same line and itself contradicts the notion of maintaining economic neutrality while interpreting a constitutional provision.

Conclusion

The judgment once again reaffirms that the right to property is not absolute and can be overridden for the public interest. The ambiguous, non-exhaustive list of reasons is open to review by the judiciary. The author believes that the judgment has resulted in the right to property being subjected to more tests than ever. What was needed to be affirmed was answered from a theoretical point of view. There was more focus on the interpretation of a constitutional provision using legislative intent, with no clear highlights to the way of its implementation. The interpretation of the constitutional provision heavily relied on legislative intent, but lacked any details on how to implement it. Lastly, reliance on the State on whose actions the appeal was made undermines the constitutional recognition of private property. The majority was able to highlight the grey nature of the right to property in the Indian Constitution, but seems to be silent on the outcomes or colours it can burst into. The present case was one such colour where this critical nature was tested.