On 5th November 2024, a nine-judge Bench of the Supreme Court delivered a judgment in Property Owners Association v. State of Maharashtra (‘Property Owners Association’) interpreting the contours of Article 39(b) of the Constitution as a Directive Principle. This question arose in the context of conflictual jurisprudence on whether the State could acquire all forms of private property as a ‘material resource of the community’ for redistributive purposes. This article examines this judgment from the perspective of its interplay with the concept of socialism, in light of the majority’s observation that the Constitution did not intend to bind the State with any particular economic dogma. It also undertakes this evaluation in the context of the inherent powers of eminent domain vested with the State. While it agrees with the outcome in the majority judgment, this article critiques the path taken to reach the conclusion.
The Judgment’s Interaction with the Theoretical Underpinnings of Socialism
The original text of the Constitution did not explicitly subscribe to socialist philosophy, despite Part IV embodying several socialist principles “fundamental in the governance of the country”. During the Emergency, the Constitution was amended for the 42nd time, to impute socialist and secular credentials to what was till then just a sovereign democratic republic as per the Preamble. This, in a way, marked a culmination of the long tussle in the 1950s-70s that saw the State assert its preference for socialism in the realm of socio-economic policy: this included legal moves such as the nationalisation of banks and coal mines, abolition of privy purses, and introduction of constitutional provisions that precluded judicial review (to assert the ‘primacy’ of certain ‘socio-economic rights’ in Part IV over particular ‘civil-political’ Fundamental Rights). Interpretation of one such socio-economic right, i.e. article 39(b), formed the crux of the main issue in Property Owners Association.
I argue that the Constitution is indeed based on socialism. Justice Chandrachud, speaking for himself and six other puisne judges, practically censures Justice V.R. Krishna Iyer for having been “influenced by a particular school of economic thought” in Ranganatha Reddy, and for quoting Karl Marx in Bhim Singhji to note how taking over large conglomerations of land is essential to make Article 39 a ‘constitutional reality’. Thereafter, Justice Chandrachud proceeds to criticise Justice O. Chinnappa Reddy for relying on socialist writers in his interpretation of Article 39(b) in Sanjeev Coke. He remarks:
“In essence, the interpretation of Article 39(b) adopted in these judgements is rooted in a particular economic ideology and the belief that an economic structure which prioritises the acquisition of private property by the state is beneficial for the nation.”
And at the fag end of its discussion on merits, the judgment notes:
“To hold that the term “distribution” cannot encompass the vesting of a private resource would amount to falling into the same error as the Justice Krishna Iyer doctrine, i.e. to lay down a preference of economic and social policy.”
However, the majority verdict suffers from the same problem of rigidity that it castigates Justices Krishna Iyer and Chinnappa Reddy for. It takes a narrow view of the socialist redistributive objectives envisaged by Part IV, whilst claiming that the 1991 ‘LPG’ reforms marked a watershed that fundamentally altered the basis upon which our economic democracy is based. To suggest this is indeed ludicrous, particularly because the State has neither abandoned its welfarist model of pursuing inclusive growth, nor has it totally let go of its control over industries in India.
Thus, the majority verdict falls into its own trap. For instance, like ‘socialist’, the Constitution did not originally declare itself to be meant for a ‘secular’ State. Yet, its provisions reeked of the State’s secular credentials. If the Court’s approach in this verdict were to be extended by analogy to this other term added by the 42nd amendment to the Preamble, Justice Chandrachud would certainly not contend that the emergence of a self-proclaimed Hindu nationalist party as the single largest party for three straight terms marked such a watershed that eroded the secular credentials of our polity.
The Judgment Fails to see that Indian Democracy is based on Socialism
Justifying its fallacy, the majority distinguishes between ‘socialism’ and ‘economic democracy’, stipulating that only the latter is fulfilled by the constitutional mandate of a welfare State under Part IV. Against this setting, it is worth noting how Justice Dhulia’s dissenting opinion refers to the pre-Independence resolution adopted by the Indian National Congress in 1931, which referred to “democracy as another name for “socialism” and “socialist principles” of equality, distribution of wealth and grassroot participation of people”. It is on this basis that he renders his dissent, noting that the inclusion of private property as a ‘material resource of the community’ under Article 39(b) is the only way in which “the socialist and democratic principles incorporated in our Constitution get their true meaning”.
In this context, I argue that a notion as broad as socialism cannot be subject to any dogmatic interpretation (which the majority verdict nearly adopts). For instance, Prof. MP Jain has interpreted socialism as an essential feature of the Constitution. As per him, it includes a mixed economic model, which neither excludes private enterprise totally nor provides for complete State ownership of the nation’s material resources. His commentary also refers to D.S. Nakara v Union of India (1982), in which the apex Court noted that socialist ideology seeks to eliminate inequality of income/status and operates to ensure a decent standard of life for all.
A shot in the arm for this broader understanding is Samatha v State of Andhra Pradesh (1997), where the Supreme Court categorically noted the complementary relationship between social justice and equality, whilst holding that the establishment of an egalitarian social order through the rule of law is a part of the Constitution’s basic structure. This is in line with Article 38 of the Constitution, which obligates the State to secure a social order that promotes the people’s welfare. It is pertinent to note Justice Dhulia’s observation here:
“Socialism, thankfully, is not a rigid concept and over the years has been adopted and adjusted according to the needs of society. ‘Socialism’ in the context of the Indian Constitution is just another name for welfare economy.”
Recently, Chief Justice Sanjiv Khanna iterated a similar interpretation during the hearings of a challenge against the constitutionality of the changes made to the Preamble vide the 42nd amendment. Hence, to argue that the Indian State is not based on socialism is to essentially question the basis of the 44th amendment, which did two things: one, it deleted the right to property from Part III and reduced its status to a mere legal-constitutional right. Two, it did not undo the amendments made to the Preamble, thereby endorsing the Indian Republic’s socialist credentials. To argue so is also tantamount to dismissing the role of Article 39 in shaping the Fundamental Rights – on one hand, it would disregard precedents like Olga Tellis (1985), in which the Court has specifically relied on Article 39(b)-(c) to widen the horizons of Article 21. On the other, it would also ignore how, in State of Bihar v. Kameshwar Singh (1952), the Court relied on Article 39 itself to authorise the deprivation of the erstwhile Fundamental Right to property, holding that zamindari abolition laws enacted to implement Part IV’s socio-economic policy must be regarded as being for ‘public purposes’.
The Judgment ought to have dealt with Eminent Domain
Justice Chandrachud flagged that Justice Krishna Iyer made a doctrinal error of postulating a “rigid economic theory…as the exclusive basis for constitutional governance”. However, whilst clipping the State’s powers of acquisition of private property, the judgment does not engage with the inherent powers of eminent domain vested with it. In Kameshwar Singh, the Court undertook a rich discussion on the State’s power of eminent domain. Justice Mahajan quoted Hugo Grotius, who remarked:
“The property of subjects is under the eminent domain of the State, so that the State…may use and even alienate and destroy such property, not only in the case of extreme necessity…but for ends of public utility…” (emphasis added)
It is worth appreciating that the challenge in Property Owners Association was based on the ‘forcible’ taking of possession of residential complexes for essentially providing shelter to the general public in line with Article 39(b) (and also the Fundamental Right to shelter under Article 21, as recognised in Chameli Singh (1995)). In this light, I argue that the judgment is a missed opportunity from the Court’s side (both majority and minority verdicts) to meaningfully engage with the boundaries of the State’s power of eminent domain.
After all, the said power operates as a reservation on individuals’ right to property: as an essential incident of sovereignty, it enables the State to take over private property for ‘public purposes’ without the owner’s consent. In Ranganatha Reddy, Justice Krishna Iyer (as quoted by Justice Nagarathna in her partially concurring opinion) favoured a liberal construction of the term ‘public purpose’, which should be governed by neither ‘socialist jurisprudence’ nor ‘capitalist legal culture’ in India’s mixed economy. That said, Justice Nagarathna also referred to the judgment in State of Maharashtra v Basantibai Khetan (1982), in which the Court considered the validity of the impugned Act under Article 39(b) read with Article 31C. In this judgment, the Court enunciated the meaning of ‘distribution’ under Article 39(b) and considered how the said acquisition in the exercise of the power of eminent domain furthered its objectives, whilst ‘keeping aside’ the observations in Sanjeev Coke based on socialism. One wonders why Justice Chandrachud did not choose a similar path.
Concluding Remarks
As stated earlier, the author agrees with the ultimate adjudication made in Property Owners Association. The judgment categorically upholds the Larger Bench Rule with respect to how Sanjeev Coke essentially overturned the majority verdict in Ranganatha Reddy. Nonetheless, the opinions by Justices Krishna Iyer and Chinnappa Reddy discussed in Property Owners Association relied on the insertion of the term ‘socialist’ in the Preamble by the 42nd amendment. To suggest that the amendment’s effect was rendered infructuous by the 1991 reforms is untenable.
The Court’s eagerness to safeguard the right to property under Article 300A is welcome. This is in line with the trend witnessed recently in Kolkata Municipal Corporation v Bimal Kumar Shah (2024), in which the Court recognised ‘sub-rights’ in cases of mandatory land acquisition by the State for public purposes. In fact, Justice Chandrachud’s enunciation of ‘indicative, but rather abstract signposts’ to determine whether particular private property constitutes a ‘material resource of the community’ under Article 39(b) reflects an effort to secure a balance between individual liberties and public good. However, the Court could have done so by relying on principles enshrined in its ‘eminent domain’ jurisprudence and respecting the State’s socialist credentials. Keeping the door ajar for judicial review on matters within the scope of Article 31C, the Court in Property Owners Association somewhat withers down the State’s power of eminent domain.
Shikhar Aggarwal is a lawyer based in Gurugram, having completed his B.A.LL.B. (Hons) from National Law University, Delhi in 2023. His areas of interest include constitutional, criminal, and administrative laws.
[Ed note: This piece was edited and coordinated by Hamza Khan and published by Baibhav Mishra from the Editorial Team.]
