[2024] 11 S.C.R. 1 : 2024 INSC 835

Property Owners Association & Ors. v.

State of Maharashtra & Ors.

(Civil Appeal No. 1012 of 2002)

05 November 2024

[Dr Dhananjaya Y Chandrachud,* CJI, Hrishikesh Roy, B.V. Nagarathna,* Sudhanshu Dhulia,* J.B. Pardiwala, Manoj Misra, Rajesh Bindal, Satish Chandra Sharma and Augustine George Masih, JJ.]

Issue for Consideration

(1) Whether Article 31C (as upheld in Kesavananda Bharati case) survives in the Constitution after amendment to the provision by the forty-second amendment was struck down by the Supreme Court in Minerva Mills case; and

(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.

Headnotes†

Constitution of India - Art.31C - Art.31C (as upheld in Kesavananda Bharati case), if survives in the Constitution after amendment to the provision by the forty-second amendment was struck down by the Supreme Court in Minerva Mills case - Held: Article 31C to the extent that it was upheld in Kesavananda Bharati case remains in force.

Held [per Dr Dhananjaya Y Chandrachud, CJI (for himself and for Hrishikesh Roy, J. B. Pardiwala, Manoj Misra,

* Author Ed. Note: There are three judgments. One judgment was pronounced by Hon'ble Dr Justice Dhananjaya Y Chandrachud, Chief Justice of India, on behalf of himself, Hon'ble Mr Justice Hrishikesh Roy, Hon'ble Mr Justice J B Pardiwala, Hon'ble Mr Justice Manoj Misra, Hon'ble Mr Justice Rajesh Bindal, Hon'ble Mr Justice Satish Chandra Sharma and Hon'ble Mr Justice Augustine George Masih. Hon'ble Mrs Justice B V Nagarathna and Hon'ble Mr Justice Sudhanshu Dhulia pronounced their separate judgments.


Rajesh Bindal, Satish Chandra Sharma, and Augustine George Masih, JJ.)]:

Article 31C to the extent that it was upheld in Kesavananda Bharati v Union of India remains in force. [Para 229(a)]

2.1. By Section 4 of the Forty-Second Amendment, the words "the principles specified in clause (b) or clause (c) of Article 39" in Article 31-C were replaced with the words "all or any of the principles laid down in Part IV." This is a case of substitution. Section 4 of the Forty-Second Amendment was subsequently struck down in Minerva Mills. Where an amendment substituting certain text with certain alternate text is invalidated, the effect is that the unamended text continues in force. This is because the legislative intent of repeal and enactment in such cases is composite and cannot be separated. To give effect to the repeal and not the enactment would result in an outcome which does not correlate with legislative intent, and, as Justice Hidayatullah noted in Laxmibai "leave the original section truncated" resulting in absurd outcomes. This would in effect invalidate the original, valid and constitutional provision despite there being no constitutional fault with it nor the legislature intending to repeal it. Thus, the presumption would be that after Minerva Mills, the unamended Article 31-C would continue in force.

Indeed, it is evident that cases such as Bhim Singh and Sanjeev Coke proceeded on this presumption. [Para 69]

2.2. The only plausible exception to this presumption would be if it could be demonstrated that Parliament, when enacting the Forty-Second Amendment would have repealed the words "the principles specified in clause (b) or clause (c) of Article 39" independent of their enactment of the words "all or any of the principles laid down in Part IV." In this case, no reference to the broader legislative proceedings or external aids is necessary to arrive at the inference that Parliament would not have independently repealed these words. The text of the amendment adopted by Parliament itself makes it abundantly clear that there was no independent intention to repeal. The effect of Section 4 of the Forty-Second Amendment was to expand the scope of the immunity provided by Article 31-C to legislation. Under the unamended Article


31-C, immunity was only provided to legislation if it gave effect to the Directive Principles found in clause (b) or clause

(c) of Article 39. However, by Section 4 of the Forty-Second Amendment, the scope of this immunity was significantly expanded to immunise legislations that gave effect to any or all of the Directive Principles in Part IV of the Constitution.

Thus, the intention of Parliament in enacting Section 4 of the constitutional amendment was undoubtedly to expand the scope of the immunity granted by Article 31-C. This being the situation, it cannot be suggested that Parliament would have repealed the words "the principles specified in clause (b) or clause (c) of article 39" if it did not simultaneously enact the broader language expanding the scope of Article 31-C.

If Parliament had independently repealed these words, it would have not just reduced the scope of Article 31-C but altogether eliminated the effect of the Article. Without the words "the principles specified in clause (b) or clause (c) of article 39" in Article 31- C, the provision would have been rendered nugatory. Given Parliament's manifest intention to expand the scope of Article 31-C by Section 4 of the Forty-Second Amendment, it is not plausible to hold that Parliament independently sought to repeal the words "the principles specified in clause (b) or clause (c) of article 39" from Article 31-C. Therefore, it is evident that the legislative intent of Parliament when adopting Section 4 of the Forty- Second Amendment was composite, to repeal and enact (i.e., to substitute) through one single action. This Court cannot therefore disaggregate the steps of repeal and enactment and give effect to the repeal even after invalidating the enactment. After Minerva Mills invalidated Section 4 of the Forty-Second Amendment, the composite legal effect of Section 4 is nullified and the unamended text of Article 31-C stands revived. [Para 70]

2.3. The text of the unamended Article 31-C was challenged, and the first part of the Article was upheld by thirteenjudge decision in Kesavananda Bharati while the latter half of the Article was invalidated. Therefore, the first half of unamended Article 31-C, which is the subject matter of the present controversy, was undoubtedly constitutional as held by the thirteen-judge decision in Kesavananda Bharati


and further by the Constitution Bench in Waman Rao.

Therefore, if as a consequence of the decision in Minerva Mills, the unamended Article 31-C continues in force, there can be no question of any unconstitutionality or adverse consequences associated with the unamended Article 31-C.

Indeed, both the Constitution Benches in Minerva Mills and Waman Rao expressly noted that the first half of Article 31-C had been held to be constitutional in Kesavananda Bharati.

Further, given that the unamended Article 31-C has been given effect for over four decades as demonstrated by the decisions in Bhim Singh and Sanjeev Coke, no argument can be raised concerning any legal or practical difficulties with the operation of the unamended Article 31-C. Given these findings, the unamended Article 31-C continues in force. [Para 71]

2.4. An amendment can be invalidated when it modifies, obliterates, or adds some feature to the Constitution that is anathema to the principles that emerge upon a structural reading of the constitutional text. If an amendment is invalidated because it causes a drastic deviation from the principles that govern our constitutional democracy, the consequences must be a return to those principles. Article 31-C represented a delicate balance between the goals of Part IV and the rights of Part III of the Constitution. This balance was held to not impermissibly deviate from the core principles that govern our Constitution by the thirteen judges' decision of this Court in Kesavananda Bharati.

However, in Minerva Mills, Section 4 of the Forty-Second Amendment was held to violate these core principles that form the basic structure. The logical result of such a ruling is that the constitutional text must return to within the fold of the basic structure. To give effect to the repealing portions of Section 4 of the Forty-Second Amendment while also invalidating the enactment would not result in a return to a constitutional text that is in conformity with the basic structure. Rather, it would result in a novel third outcome, the constitutionality of which would be uncertain, untested, and may itself violate the basic structure. Therefore, the consequence of invalidating Section 4 of the Forty-Second Amendment must be that the unamended Article 31-C is revived. [Para 72]


Held (per B.V. Nagarathna, J.) (Concurring): I am in complete accord with the reasoning that, in the absence of any indication that Parliament intended a "repeal without substitution," the original text of Article 31C as it existed before the Constitution (Forty Second) Amendment Act, 1976 must be reinstated following the invalidation of the said amendment. In Minerva Mills case, when the amendment was struck down for deviating from constitutional principles, the logical consequence that must follow the declaration of invalidity of the amendment is to revert to those original principles which the amendment deviated from. This is by giving effect to Article 31C, to the extent it was upheld in Kesavananda Bharati case. This represents a return to the Constitution's original text, aligning with the basic structure of the Constitution. Consequently, invalidating Section 4 of the Forty-Second Amendment should automatically result in the restoration of the unamended Article 31C. I agree that Article 31C to the extent that it was upheld in Kesavananda Bharati remains in force. [Paras 3 and 23(a)]

Held (per Sudhanshu Dhulia, J.) (Concurring): The unamended Article 31-C to the extent held valid in Kesavananda Bharati survives. [Para 2]

B 1. Constitution of India - Art.39(b) - Whether the phrase 'material resources of the community' used in Art.39(b) includes privately owned resources - Held [per Dr Dhananjaya Y Chandrachud, CJI (for himself and for Hrishikesh Roy, J. B. Pardiwala, Manoj Misra, Rajesh Bindal, Satish Chandra Sharma, and Augustine George Masih, JJ.)] (Majority opinion) - Theoretically, the answer is yes, the phrase may include privately owned resources - However, one cannot subscribe to the expansive view adopted in the minority judgement authored by Justice Krishna Iyer in Ranganatha Reddy case and subsequently relied upon in Sanjeev Coke case - 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 inquiry about whether the resource in question falls within the ambit of Art. 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 - Public Trust Doctrine evolved by Supreme Court may also help identify resources which fall within the ambit of the phrase "material resource of the community" - Held (per B.V. Nagarathna, J.) - Yes, privately owned resources except "personal effects" can come within the scope and ambit of the phrase "material resources of the community" provided such resources get transformed as "resources of the community" - Held (per Sudhanshu Dhulia, J.) (Dissenting) - The view of the learned Chief Justice in this case (i.e. the majority opinon) ultimately holds that not all privately owned resources are "material resources of the community" - Not only this it further limits the hands of the legislature to a nonexhaustive list of factors to determine which resources can be considered as "material resources" - There is no need for this pre-emptive determination - The definition of "material resources of the community" was purposely kept in generalized and broad-based terms - Privately owned resources are part of "material resources of the community" - Provisions in Article 39(b) & (c) have to be read in light of Art.38 of the Constitution - Once one does that, one cannot but give an expansive meaning to the phrase "material resources of the community".

B 2. Constitution of India - Art.39(b) - Interpretation of - Whether interpretation of Article 39(b) adopted by Justice Krishna Iyer in Ranganatha Reddy case and followed in Sanjeev Coke case must be reconsidered - Held [per Dr Dhananjaya Y Chandrachud, CJI (for himself and for Hrishikesh Roy, J. B. Pardiwala, Manoj Misra, Rajesh Bindal, Satish Chandra Sharma, and Augustine George Masih, JJ.)] (Majority opinion) - 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 Art.39(b) - Thus, a coequal bench of this Court in Sanjeev Coke erred by relying on the minority opinion - Held (per B.V. Nagarathna, J.) (Dissenting) - On merits it cannot be held that Sanjeev Coke violated judicial discipline - One cannot lose sight of the fact that in Sanjeev Coke


this Court did not decide the case only on the basis of the opinion of Krishna Iyer, J. in Ranganatha Reddy - Therefore, Sanjeev Coke is good law insofar as on the merits of the matter is concerned - Held (per Sudhanshu Dhulia, J.) (Dissenting) - In Sanjeev Coke, when the Five Judge Constitution Bench unanimously followed the minority judgement in Ranganatha Reddy, it did not violate judicial discipline of not following the majority, since in Sanjeev Coke, the Five Judges did not go against the law laid down by the majority Judges in Ranganatha Reddy but only adopted the logic of the Three Judges on which the majority of Four Judges were silent - The five learned judges in Sanjeev Coke relied upon the decision of the minority judges in Ranganath Reddy as they were persuaded by the logic and the interpretation given by Justice Krishna Iyer to the phrase "material resources of the community" - 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 lost none of its relevance, or jurisprudential value, nor has it lost the audience which appreciates these values.

B 3. Constitution of India - Art.39(b) - Phrase 'material resources of the community' in Article 39(b) - Meaning of - Single-sentence observation in Mafatlal case to the effect that 'material resources of the community' include privately owned resources - Effect of - Held [per Dr Dhananjaya Y Chandrachud, CJI (for himself and for Hrishikesh Roy, J. B. Pardiwala, Manoj Misra, Rajesh Bindal, Satish Chandra Sharma, and Augustine George Masih, JJ.)] (Majority opinion) - The single-sentence observation in Mafatlal case to the effect that 'material resources of the community' include privately owned resources is not part of the ratio decidendi of the judgement - Thus, it is not binding on the Court - Held (per Sudhanshu Dhulia, J.) (Concurring) - The majority opinion in Mafatlal constitutes obiter dicta and is not binding on this Court - Held (per B.V. Nagarathna, J.) - The single-sentence observation in Mafatlal to the effect that "material resources of the community" include privately owned resources may be obiter but has great persuasive value.


B 4. Words and Phrases - Term 'distribution' - Meaning and connotation of - Distribution by the State - Whether acquisition of private resources falls within the ambit of the term 'distribution - Held [per Dr Dhananjaya Y Chandrachud, CJI (for himself and for Hrishikesh Roy, J. B. Pardiwala, Manoj Misra, Rajesh Bindal, Satish Chandra Sharma, and Augustine George Masih, JJ.)] - 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 nationalisation - In the specific case, the Court must determine whether the distribution 'subserves the common good' - Held (per B.V. Nagarathna, J.): The term "distribution" has no doubt a wide connotation but vesting in the State of a particular privately owned "material resource" or nationalisation 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 nationalisation could be utilised 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 - Alternatively, the State could decide to actually distribute the "material resources of the community" to eligible and deserving persons by way of assignment, lease, allotment, grant, etc. - The same would also come within the scope and ambit of the expression "distribution" - Held (per Sudhanshu Dhulia, J.): It is for the legislature to decide how the ownership and control of material resources is to be distributed in order to subserve common good - How to control and distribute a material resource is also the task of the Legislature, but while doing so what has to be seen is that the control and ownership of the material resource be so distributed that it subserves common good of the community - If it does not, then such a legislation can be struck down as the Judiciary is not deprived of its powers of judicial review.


Held [per Dr Dhananjaya Y Chandrachud, CJI (for himself and for Hrishikesh Roy, J. B. Pardiwala, Manoj Misra, Rajesh Bindal, Satish Chandra Sharma, and Augustine George Masih, JJ.)] (Majority Opinion):

Article 39(b) is not a source of legislative power. The inclusion or exclusion of 'privately-owned resources' from the ambit of the provision does not impact the power of the legislature to enact laws to acquire such resources. The power to acquire private resources, in certain situations, continues to be traceable to other provisions in the Constitution, including the sovereign power of eminent domain. [Para 203]

The interpretation of Article 39(b), i.e. that all private property is covered within the ambit of Article 39(b) is inconsistent with the text of Article 39(b). [Para 204]

There is a distinction between holding that private property may form part of the phrase 'material resources of the community' and holding that all private property falls within the net of the phrase. It is here that the judgment by Justice Krishna Iyer in Ranganatha Reddy, and the consequent observations in Sanjeev Coke fall into error. Justice Krishna Iyer cast the net wide, holding that all resources which meet "material needs" are covered by the phrase and any attempts by the government to nationalise these resources would be within the scope of Article 39(b). He clarified that not only the "means of production" but also the goods so produced fall within the net of the provision. The illustration which he provides in Ranganatha Reddy indicates the unworkable nature of such an interpretation. Justice Krishna Iyer observed, by way of an illustration, that not only do factories which produce cars fall within the net of Article 39(b), but even privately owned cars are covered by the provision. Similarly, even in Sanjeev Coke, the net is cast wide and this Court observed that "all things capable of producing wealth of the community" fall within the ambit of the phrase. In both decisions, it was observed that all resources of the individual are consequentially the resources of the community. [Para 209]

An interpretation of Article 39(b) which places all private property within the net of the phrase "material resources of the community" only satisfies one of the three requirements of the phrase, i.e. that the goods in question must be a

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'resource'. However, it ignores the qualifiers that they must be "material" and "of the community". The use of the words "material" and "community" are not meaningless superfluities.

One cannot adopt a construction of the provision which renders these terms otiose. The words "of the community" must be understood as distinct from the "individual". If Article 39(b) was meant to include all resources owned by an individual, it would state the "ownership and control of resources is so distributed as best to subserve the common good". Similarly, if the provision were to exclude privately owned resources, it would state "ownership and control of resources of the state …" instead of its current phrasing. The use of the word "of the community" rather than "of the state" indicates a specific intention to include some privately owned resources. [Para 211]

In essence, the text of the provision indicates that not all privately owned resources fall within the ambit of the phrase.

However, privately owned resources are not excluded as a class and some private resources may be covered. The resource in question must meet the two qualifiers, i.e. it must be a "material" resource and it must be "of the community". [Para 212]

To declare that Article 39(b) includes the distribution of all private resources amounts to endorsing a particular economic ideology and structure for our economy. Justice Krishna Iyer's judgment in Ranganatha Reddy, which was followed inter alia in Sanjeev Coke and Bhim Singhji, was influenced by a particular school of economic thought. 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. [Para 213]

The Constitution was framed in broad terms to allow succeeding governments to experiment with and adopt a structure for economic governance which would subserve the policies for which it owes accountability to the electorate. The role of this Court is not to lay down economic policy, but to facilitate this intent of the framers to lay down the foundation for an 'economic democracy'. The doctrinal error in the Krishna Iyer approach was, postulating a rigid economic theory, which


advocates for greater state control over private resources, as the exclusive basis for constitutional governance. The foresighted vision of our framers to establish an 'economic democracy' and trust the wisdom of the elected government, has been the backbone of the highgrowth rate of India's economy, making it one of the fastest-growing economies in the world. To scuttle this constitutional vision by imposing a single economic theory, which views the acquisition of private property by the state as the ultimate goal, would undermine the very fabric and principles of our constitutional framework. [Paras 214, 215 and 216]

The right to property was included in the Constitution as a fundamental right under Articles 19(1)(f) and Article 31.

Subsequently, the right to property was deleted from Part III of the Constitution by the Constitution (Forty-fourth Amendment) Act, 1978. However, a modified version was inserted and the right to property continues to be constitutionally protected under Article 300A. Although no longer in the nature of a fundamental right, the provision has been characterised as a constitutional and human right. The interpretation of Article 39(b), both as a pre-cursor to the protection of Article 31C and as an aspirational Directive Principle, cannot run counter to the constitutional recognition of private property.

To hold that all private property is covered by the phrase "material resources of the community" and that the ultimate aim is state control of private resources would be incompatible with the constitutional protection. [Paras 217, 220]

A construction of Article 39(b) which provides that all private property is included within the ambit of Article 39(b) is incorrect.

However, there is no bar on the inclusion of private property as a class and if a privately owned resource meets the qualifiers of being a 'material resource' and 'of the community', it may fall within the net of the provision. "Material resources of the community" refers to either natural resources (which are those of the nation) or those resources which in a large sense can be said to be of community, even though they may be in private hands. [Para 221]

10. There are various forms of resources, which may be privately owned, and inherently have a bearing on ecology and/or the well-being of the community. Such resources fall within

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the net of Article 39(b). To illustrate, non-exhaustively, there may exist private ownership of forests, ponds, fragile areas, wetlands and resource-bearing lands. Similarly, resources like spectrum, airwaves, natural gas, mines and minerals, which are scarce and finite, may sometimes be within private control. However, as the community has a vital interest in the retention of the character of these resources, they fall within the ambit of the expression "material resources of the community". [Para 223]

11.

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. [Para 229(b)]

12. 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 judgement.

Thus, it is not binding on this Court. [Para 229(c)]

13. On the limited question of whether the acquisition of private resources falls within the ambit of the term 'distribution', 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. 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 nationalisation.

In the specific case, the Court must determine whether the distribution 'subserves the common good'. [Paras 227, 228 and 229(f)]

14. 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 judgement 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'. [Para 229(d)]

15. 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". [Para 229(e)]

Held (per B.V. Nagarathna, J.):

Articles 37, 38 and 39 of the Constitution of India which are part of the Directive Principles of State Policy have to be interpreted by bearing in mind the changing economic policies of the State and not in a rigid watertight compartment. The flexibility of interpretation is having regard to the dynamic changes in the Indian socio-economic policies meant for the welfare and progress of the people of India. An interpretation of the aforesaid Articles or for that matter any other provision of the Constitution must be viewed in the historical backdrop of the period in which the interpretation was made by this Court during the course of adjudication. Any interpretation which was found to be sound and in consonance with the socio-economic policy of the State during a particular period of time, cannot be critiqued at a later point of time in any quarter including by a court of law merely because the socio- economic policies of the State have changed over a period of time or there is a paradigm shift in the thinking and policies of the State. [Para 22(I)]

Articles 37 and 38 of the Constitution have to be borne in mind by the Courts while considering the validity of any policy or statute which intend to further any of the Directive Principles of State Policy. [Para 22(II)]

Article 39(b) has to be read in the context of Article 39(c).

Articles 39(b) and (c) supplement and complement each other and cannot be construed in silos. Article 39(b) comprises of

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following five components, namely, (i) ownership and control;

(ii) material resources; (iii) of the community; (iv) so distributed; and (v) as best to subserve the common good.

(i) The expression "ownership and control" must be given its widest connotation in the context of "distribution of" "material resources of the community" "as best to subserve the common good".

(ii) "Material resources" can in the first instance be divided into two basic categories, namely, (i) State owned resources which belong to the State which are essentially material resources of the community, held in public trust by the State; and (ii) privately owned resources.

However, the expression "material resources" does not include "personal effects" or "personal belonging" of individuals, such as, clothing or apparel, household articles, personal jewellery and other articles of daily use belonging to the individuals of a household and which are intimate and personal in nature and use.

Excluding "personal effects", all other privately owned resources can be construed as "material resources".

Thus, all resources whether they are public resources or privately owned resources which come within the scope and ambit of the expression "material resources" as stated above are included within that expression.

(iii) "Material resources" which are privately owned could be transformed as "material resources of the community", inter alia, in the following five ways: a. by nationalisation, which could be either by way of an enactment made by the Parliament or a State legislature or in any other manner in accordance with law; b. by acquisition, which could be by way of a special enactment made by the Parliament or a State legislature having regard to Entry 42 - List III of the Seventh Schedule of the Constitution. Alternatively, the acquisition could be made under the extant Parliamentary or State laws dealing with acquisition; c. by operation of law, such as vesting of private resources in the State, which could be by virtue of statutes dealing with land reforms, land tenures, abolition of inams, village offices or any other law where by operation of law there would be vesting


of private material resources in the State or in any other manner in accordance with law; d. by purchase of the material resource from private persons by the State, its agencies and instrumentalities in the manner known to law; and e. by the private owner of the material resource converting his "material resources" as a "material resource of the community" by donation, gift, creation of an endowment or a public trust or in any other manner known to law.

(iv) In (a) to (d) above, the provision of Article 300A which is a constitutional right to property has to be complied with.

(v) The "material resources of the community" have to be "distributed as best to subserve the common good".

Distribution could be in two ways: Firstly, by the State itself retaining the material resource for a public purpose and/or for public use; and Secondly, privately owned material resources when converted as "material resources of the community" can be distributed to eligible and deserving persons either by way of auction, grant, assignment, allocation, lease, sale or any other mode of transfer known to law either temporarily or permanently depending upon the mode adopted and unconditionally or with conditions depending upon:(a) nature of the resource and its inherent characteristics; (b) the impact of the resource on the well-being of the community;

(c) the scarcity of the resource; (d) the consequences of such a resource being concentrated in the hands of the private owners; and (e) any such factors.

(vi) The expression "common good" would, inter alia, mean that the distribution of the "ownership and control of material resources of the community" would not lead to concentration of the wealth and means of production in the hands of few which is a Directive Principle in clause (c) of Article 39. Thus, "distribution of material resources of the community" cannot violate the Directive Principle in clause (c) of Article 39 of the Constitution. [Para 22(III)]

The majority judgment of this Court in Ranganatha Reddy and the judgment in Abu Kavur Bai relate to nationalisation of contract carriages/State carriages which were upheld by this

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Court. Nationalisation of coking coal mines was upheld by this Court in Sanjeev Coke. In Bhim Singhji and Basantibai, certain provisions of the Urban Land Ceiling Act and the provisions of MHADA respectively were upheld on the touchstone of Article 39(b) of the Constitution. The nine-Judge Bench in Mafatlal referred to the judgments of this Court in Ranganatha Reddy, Abu Kavur Bai etc. in the context of the submission made before, i.e., the Indian Constitution envisages Justice - social, economic and political, to all citizens of India as enshrined in the preamble. This was by way of an obiter but having persuasive value. [Para 22(IV)]

The majority judgment in Ranganatha Reddy, no doubt, did not concur with the views of Krishna Iyer, J. expressed in his separate opinion. However, in Sanjeev Coke the Constitution Bench of five-Judges independently upheld what was challenged in the said case, namely, the Coking Coal Mines (Nationalisation) Act, 1972 and while doing so in paragraphs 19 and 20 referred to the observations of Krishna Iyer, J. in Ranganatha Reddy and made certain observations on the majority judgment in Minerva Mills. However, A.N. Sen, J. did not express any opinion on the judgment of this Court in Minerva Mills. What is significant is that the judgments in Ranganatha Reddy as well as in Sanjeev Coke upheld the respective Nationalisation Acts. Therefore, on merits it cannot be held that Sanjeev Coke violated judicial discipline. One cannot lose sight of the fact that in Sanjeev Coke this Court did not decide the case only on the basis of the opinion of Krishna Iyer, J. in Ranganatha Reddy but on merits on the validity of the Nationalisation Act. Therefore, Sanjeev Coke is good law insofar as on the merits of the matter is concerned. [Para 23(b)]

The single-sentence observation in Mafatlal to the effect that "material resources of the community" include privately owned resources may be obiter but has great persuasive value. [Para 23(c)]

Yes, privately owned resources except "personal effects" as explained above can come within the scope and ambit of the phrase "material resources of the community" provided such resources get transformed as "resources of the community" as discussed by me above. [Para 23(d)]


I agree that 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". In addition, I also reiterate my discussion and conclusion on how privately owned material resource can be transformed as "material resource of the community". [Para 23(e)]

The term "distribution" has no doubt a wide connotation but vesting in the State of a particular privately owned "material resource" or nationalisation 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 nationalisation could be utilised 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.

Alternatively, the State could decide to actually distribute the "material resources of the community" to eligible and deserving persons by way of assignment, lease, allotment, grant, etc.

The same would also come within the scope and ambit of the expression "distribution". [Para 23(f)]

10. 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. The observations of the Judges in those decisions would not call for any critique in the present times. Neither is it justified nor warranted. [Para 24]

Held (per Sudhanshu Dhulia, J.):

The question as to whether privately owned resources are part of "material resources of the community" as used in Article 39(b), has been answered by the learned Chief Justice as "yes", "the phrase may include privately owned resources", but not in the expansive manner as held by the three learned

18


judges in State of Karnataka v. Ranganatha Reddy and later in Sanjeev Coke Mfg. Co. v. Bharat Coking Coal Ltd.

The judgment further sets limits on what could be "material resources of the community". I am unable to accept the above proposition as this view ultimately holds that not all privately owned resources are "material resources of the community".

Not only this it further limits the hands of the legislature to a non-exhaustive list of factors to determine which resources can be considered as "material resources". In my opinion there is no need for this pre-emptive determination. The definition of "material resources of the community" was purposely kept in generalized and broad-based terms. I entirely endorse the view taken by the Three learned Judges in Ranganatha Reddy and by the Five learned Judges in Sanjeev Coke, as to the scope and ambit of "material resources of the community". Privately owned resources are a part of the "material resources of the community". [Para 3]

2. "We may have democracy, or we may have wealth concentrated in the hands of a few, but we cannot have both." This expression is attributed to Justice Louis D. Brandeis, an eminent Jurist and a former Judge of US Supreme Court.

Without doubt, when Articles 38 and 39 of the Constitution of India were being incorporated in Part IV of our Constitution, a similar thought dominated the minds of the framers of our Constitution. It is for this reason that Granville Austin calls the Indian Constitution, "first and foremost a social document".

Our Constitution is not merely a roadmap for governance, it is also a vision for a just and equitable society. [Para 5]

In Mafatlal, the question before this Court primarily was of unjust enrichment. The observations of Justice Jeevan Reddy are only incidental and were not related to the core issue.

I agree with the learned Chief Justice on this point and I adopt the detailed reasoning given by him in holding that the majority opinion in Mafatlal constitutes obiter dicta and is not binding on this Court. [Para 24]

The question is that when in Sanjeev Coke, the Five Judge Constitution Bench unanimously followed the minority judgement in Ranganatha Reddy did it violate judicial discipline of not following the majority but the minority decision.

In my opinion, it did not break any judicial discipline, since in


Sanjeev Coke, the Five Judges did not go against the law laid down by the majority Judges in Ranganatha Reddy but only adopted the logic of the Three Judges on which the majority of Four Judges were silent. [Para 30]

It is difficult to even come to the conclusion that the Four Judges in Ranganatha Reddy entirely disagreed with the minority opinion of Justice Krishna Iyer. It merely says "we must not be understood to agree with all that he has said in his judgment in this regard." This is not exactly a disagreement.

The majority of the Four Judges chose to remain silent on the subject. It cannot be said that the Four Judges, in any way, said anything contrary or in opposition to what was laid down by the Three Judges in Ranganatha Reddy, and therefore, no judicial discipline was broken by Justice O. Chinnappa Reddy when he authored the unanimous judgment in Sanjeev Coke by adopting the logic of the Three Judges in Ranganatha Reddy. The logic is very clear, in cases where a Judge or Judges of the Supreme Court in minority have given a decision on a point on which the majority has remained silent, that it would be binding on the High Courts and all other Courts, and for this Court the least it will have is persuasive value.

The five learned judges in Sanjeev Coke relied upon the decision of the minority judges in Ranganath Reddy as they were persuaded by the logic and the interpretation given by Justice Krishna Iyer to the phrase "material resources of the community". [Para 31]

The provisions in Article 39(b) & (c) have to be read in the light of Article 38 of the Constitution of India. Once one does that, one cannot but give an expansive meaning to the phrase "material resources of the community". 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 interpretation of the phrase "material resources of the community". [Para 48]

It is for the legislature to decide how the ownership and control of material resources is to be distributed in order to subserve common good. Once the expansive meaning of "material resources of the community" is determined, there is

20


no necessity of drawing further guidelines for the legislatures to determine as to what will constitute material resources. How to control and distribute a material resource is also the task of the Legislature, but while doing so what has to be seen is that the control and ownership of the material resource be so distributed that it subserves common good of the community.

If it does not, then such a legislation can be struck down as the Judiciary is not deprived of its powers of judicial review.

The legislation in question has to establish a nexus with the principles specified in Article 39(b) and (c) to be a valid legislation. This is the law in terms of Kesavananda Bharati and Minerva Mills. To put it differently 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. [Para 49]

The incorporation of Article 38 as well as Article 39(b) and

(c) in Part IV of our Constitution was based on the prevalent philosophy of the time and the path of development India chose to follow. The interpretation given to the above provisions by this Court, particularly in Ranganatha Reddy and Sanjeev Coke also has its contextual relevance. Perhaps in some ways situations have changed. What has not changed, however, is the inequality. There is today a political equality and there is also an equality in law, yet the social and economic inequalities continue as cautioned by Dr. Ambedkar in his speech in the constituent Assembly on November 25,

1949. The inequality in income and wealth and the growing gap between the rich and the poor is still enormous. It will therefore not be prudent to abandon the principles on which Articles 38 and 39 are based and on which stands the Three Judge opinion in Ranganatha Reddy and the unanimous verdict in Sanjeev Coke. [Para 50]

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. I must also record here my strong disapproval on the remarks made on the Krishna Iyer Doctrine as it is called.

This criticism is harsh, and could have been avoided. The Krishna Iyer Doctrine, or for that matter the O. Chinnappa Reddy Doctrine, is familiar to all who have anything to do with law or life. It is based on strong humanist principles of fairness and equity. It is a doctrine which has illuminated our path in dark times. The long body of their judgment is not just a reflection of their perspicacious intellect but more importantly of their empathy for the people, as human being was at the centre of their judicial philosophy. [Para 50]

Case Law Cited

In the judgment of Dr. Dhananjaya Y. Chandrachud, CJI:

Sanjeev Coke Manufacturing Co v. Bharat Coking Coal Ltd. [1983] 1 SCR 1000 : (1983) 1 SCC 147 : 1982 INSC 93 and State of Karnataka v. Ranganatha Reddy [1978] 1 SCR 641 : (1977) 4 SCC 471 : 1977 INSC 196 [Minority opinion of Justice Krishna Iyer] - held, erroneous.

State of Maharashtra v. Central Provinces Manganese Ore. [1977] 1 SCR 1002 : (1977) 1 SCC 643; DK Trivedi & Sons v. State of Gujarat [1986] 1 SCR 479 : (1986) Supp. SCC 20; Shamarao Parulekar v. District Magistrate, Thana [1952] 1 SCR 683 : (1952) 2 SCC 1 : 1952 INSC 63; Natural Resources Allocation, In Re : Special Reference No.1 of 2012 [2012] 9 SCR 311 : (2012) 10 SCC 1 : 2012 INSC 428; Shaukat Khan v. State of Andhra Pradesh [1975] 1 SCR 429 : (1974) 2 SCC 376; Indian Express Newspapers (Bombay) v. Union of India [1985] 2 SCR 287 : (1985) 1 SCC 641 : 1984 INSC 231 - relied on.

State of Maharashtra v. Basantibai Khetan [1986] 1 SCR 707 :

(1986) 2 SCC 516 : 1986 INSC 40; Minerva Mills v. Union of India [1981] 1 SCR 206 : (1980) 3 SCC 625 : 1980 INSC 142; Kesavananda Bharati v. State of Kerala [1973] Supp. 1 SCR 1 :

(1973) 4 SCC 225 : 1973 INSC 91; Waman Rao v. Union of India [1981] 2 SCR 1 : (1980) 3 SCC 587 : 1980 INSC 216; Mafatlal Industries Ltd v. Union of India [1996] Supp. 10 SCR 585 : (1997) 5 SCC 536 : 1996 INSC 1514; IR Coelho v. State of Tamil Nadu [1999] Supp. 2 SCR 394 : (1999) 7 SCC 580 : 1999 INSC 394; Malpe

22


Vishwanath Acharya v. State of Maharashtra [1997] Supp. 6 SCR 717 : (1998) 2 SCC 1 : 1997 INSC 831; Supreme Court Advocates- On-Record Association v. Union of India [2015] 13 SCR 1 : (2016) 5 SCC 1 : 2015 INSC 285; Maharao Sahib Shri Bhim Singhji v.

Union of India [1985] Supp. 1 SCR 862 : (1981) 1 SCC 166 : 1980 INSC 219; ATB Mehtab Majid v. State of Madras [1963] Supp. 2 SCR 435 : (1963) 14 STC 355 : 1962 INSC 342; Koteswar Vittal Kamath v. Rangappa Baliga [1969] 3 SCR 40 : (1969) 1 SCC 255 : 1968 INSC 335; The Property Owners' Association and Ors.

v. The State of Maharashtra and Ors. [1996] Supp. 2 SCR 230 :

(1996) 4 SCC 49 : 1996 INSC 598; Property Owners' Assn. v.

State of Maharashtra (2001) 4 SCC 455; Property Owners' Assn.

v. State of Maharashtra (2013) 7 SCC 522; Mulchand Odhavji v.

Rajkot Borough Municipality (1971) 3 SCC 53; BN Tewari v. Union of India [1965] 2 SCR 421; T Devadasan v. Union of India [1964] 4 SCR 680 : 1963 INSC 183; B Banerjee v. Anita Pan [1975] 2 SCR 774 : (1975) 1 SCC 166 : 1974 INSC 246; State of Tamil Nadu & Ors. v. L. Abu Kavur Bai & Ors. [1984] 1 SCR 725 : (1984) 1 SCC 515; Jijubhai Nanbhai Kachar v. State of Gujarat [1994] 1 SCR 807 : (1995) Supp 1 SCC 596; National Textile Corp Ltd. v.

Sitaram Mills Ltd. [1986] 2 SCR 187 : AIR 1986 SC 1234 : 1986 INSC 61; Union of India v. Cynamide India Ltd. [1987] 2 SCR 841 :

(1987) 2 SCC 720 : 1987 INSC 100; Tinsukhia Electric Supply Co.

Ltd. v. State of Assam & Ors. [1989] 2 SCR 544 : (1989) 3 SCC 709 : 1989 INSC 128; N. Parthasarathy v. Controller of Capital Issues [1991] 2 SCR 329 : (1991) 3 SCC 153 : 1991 INSC 104; Orient Paper and Industries Ltd. v. State of Orissa [1990] Supp. 2 SCR 480 : (1991) Supp 1 SCC 81; Assam Sillimanite Ltd. & Anr v. Union of India & Ors. [1990] 1 SCR 983 : (1992) Suppl 1 SCC 692 : 1990 INSC 89; Mahinder Kumar Gupta v. Union of India, Ministry of Petroleum and Natural Gas (1995) 1 SCC 85; Tata Iron & Steel Co v. UOI [1996] Supp. 3 SCR 808 : (1996) 9 SCC 709 : 1996 INSC 770; Victorian Granites Pvt. Ltd. v. P.

Rama Rao & Ors. [1996] Supp. 5 SCR 692 : (1996) 10 SCC 665 : 1996 INSC 1018; Mafatlal Industries Ltd. & Ors. v. Union of India & Ors. [1996] Supp. 10 SCR 585 : (1997) 5 SCC 536; Reliance Natural Resources Ltd. v. Reliance Industries Ltd. [2010] 5 SCR 704 : (2010) 7 SCC 1 : 2010 INSC 290; Central Board of Dawoodi Bohra v. State of Maharashtra [2004] Supp. 6 SCR 1054 : (2005) 2 SCC 673; Trimurthi Fragrances (P) Ltd. v. State (NCT of Delhi) [2022] 15 SCR 516 : 2022 SCC OnLine SC 1247 : 2022 INSC 975; Jaishri Laxmanrao Patil v. State of Maharashtra [2021] 15


SCR 715 : (2021) 8 SCC 1 : 2021 INSC 284; Rajnarain Singh v.

Patna Administration Committee [1955] 1 SCR 290 : (1954) 2 SCC 82 : 1954 INSC 69; Kaikhosrou (Chick) Kavasji Framji v. Union of India [2019] 4 SCR 222 : (2019) 20 SCC 705 : 2019 INSC 378; Navtej Singh Johar v. Union of India [2018] 7 SCR 379 : (2018) 10 SCC 1 : 2018 INSC 790; Lt. Col. Nitisha & Ors. v. Union of India & Ors. [2021] 4 SCR 633 : (2021) 15 SCC 125 : 2021 INSC 210; Sita Soren v. Union of India [2024] 3 SCR 462 : (2024) 5 SCC 629 : 2024 INSC 161; Islamic Academy of Education v. State of Karnataka [2003] Supp. 2 SCR 474 : (2003) 6 SCC 697 : 2003 INSC 391; Secunderabad Club v. CIT [2023] 12 SCR 979 : 2023 SCC OnLine SC 1004 : 2023 INSC 736; State of Gujarat v. Utility Users' Welfare Assn. [2018] 9 SCR 106 : (2018) 6 SCC 21 : 2018 INSC 329; State of Madras v. Champakan Dorairjan [1951] 1 SCR 525 : AIR 1951 SC 226 : 1951 INSC 26; Mohd Hanif Qureshi v.

State of Bihar [1959] 1 SCR 629 : 1957 SCC OnLine SC 17; Golak Nath v. State of Punjab [1967] 2 SCR 762 : [1967] SCC OnLine SC 14 : 1967 INSC 45; Indian Handicrafts Emporium v.

Union of India [2003] Supp. 3 SCR 43 : (2003) 7 SCC 589 : 2003 INSC 427; M.R.F. Ltd. v. Inspector, Kerala Govt [1998] Supp. 2 SCR 632 : (1998) 8 SCC 227 : 1998 INSC 423; Workmen v.

Meenakshi Mills Ltd. [1992] 3 SCR 409 : (1992) 3 SCC 336 : 1992 INSC 164; Pathumma v. State of Kerala [1978] 2 SCR 537 :

(1978) 2 SCC 1 : 1978 INSC 7; State of Gujarat v. Mirzapur Moti Kureshi Kassab Jamat [2005] Supp. 4 SCR 582 : (2005) 8 SCC 534 : 2005 INSC 525; State of Kerala v. N.M. Thomas [1976] 1 SCR 906 : (1976) 2 SCC 310 : 1975 INSC 224; Bandhua Mukti Morcha v. Union of India [1984] 2 SCR 67 : (1984) 3 SCC 161 : 1983 INSC 203; Ashok Kumar Thakur v. Union of India [2008] 4 SCR 1 : (2008) 6 SCC 1 : 2008 INSC 473; Olga Tellis v. Bombay Municipal Corpn. [1985] Supp. 2 SCR 51 : (1985) 3 SCC 545 : 1985 INSC 151; S.R. Chaudhuri v. State of Punjab [2001] Supp. 1 SCR 621 : (2001) 7 SCC 126 : 2001 INSC 373; K.S. Puttaswamy

v. Union of India [2017] 10 SCR 569 : (2017) 10 SCC 1 : 2017 INSC 1235; Maharashtra State Electricity Board v. Thana Electric Supply Co. [1989] 2 SCR 518 : (1989) 3 SCC 616 : 1989 INSC 127; Tinsukhia Electric Supply Co. Ltd. v. State of Assam [1989] 2 SCR 544 : (1989) 3 SCC 709 : 1989 INSC 128; Assam Sillimanite Ltd. v. Union of India [1990] 1 SCR 983 : (1992) Supp. 1 SCC 692 : 1990 INSC 89; Hardeep Singh v. State of Punjab [2014] 2 SCR 1 : (2014) 3 SCC 92 : 2014 INSC 21; Rohitash Kumar v.

Om Prakash Sharma [2012] 13 SCR 47 : (2013) 11 SCC 451 :

24


2012 INSC 509; Chandigarh Housing Board v. Major General Devinder Singh [2007] 3 SCR 1049 : (2007) 9 SCC 6 : 2007 INSC 291; Lachhman Dass v. Jagat Ram [2007] 2 SCR 980 : (2007) 10 SCC 448; Vidya Devi v. State of Himachal Pradesh [2020] 1 SCR 749 : (2020) 2 SCC 569 : 2020 INSC 23; Kolkata Municipal Corporation & Anr v. Bimal Kumar Shah & Ors. [2024] 5 SCR 831 : 2024 INSC 435; M.C. Mehta v. Kamal Nath [1996] Supp. 10 SCR 12 : (1997) 1 SCC 388 : 1996 INSC 1482; M.I. Builders (P) Ltd. v. Radhey Shyam Sahu [1999] 3 SCR 1066 : (1999) 6 SCC 464 : 1996 INSC 1482; Fomento Resorts and Hotels Ltd.

v. Minguel Martins [2009] 3 SCR 1 : (2009) 3 SCC 571 : 2009 INSC 39; Intellectuals Forum v. State of A.P. [2006] 2 SCR 419 :

(2006) 3 SCC 549 : 2006 INSC 101; Vedanta Limited v. State of Tamil Nadu [2024] 2 SCR 1121 : 2024 INSC 175; Centre for Public Interest Litigation v. Union of India [2012] 3 SCR 147 : (2012) 3 SCC 1 - referred to.

Property Owners' Association v. State of Maharashtra, 1991 SCC OnLine Bom 521; Laxmibai v. State of Madhya Pradesh, AIR 1951 Nag 94; Shriram Gulabdas v. Board of Revenue, Madhya Pradesh (1952) 3 STC 343 - referred to.

Frost v. Corporation Commissioner, 278 U.S. 505; Texas Company

v. Cohn Wash, 2d 360 (17 April 1941, Supreme Court of Washington); Mazurek v. FM Ins Company, Jamestown 320 Pa 33 (Pa. 1935) (25 November 1935, Supreme Court of Pennsylvania) - referred to.

In the judgment of B. V. Nagarathna, J.

Sanjeev Coke Manufacturing Co. v. Bharat Coking Coal Ltd. [1983] 1 SCR 1000 : (1983) 1 SCC 147 : AIR 1983 SC 239; State of Tamil Nadu v. L. Abu Kavur Bai [1984] 1 SCR 725 : (1984) 1 SCC 515 : 1984 INSC 17 and State of Maharashtra v. Basantibai Mohanlal Khetan [1986] 1 SCR 707 : (1986) 2 SCC 516 - affirmed.

Property Owners' Association v. State of Maharashtra [1996] Supp. 2 SCR 230 : (1996) 4 SCC 49; H.H. Kesavananda Bharati Sripadagalvaru v. State of Kerala [1973] Supp. 1 SCR 1 : (1973) 4 SCC 225 : AIR 1973 SC 1461; State of Karnataka v. Ranganatha Reddy [1978] 1 SCR 641 : AIR 1978 SC 215; Mafatlal Industries v.

Union of India [1996] Supp. 10 SCR 585 : (1997) 5 SCC 536; IR Coelho v. State of Tamil Nadu [1999] Supp. 2 SCR 394 : (1999) 7 SCC 580 : 1999 INSC 394; Minerva Mills Ltd. v. Union of India


[1981] 1 SCR 206 : (1980) 3 SCC 625 : AIR 1980 SC 1789; State of West Bengal v. Anwar Ali Sarkar [1952] 1 SCR 284 : AIR 1952 SC 75; Supreme Court Advocates-On-Record Association v. Union of India [1993] Supp. 2 SCR 659 : (1993) 4 SCC 441; Zee Telefilms Ltd. v. Union of India [2005] 1 SCR 913 : AIR 2005 SC 2677; Justice K.S. Puttaswamy (Retd.) v. Union of India [2017] 10 SCR 569 : (2017) 10 SCC 1; National Legal Services Authority v. Union of India [2014] 5 SCR 119 : (2014) 5 SCC 438; Joseph Shine v.

Union of India [2018] 11 SCR 765 : (2019) 3 SCC 39; Navtej Johar

v. Union of India [2018] 7 SCR 379 : (2018) 10 SCC 1; Anuj Garg

v. Hotel Association of India [2007] 12 SCR 991 : AIR 2008 SC 63; Secretary, Ministry of Defence v. Babita Punia [2020] 3 SCR 833 :

(2020) 7 SCC 469; Lt. Colonol Nitisha & Others v. Union of India [2021] 4 SCR 633 : AIR 2021 SC 1797; Bhim Singhji v. Union of India, AIR 1981 SC 234; Waman Rao v. Union of India [1981] 2

SCR 1 : (1980) 3 SCC 587 : 1980 INSC 216; AIR 1981 SC 271; Centre for Public Interest Litigation v. Union of India [2012] 3 SCR 147 : (2012) 3 SCC 1; In Re : Natural Resources Allocation, Special Reference No.1 of 2012 [2012] 9 SCR 311 : (2012) 10 SCC 1; H.H. Maharaja Rana Hemant Singhji v. CIT [1976] 3 SCR 423 :

(1976) 1 SCC 996; State of West Bengal v. Subodh Gopal Bose [1954] 1 SCR 587 : AIR 1954 SC 92; Jilubhai v. State of Gujarat [1994] 1 SCR 807 : AIR 1995 SC 142; Rustom Cavasjee Cooper

v. Union of India [1970] 3 SCR 530 : AIR 1970 SC 564; State of Bihar v. Kameshwar Singh [1952] 1 SCR 889 : AIR 1952 SC 252; Coal India Ltd. v. CCI [2023] 7 SCR 827 : (2023) 10 SCC 345; Madhusudan Singh v. Union of India [1984] 1 SCR 849 : (1984) 2 SCC 381; Tinsukhia Electric Supply Co. Ltd. v. State of Assam [1989] 2 SCR 544 : (1989) 3 SCC 709; Assam Sillimanite Ltd.

v. Union of India [1990] 1 SCR 983 : (1992) Supp. 1 SCC 692; Kolkata Municipal Corporation v. Bimal Kumar Shah [2024] 5 SCR 831 : 2024 INSC 435 - referred to.

In the judgment of Sudhanshu Dhulia, J.

State of Karnataka v. Ranganatha Reddy [1978] 1 SCR 641 :

(1977) 4 SCC 471 [Minority opinion of Justice Krishna Iyer]; and Sanjeev Coke Mfg. Co. v. Bharat Coking Coal Ltd. [1983] 1 SCR 1000 : (1983) 1 SCC 147 : AIR 1983 SC 239 - impliedly affirmed.

Minerva Mills v. Union of India [1981] 1 SCR 206 : (1980) 3 SCC 625; Kesavananda Bharati v. State of Kerala [1973] Supp.

26


1 SCR 1 : (1973) 4 SCC 225; State of Madras v. Champakam Dorairajan [1951] 1 SCR 525 : 1951 SCC OnLine SC 30; In Re : Kerala Education Bill, 1957 [1959] 1 SCR 995 : 1958 SCC OnLine SC 8; Mohd. Hanif Quareshi and others v. State of Bihar and others [1959] 1 SCR 629 : 1957 SCC OnLine 17; State of Kerala v. N.M.

Thomas [1976] 1 SCR 906 : (1976) 2 SCC 310; State of Gujarat

v. Mirzapur Moti Kureshi Kassab Jamat and others [2005] Supp. 4 SCR 582 : (2005) 8 SCC 534; Mafatlal Industries v. Union of India [1996] Supp. 10 SCR 585 : (1997) 5 SCC 536; Waman Rao & Others v. Union of India [1981] 2 SCR 1 : (1981) 2 SCC 362; State of T.N. v. L. Abu Kavur Bai [1984] 1 SCR 725 : (1984) 1 SCC 515; Tinsukhia Electric Supply Co. Ltd. v. State of Assam [1989] 2 SCR 544 : (1989) 3 SCC 709; Madhusudan Singh v.

Union of India [1984] 1 SCR 849 : (1984) 2 SCC 381; State of Maharashtra v. Basantibai Mohanlal Khetan [1986] 1 SCR 707 :

(1986) 2 SCC 516; Assam Sillimanite Ltd. v. Union of India [1990] 1 SCR 983 : (1992) Supp 1 SCC 692; Jilubhai Nanbhai Khachar

v. State of Gujarat [1994] 1 SCR 807 : (1995) Supp 1 SCC 596; KT Moopli Nair v. State of Kerala [1961] 3 SCR 77 : 1960 SCC OnLine SC 7; Shankari Prasad Singh v. Union of India, AIR 1951 SC 458; State of Bihar v. Kameshwar Singh [1952] 1 SCR 889 :

(1952) 1 SCC 528; State of West Bengal v. Bela Banerjee [1954] 1 SCR 558 : (1953) 2 SCC 648; Vajravelu v. Special Deputy Collector [1965] 1 SCR 614 : 1964 SCC OnLine SC 22; State of Madras v. D. Namasivaya Mudaliar [1964] 6 SCR 936 : 1964 SCC OnLine SC 169; Union of India v. Metal Corporation of India [1967] 1 SCR 255 : 1966 SCC OnLine SC 15; State of Gujarat

v. Shri Shantilal Mangaldas & Ors. [1969] 3 SCR 341 : AIR 1969 SC 634; RC Cooper v. Union of India [1970] 3 SCR 530 : (1970) 1 SCC 248; Video Electronics Pvt. Ltd. v. State of Punjab [1989] Supp. 2 SCR 731 : (1990) 3 SCC 87; Bangalore Water Supply & Sewerage Board. v. A. Rajappa & Others [1978] 3 SCR 207 :

(1978) 2 SCC 213; Maneka Gandhi v. Union of India [1978] 2 SCR 621 : (1978) 1 SCC 248; MH Hosket v. State of Maharashtra [1979] 1 SCR 192 : (1978) 3 SCC 544; Hussainara Khatoon v.

Home Secretary, State of Bihar (I) [1979] 3 SCR 169 : (1980) 1 SCC 81; Sunil Batra v. Delhi Administration [1980] 2 SCR 557 :

(1980) 3 SCC 488; Bijoe Emmanuel v. State of Kerala [1986] 3 SCR 518 : (1986) 3 SCC 615; Vishaka v. State of Rajasthan [1997] 3 Supp. SCR 404 : (1997) 6 SCC 241; K.S. Puttaswamy


v. Union of India [2017] 10 SCR 569 : (2017) 10 SCC 1; Navtej Singh Johar v. Union of India [2018] 7 SCR 379 : (2018) 10 SCC 1 - referred to.

V. Padmanabha Ravi Varma Raja v. Deputy Tahsildar, 1962 SCC OnLine Ker 98; Mahinder Bahawanji Thakur v. S.P. Pande, 1963 SCC OnLine Bom 28; Sudha Tiwari v. Union of India, 2011 SCC OnLine All 253; Raja Suryapal Singh v. U.P of Govt., 1951 SCC OnLine All 183 - referred to.

Hunter v. Southam Inc (1984) 2 SCR 145 (Canada Supreme Court); Fay v. New York 332 U.S. (1947) (Jackson, J.) - referred to.

Books and Periodicals Cited

In the judgment of Dr. Dhananjaya Y. Chandrachud, CJI:

DD Basu, 'Constitution of India', Vol 9, p. 9917; Advanced Law Lexicon by Ramanathaier, 3rd Edn., Vol. III, p. 2509; Halsbury, 2nd Edn, Vol 19, para 556; Eugene Wambaugh, The Study of Cases (Boston: Little, Brown & Co., 1892); HM Seervai, Constitutional Law of India, Vol 2 (4th ed, Universal Law Publishing 2002) 1934-40; Constituent Assembly Debates, Vol VII (15th November 1948); Black's Law Dictionary, 8th Edition, South Asian Edition, 2015; Hughes, The Supreme Court of The United States, (1930) American Bar Asson. Journal.; Rahul De, A History of Economic Policy in India: Crisis, Coalitions, and Contingency, 2023 (Oxford University Press); Ministry of Finance (Department of Economic Affairs), Government of India, The Indian Economy: A Review, January 2024; Ministry of Finance (Department of Economic Affairs), Government of India, Economic Survey 2023-24, July 2024 - referred to.

In the judgment of Sudhanshu Dhulia, J.

Mr. Justice Brandeis, Great American: Press Opinion & Public Appraisal (The Modern View Press, Saint Louis, 1941), Pg.42; Granville Austin, The Indian Constitution: Cornerstone of a Nation (Oxford University Press, New Delhi, Second Impression 2000), Pgs. 50, 51; Aharon Barak, The Judge in a Democracy (Princeton University Press, 2006), Pgs. 4-5, 308; Aharon Barak, Purposive

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Interpretation in Law (Universal Law Publishing Co., 2007), Pgs. 370, 372, 377; Aharon Barak, Hermeneutics and Constitution Interpretation, 14 Cardozo L. Rev. 767, (1992-93), Pg. 772; A. M Zaidi et al., The Encyclopaedia of The Indian National Congress (VOL.-10: 1930-1935): The Battle For Swaraj (S. Chand & Co.

Ltd., 1980), Pg. 183; Rakesh Batabyal (ed.), The Penguin Book of Modern India Speeches (Penguin Books, 2007), Pg. 365; O. Chinnappa Reddy, The Court and The Constitution of India: Summits and Shallows (Oxford University Press, 2008), Pg. 137, 139; Bipan Chandra, Nationalism & Colonialism in Modern India (Orient Longman, 1979), Pgs. 145, 158; Sir P. Thakurdas, Jrd Tata et al., A Plan of Economic Development for India (Part II) (1944); Sanjay Baru (ed.), The Bombay Plan (Rupa Publications India Pvt Ltd., 2018), Pg. 292; Aditya Mukherjee, Political Economy of Colonial and Post-Colonial India (Primus Books, 2022), Pg.192; Justice O. Chinnappa Reddy, The Court and The Constitution of India: Summits and Shallows (Oxford University Press, 2008), Pgs. 74-75, 76; Constituent Assembly Debates, Vol. I, Pg. 62; Vol. II, Pg. 316; Vol. V, Pg.341; Vol. VII, Pgs. 41, 225, 473, 518-19 and 539; Vol. IX, Pg. 1195; Vol. XI, Pg.979; P.K. Tripathy, Spotlights on Constitutional Interpretation (N.M Tripathi Pvt. Ltd., 1972), Pg. 295; Shylashri Shankar, Scaling Justice: The Supreme Court, Social Rights and Civil Liberties in India (Oxford University Press, 2009), Pg. 124; H.M. Seervai, Constitutional Law of India (4th Ed., Vol. II, 1993), Pgs. 1923-1924, 1932; Lael K. Weis, Constitutional Directive Principles, 37 (4) Oxford Journal of Legal Studies 916 (2017), Pg. 923; Parliamentary Debates (Part II-Proceedings Other Than Questions and Answers), Pgs. 8830, 8831-8832; Aditya Mukherjee, Political Economy of Colonial and Post-Colonial India (Primus Books, 2022), Pg. 511; C.H Hanumantha Rao, Rural Society and Agricultural Development in Course of Industrilisation: Case of India, 26 Economic and Political Weekly (1991), Pg. 691; Report of the Monopolies Inquiry Commission 1965; Lok Sabha Debates (Part II- Proceedings Other Than Questions and Answers), Vol-III, Pgs. 4833-4834; A. Moin Zaidi, The Great Upheaval 1969-1972 (Orientalia, 1972), Pgs. 103-105; Anatole France et. al., Crainquebille (Dodd, Mead & Co., Inc., 1922), Pg. 171; Global Hunger Index 2024; National Multidimensional Poverty Index: A Progress Review 2023, Niti Aayog, Government Of India - referred to.


List of Keywords

Article 31C of the Constitution; Amendment struck down by Supreme Court; Interpretation of Article 39(b) of the Constitution; Article 300A; Phrase 'material resources of the community'; Kesavananda Bharati case; Minerva Mills case; Sanjeev Coke case; Ranganatha Reddy case; Privately owned resources; Qualifier of 'material needs'; Public Trust Doctrine; Minority opinion; Term 'distribution'; Distribution by the State; Vesting of resources in the State; Nationalisation; Common good.

Case Arising From

CIVIL APPELLATE/ ORIGINAL JURISDICTION: Civil Appeal No. 1012 of 2002

From the Judgment and Order dated 13.12.1991 of the High Court of Judicature at Bombay, Maharashtra in WP No. 2673 of 1986

With

Special Leave Petition (Civil) Nos. 4367, 5204, 5777, 6191-6192, 7950, 8797 of 1992, Special Leave Petition (Civil) No. 6744 of 1993, Special Leave Petition (Civil) Nos. 2303 And 13467 of 1995, Writ Petition (Civil) No. 934 of 1992, Writ Petition (Civil) No. 660 of 1998, Writ Petition (Civil) No. 342 of 1999, Writ Petition (Civil) Nos. 469 And 672 of 2000 and Writ Petition (Civil) No.66 of 2024

Appearances for Parties

R Venkataramani, Attorney General for India, Tushar Mehta, Solicitor General, Zal Andhyarujina, Balbir Singh, Rakesh Dwivedi, Gopal Sankaranarayanan, Shyam Divan, Ms. Uttara Babbar, Dr.

Harshvir Pratap Sharma, Santosh Paul, Rajiv Dutta, Sr. Advs., H.

Devarajan, Sameer Parekh, Ms. Sonali Basu Parekh, E.R. Kumar, Sumit Goel, Ishan Nagar, Jayom Mahesh Shah, Ashok Rajagopalan, Abhishek Thakral, Ms. Aditi, Ms. Apurba Pattanayak, Abhay Jadeja, Ms. Dhanyashree Jadeja, Varun Satiya, Arun Unnikrishnan, Ms.

Revati Desai, Ms. Akanksha Agrawal, Ms. Serena Jetmalani, Shayan Bisney, M/s. Parekh & Co., D. Ashok Rajagopalan, Ms.

Madhu Tyagi, Kunal Jain, S. C. Birla, Subrat Birla, Ujjwal A. Rana, Himanshu Mehta (for M/s. Gagrat And Co.), S. R. Setia, Amarjit Singh Bedi, Gaganpreet Sandhu, Varun Chandiok, Ms. Riya Seth, Dinesh Kumar, Jay Kishan Dev, P. N. Gupta, Mrs. Bharti Gupta, Pushp Raj Gupta, Ms. Aashima Gupta, T. Srinivasa Murthy, Hemant

30


Pathak, Mrs. Manisha Chanwani, Samit Shukla, Ashish Wad, Manoj Wad, Mrs. Tamali Wad, Ajeyo Sharma, Ms. Akriti Arya, M/s. J S Wad And Co, P. Narasimhan, Sushant Dogra, Dhananjay Kataria, Kartikay Aggarwal, Raman Yadav, Ms. Ameyavikrama Thanvi, Ms. Oorjasvi Goswami, Chitvan Singhal, Abhishek Kr. Pandey, Chirag M. Shroff, Siddharth Dharmadhikari, Aaditya Aniruddha Pande, Bharat Bagla, Sourav Singh, Aditya Krishna, Kanu Agrawal, Naman Tandon, Madhav Sinhal, Gaurang Bhushan, Ms. Monica Benjamin, Ms. Anu Sura, Ranjeev Khatana, Shyam Gopal, Ms.

Preet S. Phanse, Adarsh Dubey, Prahlad Singh, Shashank Bajpai, Ms. Sansriti Pathak, Nipun Saxena, Ms. Astha Sharma, Srisatya Mohanty, Ms. Anju Thomas, Sanjeev Kaushik, Ms. Mantika Haryani, Shreyas Awasthi, Eklavya Dwivedi, Himanshu Chakravarty, Ms.

Aditi Gupta, Ms. Jahnvi Dubey, Ms. Trisha Chandran, Ms. Shivani Vij, Ms. Tanya Srivastava, Vishal Sinha, Madhav Gupta, Ms. Ripul Swati Kumari, Bhanu Mishra, Ms. Muskan Surana, Ms. Lihzu Shiney Konyak, Archit Adlakha, Ms. Saumya Saxena, Aditya Raj Pandey, Shrutanjaya Bharadwaj, Mahesh Agarwal, Rishi Agrawala, Manu Krishnan, Ms. Anwesha Padhi, Yash Momaya, Ms. Shivani Agarwal, Udayaditya Banerjee, Aditi Deshmukh, Shaurya Rai Ranjan, Aryan Rachh, E. C. Agrawala, Ms. Daisy Hannah, Ms. Oindrila Sen, Ms.

Rayana Mukherjee, Samarth Mohanty, Tejas Patel, Mrs. Meera Kaura, Mrs. Stuti Jain, Paras Joshi, Akshu Jain, Akul Krishnan, Amit Seth, Dibyanshu Pandey, Radhe Shyam Sharma, Varun K Chopra, Mehul Sharma, M/s. Vkc Law Offices, Ms. Sujata Kurdukar, Gopal Balwant Sathe, Nishant Ramakantrao Katneshwarkar, M/s.

Manoj Swarup And Co., Mrs. Manik Karanjawala, Ms. Nandini Gore, Ms. Sonia Nigam, Mohammad Shahyan Khan, Akarsh Sharma, Rabin Majumder, Pramod B. Agarwala, Sriharsh Nahush Bundela, Vedant Mishra, Virendra Mohan, M/s. Lawyer S Knit & Co, Sunil Kumar Verma, Manu Krishnan G, Ms. B. Vijayalakshmi Menon, Vivek Sharma, R. Nedumaran, Haresh G. Ganatra, Ms. Anuradha H. Ganatra, Siddharth Dutta, Ms. Neha Singh, Ms. Subhashree Jaganathan, C. Aravind, Shivaji M. Jadhav, Brij Kishor Sah, Adarsh Kumar Pandey, Ms. Apurva, Vignesh Singh, Aditya S. Jadhav, Alok Kumar, Diwakar Sharma, Arun Kanwa, Ms. Aliya Singh, Kanishk Chaudhary, Prabal Chaudhary, Mrs. Chitra Chaudhary, Prashant Chaudhary, M. C. Dhingra, Gaurav Dhingra, Piyush Kant Roy, Surendra Gautam, Abhishek Lakra, Rishab Kumar Singh, Arvind Kumar Singh, Shashank Singh, Advs. for the appearing parties.


Judgment / Order of the Supreme Court

Judgment

Dr Dhananjaya Y Chandrachud, CJI

Table of Contents*

A. Background ...................................................................... 6

Genesis of the Reference ......................................... 6

ii.

The three reference orders ....................................... 12

iii.

Scope of the present reference ................................ 18

B. Issues ................................................................................ 21

C. Article 31C ........................................................................ 23

Brief History of Article 31-C ...................................... 23

ii.

The present dispute concerning Article 31-C and rival contentions ...................................................... 35

iii.

Precedents concerning invalidation of amendments ........................................................... 46

iv.

Analysis and Conclusions concerning Article 31-C 75

D. Article 39(b) ...................................................................... 84

Submissions ............................................................. 84

a. Submissions of the appellants and intervenors ..... 84

b. Submissions of the Respondents and Intervenors.... 89

ii.

Judicial Discipline: Observations in Sanjeev Coke and Mafatlal ............................................................... 95

a. The resurrection of the minority view in Ranganatha Reddy by Sanjeev Coke ............................... 95

b. Sanjeev Coke erred in relying on the observations of the minority in Ranganatha Reddy ...................... 103

The error has been carried forward in subsequent decisions ............................................................... 110

d. The single-line observation in Mafatlal is obiter dicta ...................................................................... 112

iii.

Interpreting Article 39(b) ........................................... 123

* Ed. Note: Pagination as per the original Judgment.

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a. Article 39(b) as a pre-requisite to protection under Article 31C ............................................................ 123

b. Article 39(b) as a Directive Principle ......................... 128

iv.

Historical Context: Constituent Assembly Debates 135

a. Debates about the purpose of Directive Principles... 135

b. Debates about the text of Article 39(b) ..................... 142

Inferences from the discussions in the Constituent Assembly .............................................................. 150

Interpretation of Article 39(b) that has been doubted ...................................................................... 156

vi.

Correctness of the above interpretation of Article 39(b) ........................................................................... 175

a. The interpretation is inconsistent with the text of Article 39(b) ........................................................... 176

b. The interpretation amounts to endorsing a particular economic ideology ................................. 180

The interpretation is incompatible with the right to property ................................................................. 184

d. Determining the 'materiality' and 'community element' of the resource ........................................ 186

e. The provision may include the 'vesting' of private resources in the state ............................................ 189

E. Conclusion ....................................................................... 191

The reference to this Constitution Bench raises significant questions about Articles 39(b) and 31-C of the Constitution. Answering the reference has been an adventure through the intricacies of constitutional interpretation and the annals of constitutional history.

However, an interpretation of these provisions must involve an understanding of not only their historical context but also the social and economic values which guide the present and are likely to guide the future. Directive Principles of State Policy1 such as Article 39(b) and safe harbour provisions such as Article 31-C are unique creations of our Constitution. Understanding them is a delicate task

1 "Directive Principles"


that involves balancing competing yet coexistent values embedded in our Constitution - the recognition of the individual rights of all citizens and an aspiration towards a welfare state which secures socio-economic justice.

Before proceeding, it would be appropriate to briefly refer to the provisions of the Constitution which form the heart of the reference and controversy before this Court. Article 39(b), a part of the Directive Principles contained in Chapter IV of the Constitution, reads as follows:

"39. Certain principles of policy to be followed by the State.-The State shall, in particular, direct its policy towards securing-

"(b) that the ownership and control of the material resources of the community are so distributed as best to subserve the common good;"

Article 31C of the Constitution provides certain legislations a safe harbour and protects them from being challenged under Articles 14 and 19. The only requirement is that the legislation must give effect to "the principles specified in clause (b) or clause (c) of Article 39".

In a sense, Article 31C is the ying to the yang of Article 39(b), which gives it a unique colour and texture and provides it with far-reaching consequences. Once it is established that a particular legislation has a nexus with the principles specified in Article 39(b), Article 31C provides the legislation with a lifeboat - protecting it from a challenge to its constitutionality under Articles 14 and 19 of the Constitution.

With this broad context in mind, we first delve into the journey of the reference to this Constitution Bench and define the scope of this judgement.

Background

Genesis of the Reference

Mumbai is the most populous city in India and one of the most densely populated cities in the world. A persistent problem faced by its residents has been the large number of old, dilapidated buildings which continue to be inhabited despite becoming unsafe due to lack of repairs and reconstruction. It is estimated that over sixteen

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thousand buildings in the city were constructed before 1940.2 The antiquity of the buildings in the island city is compounded by the geographical location of the city. Situated on the western coastline, the saline air of the city contributes to the reduction in the lifespan of its structures. The monsoon rains create pressing challenges for the safety of human settlements and residential buildings.

Every year before the monsoon, the Mumbai Building Repair and Reconstruction Board issues a list of dangerous buildings deemed unfit for human habitation. It issues eviction notices to the people living in such buildings and asks occupants to vacate the buildings to avert untoward incidents. Yet, despite these efforts, the city still grapples with the recurring tragedy of building collapses, resulting in loss of life and property, a reminder of the ongoing struggle to ensure safe and secure housing for its residents.3

The erstwhile Bombay was originally a group of seven islands.

These islands were merged by a series of land reclamation projects to create the present-day 'Island City of Bombay'. By the beginning of the twentieth century, the island city emerged as a major textile centre. With the growth of the textile industry, there was a significant inflow of workmen from outside of the city. This necessitated the construction of additional residential buildings to house the workmen and their families. The colonial government leased properties for this purpose and a large number of buildings were constructed. During World War II, the scarcity of housing accommodation became even more acute and there was an unprecedented increase in the rents.

To mitigate this, Rent Control legislations were introduced.

The use of the buildings by more people than they could accommodate resulted in a steady deterioration of the structures and the dilapidation of the buildings over a period of time. Therefore, the Bombay Housing

2 Maharashtra Housing and Area Development Authority, Number of Cessed Buildings, https://www. mhada.gov.in/en/content/m-b-r-r-board-history.

3 See Hindustan Times, 1 dead, four hurt as portion of nearly 100-year-old building collapses in Grant Road, 21 July 2024, https://www.hindustantimes.com/cities/mumbai-news/1-dead-four-hurt-as-portionof-nearly-100-year-old-building-collapses-in-grant-road-101721503683871.html; Indian Express, Dongri building collapse: In 37 years, 894 people died in accidents involving MHADA, 17 July 2019, https://indianexpress.com/article/cities/mumbai/dongri-building-collapse-in-37-years-894-people-diedin-accidents-involving-mhada-buildings-5832965/; Indian Express, Mumbai building collapse: Bhendi Bazaar accident leaves 24 dead, CM Devendra Fadnavis assures strict action, 31 August 2017, https:// indianexpress.com/article/cities/mumbai/mumbai-building-collapse-bhendi-bazaar-accident-death-tollrises-to-22-4822665/


Board Act 1948 was enacted which provided for the setting up of a Housing Board of Bombay to execute housing schemes and construct new residential buildings in the island city. Although the enactment helped increase the housing stock, it could not address the issue of existing buildings, which were collapsing from time to time, resulting in loss of life and property. To address the alarming rate of collapses, which were resulting in the loss of life and property, and exacerbating the existing housing shortage, urgent measures were needed, particularly in light of the rapid population growth of the city due to influx from various parts of the country. The Bombay Repairs and Reconstruction Board Act 1969 was introduced. Under this enactment, the Bombay Building Repairs and Reconstruction Board was set up and a cess was introduced to generate funds for the repair and reconstruction of dangerous buildings. A part of the cess was borne by the owners, while the remaining part was borne by the tenants. However, despite these efforts, due to the unprecedented scale of the problem and lack of financial resources, the problem persisted.

Accordingly, the state legislature of Maharashtra enacted the Maharashtra Housing and Area Development Act 1976,4 which received the assent of the President on 25 April 1977. The long title stipulates that it is an Act to "unify, consolidate and amend the laws relating to housing, repairing and reconstructing dangerous buildings and carrying out improvement works in slum areas." Preexisting laws such as the Bombay Housing Board Act 1948, the Madhya Pradesh Housing Board Act 1950, the Bombay Building Repairs and Reconstruction Board Act 1969 and the Maharashtra Slum Improvement Board Act 1973 were repealed on the enactment of the MHADA Act.5

Chapter VIII of the MHADA Act provides for the repairs and reconstruction of dilapidated buildings in 'Brihan Mumbai' or the erstwhile 'Greater Bombay'.6 A cess is levied on the owners which is utilised by the Mumbai Building Repair and Reconstruction Board to carry out repairs and reconstruction of such buildings.

4 "MHADA Act"

5 Section 188, MHADA Act.

6 Section 1(2), MHADA Act.

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For this purpose, the buildings in Brihan Mumbai are divided into three categories. Category A consists of buildings erected before 1 September 1940, Category B consists of buildings erected between 1 September 1940 and 31 December 1950 and Category C consists of buildings erected between 1 January 1951 and 30 September 1969.7

10. On 26 February 1986, the Governor of Maharashtra introduced an Ordinance to amend the MHADA Act.8 Subsequently, an amending Act came into force, which inserted Chapter VIII-A of the MHADA Act.9 The chapter deals with the 'acquisition of cessed properties for co-operative societies of occupiers', and its provisions apply to the buildings in Category A, i.e. cessed buildings erected before 1 September 1940 in Brihan Mumbai.10 The provisions of the Chapter envisage the acquisition of such properties by the state and their transfer to a cooperative society on payment of a hundred times the monthly rent of the premises if seventy per cent of the occupiers of the building make an application to this effect.11 Such acquisition may be for the better preservation of the buildings; for carrying out structural repairs or for the reconstruction of a new building. After the land is transferred to the cooperative society, it must be used solely for its original purpose, and there is a restriction on transferring the land or building.12

11. The intention behind inserting Chapter VIII-A has been stated by the legislature in the Preamble and the Statement of Objects and Reasons of the Amending Act. It is stated that the provisions were introduced to address the urgent need for repairs and reconstruction of old, dilapidated buildings in urban areas, particularly in 'Greater Bombay'. These buildings pose a significant danger due to their poor condition and risk of collapse. Previous efforts, including levying a cess and establishing an authority for structural repairs, failed to achieve the desired results due to the scale of the problem and insufficient financial resources. Thus, a new approach was adopted

7 Section 84, MHADA Act.

8 Maharashtra Housing and Area Development (Amendment) Ordinance, 1986

9 Maharashtra Housing and Area Development (Second Amendment) Act, 1986 [Mah. XXI of 1986] ("Amending Act")

10 Section 103A, MHADA Act.

11 Section 103B, MHADA Act.

12 Section 103C, MHADA Act.


by introducing Chapter VIII-A, involving occupiers in structural repairs or reconstruction by acquiring the old buildings and transferring ownership and control to the occupiers. The aim, according to the legislature, is to protect the occupiers' shelter, prevent building collapses, and promote equitable distribution of ownership and control of tenements to subserve the 'common good'.

12. Significantly, by the same Amending Act, Section 1A was also inserted in the MHADA Act containing the following declaration:

"1-A. Declaration.-It is hereby declared that this Act is for giving effect to the policy of the State towards securing the principle specified in Clause (b) of Article 39 of the Constitution of India and the execution of the proposals, plans or projects therefor and the acquisition therefor of the lands and buildings and transferring the lands, buildings or tenements therein to the needy persons and the cooperative societies of occupiers of such lands or buildings."

13. The appellants instituted proceedings under Article 226 of the Constitution before the High Court of Judicature at Bombay13 challenging the constitutionality of the provisions of Chapter VIII-A of the MHADA Act. The case of the appellants before the High Court was that the provisions of Chapter VIII-A are violative of Articles 14 and 19 of the Constitution. It was urged that the provisions are arbitrary, deprive property owners of their rights for illusory amounts and the classification of the buildings had no rational nexus to their object.

On the other hand, the respondents submitted that the provisions were not discriminatory or unreasonable. Further, the respondents argued that the MHADA Act gives effect to the principles laid down in Article 39(b) and in view of the immunity granted by Article 31C, the constitutionality of the Act cannot be challenged under Articles 14 and 19.14

14. On 13 December 1991, a Division Bench of the High Court dismissed the writ petitions and upheld the constitutionality of the provisions of Chapter VIII-A of the MHADA Act.15 Relying on the decision of this

13 "High Court"

14 Property Owners' Association v. State of Maharashtra, 1991 SCC OnLine Bom 521, para 10.

15 Ibid.

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Court in State of Maharashtra v Basantibai Khetan,16 the High Court held that the provisions of Chapter VIII-A are saved by Article 31C as they were enacted to give effect to the principles laid down in Article 39(b). In Basantibai Khetan, this Court held certain other provisions of the MHADA Act to be protected by Article 31C. The High Court held that the same principle applies to Chapter VIII-A as well. Further, the High Court also rejected the challenge to the constitutionality of the provisions on their merits and held that they do not violate Article 14.

15. Aggrieved by the judgement of the High Court, the appellants instituted Special Leave Petitions before this Court. These petitions have culminated in the underlying civil appeals.

ii.

The three reference orders

16. The appeals have travelled through three separate reference orders before being placed before this bench of nine judges. The batch of appeals was first placed before a bench of three judges of this Court.

By an order dated 1 May 1996,17 the three-Judge Bench recorded the submission of Mr Fali S Nariman, the learned counsel appearing for the appellants that Article 31C no longer survives in the Constitution after an amendment to the provision was invalidated by this Court in Minerva Mills v. Union of India.18 It was argued that since Article 31C no longer survived, it could not exclude an attack on the constitutional validity of the Act on the grounds of Articles 14 and 19.

17. A brief history of Article 31C and the layers of this contention are discussed in Part C of this judgement. However, at this stage, to understand the scope of the reference, it is sufficient to note that in Kesavananda Bharati v. State of Kerala,19 this Court upheld the validity of Article 31C in part. Subsequently, Article 31C was amended by the Constitution (Forty-second Amendment) Act, 197620 to expand the protection of Article 31-C to laws framed in furtherance of any Directive Principle and not only Articles 39(b) and (c). This

[1986] 1 SCR 707 : (1986) 2 SCC 516 : 1986 INSC 40

17 [1996] Supp 2 SCR 230 : (1996) 4 SCC 49 : 1996 INSC 598 ("three-judge bench order")

[1981] 1 SCR 206 : (1980) 3 SCC 625 : 1980 INSC 142

19 [1973] Supp. 1 SCR 1 : (1973) 4 SCC 225 : 1973 INSC 91

20 "Forty-Second Amendment"


amendment to Article 31C by the forty-second amendment was invalidated by this Court in Minerva Mills for being violative of the basic structure of the Constitution.

18. Before the bench of three judges, Mr Nariman inter alia urged that the doctrine of revival, as it applies to ordinary statutes does not apply to a constitutional amendment. Hence, he urged that when the part of the forty-second amendment which amended Article 31C was invalidated, it did not result in the automatic revival of the unamended Article 31C. He argued that the decision in Minerva Mills proceeded on a concession that Article 31C remained in force and an unexplained assumption that the unamended Article 31-C (to the extent that it was upheld in Kesavananda Bharati)stood revived.

He argued that the question never arose nor was it decided in the case or subsequently in Waman Rao v Union of India21 or Sanjeev Coke Manufacturing Co vs. Bharat Coking Coal Ltd.22

19. On the other hand, Mr Ashok Desai appearing for the respondents contended that the matter stood concluded by the decisions in Minerva Mills, Waman Rao and Sanjeev Coke, wherein revival of the unamended Article 31C was undisputed because it was an 'obvious position of law' and had held the field for a long period of time.

20. The three-judge bench of this Court observed since the decisions in

Minerva Mills, Waman Rao and Sanjeev Coke were all rendered by a bench of five judges and the assumption that Article 31C remains in force was disputed, it would be appropriate to refer the matter to a larger bench. The reference was made in the following terms:

"8. Having heard learned counsel for some time, we have formed the opinion that it would be more appropriate for a Bench of not less than five Judges to consider and decide these questions for an authoritative pronouncement on the same. The decisions in Minerva Mills [(1980) 3 SCC 625], Waman Rao [(1980) 3 SCC 587] and Sanjeev Coke [(1983) 1 SCC 147] are all by a Bench of five Judges. The question in the form it is raised by Shri F.S. Nariman did

[1981] 2 SCR 1 : (1980) 3 SCC 587 : 1980 INSC 216

[1983] 1 SCR 1000 : (1983) 1 SCC 147 : 1982 INSC 93

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not arise for consideration in any of those decisions which were rendered on a certain premise as indicated therein, which assumption is now seriously challenged by Shri F.S. Nariman. Even if it is assumed that Article 145(3) of the Constitution is not attracted, it does appear to us that in order to settle the controversy on this point which is of some significance and to avoid the question being reagitated before another Bench of less than five Judges, the more appropriate course is to refer these matters for being heard and decided by a Bench of not less than five Judges."

(emphasis supplied)

21. The underlying appeals were then placed before a bench of five judges of this Court. By an Order dated 21 March 2001,23 the fivejudge bench noted the contentions which had been raised before the three-judge bench about the revival of Article 31-C. Further, it was observed that the counsel were heard by the Bench at length on the "various issues" that arose in the case, including the interpretation of Article 39(b). The bench went on to express the need to reconsider the view taken by this Court in Sanjeev Coke on the interpretation of Article 39(b), where this Court relied on a concurring opinion authored by Justice Krishna Iyer in State of Karnataka v. Ranganatha Reddy,24 on behalf of a minority of judges.

22. Part D of this judgement will explore these decisions and their interpretation of Article 39(b) in further detail. At this stage, to understand the scope of the reference, it is sufficient to note that in Ranganatha Reddy, the validity of the Karnataka Contract Carriages (Acquisition) Act 1976 was under challenge. The majority opinion authored by Justice Untwalia (for himself and three other judges) upheld the constitutionality of the legislation on its merits. However, Justice Krishna Iyer (for himself and two other judges) authored a concurring opinion, where the enactment was upheld on the ground that it had a nexus with Article 39(b), which protected the legislation under Article 31C. The majority opinion expressly noted that it did not consider it necessary to deal with Article 31C or Article 39(b) and must

(2001) 4 SCC 455 ("five-judge bench order")

[1978] 1 SCR 641 : (1977) 4 SCC 471 : 1977 INSC 196


not be construed to agree with the observations of Justice Krishna Iyer. Subsequently, in Sanjeev Coke, while upholding the validity of the Coking Coal Mines (Nationalisation) Act 1972, a five-judge Bench of this Court adopted the view taken in the judgement authored by Justice Krishna Iyer, on behalf of the minority in Ranganatha Reddy.

23. In this backdrop, the Bench of five judges expressed the view that the interpretation of Article 39(b) in Sanjeev Coke, requires reconsideration and referred the cases to a larger bench, in the following terms:

"6. The interpretation put on Article 39(b) by Krishna Iyer, J.in Ranganatha Reddy case [(1977) 4 SCC 471 : (1978) 1 SCR 641] was not specifically assented to in the majority decision but in Sanjeev Coke case[(1983) 1 SCC 147 :

(1983) 1 SCR 1000] it is the observations in the judgment of Krishna Iyer, J. which have been followed.

7. Having heard the counsel at length, we are of the opinion that the views expressed in Sanjeev Coke case [(1983) 1 SCC 147 : (1983) 1 SCR 1000] require reconsideration.

Keeping in view the importance of the point in issue, namely, the interpretation of Article 39(b) it will be appropriate if these cases are heard by a larger Bench of not less than seven Judges."

(emphasis supplied)

24. Finally, the batch of cases was placed before a Bench of seven judges of this Court. The learned Solicitor General (at the time) brought the attention of the bench to an observation in the majority opinion in Mafatlal Industries Ltd vs. Union of India,25a decision by a bench of nine judges of this Court. In the majority opinion in Mafatlal, Justice Jeevan Reddy (speaking for himself and four other judges) observed: "[t]that 'the material resources of the community are not confined to public resources but include all resources, natural and man-made, public, and private owned' is repeatedly affirmed by this Court" and referred inter alia to the decisions of this Court in Ranganath Reddy and Sanjeev Coke to advance this proposition.

25 [1996] Supp. 10 SCR 585 : (1997) 5 SCC 536 : 1996 INSC 1514

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25. In its order dated 19 February 2002,26 the Bench of seven judges took the view that the interpretation of Article 39(b) requires reconsideration by a larger bench of nine judges. The bench expressed "some difficulty in sharing the broad view" that material resources owned by the community, the phrase employed by Article 39(b), includes privately owned resources. It was directed that the case be listed before a bench of nine judges after the hearing in IR Coelho vs.

State of Tamil Nadu27 is concluded, as there appeared to be similar issues raised. The reference was made in the following terms:

"5. Having given due consideration, we are of the opinion that this interpretation of Article 39(b) requires to be reconsidered by a Bench of nine learned Judges: we have some difficulty in sharing the broad view that material resources of the community under Article 39(b) covers what is privately owned.

6. Given that there is some similarity in the issues here involved and in I.R. Coelho v. State of T.N. [(1999) 7 SCC 580. Ed. : The nine-judge Bench decision therein is reported as I.R. Coelho v. State of T.N., (2007) 2 SCC 1.] which already stands referred to a larger Bench, preferably of nine learned Judges, we are of the view that these matters should be heard by a Bench of nine learned Judges immediately following the hearing in I.R. Coelho"

(emphasis supplied)

26. The above seven-Judge Bench order has resulted in the present reference before this bench of nine judges.

iii.

Scope of the present reference

27. During the course of the hearing, the learned Solicitor General appearing on behalf of the respondents, submitted that the reference made in the seven-judge bench order only pertains to the interpretation of Article 39(b) and not the survival of Article 31-C. It was urged that, unlike the three-judge bench order, the five-judge bench order and the seven-judge bench order dropped the issue concerning Article

(2013) 7 SCC 522 ("seven-judge bench order")

27 [1999] Supp. 2 SCR 394 : (1999) 7 SCC 580 : 1999 INSC 394


31C and only referred the Article 39(b) question to a larger bench.

Therefore, it was urged that this Court restrict the scope of this judgement to the interpretation of Article 39(b) and more specifically, only to the question of whether "material resources of the community" include privately owned resources.

28. On the other hand, the learned counsel for the appellants urged this Court to understand the scope of the reference more expansively.

They broadly submitted that this Court may consider five issues and filed detailed submissions on each of these questions. The issues which they raised are: firstly, whether the unamended Article 31C survives after the amendment to the provision by the forty-second amendment was struck down in Minerva Mills. Second, the meaning of Article 39(b) and whether the phrase 'material resources of the community' includes privately owned resources. Third, whether the MHADA Act gives effect to the principles laid down in Article 39(b) and is protected by Article 31C. Fourth, in view of the decision in IR Coehlo, whether a challenge under Articles 14, 19 and 21 can continue to be mounted even if the Act is protected by Article 31C.

Finally, the appellants have also filed their submissions challenging the constitutionality of specific provisions of Chapter VIII-Aof the MHADA Act on other grounds.

29. Eventually, during the course of the hearing, the counsel for the appellants fairly conceded that the last three issues may be argued before a regular bench after the present reference is answered.

They urged that this Court, however, must determine the question about whether Article 31C survives in the Constitution as it was a central theme in the reference orders and also has a bearing on the interpretation of Article 39(b). We agree with this understanding.

30. In our considered view, although the seven-judge bench order does not directly refer the question regarding the survival of Article 31C to this bench of nine judges, it must form a part of our analysis for the following reasons:

The issue about the survival or revival of Article 31C is intrinsically connected to the question of interpreting Article 39(b). If this Court concludes that Article 31C does not survive as part of the Constitution after the decision in Minerva Mills, no protection will be provided to the MHADA Act even if it has a nexus with the principles laid down in Article 39(b). Therefore,

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logically, in the context of this reference, this Court must first decide the question about the survival of Article 31C before adjudicating on the interpretation of Article 39(b).

ii.

The question about the survival of 31-C has never been conclusively answered by this Court. The question was specifically referred to the bench of five judges in the three-judge bench order. However, the five-judge bench did not decide the question about the survival of Article 31-C and instead referred the case to a larger bench on the question of the interpretation of Article 39(b). Similarly, even the seven-judge bench did not answer the Article 31-C question and only referred the Article 39(b) question to this bench. Therefore, the 31-C question has remained unanswered.

iii.

Several judgements of this Court post-Minerva Mills have proceeded on the assumption that Article 31C (as upheld in Kesavananda Bharati) remains part of the Constitution.

However, none of these decisions directly deals with the legal question of its survival. These decisions are addressed in further detail in Part C below. This Court must provide certainty on questions of law that have remained unanswered over prolonged periods of time, particularly, when the question has a direct bearing on the reference before it. In the event that this Court concludes that Article 31C is not revived, it will impact numerous legislations that have been protected by this provision. Therefore, it is incumbent on this Court to decide this significant constitutional question at the earliest occasion.

A bench of nine judges is best suited to carry out this exercise and bring finality to this question of law.

Issues

31. In view of the above, the scope of this judgment can be tied down to determining two issues:

Article 31C: Whether Article 31C (as upheld in Kesavananda Bharati) survives in the Constitution after the amendment to the provision by the forty-second amendment was struck down by this Court in Minerva Mills; and

Article 39(b): Whether the interpretation of Article 39(b) adopted by Justice Krishna Iyer in Ranganatha Reddy and followed in Sanjeev Coke must be reconsidered. 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.

32. All other issues, including the constitutionality of the MHADA Act, are not being determined in the present judgment. Parties are at liberty to raise submissions on these issues before the regular bench that will decide the underlying appeal.

33. A Writ Petition challenging inter alia the standard rent provisions of the Bombay Rent Hotel and Lodging House Rates Control Act 1947 and the Maharashtra Rent Control Act 1999 has also been tagged with the underlying appeals.28 The petitioners contend that the provisions of these legislations contravene the decision of this Court in Malpe Vishwanath Acharya vs. State of Maharashtra.29 A determination of the constitutionality of these individual enactments does not form part of our analysis in this judgement and may be determined by a regular bench after this Court answers the present reference.

34. Further, several intervenors before this Court, including the State of West Bengal are parties to a pending batch of appeals before this Court relating to the constitutionality of the West Bengal Land Reforms Act 1955 and the amendments made to the Act in 1981 and 1986.30Akin to the declaration in the MHADA Act, the West Bengal Land Reforms Act 1955 also contains a declaration that it has been enacted to give effect to the "policy of the State towards securing the principle specified in Clauses (b) and (c) of Article 39 of the Constitution". By an Order dated 17 July 2014, a three-judge Bench of this Court has referred several questions arising from these appeals to a Bench of five judges.31 On 26 February 2016,

28 Writ Petition No 660 of 1998.

29 [1997] Supp. 6 SCR 717 : (1998) 2 SCC 1 : 1997 INSC 831

30 Civil Appeal No. 16879 of 1996.

31 Questions referred: "a. Whether Article 300 A, which does not contain a provision like Article 31(2), would mandate payment of any amount as compensation for depriving of a person of his property under the authority of law? If yes, then what are the parameters of adjudging the principles for payment of amount or the amount fixed by the Acquiring Act as illusory? b. Whether the Constitutional Amendments inserting the amending Acts in the 9th Schedule would be violative of the Basic Structure of the Constitution and would therefore be open to challenge in the light of the judgment of this Hon'ble Court in I.R. Coelho (Dead by LRS) Vs. State of Tamil Nadu [(2007) 2 SCC 1] and therefore be liable to be struck down?

c. Whether the Section 4-D inserted by the 1981 Amendment Act of the West Bengal Land Reforms Act, 1955 which prescribes the offences and penalties with retrospective effect from 07.08.1969 in the face of the prohibition contained in Article 20(1) of the Constitution of India is valid?"

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the five-Judge Bench of this Court so constituted directed that these appeals be listed after the disposal of the underlying civil appeals in the present case. It is clarified that the intervenors have only been heard on the issues that arise from the reference before us.

This judgement does not deal with the West Bengal Land Reforms Act 1955 or any other related enactment. A determination on the questions of law referred to the five-judge bench and adjudication of the constitutionality of the West Bengal Land Reforms Act 1955 will be carried out by appropriate benches of this Court.

Article 31C

Brief History of Article 31-C

35. Article 31-C provides statutes with immunity against constitutional challenges for alleged breaches of Articles 14 and 19 provided that the statutes give effect to the principles set out in clauses (b) or (c) of Article 39. Article 31-C represents a constitutionally sanctioned limitation on the operation of certain Part III rights insofar as they give effect to the Directive Principles contained in clauses (b) and

(c) of Article 39.

36. When inserted into the Constitution in 1971, Article 31-C provided that no law giving effect to a State policy securing the principles set out in clauses (b) or (c) of Article 39 was void on the ground that it impermissibly abridged the rights conferred by Articles 14, 19, or 31. However, Article 31-C has been amended by Parliament and interpreted by this Court on several occasions. It is therefore necessary to clearly lay out the history of this constitutional provision before adverting to the current controversy concerning the provision.

Article 31-C was inserted into the Constitution by Section 3 of the Constitution (Twenty-Fifth Amendment) Act, 1971. At the time of its inclusion in the Constitution, it read as follows:

"31C. Saving of laws giving effect to certain directive principles. - Notwithstanding anything contained in article 13, no law giving effect to the policy of the State towards securing the principles specified in clause (b) or clause

(c) of article 39 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, article 19 or article 31; 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:

Provided that when such law is made by the Legislature of a State, the provisions of this article shall not apply thereto unless such law, having been reserved for the consideration of the President, has received his assent."

37. Article 31-C, along with Article 31-A, was challenged in Kesavananda Bharati v State of Kerala.32 In the decision in that case, a majority comprising of seven of the thirteen judges consisting of Justices KK Mathew, AN Ray, DG Palekar, HR Khanna, YV Chandrachud, MH Beg, and SN Dwivedi upheld the constitutional validity of the first part of Article 31-C which provided immunity from challenges under Article 14, Article 19, and Article 31 to laws giving effect to the Directive Principles set out in clauses (b) or (c) of Article 39.33 In the case of six of the Judges (Mathew, Ray, Palekar, Chandrachud, Beg, and Dwivedi JJ), this flowed from their reasoning that Parliament's power to amend the Constitution was unbounded and courts could not judicially review the validity of a constitutional amendment even if it modified the application of fundamental rights. Justice Khanna, however, did not subscribe to the view that Parliament's power to amend the Constitution was unlimited.34 Nonetheless, on an independent analysis of Article 31-C, Justice Khanna found that the first part of Article 31-C which immunised laws from Article 14, Article 19, and Article 31 challenges did not violate the basic structure of the Constitution.35

38. In Kesavananda Bharati, there also arose substantial disagreement concerning the second half of Article 31-C which stated that no law containing a declaration that the statute gave effect to a policy furthering the principles in clause (b) or (c) of Article 39 could be questioned by a court on the ground that it did not in fact give effect to such policy. A majority of seven judges consisting of Chief Justice SM Sikri, and Justices JM Shelat, AN Grover, KS Hegde, AK

32 [1973] Supp. 1 SCR 1 : (1973) 4 SCC 225 : 1973 INSC 91

33 Ibid [1035]-[1040], [1065] (Ray J); [1323], [1331], [1333] (Palekar J); [1518] (Khanna J); [1770]-[1771], [1787]-[1788] (Mathew J); [1855] (Beg J); [1995] (Dwivedi J); [2118] (Chandrachud J).

34 Ibid [1537] (Khanna J).

35 Ibid [1518] (Khanna J).

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Mukherjea, P Jaganmohan Reddy, and HR Khanna found that the latter half of Article 31-C violated the basic structure and was therefore invalid.36 Thus, the final outcome of the decision in Kesavananda Bharati as concerns Article 31-C was that (i) the first half of Article 31-C granting immunity to laws enacted in furtherance of clauses

(b) or (c) of Article 39 against challenges based on Articles 14,19 and 31 was valid; and (ii) the second half of Article 31-C excluding judicial review over whether a law in truth furthers the principles set out in clauses (b) or (c) of Article 39 was struck down. As Justice HR Khanna succinctly recorded in his conclusions:

"1537. … (xiii) The first part of Article 31-C introduced by the Constitution (Twenty-fifth) Amendment Act is valid. The said part is as under:

"31-C. Notwithstanding anything contained in Article 13, no law giving effect to the policy of the State towards securing the principles specified in clause (a) or clause

(c) of Article 39 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, Article 19 or Article 31:

Provided that where such law is made by the legislature of a State, the provisions of this article shall not apply there to unless such law, having been reserved for the consideration of the President, has received this assent."

(xiv) The second part of Article 31-C contains the seed of national disintegration and is invalid on the following two grounds:

(1) It gives a carte blanche to the legislature to make any law violative of Articles 14, 19 and 31 and make it immune from attack by inserting the requisite declaration. Article 31-C taken along with its second part gives in effect the power to the legislature including a State Legislature, to amend the Constitution in important respects.

36 Ibid [417]-[429] (Sikri CJ); [599]-[605] (Shelat and Grover JJ); [726]-[735] (Hedge and Mukhrejea); [1203]-1210] (Reddy J); [1530]-[1535-A] (Khanna J).


(2) The legislature has been made the final authority to decide as to whether the law made by it is for the objects mentioned in Article 31-C. The vice of the second part of Article 31-C lies in the fact that even if the law enacted is not for the object mentioned in Article 31-C, the declaration made by the legislature precludes a party from showing that the law is not for the object and prevents a court from going into the question as to whether the law enacted is really for that object. The exclusion by the legislature, including a State Legislature, of even that limited judicial review strikes at the basic structure of the Constitution.

The second part of Article 31-C goes beyond the permissible limit of what constitutes amendment under Article 368.

The second part of Article 31-C can be severed from the remaining part of Article 31-C and its invalidity would not affect the validity of the remaining part. I would, therefore, strike down the following words in Article 31-C -

"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."

39. In essence, the second half of Article 31-C was severed from the first half and struck down. The second half of Article 31-C was thus no longer legally enforceable. What follows from the above conclusions is that after the decision in Kesavananda Bharati, Article 31-C ought to be read as follows:

"31C. Saving of laws giving effect to certain directive principles. - Notwithstanding anything contained in article 13, no law giving effect to the policy of the State towards securing the principles specified in clause (b) or clause (c) of article 39 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, article

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19 or article 31; *[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:]

Provided that when such law is made by the Legislature of a State, the provisions of this article shall not apply thereto unless such law, having been reserved for the consideration of the President, has received his assent."

*No longer enforceable after Kesavananda Bharati

40. Subsequently, Article 31-C was further amended by the Constitution (Forty-second Amendment) Act, 1976 ("Forty-Second Amendment").

By Section 4 of this Act, the words "the principles specified in clause

(b) or clause (c) of article 39" were replaced with the words "all or any of the principles laid down in Part IV." The effect of the Forty- Second Amendment was that Article 31-C was amended as follows:

"31C. Saving of laws giving effect to certain directive principles. - 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 the principles specified in clause (b) or clause (c) of article 39] 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, article 19 or article 31; **[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:]

Provided that when such law is made by the Legislature of a State, the provisions of this article shall not apply thereto unless such law, having been reserved for the consideration of the President, has received his assent."

*Substitution effected by the Forty-Second Amendment

** No longer enforceable after Kesavananda Bharati

Shortly thereafter, Article 31-C was once again amended by Section 8 of the Constitution (Forty-fourth Amendment) Act, 1978. This amendment removed reference to Article 31 of the Constitution contained in Article 31-C. This was a logical corollary to the omission of


Article 31 itself from the Constitution. As Article 31 had been removed from the Constitution, it was no longer necessary that Article 31-C provide legislation with immunity from Article 31 challenges. Thus, after the Constitution (Forty-fourth Amendment) Act, 1978, Article 31-C read as follows:

"31C. Saving of laws giving effect to certain directive principles. - 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 the principles specified in clause (b) or clause (c) of article 39] 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 **[or article 31]; ***[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:]

Provided that when such law is made by the Legislature of a State, the provisions of this article shall not apply thereto unless such law, having been reserved for the consideration of the President, has received his assent."

*Substitution effected by the Forty Second Amendment

**Omission by Forty Forth Amendment

*** No longer enforceable after Kesavananda Bharati

The amendment to Article 31-C by Section 8 of the Constitution (Fortyfourth Amendment) Act, 1978 and its legal effect are not in dispute.

41. The amendment to Article 31-C by Section 4 of the Forty-Second Amendment was challenged in Minerva Mills v Union of India.37 The petitioners had challenged the Sick Textile Undertakings (Nationalisation) Act, 1974, and the order dated 19 October 1971 nationalising their business. However, at the time of the challenge, the impugned legislation had already been inserted into the Ninth Schedule of the Constitution. Thus, to secure the ultimate relief of

[1981] 1 SCR 206 : (1980) 3 SCC 625 : 1980 INSC 142

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reversing the nationalisation, the petitioners in Minerva Mills also challenged the thirty-ninth amendment to the Constitution which had inserted the impugned legislation into the Ninth Schedule of the Constitution and Section 55 of the Forty-Second Amendment which modified Article 368 to exclude constitutional amendments from judicial review. As part of this broader challenge, the petitioners in Minerva Mills also separately challenged Section 4 of the Forty- Second Amendment on the ground that the amendment to Article 31-C violated the basic structure of the Constitution. Parallel to the Constitution Bench proceedings in Minerva Mills, a separate Constitution Bench heard the challenge to the Maharashtra Agricultural Lands (Ceiling on Holdings) Act, 1961 in Waman Rao v Union of India.38 Although Chief Justice YV Chandrachud and Justice PN Bhagwati sat on both Constitution Benches (and indeed Justice Bhagwati authored a common opinion for both cases), the remaining three judges on both Constitution Benches were different and the two cases dealt with separate issues. In Waman Rao, the petitioners sought to assail the unamended portion of Article 31-C.

We shall advert to the decision in Waman Rao shortly, but at present, it is sufficient to note that in Minerva Mills, the Constitution Bench decided the validity of the changes wrought to Article 31-C by the Forty-Second Amendment while in Waman Rao, the Constitution Bench dealt with arguments concerning the validity of Article 31-C as it stood prior to the Forty-Second Amendment. This is clarified by the observation of Chief Justice YV Chandrachud, speaking for the majority in Minerva Mills, where he noted:

"24. … Mr. Palkhivala did not challenge the validity of the unamended Article 31-C, and indeed that could not be done. The unamended Article 31-C forms the subjectmatter of a separate proceeding and we have indicated therein that it is constitutionally valid - to the extent to which it is upheld in Kesavananda Bharati."

The separate proceedings that the learned Chief Justice was adverting to were those in Waman Rao. It is also worth referring to the opinion of Justice PN Bhagwati (as he then was) in the decision

[1981] 2 SCR 1 : (1981) 2 SCC 362


of Minerva Mills. Justice Bhagwati authored a common judgment for both the decisions in Minerva Mills and Waman Rao. In his common judgment he stated:

"84. Now, in Wamanrao case the broad argument of Mr Phadke on behalf of the petitioners […] that the fundamental rights enshrined in Articles 14 and 19 form the basic structure of the Constitution and therefore Article 31-A, Article 31-B read with Ninth Schedule and the unamended Article 31-C insofar as they exclude the applicability of Articles 14 and 19 to certain kinds of legislation emasculate those fundamental rights and thereby damage the basic structure of the Constitution…

[…]

The argument of Mr. Palkhivala on behalf of the petitioners in the Minerva Mills case was a little different. He too attacked the vires of clause (4) and 5) of Article 368 since they barred at the threshold any challenge against the constitutional validity of the amendment made in Article 31-C but so far as Article 31-A, Article 31-B and the unamended Article 31-C were concerned, he did not dispute their validity and, as pointed out by us earlier, he conceded and in fact gave cogent reasons showing that they were constitutionally valid. His only attack was against the validity of the amendment made in Article 31-C by Section 4 of the Constitution (Forty-second Amendment) Act, 1976 and he contended that this amendment, by making the directive principles supreme over the fundamental rights, damaged or destroyed the basic structure of the Constitution…."

(emphasis supplied)

The opinion of Justice PN Bhagwati clearly delineates the scope of the contentions, and consequently the decisions in Minerva Mills and Waman Rao. In the former case, the amendment to Article 31-C, which expanded the scope of immunity provided to legislation, was challenged. In the latter case, the petitioners sought to challenge the unamended Article 31-C that had already been partly upheld and partly invalidated in Kesavananda Bharati.

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42. The Constitution Bench of five judges of this Court in Minerva Mills invalidated Section 4 of the Forty-Second Amendment.39 Chief Justice YV Chandrachud, speaking for the majority held:

"58. … On any reasonable interpretation, there can be no doubt that by the amendment introduced by Section 4 of the 42nd Amendment, Articles 14 and 19 stand abrogated at least in regard to the category of laws described in Article 31-C. The startling consequence which the amendment has produced is that even if a law is in total defiance of the mandate of Article 13 read with Articles 14 and 19, its validity will not be open to question so long as its object is to secure a directive principle of State policy. […] A large majority of laws, the bulk of them, can at any rate be easily justified as having been passed for the purpose of giving effect to the policy of that State towards securing some principle or the other laid down in Part IV. In respect of such laws, which will cover an extensive gamut of the relevant legislative activity, the protection of Articles 14 and 19 will stand wholly withdrawn…"

Chief Justice YV Chandrachud noted that the amendment to Article 31-C provided immunity to a sweeping range of legislation and the threshold for availing of such immunity was remarkably low. This severely undermined the protections granted to citizens by Articles 14 and 19. This reasoning led the majority in Minerva Mills to conclude that:

"75.…Section 4 of the Constitution (Forty-second Amendment) Act is beyond the amending power of the Parliament and is void since it damages the basic or essential features of the Constitution and destroys its basic structure to the total exclusion of challenge to any law on the ground that it is inconsistent with, or takes away or abridges any of the rights conferred by Article 14 or Article 19 of the Constitution, if the law is for giving effect to the policy of the State towards securing all or any of the principles laid down in Part IV of the Constitution."

39 Minerva Mills [75] (Chandrachud CJ).


Before examining the legal effect of the Minerva Mills decision on Article 31-C, we may briefly advert to the decision in Waman Rao which was delivered four months after the decision in Minerva Mills. As noted above, the Constitution Bench in Waman Rao was faced with arguments that the unamended Article 31-C was also unconstitutional.

43. The petitioners in Waman Rao challenged the Maharashtra Lands (Ceiling on Holdings) Act, 1961 which had been placed in the Ninth Schedule of the Constitution. The respondents relied on Articles 31A, 31B, and 31C to contend that the impugned legislation was immunised from constitutional challenges grounded in Articles 14 and 19. In response to this defence, the petitioners contended that the aforementioned constitutional provisions were themselves unconstitutional and assailed the constitutional amendments which inserted them into the Constitution. In doing so, the petitioners challenged Article 31-C (as it stood prior to the Forty-Second Amendment). To obviate the precedent in Kesavananda Bharati, where the vires of Article 31-C had already been disputed and arguably settled, the petitioners in Waman Rao contended that no clear holding concerning Article 31-C was discernible from the numerous opinions in Kesavananda Bharati. The Constitution Bench in Waman Rao rejected this contention. Chief Justice YV Chandrachud, speaking for the majority, held:

"53. Shri M.N. Phadke, who led the argument on behalf of the petitioners, built a formidable attack against the vires of Article 31-C. But, with respect to the learned counsel, the effort is fruitless because the question as regards the validity of Article 31-C is no longer res integra. The opening clause of Article 31-C was upheld by the majority in Kesavananda Bharati and we do not quite see how the petitioners can be permitted to go behind this decision. […] It is well known that six learned Judges who were in minority in Kesavananda Bharati upheld the first part of Article 31-C, which was a logical and inevitable consequence of Parliament's power to amend the Constitution. Khanna, J. did not subscribe to that view but, all the same, he upheld the first part of Article 31-C for different reasons.

The question of the validity of the Twenty-fifth Amendment by which the unamended Article 31-C was introduced

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into the Constitution was specifically raised before the court and the arguments in that behalf were specifically considered by all the six minority Judges and by Khanna, J. It seems to us difficult, in these circumstances, to hold that no common ratio can be culled from the decision of the majority of the seven judges who upheld the validity of Article 31-C. Putting it simply, there is no reason why simple matters should be made complicated, the ratio of the majority judgements in Kesavananda Bharati is that the first part of Article 31-C is valid."

The majority of the Constitution Bench in Waman Rao ultimately held that:

"68. … (3) Article 31-C of the Constitution, as it stood prior to its amendment by Section 4 of the Constitution (42nd Amendment) Act, 1976, is valid to the extent to which its constitutionality was upheld in Kesavananda Bharati. Article 31-C, as it stood prior to the Constitution (42nd Amendment) Act does not damage any of the basic or essential features of the Constitution or its basic structure…."

The decision in Waman Rao upheld the validity of Article 31-C (as it stood prior to the Forty-Second Amendment) insofar as it had already been upheld in Kesavananda Bharati.

44. To sum up, the decision in Kesavananda Bharati upheld the first half of Article 31-C to the extent that it provided immunity to statutes from Article 14 and Article 19 challenges if they gave effect to the principles in clause (b) or clause (c) of Article 39. The decision in Kesavananda Bharati also struck down the second half of Article 31-C which prevented judicial review of whether a law in fact gave effect to these principles. The decision in Minerva Mills invalidated Section 4 of the Forty-Second Amendment which expanded the scope of the immunity provided by Article 31-C from laws giving effect to the principles in clause (b) or clause (c) of Article 39 to laws giving effect to any Directive Principle. The decision in Waman Rao, which concerned Article 31-C prior to the Forty-Second Amendment, reiterated the position set out in Kesavananda Bharati, that the first half of the unamended Article 31-C was constitutionally valid and the second half was not.


ii.

The present dispute concerning Article 31-C and rival contentions

45. It is here that the present controversy concerning Article 31-C arises.

Both the appellants and the respondents before us accept that after the decision in Minerva Mills, the words "all or any of the principles laid down in Part IV" in Article 31-C are legally unenforceable. But this is where the agreement ends. In the respondents' view, the consequence of Minerva Mills invalidating these words is that the words that existed in Article 31-C prior to the Forty-Second Amendment stand revived. In other words, as the Forty-Second Amendment has been struck down by the Court, Article 31-C will now read as it did after the decision in Kesavananda Bharati but prior to the Forty-Second Amendment. The Respondents submit that after Minerva Mills, Article 31-C should be read as follows:

"31C. Saving of laws giving effect to certain directive principles. - 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] the principles specified in clause (b) or clause (c) of article 39 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, article 19 or article 31; 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:"

In contrast to this, the appellants submit that since the words "the principles specified in clause (b) or clause (c) of Article 39" were omitted by the Forty-Second Amendment and substituted with different words, the invalidation of the substituted words by the Minerva Mills decision cannot revive words specifically omitted by Parliament. Thus, in the view of the appellants, Article 31-C reads as follows:

"31C. Saving of laws giving effect to certain directive principles. - 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] the principles specified in clause (b) or clause (c) of article 39 shall be deemed to be void on the ground that it is

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inconsistent with, or takes away or abridges any of the rights conferred by article 14, article 19 or article 31; 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 appellants acknowledge that such an interpretation would effectively render the protection granted to legislation by Article 31-C nugatory. However, this is not an inadvertent consequence of the appellants' argument but rather a central plank. It is their case that after the decision in Minerva Mills, Article 31-C may no longer be relied on to immunise legislation, even if such legislation can be justified as giving effect to the principles specified in clause (b) or clause (c) of Article 39. Thus, the tests of Articles 14 and 19 would be unequivocally applicable even to such legislations. The contentions and interpretation advanced by the appellants have significant ramifications not only for the legislations impugned in the underlying appeals before us but also for countless others whose constitutional validity is dependent on the immunity provided by Article 31-C.

46. At its core, the present dispute concerns whether the text of Article 31-C as it stood prior to the Forty-Second Amendment can continue to be given legal effect after the Court in Minerva Mills invalidated Section 4 of the Forty-Second Amendment. The appellants contended that the unamended Article 31-C (as it stood prior to the Forty-Second Amendment) does not automatically revive after the decision in Minerva Mills. Mr Zal Andhyarujina, learned senior counsel and Mr Sameer Parekh, learned counsel represented the appellants.

Their position was supported by Ms Uttara Babbar, learned senior counsel for one of the intervenors. The argument may be briefly summarised as follows:

(i) The act of substitution by the Forty-Second Amendment consists of two steps, first the old provision is erased and next, the new provision is inserted. After the new provision is inserted, the old text ceases to exist and cannot be given legal effect.

This was described as the "pen and ink" theory. Thus, even if Minerva Mills invalidated the amended text, the judgement's effect was only to stop the inserted text from being enforced and a judicial order cannot reverse the first step of erasure.

Only a legislature can modify words in a statute. As a result,


after Minerva Mills, the words erased by the Forty-Second Amendment do not revive and the unamended Article 31-C cannot be given effect to.

(ii) Further, when a court declares a law to be unconstitutional, this declaration does not repeal the law from the statute books, it merely renders it legally unenforceable. Only the legislature can add or repeal the text from the statute books. Thus, the decision in Minerva Mills only renders the amended text of Article 31-C unenforceable and cannot repeal the Forty-Second Amendment in totality or reinstate the unamended Article 31-C.

47. Mr R Venkatramani, learned Attorney General for India and Mr Tushar Mehta, learned Solicitor General of India, representing the respondents, countered the above understanding. Their position was supported by Mr Rakesh Dwivedi and Mr Gopal Sankarnarayan, learned senior counsel appearing for the intervenors. Their arguments may be briefly summarised as follows:

(i) When an amendment is set aside, the entire legal effect of the amendment is invalidated and thus the text preceding the amendment will be restored. There are no distinct steps of erasure and insertion. All the stages of the Forty-Second Amendment stand cumulatively negated by the decision in Minerva Mills;

(ii) When exercising basic structure scrutiny, this Court grounds its reasoning in the relationship between the unamended provision and the amended provision and the impact the amendment has on the Constitution. If the Court finds an amendment impermissible and invalidates it, the position as it stood prior to the amendment must stand revived for the basic structure theory to have effect. If the invalidation of an amendment by the Court led to some third result, where the insertion was invalidated but the erased text did not revive, this would not result in a return to the unamended Constitution but some third uncontemplated result which may itself violate the basic structure. Thus, the revival of the unamended constitutional provision is the approach consistent with the theoretical foundation of basic structure review;

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(iii) The decision of a Constitution Bench of this Court in Supreme Court Advocates-On-Record Association v Union of India40 squarely covers the present scenario and holds that when a constitutional amendment is struck down, the position that existed prior to the amendment stands revived;

(iv) This Court in the decisions in Maharao Sahib Shri Bhim Singhji v Union of India,41 Sanjeev Coke and Basantibal Khetan has repeatedly held that Article 31-C as it stood prior to the Forty-Second Amendment is operative; and

(v) If the words struck down by Minerva Mills relating to clauses

(b) and (c) of Article 39 were omitted by judicial fiat from Article 31-C, the entire provision would be unworkable despite this precise text of Article 31-C having been upheld by thirteen judges in Kesavananda Bharati and the constitutional validity of the provision having been reaffirmed in Waman Rao.

Before delving further into our analysis, we may briefly advert to the decisions relied on by the Respondents where this Court has applied Article 31-C after the decision in Minerva Mills. If these decisions provide a cogent answer as to the status of Article 31-C after Minerva Mills, our inquiry need not go any further.

48. In Bhim Singh, a Constitution Bench of this Court upheld the Urban Land (Ceiling and Regulation) Act, 1976 on the ground that the Act gave effect to the Directive Principles in clauses (b) and (c) of Article 39 of the Constitution. The impugned legislation in Bhim Singh sought to inhibit the concentration in ownership of urban land and was inter alia challenged on the ground that it was not in furtherance of clause (b) or (c) of Article 39 and thus not protected under Article 31-C. Rejecting this submission, Chief Justice YV Chandrachud, speaking for himself and Justice PN Bhagwati held:

"1. We have perused the judgement prepared by Brother Tulzapurkar with care but, with respect, we are unable to agree with him that the Urban Land (Ceiling and Regulation) Act, 33 of 1976, does not further the Directive Principles of State Policy in clauses (b) and (c) of Article 39 of the

[2015] 13 SCR 1 : (2016) 5 SCC 1 : 2015 INSC 285

41 [1985] Supp. 1 SCR 862 : (1981) 1 SCC 166 : 1980 INSC 219


Constitution. The vice from which a provision here or a provision there of the impugned Act may be shown to suffer will not justify the conclusion that the Act is not intended to or does not, by its scheme, in fact implement or achieve the purpose of clause (b) and (c) of Article 39."42

Justice Krishna Iyer, concurring with Chief Justice Chandrachud and Justice Bhagwati and thus forming a majority in Bhim Singh, held:

"16-A. … The purpose of the enactment, garnered from the preamble, is to set a ceiling on vacant urban land, to take over the excess and to distribute it on a certain basis of priority. The whole story of the legislation, the long gestation of pre-legislative consideration, the brooding presence of Article 39(b) and (c) and the emphasis in Section 23(4) on common good as the guiding factor for distribution point to public purpose, national development and social justice as the cornerstone of the policy of distribution…"43

The decision in Bhim Singh was delivered after that in Minerva Mills. The majority opinions in Bhim Singh proceeded on the basis that the text of Article 31-C stood as it had prior to the Forty-Second Amendment to the Constitution. In other words, the judges began their analysis with the presumption that the Union could rely on Article 31-C and that the appropriate test under Article 31-C was whether the legislation in question furthered the principles set out in clauses (b) or (c) of Article 39. If the Court had adopted the present appellants' interpretation of Article 31-C, they could not have proceeded on this basis because according to the appellants, references to clauses (b) or (c) of Article 39 are deemed to be omitted from Article 31-C after the Forty-Second Amendment and Minerva Mills. While the decision in Bhim Singh would fortify the position of the present respondents, the judgment does not provide any rationale as to how and why the text of the unamended Article 31-C stood revived.

49. In Sanjeev Coke, a challenge was brought to various legislations including the Coking Coal Mines (Emergency Provisions) Act, 1971 which vested the management of coking coal mines and coke oven

42 Maharao Sahib Shri Bhim Singhji v Union of India 1981 (1) SCC 166 [1] (Chandrachud CJ).

43 Maharao Sahib Shri Bhim Singhji v Union of India 1981 (1) SCC 166 [16-A] (Krishna Iyer J).

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plants with the State, the Coking Coal Mines (Nationalisation) Act, 1972 which resulted in the nationalisation of certain coking coal mines, the Coal Mines (Taking Over of Management) Act, 1973 and finally the Coal Mines (Nationalisation) Act, 1973 which together resulted in nationalisation of all coal mines irrespective of whether they were a coking coal mine or not. The petitioners in Sanjeev Coke argued that the State had discriminated between certain coke oven plants and their coke oven plants. In response, the Union Government contended that the legislations were immunised against an Article 14 challenge as they were protected by Article 31-C. The majority opinion in Sanjeev Coke raised certain concerns regarding the reasoning in Minerva Mills but observed that as a review petition against Minerva Mills was pending before the Court, it was not appropriate to examine this issue further.44 Nonetheless, in the ultimate analysis of the petitioners' arguments, Justice Chinnappa Reddy speaking for the Constitution Bench in Sanjeev Coke, held:

"17. We are firmly of the opinion that once Article 31-C comes in Article 14 goes out. There is no scope for bringing in Article 14 by a side wind as it were, that is, by equating the rule of equality before the law of Article 14 with the broad egalitarianism of Article 39(b) or by treating the principle of Article 14 as included in the principle of Article 39(b).To insist on nexus between the law for which protection is claimed and the principle of Article 39(b) is not to insist on fulfilment of the requirement of Article 14.

They are different concepts and in certain circumstances, may even run counter to each other. That is why the need for the immunity afforded by Article 31-C. Indeed there are bound to be innumerable cases where the narrower concept of equality before the law may frustrate the broader egalitarianism contemplated by Article 39(b)…."

"18. The next question for consideration is whether the Coking Coal Mines (Nationalisation) Act is a law directing the policy of the State towards securing "that the ownership and control of the material resources of the community are so distributed as best to subserve the common good"…"

44 Sanjeev Coke [10]-[13] (Chinnappa Reddy J).


As in the decision in Bhim Singh, the above paragraphs evince that the Constitution Bench in Sanjeev Coke proceeded on the basis that Article 31-C was operative and that it ought to be interpreted as it stood prior to the Forty-Second Amendment. The Court noted that once an Article 31-C defence is claimed, Article 14 cannot be resorted to if there is a nexus between the law and the aims set out in clause

(b) and clause (c) of Article 39. The explicit references to Articles 31-C and 39(b) demonstrate that the Court proceeded on the basis that the protection afforded to legislations by Article 31-C continued to operate after Minerva Mills. However, as with Bhim Singh, the decision in Sanjeev Coke offers no explanation as to the exact legal mechanics which lead to the continued legal operation of the unamended Article 31-C. Thus, these decisions leave unaddressed the contentions raised by the present appellants.

50. It is also pertinent to refer to the approach of the two-judge Bench of this Court in Basantibal Khetan. In that case, Special Leave Petitions were filed against the judgement of the High Court of Judicature at Bombay invalidating certain provisions of the MHADA Act which permitted the acquisition of private property. It was contended that the provisions of the legislation which set out the basis for determining compensation were violative of Articles 14 and 19 of the Constitution.

In invalidating these provisions, the High Court held that the impugned provisions were not protected by Article 31-C of the Constitution and were violative of Article 14. However, when the matter was heard by a Division Bench of this Court, Justice ES Venkataramiah (as the learned Chief justice then was) held that the law would be entitled to immunity under Article 31-C. The learned judge observed:

"13. Even granting for purpose of argument that subsections (33) and (4) of Section 44 are violative of Article 14 of the Constitution, we are of the view that the said provisions receive the protection of Article 31-C of the Constitution. […] Let us proceed on the basis that after Kesavananda Bharati v. State of Kerala and Minerva Mills Ltd. v. Union of India, Article 31-C reads as:

"Notwithstanding anything contained in Article 13, no law giving effect to the policy of the State towards securing the principles specified in clause (b) or clause

(c) of Article 39 shall be deemed to be void on the

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ground that it is inconsistent with or takes away or abridges any of the rights conferred by Article 14 or Article 19."

Clause (b) or Article 39 of the Constitution which is relevant for our purpose states that the State shall, in particular, direct its policy towards securing that the ownership and control of material resources of the community are so distributed as best to subserve common good.

[…]

14. … The High Court erred in taking a very narrow view of the objects of the Act and the functions of the Authority under it. We are satisfied that the Act is brought into force to implement the Directive Principle contained in Article 39(b) and hence even if there is any infraction of Article 14 it is cured by Article 31-C which is clearly attracted to the case."

The extracted paragraphs demonstrate that the Division Bench explicitly proceeded on the basis that the unamended Article 31-C had revived and was in legal effect. The two-Judge Bench cited both the decisions in Kesavananda Bharati and Minerva Mills.

It concluded that after Kesavananda Bharati, the second half of Article 31-C was no longer in effect. It also concluded that after Minerva Mills struck down the Forty-Second Amendment, the text of Article 31-C as it stood prior to the Forty-Second Amendment stood revived. This approach would support the arguments of the respondents concerning the interpretation of Article 31-C. However, like the decisions in Bhim Singh and Sanjeev Coke, no argument was raised that the unamended Article 31-C did not automatically revive absent legislative intervention and the two-judge Bench has proceeded on an assumption that the unamended Article 31-C is enforceable.

51. In the above decisions interpreting Article 31-C, this Court has consistently taken the position that Article 31-C, as it stood prior to the Forty-Second Amendment, has legal effect and can be invoked to defend legislations against Article 14 and Article 19 challenges.

However, as the appellants correctly point out, no jurisprudential explanation has been provided for why this is the case and, in most


decisions, this Court has assumed that Article 31-C continues to have legal effect. In light of the specific contentions raised by the appellants in the present case, and the significant consequences flowing from the appellants' arguments, this Court must examine the constitutional question of whether, after Minerva Mills invalidated the Forty-Second Amendment, the text of the unamended Article 31-C can be enforced.

iii.

Precedents concerning invalidation of amendments

52. The first decision which the appellants relied on was Shamarao Parulekar v District Magistrate, Thana.45 The case concerned the Preventive Detention Act, 1950 which at the time was scheduled to expire on 1 April 1952. A few months prior to this, on 15 November 1951, the petitioner (Shamarao) was detained. However, the statute was subsequently amended to extend its lifespan by six months till 1 October 1952. Shamarao contended that the extension of the Act could not extend his detention past 1 April 1952, when the Act was originally scheduled to expire. Justice Vivian Bose, speaking for a Constitution bench of this Court observed that the amendment to the Preventive Detention Act, 1950 expressly stated that detention orders shall remain in force "so long as the principal Act is in force" and "principal Act" had been defined as the 1950 Act. The learned Judge went on to explain:

"7. … The rule is that when a subsequent Act amends an earlier one in such a way as to incorporate itself, or a part of itself, into the earlier, then the earlier Act must thereafter be read and construed (except where that would lead to a repugnancy, inconsistency or absurdity) as if the altered words had been written into the earlier Act with pen and ink and the old words scored out so that thereafter there is no need to refer to the amending Act at all. This is the rule in England [citation omitted]; it is the rule in America [citation omitted] and it is the law which the Privy Council applied in India in Keshoram Poddar v. Nundo Lal Mallick.

Bearing this in mind it will be seen that the 1950 Act remains the 1950 Act all the way through even with its subsequent amendments. Therefore, the moment the 1952 Act was

[1952] 1 SCR 683 : 1952 (2) SCC 1 : 1952 INSC 63

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passed and Section 2 came into operation, the Act of 1950 meant the 1950 Act as amended by Section 2, that is to say, the 1950 Act now due to expire on 1-10-1952."

The decision in Shamarao Parulekar outlines the "Pen and Ink" theory advocated by the appellants. When an amending statute effectuates a substitution, it modifies the original statutory text by omitting certain words and inserting certain other words. After the amending Act, the statute must be read to exclude the omitted words and to include the inserted words. The appellants rely on Shamarao Parulekar to highlight that a court cannot give effect to the omitted words after they have been removed by the amending Act. This rule is subject to certain well-recognised exceptions (such as in respect of rights which have been created under the original statutory text and limitations on the retrospective operation of laws).

The exceptions are not of concern to us presently. However, the appellants argue that Shamarao Parulekar represents an authority for the proposition that after the Forty-Second Amendment, the words "the principles specified in clause (b) or clause (c) of article 39" can no longer be enforced as they were omitted by a constitutional amendment. However, the decision in Shamarao Parulekar is not strictly applicable to the present situation as it did not deal with the legal effect of the amending act itself being declared void. While the decision undoubtedly lays down the correct position of law where a valid amendment is enacted, it offers no insight into whether a court can give effect to the words omitted by an amendment if the amendment is declared unconstitutional. In such cases, do the omitted words revive? This question is not answered by Justice Bose in Shamarao Parulekar for the amendment to the Preventive Detention Act was not invalidated.

53. The Appellants next placed significant emphasis on the decision in

ATB Mehtab Majid v State of Madras.46 The case concerned a challenge to Rule 16 of the Madras General Sales Tax (Turnover and Assessment) Rules, 1939. Rule 16 had been amended to include a proviso which resulted in the differential taxation of tanned hides based on whether they had been tanned within the state of Madras or outside the state. When the issue reached this Court, it

46 [1963] Supp. 2 SCR 435 : (1963) 14 STC 355 : 1962 INSC 342


was observed that under the amended Rule 16, a dealer who both purchased the untanned hides and tanned them within the State, was only required to pay the duty on the purchase price but a dealer who purchased the untanned hides from outside the state and tanned them within the state, would be liable to pay sales tax on the sale price of the tanned hides, which was substantially higher.47 Speaking for a Constitution Bench of this Court, Justice Raghubar Dayal, struck down the amended Rule 16 as violative of Article 304(a) of the Constitution on the following terms:

"We are therefore of the opinion that the provisions of rule 16(2) discriminate against imported hides or skins which had been purchased or tanned outside the State and that therefore they contravene the provisions of Article 304(a) of the Constitution.

It has been urged for the respondent that if the impugned rule be held invalid, old rule 16 gets revived and that the tax assessed on the petitioner will be good. We do not agree. Once the old rule has been substituted by the new rule, it ceases to exist and it does not automatically get revived when the new rule is held to be invalid."48

The Court in ATB Mehtab Majid found that when an amendment to a rule is invalidated by a court, the old rule does not revive. It draws on the underlying rationale of the Shamarao Parulekar decision in that once a rule is substituted, it ceases to have any legal force and cannot be given legal effect. Hence, the Court held that if the amendment is found to be unconstitutional, the unamended text does not revive and cannot be enforced. While the decision does support the argument of the appellants, that the unamended text of Article 31-C does not revive, the judgement does not elaborate on why the pre-existing rule does not revive. Thus, the decision is of no more assistance to us than the decisions in Bhim Singh and Sanjeev Coke which, without providing detailed reasons, found that Article 31-C stood revived.

47 ATB Mehtab Majid v State of Madras 1963 14 STC 355.

48 ATB Mehtab Majid v State of Madras 1963 14 STC 355.

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54. However, further elucidation on the view in ATB Mehtab Majid is found in Koteswar Vittal Kamath v Rangappa Baliga.49 The decisions has its roots in a contractual dispute where the appellants contended that the contracts in question were forward contracts and void considering the prohibition on forward contracts in the Travancore-Cochin Vegetable Oils and Oil cakes (Forward Contracts Prohibition) Order, 1950. The respondents in the case alleged that the 1950 Prohibition Order was unenforceable as it was passed under a law that had since been repealed. After tracing the history of the relevant legislation, a three-judge bench of this Court observed that the 1950 Prohibition Order was potentially still in force due to the Section 73(2) of the Travancore-Cochin Public Safety Measures Act, 1950, which stipulated that orders passed under certain repealed legislations continued in force.50 However, the respondents in the case raised a secondary contention that the state legislature of Travancore was not competent to enact the Public Safety Measures Act, 1950 because Parliament had the exclusive power to legislate on the issue of stock exchanges and forward contracts under Entry 48 of List I of the Seventh Schedule of the Constitution. Justice Bhargava, speaking for a three-Judge Bench of this Court opined that this contention was not relevant for the following reasons:

"7. … if it be held that the State Government could not competently pass the Prohibition Order, 1950, because it was a piece of legislation on Forward Contracts, that Order would be treated as void and non-est. Thereupon, the earlier Prohibition Order 1119, would continue in force right up to 30th March, 1950. […] When the Prohibition Order of 1950, was purported to be issued on 8th March, 1950, it was not laid down that it was being issued so as to supersede the earlier Prohibition Order of 1119. If it had been a valid Order, it would have covered the same field as the Prohibition Order of 1119, and, consequently, would have been the effective Order under which the rights and obligations of parties have to be governed. On the other hand, if it be held to be void, this Order will not have the effect of superseding the earlier Order of 1119."

[1969] 3 SCR 40 : (1969) 1 SCC 255 : 1968 INSC 335

50 Ibid [4] (Bhargava J).


Justice Bhargava observed that even if the 1950 Prohibition Order was held to be void, the consequence would merely be that the parties would have been governed by the earlier Prohibition Order 1119.

Justice Bhargava held that if the later Order was found to be void, it would "not have the effect of superseding the earlier Order."51 The learned Judge went on to distinguish the decision in ATB Mehtab Majid in the following manner:

"7. … Learned counsel for the respondent, however, urged that the Prohibition Order of 1119, cannot, in any case, be held to have continued after 8th March, 1950, if the principle laid down by this Court in Firm A.T.B. Mehtab Majid & Co. v. State of Madras is applied….

[…]

8. On that analogy, it was argued that, if we hold that the Prohibition Order of 1950, was invalid, the previous Prohibition Order of 1119, cannot be held to be revived. This argument ignores the distinction between supersession of a rule, and substitution of a rule. In the case of Firm A.T.B.

Mehtab Majid & Co., the new Rule 16 was substituted for the old Rule 16. The process of substitution consists of two steps. First, the old rule is made to cease to exist and, next, the new rule is brought into existence in its place. Even if the new rule is invalid, the first step of the old rule ceasing to exist comes into effect, and it was for this reason that the court held that, on declaration of the new rule as invalid, the old rule could not be held to be revived. In the case before us, there was no substitution of the Prohibition Order of 1950, for the Prohibition order of 1119. The Prohibition Order of 1950, was promulgated independently of the Prohibition Order of 1119 and because of the provisions of law it would have had the effect of making the Prohibition Order of 1119 inoperative if it had been a valid Order. If the Prohibition Order of 1950 is found to be void ab initio, it could never make the Prohibition Order of 1119 inoperative."

(emphasis supplied)

51 Ibid [7] (Bhargava J).

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Justice Bhargava observed that unlike in ATB Mehtab Majid, in Koteswar Vittal Kamath, the later order did not substitute the earlier order but it merely superseded the earlier order. Thus, the earlier order was never expressly repealed and hence if the later order was struck down, the earlier order continued to be in force. However, beyond this distinction, Justice Bhargava went on to explain what in his view was the reason for the holding in ATB Mehtab Majid, namely that the process of substitution had two distinct steps, first, an omission and second, an insertion. According to Justice Bhargava, the reason for the outcome in ATB Mehtab Majid was that where an amending rule is struck down, only the second step of inserting new words is invalidated but the first step of omitting old words continues to have legal effect. The appellants rely on this reasoning to contend that when Minerva Mills stuck down the Forty-Second Amendment, only the newly inserted language expanding Article 31-C's exemption to cover all Directive Principles was struck down. However, the Amendment's function of omitting the words "the principles specified in clause (b) or clause (c) of article 39" still stands. Hence, it was urged that even after the decision in Minerva Mills, these words stand omitted from Article 31-C. This is in essence the heart of the argument of the appellants. As a matter of interpreting precedent, it is important to note that the two-step process of substitution relied on by the appellants is only found in the three-judge bench decision in Koteswar Vittal Kamath, and not in the Constitution Bench decision in ATB Mehtab Majid. Further, Justice Bhargava's explanation of the process of substitution as having two steps after he had already distinguished ATB Mehtab Majid on facts is at best an obiter dictum.

However, ultimately neither of these judgments is binding on us, sitting in a composition of nine, and we must independently evaluate the correctness and completeness of the view taken regarding the legal effect of invalidating an amendment.

55. The Respondents resist the reasoning of a two-step substitution process set out in Koteswar Vittal Kamath by relying on a second line of decisions, beginning with the 1951 decision of the High Court of Nagpur in Laxmibai v State of Madhya Pradesh.52 The case concerned the Central Provinces & Berar Regulation of Letting

52 AIR 1951 Nag 94.


Accommodation Act, 1946 which, when originally enacted, stipulated that the statute would expire at the end of one year. However, by an Ordinance, and later a validating legislation, the lifespan of the statute was extended till such date as the provincial government may specify. The Ordinance and validating legislation were challenged on the grounds of excessively delegating legislative functions (concerning the lifetime of a statute) to the executive. A Full Bench of the Nagpur High Court upheld the Ordinance and the validating legislation extending the operation of the 1946 Act.53 Justice Hidayatullah, as the learned Chief Justice then was, speaking for the majority of the Full Bench went on to discuss the question of whether, if the amending Ordinance had been void, the original text would have been revived or not. The learned Judge observed:

"144. The original section read:

"It shall come into force on 1-10-1947 & shall remain in operation for a period of one year.'

145. The underlined (here italicised) words alone were amended. If the amendment is unconstitutional we must leave it completely out. We cannot use the intention underlying that amendment to take the place of enactment.

We cannot read the legislative act of the Governor as involving a repeal & a reenactment & give effect to the repeal though not the enactment. To do so would leave the original section truncated, & besides, there is no authority to give effect to a mere legislative intent or purpose…

[…]

146. … When the amendment comes later & is unconstitutional it has no effect whatever."

(emphasis supplied)

The judgement in Laxmibai outlines a different approach to analysing the legal effect of a judicial decision invalidating an amendment.

Justice Hidayatullah found that where an amendment is invalid, the legal effect of the amendment is nullified in its entirety. The learned

53 Ibid [142] (Hidayatullah J); [157] (Mangalmurti J).

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Judge relied on several decisions of the US Supreme Court, most notably, Frost v Corporation Commissioner54 where Justice Sutherland held:

"Here it was conceded that the statute, before the amendment, was entirely valid. When passed, it expressed the will of the Legislature which enacted it. Without an express repeal, a different Legislature undertook to create an exception, but, since that body sought to express its will by an amendment which, being unconstitutional, is a nullity and therefore, powerless to work any change in the existing statute, that statute must stand as the only valid expression of the legislative intent."

According to Frost and Laxmibai, where an amendment is invalidated both the amendment's omission of old words and its insertion of new words have no legal effect. Justice Hidayatullah noted that giving effect to the legislative intent of repeal while simultaneously striking down the new enactment could lead to a truncated statutory provision rendering the law unworkable. The effect of the judgement may be to inadvertently invalidate two provisions, both the new and the old, despite there being no constitutional fault with the old. This observation is directly applicable to the case before us because if the unamended Article 31-C does not revive after the decision in Minerva Mills, Article 31-C would be truncated and unworkable despite the validity of the Article being upheld by thirteen Judges in Kesavananda Bharati. In terms of precedential value, Justice Hidayatullah's observations are admittedly also obiter dictum given that the High Court had upheld the Ordinance. However, these observations were subsequently relied on by the High Court of Nagpur in Shriram Gulabdas v Board of Revenue, Madhya Pradesh55 and in the decisions of this Court that we shall now advert to.

56. In Mulchand Odhavji v Rajkot Borough Municipality56 a Constitution Bench of this Court invalidated the Municipality of Rajkot's levy of octroi duty. The case originated from the United States of Saurashtra where the Saurashtra Terminal Tax and Octroi Ordinance of 1949

278 U.S. 505.

1952 (3) STC 343.

1971 (3) SCC 53.


allowed the state government to levy octroi duty from the towns and cities specified in Schedule I until these municipalities enacted their own rules for the levy of octroi duty. Rajkot was one such town and in 1953 the municipality enacted its own rules for the levy of octroi duty. In 1956, the state government removed Rajkot from Schedule I of the 1949 Ordinance. However, in Mulchand Odhavji, the 1953 rules for levying octroi duty were invalidated by the trial court for violating the rule-making procedure in the parent legislation.57 Following this invalidation and in appeal to this Court, a secondary question arose as to whether the municipality could still collect octroi duty for the period that the 1953 rules were in force. In other words, did the levy of octroi duty by the state government under the 1949 Ordinance revive after the 1953 rules were invalidated? Justice JM Shelat, speaking for a Constitution Bench of this Court held:

"8. … As already stated, Ordinance 47 of 1949, was promulgated to meet the transitional situation when municipalities in towns and cities of Saurashtra were yet to be constituted. […] The rules framed by the Government were thus put in the field until the time when the municipalities could frame rules of their own and levy and collect the octroi duty. […] While issuing the said notification, the intention obviously was that once the municipal rules came into operation the Government rules, insofar as they pertained to the respondent-Municipality, would cease to operate. The Government rules, however, were to cease to operate as the notification provided "from the date the said Municipality put into force their independent bye-laws." It is clear beyond doubt that the Government rules would cease to apply from the time the respondent Municipality brought into force its own byelaws and rules under which it could validly impose, levy and recover the octroi duty. The said notification did not intend any hiatus when neither the Government rules nor the municipal rules would be in the field. Therefore, it is clear that if the bye-laws made by the respondent Municipality could not be legally in force for some reason or the other, for instance, for not having been

57 Ibid [10].

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validly made, the Government rules would continue to operate as it cannot be said that the Municipality had "put into force their independent bye-laws."

(emphasis supplied)

The decision in Mulchand Odhavji admittedly did not concern an amendment simpliciter and relied on the text of the state government rules which stipulated when they would operate. However, two important observations may be made. First, this Court observed that it would be an anomalous situation whereby a court invalidated a freshly enacted rule, but because of such invalidation and the courts' simultaneous enforcement of the repeal of the earlier rule, no rule of taxation held the field despite the state government having such power and there being no fault with the earlier rule. Second, the court gave effect to the state government's rules despite Rajkot being removed from Schedule I of the 1949 Ordinance. This was a recognition that the omission of Rajkot was only done because of the corresponding enactment of the municipality's separate rules. This was even though the omission was done by an entirely separate authority (the state government) from the enacting authority (the municipality). Thus, the Constitution Bench in Mulchand Odhavji adopted a broader approach of examining the entirety of the legislative circumstances and reversed both the omission and insertion steps of the legislative process after invalidating the unconstitutional rule.

57. The respondents next relied on State of Maharashtra v Central Provinces Manganese Ore.58 In a taxation dispute, the assessee challenged an amendment to the Explanation to clause (g) of Section 2 of the Central Provinces and Berar Sales Tax Act, 1947.

The amendment to the Explanation modified the regime of taxation from one concerning goods that were in the Central Provinces and Berar when the contract was made, to one covering even future goods that were in the provinces after the contract was made. The High Court invalidated the amendment on the ground that it had not secured the assent of the Governor General under Section 107 of the Government of India Act, 1935.59 After the High Court declared the amendment as void, a question arose before this Court as to

[1977] 1 SCR 1002 : (1977) 1 SCC 643 : 1976 INSC 269

59 Ibid [8] (Beg J).


whether the unamended Explanation to clause (g) stood revived. The assessee adopted the two-step argument concerning substitution found in Koteswar Vittal Kamath and contended that as the assent of the Governor General was not required to repeal the earlier Explanation to clause (g), the repealing step of the substitution was valid while only the insertion step of the substitution was hit by the failure to secure the Governor General's assent under Section 107 of the Government of India Act. Therefore, the assessee contended that the unamended Explanation to clause (g) did not stand revived.

Justice Beg, speaking for a Three-Judge Bench of this Court rejected this contention and held:

"17. In the case before us although the word "substitution" is used in the amending Act, yet, the whole legislative process termed substitution was itself abortive. The whole of that process did not take effect as the assent of the Governor-General, required by Section 107, Government of India Act, was lacking. […]

18. We do not think that the word substitution necessarily or always connotes two severable steps, that is to say, one of repeal and another of a fresh enactment even if it implies two steps. Indeed, the natural meaning of the word "substitution" is to indicate that the process cannot be split up into two pieces like this. If the process describes as substitution fails, it is totally ineffective as to leave intact what was sought to be displaced. That seems to be the ordinary and natural meaning of the words "shall be substituted".

This part could not become effective without the assent of the Governor-General. The State Governor's assent was insufficient. It could not be inferred that, what was intended was that, in case the substitution failed or proved ineffective, some repeal, not mentioned at all, was brought about and remained effective so as to create what may be described as a vacuum in the statutory law on the subject matter. Primarily, the question is one of gathering the intent from the use of words in the enacting provisions seen in the light of the procedure gone through. Here, no intention to repeal, without a substitution, is deducible. In other words,

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there could be no repeal if substitution failed. The two were a part and parcel of a single indivisible process and not bits of a disjointed operation."

(emphasis supplied)

This extracted paragraph has several strands of important reasoning that build on the decisions of Laxmibai and Mulchand Odhavji.

First, the Court cast doubt on whether substitution always entails two distinct steps of repeal and enactment as outlined in Koteswar Vittal Kamath. Second, the Court reiterated that this two-step approach, where repeal is given effect to but insertion is not given effect to, can result in an unintended legislative vacuum. Third, the Court highlighted that it was necessary to examine whether there was any intention to repeal without insertion. This is relevant because there may exist cases where a legislature independently seeks to repeal a provision and also enacts another provision. In such cases, it may be appropriate to differentiate the two steps if there is cogent evidence to demonstrate that independent of the enactment step, the legislature would have nonetheless repealed the provision in question. In the words of Justice Beg, is there an "intention to repeal, without a substitution"? However, absent clear legislative intent to independently repeal without substitution, where the legislature engages in substitution, it is in fact a single indivisible process and the effect of a court invalidating the amended text is to bring back the unamended text. This is because, in the case of substitution, an inference can be made that the legislature would never have repealed the unamended text without simultaneously inserting the new amended text. Thus, to invalidate the amended text but also refuse to give effect to the unamended text would be to give effect to a third outcome that could lead to absurd consequences and was never intended by the legislature. Thus, where the intent is substitution and the inserted or amended text is declared invalid, the result is to invalidate the combined exercise of repeal and enactment and the pre-amendment provision continues in force.

58. The above approach was also adopted by a two-Judge Bench of this Court in DK Trivedi & Sons v State of Gujarat.60 The case concerned three notifications issued by the state government of

60 [1986] 1 SCR 479 : (1986) Supp SCC 20


Gujarat under Section 15 of the Mines and Minerals (Regulation and Development) Act, 1957 (MMRD Act) specifying rates of royalty and dead rent to be paid by mining companies. Section 15(3) of the MMRD Act prohibited the state government from increasing the rates of royalty (and as a result dead rent)61 more than once in a period of four years. For the four-year period between 1974 and 1978, this Court found that the State of Gujarat had increased the rates of royalty and dead rent in 1974 and then again impermissibly increased royalty rates in 1975 and dead rents in 1976. The Court struck down these subsequent enhancements as violative of Section 15(3) of the MMRD Act.62 A question then arose, as to whether after invalidating these subsequent notifications, the rate of royalty and dead rent under the last valid notification of 1974 stood revived or not. Justice DP Madon, writing for the Bench, cited the decision in Central Provinces Manganese Ore with approval and held:

"72. The position before us is the same. It was not the intention of the Government of Gujarat that even if the new schedule of royalty substituted by the 1975 Notification was void and inoperative Schedule I as substituted by the 1974 Notification nonetheless stand repealed. It was equally not the intention of the Government of Gujarat that even if the rates of dead rent substituted in Schedule II by the 1976 Notification were void and inoperative, the rates of dead rent as substituted by the 1974 Notification would nonetheless stand repealed. If the contention in this behalf were correct, it would lead to the startling result that on and from the date of the coming into force of the 1975 Notification no royalty was payable in respect of minor minerals and that on and from the date of the coming into force of the 1976 Notification no dead rent was payable in respect of any leased area.

The rates in Schedule I and Schedule II were intended to be substituted by new rates. The intention was not to repeal them in any event. If the substitutions effected by the 1975 and 1976 Notifications were invalid, such substitutions were equally invalid to repeal the 1974

61 See Ibid [55] (Madon J).

62 Ibid [65], [67] (Madon J).

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Notification. The result is that the 1974 Notification continued to be operative both as regards the rates of royalty and the rates of dead rent until they were validly substituted with effect from April 1, 1979, by the 1979 Notification."

(emphasis supplied)

The above extract comports with the reasoning in Central Provinces Manganese Ore. The two-Judge bench observed that it could never have been the intention of the Government of Gujarat to independently repeal the existing 1974 rates of royalty and dead rent when it substituted them by subsequent notifications enhancing the rates. This is doubly evident from the fact that the government had enhanced the rates of royalty and dead rent. Therefore, it cannot be presumed that the Government ever independently intended to repeal the 1974 notification which would have led to a cessation in the collection of revenue. This being the position, the result of invalidating the subsequent notifications while simultaneously giving effect to repeal of the 1974 Notification would lead to an absurd result which was never intended by the government. Thus, rather than breaking down the process of substitution into two distinct steps of repeal and enactment and analysing the effect of the invalidation disjunctively, in Central Provinces Manganese Ore and DK Trivedi & Sons, the Court asks whether it is plausible that the legislature intended to independently repeal the substituted provision. In the absence of clear evidence of such legislative intent, the process of substitution is invalidated in its entirety and the original, unamended provision continues to have legal force.

59. The position adopted in Central Provinces Manganese Ore and

DK Trivedi & Sons also finds support from decisions in the US.

We have already noted Justice Hidayatullah's reliance on the US Supreme Court's decision in Frost v Corporation Commissioner.63 However, decisions in state Courts of the United States following Frost are even more explicit in their reasoning. For example, in Texas Company v Cohn64 the Supreme Court of Washington was tasked with determining whether a 1937 taxation statute continued

278 U.S. 505.

64 8 Wash 2d 360 (17 April 1941, Supreme Court of Washington).


in force after a 1939 statute had replaced it, but the subsequent statute had been invalidated by the Court. Justice Drive, speaking for the Supreme Court of Washington sitting en banc held:

"The 1939 petroleum products tax law specifically repealed the 1937 statute, but it is the position of the appellants that, when the repealing act was wholly vitiated as unconstitutional by the Inland case, its repealing clause also fell. Therefore, they assert, the 1937 statute has never been legally repealed and has remained in full force and effect in contemplation of law, assuming, of course, that it is constitutional.

This position, we think, is sound. It is too apparent to require much comment that the legislature, when it enacted the 1939 act, attempted to set up a new and complete fuel oil tax law in place of the 1937 statute. The earlier law was repealed only to clear the decks and give the new act unobstructed operation and effect. It does not appear that the legislature intended in any event, to repeal the prior law. Under such circumstances, the repeal clause falls within the unconstitutional statute of which it is part."

(emphasis supplied)

The approach adopted by the Supreme Court of Washington was to examine the totality of the legislative circumstances and proceedings, and absent any express intention of the legislature to independently repeal the 1937 law, hold that the repeal of the 1937 law was reversed by the 1939 law being invalidated. Thus, the 1937 law continued in force. This reasoning was also adopted by the Supreme Court of Pennsylvania in Mazurek v FM Ins Company, Jamestown.65 In that case, an 1857 statute allowed individuals to sue insurers in the county where the insured property was located. The 1857 statute was repealed by a 1921 law, but Section 344 of the 1921 law preserved the jurisdiction of individuals to sue insurers in the jurisdiction where the insured property was located. The 1921 law was later invalidated, and a question arose as to whether the 1857 law and the preservation of jurisdiction by Section 344 could still be given effect. Justice Maxey held that it could be:

65 320 Pa 33 (Pa. 1935) (25 November 1935, Supreme Court of Pennsylvania)

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"The only question is whether where, as here, an act expressly repeals another act and provides a substitute for the act repealed and the substitute is found unconstitutional, is the other act so expressly repealed, to be judicially accepted as repealed. Such a construction is not warranted unless it clearly appears that the legislature would have passed the repealing clauses even if it had not provided a substitute for the acts repealed. Not only was there no such intention on the part of the legislature in the present case, but it is apparent that exactly the opposite was intended. The precise question now being discussed has not heretofore been passed upon by this court. However, other courts have enunciated the principle that a repealing clause expressly repealing a prior statute is itself ineffective where the substitute for the prior statute provided in the repealing statute is unconstitutional, and where it does not appear that the legislature would have enacted the repealing clause without providing a substitute for the act repealed [citations omitted]. There is no doubt that the legislature in enacting section 344 of the Act of 1921 intended to preserve to courts of countries in which insured properties were located the jurisdiction in insurance cases created by the Act of 1857. It is a legitimate inference that the Act of 1857 would not have been repealed by the Act of 1921 if the legislature had known that section 344 of that act would be declared invalid for defect in the title of the act."

(emphasis supplied)

The above extracts make it evident that the appropriate test in cases of substitution is whether the legislature intended to repeal the law if they knew that the law they were enacting would not have legal effect. Looked at from another perspective, the question is, would the legislature have given effect to the repeal if they did not also simultaneously intend to enact an alternative provision or statute.

These decisions from the United States of America are of particular relevance, as like in India, courts in the United States have long followed the doctrine of judicial review and invalidation of both primary and secondary legislation. Therefore, the experience of American


courts on the consequences of a legislation being struck down is undoubtedly of assistance in the Indian context where courts are similarly empowered.

60. Although the decisions of Central Provinces Manganese Ore and

DK Trivedi & Sons were rendered by a three-Judge Bench and a two-Judge Bench of this Court respectively, they were also endorsed by a Constitution Bench of five judges of this Court in Supreme Court Advocates-On-Record Association v Union of India.66 The NJAC Decision is particularly relevant to the case before us because it expressly concerns the legal consequences arising out of the invalidation of a constitutional amendment. In the NJAC Decision, a Constitution Bench of this Court was seized of a challenge to the Ninety-Ninth Constitutional (Amendment) Act, 2014.67 The amendment replaced the collegium-led system of appointing judges with a National Judicial Appointments Committee. The Constitution Bench invalidated the ninety-ninth amendment as violating the basic structure. However, the Union of India contended that upon the invalidation of the ninety-ninth amendment, the earlier collegium-led system of judicial appointments would not revive because Article 124(2) in its original form (upon which the collegium-led system is based) had been repealed by the ninety-ninth amendment. A majority of four judges in the NJAC Decision all rejected this argument and held that the earlier system of judicial appointments would stand revived upon the invalidation of the ninety-ninth amendment.68The opinion of Justice JS Khehar(as the learned Chief Justice then was) expressly relied on the decision in Central Provinces Manganese Ore. The learned Judge held:

"412.10 What needs to be kept in mind as we have repeatedly expressed above is that the issue canvassed in the judgements relied upon [by the Solicitor General of India] was the effect of a voluntary decision of a legislature in amending or repealing an existing provision. That position would arise, if Parliament had validly amended or repealed an existing constitutional provision. Herein, the impugned constitutional amendment has definitely

66 [2015] 13 SCR 1 : (2016) 5 SCC 1 : 2015 INSC 285 ("NJAC Decision").

67 "Ninety-ninth amendment"

68 NJAC Decision [413] (Khehar J); [963] (Lokur J); [989] (Joseph J); [1110] (Goel J).

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the effect of substituting some of the existing provisions of the Constitution, and also, adding to it some new provisions. Naturally substitution connotes that the earlier provision ceases to exist and the impugned constitutional amendment by a process of judicial review has been set aside. Such being the position, whatever be the cause and effect of the impugned constitutional amendment, the same will be deemed to be set aside and the position preceding the Amendment will be restored. It does not matter what are the stages or steps of the cause and effect of the Amendment, all the stages and steps will stand negated, in the same fashion as they were introduced by the Amendment, when the amended provisions are set aside."

(emphasis supplied)

Justice Khehar endorsed the approach whereby the invalidation of an amendment would also reverse any repeals brought about by the amendment. The learned Judge rejected the approach of disaggregating the process of substitution into the two steps of repeal and enactment. When Parliament acted to substitute one provision with the other, it cannot be said to have intended to independently repeal the original provision absent clear evidence to the contrary.

Where no intention to independently repeal the existing provision of law is to be found, the effect of invalidating a substitution is that the entirety of the substitution stands at nullity. In the NJAC Decision, Justice Khehar also opined on the dire consequences of the pre- existing appointment process for judges not reviving. He wrote:

"413. … it would have to be kept in mind that if the construction suggested by the learned Solicitor General was to be adopted, it would result in the creation of a void.

We say so, because if neither the impugned constitutional provision nor the amended provisions of the Constitution would survive, it would lead to a breakdown of the constitutional machinery inasmuch as there would be a lacuna or a hiatus insofar as the manner of selection and appointment of Judges to the higher judiciary is concerned.

Such a position, in our view, cannot be the result of any sound process of interpretation..,"


The above extract highlights a key issue originally expounded by Justice Hidayatullah in Laxmibai and reiterated by Central Provinces Manganese Ore and DK Trivedi & Sons; namely, that giving effect to the repeal while simultaneously invalidating the enactment could lead to a lacuna in the law, rendering a provision unworkable, or as in the case of the NJAC Decision, lead to a "constitutional crisis".

61. The opinion of Justice MB Lokur in the NJAC Decision also highlights another aspect of this issue that must be kept in mind. Justice Lokur assessed the outcome of non-revival of the unamended text vis-à-vis the principles expressed in the judgement. The learned Judge wrote:

"961. … If the contention of the learned Solicitor General is accepted, then on the facts of the case, the result would be calamitous. The simple reason is that if the 99th Constitutional Amendment Act is struck down as altering the basic structure of the Constitution and if Article 124(2) in its original form is not revived then Article 124(2) of the Constitution minus the words deleted (by the 99th Constitution Amendment Act) and minus the words struck down (those inserted by the 99th Constitution Amendment Act) would read as follows:

"(2) Every Judge of the Supreme Court shall be appointed by the President by warrant under his hand and seal and shall hold office until he attains the age of sixty-five years:"

962. This would give absolute power to the President to appoint a Judge to the Supreme Court without consulting the Chief Justice of India (and also to appoint a Judge to a High Court). The result of accepting his submission would be to create a tyrant […]

963. This was put to the learned Solicitor General and it was also put to him that if his submissions are correct, then it would be better for the Union of India to have the 99th Constitution Amendment Act struck down so that absolute power resides in the President making him/her an imperium in imperio so far as the appointment of Judges is concerned. The learned Solicitor General smiled but obviously had no answer to give. It must, therefore, be

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held that the constitutional provisions amended by the 99th Constitution Amendment Act spring back to life on the declaration that the 99th Constitution Amendment Act is unconstitutional."

The above extract highlights how following a two-step approach advanced by the appellants may result in a situation where the ultimate consequence of invalidating an amendment is a graver perpetuation of the harms sought to be prevented by the striking down of the amendment. The Constitution Bench in the NJAC Decision invalidated the Ninety-Ninth Amendment on the ground that it interfered with judicial independence which is part of the basic structure of the Constitution. But as Justice Lokur's opinion points out, disaggregating the substitution and giving effect to the repealing portion of the amendment while also invalidating the new enactment would lead to a situation where judicial independence was further compromised. Such an approach would be neither legally tenable nor normatively desirable.

62. We may briefly advert to three more decisions on the relationship between the principles of the judgement in question and the outcome of invalidating an amendment to demonstrate the significance of this issue. In the NJAC Decision, it was evident that absent the pre-existing regime reviving, the principles set out in the judgement would be significantly undermined. However, the opposite may also be true. This may be seen from the decision in BN Tewari v Union of India,69 which was a writ petition under Article 32 filed on the heels of the decision of this Court in T Devadasan v Union of India.70 The case concerned a Union Public Service Commission (UPSC) notification reserving 12.5 per cent of seats for candidates from the Scheduled Castes and 5 per cent of seats for candidates from the Scheduled Tribes. In 1952, the UPSC instituted a carry-forward rule whereby unfilled reserved seats each year were added to the subsequent year's reserved seats for up to two years. This rule was subsequently amended in 1955, challenged in T Devadasan, where the carry forward rule "as modified in 1955" was struck down

[1965] 2 SCR 421

[1964] 4 SCR 680 : 1963 INSC 183


as unconstitutional.71 In BN Tewari, the petitioners contended that it was only the 1955 substitution that was invalidated, and as a result the 1952 carry-forward rule was revived and continued to be in effect. Justice KN Wanchoo, speaking for a Constitution Bench of this Court, negatived this contention by noting:

"6. … It is true that in Devadasan case, the final order of this Court was in these terms:

"In the result the petition succeeds partially and the carry forward rule as modified in 1955 is declared invalid."

That however does not mean that this Court held that the 1952-rule must be deemed to exist because this Court said that the carry forward rule as modified in 1955 was declared invalid. The carry forward rule of 1952 was substituted by the carry forward rule of 1955. On this substitution the carry forward rule of 1952 clearly ceased to exist because its place was taken by the carry forward rule of 1955. Thus by promulgating the new carry forward rule in 1955, the Government of India itself cancelled the carry forward rule of 1952. When therefore this Court struck down the carry forward rule as modified in 1955 that did not mean that the carry forward rule of 1952 which had already ceased to exist, because the Government of India itself cancelled it and had substituted a modified rule in 1955 in its place, could revive it. We are therefore of the opinion that after the judgment of this Court in Devadasan case there is no carry forward rule at all, for the carry forward rule of 1955 was struck down by this Court while the carry forward rule of 1952 had ceased to exist when the Government of India substituted the carry forward rule of 1955 in its place."

The Court in BN Tewari found that after the rule was amended in 1955, the 1952 rule ceased to exist and even after the 1955 rule was struck down, the 1952 rule did not revive as it had been repealed by the Government itself. At first glance, the decision in BN Tewari also supports the "Pen and Ink" theory propounded by the appellants and results in an identical outcome to that in ATB Mehtab Majid.

71 T Devadasan [22] (Mudholkar J).

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We have already adverted to the limitations and inconsistencies with this approach as highlighted in the cases of Laxmibai, Central Provinces Manganese Ore, and DK Trivedi & Sons. However, this case also demonstrates the practical difficulties that may arise if an unconstitutional provision revives. In T Devadasan, the Court had held the underlying basis for the carry forward rule to be unconstitutional.

If the Court in BN Tewari had found the carry forward rule stood revived, it would have resulted in the revival of a rule that was (at the time) ex-facie unconstitutional and repugnant to the holding in the T Devadasan. Thus, in addition to the narrower issue of whether a pre-existing rule is revived, the Court in BN Tewari was also mindful of the relationship between the unamended provision and the decision to invalidate the amendment. BN Tewari is an example of where allowing the unamended rule to revive would have revived a (at the time) unconstitutional rule.

63. The need to assess not only the entirety of the legislative circumstances but also the judicial decision invalidating the amending statute is also apparent from the decision in Shaukat Khan v State of Andhra Pradesh.72 The case concerned the Hyderabad Inams Abolition Act, 1955 which was eventually repealed as amended by the Andhra Pradesh (Telangana Area) Abolition of Inams Act, 1967.

During proceedings concerning the validity of the 1955 Act before this Court, the High Court of Andhra Pradesh Act invalidated the entirety of the 1967 legislation. Before this Court, a question arose that as the 1967 statute had repealed the 1955 law, and the 1967 statute itself had been struck down, whether the 1955 was now in force.

Justice P Jaganmohan Reddy, speaking for a two-Judge Bench of this Court observed:

"10. On the main question whether the impugned Acts were revived by reason of the High Court of Andhra Pradesh striking down Act 9 of 1967, a perusal of that judgment would show that the Division Bench considered the question and held that as the inam lands had already vested in the Government on July 20, 1955, there was no need to abolish inams which already stood abolished long before the date when the impugned Act, namely, Act 9 of 1967, was enacted."

[1975] 1 SCR 429 : (1974) 2 SCC 376 : 1974 INSC 118


The learned Judge quoted the judgment of the High Court of Andhra Pradesh where the High Court had held:

"The effect of the impugned Act in pith and substance is really not agrarian reform but to destroy the rights of the inamdars and others who were assured compensation under the repealed Act."

Based on this finding of the High Court, Justice Jaganmohan Reddy concluded:

"10. … The striking down of Act 9 of 1967 must be construed in the light of the reasoning given by the learned Judges of the Division Bench of the Andhra Pradesh High Court that the Abolition Act 8 of 1955 and the Amendment Act 10 of 1956 had already achieved the result which Act 9 of 1967 was intended to achieve, and once the inams had already vested in the Government, compensation had to be paid in accordance with the terms of those laws and cannot again be re-opened by vesting the inams which had already vested as if they had not already vested in the Government. This postulates the existence of the Acts impugned before us as a ground for striking down Act 9 of 1967, so that when the High Court says that the latter Act 9 of 1967is void it could not have intended to say that even the Acts now impugned before us did not revive."

This Court in Shaukat Khan observed that the High Court of Andhra Pradesh had invalidated the 1967 statute precisely on the ground that the inams had already vested in the state government under the 1955 law and the regime of compensation could not subsequently be altered by the 1967 statute. This reasoning presupposes the existence of the 1955 laws being in force. The High Court could not invalidate the 1967 law but also simultaneously enforced the repeal of the 1955 statute which it had expressly stated would govern compensation.

Thus, where a court assesses whether a law revives or not after an amendment or subsequent enactment is invalidated, the court must assess both the totality of the legislative circumstances but also the logical consequences that flow from the decision to invalidate the statute or provision in question.

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64. An even more explicit demonstration of this rationale can be found in Indian Express Newspapers (Bombay) v Union of India.73 The case concerned a 1977 notification under Section 25 of the Customs Act, 1962 granting a wholesale exemption from customs duty on newsprint. However, by a fresh notification in 1981, the Union Government amended its policy and stated that for the printing of newspapers, books and periodicals, the exemption from customs duty would only apply beyond 10 per cent. In effect, the 1981 notification imposed a 10 per cent ad valorem customs duty on imported newsprint from newspapers and periodicals. The 1981 notification was struck down by a three-judge bench of this Court on the ground that it impermissibly restricted the freedom of speech guaranteed by Article 19 of the Constitution.74 On the secondary question of whether the earlier 1977 notification stood revived, the Court held that it did. Justice ES Venkataramiah, as the learned Chief Justice then was, speaking for the Court held:

"107. … We may also state that the legal effect on an earlier law when the later law enacted in its place is declared invalid does not depend merely upon the use of words like, 'substitution', or 'supersession'. It depends upon the totality of the circumstances and the context in which they are used.

[…]

109. Hence, if the notification dated July 15, 1977 cannot revive on the quashing of the impugned notifications, the result would be disastrous to the petitioners as they would have to pay customs duty of 40% ad valorem from March 1, 1981 to February 28, 1982 and 40% ad valorem plus Rs 1000 per MT from March 1, 1982 onwards. […] Such a result cannot be allowed to ensue."

The Court in Indian Express Newspapers (Bombay) observed that the consequence of the pre-existing law not reviving would in fact result in greater prejudice to the petitioners than if there had been no judgment of the court at all. If after the 1981 notification

[1985] 2 SCR 287 : (1985) 1 SCC 641 : 1984 INSC 231

74 Ibid [102] (Venkataramiah J).


was invalidated, the 1977 notification granting a general exemption from customs duty on newsprint did not continue in force, the net outcome would be a higher customs duty on news publishers. This was because the original notification itself was framed in the manner of an exemption from customs duty. The above extract makes it clear that in addition to the question of whether the legislative intent was indivisible, the issue of the legal effect of invalidation in cases of substitution must take into account the facts of a given case, the rationale for invalidation, and the practical effect of the unamended text being revived or not.

iv.

Analysis and Conclusions concerning Article 31-C

65. Based on the above precedents, certain principles governing the consequence of an amendment resulting in a substitution being invalidated come to the fore. It is not appropriate to separate an amendment which substitutes certain words with certain other words into multiple steps and examine the legal effect of invalidation on each of these steps independently. This is because when a legislature enacts a substitution, it is only removing certain text to make space for the new text it wishes to enact. Simply put, the legislature would not remove the text in question without at the same time inserting alternate text. Given that the legislative intent is composite and indivisible, to remove and insert simultaneously, a judicial approach which disaggregates these two steps and treats them differently would amount to the courtre-writing the law contrary to the legislative intent. As the decisions from the United States note, in such cases, there are two expressions of legislative intent, the original text and the amended text. If the amended text is invalidated, the only valid expression of legislative intent is the original text. If a court were to find that even the original text could not be given legal effect because it had been repealed, this would result in a third outcome, a legal vacuum which was neither intended by the legislature that enacted the original text nor by the legislature which adopted the amended the text. Crucially, this third outcome would fail to give effect to either legislative intent despite there being no constitutional fault in the original provision. As the decisions in Laxmibai, Central Provinces Manganese Ore, and DK Trivedi & Sons note, if a court were to not only invalidate the newly inserted text but also hold that the old text stands repealed it could lead to absurd outcomes or render the text wholly unworkable. The practical effect of such an outcome would be

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that a judicial decision invalidating an unconstitutional amendment would also inadvertently nullify a valid and constitutional provision which the legislature would never have repealed without providing a replacement.

66. Insofar as the argument that the original rule had been repealed by the legislature itself and thus ought not to be given effect, as noted above, this reasoning is negated by the inference that the legislature would never have repealed the original text without simultaneously adopting the amended text. While a court cannot give effect to text that the legislature has repealed, as noted in Shamarao Parulekar, a case where a legislature has engaged in substitution, and the newly enacted text has been invalidated, is materially different. There may exist a narrow sub-set of cases where it is evident from the legislative circumstances or external aids to statutory interpretation, that the legislature would have in fact repealed the provision or words in question independent of its enactment of an alternative provision.

Therefore, it is incumbent on courts to ask the question posed by Justice Beg in Central Provinces Manganese Ore, is there "intention to repeal, without a substitution"? Although some of the precedents discussed frame the question as 'would the legislature have repealed the original text if it knew a court would invalidate the amended text?', a more appropriate framing of the question would be, "Would the legislature have repealed the original text without giving effect to the amended text?" for this is the result of a court invalidating the amended text. If in cases where a legislature has repealed text and inserted other text, there is clear evidence that the legislature would have repealed the text in question independent of its decision to give effect to new or alternate language, then a court can continue to give effect to the repeal despite invalidating the new text. This is because, in such cases, the legislative intent is not composite or indivisible, and it is evident that the legislature contemplated that the original text would be repealed independent of whether the new text was given effect or not. However, absent such clear legislative intent, where a legislature substitutes a text by amendment and the amendment is invalidated, it is presumed that the unamended text stands revived.

67. This analysis of whether legislative intent is composite or not is relevant to the case of substitutions. However, there is another reason why the argument of the appellants that repealed text can


never be enforced after a court invalidates an amendment may be flawed, and that is the case of a repeal simpliciter. Let us imagine a situation where Parliament were to by constitutional amendment, repeal protections concerning tenure or salary granted to constitutional functionaries such as Judges or Election Commissioners. This would be a case of an amendment that only repealed constitutional text.

Such an amendment would likely violate the basic structure of the Constitution. If this Court were to invalidate such an amendment, could it be contended that the protections do not revive? The only logical relief in such a case is the revival of those protections. These protections would be enforceable despite the fact that they have been omitted from the statute book or constitutional text by the legislature.

This would not be a case of the court re-writing the law but merely nullifying the effect of the repeal. Thus, it cannot be said that a court cannot nullify the effect of a repeal. The case of substitutions is admittedly more complicated, as the Court must investigate whether the legislative intent to repeal and enact is composite and indivisible.

However, once it is demonstrated that the legislature would not have repealed without simultaneously enacting, there can be no doubt that a court can reverse both the effects of the enactment and the repeal.

68. Finally, in addition to looking at the totality of the legislative circumstances, the court must also examine the consequence of the original text reviving or not reviving vis-à-vis the principles espoused in the judgement. Ordinarily, where an unconstitutional provision is struck down, it is presumed that the original text is constitutional and thus there are no adverse consequences flowing from its reviving.

However, there may exist cases where the underlying or original rule itself is unconstitutional or that to revive the situation that existed prior to the amendment would either severely undermine the legal principles set out in the judgement invalidating the amendment or result in some other adverse consequences. In such cases, courts have the flexibility to appropriately shape reliefs. Having clarified the position of law, we now apply the tests outlined above to the question concerning Article 31-C before us.

69. By Section 4 of the Forty-Second Amendment the words "the principles specified in clause (b) or clause (c) of article 39" in Article 31-C were replaced with the words "all or any of the principles laid down in Part IV." This is a case of substitution. Section 4 of the Forty-Second Amendment was subsequently struck down in Minerva Mills. As

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noted above, where an amendment substituting certain text with certain alternate text is invalidated, the effect is that the unamended text continues in force. This is because the legislative intent of repeal and enactment in such cases is composite and cannot be separated.

To give effect to the repeal and not the enactment would result in an outcome which does not correlate with legislative intent, and, as Justice Hidayatullah noted in Laxmibai "leave the original section truncated" resulting in absurd outcomes. This would in effect invalidate the original, valid and constitutional provision despite there being no constitutional fault with it nor the legislature intending to repeal it. Thus, the presumption would be that after Minerva Mills, the unamended Article 31-C would continue in force. Indeed, it is evident that cases such as Bhim Singh and Sanjeev Coke proceeded on this presumption.

70. The only plausible exception to this presumption would be if it could be demonstrated that Parliament, when enacting the Forty-Second Amendment would have repealed the words "the principles specified in clause (b) or clause (c) of article 39" independent of their enactment of the words "all or any of the principles laid down in Part IV." In this case, no reference to the broader legislative proceedings or external aids is necessary to arrive at the inference that Parliament would not have independently repealed these words. The text of the amendment adopted by Parliament itself makes it abundantly clear that there was no independent intention to repeal. The effect of Section 4 of the Forty-Second Amendment was to expand the scope of the immunity provided by Article 31-C to legislation. Under the unamended Article 31-C, immunity was only provided to legislation if it gave effect to the Directive Principles found in clause (b) or clause (c) of Article 39. However, by Section 4 of the Forty-Second Amendment, the scope of this immunity was significantly expanded to immunise legislations that gave effect to any or all of the Directive Principles in Part IV of the Constitution. Thus, the intention of Parliament in enacting Section 4 of the constitutional amendment was undoubtedly to expand the scope of the immunity granted by Article 31-C. This being the situation, it cannot be suggested that Parliament would have repealed the words "the principles specified in clause (b) or clause (c) of article 39" if it did not simultaneously enact the broader language expanding the scope of Article 31-C. If Parliament had independently repealed these words, it would have


not just reduced the scope of Article 31-C but altogether eliminated the effect of the Article. Without the words "the principles specified in clause (b) or clause (c) of article 39" in Article 31-C, the provision would have been rendered nugatory. Given Parliament's manifest intention to expand the scope of Article 31-C by Section 4 of the Forty-Second Amendment, it is not plausible to hold that Parliament independently sought to repeal the words "the principles specified in clause (b) or clause (c) of article 39" from Article 31-C. Therefore, it is evident that the legislative intent of Parliament when adopting Section 4 of the Forty-Second Amendment was composite, to repeal and enact (i.e., to substitute) through one single action. This Court cannot therefore disaggregate the steps of repeal and enactment and give effect to the repeal even after invalidating the enactment.

After Minerva Mills invalidated Section 4 of the Forty-Second Amendment, the composite legal effect of Section 4 is nullified and the unamended text of Article 31-C stands revived.

71. The final question is whether the revival of the unamended text of Article 31-C would in some way manifestly contravene the principles laid down in the judgment of Minerva Mills or result in some other adverse consequence. The text of the unamended Article 31-C was challenged, and the first part of the Article was upheld by thirteenjudge decision in Kesavananda Bharati while the latter half of the Article was invalidated. Therefore, the first half of unamended Article 31-C, which is the subject matter of the present controversy, was undoubtedly constitutional as held by the thirteen-judge decision in Kesavananda Bharati and further by the Constitution Bench in Waman Rao. Therefore, if as a consequence of the decision in Minerva Mills, the unamended Article 31-C continues in force, there can be no question of any unconstitutionality or adverse consequences associated with the unamended Article 31-C. Indeed, both the Constitution Benches in Minerva Mills and Waman Rao expressly noted that the first half of Article 31-C had been held to be constitutional in Kesavananda Bharati. Further, given that the unamended Article 31-C has been given effect for over four decades as demonstrated by the decisions in Bhim Singh and Sanjeev Coke, no argument can be raised concerning any legal or practical difficulties with the operation of the unamended Article 31-C. Given these findings, we conclude that the unamended Article 31-C continues in force.

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72. One final observation may be made. The principles discussed in this section of the judgement concerning the consequences of a substitution being invalidated emanate from cases concerning the invalidation of statutory provisions or delegated legislation. While constitutional amendments undoubtedly stand on a different footing legally, there is no reason that these principles concerning statutory interpretation would not apply equally to constitutional amendments. Indeed, the respondents before us highlighted a reason for them to apply with even greater force to constitutional amendments. The underlying rationale of the basic structure doctrine concerning constitutional amendments is that the amendment must not impermissibly deviate from the core principles that structure and govern our constitutional democracy.

An amendment can be invalidated when it modifies, obliterates, or adds some feature to the Constitution that is anathema to the principles that emerge upon a structural reading of the constitutional text. While Parliament undoubtedly has a constitutional prerogative to amend the Constitution and continually give constitutional character to the citizens' democratic aspirations, the question in basic structure review is a question of the degree of deviation from the principles that undergird the Constitution. If an amendment is invalidated because it causes a drastic deviation from the principles that govern our constitutional democracy, the consequences must be a return to those principles. Article 31-C represented a delicate balance between the goals of Part IV and the rights of Part III of the Constitution. This balance was held to not impermissibly deviate from the core principles that govern our Constitution by the thirteen judges' decision of this Court in Kesavananda Bharati. However, in Minerva Mills, Section 4 of the Forty-Second Amendment was held to violate these core principles that form the basic structure.

The logical result of such a ruling is that the constitutional text must return to within the fold of the basic structure. To give effect to the repealing portions of Section 4 of the Forty-Second Amendment while also invalidating the enactment would not result in a return to a constitutional text that is in conformity with the basic structure.

Rather, it would result in a novel third outcome, the constitutionality of which would be uncertain, untested, and may itself violate the basic structure. Therefore, the consequence of invalidating Section 4 of the Forty-Second Amendment must be that the unamended Article 31-C is revived.


Article 39(b)

73. The second question framed for our determination is:

"Whether the interpretation of Article 39(b) adopted by Justice Krishna Iyer in Ranganatha Reddy and followed in Sanjeev Coke must be reconsidered. 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."

74. To answer this question, we will first briefly summarise the submissions of the counsel on this issue. Next, we will address the arguments that relate to the judicial discipline followed in the judgments of this Court which have given rise to the reference. Finally, we analyse the interpretation of Article 39(b) adopted in the judgements that have been doubted and determine the correctness of such an interpretation.

Submissions

Submissions of the appellants and intervenors

75. Mr Zal Andhyarujina, learned senior counsel, and Mr Sameer Parekh, learned counsel for the appellants broadly made the following submissions:

Article 31C gives primacy to the Directive Principles contained in Articles 39(b) and overrides the fundamental rights guaranteed in Articles 14 and 19. As this is a significant immunity, the requirements of Article 39(b) must be strictly complied with and read narrowly;

Article 39(b) requires that there must not only be a 'material resource', but such resource must also be 'of the community'. If the material cannot be traced to the 'the community', it cannot be the subject of the policy;

The object that must be "distributed" under Article 39(b) is the "ownership and control" of the resources. The mere distribution of the resources, without disturbing the element of its ownership and control cannot be the subject of the policy;

From various dictionary definitions of the terms 'material', 'resource', and 'resources', it emerges that 'material resources of the community' mean either natural resources (which are

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those of the country or the nation) or the means of production which in a large sense can be said to be of community, even though they may be in private hands;

The formulation of 'material resources' advanced by Justice Krishna Iyer in Ranganatha Reddy and subsequently followed in several judgements of this Court is too wide. Merely because a privately owned resource meets the qualifier of "material needs" does not make it a 'material resource of the community'. The Constitution does not embody the social theory that because the individual is a member of the community, his resources however small are a necessary part of the community;

As evidenced from the debates in the Constituent Assembly, Article 39(b) has been deliberately drafted in language which provides flexibility to adapt to changing constitutional and social values. It cannot be restricted to a 'Marxist reading' of the Constitution;

Despite the purported socialist aims of the Constituent Assembly in incorporating the Directive Principles, private property was included as a fundamental right at the inception of the Constitution and continues to be given importance in inter alia Article 300A. This must be considered while interpreting the "community" element of Article 39(b); and

The observations of this Court in Mafatlal on whether Article 39(b) encompasses private property are obiter dicta. The decision merely proceeds on the basis that the same has been "repeatedly affirmed by this Court" and the question was not before the Court.

76. Mr H Devarajan, counsel appearing on behalf of the appellants supplemented the arguments of Mr Andhyarujina and Mr Parekh. In the context of the MHADA Act, he made the following submissions:

If Article 39(b) is to be read to include privately owned resources, the provision would have to be worded differently. It would either expressly contain the words "private material resources" or in any event, not contain the rider after material resources that they must be "of the community";

b. 'Material resources of the community' refers to resources which must produce goods or services for the community or be 'capable


of producing wealth for the community'. While dilapidated buildings in the island city of Mumbai may fall within the ambit of 'resources', they cannot constitute 'material resources of the community'; and

The minority opinion authored by Justice Krishna Iyer in Ranganatha Reddy and subsequently followed in Sanjeev Coke was rendered in the context of 'nationalisation' and the same context cannot be supplanted in the context of the MHADA Act.

77. Ms Uttara Babbar, senior counsel for one of the intervenors75 supplemented the arguments of the counsel for the appellants and made the following submissions:

The decision in Sanjeev Coke and the observations in Mafatlal that 'material resources of the community' include privately owned resources are not good law. The interpretation of Article 39(b) advanced by Justice Krishna Iyer in Ranganatha Reddy relied on in these decisions was part of the minority opinion, from which the majority had distanced itself;

Further, in Sanjeev Coke, the Court expressed its 'misgivings' about the decision in Minerva Mills. However, this was not permissible as Minerva Mills was rendered by a bench of coequal strength. Similarly, observations in Sanjeev Coke about the validity of Article 31-C as amended by the Forty-Second Amendment were beyond the lis before it;

In Mafatlal Industries, the nine-judge bench carried forward the error by relying on the decision in Sanjeev Coke and the observations of Justice Iyer in Ranganatha Reddy;

The words "of the community" used in Article 39(b) must be understood as distinct from the 'individual'. An interpretation of the Article that provides that resources of the individual are part of the community, renders the use of the phrase "of the community" otiose;

Article 39(b) mandatorily requires "distribution" of "ownership and control" of the resources in question. This pre-supposes the acquisition of the resource by the state and cannot include

75 I.A. No. 28541 of 2024.

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laws that provide for the acquisition of private resources by the state. The protection of Article 31-C and Article 39(b) comes in only at the stage of distribution and not at the anterior stage of acquisition of assets by the state or vesting;

Acquisition of resources is permissible under the various other powers of the legislature, including the power of eminent domain and would get other protections such as the protection of Article 31-A. However, laws which provide for acquisition cannot be interpreted to be giving effect to Article 39(b) and must meet the muster of Articles 14 and 19; and

The Constituent Assembly discussed the proposal for an amendment to the draft text of the present Article 39(b). The proposal entailed that the provision be read as "material resources…shall be vested in and belong to the country collectively". However, this amendment was rejected. The assembly consciously chose to use the phrase "material resources…are so distributed", rather than "material resources …shall be vested", indicating that it does not encompass the acquisition or vesting of private resources.

78. The counsel for the appellants also sought to argue that the constitutional jurisprudence with regard to fundamental rights has undergone a sea change since Kesavananda Bharati. In I.R.

Coelho, in the context of Article 31-B, a bench of nine judges of this Court held that even constitutional amendments by which laws are inserted in the ninth schedule are amenable to a basic structure challenge. This Court further held that the essence of Articles 21, 14 and 19 is a part of this basic structure and amendments inserting laws in the ninth schedule can be tested on this anvil. According to the appellants, in view of this judgement, it is difficult to envisage a situation where Articles 14 and 19 can be abrogated by a mere legislation under the protection of Article 31-C without even requiring a constitutional amendment. As noted during the course of the hearing, such arguments essentially involve a challenge to the constitutionality of Article 31-C itself, which falls outside the ambit of this judgement and has already been settled by a thirteen-judge bench of this Court in Kesavananda Bharati. We are not inclined to address these arguments. However, parties are at liberty to raise arguments relying on IR Coehlo to advance their submissions on the constitutionality of the MHADA Act before the regular bench.


Submissions of the Respondents and Intervenors

79. Mr R Venkataramani, the learned Attorney General appearing on behalf of the respondents, contested the interpretation of Article 39(b) advanced by the appellants and advocated for a wider reading of the provision. He submitted:

Given the constitutional context of Article 39(b) and its relevance towards realising an egalitarian social order, any narrow reading of the provision would offend the free play that is desirable in the working of the provision;

Nothing in Article 39 suggests any limitation of the words used therein. The distinction between public and private resources, or natural and human-made resources is alien to the spirit of Article 39 (b) and (c); and

A wide range of resources have been considered as part of the phrase 'material resources of the community' and within the ambit of Article 39(b). These include housing,76 contract carriages,77 land,78 coke oven plants,79 assets of sick textile undertakings,80 drugs,81 electricity,82 capital,83 licenses for felling bamboo,84 refractory plants,85 grant of dealerships of petroleum products,86 mines and minerals,87 mining lease,88 refund of excise,89 natural gas90 and the grant of natural resource.91

76 B Banerjee v Anita Pan (1975) 1 SCC 166 : 1974 INSC 246

77 State of Karnataka & Anr v. Shri Ranganatha Reddy & Anr. (1977) 4 SCC 471; State of Tamil Nadu & Ors.

v. L. Abu Kavur Bai & Ors. (1984) 1 SCC 515

78 Maharao Sahib Shri Bhim Singhji v. Union of India & Ors. (1981) 1 SCC 166; Jijubhai Nanbhai Kachar v State of Gujarat (1995) Supp 1 SCC 596

79 Sanjeev Coke.

80 National Textile Corp Ltd v. Sitaram Mills Ltd, AIR 1986 SC 1234; 1986 INSC 61

81 Union of India v. Cynamide India Ltd. (1987) 2 SCC 720; 1987 INSC 100

82 Tinsukhia Electric Supply Co. Ltd. v. State of Assam & Ors. (1989) 3 SCC 709 : 1989 INSC 128

83 N. Parthasarathy v. Controller of Capital Issues (1991) 3 SCC 153 : 1991 INSC 104

84 Orient Paper and Industries Ltd. v. State of Orissa (1991) Supp 1 SCC 81

85 Assam Sillimanite Ltd & Anr v. Union of India & ors. (1992) Suppl 1 SCC 692 : 1990 INSC 89

86 Mahinder Kumar Gupta v. Union of India, Ministry of Petroleum and Natural Gas, (1995) 1 SCC 85

87 Tata Iron & Steel Co v UOI (1996) 9 SCC 709 : 1996 INSC 770 : 1996 INSC 770

88 Victorian Granites Pvt. Ltd. v. P. Rama Rao & Ors (1996) 10 SCC 665 : 1996 INSC 1018

89 Mafatlal Industries Ltd. & Ors. v. Union of India & Ors. (1997) 5 SCC 536

90 Reliance Natural Resources Ltd. v. Reliance Industries Ltd. (2010) 7 SCC 1 : 2010 INSC 290

91 In Re Natural Resources Allocation (2012) 10 SCC 1,

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80. Mr Tushar Mehta, the learned Solicitor General, supplemented the arguments of the learned Attorney General. He argued:

The interpretation that Article 39(b) includes privately owned resources, has been a consistent position of this Court and has acquired the status of stare decisis. The opinion of Justice Krishna Iyer in Ranganatha Reddy has been followed in Sanjeev Coke, State of Tamil Nadu & Ors vs. L. Abu Kavur Bai & Ors.,92 and also by a bench of eleven judges in Mafatlal Industries. There is no conflict of opinion between different judgements;

The observations in Mafatlal Industries on the interpretation of Article 39(b) do not constitute obiter dicta. The interpretation of Article 39(b) is discussed by three opinions in the decision, including the dissenting opinion and the issue was specifically argued;

The meaning of the phrase "material resources of the community" cannot be whittled down to only include public resources and exclude private property. The phrase specifically uses the word 'community' to include the resources of every individual;

The inclusion of the phrase "securing that the ownership and control" in Article 39(b) indicates that the phrase that follows it i.e. "material resources of the community" includes resources which are not public resources. The 'ownership and control' of public resources would not be required to be secured and it is only private property that is required to be "secured" for the purposes of ownership and control;

The terms 'ownership' and 'control' are disjunctive and there may be situations where the state does not acquire ownership but only acquires control. For instance, if a mineral is found on private land, the ownership may remain with the private person, but control over the mineral and the land is taken over by the government. Therefore, the term 'and' must be read as 'and/or';

[1984] 1 SCR 725 : (1984) 1 SCC 515 : 1984 INSC 17


The securing of ownership and control must be of any identifiable class of "material resources" and not in general terms as a wholesale acquisition of all private property without any defined principle;

Article 39(b) leaves it entirely to the wisdom of the legislature to decide what should constitute 'material resources' at a given point in time, keeping in mind the dynamics of national and international economic configurations. It allows the legislature to enact a law for the distribution of particular material resources, irrespective of its pattern of ownership;

The debates in the Constituent Assembly indicate that the framers of the Constitution deliberately framed Article 39(b) in the broadest possible terms. The idea was to leave enough room for future governments to determine the best way of achieving 'economic democracy';

The deletion of the right to property as a fundamental right, under the erstwhile Article 31 and Article 19(1)(f), points towards the inclusion of private property within the ambit of 'material resources of the community' under Article 39(b);

Provisions akin to Article 39(b) are present in various constitutions across the world and have not posed any problems. Even in the absence of Article 39(b), the formation of any nation State, includes within itself, the power to acquire an identifiable class of property or "material resource" from an identifiable "community" for the larger public or "common good"; and

The preservation of 'material resources', such as buildings constitutes the 'common good'.The principle of 'intergenerational equity' propounded by this Court in the context of natural resources, provides that resources need to be used judicially to ensure that future generations are also able to enjoy the fruits of the resources.

81. Mr Rakesh Dwivedi, senior counsel appearing for the State of West Bengal advanced the view that this Court should refrain from laying down a water-tight interpretation of the resources and forms of distribution that fall within the ambit of Article 39(b). Such an exercise, Mr Dwivedi urged, is context-specific and must be left for

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experimentation by the Parliament, in view of changing economic priorities. In the context of this formulation, he broadly made the following submissions:

The phrase 'material resources" includes privately owned resources within its ambit. Only resources that are earmarked for personal use and do not act as a source of income or wealth are excluded from the phrase;

The proposal to amend the existing provision to include specific resources was rejected by the Constituent Assembly.

Dr Ambedkar stated that it was a deliberate choice to keep the phraseology extensive to account for future economic priorities.

Thus, Article 39(b) must be construed liberally.;

The provision uses the term "community" instead of "State/ Government". The phrase includes all citizens or sections of citizens or a community of individuals and thus, encompasses privately owned resources;

Various forms of private property inherently have a bearing on ecology and the well-being of the community, for instance, privately owned forests, large ponds, fragile areas and wetlands.

Such properties by their nature, would be included in the phrase "material resources of the community".

The word "distributed" in Article 39(b) has been used as a part of the phrase, "so distributed as best to subserve the common good" and must be widely interpreted. The intent is that the State may adopt any mode of distribution as long as it subserves the common good. Such distribution may be piecemeal or the resources may be kept in the control of a governmental or private agency, provided the benefits reach the people as a 'common good'; and

Articles 38, 39(b) and (c), must be read together. They indicate that the provisions are not limited to the material resources owned by the State and its agencies. They enable the state to make a law for distributing ownership and control of the material resources which may be in the hands of private persons to achieve economic justice and redistribution.


82. Mr Gopal Sankarnaryanan, senior counsel, appearing for an intervenor, supplemented the arguments advanced by the counsel for the respondents and the State of West Bengal. He broadly made the following submissions:

The purport of clauses (b) and (c) of Article 39 must be interpreted in the context of whether Article 31C was meant to apply to laws dealing with privately owned property or resources. Article 31C was inserted in the Constitution by the Parliament to overcome the judgement in RC Cooper, wherein this Court struck down the nationalisation of the private rights of shareholders and banks as violative of Article 14;

Article 31C is part of a scheme, along with Articles 31A and 31B which were inserted by the first amendment. That both Article 31-A and 31-B apply to private property is uncontested.;

If 'ownership and control' of 'material resources of the community' excluded private ownership, there would be no challenge under Article 19 to require protection under Article 31C;

Article 39(c) seeks to prevent the "concentration of wealth and means of production" which could be to the common detriment.

Such phrases cannot be construed to refer to public wealth and public means of production. A similar interpretation must be adopted for Article 39(b); and

The concept of 'common good' alluded to in Article 39(b) is critical to determine whether the provision includes privately owned resources. The COVID-19 pandemic has shown us the need to pool resources, which may often be privately owned, to protect the health of the community.

ii.

Judicial Discipline: Observations in Sanjeev Coke and Mafatlal

83. Several arguments have been made with regard to the judicial discipline followed by and the precedential value of the judgements which lie at the heart of this reference. We will first address these arguments before analysing the correctness of the interpretation of Article 39(b) in these judgements.

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The resurrection of the minority view in Ranganatha Reddy by Sanjeev Coke

84. As discussed in Part A of this judgement, the five-judge bench order referred the correctness of the decision in Sanjeev Coke to a larger bench of seven judges. One of the apprehensions of this Court in this reference order was that this Court in Sanjeev Coke, followed the observations of the minority judgement in Ranganatha Reddy, despite the majority expressly distancing itself from such observations. The appellants have also advanced similar contentions.

They argue that the decision in Sanjeev Coke is not good in law as the judgement follows a minority view which was 'disagreed' with by the majority, and the same error was repeated by subsequent decisions that have followed Sanjeev Coke. Therefore, we first explore whether the decision in Sanjeev Coke can be faulted on the ground of judicial discipline.

85. The judgement at the heart of this controversy before us is

Ranganatha Reddy rendered by a bench of seven judges of this Court. The issue before this Court related to the constitutional validity of the Karnataka Contract Carriages (Acquisition) Ordinance, 1976, followed by the Karnataka Contract Carriages (Acquisition) Act, 1976.

The legislation provided for the nationalisation of contract carriages in the state. One opinion was authored by Justice NL Untwalia for the majority, speaking for himself, Chief Justice MH Beg, Justice YV Chandrachud and Justice PS Kailasam. Justice Krishna Iyer, speaking for himself, Justice Jaswant Singh and Justice PN Bhagwati, authored a separate but concurring opinion on behalf of a minority of the judges.

86. In Ranganatha Reddy, the issue arose before this Court in an appeal from the judgement of the Karnataka High Court which struck down the legislation and declared it to be unconstitutional. Justice Untwalia, speaking for the majority, briefly delineated the findings of the High Court in the following terms:

"4. We now proceed to state the findings of the High Court on the various points argued before it not in the order as finally recorded in para 98 of its judgment at p. 1530 but in the order the points were urged before us by Mr Lal Narayan Sinha, learned Counsel for the appellants. They are as follows:


"(1) The acquisition is not for a public purpose.

(2) The compensation or the amount provided for or the principles laid down in the Act for payment in lieu of the various vehicles, permits and other assets is wholly illusory and arbitrary."

For the two reasons aforesaid, the Act is violative of Article 31(2) of the Constitution and is a fraud on it. It is, therefore, null and void.

(3) The acquisition of contract carriages with inter-State permits and other assets pertaining to such operators is ultra vires the legislative power and the competence of the State Legislature.

(4) Article 31-C does not bar the challenge to the Act as being violative of Article 31(2) of the Constitution as there is no reasonable and substantial nexus between the purpose of the acquisitions and securing the principles specified in clauses (b) and (c) of Article 39."

(emphasis supplied)

87. From the above, it is clear that the High Court declared the Act unconstitutional on several grounds, including a violation of Article 31(2)93 and on the ground of legislative competence. Significantly, as stated in point (4) of the above extract, the High Court also decided on the question of whether the legislation had a nexus with Articles 39(b) and (c) and was consequently protected by Article 31-C. In this regard, the High Court took the view that there was no substantial nexus between the purpose of the acquisition by the legislation and the principles laid down in Articles 39(b) and (c).

88. It was in the context of the above findings of the High Court that the appeal was heard by this Court. The majority judgement, authored by Justice Untwalia, upheld the constitutionality of the Act on the

93 Article 31(2) was part of the Constitution at the time. It has been subsequently omitted by Section 6 of the Constitution (Forty-fourth Amendment) Act, 1978, w.e.f. 20.06.1979. [It read: "(2) No property, movable or immovable, including any interest in, or in any company owning, any commercial or industrial undertaking, shall be taken possession of or acquired for public purposes under any law authorising the taking of such possession or such acquisition, unless the law provides for compensation for the property taken possession of or acquired and either fixes the amount of the compensation, or specifies the principles on which, and the manner in which, the compensation is to be determined and given."]

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ground that the legislation met the muster of Article 31(2). It was held that the provisions were for 'public purpose' and provided adequate compensation, as required by the provision. While arguments were made by the counsel on all the issues raised by the judgement of the High Court, the majority judgement eventually upheld the constitutionality of the Act only on the ground of Article 31(2). In fact, it appears that Justice Untwalia consciously refrained from making observations about whether the legislation had a nexus with Article 39(b) and the consequent protection under Article 31C.

This is evidenced by the following observations of Justice Untwalia:

"15. … For the purpose of deciding the point which falls for consideration in these appeals, it will suffice to say that still the overwhelming view of the majority of Judges in Kesavananda Bharati case is that the amount payable for the acquired property either fixed by the legislature or determined on the basis of the principles engrafted in the law of acquisition cannot be wholly arbitrary and illusory.

When we say so we are not taking into account the effect of Article 31-C inserted in the Constitution by the 25th Amendment (leaving out the invalid part as declared by the majority).

17. As already stated the High Court took the view that the amount payable under the Act for the property acquired would be such that it will be wholly arbitrary and illusory and leave the many operators in huge debts. Many of them were plying their contract carriages having taken loans of considerable sums of money from the various financiers on hire-purchase system, for whom also Mr A.K. Sen appeared and argued before us. They would not only be paupers but huge liability will remain on their shoulders if the interpretation put by the High Court were to be correct. Mr Lal Narayan Sinha, learned Counsel for the appellants, took a very just and proper attitude in advancing an argument before us which would take away the basis of the High Court judgment in this regard.

With respect to each and every relevant section on the question of payment of the amount in lieu of the property


acquired he suggested such a reasonable, harmonious and just construction by the rules of interpretation that we found no difficulty in accepting his argument - rather, were glad to do so. The other side on the interpretation so put, which we are going to mention hereinafter, felt satisfied to a large extent. Mr Sinha also advanced some argument with reference to the valid part of Article 31-C read with clauses (b) and (c) of Article 39 but very wisely did not choose to heavily rely upon it. On the interpretation of the statute as canvassed by him, there hardly remained any necessity of it.

27. On the interpretations aforesaid which we have put to the relevant provisions of the Act, it was difficult - rather impossible - to argue that the amount so fixed will be arbitrary or illusory. In some respects it may be inadequate but that cannot be a ground for challenge of the constitutionality of the law under Article 31(2). The respondents felt quite satisfied by the interpretations aforesaid and could not pursue their attack on the vires of the Act on that ground."

(emphasis supplied)

89. Justice Untwalia also expressly clarified that the majority opinion does not express any opinion on whether the Act has a reasonable nexus with Articles 39(b) and (c) and Article 31-C is applicable. Further, the learned judge observed that while Justice Krishna Iyer has rendered a separate opinion specifically dealing with the Article 39(b) and (c) question, the majority must not be understood to be in agreement with those findings. Justice Untwalia observed:

"37. At the end we may also indicate that under subsection (6) of Section 19 all sums deducted by the State Government under sub-section (3) of Section 10 which include the sums payable to the secured creditors stand transferred to the Corporation which is obliged to credit the sums transferred to the appropriate funds. The said provision would take within its ambit the liability of the Corporation to pay forthwith the sum found due to the secured creditors. Since we have upheld the constitutional validity of the Act on merits by repelling

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the attack on it by a reasonable and harmonious construction of the Act, we do not consider it necessary to express any opinion with reference to Article 31-C read with clauses (b) and (c) of Article 39 of the Constitution. Our learned Brother Krishna Iyer, J. has prepared a separate judgment specially dealing with this point. We must not be understood to agree with all that he has said in his judgment in this regard."

90. Justice Krishna Iyer began his separate opinion, on behalf of himself and two other judges, with the following question: "We go wholly with our learned brother Untwalia, J. Then why a separate afterword?"94The opinion then goes on to frame the questions that arose from the judgement of the High Court in the following terms:

"50. Back to the challenging problems thrown up by the High Court's decision. The facts are there in the leading judgment and the formulation of the controverted propositions also needs no reiteration. Broadly speaking, we strike no note of dissensus but seek to bring out some social nuances even in consensus. Let us project the pegs on which our discussion may hang. Incidentally, conceptual differences about the dimensions of the change visualised by Article 31-C read with Article 39(b) and (c) are bound to exist among Judges who, after all, professionally objectify the social philosophy of the Constitution through the subjective prism of their own mentalism.

1. What is a "public purpose", set as a constitutional limitation in Article 31(2), compliance with which conditions the immunity from attack based on Article 19(1)(f) or inadequacy of recompense when any person is deprived of his property?

1(a). What is the degree of nexus between the public purpose and the acquisition desiderated by Article 31(2)?

1(b). Can Cooper be judicially resurrected, draped differently but with the same "compensation" soul, even after the amendment of Article 31(2)?

94 Ranganatha Reddy [40].


2. What are the pervasive ambience and progressive amplitude of the "directive principle" in Article 39(b) and (c) in the context of nationalisation of public utilities?

2(a). Can State monopoly by taking over private property be a modus operandi of distribution of ownership and control of the material resources of the community to subserve tile common good, within the framework of Article 39 (b)?

2(b). Are distribution and nationalisation antithetical or overlapping?

2(c). What is the connotation of the expression "material resources"? Can private buses be regarded as material resources of the community?"

91. The above formulation by Justice Krishna Iyer of the issues raised by the High Court is distinguishable from the formulation of the issues by the majority in paragraph 4 of the judgement, extracted above. Issues 2, 2(a), 2(b) and 2(c) identified by Justice Krishna Iyer on the interpretation of Article 39(b), and particularly the purport of the terms 'distribution' and 'material resources' were not even framed as issues by the majority, let alone answered. We will discuss in detail, the answers given by Justice Krishna Iyer to these questions at a later stage. For now, it is sufficient to note that Justice Krishna Iyer inter alia observed that all resources that satisfy material needs, including privately owned resources, fall within the ambit of the phrase 'material resources of the community' used in Article 39(b).95

92. There was a resurrection of these observations by Justice Krishna Iyer in the decision of five judges of this Court in Sanjeev Coke.

As briefly noted above, in this case, the petitioners challenged the nationalisation of their coke oven plants on the ground that nationalising certain coke oven plants, while leaving others out violated Article 14 of the Constitution. The Court proceeded on the assumption that Article 31C remains in force and protects a legislation from challenge under Articles 14 and 19 when the Act bears a nexus

95 Ranganatha Reddy [80-84].

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with the principles in Article 39(b) or (c). This Court held that the Coking Coal Mines (Nationalisation) Act 1972 is a legislation that gives effect to the policy specified in Article 39(b) and therefore, is immune from a challenge to its constitutionality under Article 14. To establish the nexus between the Act and the principles laid down in Article 39(b), the bench of five judges of this Court (speaking through Chinappa Reddy, J) analysed the scope of Article 39(b) and the meaning of both 'material resources of the community' and the concept of 'distribution to subserve the common good'.

93. The counsel for the petitioner in Sanjeev Coke mirrored the arguments made by some of the appellants in the case before us. It was urged that a coal mine or coke oven plant owned by private parties cannot constitute a "material resource of the community" until it is acquired by the state. It was argued that to qualify as a material resource of the community, the ownership of the resource must vest with the state. A legislation such as the Coking Coal Mines (Nationalisation) Act, it was urged, may be a legislation for the acquisition of coking coal mines and coke oven plants belonging to private parties but cannot be considered to be a legislation in furtherance of Article 39(b). In essence, the petitioners' case was that acquisition is a pre-requisite for 'distribution' and cannot be considered synonymous with distribution.

94. This Court rejected this argument and quoted with approval paragraphs 82 to 83 of the judgment authored by Justice Krishna Iyer in Ranganatha Reddy for a minority of judges. Relying on the observations of Justice Krishna Iyer, this Court concluded that material resources of the community are not confined to public-owned resources but include "all resources, natural and man-made, public and private-owned". In this way, the observations in the minority opinion authored by Justice Krishna Iyer in Ranganatha Reddy were resurrected by a five-Judge Bench of this Court in Sanjeev Coke.

Sanjeev Coke erred in relying on the observations of the minority in Ranganatha Reddy

95. The first issue which arises is the precedential value of the observations made by Justice Krishna Iyer in his opinion in Ranganatha Reddy and whether a subsequent bench of lesser strength in Sanjeev Coke was in violation of judicial discipline by following these observations.


96. The law laid down by this Court is binding on subsequent benches of lesser or coequal strength. A bench of lesser strength cannot disagree or dissent from the view taken by a bench of a larger quorum. In case of any doubt, such a bench may only invite the attention of the Chief Justice and request for the matter to be placed for hearing before a bench of a larger strength than the quorum of the bench whose decision was being considered. A bench of coequal strength may go one step ahead, and express an opinion doubting the correctness of the view taken by the earlier bench of coequal strength. Subsequently, the matter may be placed before a larger bench to lay down the law on the correctness of the decision which is doubted.96

97. Judges of this Court have the liberty to pronounce separate dissenting judgment(s). However, it is the decision of the majority of judges which constitutes the binding judgment.97The binding nature of the judgement depends on the bench strength and not the numerical strength of the majority taking a particular view. For instance, if a judgment is pronounced by a bench of seven judges, with four judges constituting the majority, and the remaining three judges dissenting from the view of the majority, the majority judgement will constitute a binding judgment by a bench of seven judges and not a bench of four judges. This position of law has been clarified and settled by a Constitution Bench of this Court in Trimurthi Fragrances (P) Ltd.

v. State (NCT of Delhi).98

98. A dissenting judgment, however, must be distinguished from a concurring judgment.99 A dissenting judgment is a judgment signed by a minority of judges, with or without an accompanying opinion, which expresses non-concurrence with the decision of the majority of judges of the court.100 However, judges of this Court who agree with the decision of the majority may also author separate opinions.

96 Central Board of Dawoodi Bohra vs. State of Maharashtra (2005) 2 SCC 673 [12] : 2004 INSC 720

97 Article 145(5), Constitution of India. [It reads: "No judgment and no such opinion shall be delivered by the Supreme Court save with the concurrence of a majority of the Judges present at the hearing of the case, but nothing in this clause shall be deemed to prevent a Judge who does not concur from delivering a dissenting judgment or opinion."] A similar provision was contained in Section 214(4) of the Government of India Act, 1935.

98 [2022] 15 SCR 516 : 2022 SCC OnLine SC 1247 : 2022 INSC 975

99 DD Basu, 'Constitution of India', Vol 9, p 9917.

100 ADVANCED LAW LEXICON BY RAMANATHAIER, 3rd Edn., Vol. III, p. 2509.

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In such 'concurring opinions', the judge (or judges) agree with the conclusion of the majority, though they separately state their views on the case or their reasons for concurrence. Such opinions may be based on different grounds and the judges may give separate reasons, even about observations on which they concur with the majority. The majority judgement too is not always contained in a single opinion. It is common practice for a plurality of judges of this Court to render separate opinions, and it is from the conclusions and concurring observations of each of their judgements that a majority opinion is identified.

99. In order to determine whether the observations in the concurring opinion of a numerical minority of judges constitute a binding precedent, we must ask two questions. Firstly, when only the concurring opinion expounds the law on a particular point, does the majority opinion indicate a difference of opinion from that view or distance itself from such reasoning? Secondly, are the observations in the concurring opinion essential to the ratio decidendi and can they be regarded as an expression of opinion on behalf of this Court as a whole?101These requirements are cumulative. For observations in a concurring opinion to be binding on a smaller or coequal bench, the observations in the concurring opinion should be both free from disagreement or difference by the majority of judges and also be a part of the ratio decidendi of the judgment.

100. The disagreement with the concurring view in the majority opinion may be express or implied. The majority may expressly state that it disagrees with or distances itself from the view taken in a concurring opinion on a particular issue. Alternatively, the discussion in the majority judgment on that issue may be at odds with the observations in the concurring opinion. It is the latter situation that becomes more tricky, particularly, when a single opinion has not been authored on behalf of the majority. A Constitution Bench of this Court in Jaishri Laxmanrao Patil v. State of Maharashtra102 has provided some assistance about how to cull out the binding majority opinion in such a situation, where various judges, discuss the same question of law albeit differently. The Constitution Bench

101 DD Basu, 'Constitution of India', Vol 9, p 9849.

102 [2021] 15 SCR 715 : (2021) 8 SCC 1 : 2021 INSC 284


(speaking through Justice Ravindra Bhat) relied on the observations in Rajnarain Singh v. Patna Administration Committee103and held that to cull out the majority in such cases, the Court must attempt to ascertain the 'greatest common measure' of agreement.

The Court held:

"355. Before we proceed to notice the relevant paragraphs of the judgment of Indra Sawhney, we need to first notice method of culling out the majority opinion expressed in a judgment where more than one judgments have been delivered. The Constitution Bench of this Court in Rajnarain Singh v. Patna Admn. Committee, had occasion to find out the majority opinion of a seven-Judge Bench judgment delivered by this Court in Delhi Laws Act, 1912, In re. the Constitution Bench laid down that opinion which embodies the greatest common measures of the agreement among the Bench is to be accepted as the decision of the Court. Thus, for culling out the decision of the Court in a case where there are several opinions, on which there is greatest common measure of agreement is the decision of the Court."

(emphasis supplied)

101. Therefore, in situations where several opinions are authored, dealing with the same questions of law, to identify the propositions of law that are binding on subsequent benches, the greatest common measure of agreement by a majority of judges would be binding on future benches.

102. It must be noted, however, that there is a difference between whether an observation is a binding precedent and whether it is a position of law that may have persuasive value on subsequent benches. In the absence of disagreement by a majority of judges (either express or implied), nothing precludes subsequent benches of this Court from relying on observations made in a concurring opinion(on behalf of the minority of judges) which are not discussed by the other judges at all. It is assumed in such cases, that all judges on the bench have read the opinions of one another, and did not deem it necessary

103 [1955] 1 SCR 290 : (1954) 2 SCC 82 : 1954 INSC 69

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to either state their express disagreement with the opinion or lay down a different understanding of the proposition of law (implied disagreement).104

103. For instance, in Navtej Singh Johar v Union of India,105 one of us (DY Chandrachud, J) authored a concurring opinion, recognising the concept of 'indirect discrimination'. While technically this was an opinion on behalf of only one judge, the other judgements in the case did not discuss this issue at all. Neither did the other judges expressly disagree with the view, nor did they present a view on the subject that could be seen as being at odds with the view taken in the concurring opinion. In the absence of such disagreement, express or implied, subsequent benches of this Court were not precluded from relying on the observations as having persuasive value. In Lt. Col.

Nitisha & Ors. vs. Union of India & Ors,106 a two-Judge Bench of this Court relied on the conception of 'indirect discrimination' while analysing an evaluation criteria set by the army, which was facially neutral but disproportionately impacted women officers. The bench was not violating judicial discipline merely because a majority of judges did not expressly agree with the view or discuss the concept at all. The fact that the observations of the concurring opinion were not disagreed with or even discussed is sufficient for a subsequent bench to rely on the same if they choose to do so. In such cases, the court is not bound by the view but may choose to rely on it.

104. However, the above example is distinguishable from the situation in

Ranganatha Reddy. The majority judgment in Ranganatha Reddy not only refrained from making observations about the interpretation of Article 39(b) but also indicated an express disagreement with the observations in the judgment of Justice Krishna Iyer on the point. It was to prevent future benches from relying on the observations of that judgment, by presuming concurrence, that the majority opinion clarified that it must not be understood to agree with the observations in the judgement of Justice Krishna Iyer. Thus, it is clear that a majority of judges of this Court did not adopt the view advanced by

104 Kaikhosrou (Chick) Kavasji Framji v. Union of India (2019) 20 SCC 705 [40-46] : 2019 INSC 378

105 [2018] 7 SCR 379 : (2018) 10 SCC 1 [442-446] : 2018 INSC 790

106 [2021] 4 SCR 633 : (2021) 15 SCC 125 [50] : 2021 INSC 210


Justice Krishna Iyer on the interpretation of Article 39(b). In such a situation, the bench of five judges in Sanjeev Coke was bound by the view of the majority in Ranganatha Reddy, which was a decision rendered by a bench of seven judges. The view taken by a minority of three judges and specifically disagreed with by the majority of four judges could not be relied on by a smaller bench of five judges in Sanjeev Coke. Not only was the opinion in the judgment of a minority of judges not binding, but it also could not be relied on as having persuasive value, since there was a majority opinion of a larger bench disagreeing with the view.

105. The majority in Ranganatha Reddy did not discuss its interpretation of Article 39(b) and merely expressed their disagreement simpliciter with the view of the concurring minority. Therefore, it is undoubtedly possible that the bench of a lower quorum in Sanjeev Coke was perplexed about the interpretation of Article 39(b) that it was bound to follow. In such a situation it was open to the bench to have brought this to the attention of the Chief Justice and requested for the matter to be placed before a larger bench. A part of the beauty of minority opinions undoubtedly lies in the hope of the author that, in some cases, they may become the law when adopted by a majority in a future case.107 However, this cannot be done by compromising on judicial discipline. To this effect, this Court in Sanjeev Coke erred in relying on the observations in the opinion of Justice Krishna Iyer in Ranganatha Reddy, when the binding opinion of the majority of judges expressly stated their inability to agree with those observations.

The error has been carried forward in subsequent decisions

106. Mr Tushar Mehta, the learned Solicitor General of India, has argued that this Court has consistently upheld the observations of Justice Krishna Iyer in Ranganatha Reddy and this is not a case of jurisprudential inconsistency or conflicting decisions. The observations in Sanjeev Coke on Article 39(b), adopting the minority

107 The famous words of Chief Justice Hughes: "A dissent in a court of last resort is an appeal to the brooding spirit of the law, to the intelligence of a future day when a later decision may possibly correct the error into which the dissenting judge believes the court to have been betrayed...... Nor is this always in vain. In a number of cases dissenting opinions have in time become law."[HUGHES, THE SUPREME COURT OF THE UNITED STATES, (1930) American BarAsson. Journal.]

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view in Ranganatha Reddy, have been followed in subsequent decisions of this Court. These decisions include inter alia S Abu Kavur Bai, Basantibal Khetan, and Mafatlal. Thus, it was urged, that this Court should refrain from unsettling a position of law that has been consistent for several years and has "acquired the status of stare decisis".

107. We are not inclined to accept this submission. In Sita Soren v Union of India,108 a Constitution Bench of this Court, speaking through one of us (DY Chandrachud, J) had occasion to clarify that the doctrine of stare decisis is not an inflexible rule of law. This Court may review its earlier decisions if it believes that there is an error, or the effect of the decision would harm the interests of the public or if "it is inconsistent with the legal philosophy of the Constitution".

In cases involving the interpretation of the Constitution, this Court would do so more readily than in other branches of law because not rectifying a manifest error would be harmful to the public interest and the polity. The period of time over which the case has held the field is not of primary consequence.

108. As noted above, the decision of the five-judge bench in Sanjeev Coke was based on an erroneous reliance on the minority opinion in Ranganatha Reddy. The same error committed in Sanjeev Coke has been carried forward in subsequent decisions of this Court ever since. The view of a minority of three judges, expressly disagreed with by a majority of four judges, has been relied on for several years, without its validity ever being tested by a larger bench.

Similarly, the disagreement with the minority opinion expressed by the majority in Ranganatha Reddy has also remained untested, with the smaller bench in Sanjeev Coke adopting the minority view without any explanation. Therefore, this bench of nine judges must test the correctness of the decision in Ranganatha Reddy and the subsequent decisions relying on the minority opinion in the case.

This exercise has eluded this Court for a long period of time. As noted above, it is only a bench of a larger quorum (nine judges) that can test the correctness of an opinion rendered by a smaller bench (seven judges) and thus, this Constitution Bench must reconsider the interpretation of Article 39(b) adopted in these judgements.

108 [2024] 3 SCR 462 : (2024) 5 SCC 629 [33] : 2024 INSC 161


The single-line observation in Mafatlal is obiter dicta

109. Another point of contention between the parties has been the precedential value of the single-line observation of a nine-judge bench of this Court in Mafatlal that the phrase 'material resources of the community' under Article 39(b) includes privately owned property. As noted above, the underlying seven-judge referral order notes that the attention of this Court was drawn to this observation in Mafatlal. It was in this context that the seven-judge bench order expressed doubts about the view and referred the question to this bench of nine judges.

110. The counsel for the appellants contend that the observations in

Mafatlal on this point constitute obiter dicta and do not bind this bench of coequal strength. On the other hand, the counsel for the respondents have advanced the view that the issue arose directly in the case and the observations are binding on this bench.

111. Not every observation in a judgement of this Court is binding as precedent. Only the ratio decidendi or the propositions of law that were necessary to decide on the issues between the parties are binding.109 Observations by the judge, even determinative statements of law, which are not part of her reasoning on a question or issue before the court, are termed obiter dicta. Such observations do not bind the Court. More simply, a case is only an authority for what it actually decides.110

112. A Constitution Bench of this Court (speaking through Chief Justice Khare) in Islamic Academy of Education v. State of Karnataka111pithily observed:

"2. […] The ratio decidendi of a judgment has to be found out only on reading the entire judgment. In fact, the ratio of the judgment is what is set out in the judgment itself.

The answer to the question would necessarily have to be read in the context of what is set out in the judgment and not in isolation. In case of any doubt as regards any observations, reasons and principles, the other part of the

109 HALSBURY, 2nd Edn, Vol 19, para 556.

110 Secundrabad Club v. CIT, 2023 SCC OnLine SC 1004 [13] : 2023 INSC 736

111 [2003] Supp. 2 SCR 474 : (2003) 6 SCC 697 [2] : 2003 INSC 391

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judgment has to be looked into. By reading a line here and there from the judgment, one cannot find out the entire ratio decidendi of the judgment. […]"

113. In Secunderabad Club v. CIT,112 this Court, speaking through one of us (Justice BV Nagarathna), had occasion to delineate how to cull out the ratio decidendi of a judgement and identify the principles which have precedential value. This Court observed:

"14. […] According to the well-settled theory of precedents, every decision contains three basic ingredients :

(i) findings of material facts, direct and inferential. An inferential finding of fact is the inference which the judge draws from the direct or perceptible facts ;

(ii) statements of the principles of law applicable to the legal problems disclosed by the facts ; and

(iii) judgment based on the combined effect of (i) and (ii) above.

For the purposes of the parties themselves and their privies, ingredient (iii) is the material element in the decision, for, it determines finally their rights and liabilities in relation to the subject-matter of the action. It is the judgment that estops the parties from reopening the dispute. However, for the purpose of the doctrine of precedent, ingredient

(ii) is the vital element in the decision. This is the ratio decidendi. It is not everything said by a judge when giving a judgment that constitutes a precedent. The only thing in a judge's decision binding a party is the principle upon which the case is decided and for this reason it is important to analyse a decision and isolate from it the ratio decidendi."

(emphasis supplied)

114. Further, a simple test that has been invoked by this Court to determine whether a particular proposition of law is to be treated as the ratio decidendi of a case is the "inversion test" formulated by Professor

112 [2023] 12 SCR 979 : 2023 SCC OnLine SC 1004 : 2023 INSC 736


Eugene Wambaugh.113 The test mandates that to determine whether a particular proposition of law is part of the ratio decidendi of the case, the proposition is to be inversed. This means that either that proposition is hypothetically removed from the judgement or it is assumed that the proposition was decided in reverse. After such removal or reversal, if the decision of the Court on that issue before it would remain the same then the observations cannot be regarded as the ratio decidendi of the case.114

115. In Mafatlal, a Bench of nine Judges of this Court adjudicated on the rights and remedies available to a citizen against the State in relation to the refund of unlawfully recovered taxes and imposts. The court dealt with whether a manufacturer or assessee who has passed on the burden of an illegally recovered tax is entitled to a refund or whether a refund in such cases will amount to unjust enrichment.

One of the several arguments made by the counsel appearing for the Union of India was that this question must be decided in light of the constitutional values of social and economic justice, including those laid down in the Preamble and Articles 39(b) and (c). More specifically, it was urged that Article 265115 must be interpreted in the context of these constitutional values.

116. Faced with the above argument, the majority opinion authored by Justice Jeevan Reddy, on behalf of himself and four other judges, made certain observations which referred to Article 39(b). These observations are found in paragraphs 84 to 86 of the judgement.

We must take a closer look at these observations, in the context of the issues before the Court, to determine whether they are part of the ratio decidendi and central to the decision of this Court.

117. Justice Jeevan Reddy attempted to locate the question of refund of unlawfully recovered duty within the framework of the "philosophy and core values" which guide our Constitution. In this context, it was observed that these values can be located inter alia in the Directive Principles contained in Part IV, including Article 39(b) and the Preamble of the Constitution. Justice Jeevan Reddy observed:

113 State of Gujarat v. Utility Users' Welfare Assn. (2018) 6 SCC 21 [113-114] : 2018 INSC 329

114 Eugene Wambaugh, The Study of Cases (Boston: Little, Brown & Co., 1892)

115 Article 265, Constitution of India. [It reads: "265. Taxes not to be imposed save by authority of law - No tax shall be levied or collected except by authority of law".]

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"84. […] Unlike the economically neutral - if not procapitalist - Constitutions governing those countries, the Indian Constitution has set before itself the goal of "Justice, Social, Economic and Political" - a total restructuring of our society - the goal being what is set out in Part IV of the Constitution and, in particular, in Articles 38 and 39.

Indeed, the aforesaid words in the Preamble constitute the motto of our Constitution, if we can call it one.

Article 38 enjoins upon the State to "strive to promote the welfare of the people by securing and protecting as effectively as it may a social order in which justice, social, economic and political shall inform all the institutions of the national life". Article 39 lays down the principles of policy to be followed by the State. It says that the State shall, in particular, direct its policy towards securing "(b) that the ownership and control of the material resources of the community are so distributed as best to subserve the common good; and

(c) that the operation of the economic system does not result in the concentration of wealth and means of production to the common detriment". Refunding the duty paid by a manufacturer/assessee in situations where he himself has not suffered any loss or prejudice (i.e., where he has passed on the burden to others) is no economic justice; it is the very negation of economic justice.

By doing so, the State would be conferring an unearned and unjustifiable windfall upon the manufacturing community thereby contributing to concentration of wealth in a small class of persons which may not be consistent with the common good. The Preamble and the aforesaid articles do demand that where a duty cannot be refunded to the real persons who have borne the burden, for one or the other reason, it is but appropriate that the said amounts are retained by the State for being used for public good […]

(emphasis supplied)

118. In the next paragraph, Justice Jeevan Reddy made further observations about 'philosophy and values' which must be kept in


mind while interpreting the Constitution. Significantly, Justice Jeevan Reddy borrowed from the observations by Justice Krishna Iyer in Ranganatha Reddy and noted:

"85. […] As observed by Thomas Jefferson, as far back as in 1816, "laws and institutions must go hand-in-hand with the progress of the human mind … as new discoveries are made, new truths are discovered and manners and opinions change with the change of circumstances, institutions must advance also and keep pace with the time…". The very same thought was expressed by Krishna Iyer, J. in State of Karnataka v. Ranganatha Reddy with particular reference to our constitutional philosophy and values:

"Constitutional problems cannot be studied in a socio-economic vacuum, since socio-cultural changes are the source of the new values, and sloughing off old legal thought is part of the process of the new equity-loaded legality…. It is right that the rule of law enshrined in our Constitution must and does reckon with the roaring current of change which shifts our social values and shrivels our feudal roots, invades our lives and fashions our destiny."

The learned Judge quoted Granville Austin, saying:

"The Judiciary was to be the arm of the social revolution, upholding the quality that Indians had longed for in colonial days…. The courts were also idealised because, as guardians of the Constitution, they would be the expression of a new law created by Indians for Indians."

119. Having made these observations, this Court went on to accept the submission of the counsel for the Union of India and held that the 'philosophy and core values' of our Constitution must be kept in mind while understanding the provisions of the Constitution, including Article 265. Before reaching this conclusion, the judgement stated in a single sentence that "the 'material resources of the community' are not confined to public resources" but include all resources, including privately owned resources. The observations were as follows:

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"86. That "the material resources of the community" are not confined to public resources but include all resources, natural and man-made, public and private owned" is repeatedly affirmed by this Court. (See Ranganatha Reddy, Sanjeev Coke Manufacturing Co. v.

Bharat Coking Coal and State of T.N. v. L. Abu Kavur Bai), We are of the considered opinion that Shri Parasaran is right in saying that the philosophy and the core values of our Constitution must be kept in mind while understanding and applying the provisions of Article 265 of the Constitution of India and Section 72 of the Contract Act (containing as it does an equitable principle) - for that matter, in construing any other provision of the Constitution and the laws. Accordingly, we hold that even looked at from the constitutional angle, the right to refund of tax paid under an unconstitutional provision of law is not an absolute or an unconditional right. Similar is the position even if Article 265 can be invoked - we have held, it cannot be - for claiming refund of taxes collected by misinterpretation or misapplication of a provision of law, rules, notifications or regulation."

120. The above observations indicate that the relevance of Article 39(b) to the judgement was limited to the larger socio-economic values which it espouses. The ratio decidendi of the majority judgement was that the constitutional values contained in the Preamble and Part IV of the Constitution, including Article 39(b) must be considered while interpreting Article 265 and determining whether a refund of taxes is permissible to a person who has passed on the burden.

The single-line observation on Article 39(b) encompassing privately owned property was not relevant to this holding. To hold that this observation constitutes the ratio decidendi of the judgment would be to disregard the warning of Chief Justice Khare in Islamic Academy of Education that "by reading a line here and there from the judgment, one cannot find out the entire ratio decidendi of the judgment."116

116 Islamic Academy of Education [2].


121. This Court in Mafatlal did not independently conclude that Article 39(b) encompasses private property or justify the relevance of this proposition to the issues before the court. It was merely stated that this has been "repeatedly affirmed" by this Court. Even if this proposition of law is inverted and it is presumed that this Court observed that private resources do not fall within the ambit of 'material resources of the community', it would not impact the decision or the issue in question. The underlying values of economic justice which run through Chapter IV of the Constitution and the Preamble would remain intact and this Court would have reached the same conclusion. The tax collected was already within the "ownership and control" of the government, and in the context of a refund, there is no question of distributing any privately owned resources. We are therefore inclined to accept the submission of the appellants that the issue of whether Article 39(b) includes privately owned property was not a matter in dispute in Mafatlal. The single-line observation of Justice Jeevan Reddy in the majority opinion constitutes obiter dicta and is not binding on this Court.

122. Mr Tushar Mehta, the learned Solicitor General of India contended that certain observations on Article 39(b) have been made not only in the majority opinion but also in two other opinions - a concurring opinion authored by Justice Paripoornan and a dissenting opinion authored by Justice SC Sen. It was urged that this indicates that the issue of Article 39(b) was central to the dispute and the observations of the majority on the inclusion of private property are part of the ratio of the judgement.

123. Justice Paripoornan concurred with the majority view and accepted the submission of the counsel for the Union of India that Article 265 of the Constitution must be construed in light of the values in the Preamble and Articles 39(b) and (c). The observations were in the following terms:

"304. […] The plea urged was that, if the assessee, is denied the refund, the State Government could retain the amount illegally collected, and it would amount to violation of the constitutional mandate enshrined in Article 265 of the Constitution. An equitable principle will not hold good against a constitutional mandate. On the other hand the counsel for the Union of India, Shri K. Parasaran, brought to our notice the following portion of the Preamble and

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Articles 39(b) and (c) of the Constitution to contend that Article 265 of the Constitution cannot be construed in a vacuo or isolation, but should be construed in the light of the basic principles contained in other parts of the Constitution - viz. - the Preamble and the Directive Principles of State Policy:

"Preamble

WE, THE PEOPLE OF INDIA, having solemnly resolved to constitute India into a Sovereign Socialist Secular Democratic Republic and to secure to all its citizens:

Justice, social, economic and political:

***"

Articles 39(b) and (c):

"39. (b) that the ownership and control of the material resources of the community are so distributed as best to subserve the common good;

(c) that the operation of the economic system does not result in the concentration of wealth and means of production to the common detriment;"

305. Mr Parasaran also urged that it should be borne in mind that excise duty is an indirect levy or tax which could be passed on. Innumerable persons bear the brunt.

And it is passed on, ordinarily by prudent businessmen. […] The scope of Article 39(b) of the Constitution, as laid down by this Court in State of Karnataka v.

Ranganatha Reddy, Sanjeev Coke Mfg. Co. v. Bharat Coking Coal Ltd., State of T.N. v. L. Abu Kavur Bai, was highlighted. […]

306. On an evaluation of the rival pleas urged in the matter, I am of the view that the plea of the counsel for Union of India should prevail."

(emphasis supplied)


124. On the other hand, Justice Sen disagreed with the view taken in the opinions authored by Justice Jeevan Reddy and Justice Paripoornan.

He held that the provisions of Article 39 cannot curtail the interpretation of Article 265, and the Directive Principles do not permit the state to use unlawfully collected properties. He observed:

"161. Article 39 of the Constitution has directed the State to formulate 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 and that the operation of the economic system does not result in the concentration of wealth and means of production to the common detriment. These provisions do not in any way curtail the scope and effect of Article 265. Article 39 does not enjoin that unlawfully collected properties should be used by the State for the common good. Nor does it say that the operation of the economic system should be so moulded as to prevent concentration of wealth, by unlawful means. Article 39 cannot be a basis for retaining whatever has been gathered unlawfully by the Government for common good. Simply stated the Directive Principles of State Policy do not license the Government to rob Peter to pay Paul."

125. The above observations in the opinions of Justice Paripoornan and Justice SC Sen only further indicate that the argument of the counsel was limited to whether Article 265 of the Constitution must be interpreted in light of the constitutional values found inter alia in the Preamble and Part IV, including Article 39(b).The observations in these two opinions in no way assist the respondents in establishing that the single sentence in the majority judgement about the inclusion of private property constituted the ratio decidendi of the judgment.

126. In any event, the mere presence of an observation in multiple opinions of the court, be it concurring or dissenting opinions, does not automatically indicate that they form part of the ratio decidendi.

In order to determine whether the observations form part of the ratio decidendi, one must go back to the drawing board and determine whether the observations pertained to an issue which actually arose between the parties and were necessary to the determination by the court. In other words, even if a numerical majority of judges or

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opinions of the Court affirm an observation, it would not automatically constitute the ratio decidendi of the case. It must be independently established that the observation relates to an issue which was in dispute before the court.

127. Therefore, the single-line observation in Mafatlal that the phrase 'material resources of the community' used in Article 39(b) includes privately owned resources was obiter dicta and is not binding on this Court.

iii.

Interpreting Article 39(b)

128. Having addressed the contentions regarding judicial discipline and the precedential value of the judgments which gave rise to this reference, we turn to the substantive question before us: the interpretation of Article 39(b).

129. The counsel for the respondents contended that this Court should refrain from laying down a water-tight interpretation of Article 39(b) and it should be left to Parliament to determine the ambit of the provision based on the economic priorities of the day. We are not inclined to accept such an argument in its entirety. The interpretation of Article 39(b) has far-reaching consequences, involving judicial inquiry, which makes it incumbent on this Court to interpret the provision. These consequences, detailed below, underscore the necessity of a constitutional interpretation by this Court, while also highlighting the ramifications of adopting a wide and unmanageable construction of the provision.

Article 39(b) as a pre-requisite to protection under Article 31C

130. As discussed in Part C of this judgement, Article 31C as upheld by the majority in Kesavananda Bharati remains in force under the Constitution. Under this provision (as it stands), no law giving effect to the policy of the State towards securing the principles specified in clauses (b) or (c) of Article 39(b) can be challenged on the ground that it is inconsistent with or takes away or abridges any of the rights conferred by Articles 14 and 19 of the Constitution. Therefore, the first and perhaps most significant consequence of this Court holding that a certain statute gives effect to the principles in Article 39(b) is that it falls within the immunity provided by Article 31C. The constitutionality of such a legislation cannot be challenged under Articles 14 or 19 of the Constitution.


131. Prior to the decision in Kesavananda Bharati, if a law merely contained a declaration that it gives effect to the policy laid down in Article 39(b), it could not be questioned in any court on the ground that it does not actually give effect to such a policy. In Kesavananda Bharati, this part of the provision was struck down. All laws which purport to give effect to the principles in Articles 39(b) or (c) of the Constitution are subject to judicial inquiry and review on the question of whether they actually bear a nexus with the provision. In other words, the question of whether they do in fact give effect to the principles in Articles 39(b) and (c) is justiciable.

132. In Kesavananda Bharati, while striking down the second part of the erstwhile Article 31-C, Justice HR Khanna explained the importance of the court exercising judicial review on whether the legislation gives effect to the principles under Article 39(b) and (c). He was particularly apprehensive of giving the legislature the final authority to determine whether a law falls within the ambit of Article 39(b). The exclusion of judicial review was held to be violative of the basic structure of the Constitution. Justice Khanna observed:

"(xiv) The second part of Article 31-C contains the seed of national disintegration and is invalid on the following two grounds:

(3) It gives a carte blanche to the legislature to make any law violative of Articles 14, 19 and 31 and make it immune from attack by inserting the requisite declaration. Article 31-C taken along with its second part gives in effect the power to the legislature including a State Legislature, to amend the Constitution in important respects.

(4) The legislature has been made the final authority to decide as to whether the law made by it is for the objects mentioned in Article 31-C. The vice of the second part of Article 31-C lies in the fact that even if the law enacted is not for the object mentioned in Article 31-C, the declaration made by the legislature precludes a party from showing that the law is not for the object and prevents a court from going into the question as to whether the law enacted is really for that object. The

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exclusion by the legislature, including a State Legislature, of even that limited judicial review strikes at the basic structure of the Constitution.

The second part of Article 31-C goes beyond the permissible limit of what constitutes amendment under Article 368."

133. The sequitur to this Court striking down the second part of Article 31-C in Kesavananda Bharti is that the court may conduct a judicial inquiry into whether the legislation which is sought to be saved by Article 31-C, actually bears a direct and reasonable nexus with the principles laid down in Article 39(b) or (c), as the case may be. In this regard, the observations of Justice Mathew in Kesavananda Bharati are instructive:

"1779. […] a Court will have to examine the pith and substance, the true nature and character of the law as also its design and the subject-matter dealt with by it together with its object and scope. If the Court comes to the conclusion that the declaration was merely a pretence and that the real purpose of the law is the accomplishment of some object other than to give effect to the policy of the State towards securing the Directive Principles in Article 39(b) and (c), the declaration would not be a bar to the Court from striking down any provision therein which violates Articles 14, 19 or 31. In other words, if a law passed ostensibly to give effect to the policy of the State is, in truth and substance, one for accomplishing an unauthorised object, the Court would be entitled to tear the veil created by the declaration and decide according to the real nature of the law."

(emphasis supplied)

134. In view of the decision in Kesavananda Bharati, it has been consistently affirmed by this Court that the declaration in a statute that the Act has a nexus with or seeks to give effect to the principles laid down in Article 39(b) or (c) is subject to judicial review. To determine whether a statute is within the folds of Article 31-C, the court may examine the nature and character of legislation to determine whether there is any direct and reasonable nexus between the law and the principles in Articles 39(b) and (c). On such an examination, if it


appears that there is no such nexus, the legislation will not enjoy the protection of Article 31-C. It has been held by this Court that "to see the real nature of the statute, the court may also tear the veil". If the court concludes that the object of the legislation was merely a pretence and the real object does not correspond with the principles laid down in Articles 39(b) and (c), Article 31-C would not be attracted and the validity of the statute would have to be tested independent of Article 31-C.

135. It cannot be gainsaid that the impact of a legislation being saved by Article 31C is significant. The impact of this 'safe harbour' was eloquently described by Chief Justice YV Chandrachud, speaking for a majority of judges in Minerva Mills. While detailing the consequence of legislation being protected from a challenge under Article 14 and 19, this Court observed:

"61. Articles 14 and 19 do not confer any fanciful rights.

They confer rights which are elementary for the proper and effective functioning of a democracy. They are universally so regarded, as is evident from the Universal Declaration of Human Rights. Many countries in the civilised world have parted with their sovereignty in the hope and belief that their citizens will enjoy human Freedoms. And they preferred to be bound by the decisions and decrees of foreign tribunals on matters concerning human freedoms. If Articles 14 and 19 are put out of operation in regard to the bulk of laws which the legislatures are empowered to pass, Article 32 will be drained of its life-blood.

74. Three Articles of our Constitution and only three, stand between the heaven of freedom into which Tagore wanted his country to awake and the abyss of unrestrained power.

They are Articles 14, 19 and 21. Article 31-C has removed two sides of that golden triangle which affords to the people of this country an assurance that the promise held forth by preamble will be performed by ushering an egalitarian era through the discipline of fundamental rights, that is, without emasculation of the rights to liberty and equality which alone can help preserve the dignity of the individual"

(emphasis supplied)

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136. In view of the above, the first consequence of the interpretation of Article 39(b) by this Court is linked to its reviewing role as a pre- condition to the protection of Article 31-C. Given that this Court may judicially review the question of whether a legislation bears a direct and reasonable nexus with the principles of Article 39(b), the interpretation of the provision cannot be left solely to the legislature.

This Court must lay down a construction of the provision, which does not grant the legislature absolute authority to include any legislation within the fold of Article 39(b) without a governing principle.

Article 39(b) as a Directive Principle

137. The unique consequence flowing from Article 39(b) as a pre-condition to receiving the protection of Article 31-C has been detailed above.

However, the provision also has a special place in the Constitution, as a part of the Chapter on 'Directive Principles of State Policy'.

138. Chapter IV of the Constitution is titled ' Directive Principles of State Policy' and contains Articles 36 to 51. The preambular text of Chapter IV may be located in Article 37, which reads as follows:

"37. Application of the principles contained in this Part.- The provisions contained in this Part shall not be enforceable by any court, but the principles therein laid down are nevertheless fundamental in the governance of the country and it shall be the duty of the State to apply these principles in making laws."

139. From the text of Article 37, three major principles about the provisions contained in Chapter IV can be identified. Firstly, unlike fundamental rights and other provisions in the Constitution, they shall not be 'enforceable' by any court. In other words, a breach of a Directive Principle cannot ground a legal claim. Secondly, the principles laid down in the provisions are fundamental to the governance of the country. Thirdly, it is the 'duty of the State' to apply these principles in making laws. These principles raise questions about the purport of the term 'fundamental' in the context of Chapter IV and whether the duty of the state to apply these principles is a legal or merely a moral duty. It is undoubtedly true that Article 37 renders Directive Principles immune from judicial enforcement. However, such non- enforceability is predicated on the understanding that many of these principles require fiscal resources for implementation, and thus


immediate accountability for their non-fulfilment would have burdened a nascent country. The non-justiciability of these principles does not diminish their significance and they remain significant despite their direct non-enforceability through judicial channels.117

140. The rest of the chapter, containing Articles 38 to 51 lays down the principles which constitute the Directive Principles. These principles range from equal pay for equal work to the organisation of village panchayats to humane conditions of work and maternity relief. Initially, between the 1950s and 1960s, the jurisprudence of this Court reflected the view that Directive Principles have no role to play in the decisionmaking of the courts - they are not directly enforceable, do not play a role in the interpretation of statutes, and cannot be used to abridge or interpret fundamental rights in any way. They were viewed as mere instructions to the legislature and executive, which lay outside the ambit of judicial inquiry. For instance, an early decision of this Court in State of Madras v Champakan Dorairjan118 declined to accord any weight to arguments that sought to invoke Directive Principles as a justification for allegedly abridging fundamental rights. In this case, the erstwhile State of Madras sought to justify caste-based affirmative action policies by invoking Article 46 of the Constitution.119 A seven-judge bench of this Court (speaking through Justice SR Das) rejected these arguments and opined:

"15. […] The Directive Principles of the State policy, which by Article 37 are expressly made unenforceable by a court, cannot override the provisions found in Part III which, notwithstanding other provisions, are expressly made enforceable by appropriate writs, orders or directions under Article 32. The chapter of Fundamental Rights is sacrosanct and not liable to be abridged by any legislative or executive Act or order, except to the extent provided in the appropriate article in Part III. The Directive Principles of State policy have to conform to and run as subsidiary to the chapter of Fundamental Rights. In our opinion,

117 Ashok Kumar Thakur v Union of India (2008) 6 SCC 1 [173] : 2008 INSC 473

118 [1951] 1 SCR 525 : AIR 1951 SC 226 [15] : 1951 INSC 26

119 Article 46, Constitution of India: "The State shall promote with special care the educational and economic interests of the weaker sections of the people, and, in particular, of the Scheduled Castes and the Scheduled Tribes, and shall protect them from social injustice and all forms of exploitation."

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that is the correct way in which the provisions found in Parts III and IV have to be understood. […]"

(emphasis supplied)

141. A similar view is advanced by the distinguished constitutional scholar, HM Seervai in his treatise, 'Constitutional Law of India'.120 Seervai adopts the view that Directive Principles have no role to play in constitutional adjudication by the court and are mere exhortations to the legislature and executive. In his opinion, the only body that can hold the government accountable in relation to Directive Principles is the electorate and the courts must steer clear of this domain. If this position of law was true, there would be some merit in the argument of the respondents that this Court should refrain from laying down an interpretation of Article 39(b) and leave it to the legislature (and the electorate) to evolve an interpretation for themselves. However, the jurisprudence of this Court with regard to the role of Directive Principles has evolved significantly, and the construction of Directive Principles plays a vital role in various forms of judicial inquiry.

142. Early signs of a shift in the approach of this Court were visible in Mohd Hanif Qureshi v State of Bihar.121 This Court held that attempts must be made to harmoniously interpret Directive Principles and fundamental rights. However, this Court stopped short of granting Directive Principles any further role vis-à-vis interpreting fundamental rights. The role of Directive Principles was placed subordinate to fundamental rights. This Court adopted the view that the government should undoubtedly frame legislation advancing Directive Principles, but the fundamental rights in Part III, interpreted autonomously, would continue to serve as constraints on these endeavours. Similar observations were echoed by this Court in Golak Nath v. State of Punjab,122 marking an entry into the era of harmonious construction of Directive Principles and fundamental rights.

143. Subsequently, in the landmark decisions in Kesavananda Bharati and Minerva Mills, the insistence of this Court on a harmonious reading and interplay between fundamental rights and Directive Principles became even stronger. In Minerva Mills, this Court

120 HM Seervai, Constitutional Law of India, Vol 2 (4th ed, Universal Law Publishing 2002) 1934-40.

121 [1959] 1 SCR 629 : 1957 SCC OnLine SC 17 [12]

122 [1967] 2 SCR 762 : 1967 SCC OnLine SC 14 [16, 19] : 1967 INSC 45


(speaking through Chief Justice YV Chandrachud) quoted Granville Austin and observed that Part III and Part IV of the Constitution are "two wheels of a chariot, one no less important than the other". This Court made the following observations:

"56. The significance of the perception that Parts III and IV together constitute the core of commitment to social revolution and they, together, are the conscience of the Constitution is to be traced to a deep understanding of the scheme of the Indian Constitution. Granville Austin's observation brings out the true position that Parts III and IV are like two wheels of a chariot, one no less important than the other. You snap one and the other will lose its efficacy. They are like a twin formula for achieving the social revolution, which is the ideal which the visionary founders of the Constitution set before themselves. In other words, the Indian Constitution is founded on the bedrock of the balance between Parts III and IV. To give absolute primacy to one over the other is to disturb the harmony of the Constitution. This harmony and balance between fundamental rights and directive principles is an essential feature of the basic structure of the Constitution.

57. […] It is in this sense that Parts III and IV together constitute the core of our Constitution and, combine to form its conscience. Anything that destroys the balance between the two parts will ipso facto destroy an essential element of the basic structure of our Constitution."

(emphasis supplied)

144. In the background of these decisions, which mandated that fundamental rights and Directive Principles must be construed harmoniously, an important principle began to emerge in the jurisprudence of this Court. Courts began to rely on Directive Principles while adjudicating on the 'reasonableness' of the restriction imposed on fundamental rights. This has been affirmed in a line of precedent of this Court.123

123 See Indian Handicrafts Emporium v. Union of India (2003) 7 SCC 589 : 2003 INSC 427; M.R.F. Ltd. v.

Inspector, Kerala Govt (1998) 8 SCC 227 [13] : 1998 INSC 423; Workmen v. Meenakshi Mills Ltd. (1992) 3 SCC 336 [27] : 1992 INSC 164; Pathumma v. State of Kerala (1978) 2 SCC 1 : 1978 INSC 7

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We may reiterate the observations in one such case to understand this position of law.

145. In State of Gujarat v. Mirzapur Moti Kureshi Kassab Jamat,124 a bench of seven judges reconsidered several questions which were decided in Mohd Hanif Qureshi. Significantly, this Court had occasion to lay down the correct position on the role played by Directive Principles in our constitutional scheme, particularly, with regard to their role vis-à-vis fundamental rights. The Court moved away from the view in Mohd Hanif Qureshi that the implementation of a Directive Principle cannot be considered a valid ground for establishing the reasonability of the restriction imposed on the fundamental right guaranteed by Article 19(1)(g). After reviewing several cases on this point, this Court (speaking through Chief Justice Lahoti) laid down the law in the following terms:

"41. [….] For judging the reasonability of restrictions imposed on fundamental rights the relevant considerations are not only those as stated in Article 19 itself or in Part III of the Constitution: the directive principles stated in Part IV are also relevant. Changing factual conditions and State policy, including the one reflected in the impugned enactment, have to be considered and given weightage to by the courts while deciding the constitutional validity of legislative enactments. A restriction placed on any fundamental right, aimed at securing directive principles will be held as reasonable and hence intra vires subject to two limitations: first, that it does not run in clear conflict with the fundamental right, and secondly, that it has been enacted within the legislative competence of the enacting legislature under Part XI Chapter I of the Constitution.

47 […] The series of decisions which we have referred to hereinabove and the series of decisions which formulate the three stages of development of the relationship between directive principles and fundamental rights undoubtedly

124 [2005] Supp. 4 SCR 582 : (2005) 8 SCC 534 : 2005 INSC 525


hold that, while interpreting the interplay of rights and restrictions, Part III (Fundamental rights) and Part IV (Directive principles) have to be read together. The restriction which can be placed on the rights listed in Article 19(1) are not subject only to Articles 19(2) to 19(6); the provisions contained in the chapter on directive principles of State policy can also be pressed into service and relied on for the purpose of adjudging the reasonability of restrictions placed on the fundamental rights."

146. Similarly, in view of the above jurisprudence which mandates that Directive Principles and fundamental rights be viewed as 'complementary and supplementary', Directive Principles have also acquired a role in interpreting fundamental Rights. Reference may be made to the decision in State of Kerala v. N.M. Thomas125 and Ashok Kumar Thakur v Union of India,126 where this Court interpreted the right to equality under Article 14 in light of the Directive Principles. Similarly, in cases such as Bandhua Mukti Morcha v.

Union of India127 and Olga Tellis v. Bombay Municipal Corpn.,128 this Court expanded the interpretation of Article 21 in light of various Directive Principles and held that these principles are fundamental to"understanding the meaning and content of fundamental rights".

147. In sum, the Directive Principles play an integral role in constitutional interpretation by this Court. Firstly, fundamental rights are to be interpreted harmoniously and in light of these Directive Principles.

Secondly, they act as markers of reasonable restrictions on fundamental rights. Therefore, given the role of Directive Principles in constitutional adjudication by this Court, it cannot abdicate the task of interpreting Article 39(b).

iv.

Historical Context: Constituent Assembly Debates

148. Most counsel before us have sought to rely on the debates before the constituent assembly to buttress their understanding of Article 39(b).

Both sides have drawn different inferences from the discussions of the

125 [1976] 1 SCR 906 : (1976) 2 SCC 310 : 1975 INSC 224

126 [2008] 4 SCR 1 : (2008) 6 SCC 1 : 2008 INSC 473

127 [1984] 2 SCR 67 : (1984) 3 SCC 161 [10] : 1983 INSC 203

128 [1985] Supp. 2 SCR 51 : (1985) 3 SCC 545 [33] : 1985 INSC 151

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members of the Constituent Assembly. To address these arguments and understand the intention behind the introduction of Article 39(b) in the Constitution, we will review the debates and discussions in the assembly that are relevant to the issue at hand.

Debates about the purpose of Directive Principles

149. On 4 November 1948, Dr BR Ambedkar moved a motion to introduce the draft constitution and delivered a landmark speech, explaining the intentions and ideas behind various provisions of the draft constitution. Dr Ambedkar elucidated the purpose behind including Directive Principles in the Constitution. He stated that they are a novel feature of our Constitution and the only other Constitution which embodies such principles is that of Ireland. He dismissed the criticism that such principles are merely 'pious declarations' which do not have any binding force. Dr Ambedkar observed:

"If it is said that the Directive Principles have no legal force behind them, I am prepared to admit it. But I am not prepared to admit that they have no sort of binding force at all. Nor am I prepared to concede that they are useless because they have no binding force in law."

150. According to Dr BR Ambedkar, the Directive Principles are akin to the 'Instrument of Instructions' issued to the Governor-General and the Governors of the colonies by the British Government under the Government of India Act 1935. The only difference was that the Directive Principles are in the form of instructions to the Legislature and the Executive. He stated that while future governments may not be answerable for a breach of such principles in a court of law, they would respect these principles, knowing that they are answerable for them before the electorate. Dr Ambedkar noted the importance of such instructions in the following terms:

"The inclusion of such instructions in a Constitution such as is proposed in the Draft becomes justifiable for another reason. The Draft Constitution as framed only provides a machinery for the government of the country.

It is not a contrivance to install any particular party in power as has been done in some countries. Who should be in power is left to be determined by the people, as it must be, if the system is to satisfy the


tests of democracy. But whoever captures power will not be free to do what he likes with it. In the exercise of it, he will have to respect these instruments of instructions which are called Directive Principles. He cannot ignore them. He may not have to answer for their breach in a Court of Law. But he will certainly have to answer for them before the electorate at election time. What great value these directive principles possess will be realized better when the forces of right contrive to capture power."

(emphasis supplied)

151. On 19 November 1948, the Constituent Assembly discussed some of the provisions in Part IV of the draft Constitution. An amendment was moved by Mr Damodar Swarup Seth to draft article 30, which corresponds to Article 38 of the present constitution, in the following terms:

"Sir, I move that for article 30, the following be substituted:

"30. The State shall endeavour to promote the welfare, prosperity and progress of the people by establishing and maintaining democratic socialist order and for the purpose the State shall direct its policy towards securing :-

(a) the transfer to public ownership of important means of communication, credit and exchange, mineral resources and the resources, of natural power and such other large economic enterprise as are matured for socialisation;*

(b) the municipalisation of public utilities;

(c) the encouragement of the organisation of agriculture, credit and industries on co-operative basis."

152. Mr Seth advanced the view that the principles laid down in draft article 30 must be made more specific and convey a clear indication about the 'economic nature of the social order to be established'.

He was of the view that the provision must expressly state an endeavour to establish and maintain a 'democratic socialist order', which in his view, was necessary to mitigate the 'capitalistic order' He opined:

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"Sir, my reason for submitting this amendment is that I feel that as it is worded, the article is somewhat indefinite and vague, and does not convey any clear indication as to the economic nature of the social order to be established.

We all know that the society in which we now live is of a capitalistic order or character and in this society we see the exploiter and exploited classes both existing side by side; and the exploiting class is naturally the top-dog and the exploited class the under-dog. In such a society we clearly see that the real welfare of the masses, of the toiling millions can neither be secured nor protected, unless the society is made clear of the exploiter class, and that can only be possible when we establish a socialist democratic order, and transfer to public ownership the "important means of production, communication, credit and exchange, mineral resources and the resources of natural power and such other large economic enterprise as are matured for socialisation;" bring about the "municipalisation of public utilities"; and "the encouragement of the organisation of agriculture, credit and industries on co-operative basis".

153. The response of Dr BR Ambedkar to this proposal is particularly instructive. He opposed the amendment and stated that there was a misunderstanding among members who proposed such amendments. He was of the view that along with a 'parliamentary democracy', the Constitution sought to establish as an ideal, the concept of an 'economic democracy'. However, he noted there are various ways in which this ideal of 'economic democracy' can be achieved - ranging from individualism to socialism to communism.

Dr Ambedkar observed as follows:

"…. As I stated, our Constitution as a piece of mechanism lays down what is called parliamentary democracy. By parliamentary democracy we mean 'one man, one vote'.

We also mean that every Government shall be on the anvil, both in its daily affairs and also at the end of a certain period when the voters and the electorate will be given an opportunity to assess the work done by the Government.

The reason why we have established in this Constitution a political democracy is because we do not want to install


by any means whatsoever a perpetual dictatorship of any particular body of people. While we have established political democracy, it is also the desire that we should lay down as our ideal economic democracy. We do not want merely to lay down a mechanism to enable people to come and capture power. The Constitution also wishes to lay down an ideal before those who would be forming the Government. That idea is economic democracy, whereby, so far as I am concerned, I understand to mean, 'one man, one vote'. The question is : Have we got any fixed idea as to how we should bring about economic democracy ? There are various ways in which people believe that economic democracy can be brought about; there are those who believe in individualism as the best form of economic democracy; there are those who believe in having a socialistic state as the best form of economic democracy; there are those who believe in the communistic idea as the most perfect form of economic democracy."

154. According to Dr Ambedkar, the idea was to leave enough room for different schools of economic thought and for the electorate to decide which ideals are the best way to achieve 'economic democracy'. With this intent in mind, the language used in the Directive Principles was 'not fixed or rigid'. He stated:

"Now, having regard to the fact that there are various ways by which economic democracy may be brought about, we have deliberately introduced in the language that we have used, in the directive principles, something which is not fixed or rigid. We have left enough room for people of different ways of thinking, with regard to the reaching of the ideal of economic democracy, to strive in their own way, to persuade the electorate that it is the best way of reaching economic democracy, the fullest opportunity to act in the way in which they want to act.

Sir, that is the reason why the language of the articles in Part IV is left in the manner in which this Drafting Committee thought it best to leave it. It is no use giving a fixed,

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rigid form to something which is not rigid, which is fundamentally changing and must, having regard to the circumstances and the times, keep on changing. It is, therefore, no use saying that the directive principles have no value. In my judgment, the directive principles have a great value, for they lay down that our ideal is economic democracy. [..]

I think, if the friends who are agitated over this question bear in mind what I have said just now that our object in framing this Constitution is really twofold : (i) to lay down the form of political democracy, and (ii) to lay down that our ideal is economic democracy and also to prescribe that every Government whatever, it is in power, shall strive to bring about economic democracy, much of the misunderstanding under which most members are labouring will disappear."

155. An insight may also be gleaned from Dr Ambedkar's response to a proposal by Professor KT Shah to include the phrase "India shall be a Secular, Federal, Socialist Union of States" in draft Article 1 of the Constitution.129 Dr Ambedkar opposed the proposal with a two-fold response. First, he reiterated his position that the Constitution is not a mechanism to install a particular political party, structure of social organisation or economic policy. To lay down such a policy about how social and economic life is to be organised, in his view, would "destroy democracy" and take away citizens' liberty to choose the method of social organisation that suits their needs. He stated that while at that point in time, a socialist organisation may be deemed to be beneficial, future generations may devise a different form of social organisation. Second, he conceded that the several Directive Principles, including Article 31(ii), which corresponds with the present Article 39(b) are already "socialistic" in their direction and thus, the amendment was 'superfluous'. The observations of Dr Ambedkar are extracted below:

"Mr. Vice-President Sir, I regret that I cannot accept the amendment of Prof. K. T. Shah. My objections, stated briefly are two. In the first place the Constitution,

129 Constituent Assembly Debates, Vol VII (15th November 1948)


as I stated in my opening speech in support of the motion I made before the House, is merely a mechanism for the purpose of regulating the work of the various organs of the State. It is not a mechanism whereby particular members or particular parties are installed in office. What should be the policy of the State, how the Society should be organised in its social and economic side are matters which must be decided by the people themselves according to time and circumstances. It cannot be laid down in the Constitution itself, because that is destroying democracy altogether. If you state in the Constitution that the social organisation of the State shall take a particular form, you are, in my judgment, taking away the liberty of the people to decide what should be the social organisation in which they wish to live. It is perfectly possible today, for the majority people to hold that the socialist organisation of society is better than the capitalist organisation of society. But it would be perfectly possible for thinking people to devise some other form of social organisation which might be better than the socialist organisation of today or of tomorrow. I do not see therefore why the Constitution should tie down the people to live in a particular form and not leave it to the people themselves to decide it for themselves. This is one reason why the amendment should be opposed.

The second reason is that the amendment is purely superfluous. My Honourable friend, Prof. Shah, does not seem to have taken into account the fact that apart from the Fundamental Rights, which we have embodied in the Constitution, we have also introduced other sections which deal with directive principles of state policy. If my honourable friend were to read the Articles contained in Part IV, he will find that both the Legislature as well as the Executive have been placed by this Constitution under certain definite obligations as to the form of their policy.

[…]

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What I would like to ask Professor Shah is this: If these directive principles to which I have drawn attention are not socialistic in their direction and in their content, I fail to understand what more socialism can be."

(emphasis supplied)

Debates about the text of Article 39(b)

156. On 22 November 1948, the Constituent Assembly debated a proposed amendment to Article 31 of the draft Constitution, which corresponds to Article 39 of the present Constitution. Professor KT Shah proposed that clause (ii) of Article 31 of the draft constitution, which corresponds to Article 39(b) of the present Constitution, be substituted as follows:

"Mr. Vice-President, Sir, I beg to move:

"That for clause (ii) of article 31, the following be substituted:

'(ii) that the ownership, control and management of the natural resources of the country in the shape of mines and mineral wealth, forests, rivers and flowing waters as well as in the shape of the seas along the coast of the country shall be vested in and belong to the country collectively and shall be exploited and developed on behalf of the community by the State as represented by the Central or Provincial Governments or local governing authority or statutory corporation as may be provided for in each case by Act of Parliament';"

(emphasis supplied)

157. Professor Shah contended that the clause in its then existing form could lend itself to "any interpretation" and expressed an apprehension that if the clause is left vaguely worded it would fail to serve its purpose and "make the proper development of the country or the just redistribution of its wealth, or bringing in a fair measure of social justice, only an empty dream." Therefore, he suggested that the existing clause should be substituted with the draft provision extracted above.

158. Professor Shah was of the view that there could be no dispute about the proposition that as regards the natural resources described in the substituted clause, no human being lent any value in their creation


by their own labour. Therefore, it was urged, that they are 'gifts of nature' and should belong to all people collectively. He stated that if they are to be developed, they must be for and on behalf of the community. He vehemently opposed the utilisation of such resources by 'private monopolists', who in his opinion, only sought 'profit for themselves'. He noted as follows:

"The creation or even the presence of vested interests, of private monopolists, of those who seek only a profit for themselves, however useful, important, or necessary the production of such natural resources may be for the welfare of the community, is an offence in my opinion against the community, against the long-range interests of the country as a whole, against the unborn generations, that those of us who are steeped to the hilt, as it were, in ideals of private property and the profit motive, do not seem to realise to the fullest.

In the resources that are mentioned in my amendment not only is there no creation of any value or utility by anybody's proprietary right being there, but what is more, the real value comes always by the common effort of society, by the social circumstances that go to make any particular interests or resources of this kind valuable."

159. In essence, Professor Shah was of the view that the ultimate ownership, direct management, conduct and development of the natural resources such as mines, mineral wealth and the other natural resources detailed in his proposed amendment, must only be in the hands of the state. He opined as follows:

"Take mines and mineral wealth. Mines and mineral wealth, as everybody knows, are an exhaustible, - a wasting asset. Unfortunately, these, instead of having been guarded and properly protected and kept for the community to be utilised in a very economical and thrifty manner, have been made over to individual profit-seeking concession-holders and private monopolists, so that we have no control over their exploitation, really speaking, for they are used in a manner almost criminal, so that they can obtain the utmost profit on them for themselves,

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regardless of what would happen if and when the mines should come to an end or the stored up wealth of ages past is exhausted.

I suggest, therefore, that we allow no long range interests of private profit-seekers involved in the utilisation of these mines and the mineral wealth, that on the proper utilisation of these mines and mineral wealth depends not only our industrial position, depend not only all our ambitions, hopes and dreams of industrialising this country, but what is much more, depends also the defence and security of the nation. It would, therefore, I repeat, be a crime against the community and its unborn generations if you do not realise, even at this hour, that the mineral wealth of the country cannot be left untouched in private hands, to be used, manipulated, exploited, exhausted as they like for their own profit.

It is high time, therefore, that in this Constitution we lay down very categorically that the ultimate ownership, the direct management, conduct and development of these resources can only be in the hands of the State or the agents of the State, the representatives of the State, or the creatures of the State, like Provinces, municipalities, or statutory corporations.

Another argument may also be advanced here in support of my view. By their very nature, these resources cannot be exploited economically or efficiently unless they become monopolies. In one form or another, they have to be developed in a monopolistic manner. Now monopolies are always distrusted so long as they remain in private hands and are operated for private profit. If they are to be monopolized, as I believe inevitably they will have to be, then it is just as well that they should be owned, managed and worked by the State."

160. Professor Shah stated that the draft provision only provided for vague State control, in the form of a mandate to "sub-serve the common good". He opined that in order to have a positive guarantee of the


'proper, social, and wholly beneficial utilisation' of resources, it was essential to ensure that their ownership, control and management were vested in the public hands. He noted:

"It is not enough to provide only for a sort of vague State control over them as the original clause does; it is not enough merely to say that they could be so utilised as to "sub serve the common good," every word of which is vague, undefined and undefinable, and capable of being twisted to such a sense in any court of law, before any tribunal by clever, competent lawyers, as to be wholly divorced from the intention of the draftsman, assuming that the draftsman had some such intention as I am trying to present before the House. We must have more positive guarantee of their proper, social and wholly beneficial utilisation; and that can only be achieved if their ownership, control and management are vested in public hands.

Considerations, therefore, of immediate wealth, of the necessity of industrialisation, of national defence, and of social justice have moved me to invite this House to consider my amendment favourably, namely, that without a proper full-fledged ownership, absolute control and direct management by the State or its representatives of these resources, we will not be able to realise all our dreams in a fair, efficient, economical manner which I wish to attain by this means."

(emphasis supplied)

161. Finally, before concluding, Professor KT Shah clarified that his proposed amendment deliberately did not include 'land' in the list of resources, because "the various measures that have been in recent years adopted to exclude landed proprietors - zamindars to oust them and take over the land, would automatically involve the proposition that the agricultural or culturable land of this country belongs to the country collectively, and must be used and developed for its benefit."

162. Mr Shibban Lal Saxena supported the amendments moved by Professor KT Shah to draft Article 31(ii). He opined that the proposed

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amendments, in essence, suggested that the system of our State shall be 'socialist'. He urged Dr Ambedkar "at least to incorporate the spirit of those amendments somewhere in the Constitution". In the specific context of the amendment proposed to Article 31(ii), he opined that the enunciation is "very wide", such that any system of economy could be based on it. The clause in its existing form, according to Mr Saxena, left it open to future Parliaments to evolve an economic plan of their choice. However, he was of the view, that there must at least be a Directive Principle that states that key industries of the country shall be owned by the State. He noted:

"Now, this enunciation "ownership and control of the material resources of the community to be distributed so as to sub serve the common good" is a very wide enunciation of a most important principle. The enunciation is so general that any system of economy can be based upon it. Upon it can be based a system of socialist economy where all the resources of the country belong to the State and are to be used for the well being of the community as a whole. But a majority in the next Parliament can also come forward and say that the New Deal evolved by Roosevelt is the best system, and it should be adopted. This clause leaves it open to any future parliament to evolve the best plan of their choice. But I feel personally that we should today at least lay down that the key industries of the country shall be owned by the State.

[…]

Unless we lay down in the Constitution itself that the key industries shall be nationalized and shall be primarily used to serve the needs of the nation, we shall be guilty of a great betrayal. Even if the principle is not to be enforced today, we must lay down in this clause

(ii) about directive principles that the key industries shall be owned by the State. That is, according to the Congress, the best method of distributing the material resources of the country. I therefore think that Professor Shah's amendment has merely drawn attention to this fundamental principle."


163. Mr Jadubans Sahay disagreed with the text of Professor KT Shah's proposed amendments as he was of the view that it was 'loosely worded'. However, he stated that he was in support of the principles and the spirit underlying the amendment. In his opinion, the Constituent Assembly should not have refrained from incorporating in the Constitution, at least in the form of a Directive Principle, that the 'means of production' and the natural or material resources shall belong to the community and through it to the State. The ultimate goal, he urged, must be that all means of production and the 'gifts of nature' which belong to the country should belong to the State or the community. He opined:

"…But I may state for the information of the House that, so far as the principles which underlie his amendment are concerned, I support them. The spirit of it also I support.

I fail to see why this august Assembly which meets only once in every country, is not keen to the extent of clearly and boldly incorporating in this article that the means of production and the natural or material resources of the country shall belong to the community and through it to the State. I cannot understand this, though the large majority of the amendments, if you scrutinise them, will be found to favour the principles underlying the amendment of Professor Shah. I cannot understand how it is that the Congress, the predominantly majority party here, is not pressing this thing."

"… After all this is a directive principle. I am not asking you to incorporate it so that the capitalists and the big purses of the country may not have the opportunity to work the mines and the minerals. This is only a directive principle. Are we not going to keep it as our goal that all means of productions and the gifts of Nature which belong to this vast country should belong to the State or to the community? I am sorry, Sir, that the bogey has been raised by the capitalists that if you talk like this they will cease to produce. I know the large majority of friends here will not be deterred by this bogey raised by the capitalists, because production is not for the welfare of the community. It is for the welfare of the

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capitalists. They produce for profits. Honourable Members of this House know it better than myself that they produce for profit and they will continue to produce as long as they make profit and, if not, they will not. So we should not be deterred by this slogan. …

Sir, in this Chapter and particularly in this article are we not going to suggest that ultimately we have to nationalise them, are we not going to suggest that is the aim of the nation, is the target of the nation?[…]"

(emphasis supplied)

164. Mr S Nagappa supported the existing text of clauses (ii) and (iii) of Article 31 and believed that they were intended for the benefit of the "poor man". He opined that, while it would have been better if the clause had been drafted in more unequivocal language, they represented a "ray of hope for the future". In his opinion, as long as these clauses stood, there was "no possibility of capitalism thriving in India". He too was in vehement support of the goal to "nationalize industries and means of production".

165. Dr BR Ambedkar opposed the amendments proposed by Mr KT Shah.

In his opinion, the language of the draft provision used "extensive language", which could potentially include the propositions moved by Professor KT Shah. He noted as follows:

"With regard to his other amendments, viz., substitution of his own clauses for sub-clauses (ii) and (iii) of Article 31, all I want to say is this that I would have been quite prepared to consider the amendment of Professor Shah if he had shown that what he intended to do by the substitution of his own clauses was not possible to be done under the language as it stands. So far as I am able to see, I think the language that has been used in the Draft it a much more extensive language which also includes the particular propositions which have been moved by Professor Shah, and I therefore do not see the necessity for substituting these limited particular clauses for the clauses which have been drafted in general language deliberately for a set purpose. I therefore oppose his second and third amendments."


166. Eventually, the motion to amend the provision was put to vote. The proposal to substitute the provision was negatived and it was thus introduced in its present form.

Inferences from the discussions in the Constituent Assembly

167. Before laying down the principles which emerge from the above discussions, two caveats must be kept in mind.

168. Firstly, debates and discussions in the Constituent Assembly serve a limited purpose in constitutional interpretation. A review of the debates and discussions in the Constituent Assembly may aid in gleaning the principles and intent behind introducing various provisions of the Constitution. However, these principles do not control the meaning of the provision.130 This Court must interpret provisions of the Constitution in consonance with changing times, values and in the present case, even changing economic priorities.

The Constitution is a living document. The ideas and the thinking of the framers of the Constitution cannot remain frozen for time immemorial. As a Constitution Bench of this Court noted in K.S.

Puttaswamy v. Union of India,131 the Constitution governs the lives of over 125 crore citizens of this country and must be interpreted to respond to the changing needs of society at different points in time.

This Court, speaking through one of us (Justice DY Chandrachud), observed:

"130. Now, would this Court in interpreting the Constitution freeze the content of constitutional guarantees and provisions to what the Founding Fathers perceived? The Constitution was drafted and adopted in a historical context.

The vision of the Founding Fathers was enriched by the histories of suffering of those who suffered oppression and a violation of dignity both here and elsewhere. Yet, it would be difficult to dispute that many of the problems which contemporary societies face would not have been present to the minds of the most perspicacious draftsmen. No generation, including

130 S.R. Chaudhuri v. State of Punjab (2001) 7 SCC 126 : 2001 INSC 373

131 [2017] 10 SCR 569 : (2017) 10 SCC 1 [476] : 2017 INSC 1235

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the present, can have a monopoly over solutions or the confidence in its ability to foresee the future. As society evolves, so must constitutional doctrine. … "

(emphasis supplied)

169. Secondly, when the framers of the Constitution debated on the scope of Article 39(b) and other Directive Principles, the safe harbour provision under Article 31C did not exist. As discussed earlier in this judgement, Article 31-C was only introduced over twenty years later in 1971, by the twenty-fifth amendment to the Constitution. Therefore, the discussion in the Constituent Assembly on the scope of Article 39(b) was limited to viewing the provision as akin to any other Directive Principle -as an aspirational principle for future governments. Dr Ambedkar noted in his speech on 4 November 1948 that Directive Principles including Article 39(b) were instructions to the executive and legislature on "how they should exercise their powers". At the time of these discussions, the framers of our Constitution could not have contemplated that legislation which bears a nexus with the principles of Article 39(b) would be protected from a challenge under Part III rights contained in Articles 14, 19 and the erstwhile Article 31 of the Constitution. Therefore, while interpreting Article 39(b) in the context of the present-day Constitution which contains Article 31C, we must be cautious in drawing overbroad conclusions from the discussions in the Constituent Assembly.

170. With these two caveats in mind, the following inferences may be made from the discussions in the Constituent Assembly about the nature of the Directive Principles:

Dr Ambedkar's landmark speech on 4 November 1948 evinces that Directive Principles, including the present-day Article 39(b) were understood to be guiding principles or 'instructions' to the executive and legislature. While they would not be enforceable under law, it was believed that the values enshrined in them would assume importance at the time of elections and the electorate would hold future governments accountable. This purpose attributed to Article 39(b) in the Constituent Assembly is substantially different from the current roles that it serves in our constitutional structure - both as a pre-condition to Article 31C and often as a tool to interpret rights contained in Part III of the Constitution;


The discussions in the Constituent Assembly indicate the objection of Dr Ambedkar to any proposals to expressly lay down a particular form of social structure or economic policy for future governments in the Constitution.He noted that the Constitution, including in the Directive Principles, did not intend to prioritise one form of government or economic structure over the other but instead only laid down the ideal of 'economic democracy';

Dr Ambedkar did not intend to locate the idea of 'economic democracy' within a single economic or political school of thought. Instead, it was believed that future governments and electorates would identify the socio-economic structure which best suits the needs of society. It was to be left to future generations to persuade the electorate and determine the "best way" of achieving the ideal of an 'economic democracy;' and

When members such as KT Shah and Damodar Seth sought greater inclusion of what they termed as 'socialistic' thought, Dr Ambedkar's response was always that such principles can be accommodated within the ambit of the widely worded provisions, as they exist. Not only were such proposals to specify an economic structure opposed by Dr Ambedkar but in all the examples discussed above, they were also negatived by a majority when the draft amendments were put to a vote.

171. We now turn to an analysis of the amendment proposed by Professor KT Shah to Article 31(ii), which corresponds with the present-day Article 39(b). As discussed above, Professor Shah sought to substitute the article with the following provision:

"(ii) that the ownership, control and management of the natural resources of the country in the shape of mines and mineral wealth, forests, rivers and flowing waters as well as in the shape of the seas along the coast of the country shall be vested in and belong to the country collectively and shall be exploited and developed on behalf of the community by the State as represented by the Central or Provincial Governments or local governing authority or statutory corporation as may be provided for in each case by Act of Parliament';"

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172. The proposed amendment to Article 31(ii) sought to make the language of the provision more specific and lay down a 'socialist' economic order. It specified a list of natural resources to be covered by the provision, and also expressly stated that these resources would be vested in the state which would exploit them on behalf of the community. The opposition to the existing provision was that it allowed future Parliaments to evolve an economic plan of their choice instead of laying down that key industries would be owned by the state.

173. Once again, following his view in earlier debates, Dr Ambedkar opposed the amendment, which sought to lay down the specificities of a 'socialist' economic order. His exact response, however, was significant - he stated that the proposed amendment was already covered by the "extensive language" of the existing provision. This response has been central to the submissions of the counsel for the appellants and respondents before us.

174. Ms. Uttara Babbar, senior counsel, submitted that the keyword in the amendment was 'vested'. She argued that the proposed amendment differs from the current provision, as it sought to include the vesting of certain natural resources, which may otherwise be privately owned, in the state. According to her, the rejection of the amendment by the Constituent Assembly indicates that the existing provision does not include the 'vesting' of resources in the state, but only pertains to the distribution of resources already owned and controlled by the state. Regarding Dr Ambedkar's statement that the proposed amendment is already included within the provision, she contended that this was limited to the fact that the natural resources listed in the proposed amendment were covered by the existing clause. In the absence of any discussion on the "vesting" of such resources in the state, she argued that Ambedkar's response cannot be interpreted to incorporate such an understanding.

175. On the other hand, Mr Tushar Mehta learned Solicitor General for India and Mr Rakesh Dwivedi, senior counsel appearing for the State of West Bengal contend that Dr Ambedkar's response to the proposed amendment indicates that the clause includes within its fold the vesting or acquisition of privately owned resources as well. The provision, according to them, was deliberately framed in expansive terms, to include all types of resources, including privately owned


resources. The idea was to keep the provision widely worded so that future governments could mould it according to the economic priorities and dynamics of the day.

176. In our view, Dr Ambedkar's objection to the proposed amendment must be interpreted in view of his earlier observations on the nature of the Directive Principles and his vehement objection to any attempts to lay down a rigid 'economic structure' in the Constitution.

Dr Ambedkar was clear that he was opposed to laying down any particular school of economic thought in the Directive Principles, notwithstanding a passing remark about the socialistic direction of Part IV, discussed above. This passing remark too may be understood in light of the Directive Principles being used as a tool by the framers to accommodate ideological dissenters who would otherwise lose out in constitutional negotiations. As Directive Principles were understood as non-justiciable exhortations, the framers often made strategic concessions in their text to accommodate diverse views and ensure the deliberations did not break down.

177. However, in view of the fact that Article 39(b) has evolved beyond a non-justiciable directive, we must pay heed to Dr Ambedkar's prescient warning that the Constitution must not be interpreted in a way that imposes a rigid economic structure. With this principle in mind, Dr Ambedkar's response to the proposed amendment to Article 39(b) cannot be interpreted to indicate that the provision encompasses all private property, and any legislation to convert private ownership to public ownership would fall within its ambit.

At best, the response suggests that natural resources including rivers and seas may be vested in the state for the "common good" in certain specific cases.

178. With this historical context in mind, we now turn to examine how this Court has interpreted the provision over time, including in the judgments that have been called into question in the present reference.

Interpretation of Article 39(b) that has been doubted

179. The genesis of this reference lies in the judgement of this Court in

Ranganatha Reddy. A seven-judge bench of this Court adjudicated on the constitutionality of the Karnataka Contract Carriages (Acquisition) Act, 1976, which dealt with the acquisition of private contract carriages by the State. The legislature was of the view that nationalisation was

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necessary because private contract carriages were being operated in a manner "detrimental to the public interest" and the nationalisation of the carriages would prevent misuse and provide better facilities. The legislation contained a declaration stating that it is in furtherance of the principles contained in Articles 39(b) and (c) and thus protected by Article 31-C. The Karnataka High Court struck down the legislation as unconstitutional on various grounds, including inter alia that it was not protected by Article 31-C.

180. As noted earlier in this judgement, the majority decision, authored by Justice Untwalia, upheld the constitutional validity of the legislation but did not discuss the question of whether the legislation was in furtherance of Article 39(b) and thus, protected by Article 31- C. However, the contours of Article 39(b) were discussed in the concurring opinion authored by Justice Krishna Iyer (on behalf of himself and two other judges), and it was held that legislation was saved by Article 31-C. Justice Krishna Iyer framed the questions with regard to Article 39(b) in the following terms:

"50. […]

2. What are the pervasive ambience and progressive amplitude of the "directive principle" in Article 39(b) and

(c) in the context of nationalisation of public utilities?

2 (a). Can State monopoly by taking over private property be a modus operandi of distribution of ownership and control of the material resources of the community to subserve the common good, within the framework of Article 39 (b)?

2(b). Are distribution and nationalisation antithetical or overlapping?

2 (c). What is the connotation of the expression "material resources"? Can private buses be regarded as material resources of the community?"

181. Justice Krishna Iyer held that the purpose behind the provision is to allow for the "restructuring of the social order" and each word in the provision contributes to this "social mission". He warned against a "ritualistic construction" of the provision which would weaken this purpose. He observed:


"80. […] The key word is "distribute" and the genius of the Article, if we may say so, cannot but be given full play as it fulfils the basic purpose of restructuring the economic order. Each word in the article has a strategic role and the whole article a social mission. It embraces the entire material resources of the community. Its task is to distribute such resources. Its goal is so to undertake distribution as best to subserve the common good. It reorganizes by such distribution the ownership and control.

83. Two conclusions strike us as quintessential. Part IV, especially Article 39(b) and (c), is a futuristic mandate to the State with a message of transformation of the economic and social order. Firstly, such change calls for collaborative effort from all the legal institutions of the system: the legislature, the judiciary and the administrative machinery. Secondly and consequentially, loyalty to the high purpose of the Constitution viz. social and economic justice in the context of material want and utter inequalities on a massive scale, compels the Court to ascribe expansive meaning to the pregnant words used with hopeful foresight, not to circumscribe their connotation into contradiction of the objectives inspiring the provision. To be Pharisaic towards the Constitution through ritualistic construction is to weaken the social-spiritual thrust of the founding fathers' dynamic faith."

(emphasis supplied)

182. While holding that Article 39(b) includes the nationalization of motor vehicles, Justice Krishna Iyer had occasion to interpret the phrase "material resources of the community". In essence, Justice Krishna Iyer interpreted the term "material resources" to cover "all national wealth" including all resources - natural and manmade, private and public. The only qualifier according to Justice Iyer is that the resource must "meet material needs". He adopted the view that an individual is a member of the community, and thus, all resources of the individual are part of the "community". According to Justice Iyer, if privately owned resources are excluded from the ambit of Article 39(b) it would defeat the underlying purpose of the provision, which is redistribution of wealth. Further, he clarified that not only

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private 'means of production', but also 'private resources' are included within the fold of Article 39(b). These observations lie at the heart of the controversy before this Court, and the correctness of this interpretation of 'material resources of the community' has been challenged by the appellants before us. The observations are reproduced below.

"81. "Resources" is a sweeping expression and covers not only cash resources but even ability to borrow (credit resources). Its meaning given in Black›s Legal Dictionary is:

"Money or any property that can be converted into supplies; means of raising money or supplies; capabilities of raising wealth or to supply necessary wants; available means or capability of any kind."

And 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.

To exclude ownership of private resources from the coils of Article 39(b) is to cipherise its very purpose of redistribution the socialist way. A directive to the State with a deliberate design to dismantle feudal and capitalist citadels of property must be interpreted in that spirit and hostility to such a purpose alone can be hospitable to the meaning which excludes private means of production or goods produced from the instruments of production. Sri A.K. Sen agrees that private means of production are included in "material resources of the community" but by some baffling logic excludes things produced.

If a car factory is a material resource, why not cars manufactured? "Material" may cover everything worldly and "resources", according to Random House Dictionary, takes in "the collective wealth of a country or its means of producing wealth: money or any property that can be converted into money assets". No further argument is


needed to conclude that Article 39(b) is ample enough to rope in buses. The motor vehicles are part of the material resources of the operators."

(emphasis supplied)

183. The next part of Article 39(b) that Justice Krishna Iyer discussed, in his concurring opinion, is the term "distribution". More specifically, the opinion explores whether "nationalisation"can be understood to be a form of "distribution" which subserves the "common good".

Justice Krishna Iyer held that a narrow interpretation cannot be given to the term. After referring to the dictionary definition of the term 'distribution', it was observed that the nationalisation of resources, which essentially entails classifying and allocating industries/ services/utilities between the private and public sectors, is a form of 'distribution'. Moreover, nationalisation has been held to be a distributive process which is for the "good of the community". The observations are reproduced below.

"82. The next question is whether nationalisation can have nexus with distribution. Should we assign a narrow or spacious sense to this concept? Doubtless, the latter, for reasons so apparent and eloquent. To "distribute", even in its simple dictionary meaning, is to "allot, to divide into classes or into groups" and "distribution" embraces "arrangement, classification, placement, disposition, apportionment, the way in which items, a quantity, or the like, is divided or apportioned; the system of dispersing goods throughout a community". (See Random House Dictionary). To classify and allocate certain industries or services or utilities or articles between the private and public sectors of the national economy is to distribute those resources. Socially conscious economists will find little difficulty in treating nationalisation of transport as a distributive process for the good of the community. You cannot condemn the concept of nationalisation in our Plan on the score that Article 39(b) does not envelop it. It is a matter of public policy left to legislative wisdom whether a particular scheme of take-over should be undertaken."

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184. The next decision with a bearing on the interpretation of Article 39(b) is Bhim Singhji. As briefly discussed earlier, a five-judge Constitution bench of this Court adjudicated on the constitutionality of the Urban Land (Ceiling and Regulation) Act 1976. The legislation inter alia provided for the imposition of a ceiling on vacant land in urban agglomerations and for the acquisition of land in excess of the ceiling limit, to prevent the concentration of urban land in the hands of a few. Chief Justice YV Chandrachud, Justice Bhagwati, Justice Krishna Iyer and Justice Sen, constituting a majority of four judges held that the Act gave effect to the principles laid down in Articles 39(b) and (c), and, thus was protected by Article 31-C.Initially, when the judgement was pronounced, Chief Justice YV Chandrachud (for himself and Justice Bhagwati) authored a short judgment stating that detailed reasons would follow. Eventually, Chief Justice YV Chandrachud (for himself and Justice Bhagwati) issued an order stating that the learned judges agreed with the reasons stated in the opinion of Justice Krishna Iyer.132 Justice Sen concurred with the majority on the question of whether the Act was in furtherance of Articles 39(b) and (c) but disagreed on some other aspects.

Justice Tulzapurkar authored a dissenting opinion, striking down the legislation as unconstitutional and held that the Act did not give effect to the principles in Articles 39(b) and (c) so as to be saved by Article 31C.

185. The opinion of the majority authored by Justice Krishna Iyer held that a law that inhibits the concentration of urban land in the hands of a few and ensures equitable distribution falls within the ambit of Article 39(b) and (c). He observed:

"10. […]Article 39(b) and (c) of the Constitution are directly attracted and there is no doubt that the fullest exploitation of the material resources of the community undoubtedly requires distribution of urban land geared to the common good. It is also a notorious fact that concentration of urban land in private hands is an effective forbiddance of the maximum use of such land for industrial purposes at a critical juncture when the nation is fighting for survival through industrialisation.

132 Maharao Sahib Shri Bhim Singhji v. Union of India (1986) 4 SCC 615


It needs no argument to conclude that the objective of the legislation as set out in the long title and in the statutory scheme is implementation of Part IV of the Constitution.

The directive principles of State Policy being paramount in character and fundamental in the country's governance, distributive justice envisaged in Article 39(b) and (c) has a key role in the developmental process of the socialist republic that India has adopted. […]

11. The taking over of large conglomerations of vacant land is a national necessity if Article 39 is a constitutional reality. "Law can never be higher than the economic order and the cultural development of society brought to pass by that economic order." (Marx). Therefore, if Article 38 of the Constitution which speaks of a social order informed by economic justice, is to materialise, law must respond effectively and rise to the needs of the transformation envisioned by the founding fathers. […]"

186. Although Justice Krishna Iyer did not cite his concurring judgement in Ranganatha Reddy, he made certain observations which may help contextualise his observations on Article 39(b) in Ranganatha Reddy. He observed that the acquisition of private resources by the state to favour another private owner is not within the scheme of Article 39(b). In some circumstances, according to Justice Krishna Iyer, even a private industry may serve the common good and certain professions and industries may remain in private hands, "in the transitional stage of our pluralist economy undergoing a fabian transformation".

"16-A. […] It is not and never can be compulsory taking from some private owners to favour by transfer other private owners. The prevalent pathology of corrupt use of public power cannot be assumed by the court lest the same charge be levelled against its echelons. The wide definition of "industry" or the use of general words like 'any person" and "any purpose" cannot free the whole clause from the inarticulate major premise that only a public purpose to subserve the common good and filling the bill of Article 39(b) and (c) will be permissible.

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Even a private industry may be for a national need and may serve common good. Even a medical clinic, legal aid bureau, engineering consultant's office, private ambulance garage, pharmacist's shop or even a funeral home may be a public utility. Professions for the people, trade at the service of the community and industry in the strategic sector of the nation's development may well be in private hands in the transitional stage of our pluralist economy undergoing a fabian transformation.

Why should lands allotted to such private industries or professionals be condemned? The touchstone is public purpose, community good and like criteria. If the power is used for favouring a private industrialist or for nepotistic reasons the oblique act will meet with its judicial waterloo.

To presume as probable graft, nepotism, patronage, political clout, friendly pressure or corrupt purpose is impermissible. […]."

187. The next decision that is relevant to the interpretation of Article 39(b) is Sanjeev Coke - a decision of a Constitution Bench of five judges of this Court. As noted earlier in this judgement, the observations of this Court in this case have been specifically doubted in the reference orders before us. This Court was adjudicating on the constitutionality of the Coking Coal Mines (Nationalisation) Act, 1972, which provided for the acquisition of coking coal mines, along with their coking oven plants. In addition to these coking oven plants, twelve coking oven plants which were owned by independent persons, such as the petitioners, were also nationalised under the legislation. The petitioners contended that the legislation violated Article 14 as other coking oven plants were not being nationalised, although they were similarly placed. The Union of India defended the legislation on its merits and also argued that the legislation was protected by Article 31-C as it gives effect to the principles in Article 39(b). According to the legislature, the Act providing for the nationalisation of the coking coal mines and coke oven plants was "with a view to reorganising and reconstructing such mines and plants for the purpose of protecting, conserving and promoting scientific development of the resources of coking coal needed to meet the growing requirements of the iron and steel industry and for matters connected therewith or incidental thereto".


188. The counsel for petitioners in the case argued that a law which violates the "broader egalitarian principle" embodied in Article 14 cannot be considered to be giving effect to the principles laid down in Article 39(b). To further this argument, the counsel relied on the observations made by Justice Bhagwati in his dissenting opinion in Minerva Mills, wherein the learned judge upheld the constitutionality of an amendment to Article 39(b) by the forty-second Amendment.

Justice Bhagwati, in essence, had observed that when a law gives effect to a Directive Principle, such a law would always conform to the principle of "real and substantive" equality, even if it may conflict with the formalistic doctrinaire view of equality. This argument was rejected by the Court and it was held that if the law to further the Directive Principle must necessarily be non-discriminatory or based on a reasonable classification then there is no purpose left in Article 31-C. It would be valid on its own. Hence it was held that a law designed to promote a Directive Principle, even if it came into conflict with the formalistic and doctrinaire view of equality before the law, would advance the broader egalitarian principle and the constitutional goal of social and economic justice for all. If the law was aimed at the broader egalitarianism of the Directive Principles, Article 31-C was held to protect the law from a challenge under Article 14.133

189. On the question of whether the Act gives effect to Article 39(b), the counsel for the petitioners argued that a coal mine or coke oven plant owned by private parties could not constitute "material resources of the community". It was urged that to qualify as a "material resources of the community", the ownership of the resource must vest in the state. The legislation may be considered as a legislation for the acquisition by the State of coking coal mines and coke oven plants belonging to private parties but it is not a legislation towards securing the principles in Article 39(b). It was argued that the keyword in Article 39(b) is "distribute" and material resources had first to be acquired by the State before they could be distributed. A law providing for acquisition could not, it was urged, be considered a law for distribution.

190. This argument was rejected by this Court (speaking through Justice Chinappa Reddy). The Court observed that the expression "material resources of the community" means all things capable of producing

133 Sanjeev Coke [16, 17].

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wealth for the community and cannot be limited to only public-owned resources. Further, the words must - the learned Judge held - be understood in the context of the constitutional goal of setting up a "socialist" republic, which has always been the goal of the Chapter on Directive Principles. Further, it was held that the term "distribution"cannot be given a narrow construction, and includes the "transformation of wealth from private ownership into public ownership". This Court relied on the observations in the concurring opinion authored by Justice Krishna Iyer in Ranganatha Reddy to buttress these observations. These findings on the meaning of the phrases "material resources of the community" and "distribution" are at the heart of the reference before us and have been reproduced in full below.

"19.[…]

The expression "material resources of the community" means all things which are capable of producing wealth for the community. There is no warrant for interpreting the expression in so narrow a fashion as suggested by Shri Sen and confine it to public-owned material resources and exclude private-owned material resources. The expression involves no dichotomy.

The words must be understood in the context of the constitutional goal of establishing a sovereign, socialist, secular, democratic republic. Though the word "socialist" was introduced into the Preamble by a late amendment of the Constitution, that socialism has always been the goal is evident from the Directive Principles of State Policy.

The amendment was only to emphasise the urgency.

Ownership, control and distribution of national productive wealth for the benefit and use of the community and the rejection of a system of misuse of its resources for selfish ends is what socialism is about and the words and thought of Article 39(b) but echo the familiar language and philosophy of socialism as expounded generally by all socialist writers.

[…]


We may also look at it this way. When we say that the State of Himachal Pradesh possesses immense forest wealth or that the State of Bihar possesses immense mineral wealth, we do not mean that the Governments of the States of Himachal Pradesh and Bihar own the forest and mineral wealth; what we mean is that there is immense forest and mineral wealth in the territories of the two States, whether such wealth is owned by the people as a whole or by individuals. Again, when we talk of, say, a certain area in Delhi being a Bengali, Punjabi or South Indian area, we do not mean that the area is owned by Bengalis, Punjabis or South Indians but only that large numbers of Bengalis, Punjabis or South Indians live in that area. When Article 39(b) refers to material resources of the community it does not refer only to resources owned by the community as a whole but it refers also to resources owned by individual members of the community. Resources of the community do not mean public resources only but include private resources as well. Nor do we understand the word "distribute" to be used in Article 39(b) in the limited sense in which Shri Sen wants us to say it is used, that is, in the sense only of retail distribution to individuals. It is used in a wider sense so as to take in all manner and method of distribution such as distribution between regions, distribution between industries, distribution between classes and distribution between public, private and joint sectors.

The distribution envisaged by Article 39(b) necessarily takes within its stride the transformation of wealth from private ownership into public ownership and is not confined to that which is already public-owned. The submissions of Shri Sen are well-answered by the observations of Krishna Iyer, J. in State of Karnataka v. Ranganatha Reddy […]"

191. Additionally, this Court also held that the fact that only a part of the industry, and not the industry as a whole was being nationalised was irrelevant to the question of whether Article 39(b) would be attracted.

It was held that the distribution between public, private and joint sectors and the extent and range of any scheme of nationalisation are essentially matters of state policy which are inherently inappropriate subjects for judicial review.

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192. The next decision of this Court which discussed the meaning and content of Article 39(b) and has been referred to in the underlying reference orders is Abu Kavur Bai. Akin to Ranganatha Reddy, this is another case which dealt with the nationalisation of transport services. In that case, the constitutionality of the Tamil Nadu State Carriages and Contract Carriages (Acquisition) Act 1973, which sought to nationalise the transport industry in stages, was under challenge.

The transport service and part of the assets of the operators were acquired by the State under the legislation. The Madras High Court declared the Act as being violative of Article 31(2) and outside the protective umbrella contained in Article 31C.

193. The Constitution Bench of this Court (speaking through Justice Fazal Ali) upheld the constitutionality of the legislation. This Court held that the legislation gave effect to the principles in Articles 39(b) and (c) and was thus saved from a challenge under Article 31(2), due to the application of Article 31-C. The judgment relied on the decisions in Ranganatha Reddy and Sanjeev Coke to arrive at this conclusion.

This Court held that the reason for the inclusion of Article 31-C was based on the theoretical aspiration that means of production, key industries, mines, minerals, public utilities, and services may be taken gradually under public ownership, management and control.

Nationalisation, it was held, was necessary to achieve the goal of building an egalitarian society.134

194. It was argued before this Court that the nationalisation of the entire transport services along with the vehicles and workshops does not serve "any public good" and does not prevent the concentration of wealth in the hands of a few. Moreover, it was argued that the taking over of vehicles, tools, implements and workshops was not contemplated by Article 39(b) as they constituted movable properties and not "material resources". This Court rejected these arguments.

Relying on the decision in Ranganatha Reddy, where a similar legislation in the State of Karnataka was upheld by this Court, it was held that the state has nationalised the carriages to provide expeditious transport at reasonable rates to the members of the public and prevent misuse by private operators, which constitutes

134 Abu Kavur Bai [29-31].


an important public purpose.135 This Court relied on the definition in various dictionaries and the observations of this Court in Sanjeev Coke and held that the term "material resources" used by Article 39(b) is wide enough to cover both movable and immovable properties.136

195. Finally, this Court addressed the argument that the nationalisation policy codified in the legislation does not envisage 'distribution', because the property that is taken over is not distributed to various members of the community for their benefit. This Court, in line with its earlier observations, rejected this argument. Referring to definitions of the term 'distribution', it was held that 'distribution' must not be given a narrow construction which will defeat the purpose of Article 39(b).This Court held that the nationalisation of transport services fell within the ambit of 'distribution' and observed:

"92. It is obvious, therefore, that in view of the vast range of transactions contemplated by the word 'distribution' as mentioned in the dictionaries referred to above, it will not be correct to construe the word 'distribution' in a purely literal sense so as to mean only division of a particular kind or to particular persons. The words, apportionment, allotment, allocation, classification, clearly fall within the broad sweep of the word 'distribution'. So construed, the word 'distribution' as used in Article 39(b) will include various facets, aspects, methods and terminology of a broad-based concept of distribution. In other words, the word 'distribution' does not merely mean that property of one should be taken over and distributed to others like land reforms where the lands from the big landlords are taken away and given to landless labourers or for that matter the various urban and rural ceiling Acts. That is only one of the modes of distribution but not the only mode. In the instant case, as we have already pointed out, distribution is undoubtedly there though in a different shape. So far as the operators were concerned they were mainly motivated by making huge profits and were most reluctant to go to villages or

135 Abu Kavur Bai [74, 75].

136 Abu Kavur Bai [78-83].

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places where the passenger traffic is low or the track is difficult. This naturally caused serious inconvenience to the poor members of the community who were denied the facility of visiting the towns or other areas in a transport.

By nationalising the transport as also the units the vehicles would be able to go to the farthest corner of the State and penetrate as deep as possible and provide better and quicker and more efficacious facilities. This would undoubtedly be a distribution for the common good of the people and would be clearly covered by clause (b) of Article 39."

196. The above principles laid down in Ranganatha Reddy, Sanjeev Coke and Abu Kavur Bai have been followed in decisions which dealt with the nationalisation or acquisition of certain resources by the state. These resources include electrical energy [Tinsukhia Electric Supply Co. Ltd. v. State of Assam137 and Maharashtra State Electricity Board v. Thana Electric Supply Co.138], refractory plants [Assam Sillimanite Ltd. v. Union of India139] and land [Basantibai Khetan]. In the interests of brevity, we will not reiterate the findings in each of these decisions. However, it may be noted that these decisions followed the view in Ranganatha Reddy, Sanjeev Coke and Abu Kavur Bai on two broad aspects. Firstly, the phrase 'material resources of the community' includes privately owned resources and cannot be restricted to resources owned by the state. Secondly, nationalization or the vesting of these private resources in the State falls within the expression "distribution" and subserves the common good.

197. Another significant decision where a Constitution Bench of this Court explored the meaning of Article 39(b) is Natural Resources Allocation, In re, Special Reference No. 1 of 2012.140 Unlike the decisions discussed above, this was not a case where the protection of Article 31-C was sought to protect a legislation, instead, Article 39(b) was relied on by this Court to determine whether there is a

137 [1989] 2 SCR 544 : (1989) 3 SCC 709 : 1989 INSC 128

138 [1989] 2 SCR 518 : (1989) 3 SCC 616 : 1989 INSC 127

139 [1990] 1 SCR 983 : (1992) Supp 1 SCC 692 : 1990 INSC 89

140 [2012] 9 SCR 311 : (2012) 10 SCC 1 : 2012 INSC 428


constitutional mandate for the distribution of natural resources in a particular way. In view of the observations of a two-judge bench of this Court on the allocation of spectrum, the President made a reference to this Court. One of the main questions before this Court was whether auctions are the only constitutionally permissible means for the state to dispose of natural resources.

198. The Constitution Bench held that declaring auctions as a constitutional mandate would be impermissible as it would distort the constitutional principles in Article 39(b). This Court held that Article 39(b) lays down a 'restriction' on the object of distribution of natural resources, i.e. that such distribution must be to achieve the "common good". Further, the term "distribution" was held to have a wide connotation, not restricted to only one mode of allocation such as auctions. This Court held:

"113. […] The overarching and underlying principle governing "distribution" is furtherance of common good.

But for the achievement of that objective, the Constitution uses the generic word "distribution". Distribution has broad contours and cannot be limited to meaning only one method i.e. auction. It envisages all such methods available for distribution/allocation of natural resources which ultimately subserve the "common good".

199. Further, this Court held that although auctions may be the best way to maximise revenue, revenue maximisation is not always the best way to subserve the 'common good'. In some cases, according to this Court, revenue considerations may assume a secondary position vis-à-vis developmental considerations. This Court held:

"119. The norm of "common good" has to be understood and appreciated in a holistic manner. It is obvious that the manner in which the common good is best subserved is not a matter that can be measured by any constitutional yardstick-it would depend on the economic and political philosophy of the Government. Revenue maximisation is not the only way in which the common good can be subserved. Where revenue maximisation is the object of a policy, being considered qua that resource at that point of time to be the best way to subserve the common good, auction would be one of the preferable methods, though

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not the only method. Where revenue maximisation is not the object of a policy of distribution, the question of auction would not arise. Revenue considerations may assume secondary consideration to developmental considerations.

120. […] Economic logic establishes that alienation/ allocation of natural resources to the highest bidder may not necessarily be the only way to subserve the common good, and at times, may run counter to public good. Hence, it needs little emphasis that disposal of all natural resources through auctions is clearly not a constitutional mandate."

200. Notably, this Court relied on the decisions in L Abu Kavur Bai and the decision of Ranganatha Reddy to arrive at the above propositions.

In essence the decision in Special Reference No. 1 does two things.

Firstly, it restates the wide interpretation of 'distribution' and holds that no single mode of distribution is mandated by Article 39(b). Secondly, it interprets the phrase 'common good' to have a wide import and clarifies that revenue maximisation by the government is not always the only way to subserve the common good. Importantly, this was not a decision where Article 39(b) was invoked to prevent a challenge under Article 14 but to interpret the constitutional mandate about the distribution of natural resources, in light of the 'negative' right to equality in Article 14 and the 'positive' mandate in Article 39(b). In a sense, this is an example of harmoniously construing fundamental rights (Article 14) and the Directive Principles (Article 39(b)) to understand underlying constitutional principles and mandates.

201. The broad precepts which emerge from these decisions may be summarised thus:

The purpose behind Article 39(b) is to allow the state to carry out a 'restructuring of the economy'. The goal of the article is to prevent the concentration of wealth in a few hands;

The term "material resources of the community" refers to things capable of producing wealth for the community and includes all resources- natural and man made, private and public. The resources of the individual are the resources of the community and thus, privately owned property is covered by the phrase;


The nationalisation of privately owned resources may give effect to Articles 39(b) and (c). The expression 'distribution' must be given a wide construction so as to include the acquisition of private resources by the state; and

The decisions which advance the above precepts ground their interpretation of Article 39(b) in the observations of Justice Krishna Iyer in Ranganatha Reddy and the subsequent affirmation in Sanjeev Coke and Abu Kavur Bai.

202. In view of the above, the following questions fall for the consideration of this Court:

Do all privately owned resources fall within the ambit of 'material resources of the community'?

Is the acquisition of private resources by the state a form of distribution recognised by Article 39(b)?

vi.

Correctness of the above interpretation of Article 39(b)

203. Article 39(b) is not a source of legislative power. The inclusion or exclusion of 'privately-owned resources' from the ambit of the provision does not impact the power of the legislature to enact laws to acquire such resources. The power to acquire private resources, in certain situations, continues to be traceable to other provisions in the Constitution, including the sovereign power of eminent domain.

Acquisition of property, for instance, is a Concurrent list subject in Entry 42 of List III of the Seventh Schedule. Further, where a legislation falls within the ambit of Article 39(b), the law is only protected against a challenge under Articles 14 and 19 of the Constitution. Even if a law is in furtherance of Article 39(b) and protected by Article 31C, it is susceptible to a challenge to its constitutionality under other provisions of the Constitution, including Article 300-A. Similarly, a law which falls outside the ambit of Article 39(b), may still be valid.

All other benefits and protections granted by the Constitution under inter alia Articles 31A and 31B continue to be applicable to such a law. With this in mind, we turn to determining the correctness of the above interpretation of Article 39(b), i.e. that all private property is covered within the ambit of Article 39(b).

The interpretation is inconsistent with the text of Article 39(b)

204. Five significant elements emerge from the text of Article 39(b), which has been reproduced in paragraph 2 of this Judgement. These are:

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The provision relates to "ownership and control";

The ownership and control of "material resources" is dealt with by the provision;

The material resources which the provision covers are those which are "of the community";

The policy of the state must be directed to secure the "distribution" of the ownership and control of such resources;

The purpose of the distribution must be to "best subserve the common good".

205. The question before this Court is whether privately owned resources fall within the ambit of the phrase 'material resources of the community'.

To define the phrase 'material resources of the community', the law lexicons and legal dictionaries draw our attention to the definitions by this Court in Ranganatha Reddy, Sanjeev Coke and Abu Kavur Bai. These judgements have been doubted in the reference before us. Thus, we need to consider the terms afresh to understand the correct interpretation of the phrase. We may begin by looking at the terms 'material', 'resources' and 'community', independently.

206. Black's Law Dictionary defines the expression 'resources' in the following terms:

"a factor of production or economy needed for an activity.

Basic resources are labour, land, and capital. Others can include information, energy, entrepreneurship, expertise, time and management."141

207. The term 'material' is defined as:

"1. Of or relating to matter; physical (material goods).

2. Having some logical connection with the consequential facts (material evidence).

3. Of such a nature that knowledge of the item would affect a person's decision-making; significant; essential (material alteration of a document)."142

141 Black's Law Dictionary, 8th Edition, South Asian Edition, 2015.

142 Ibid.


208. Similarly, the term 'community' has been defined in the following terms:

"anything constitutes a community; a common interest, a common language, a common government, is the basis of that community which is formed by any number of individuals; the coming together of many and keeping together under given law and for given purposes constitutes a society."143

209. None of these definitions indicate that the terms exclude 'private property' from the provision. However, there is a distinction between holding that private property may form part of the phrase 'material resources of the community' and holding that all private property falls within the net of the phrase. It is here that the judgment by Justice Krishna Iyer in Ranganatha Reddy, and the consequent observations in Sanjeev Coke fall into error. Justice Krishna Iyer cast the net wide, holding that all resources which meet "material needs" are covered by the phrase and any attempts by the government to nationalise these resources would be within the scope of Article 39(b). He clarified that not only the "means of production" but also the goods so produced fall within the net of the provision. The illustration which he provides in Ranganatha Reddy indicates the unworkable nature of such an interpretation. Justice Krishna Iyer observed, by way of an illustration, that not only do factories which produce cars fall within the net of Article 39(b), but even privately owned cars are covered by the provision.144 Similarly, even in Sanjeev Coke, the net is cast wide and this Court observed that "all things capable of producing wealth of the community" fall within the ambit of the phrase. In both decisions, it was observed that all resources of the individual are consequentially the resources of the community.

210. It is a settled rule of interpretation that no word in a statute may be construed as surplusage and be rendered ineffective. While construing a provision, full effect is to be given to the language used in the provision.145 This principle is equally applicable to constitutional interpretation. The provisions of the draft Constitution

143 Ramanathaier, Advanced Law Lexicon, 3rd Edition., Vol. III.

144 Ranganatha Reddy [81]

145 Hardeep Singh v. State of Punjab (2014) 3 SCC 92 [43-44] : 2014 INSC 21; Rohitash Kumar v Om Prakash Sharma (2013) 11 SCC 451 [27-29] : 2012 INSC 509

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placed before the Constituent Assembly by Dr B R Ambedkar were debated at length. Often, members of the assembly would propose amendments which involved alternate phrasing of various provisions. These were debated thread-bare in the assembly before the members voted on the final text. As noted earlier in this judgement, the text of the present Article 39(b) was also the subject of debate and discussion. An amendment was proposed by Professor KT Shah, which sought an alternative phrasing of the provision. After detailed discussions, the assembly ultimately voted in favour of the current phrasing of the provision. Therefore, while interpreting the article, we cannot ignore the specific words used in the provision or render them ineffective.

211. An interpretation of Article 39(b) which places all private property within the net of the phrase "material resources of the community" only satisfies one of the three requirements of the phrase, i.e. that the goods in question must be a 'resource'. However, it ignores the qualifiers that they must be "material" and "of the community". The use of the words "material" and "community" are not meaningless superfluities. We cannot adopt a construction of the provision which renders these terms otiose. The words "of the community" must be understood as distinct from the "individual". If Article 39(b) was meant to include all resources owned by an individual, it would state the "ownership and control of resources is so distributed as best to subserve the common good". Similarly, if the provision were to exclude privately owned resources, it would state "ownership and control of resources of the state …" instead of its current phrasing. The use of the word "of the community" rather than "of the state" indicates a specific intention to include some privately owned resources.

212. In essence, the text of the provision indicates that not all privately owned resources fall within the ambit of the phrase. However, privately owned resources are not excluded as a class and some private resources may be covered. The resource in question must meet the two qualifiers, i.e. it must be a "material" resource and it must be "of the community". Thus, the judgements doubted in the reference before us are incorrect to the extent that they hold that "all resources" of an individual are part of the community and thus, all private property is covered by the phrase "material resources of the community".


The interpretation amounts to endorsing a particular economic ideology

213. To declare that Article 39(b) includes the distribution of all private resources amounts to endorsing a particular economic ideology and structure for our economy. Justice Krishna Iyer's judgment in Ranganatha Reddy, which was followed inter alia in Sanjeev Coke and Bhim Singhji, was influenced by a particular school of economic thought. This is evident from various observations made in these judgements. For instance, in Ranganatha Reddy, Justice Krishna Iyer observed that Article 39(b) constitutes "a directive to the State with a deliberate design to dismantle feudal and capitalist citadels of property".146 In Bhim Singhji, Justice Krishna Iyer cited Karl Marx in his judgment to observe that taking over large conglomerations of land is necessary to make Article 39 a "constitutional reality".147 Interestingly, in the same decision, Justice Krishna Iyer also expressed his view about the nature of the economy and observed that our economy was "in the transitional stage … undergoing a fabian transformation".148 Similarly, in Sanjeev Coke, Justice Chinappa Reddy states that "the words and thought of Article 39(b) but echo the familiar language and philosophy of socials as expounded by all socialist writers".149 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.

214. Significantly, both 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. However, as noted earlier in this judgement, the vision of the framers while drafting the Constitution was not to lay down

146 Ranganatha Reddy [81].

147 Bhim Singhji [11].

148 Ibid [16A]; Fabianism refers to a British socialist theory which believes in the gradual transition to a socialist society and rejects the revolutionary doctrines of Marxism. [Lamb, P. (2023, November 28).

Fabianism. Encyclopedia Britannica. https://www.britannica.com/money/Fabianism]

149 Sanjeev Coke [19].

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a particular form of social structure or economic policy for future governments. The debates in the Constituent Assembly reflect the foresight of Dr B R Ambedkar. He was categoric in his constitutional vision. The Constitution and the Directive Principles, as he expounded their fundamental principles, rejected the prevalence of one dogma.

The Constitution was framed in broad terms to allow succeeding governments to experiment with and adopt a structure for economic governance which would subserve the policies for which it owes accountability to the electorate. According to Dr Ambedkar, if the Constitution laid down a particular form of economic and social organisation, it would amount to taking away the liberty of people to decide the social organisation in which they wish to live. He opined on several occasions that economic democracy is not tied to one economic structure, such as socialism or capitalism, but to the aspiration for a 'welfare state'. Thus, the role of this Court is not to lay down economic policy, but to facilitate this intent of the framers to lay down the foundation for an 'economic democracy'.

215. Indeed, it is this spirit and its all-encompassing nature of the Constitution which has allowed elected governments since independence to pursue economic reforms and policies based on domestic conditions, international requirements and political exigencies of the time. At the time of independence in the 1950s and 1960s, given the early challenges of our republic, the focus of the government was on planning, a mixed economy, heavy industries, and import substitution policies. Subsequently, in the late 1960s and 1970s, there was a shift towards purportedly 'socialist' reforms and policies. Since the decade of the 1990s, or the liberalisation years, there has been a shift towards pursuing a policy of marketbased reforms.150 Today, the Indian economy has transitioned from the dominance of public investment to the co-existence of public and private investment.151 The doctrinal error in the Krishna Iyer approach was, postulating a rigid economic theory, which advocates for greater state control over private resources, as the exclusive basis for constitutional governance.

150 Rahul De, A History of Economic Policy in India: Crisis, Coalitions, and Contingency, 2023 (Oxford University Press).

151 Ministry of Finance (Department of Economic Affairs), Government of India, The Indian Economy: A Review, January 2024.


216. India's economic trajectory indicates that the Constitution and the custodians of the Constitution - the electorate - have routinely rejected one economic dogma as being the exclusive repository of truth. As participants ina vibrant multi-party 'economic democracy', the 'People of India' have voted to power governments which have adopted varied economic and social policies, based on the country's evolving development priorities and challenges. The foresighted vision of our framers to establish an 'economic democracy' and trust the wisdom of the elected government, has been the backbone of the high-growth rate of India's economy, making it one of the fastestgrowing economies in the world.152 To scuttle this constitutional vision by imposing a single economic theory, which views the acquisition of private property by the state as the ultimate goal, would undermine the very fabric and principles of our constitutional framework.

The interpretation is incompatible with the right to property

217. The right to property was included in the Constitution as a fundamental right under Articles 19(1)(f) and Article 31. Subsequently, the right to property was deleted from Part III of the Constitution by the Constitution (Forty-fourth Amendment) Act, 1978. However, a modified version was inserted and the right to property continues to be constitutionally protected under Article 300A.153 Although no longer in the nature of a fundamental right, the provision has been characterised as a constitutional and human right.154

218. A two-Judge Bench of this Court in Kolkata Municipal Corporation & Anr v. Bimal Kumar Shah & Ors,155 speaking through Justice PS Narasimha, had occasion to discuss the scope and content of Article 300-A and the constitutional vision in relation to private property.

This Court held that merely providing compensation does not justify compulsory acquisition by the state unless procedural safeguards are followed. It was observed that a "post-colonial reading" of the

152 Ministry of Finance (Department of Economic Affairs), Government of India, Economic Survey 2023-24, July 2024.

153 Article 300A of the Constitution: "Persons not to be deprived of property save by authority of law. - No person shall be deprived of his property save by authority of law."

154 Chandigarh Housing Board v. Major General Devinder Singh (2007) 9 SCC 6, 2007 INSC 291;

Lachhman Dass v. Jagat Ram (2007) 10 SCC 448; Vidya Devi v. State of Himachal Pradesh (2020) 2

SCC 569 : 2020 INSC 23

155 [2024] 5 SCR 831 : 2024 INSC 435

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constitutional right to property cannot be limited to the twin conditions of (a) the acquisition being for a public purpose; and (b) payment of compensation, and must give way to more meaningful renditions.

This Court observed:

"25. While it is true that after the 44th Constitutional Amendment, the right to property drifted from Part III to Part XII of the Constitution, there continues to be a potent safety net against arbitrary acquisitions, hasty decision-making and unfair redressal mechanisms. […] To assume that constitutional protection gets constricted to the mandate of a fair compensation would be a disingenuous reading of the text and, shall we say, offensive to the egalitarian spirit of the Constitution.

26. The constitutional discourse on compulsory acquisitions, has hitherto, rooted itself within the 'power of eminent domain'. Even within that articulation, the twin conditions of the acquisition being for a public purpose and subjecting the divestiture to the payment of compensation in lieu of acquisition were mandated. […]

A post-colonial reading of the Constitution cannot limit itself to these components alone. The binary reading of the constitutional right to property must give way to more meaningful renditions, where the larger right to property is seen as comprising intersecting sub-rights, each with a distinct character but interconnected to constitute the whole. These sub-rights weave themselves into each other, and as a consequence, State action or the legislation that results in the deprivation of private property must be measured against this constitutional net as a whole, and not just one or many of its strands."

219. The right to property under Article 300-A, this Court observed, may be seen as comprising of the following sub-rights which ensure that the procedure followed is just, fair and reasonable:

"27.[…] i) duty of the State to inform the person that it intends to acquire his property - the right to notice, ii) the duty of the State to hear objections to the acquisition - the


right to be heard, iii) the duty of the State to inform the person of its decision to acquire - the right to a reasoned decision, iv) the duty of the State to demonstrate that the acquisition is for public purpose - the duty to acquire only for public purpose, v) the duty of the State to restitute and rehabilitate - the right of restitution or fair compensation,

vi) the duty of the State to conduct the process of acquisition efficiently and within prescribed timelines of the proceedings - the right to an efficient and expeditious process, and vii) final conclusion of the proceedings leading to vesting - the right of conclusion."

220. The interpretation of Article 39(b), both as a pre-cursor to the protection of Article 31C and as an aspirational Directive Principle, cannot run counter to the constitutional recognition of private property. To hold that all private property is covered by the phrase "material resources of the community" and that the ultimate aim is state control of private resources would be incompatible with the constitutional protection detailed above.

Determining the 'materiality' and 'community element' of the resource

221. We have established above that a construction of Article 39(b) which provides that all private property is included within the ambit of Article 39(b) is incorrect. However, there is no bar on the inclusion of private property as a class and if a privately owned resource meets the qualifiers of being a 'material resource' and 'of the community', it may fall within the net of the provision. We agree with the formulation of Mr Zal Andhyarujina, learned senior counsel that "material resources of the community" refers to either natural resources (which are those of the nation) or those resources which in a large sense can be said to be of community, even though they may be in private hands.

222. The materiality of a privately owned resource and whether it has a community element cannot be determined in a vacuum and must be identified on a case-by-case basis. The underlying reference orders, limit our mandate to examining the correctness of the interpretation in Ranganatha Reddy and Sanjeev Coke, without assessing the applicability of Article 39(b) to any specific resources or legislation.

We may, therefore, only outline guiding principles to determine whether a particular privately owned resource falls within the fold

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of the provision. The following factors may be borne in mind while determining whether the resource constitutes a 'material resource of the community':

The nature of the resource and its inherent 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 owners.

223. There are various forms of resources, which may be privately owned, and inherently have a bearing on ecology and/or the well-being of the community. Such resources fall within the net of Article 39(b).

To illustrate, non-exhaustively, there may exist private ownership of forests, ponds, fragile areas, wetlands and resource-bearing lands.

Similarly, resources like spectrum, airwaves, natural gas, mines and minerals, which are scarce and finite, may sometimes be within private control. However, as the community has a vital interest in the retention of the character of these resources, they fall within the ambit of the expression "material resources of the community".

224. We may refer to the Public Trust Doctrine that has been evolved by this Court in a consistent line of precedent, to better understand the 'community' element of such resources. 156 This doctrine provides that the State holds all natural resources as a trustee of the public and must deal with them in a manner consistent with the nature of the trust. The doctrine was introduced to Indian jurisprudence by a two-judge bench decision of this Court in M.C. Mehta v. Kamal Nath157 This Court, speaking through Justice Kuldip Singh, held that the doctrine is rooted in the principle that certain resources like "air, sea, waters and forests" hold such importance to the people, as a whole, that it would be unjustified to make them a subject of private ownership. This Court held that the doctrine mandates the Government to protect the resources for the enjoyment of the general public, rather than to permit their use for commercial gains.

156 M.C. Mehta v. Kamal Nath (1997) 1 SCC 388 : 1996 INSC 1482; M.I. Builders (P) Ltd. v. Radhey Shyam Sahu (1999) 6 SCC 464 : 1996 INSC 1482; Fomento Resorts and Hotels Ltd. v. Minguel Martins (2009) 3 SCC 571 : 2009 INSC 39; Intellectuals Forum v. State of A.P. (2006) 3 SCC 549 : 2006 INSC 101; Vedanta Limited v State of Tamil Nadu, 2024 INSC 175

157 [1996] Supp. 10 SCR 12 : (1997) 1 SCC 388 [22-25] : 1996 INSC 1482


Significantly, this does not mean that the state cannot distribute such resources, sometimes even to private entities, rather while distributing such resources, the state is bound to act in consonance with the principles of public trust so as to ensure that no action is taken which is detrimental to public interest.158

225. The Constitution Bench of this Court in Special Reference No. 1, adverted to above, had occasion to observe that the Public Trust Doctrine has expanded beyond resources like air, sea, water and forests, to include other resources such as spectrum which also have a community or public element. The Constitution Bench of this Court, relying on Article 39(b), held that no part of such resources can be dissipated as a matter of largess, charity, donation or endowment, for private exploitation. The considerations may be in the nature ofthe state earning revenue or to "best sub-serve the common good".

The idea, this Court held, is that one set of private citizens cannot prosper at the cost of another set of private citizens, because such resources are owned by the community as a whole.

The provision may include the 'vesting' of private resources in the state

226. Mr Zal Andhyarujina and Mr Sameer Parekh, learned counsel for the appellants contend that the wide-net cast by Justice Krishna Iyer in Ranganatha Reddy and followed in Sanjeev Coke is not the correct position of the law. However, they both conceded, as we have held above, that in certain cases, privately owned resources may be covered by Article 39(b). On the other hand, other counsel such as Ms Uttara Babbar, learned senior counsel contend that a privately owned resource can never fall within the ambit of Article 39(b). They ground this understanding in the requirement of the provision that the state must secure the "distribution" of the concerned resources, rather than the phrase "material resources of the community". They argue that the mere vesting of a private resource in the state does not constitute "distribution" and thus, it cannot fall within the net of Article 39(b). In other words, they urged that the acquisition of privately owned resources by the state is a prerequisite to the applicability of Article 39(b) and only the process of distribution which follows the acquisition is covered by the provision.

158 Centre for Public Interest Litigation v. Union of India (2012) 3 SCC 1 [74-78] : 2012 INSC 68

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227. We cannot subscribe to such a narrow interpretation of the word 'distribution' On the limited question of whether the acquisition of private resources falls within the ambit of the term 'distribution', we agree with the principles enunciated in previous decisions of this Court. The term has a wide connotation. The distribution may be piecemeal or the resource may be kept in the control of a governmental agency or a regulated private agency, so long as the benefits percolate through to the people as a common good. As noted by this Court in In Re Natural Resources, Article 39(b) only lays down a restriction on the object of the distribution, i.e. that it must be to subserve the 'common good'. However, there is no bar on the mode of distribution.

228. In some cases, the mere vesting of the resource in the hands of the government serves the 'common good', while in other cases, a resource may be distributed amongst private players to achieve this purpose. To illustrate, a large privately owned pond may be acquired and put in control of a governmental agency or a cooperative society so that the pond is preserved. Similarly, the material resource of spectrum may be auctioned to the highest bidder who may be a private company, who would then utilize the spectrum along with their technology to best subserve the common good. These are questions of economic and social policy which fall outside the ambit of judicial inquiry. As noted above, this Court must not tread into the domain of economic policy, or endorse a particular economic ideology while undertaking constitutional interpretation. 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.

Conclusion

229. In a nutshell, the answers arrived at by this Court to the reference before us may be summarised in the following terms:

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 judgement.

Thus, it is not binding on this Court;

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 judgement 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 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 nationalisation. In the specific case, the Court must determine whether the distribution 'subserves the common good'.

230. The reference is answered in the above terms. The Registry is directed to obtain administrative instructions from the Chief Justice for placing the matters before an appropriate bench.

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Nagarathna, J.

Table of Contents*

Preface: ................................................................................... 3

Reference of questions to nine-Judge Bench: ....................... 5

Re: First issue: ....................................................................... 10

The Constitution of India: A living Tree: ............................... 11

Re: Second issue: .................................................................. 20

Submissions: ......................................................................... 20

My view on the aforesaid observations: ............................... 27

From 1950 to 1991: Planned economy to Liberalization, Privatisation and Globalisation ("LPG"): ............................... 31

Back to the second issue: ..................................................... 42

10. The situs of elaboration: ........................................................ 56

11.

Articles 37, 38 and 39(b) and (c): ........................................... 58

12. Article 37: ................................................................................ 60

13. Article 38: ................................................................................ 64

14. Article 39: ................................................................................ 65

15. Ownership and Control: ........................................................ 69

16. Material resources: ................................................................ 70

17. Of the community: .................................................................. 71

18. So distributed as best to subserve the common good: ....... 88

19. Common good: ...................................................................... 91

20. Ranganatha Reddy: ............................................................... 103

21. Bhim Singhji: .......................................................................... 109

22. Sanjeev Coke: ........................................................................ 111

23. Abu Kavur Bai: ....................................................................... 115

24. Basantibai: ............................................................................. 117

25. Mafatlal: .................................................................................. 123

26. Summary of Conclusion: ....................................................... 125

27. My Views to the Conclusions arrived at by the learned Chief Justice: ......................................................................... 132

* Ed. Note: Pagination as per the original Judgment.


Preface:

One of the greatest American Judges, Justice Benjamin N. Cardozo in his book "The Nature of Judicial Process, 1932" wrote:

"The great tides and currents which engulf the rest of men do not turn aside in their course and pass the Judges by."

1.1 In the field of constitutional law, progressive and dynamic interpretation of the Constitution in light of socio-economic developments in the Country must dominate. To such an organic text as the Constitution of India, a flexible interpretation must be given which the changing times require. Neither can there be canonization of the socialist policy followed by the State nor can the principles akin to laissez faire economics be ignored at a time when they have been resurrected by the State itself to suit the developments of the economy in the Country and for the benefit of the people of India. Chief Justice Earl Warren's statement is apposite as a reminder to our judicial conscience: (Fortune, November 1955)

"Our Judges are not monks or scientists, but participants in the living stream of our national life, steering the law between the dangers of rigidity on the one hand and of formlessness on the other. Our system faces no theoretical dilemma but a single continuous problem: how to apply to ever-changing conditions the never-changing principles of freedom."

1.2 Can principles of liberalization, privatisation and globalisation adopted in India since the year 1991, reforms in the economy and structural changes that have been brought about in these last three decades hold a mirror against the socio-economic policies that were followed in the decades immediately after India attained independence? As a result, can the judgments of this Court which interpreted the Constitution to be compatible with the policies of the State then be considered to be "a disservice to the broad and flexible spirit of the Constitution" and the authors of the said judgments being critiqued today?

1.3 I have perused the erudite and comprehensive opinion authored by Hon'ble the Chief Justice of India Dr Dhananjaya

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Y. Chandrachud on the questions referred to this nine-Judge Bench. I have also perused the opinion proposed by learned brother Dhulia, J.

The letter and spirit of the judgment of the learned Chief Justice has ignited me to pen a separate opinion, concurring with his opinion on certain issues while giving my own views on certain other aspects which is also my response to learned brother Dhulia, J.'s views.

1.4 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.

Reference of questions to nine-Judge Bench:

The genesis of the reference of the questions for consideration could be traced to the order dated 01.05.1996 passed by a three-Judge Bench of this Court reported in Property Owners' Association vs. State of Maharashtra, (1996) 4 SCC 49 ("Property Owners' Association"). The said order was followed by an order dated 21.03.2001 passed by a five-Judge Bench of this Court in the very same case (SLP (C) No.5302 of 1992 with connected matters); which for immediate reference is extracted as under:

"In these cases the main challenge is to constitutional validity of Chapter-VIIIA which was inserted in 1986 in the Maharashtra Housing and Area Development Act, 1976 which, inter alia, provided for the acquisition of certain properties on payment of hundred times the monthly rent for the premises. By the said amendment, Section - 1A was also inserted in that Act and it contains a declaration that the Act is for giving effect to the policy of the State towards securing the principles specified in Clause(b) of Article 39 of the Constitution of India. In view of Article 31C of the Constitution, the contention of the State was that the validity of any part of the statute on the ground that it violated Article 14 or 19 of the Constitution, was not permissible.

The case was heard by a Bench of Three Judges. At that time on behalf of the appellants a contention was sought


to be raised, inter alia, to the effect that Article 31C did not survive because of the events subsequent to the decision in Kesavananda Bharati's case 1973 (4) SCC 225. It was also submitted before that Bench that the doctrine of revival, as it applied to ordinary statutes, did not apply to the Constitutional Amendment and when a part of the Forty-second Amendment, which amended Article 31C, had been held to be invalid it did not result in the automatic revival of the unamended Article 31C.

In view of the aforesaid contention which was raised, by order dated 1stMay, 1996 reported in 1996 (4) SCC 49, the matter was referred to a larger Bench of not less than five Judges for hearing and deciding these matters.

We heard the counsel at length on various issues which arise in these cases. One of the points which arises for consideration relates to the interpretation of Article 39(b) of the Constitution. In State of Karnataka and Anr. Etc. vs. Shri Ranganatha Reddy and Anr. Etc. (1978) 1 SCR 641 validity of Karnataka Contract Carriages (Acquisition) Act, 1976 was challenged and the question which arose was whether the State Government could acquire and then transfer counter-signed portions of Inter State permits to Road Transport Corporation. Two judgments were delivered in that case. Krishna Iyar, J. for himself and two other learned Judges, while concurring with the decision of Untwalia, J. (with whom three other Judges agreed), interpreted Article 39(b) of the Constitution and then came to the conclusion that the Act had direct nexus with Article 39(b) and by virtue of Article 31C its validity could not be challenged on the ground of its being violative of Article 14 or 19(1) (f) of the Constitution. Untwalia, J. in his judgment observed that "we do not consider it necessary to express any opinion with reference to Article 31C read with Clauses (b) and (c) of Article 39 of the Constitution. Our learned brother Krishna Iyer, J. has prepared a separate judgment especially dealing with this point. We must not be understood to agree with all that he has said in his judgment in this regard".

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The need to interpret Article 39(b) again arose in the case of Sanjeev Coke Manufacturing Company vs. Bharat Coking Coal Ltd. and Anr. (1983) 1 SCR 1000. While upholding the validity of Coking Coal Mines (Nationalisation) Act, 1972 and the two other connected enactments the Constitutional Bench adopted the interpretation of Article 39(b) as enunciated by Krishna Iyer, J. in Ranganatha Reddy's case (supra). This interpretation has also been followed by a Division Bench of this Court in State of Maharashtra and Anr. vs. Basantibai Mohanlal Khetan and Ors. (1986) 2 SCC 516.

The interpretation put on Article 39(b) by Krishna Iyer, J. in Ranganatha Reddy's case was not specifically assented to in the majority decision but in Sanjeev Coke's case

(supra) it is the observations in the judgment of Krishna Iyer, J. which have been followed.

Having heard the counsel at length, we are of the opinion that the views expressed in Sanjeev Coke's case required reconsideration keeping in view the importance of the point in issue, namely, the interpretation of Article 39(b) it will appropriate if these cases are heard by a larger Bench of not less than Seven Judges.

The papers be laid before the Hon'ble the Chief Justice for appropriate orders."

2.1 Later, on 20.02.2002, a seven-Judge Bench passed an order referring the matter to a larger Bench. That is how these cases are before this nine-Judge Bench. For ease of reference the order dated 20.02.2002 is extracted as under:

"A Bench of five learned Judges has referred to a Bench of seven learned Judges these matters for the reason that it was of the opinion that the view expressed in the case of Sanjeev Coke Manufacturing Company vs. Bharat Coking Coal Ltd. &Anr. (1983 (1) SCC 147) required consideration.

Put shortly, the question is as to the interpretation of Article 39(b) of the Constitution which speaks of the distribution for the public good of the ownership and


control of the material resources of the community. In State of Karnataka vs. Ranganatha Reddy &Anr. (1978 (1) SCR 641), two judgments were delivered. In the judgment delivered by Krishna Iyer, J., speaking for himself and two other judges, the view was taken that material resources of the community covered all resources, natural and man-made, publicly and privately owned. The other judgment, delivered by Untwalia, J., on behalf of himself and three other Judges, did not consider it necessary to express any opinion with regard to Article 39(b); it was, however, made clear in this, the majority judgment that the learned Judges did not subscribe to the view taken in respect of Article 39(b) by Krishna Iyer, J.

The view taken by Krishna Iyer, J. in the case of Ranganatha Reddy was affirmed by a Constitution Bench in the case of Sanjeev Coke (aforementioned).

Now, in the course of the argument before us, the learned Solicitor General, appearing for the Union of India and the State of Maharashtra, has drawn our attention to the judgment of a Bench of nine learned Judges in the case of Mafatlal Industries Ltd. vs.

Union of India (1997 (5) SCC 536). Speaking for himself and four other Judges, Jeevan Reddy, J. said, "That the material resources of the community are not confined to public resources but include all resources, natural and man-made, public and private owned is repeatedly affirmed by this Court.", and reference was made to the cases of Ranganatha Reddy, Sanjeev Coke and State of Tamil Nadu vs L.Abu Kavur Bai & Ors. (1984 (1) SCC 515).

Having given due consideration, we are of the opinion that this interpretation of Article 39(b) requires to be reconsidered by a Bench of nine learned Judges: we have some difficulty in sharing the broad view that material resources of the community under Article 39(b) covers what is privately owned. G

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Given that there is some similarity in the issues here involved and in the case of I.R.Coelho vs. State of Tamil Nadu (1999 (7) SCC 580) which already stands referred to a larger Bench, preferably of nine learned Judges, we are of the view that these matters should be heard by a Bench of nine learned Judges immediately following the hearing in the case of I.R.Coelho.

Given the importance of the matter and the fact that constitutional issues are involved in I.R.Coelho as also in this case, we direct that parties shall file skeleton arguments within eight weeks.

The papers shall be placed before the Hon'ble the Chief Justice for appropriate directions."

The aforesaid orders of reference provide the canvas in respect of which the issues have to be considered and answered.

Therefore, the facts narrated by the learned Chief Justice will not have any relevance to the merits of the dispute vis-à-vis the provisions of the Act under challenge.

2.2 The learned Chief Justice has framed and considered two broad issues in his proposed judgment, which are extracted hereinunder:

"a. Whether Article 31C (as upheld in Kesavananda Bharati) survives in the Constitution after the amendment to the provision by the forty-second amendment was struck down by this Court in Minerva Mills?

b. Whether the interpretation of Article 39(b) adopted by Justice Krishna Iyer in Ranganatha Reddy and followed in Sanjeev Coke must be reconsidered.

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?"

Re: First issue:

I respectfullyconcur with the opinion expressed by the learned Chief Justice on the first issue. I am in complete accord with the


reasoning that, in the absence of any indication that Parliament intended a "repeal without substitution," the original text of Article 31C as it existed before the Constitution (Forty-Second) Amendment Act, 1976 must be reinstated following the invalidation of the said amendment. In Minerva Mills Ltd. vs. Union of India, AIR 1980 SC 1789 ("Minerva Mills"), when the amendment was struck down for deviating from constitutional principles, the logical consequence that must follow the declaration of invalidity of the amendment is to revert to those original principles which the amendment deviated from. This is by giving effect to Article 31C, to the extent it was upheld in H.H.

Kesavananda Bharati Sripadagalvaru vs. State of Kerala, AIR 1973 SC 1461 ("Kesavananda Bharati").This represents a return to the Constitution's original text, aligning with the basic structure of the Constitution. Consequently, invalidating Section 4 of the Forty- Second Amendment should automatically result in the restoration of the unamended Article 31C.

The Constitution of India: A living Tree:

Before dealing with the second issue, I would like to preface the same with the living tree doctrine of our Constitution.

4.1 Emile Durkheim, the French sociologist who formally established the academic discipline of Sociology and is commonly cited as one of the principal architects of modern Social Science, likened society to a living organism. Given that Constitutions are built to clothe societies with order, it is only logical that they be treated as living organisms capable of growth and change. It involves an understanding of the Constitution as an evolving and organic instrument. For the living tree theorists, it matters little what the intentions were at the time of Constitution making. What matters the most is how the Constitution can be interpreted to contain rights in their broadest realm. The doctrine suggests that the past plays a critical but non-exclusive role in determining the contents of the Constitution. Although the rights and freedoms under a Constitution may be rooted in the past and historically determined, they cannot be considered to be frozen by particular historical anomalies.

4.2 As per Woodrow Wilson, former President of the United States of America, "a Constitution must of necessity be a vehicle of

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life; that its substance is the thought and habit of the nation and as such it must grow and develop as the life of the nation changes."

4.3 In India, the living tree doctrine has been largely inspired from Canadian jurisprudence. Its origin in the judicial record seems to be in a 1938 Federal Court judgment where the then Governor- General of India referred a question to the Court relating to the constitutionality of the Central Provinces and Berar Sales of Motor Spirit and Lubricants Taxation Act, 1938. While expanding upon what canons of interpretation and construction the Court would use to answer the question, Sir Maurice Gwyer CJ stated that "a Constitution of government is a living and organic thing, which of all instruments has the greatest claim to be construed ut res magis valeat quampereat (in a manner in which it becomes operative rather than null)."The Court urged that in the case of federal constitutions, "a broad and liberal spirit should inspire those whose duty it is to interpret it" but they were not "free to stretch or pervert the language of the enactment to further any interest."

4.4 Subsequently, in the landmark judgment of State of West Bengal vs. Anwar Ali Sarkar, AIR 1952 SC 75 ("Anwar Ali Sarkar"), this Court struck down the West Bengal Special Courts Act, 1950, holding that it violated Article 14 of the Constitution. Vivian Bose J. in a separate judgment stated that provisions of the Constitution must not be interpreted "without regard to the background out of which they arose."Justice Bose articulated that the Constitution must be interpreted progressively to "give life to a great nation and order its being,"and not in a manner as would relaunch "discarded tools." While being conscious that people who forget their history are condemned to repeat it, he emphasised that a Constitution must be interpreted having regard not only to the historical circumstances under which it emerged, but also in a manner as would "mould the future as well as guide the present." It may be apposite to quote a paragraph from Justice Bose's erudite judgment, which brings out many elements embodied in the living tree doctrine:


"I cannot blot out their history and omit from consideration the brooding spirit of the times. They are not just dull, lifeless words static and hide-bound as in some mummified manuscript, but, living flames intended to give life to a great nation and order its being, tongues of dynamic fire, potent to mould the future as well as guide the present. The Constitution must, in my judgment, be left elastic enough to meet from time to time the altering conditions of a changing world with its shifting emphasis and differing needs."

4.5 Almost two decades later, in Kesavananda Bharati, the Court utilised the living metaphor to decide upon the amending powers of the Parliament. The Court held that the Parliament could amend the Constitution even to abridge fundamental rights, "as long as the basic structure of the Constitution is retained." In reaching this conclusion, the Court referred to multiple iterations of the understanding of the living constitution.

Therefore, justification for solidifying the constituent power of the Parliament to ensure flexibility of the Constitution, was found in the living Constitution metaphor.

4.6 In Supreme Court Advocates-On-Record Association vs. Union of India,(1993) 4 SCC 441 ("Supreme Court Advocates-On-Record Association"), this Court applied this metaphor while discussing the independence of judiciary.

This Court, in addition to calling it an "ever evolving organic document," applied the living tree metaphor to the Indian Constitution as follows:

"The Framers of the Constitution planted in India a living tree capable of growth and expansion within its natural limits. It lives and breathes and is capable of growing to keep pace with the growth of the country and its people."

4.7 Further, in Zee Telefilms Ltd. vs. Union of India, AIR 2005 SC 2677 ("Zee Telefilms"), the living Constitution metaphor was employed in adopting an expansive understanding of the term "State" as appearing under Article 12 of the Constitution.

It was held that the term "other authorities" was included under

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Article 12 at the time of framing of the Constitution with a limited objective of granting judicial review of actions of such authorities which are created under the Statute and which discharge State functions. The schism between the private and the public had become obscure with time and the Court must take note of such changes. Therefore, the Court concluded that the position of various institutions in the continuum between the private and the public need to be revaluated having regard to the organic blurring of margins of the public-private dichotomy. It was laid down that the Constitution should be interpreted in light of our whole experience and not merely in that of what was the state of law at the commencement of the Constitution. That the Constitution was a "living organism" capable of change, with changing circumstances.

4.8 In further expansion of fundamental rights, this Court in Justice K.S. Puttaswamy (Retd.) vs. Union of India, (2017) 10 SCC 1 ("Puttaswamy"), held that privacy was essential to the exercise of most fundamental rights and hence, must itself be regarded as a fundamental right. While engaging in such an expansive interpretation of the constitutional provisions, the Court described the Constitution as a "living instrument" that was resilient enough to ensure its continued relevance. The Court opined that the Constitution is a "sacred living document susceptible to appropriate interpretation of its provisions based on changing needs." This Court referred to a "brooding spirit" with several qualities which inspired the Constituent Assembly and was given the corporeal form of the Constitution of India.

4.9 The living tree metaphor is also evident in several other decisions of this Court, such as, National Legal Services Authority vs.

Union of India, (2014) 5 SCC 438; Joseph Shine vs. Union of India, (2019) 3 SCC 39; Navtej Johar vs. Union of India,

(2018) 10 SCC 1; Anuj Garg vs. Hotel Association of India, AIR 2008 SC 63; Secretary, Ministry of Defence vs. Babita Punia, (2020) 7 SCC 469; Lt. Colonol Nitisha & Others vs.

Union of India, AIR 2021 SC 1797.

4.10 Thus, we see that throughout the years, this Court has applied the living metaphor in the adjudication of a wide spectrum of controversies. While toying with different variants of the living


Constitution metaphor, the Court has consistently emphasised on two of the principal elements of the living tree doctrinethe original understanding in the roots of the constitutional tree; and the possibility of growth and development, within its natural limits.

4.11 Such is the balance between the two contesting theories of originalism and the living Constitution. Dr. Jack M. Balkin, a Professor at Yale Law School, contends that the basic idea of constitutional interpretation is that interpreters must be faithful to the original meaning of the constitutional text and to the principles that underlie the text. But, he suggests, fidelity to the original meaning does not require fidelity to the original expected application. Therefore, original expected application is merely evidence of how to apply text and principle. He explains,

"Each generation is charged with the obligation to flesh out and implement text and principle in their own time. They do this through building political institutions, passing legislation, and creating precedents, both judicial and nonjudicial. Thus, the method of text and principle is a version of framework originalism and it views living constitutionalism as a process of permissible constitutional construction."

4.12 I find that this idea is most useful in interpreting Directive Principles of State Policy. Evidently, with great foresight, theframers of our Constitution did not limit either themselves or succeeding generations to any one economic school of thought. In fact, the speeches of Dr. Ambedkar in the Constituent Assembly evince that while the economic philosophy adopted by the Government may swiftly pass from one generation to another, the ideal of economic democracy finds firm place within our Constitution. There is no strict economic diktat in the Constitution for the Parliament to follow; however, the Directive Principles act as the principles or goals that the Parliament must regard on its path to progress.

4.13 Krishna Iyer, J. adjudicated on the construction of "material resources of the community" in the backdrop of a constitutional, economic and social culture that gave primacy to the State over the individual in a broad-sweeping manner. As a matter

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of fact, the 42nd Amendment had, inter alia, inserted the word "Socialist" into the Preamble to the Constitution. By abundant caution, I must observe that "Socialist" is starkly distinguished from "Socialism", which is an economic policy of organising society and the political economy of the country. Regardless, on a conspectus understanding of all contributing factors such as the discussions in Constituent Assembly and the tide of the times that found in the broad house of economic democracy a legitimate State policy, can we castigate former judges and allege them with "disservice" only for reaching a particular interpretive outcome?

Re: Second issue:

Submissions:

Learned senior counsel and learned counsel for the intervenors contended that Article 39(b) read with Article 31C give primacy to the Directive Principles as opposed to the fundamental rights guaranteed under Articles 14 and 19. That unless a material resource is transformed as a "material resource of the community", "the ownership and control" of the said material resource cannot be distributed by the State. That there is a distinction between "material needs" and "material resources of the community". An individual's resources cannot be a part of the resources of the community. In other words, merely because an individual is a member of the community, his resources cannot be construed as resources of the community.

That "material resources of the community" must produce goods and services for the community or wealth for the community. The opinion of Krishna Iyer, J. in State of Karnataka vs. Ranganatha Reddy, AIR 1978 SC 215 ("Ranganatha Reddy") and the judgment in Sanjeev Coke Manufacturing Co. vs. Bharat Coking Coal Ltd. (1983) 1 SCC 147 : AIR 1983 SC 239 ("Sanjeev Coke") were entered in the context of nationalisation and cannot be applied in other contexts.

It was further submitted that Article 39(b) deals with "distribution of ownership and control of the material resources of the community". It does not deal with acquisition of privately owned material resources for the purpose of subsequent distribution by the State.

5.1 Learned Attorney General, Sri R. Venkataramani, leading the arguments on behalf of the respondents and intervenors


submitted that under Article 39 (b) and (c), there cannot be a narrow reading of the expression "material resources of the community". That there cannot be any limitation on the said expression. Sri Rakesh Dwivedi, learned senior counsel appearing for the State of West Bengal contended that the expression "material resources" excludes only resources which are meant for personal use; otherwise all other resources would come within the scope and ambit of the aforesaid expression. The term "community" cannot be equated with State/Government.

It is a term of wider import and encompasses all citizens who would form a community of individuals. Similarly, the expression "so distributed as best to subserve the common good" must be given the widest interpretation. Also, Article 39 (b) and (c) must be read in the context of Article 38 which Articles are meant to achieve economic justice. Sri Gopal Sankarnarayan contended that if "ownership and control of material resources of the community" excluded private ownership, there would be no challenge under Article 19 and the protection of Article 31C then be redundant.

5.2 With regard to the second issue the learned Chief Justice in paragraph 202 has raised the following two questions after an elaborate discussion of the relevant judgments on the subject:

Do all privately owned resources fall within the ambit of "material resources of the community"?

Is the acquisition of private resources by the State a form of distribution recognised by Article 39(b)?

5.3 It is observed by the learned Chief Justice that Article 39(b) is not a source of legislative power and the power to acquire private resources, in certain situations, continues to be traceable to other provisions in the Constitution, including the sovereign power of eminent domain, which is in Entry 42 - List III of the Seventh Schedule of the Constitution. Further, even if a law is in furtherance of Article 39(b) and protected by Article 31C, it is susceptible to a challenge to its constitutionality under other provisions of the Constitution including Article 300A.

5.4 In the backdrop of the above principles, the question whether all private properties are covered within the ambit of Article

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39(b) has been considered. There can be no cavil with regard to the five significant elements emerging from Article 39(b), but the question considered is, whether, privately owned resources fall within the ambit of the phrase "material resources of the community". In the context of the definition of the said expression, it is noted that four opinions, namely, of Krishna Iyer, J. in Ranganatha Reddy; Chinnappa Reddy, J. speaking for the Bench in Sanjeev Coke; Fazl Ali, J. speaking for the Bench in State of Tamil Nadu vs. L. Abu Kavur Bai, (1984) 1 SCC 515 ("Abu Kavur Bai") and Venkataramiah, J. speaking for the Bench in State of Maharashtra vs. Basantibai Mohanlal Khetan, (1986) 2 SCC 516 ("Basantibai") are doubted in the reference before us. Therefore, the proposed judgment of the learned Chief Justice considers the meaning of the expression "material", "resources" and "community" independently to conclude that none of the definitions indicate that the phrase excludes "private property" from the provision. However, a distinction is sought to be made between the following two propositions: holding that "private property" may form part of the phrase "material resources of the community" on the one hand and that "all private properties" fall within the net of the phrase on the other hand.

5.5 It is observed by the learned Chief Justice that the opinion by Krishna Iyer, J. in Ranganatha Reddy and the consequent observations in Sanjeev Coke by Chinnappa Reddy, J.fell into erroras the said judgments cast the net wide by holding that all resources which meet "material needs" are covered by the phrase. That in Sanjeev Coke, it was observed by this Court that "all things capable of producing wealth of the community" fall within the ambit of the phrase. In other words, all resources of the individuals are consequentially the resources of the community.

5.6 While interpreting Article 39(b) of the Constitution, it is opined by the learned Chief Justice that if Article 39(b) was meant to include all resources owned by an individual, it would state that the "ownership and control of resources is so distributed as best to subserve the common good". Similarly, if the provision were to exclude privately owned resources, it would state "ownership


and control of resources of the State …." instead of its present phrasing. The use of the word "of the community" rather than "of the State" indicates a specific intention to include some privately owned resources. Therefore, it is opined that not all privately owned resources fall within the ambit of the phrase.

However, privately owned resources are not excluded as a class and some private resources may be covered. Of course, they must be a "material" resource and they must be "of the community". Therefore, according to the learned Chief Justice the judgments doubted in the reference order are incorrect to the extent that they hold that "all resources" of an individual are part of the community and thus, all private property is covered by the phrase "material resources of the community".

5.7 I again have no cavil to the aforesaid discussion but what follows is the observation of the learned Chief Justice that the interpretation given by Krishna Iyer, J. in Ranganatha Reddy and Chinappa Reddy, J. in Sanjeev Coke, endorse a particular economic ideology and structure for our economy.

That in substance the authors of those judgments namely, Krishna Iyer, J. in Ranganatha Reddy and Bhim Singhji vs.

Union of India, AIR 1981 SC 234 ("Bhim Singhji") and Chinappa Reddy, J. in Sanjeev Coke were influenced by a particular school of economic thought, which prioritised the acquisition of private properties by the State being beneficial for the nation. That these two judges consistently referred to the vision of the framers of the Constitution as the basis to advance their economic ideology as the guiding principle of the provision.

5.8 As opposed to the above, Dr. Ambedkar has been quoted by the learned Chief Justice to state that economic democracy in India is not tied to one economic structure, such as Socialism or Capitalism, but to the aspiration of a welfare state. The learned Chief Justice further opines "thus, the role of this Court is not to lay down economic policy, but to facilitate this intent of the framers to lay down the foundation for an "economic democracy".

The Krishna Iyer doctrine does a disservice to the broad and flexible spirit of the Constitution." This is the finding on the first question of the second issue.

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My view on the aforesaid observations:

5.9 While considering the metamorphosis of the Indian economy from the early challenges to the transition towards liberalization and market-based reforms and from the dominance of public investment to the co-existence of public and private investment, it has been observed by the learned Chief Justice that "the doctrinal error in the Krishna Iyer approach was, postulating a rigid economic theory, which advocates for greater state control over private resources, as the exclusive basis for constitutional governance. … a single economic theory, which views the acquisition of private property by the state as the ultimate goal, would undermine the very fabric and principles of our constitutional framework."The above comments on Krishna Iyer, J. are in my opinion unwarranted and unjustified.

5.10 It is a matter of concern as to how the judicial brethren of posterity view the judgments of the brethren of the past, possibly by losing sight of the times in which the latter discharged their duties and the socio-economic policies that were pursued by the State and formed part of the constitutional culture during those times.

Merely because of the paradigm shift in the economic policies of the State to globalisation and liberalisation and privatisation, compendiously called the "Reforms of 1991", which continue to do so till date, cannot result in branding the judges of this Court of the yesteryears "as doing a disservice to the Constitution".

5.11 At the outset, I may say that such observations emanating from this Court in subsequent times creates a concavity in the manner of voicing opinions on judgments of the past and their authors by holding them doing a disservice to the Constitution of India and thereby implying that they may not have been true to their oath of office as a Judge of the Supreme Court of India.

I may say that with passage of decades after the enforcement of the Constitution and on India becoming a Republic, the transformative impact of the Constitution has been deep and pervasive not only on governance in the Country, whether at the Central, State or local level but its impact on the Indian judiciary is also a significant aspect of Indian constitutional development.

As a result, the basic features of the Constitution including the Preamble, Fundamental Rights, Directive Principles of State


Policy, Separation of Powers, Judicial Review and Independence of the judiciary have impacted both governance as well as the judiciary.Bearing in mind the goals of the Constitution as enumerated in the Directive Principles of State Policy, Parliament and State Legislatures have made legislation for giving effect to such goals and since the inception of our Republican State it is the obligation on the part of this Court to consider the correctness of such legislation in light of the vision of the framers of the Constitution as well as the transformative nature of the Indian Constitution and the intent of the policy makers and the law. It is in the above background that the Judges of this Court have been deciding constitutional issues over the decades. Of course, no particular line of thinking is static and changes are brought about by the State by bearing in mind the exigencies of the times and global impact particularly on the Indian economy.

Such attempts to create an environment suitable to the changing times have to be also appreciated by the judiciary, of course, by suitably interpreting the Constitution and the laws. But by there being a paradigm shift in the economy of this Country, akin to Perestroika in the erstwhile USSR, in my view, neither the judgments of the previous decades nor the judges who decided those cases can be said to have done a "disservice to the Constitution". The answer lies in the obligation that this Court, in particular, and the Indian judiciary, in general, has in meeting the newer challenges of the times by choosing only that part of the past wisdom which is apposite for the present without decrying the past judges. I say so, lest the judges of posterity ought not to follow the same practice. I say that the institution of the Supreme Court of India is greater than individual judges, who are only a part of it at different stages of history of this great Country! Therefore, I do not concur with the observations of the learned Chief Justice in the proposed judgment. I say so for the following narration.

From 1950 to 1991: Planned economy to Liberalization, Privatisation and Globalisation ("LPG"):

Much like many countries finding liberation from colonial rule, the immediate task before independent India was to alleviate its population out of poverty and systematically organize its economy. To that end,

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India adopted a mixed economy model wherein both public and private sectors could coexist. Turning to command economies, the Indian State sought to triumph over inter-regional disparities in resources and development through economic planning, an approach that had proven successful in command economies to bring sustained transformation of resources and implementation of plans in national interests rather than inefficient allocation of resources.

6.1 Buttressed by the Bombay Plan, proposed by influential industrialists, the Industrial Policy Resolution of 1948 and the over-expansive vision of the State shared by nearly every political party, the early years of the Indian Government had it play a dominant role in the setting up of heavy enterprises and being a controller of the economy and resources. Consequently, the market was not merely strongly regulated but also led by the public sector manifesting as state interventions and regulations with the aim of protecting indigenous industries.

6.2 With that in sight, the Planning Commission was set up in 1950 to oversee the entire range of planning, including resource allocation, implementation and appraisal of fiveyear plans under the leadership of the first Prime Minister Jawaharlal Nehru. In 1951, deterred by significant loss of foreign reserves on food import, India's First five-year plan focused on agriculture and irrigation to boost farm output.

Some scholars tout this as a success as the economy grew at 3.6%, instead of the target of 2.1%. Soon thereafter, the Second Plan, launched in 1956, saw deficit financing as an acceptable tool for much needed rapid industrialization and self-reliance focusing on heavy industries and capital goods.

Coupled with the Industrial Policy Resolution 1956, the Second Plan initiated the development of public sector and ushered in the licence Raj. The resolution, adopted by the Parliament in 1956, enumerated as a national objective the establishment of a socialist pattern of society and categorized industries into three groups:

- Schedule A: Industries which were to be exclusively in the public sector. These were industries of basic and strategic importance;


- Schedule B: Industries that were to be progressively stateowned and the State would generally set up new enterprises but in which private enterprise would be expected only to supplement the state effort; and

- Schedule C: All the remaining industries, and their future development was, in general, left to the initiative and development of private sector. Though, it was left open to the State and the private sector was still subject to the licence Raj.

This over-expansion State control enabled it to undertake large scale projects without either reliance on or negotiations with or even competition from the private sector. The construction of the Bhakra-Nangal Dam, Hirakund Dam etc. as well as steel plants in Rourkela, Bhillai and Durgapur were deified by the State as new "temples of a modern India".

6.3 However, the substantial peril of curbing the invisible hand of the economy and enterprising spirit of the private sector was that the economic policy stuck reserved and restricted India to the earmarked industries and ignored new technologies, innovations and domains that, though transforming, were not in the horizons of bureaucracy. On the other hand, funds were also substantially reallocated away from agriculture, thereby, causing food shortages and a spike in inflation. Furthermore, the State was forced to import foodgrains which depleted foreign exchange reserves.

6.4 Under the leadership of Prime Minister Lal Bahadur Shastri, the Indian Government was convinced that in the domain of agriculture it needed to loosen its tight strings on centralized planning and price controls and instead focus on technological development. With India transforming into a food-sufficient and self-reliant entity after the Green Revolution and introduction of the Minimum Support Price regime, the role of the Planning Commission was trimmed.

6.5 In the second half of 1960s, the severe drought of 1965 increased food grain imports and consequently, exacerbated the balance of payments crisis. To counter the same, on June,

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1966, the Indian Government devalued the Indian rupee by a sharp 57%, thereby accelerating inflation while it was actually aimed at boosting exports.

6.6 Monumentally, to expand the sources of credit and monitor the banking system as per the control of the Government's planning and economic policy, the Government nationalized fourteen private banks on 20th July 1969. It was thought that the aim of financial inclusion and ready access to credit for small agriculturalists could be achieved by State control of the banking system. Agnostic of immediate profit motive and creditworthiness, Banks operated and expanded to the "un-banked." However, in due course, it has been observed that limited competition and poor credit assessment severely hampered the efficiency and health of the banking system.

6.7 Around the 1980s, there had been a rising realization of the cons of protectionist policies and the merits of a market-led economy. Therefore, the sixth five-year plan marked the beginning of economic liberalization in India and outlined a series of measures aimed at boosting the economy's competitiveness.

Notable steps included removal of large-scale price controls, reductions in import duties and the beginning of the end of licence Raj. A significant deviation from the policy of 1956, a joint venture between the Government of India and Suzuki - a Japanese automaker - rolled off the assembly line in 1983, the first Maruti car. In the following years, large-scale efforts were undertaken to usher in information technology and telecom revolutions in the country along with promoting exports and the utility of foreign investment and capital goods.

6.8 The political economy of the country from 1950s till the late 1980s had made apparent that the underlying political current and rhetoric of an idyllic but industrial society based on a socialistic pattern had been failing to deliver on the hopes of a modern lifestyle and Indians' entrepreneurial spirit. This is despite the five technological missions initiated in mid-1980s. It is not uncertain that the deficit spending of the 80s led by high external debt, double-digit inflation, short-term debt reaching 147% of foreign exchange reserves, etc. shine a light on macroeconomic crisis that India found itself in at the end of the 1980s. In this


backdrop, amidst a series of negotiations and policy reforms, Prime Minister P.V. Narasimha Rao spoke to the nation on July 9, 1991 of the impending need to bring in far-reaching changes and reforms that would bolster the economy and take it to a modern globalized world. Recounting the difficulties, he said:

"…For the last eighteen months, there has been paralysis on the economic front. The last two governments postponed taking vital decisions.

The fiscal position was allowed to deteriorate. The balance-of-payment crisis became unmanageable.

Non-resident Indians and foreign leaders became more and more reluctant to lend money to India.

Consequently, India's external reserves declined steeply, and we had no foreign exchange to import even such essential commodities as diesel, kerosene, edible oil, and fertiliser. The net result was that when we came to power, we found the financial position of the country in a terrible mess. …"

6.9 The New Industrial Policy of 1991 put an end to the shackles that bound the Indian industry into inefficiency and noncompetitiveness. While the opening up of the economy was gradual, the Monopolies and Restrictive Trade Practices was diluted allowing market players to scale up without government approval and automatic approvals for Foreign Direct Investment (FDI) with majority holding and qualifiable foreign technological agreements were assured along with many other solutions. One of the many recognizable inflection points in India is the Budget Speech of 1991 delivered by India's then Finance Minister, Dr.

Manmohan Singh, July 24th, 1991, who whilst paraphrasing Victor Hugo said, "No power on earth can stop an idea whose time has come."

6.10 The reforms that were to follow have been colloquially termed as Liberalisation, Privatisation and Globalisation. In practice, the country saw the dismantling of licence Raj, some years later an active disinvestment framework and quite openly, an expression of willingness to let globalized market forces signal directions to the economy. Much need not be laboured on this aspect.

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6.11 Having seen India's potential and political commitment to a modern market economy, the International Monetary Fund (IMF) provided assistance leading to macroeconomic stabilization. In the years since, several policies such as import liberalization, unrestricted FDI inflows in some sectors, tax exemptions, promotion of exports, etc. have been adopted which would have seemed antithetical to the very idea and core of Indian economy and societal structure to the most earnest well-wishers of India only some decades ago.

6.12 While the status of health or inequity indicators is not being used as an aid for constitutional interpretation, I must also note that the "LPG policy" of 1991 can also be credited for providing the much needed impetus to the Central and State Governments for fulfilling several goals set out in the Directive Principles of State Policy which had been earlier difficult to achieve.

6.13 The golden thread throughout India's economic history postindependence has been to focus on a transformative socioeconomic growth of the people of India by way of experimentation through various plans, projects and pipe dreams. The mid-1980s was a turning point when the need for innovation, modernisation and concomitant avenues for development ushered in the Reforms of 1991 as the country faced shortages in foreign exchange reserves and foreign debts were mounting and there was a crisis of balance of payments. There has been no looking back since then except to usher in various schemes/ programmes for the welfare of the people which earlier had not really percolated to the deserving and eligible citizens for reasons which are well known.

6.14 It is in the period between the late 1960s and early 1980s that this Court gleaned the thrust to economic policies of the State and sought to provide a judicial imprimatur for the success of the economic policies. Thus, bank nationalisation, road transport nationalisation, amendments to Land Reforms laws, urban land ceiling laws, acquisition of lands, abolition of land tenures etc. were upheld by this Court while at the same time tightening the powers of amendment of the Constitution.

This was by the evolution of the basic structure doctrine which found its strong voice in Kesavananda Bharati and


perpetrated in Minerva Mills and Waman Rao vs. Union of India, AIR 1981 SC 271 ("Waman Rao") in the year 1980 and in subsequent decades.

6.15 One cannot lose sight of the precarious condition India was in when it gained Independence in the August, 1947 and at the dawn of the Republic in January, 1950. The provisions of the Constitution have hence sought to achieve a transformation in the socio-economic conditions of the people of India given the situation as it emerged in the colonial period. The transition of the Indian economy towards privatization and liberalization is ultimately for the welfare of the people of India. Heavy capital investment in the public sector in the early decades after Independence and its failure to yield good results in the subsequent decades and the move towards disinvestment and privatization are all experiments in achieving the constitutional goals which are static but the path to achieve them may vary with the passage of time.It is in the above backdrop that the judgments of this Court must be viewed rather than viewing the Judges who authored the judgments as doing a disservice to the Constitution of India.

Back to the second issue:

The further observations of the learned Chief Justice are that "however, there is no bar on the inclusion of private property as a class and if privately owned resource meets the qualifiers of being a "material resource" and "of the community", it may fall within the net of the provision. Thus, Mr. Zal Andhyarujina's formulation that "material resources of the community" refers to either natural resources (which are those of the nation) or those resources which in a large sense can be said to be of community, even though they may be in private hands: not be right".

7.1 In order to determine whether a particular privately owned resources falls within the fold of Article 39(b), certain factors have been delineated by the learned Chief Justice so as to constitute the same as a "material resource of the community", namely:

(a) nature of the resource and inherent characteristics;

(b) the impact of the resource on the well-being of the community;

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(c) the scarcity of the resource; and

(d) the consequences of such a resource being concentrated in the hands of the private owners.

7.2 The fact that the community may have a vital interest in the character of the resources and their retention in the private hands would make them fall within the ambit of the expression "material resources of the community" is the test which has been innovated. Placing reliance on the Public Trust Doctrine, it is observed by the learned Chief Justice that the doctrine mandates the government to protect the resources for the enjoyment of the general public, such as, forests, mineral bearing lands etc. rather than to permit their use for commercial gains. Significantly, this does not mean that the State cannot distribute such resources, sometimes even to private entities, rather while distributing such resources, the state is bound to act in consonance with the principles of public trust so as to ensure that no action is taken which is detrimental to public interest (vide Centre for Public Interest Litigation vs. Union of India, (2012) 3 SCC 1, paras 74-78 ("Centre for Public Interest Litigation")) are the observations of the learned Chief Justice.

7.3 Reliance is placed by the learned Chief Justice on In Re: Natural Resources Allocation, Special Reference No.1 of 2012 ("Natural Resources Allocation"), reported in (2012) 10 SCC 1, wherein it was observed that the Public Trust Doctrine has expanded beyond resources like air, sea, water and forests, to include other resources such as spectrum which also have a community or public element. That no part of such resources can be dissipated as a matter of largess, charity, donation or endowment, for private exploitation.That one set of private citizens cannot prosper at the cost of another set of private citizens, because such resources are owned by the community as a whole.

7.4 On the aspect of "vesting" private resources in the State, adverting to the arguments of Mr. Zal Andhyarujina and Mr.

Sameer Parekh, as well as Ms. Uttara Babbar, learned senior counsel, it is opined by the learned Chief Justice that their argument that the acquisition of the privately owned resource is a prerequisite to the applicability of Article 39(b) and only the


process of distribution which follows the acquisition is covered by the provision, is a narrow interpretation of the word "distribution".

Referring to Natural Resources Allocation, it is observed that Article 39(b) only lays down a restriction on the object of the distribution, i.e., it must be to subserve the "common good".

However, there is no bar on the mode of distribution. That this Court must not tread into the domain of economic policy, or endorse a particular economic ideology while undertaking constitutional interpretation. To hold that the term "distribution" cannot encompass the vesting of a private resource would amount to falling into the same error as the Krishna Iyer, J.'s doctrine, i.e. to lay down a preference of economic and social policy. Ultimately, in paragraph 229, following conclusions have been deduced by the learned Chief Justice:

"229. In a nutshell, the answers arrived at by this Court to the reference before us may be summarised in the following terms:

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 violated judicial discipline and 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 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

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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 inquiry about whether the resource in question falls within the ambit of Article 39(b) must be context-specific and subject to a nonexhaustive 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 identity resources which fall within the ambit of the phrase "material resource of the community".

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 nationalisation. In the specific case, the Court must determine whether the distribution 'subserves the common good'."

7.5 My opinion relates to the conclusion in sub-paras(d), (e) and

(f) of the above conclusions, while I am in complete agreement with sub-para (a) and I have certain observations to make on the judgments of this Court in Ranganatha Reddy, Sanjeev Coke, Abu Kavur Bai and Basantibai on the merits of the said decision.


(i) In sub-para (d) while holding that theoretically the phrase "material resources of the community" may include privately owned resources, it is also opined that 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".

(ii) In sub-para (e), while considering the question whether a resource falls within the ambit of Article 39(b), the factors to be considered have been delineated.

(iii) In sub-para (f), it is observed that vesting of the concerned resources in the state or nationalisation is covered within the connotation of the term "distribution" which has a wide connotation and can take various forms.

7.6 My immediate answer to the aforesaid conclusions is that "material resources" can, in the first instance be divided into two basic categories, namely: (i) state owned resources and,

(ii) privatelyowned resources. There can be no contra-opinion to the fact that all state-owned resources, i.e., resources which belong to the State, are essentially "material resources of the community" which are held in public trust by the State.

The State can also distribute the same in accordance with its socio-economic policy and in accordance with law aligned to the object of Article 39(b) of the Constitution. However, with regard to the "material resources" which belong to the private owners, how do such resources get qualified as "material resources of the community"? In my view, the inquiry does not merely relate to only 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.

In my view, these are not the only factors which have to be thought of while considering whether a privately owned material resource is a material resource of the community or not. In my view, a privately owned material resource can be transformed and can indeed acquire a status of "material resource of the community". What are the material resources owned by private persons which can be material resources of

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the community? They would not include what can be termed as "personal effects" of an individual such as movables in the form of an individual's apparel, household articles of daily use such as furniture, personal jewellery, kitchenware and such other articles. These are articles which are of daily need and use as submitted by learned senior counsel Sri Rakesh Dwivedi. They are resources no doubt but not "material" resources within the meaning of Article 39(b). However, there could be other types of resources privately owned, such as immovable property, which could become "material resources". The expression "of the community" would in my view include all those privately owned "material resources" which have the potential to be transformed as "material resources of the community" excluding personal effects. According to Black's Law Dictionary, Ninth Edition, the expression "personal effects" is defined to mean items of a personal character. In P. Ramanatha Aiyar's Advanced Law Lexicon, Volume 3, 6th Edition, "personal effects" has been defined to mean things required for satisfying daily necessities but does not include jewellery. This would generally mean such tangible property as is worn or carried about the person, or the designate articles associated with the person, as property having more or less intimate relation to person of possessor or such tangible property as attends the person vide H.H. Maharaja Rana Hemant Singhji vs. CIT, (1976) 1 SCC 996, 999, para 12.

7.7 Thus, to constitute an article as part of "personal effects", it is necessary that the article must be associated with the person of the possessor, must more or less have intimate relation with the possessor. Thus, any privately owned "material resources"could be transformed as "material resource of the community". How would this happen? Essentially by four different modes, namely,

(i) by nationalisation; (ii) by acquisition;(iii) by vesting of the said resource in the state, by operation of law under specific statutes and (iv) by the owner of a materialresource converting such a resource into a "material resource of the community" by way of donation or a gift, a creation of a charitable endowment, a grant or a dedication so that the said material resource is useful for the community and used or distributed as to subserve the common good. I shall discuss this aspect later.


7.8 Further, the term "distribution" no doubt has a wide connotation but, in my view, it is only "material resource of the community" which can be a subject matter of distribution under Article 39(b) which excludes "personal effects". In other words, material resources under the ownership and control of private persons cannot per se be distributed by the State unless the said resources are first transformed as "material resources of the community". In my view, public/State owned resources are per se"material resources of the community" and as rightly observed by the learned Chief Justice, the Public Trust doctrine applies to such resources. Secondly, such "material resources of the community" can be distributed as best to subserve the common good. It is only when the aforesaid twin conditions are satisfied that the goal or object of Article 39(b) would be achieved.

7.9 In other words, unless and until private ownership and control of the material resources are transformed or converted into the "material resources of the community" which is a condition precedent, there cannot be distribution of the said resources by the State. It is only when privately owned material resources are transformed as "material resources of the community" that the State acquires the right to distribute them to subserve the common good. Otherwise, the State would merely transfer privately owned material resource from one owner say, "A" to another person, say "B" without first making it a "material resource of the community" which, in my view, is not the intent of the framers of the Constitution and neither is the same envisaged under Article 39(b).

7.10 Further, the expression "distribution"need not per se stop with mere vesting of the privately owned material resources in the State on nationalisation of the said resources. It could be when the said resources are further distributed for the common good that the object and purpose of Article 39(b) would be achieved.

In certain situations, however, depending upon the nature of the resource and its characteristics or the scarcity of the resource or the particular policy to be achieved may persuade the State tonot actually distribute the said resourceamongst the citizens but to retain it with the State and utilise the same for the common good, i.e., in public interest. In such an event, the State would

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retain such privatelyowned resources with itself, either by nationalisation or through acquisition or by way of vesting of the said resource in the state by operation of law. Therefore, distribution may not in all cases be"actual distribution", i.e., by making over the "material resource of the community" to the citizens. But mere vesting of private resource in the State without anything more would not constitute "distribution"in all cases unless the policy of the State determines whether such resources have to remain under the ownership and control of the State. Till then the State must hold the same in public trust for the common good. I shall elaborate on the above aspects.

The perspective articulated in the proposed judgment of the learned Chief Justice rests upon certain key deductions, which are culled out hereinunder:

That, the framers of the Constitution did not want to impose a rigid socio-economic order under which all private property could vest with the State and any legislation to convert private ownership to public ownership would fall within the ambit of Article 39(b).

ii.

That, the text of Article 39(b) reveals the following five distinct elements, each of which must be satisfied for any legislation to fall within the purview of this provision and be regarded as advancing the ideal enshrined thereunder:

Provision relates to "ownership" and "control";

b. "Ownership" and "control" is over "material resources";

The material resources which the provision covers are those which are "of the community";

The policy of the State must be directed to secure the "distribution" of the ownership and control of such resources;

The purpose of the distribution must be to "best subserve the common good".

iii.

That, the interpretation of Article 39(b) which brings all private property under the umbrella of the phrase "material resources of the community" satisfies only one of the essential elements-


namely, that the goods in question constitute a "resource." This approach overlooks the critical qualifiers that these resources must be both "material" and "of the community."

iv.

The language of the provision suggests that not all privately owned resources fall within the scope of the phrase "material resources of the community." However, private resources are not categorically excluded, and certain privately owned assets may indeed be encompassed. To fall within this ambit, the resource must satisfy two essential qualifiers: it must be both a "material" resource and "of the community." Consequently, the judgments questioned before this nine-Judge Bench are flawed insofar as they assert that "all resources" owned by individuals are inherently part of the community and thus include all private property within the scope of "material resources of the community."

The determination of whether a particular resource falls within the ambit of Article 39(b) must be assessed in a context-specific manner, guided by a non-exhaustive set of considerations. These include the nature and characteristics of the resource, its impact on the welfare of the community, its scarcity, and the ramifications of such a resource being concentrated in the hands of private entities. Furthermore, the Public Trust Doctrine, as developed by this Court, may also be instructive and guide in identifying resources that qualify as "material resources of the community."

vi.

The term "distribution" carries a broad and expansive meaning.

The various methods of distribution that the State may adopt cannot be exhaustively enumerated, but they may include the vesting of the relevant resources in the State, acquisition of the resource, or nationalization.

The situs of elaboration:

I find myself in agreement with the judgment proposed by the learned Chief Justice insofar as the observation that not all privately owned resources fall within the ambit of the phrase "material resources of the community" is concerned. I also concur with the proposed judgment as regards the identification of the five elements of Article 39(b). However, I must elaborate on the proposed judgment, on the legal distinction between how a private resource qualifies as one "of

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the community" and how such a resource is subsequently distributed to subserve the common good. It is on this crucial point that I have penned my separate opinion.

9.1 In my considered opinion, a fundamental prerequisite for the distribution of a resource in a manner that serves the common good is to first bring that resource within the collective domain of the community, thereby rendering it a "material resource of the community".

9.2 While a public resource owned and/or controlled by the State is inherently part of the community's collective domain, a private resource which is a material resource may be brought within this pool through various mechanisms, including acquisition, nationalization, or by operation of law. The act of distributing a private material resource, however, cannot proceed in isolation from such preliminary steps to first incorporate such private material resource into the community's pool. Thus, acquisition, nationalization, and vesting by operation of law are instances of actions that bring a private material resource into the community's collective domain, rather than being termed as methods of distributing such resources. It is this crucial distinction that need elaboration.

9.3 In my opinion, I propose to discuss in detail the reasons as to why this material distinction assumes significance in the context of the instant reference and in light of the relevant Articles of the Constitution.

Articles 37, 38 and 39(b) and (c):

10. Articles 37, 38 and 39(b) &(c) of the Constitution read as under:-

"37. Application of the principles contained in this Part.-The provisions contained in this Part shall not be enforceable by any court, but the principles therein laid down are nevertheless fundamental in the governance of the country and it shall be the duty of the State to apply these principles in making laws.

38. State to secure a social order for the promotion of welfare of the people.-(1) The State shall strive to promote the welfare of the people by securing and


protecting as effectively as it may a social order in which justice, social, economic and political, shall inform all the institutions of the national life.

(2) The State shall, in particular, strive to minimise the inequalities in income, and endeavour to eliminate inequalities in status, facilities and opportunities, not only amongst individuals but also amongst groups of people residing in different areas or engaged in different vocations.

39. Certain principles of policy to be followed by the State.-The State shall, in particular, direct its policy towards securingx x x

(b) that the ownership and control of the material resources of the community are so distributed as best to subserve the common good;

(c) that the operation of the economic system does not result in the concentration of wealth and means of production to the common detriment;"

Before proceeding further, it would be useful to extract the reply to the debate on the provisions of Directive Principles in general given by Dr. Ambedkar as under:

"It is no use giving a fixed, rigid form to something which is not rigid, which is fundamentally changing and must, having regard to the circumstances and the times, keep on changing. It is, therefore, no use saying that the directive principles have no value. In my judgement, the directive principles have a great value, for they lay down that our ideal is economic democracy. Because we did not want merely a parliamentary form of government to be instituted through the various mechanisms provided in the Constitution, without any direction as to what our economic ideal or as to what our social order ought to be, we deliberately included the directive principles in our Constitution. I think if the friends who are agitated over this question bear in mind what I have said just now that our object in framing this Constitution is really twofold: (i)

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to lay down the form of political democracy, and (ii) to lay down that our ideal is economic democracy and also to prescribe that every government whoever it is in power, shall strive to bring about economic democracy, much of the misunderstanding under which most members are labouring will disappear. (Constitutional Assembly Debates, Volume VII)"

(Source: "Constitutional Law of India" by Dr. Subhash C.

Kashyap)

Article 37:

10.1 Article 37 states that the provisions contained in Part-IV of the Constitution (Directive Principles of State Policy) shall not be enforceable by any Court, but the principles therein laid down are nevertheless fundamental in the governance of the Country and it shall be the duty of the State to apply these principles in making laws. Although Prof. K.T. Shah, a member of the Constituent Assembly, sought for the Directive Principles being enforceable and proposed devising a suitable mechanism for that purpose, the said suggestion was turned down and the draft Article 29 was added as Article 37 of the Constitution.

10.2 In State of West Bengal vs. Subodh Gopal Bose, AIR 1954 SC 92 ("Subodh Gopal Bose"), this Court held that the Directive Principles of State Policy are not justiciable or enforceable by any Court; nevertheless, there is a duty cast on the courts to interpret the Constitution and the laws in furtherance of the Directive Principles as under Article 37 it has been stated that they are fundamental in the governance of the Country. Thus, it was held that there can be no law which can be in conflict with the Directive Principles of State Policy, although, the Articles in Part-IV by themselves cannot be enforced per se in a court of law.

10.3 It is well-known that the Directive Principles of State Policy have been borrowed from the Irish Constitution. Article 45 of the Irish Constitution provides that the application of the Principles of Social Policy shall not be cognizable by any Court, that the said principles are intended for the general guidance of the Irish National Parliament. Further the application of the


social policy in making of laws shall be the care of the Irish National Parliament exclusively. Similarly, Article 37 of the Constitution of India states that the Directive Principles shall not be enforceable by any Court but they are fundamental in the governance of this Country and it shall be the duty of the State to apply the Directive Principles in making laws. Also, there is a metamorphosis of this provision vide Minerva Mills decided by this Court by interpreting the same as per the intention of the framers of the Constitution.

10.4 Moreover, as between fundamental rights and Directive Principles of State Policy, it is a settled position of law that the fundamental rights are enforceable whereas the Directive Principles are to be considered while interpreting Part-III of the Constitution and they are not per se enforceable. The Directive Principles are primarily aimed at securing social and economic freedoms by appropriate State action. They are the social conscience of the Constitution; they are the goals and aims sought for achieving a welfare State in India. However, while considering a challenge to a violation of fundamental rights the Directive Principles could be considered and it is only when, to achieve the goals or the aims sought to be promoted through the Directive Principles, if there is a violation of the fundamental rights inasmuch as there is a violation of Articles 14, 15 or 16, that the means of achieving the goals could be struck down.

Thus, fundamental rights ought to be interpreted in light of the Directive Principles and the latter should, whenever and wherever possible, be read into the former. It is also said that fundamental rights and Directive Principles are supplementary and complementary to each other and the provisions in Part- III should be interpreted having regard in such a way to the Preamble and the Directive Principles of the State Policy in Part-IV. It is said that fundamental rights and Directive Principles of the State Policy are the two-wheels of the chariot and are an aid to make social and economic democracy a truism vide Jilubhai vs. State of Gujarat, AIR 1995 SC 142 ("Jilubhai").

What is of significance is that the court must give a proper and meaningful interpretation to the Directive Principles so as to harmonize them with the objectives enshrined in the Preamble of

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the Constitution, namely, Justice - political, social and economic with individual rights in the context of Part-III and Part-IV of the Constitution respectively, vide Mafatlal.

10.5 While in the initial years of the enforcement of the Constitution, fundamental rights were given primacy, however, there has been a clear shift in the judicial thinking in considering Directive Principles being fundamental to the governance of the Country by courts when laws are challenged on the keystone of there being an apparent violation of the fundamental rights.

Article 38:

10.6 The thrust of Article 38 is to promote the welfare of the people by the State by securing and protecting as effectively as it may, a social order in which social, economic and political justice shall inform all the institutions of national life. This Article positions the Indian state as being beyond than what is meant for the maintenance of law and order. The Indian State being a welfare State must pursue social, economic and political justice which must inform all institutions of the national life. While clause

(1) of Article 38 is general in nature, clause (2) inserted by Section 9 of the Constitution (Forty-fourth Amendment) Act, 1978 w.e.f. from 20.06.1979 is illustrative of the content of the ideal in clause (1) of Article 38. Clause (2) of Article 38 states that States shall, in particular, strive to minimise the inequality in income and endeavour to eliminate the inequality in status, facilities and opportunities, not only among individuals but also among groups of people, residing in different areas or engaged in different vocations. Article 38 envisions social justice for enhancing human dignity in an egalitarian, social, economic and political democracy. The said Article essentially speaks of the social and economic revolution which is an example of the Constitution of India's transformative vision. The State takes the responsibility in bringing abouta welfare State, a just"social order" where"justice - social, economic and political" prevails and where there is equity, equality and non-discrimination by bringing about"equality of status and of opportunity", as enumerated in the Preamble of the Constitution. Thus, Article 38 is a keystone for the implementation of the Directive Principles.


Article 39:

11. Article 39 (b) and (c) are relevant for the purpose of this reference.

In the draft Constitution, Article 39 was Article 31 which was debated upon by the Constituent Assembly and the draft Article 31 was renumbered as Article 39 of the Constitution. In Waman Rao, it was observed by the Court speaking through learned Y.V. Chandrachud, C.J.that the clauses of Article 39 contain Directive Principles which are vital to the well-being of the Country and the welfare of its people.

Article 39 (b) and (c) which are relevant for the purposes of this case, say that the State shall 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; that the operation of the economic system does not result in the concentration of wealth and means of the production to the common detriment. In Article 39(b), the most significant expression is "distribution". That the material resources of the community have to be so distributed as best to subserve the common good. The task of distribution of the material resources of the community is the responsibility of the State. The distribution must be of the material resources of the community in order to best subserve the common good. What is the subject matter of distribution is the ownership and control of the material resources of the community.

11.1 The main objective of Article 39(b) and (c) of the Constitution is the building of a welfare State with a social order which is egalitarian so as to bring about a non-violent social transformation in the Country. That is why Article 37 of the Constitution states that while the provisions contained in Part IV (Directive Principles of State Policy) though not enforceable by any court, the principles therein laid down are nevertheless fundamental in the governance of the Country and it shall be the duty of the State to apply these principles in making laws.

11.2 The Directive Principles of State Policy including Articles 39(b) and (c) though not justiciable but inclined towards social and economic justice have a goal of the Constitution as enshrined in the Preamble to be achieved by way of making laws and implementing them. Thus, the Directive Principles of State Policy including Articles 39(b) and (c) have to be implemented through legislation and administrative action in order to carry out the policy laid down in the legislation.

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11.3 In Kesavananda Bharati, it was observed that there is no disharmony between the Directive Principles of State Policy and the fundamental rights, because they supplement each other in aiming at the same goal of bringing about a social revolution and the establishment of a welfare State, which is envisaged in the Preamble so as to make social and economic democracy a truism in the Country. The Directive Principles are the core of the Constitutional goals and they are complementary to each other and sometimes reference is made to them as the "conscience of the Constitution".

11.4 The objectives of the Directives are to remove inequality in the society and to attempt to achieve a fair division of wealth among the members of the society in order to achieve a just and equal society. In a way, a law made to ensure implementation of the Directive Principles is in order to achieve distributive justice in a welfare State.This goal is enshrined in Article 38 of the Constitution which states that the State shall strive to promote the welfare of the people by securing and protecting, as effectively as it may, the social order in which justice - social, economic and political - shall, inform all institutions of national life.

11.5 Article 39 (b) states that the State shall, in particular, direct its policy towards securing - the ownership and control of the material resources of the community are so distributed as best to subserve the common good. This Directive Principle has to be read in the context of Article 39(c) which states that the State shall, in particular, direct its policy towards securing that the operation of the economic system does not result in the concentration of wealth and means of the production to the common detriment. Therefore, the Indian State must ensure that the ownership and control of the material resources of the community are so distributed to subserve the common good with the object of eliminating concentration of wealth and means of production in the hands of a few. What is of significance in Article 39(b) are the following expressions which shall be discussed:

(i) ownership and control;


(ii) material resources;

(iii) of the community;

(iv) so distributed; and

(v) as best to subserve the common good.

Ownership and Control:

11.6 While analysing the above, it can be observed that the expression "ownership and control" is expansively used and must be given a wide connotation even as the expression "ownership and control" sometimes may overlap vis-à-vis a material resource. For instance, a person may have ownership and control over a material resource, or he may have ownership but not control over it; while at the other times, a person has control over a material resource but not ownership over it.

Hence, the intent of the Constitution makers is to give as wide a connotation as possible in the context of both ownership and control of material resources.

Material resources:

11.7 As far as "material resources" are concerned, the expression would not only include tangible but also intangible resources; natural or physical resources as well as man-made resources and movable as well as immovable property. Also, the discussion on what would not constitute "material resources" in the context of personal effects of individual as discussed in paragraph 7.6 above is relevant to this discussion. Further, in my view, the phrase"material resources" cannot be restricted by the expression "of the community" insofar as understanding the meaning of the expression is concerned inasmuch as it would include all private material resources and under the ownership and/or control of the private persons. For example, a material resource may be under the ownership of a private person but controlled by the State. Correspondingly, a resource may belong to the State but could be controlled by a private person for instance when a privilege is conferred by the State to such a private person to control the said resource.

Typically, an example is in the context of mining of minerals, when a private person may be the owner of a mine but the

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State or its entity may take the same under its control by way of a lease under provisions of the Mines and Minerals (Development and Regulation) Act, 1957 enacted in terms of Entry 52 - List I of the Constitution. Similarly, a mine or mineral bearing land may belong to the State which could be made over to a private person by way of a lease wherein the control of the mines is temporarily handed over to the lessee for exploitation of the mineral resources, subject to terms and conditions of the lease.Therefore, in all such cases, the expression "material resources" would include both public as well as private resources, i.e., those which are under the ownership and control of the State or any public body as well as ownership and control of a private person.

Of the community:

11.8 Thus, material resources would include both public as well as private resources which belong to private persons. But what could be distributed is only "material resources of the community", and not material resources which are privately owned. This would mean that material resources of the private persons cannot per se be distributed by the State under Article 39(b) unless it becomes "material resources of the community".

11.9 In other words, even if, apart from public resources, private material resources are also to be distributed under clause (b) of Article 39 of the Constitution, they must first become "resources of the community". This is because it is only material resources "of the community" which can be distributed which would mean exclusion of distribution of private resources per se by the State. This implies that if private resources have to be distributed under clause (b) of Article 39, the private resources must first become the "resources of the community". How do material resources which are privately owned become "material resources of the community"? The answer to this question lies in the legal devices that are adopted by the State to transform private material resources into the "resources of the community".

This could be, inter alia, in the following five ways which are illustrative and not exhaustive in nature:


(i) by nationalisation;

(ii) by acquisition;

(iii) by operation of law, such as vesting of private resources in the State;

(iv) by purchase of the material resource from private persons; and

(v) by the owner of the material resource converting it as a material resource of the community by donation, gift, creation of an endowment or a public trust, etc.

11.10 What is the common denominator in the methods adopted by the State for converting private material resources into "material resources of the community"? In all these three devices, at (i), (ii) and (iii) above, what is of significance is that when, by a process of nationalisation, acquisition or vesting of private resources in the State occurs there are certain legal processes which take place: the first process is to convert the private resources into resources of the community by vesting in the State, and the second process is to utilise these community resources for the purpose of distribution for the common good. Distribution could be in two ways: firstly, by actual distribution to the deserving and eligible persons as per the policy to be implemented. Secondly, the State could retain ownership and/or control having regard to the nature of the resources and other relevant factors. The third process is that the private owners of these resources are fairly compensated when they lose all rights, title and possession over such material resources when it becomes a material resource of the community".

11.11 Thus, when private persons are so deprived of ownership as well as the control of the material resources which belong to them or are controlled by them, they must be compensated justly and fairly. Otherwise, the conversation of private material resources into "resources of the community" would be contrary to Article 300A of the Constitution which states that no person shall be deprived of his property save by authority of law. In other words, a person can be deprived of his property by the State only by authority of law.

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12. I shall discuss the various modes by which privately owned material resources can be transformed as resources of the community which I have adverted into in paragraph 11.9.

12.1 How does nationalisation of certain private resources occur?

It could be by way of an enactment of a statute by either the Parliament or a State Legislature.This is by way of a legislation.

An instance of this is in Ranganatha Reddy wherein privately owned carriages and buses were taken over by the State of Karnataka through nationalization by way of an enactment. The nationalized resources could be utilized as best to subserve the common good either by the State through its department or through a corporation, or entity created by the State Government, such as a Government Company, or a Corporation or a Society etc. An example is in the case of Rustom Cavasjee Cooper vs. Union of India, AIR 1970 SC 564 ("RC Cooper") where fourteen private banks were nationalized and the said banks are functioning as nationalized banks.

12.2 Insofar as the acquisition of private material resources is concerned, it could be by way of a special Statute made for achieving the particular purposes of acquisition, having regard to the nature of such resources and such other factors. In the alternative, acquisition could take place under the prevailing or extant laws pertaining to acquisition such as the erstwhile Land Acquisition Act, 1894 ("LA Act, 1894") which has now been repealed and substituted by Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 ("2013 Act"). Acquisition could also be under the respective State laws dealing with acquisition of land or other immovable property. But acquisition should be for a public purpose as defined under the laws.

12.3 Mahajan, J. (as the learned Chief Justice then was) speaking for a Constitution Bench of this Court in State of Bihar vs.

Kameshwar Singh, AIR 1952 SC 252 ("Kameshwar Singh"), has observed:

"The phrase "public purpose" has to be construed according to the spirit of the times in which particular legislation is enacted.

x x x


The legislature is the best judge of what is good for the community, by whose suffrage it comes into existence...."

A wider approach necessarily means that a comprehensive signification has to be given to the expression "public purpose".

12.4 That the law must also keep pace with the realities of the social and political evolution of the country as reflected in the Constitution. Therefore, anything that would promote the welfare of the people as envisaged in the Directive Principles of State Policy has to be regarded as "public purpose".

Therefore, what was earlier known as economic justice has been crystallised as Directive Principles of State Policy.

Hence, the nexus between "public purpose" and Part IV of the Constitution is relevant.

12.5 If public purpose is established under an enactment, then how that public purpose would be carried into the provisions is a matter which is left to the wisdom of the Parliament and State Legislatures. Whether it would be through nationalisation, acquisition or it should resort to pay the market price and buy in the open market any privately owned material resource for transforming it into a "material resource of the community" for the purpose of distribution so as to best subserve the community, is a matter which is within the realm and wisdom of the State.

12.6 The acquisition could be for the purpose of the State utilizing the said land or other immovable property for public purpose in order to subserve the common good or the acquired land could be allotted to deserving and eligible persons in the form of house-sites or houses being constructed by the State. This is an instance of private resources (land or other immovable property) becoming a property of the community and then being distributed to subserve the common good. However, acquisition of land has to be in terms of the rigour that is prescribed under the provisions of the LA Act, 1894 (now repealed) or in accordance with the 2013 Act, which is in force, such as the time frames which have been prescribed for the issuance of preliminary and final notifications (declaration) under Sections 4

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and 6 of the 1894 Act and hearing of objections under Section 5A of the said Act; holding an enquiry and passing of an award in terms of Sections 11 and 11A and taking of possession after making of the award, in which case the land shall vest absolutely in the Government free from all encumbrances; the computation of the payment of compensation and the payment of interest etc. to the land losers. Under the LA Act, 1894, there could not be acquisition of any land unless it was for a public purpose. Section 3(f) defined a "public purpose" as under:

"Section 3. In this Act, unless there is something repugnant in the subject or context,

x xx

(f) the expression public purpose includes-

(i) the provision of village-sites, or the extension, planned development or improvement of existing village-sites;

(ii) the provision of land for town or rural planning;

(iii) the provision of land for planned development of land from public funds in pursuance of any scheme or policy of Government and subsequent disposal thereof in whole or in part by lease, assignment or outright sale with the object of securing further development as planned;

(iv) the provision of land for a corporation owned or controlled by the State;

(v) the provision of land for residential purposes to the poor or landless or to persons residing in areas affected by natural calamities, or to persons displaced or affected by reason of the implementation of any scheme undertaken by Government, any local authority or a corporation owned or controlled by the State;

(vi) the provision of land for carrying out any educational, housing, health or slum clearance scheme sponsored by Government or by


any authority established by Government for carrying out any such scheme, or, with the prior approval of the appropriate Government, by a local authority, or a society registered under the Societies Registration Act, 1860 (21 of 1860), or under any corresponding law for the time being in force in a State, or a co-operative society within the meaning of any law relating to co-operative societies for the time being in force in any State;

(vii) the provision of land for any other scheme of development sponsored by Government, or, with the prior approval of the appropriate Government, by a local authority;

(viii) the provision of any premises or building for locating a public office,

but does not include acquisition of land for companies."

A reading of the said definition would clearly indicate as to for what public purpose immovable property could be acquired.

It is only when the acquisition was for a public purpose could it be said that the acquisition, though made under the LA Act, 1894, was within the scope and ambit of the said Act. Also, certain States have their own definitions of "public purpose" which is not necessary to discuss.

12.7 Further, under the 2013 Act, the acquisition of land as per Sections 11 and 19 of the said Act and the hearing of the objections under Section 15 and the holding of an enquiry under Section 23 and the period within which an award shall be made under Section 25 and matters to be considered in determining compensation as per Section 27; the power to take possession under Section 38 and other provisions, ensure that the acquisition of land is in accordance with what has been envisaged therein. Moreover, Section 2 of the 2013 Act categorically states that when the appropriate Government acquires land for its own use, hold and control, including for Public Sector Undertakings and for public purpose, it shall include the following purposes, namely:-

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"2. Application of Act.-(1) The provisions of this Act relating to land acquisition, compensation, rehabilitation and resettlement, shall apply, when the appropriate Government acquires land for its own use, hold and control, including for Public Sector Undertakings and for public purpose, and shall include the following purposes, namely:-

(a) for strategic purposes relating to naval, military, air force, and armed forces of the Union, including central paramilitary forces or any work vital to national security or defence of India or State police, safety of the people; or

(b) for infrastructure projects, which includes the following, namely:-

(i) all activities or items listed in the notification of the Government of India in the Department of Economic Affairs (Infrastructure Section) number 13/6/2009-INF, dated the 27th March, 2012, excluding private hospitals, private educational institutions and private hotels;

(ii) projects involving agro-processing, supply of inputs to agriculture, warehousing, cold storage facilities, marketing infrastructure for agriculture and allied activities such as dairy, fisheries, and meat processing, set up or owned by the appropriate Government or by a farmers' cooperative or by an institution set up under a statute;

(iii) project for industrial corridors or mining activities, national investment and manufacturing zones, as designated in the National Manufacturing Policy;

(iv) project for water harvesting and water conservation structures, sanitation;


(v) project for Government administered, Government aided educational and research schemes or institutions;

(vi) project for sports, health care, tourism, transportation or space programme;

(vii) any infrastructure facility as may be notified in this regard by the Central Government and after tabling of such notification in Parliament;

(c) project for project affected families;

(d) project for housing, for such income groups, as may be specified from time to time by the appropriate Government;

(e) project for planned development or the improvement of village sites or any site in the urban areas or provision of land for residential purposes for the weaker sections in rural and urban areas;

(f) project for residential purposes to the poor or landless or to persons residing in areas affected by natural calamities, or to persons displaced or affected by reason of the implementation of any scheme undertaken by the Government, any local authority or a corporation owned or controlled by the State.

(2) The provisions of this Act relating to land acquisition, consent, compensation, rehabilitation and resettlement, shall also apply, when the appropriate Government acquires land for the following purposes, namely: -

(a) for public private partnership projects, where the ownership of the land continues to vest with the Government, for public purpose as defined in sub-section (1);

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(b) for private companies for public purpose, as defined in sub-section (1): Provided that in the case of acquisition for-

(i) private companies, the prior consent of at least eighty per cent, of those affected families, as defined in sub-clauses (i) and

(v) of clause (c) of section 3; and

(ii) public private partnership projects, the prior consent of at least seventy per cent. of those affected families, as defined in subclauses (i) and (v) of clause (c) of section 3, shall be obtained through a process as may be prescribed by the appropriate Government:

Provided further that the process of obtaining the consent shall be carried out along with the Social Impact Assessment study referred to in section 4:

Provided also that no land shall be transferred by way of acquisition, in the Scheduled Areas in contravention of any law (including any order or judgment of a court which has become final) relating to land transfer, prevailing in such Scheduled Areas.

(3) The provisions relating to rehabilitation and resettlement under this Act shall apply in the cases where,-

(a) a private company purchases land, equal to or more than such limits in rural areas or urban areas, as may be prescribed by the appropriate Government, through private negotiations with the owner of the land in accordance with the provisions of section 46;

(b) a private company requests the appropriate Government for acquisition of a part of an area so prescribed for a public purpose:


Provided that where a private company requests the appropriate Government for partial acquisition of land for public purpose, then, the rehabilitation and resettlement entitlements under the Second Schedule shall be applicable for the entire area which includes the land purchased by the private company and acquired by the Government for the project as a whole."

12.8 Similarly, there are State enactments which allow acquisition of land from private owners for the purpose of distribution to eligible persons in order to best subserve the common good.

The acquisition process of privately owned land or other immovable property ensures that it ultimately vests with the appropriate Government and transforms the material resource privately owned as material resource of the community. As already noted, such land or other immovable property can be utilized by the State and its authorities, agencies and instrumentalities so as to best subserve the common good.

Alternatively, the State could distribute the said land to eligible persons having regard to the nature of the public purpose for which such land is acquired under the respective Acquisition Act or any other enactment which provides for acquisition of land, such as, Town Planning Act or City Development Authority Act etc.

12.9 However, the public purpose envisaged under the respective Acts must be to achieve a common good. Therefore, the public purpose for which acquisition of immovable property is made must be clearly established in accordance with the provisions of the respective enactments. Any special statute for acquisition of private immovable property must be for a public purpose which is ultimately for achieving a common good.

12.10 Another mode of acquisition of privately owned material resources such as land or other immovable property for the purpose of utilizing the same as best to subserve the common good is by vesting of the same in the State. How does such privately owned land vest in the State? It could be under an enactment, such as the Land Reforms Acts of the respective States, the Urban Land Ceiling Act (since repealed), the Inams

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Abolition Act, Village Offices Abolition Act, Land Tenures and Ceiling Acts under which lands privately owned or granted by the erstwhile rulers to certain persons and therefore, in the possession and control of private persons, on the abolition of such ownership and control over such lands by the State enactments, referred to above would vest with the State by operation of law. For instance, if on the appointed date the land is in possession and cultivation of tenants, then such lands covered by the respective tenancies would become vested in the State and thus be the land of the community i.e. "material resource of the community" on their vesting in the State. The State can thereafter grant occupancy rights of such lands to the tenants or other deserving persons in accordance with law i.e. by the tenants proving their tenancy on the appointed date before the Land Reforms Tribunal or as envisaged in the respective enactments. The mechanism is for a tenant to seek registration of occupancy rights on proof of tenancy which is a manner of distribution of the vested land in the State which gets transformed as material resource of the community on their vesting in the State.

12.11 Such material resources could also be bought by the State by paying a valuable consideration instead of acquisition as in the case of immovable property.

12.12 Another mode is when a private owner of immovable or other property transforms his ownership and control of material resources as "material resource of the community" by way of creation of an endowment or a grant or a donation or gift made to the State so that the said material resource converted as a community resource is used by the people at large or by the State depending upon the exigency of each case and the policy of the State. Earlier private lakes, pastures/grazing lands, forest lands, etc., were endowed for public use and therefore would be transformed as "material resource of the community".

12.13 What is significant in all these instances is the fact that private resources are not straightaway "distributed" or handed over to other private persons by the State. Private resources first become the "resources of the community" through the


methods adopted by the State either through nationalisation, acquisition or vesting of such resources in the State and once they become resources vested in the State they get transformed as "material resources of the community".

Therefore, the expression "material resources" though including private resources must ultimately get transformed as "material resources of the community". "Material resources of the community" means the community at large would be entitled to claim a benefit of said resources when they are so distributed by the State or retained by the State for a public purpose. In other words, material resources privately owned or controlled by the private persons cannot straightaway be construed to be"material resources of the community".

12.14 The expression "of the community" must be given its true meaning. This is because it is only material resources of the community which can be distributed by the State and not privately owned material resources.

So distributed as best to subserve the common good:

13. The next limb of clause (b) of Article 39 is "distribution" of "material resources of the community""as best to subserve the common good".

Therefore, distribution must be in order to subserve the "common good" and not solely for private good. This would imply that firstly, what is to be distributed is "material resources of the community" and not material resources of the private persons, per se, and secondly, the distribution must subserve the common good, which means that it is for the benefit of the public at large. Thus"common good" cannot be equated to private good which means distributed to other private persons and not being distributed to the public at large, unless distribution to other private persons is for the purpose of the common good and with a public purpose.

13.1 Thus the expression "distribution" as "best to subserve the common good" would not always envisage allocation or assignment or transfer to deserving or eligible persons. For instance, on nationalisation of banks, the Central Government exercises control over the banks as nationalized banks.

Additionally, for instance, on nationalization of buses , they could be utilized for the benefit of the general public through

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a State owned department or through a Corporation or entity created by the State, such as a Government company, a corporation, a society etc. Similarly, land acquired for a public purpose could be used by the State for serving the common good while retaining ownership and control over it and using it for the benefit of the general public which is also a public purpose. Alternatively, by allocation of said land or other immovable property in the form of house sites etc. being allotted, assigned, transferred, conveyed to eligible and deserving persons distribution of ownership and control of material resources of the community to subserve the common good is achieved.

13.2 As far as the lands or other immovable property which vest with the State by virtue of operation of law are concerned, the persons who are entitled to grant of occupancy rights may make an application under the relevant laws in respect of the vested land as erstwhile tenants and seek registration of occupancy rights for the purpose of cultivation on certain terms and conditions. When in respect of any piece of land, occupancy rights cannot be granted to an applicant, in such an event the land which stood vested in the State would become the State owned land and the same could be utilized for the purpose of making grants, assignments, allotments or conveyance to deserving and eligible persons.

13.3 Further, when private owners of material resources make an endowment, a gift or a donation to the State, their ownership and control over such resources would vest with the State and the State could utilize such material resources as best to subserve the common good. This is the essence of distribution.

Common good:

13.4 What is "common good"? It would mean that while distributing the material resources of the community there must be an object which is achieved, such that there would be no concentration of wealth and means of production in the hands of a few which is also a Directive Principle in clause (c) of Article 39. For instance, if a mining lease is to be assigned to any person who is eligible to take such a lease it must be


done in accordance with law such as by an auctionand giving due publicity so that it is not with a view to unjustly enrich a person, as this would be contrary to the notion of common good. Therefore, there cannot be a transfer of private resources being in the ownership and control of a private person to another set of private persons only by excluding the public at large. In other words, the State cannot act as an agent for distribution of privately owned material resources by taking ownership and control of the same and handing it over to other private persons selectively. That is not distribution for subserving the common good.

On the other hand, there could also be an instance where only a particular person/entity would be entitled to claim distribution of a material resource of the community having regard to the object and purpose for which the same is to be distributed which would be for the common good. This is in the context of privatisation of the "material resources of the community" which is a recent phenomenon particularly on the initiation of reforms in the Indian economy since the year

1991. However, private persons/entities who are eligible to have the ownership and/or control of the material resources of the community would do so only if it is to subserve the common good. Therefore, while acting under clause (b), the Directive under clause (c) must also be borne in mind by the State inasmuch as the distribution of material resources of the community must be to subserve the common good and not result in concentration of wealth and means of production to the common detriment. In other words, where the object is to subserve the common good, there would automatically be provisions excluded which induce concentration of wealth and means of production to the common detriment.

13.5 Reference may be made to a recent decision of a three-Judge Bench of this Court in Coal India Ltd. vs. CCI, (2023) 10 SCC 345, ("Coal India Ltd.") (of which I was a Member).In the said case, it was mainly contended that the coal mines operated by the appellants therein pursuant to the provisions of the Coal Mines (Nationalisation) Act, 1973 would be wholly outside the purview of the Competition Act, 2002. This was

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for the reason that the very purpose and policy underlying the Nationalisation Act was to monopolise the operation of the coal mines and coal mining in the hands of the Central Government and its agencies such as the appellant therein.

It was contended that it was a monopoly created by the Nationalisation Act and was accorded protection of Article 31B of the Constitution by inserting the said Act in the Ninth Schedule and it was not an ordinary monopoly. This was for the reason that the State has been charged with the duty to bear in mind the principles of "common good" being secured by the "distribution of scarce resources". It was submitted in the said case that coal, being a mineral of the highest importance in the economic life of the nation, its equitable distribution so as to secure the common good, which is the Directive contained in Article 39(b), led to the creation of a statutorily mandated monopoly through the Nationalisation Act. Therefore, it could be wholly inconceivable that the Competition Act would still be applicable to the appellant therein.

Holding that the Competition Act applied to the appellant therein and all public sector companies except where the sovereign function of the government may be involved, this Court observed in paragraph 100 as under:

"100. The expression "common good" in Article 39(b) in a Benthamite sense involves achieving the highest good of the maximum number of people. The meaning of the words "common good" may depend upon the times, the felt necessities, the direction that the Nation wishes to take in the future, the socio-economic condition of the different classes, the legal and fundamental rights and also the Directive Principles themselves. As far as the time dictated content of common good goes, it simply means that "economics" itself not being bound in chains, but it is a dynamic concept. The attainment of common good would be dependent on the appreciation and understanding of a generation as to how economic common good is best achieved. The debate between the advantages and disadvantages of pursuing the policy of State


intervention in economic policy which emasculates private enterprise and competition has almost reached its end. The advantages of a fearlessly competitive economy have been realised by the Nation. There is a backdrop to it. In the year 1991, the Nation was in a manner of speaking compelled to revisit its economic policy having regard to the precarious condition of its foreign exchange reserves. The permit raj, which involved acute regulation of economic activity by the State with all its attendant evils, cried out for reforms.

A slew of highly liberal reforms in 1991 set the stage for the Nation to make a paradigm shift. As discussed in the Raghavan Committee Report, things moved further in the direction of attaining faster economic growth. The Act is a measure which is intended to achieve the same. The role which was envisaged for the public sector company could not permit them to outlive their utility or abuse their unique position.

Disinvestment done in a proper manner was perceived as a solution. However, sans disinvestment, State monopolies, public sector companies and government companies were expected to imbibe the new economic philosophy. The novel idea, which permeates the Act, would stand frustrated, in fact, if State monopolies, government companies and public sector units are left free to contravene the Act. Now that the Nation was more than 50 years' old after it became a Republic and it no longer was the infant it was, Parliament which best knows the needs of its people, felt that the time was ripe for ushering in the wholesome idea of fair competition. Can it be said that free competition as envisaged under the Act which involves avoidance of anti-competitive agreements, abuse of dominant position and regulation of combinations are against the common good? As to how common good is best served is best understood by the representatives of the people in the democratic form of Government.

We must bear in mind the wholesome principle that when Parliament enacts laws, it is deemed to be

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aware of all the existing laws. Properly construed and operated fairly, the "Act" would, in other words, harmonise with common good, being its goal as well."

Further, this Court in paragraphs 118 to 122, observed as under:

"118. The appellants rely upon the judgment of this Court in State of T.N. v. L. Abu Kavur Bai, (1984) 1 SCC 515 for the proposition that the scheme of monopoly or nationalisation subserves public good.

In the said case, the Court was dealing with a case of nationalisation of transport services. There can be no quarrel with the proposition that the purpose of the Nationalisation Act was indeed to subserve the common good as held in Tara Prasad Singh

v. Union of India, (1980) 4 SCC 179. The purpose of the vesting under the Nationalisation Act was to distribute the resource to subserve the common good.

119. We may, in fact, notice the concern of the Court in Tara Prasad Singh about coal being not inexhaustible and the need for a wise and planned conservation of the resources being expressed in para 39. No doubt, all this was at the time when the Nation was confronted with the condition of the mines being what it was as brought out in the Statement of Objects.

120. We agree with the appellants and as held by this Court in State of Karnataka v. Ranganatha Reddy,

(1977) 4 SCC 471 that "distribution" is a word of wide meaning and it is covered by Article 39(b) of the Constitution. It must be remembered that the Court had occasion to hold so by way of dealing with the argument that nationalisation did not have a nexus with the word "distribution".

121. The judgment of this Court in Waman Rao v.

Union of India, (1981) 2 SCC 362 holds that laws passed to give effect to Articles 39(b) and 39(c) could not be found violative of Article 14. There cannot be any quarrel. We are, in this case, called upon


to deal with the case based on the actions taken by the appellant, which is a government company based on its powers under the Nationalisation Act, being challenged on the anvil of a later law made by Parliament, the validity of which, relevantly is not under challenge.

122. Distribution of coal is intended to subserve common good holds this Court in Samatha v. State of A.P., (1997) 8 SCC 191. The content of common good is itself not a static concept. It may take its hue from the context and the times in which the matter falls for consideration by the Court. If Parliament has intended that State monopolies even if it be in the matter of distribution must come under the anvil of the new economic regime, it cannot be found flawed by the Court on the ground that subjecting the State monopoly would detract from the common good which the earlier Nationalisation Act when it was enacted, undoubtedly, succeeded in subserving. We see no reason to hold that a State monopoly being run through the medium of a government company, even for attaining the goals in the Directive Principles, will go outside the purview of the Act."

Ultimately, in paragraph 130, it was opined by this Court that there was no merit in the contention of the appellants therein that the Competition Act would not apply to them for the reason that they were governed by the Nationalisation Act.

13.6 Thus, under Article 39(b), there could be policies made by the State towards securing the ownership and control over material resources of the community so as to distribute as best to subserve the common good. However, as discussed above this need not be only by way of a legislation, it could also be by acting under the extant legislations which would envisage a policy having the letter and spirit of Article 39(b).

In case there is any enactment made in the context of Article 39(b), in such an event, the same cannot be assailed on the touchstone of Articles 14 or 19, in view of Article 31C of the

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Constitution. In my view, this bar under Article 31C, inter alia, is in order to achieve the salutary object of clause (c) of Article 39 which envisages that the operation of the economic system does not result in the concentration of wealth as means of production to the common detriment. Thus, clause (b) of the said Article is a means to achieve an end in clause (c). Thus, both clauses (b) and (c) of Article 39 being complementary and supplementary to each other have been clearly envisaged in Article 31C of the Constitution and therefore any policy which is in the form of an enactment or a law or any action taken to further the goals of Article 39(b) and (c) cannot be assailed on the basis of grounds available under Articles 14 and 19.

Thus, Article 31C provides that no such law giving effect to the policy of the State towards securing the principles specified in clauses (b) and (c) of Article 39 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 Articles 14 and 19.

13.7 In Ranganatha Reddy, while upholding the legislation for nationalisation of contract carriages by the Karnataka State, it was observed by this Court speaking through Untwalia, J. that "to distribute" means "to allot, to divide into classes or into groups and "distribution" embraces arrangement, classification, placement, disposition, apportionment, the way in which items, a quantity or the like is divided or apportioned; the system of dispersing goods throughout a community". Thus, nationalisation of transport is a distributive process for the good of the community where the State or its instrumentalities would take upon themselves to conduct the economic activity on nationalisation.

13.8 In Sanjeev Coke, a five-Judge Bench of this Court speaking through Chinnappa Reddy, J.held that the word "distribute" in Article 39(b) "is used in a wider sense so as to take in all manner and method of distribution such as distribution between regions, distribution between industries, distribution between classes and distribution between public, private and joint sectors. The distribution envisaged by Article 39(b) necessarily takes within its stride the transformation of wealth from privateownership into public-ownership and is not confined to that which is already public owned"


13.9 Similarly, in Madhusudan Singh vs. Union of India, (1984) 2 SCC 381 ("Madhusudan Singh") while upholding land reforms measures, this Court observed (in para 22) that the surplus agricultural lands from the landlords could be distributed amongst the poor suffering landless tillers of the soil who were at the mercy of the rich landlords or zamindars.

Such land reforms legislations, therefore, were for securing and giving effect to objects of Article 39(b) clearly intending to distribute the material resources of the community, viz., the agricultural lands, to a large number of tillers of the soil in order to serve the common good of the aforesaid people on such land vesting in the State by operation of law under various legislations.

13.10 In Natural Resources Allocation, auction was considered to be a manner of distribution of material resources of the community. This Court observed that the distribution of the "material resources of the community" must be for the "common good" which should be the sole guiding factor under Article 39(b) and the touchstone of testing whether any policy subserves the "common good". As regards the means adopted, it should also be in accordance with law and the principles enshrined in Article 39(b). The Court also observed that there may be various methods of distribution of material resources of the community including natural resources and it depends upon the wisdom of the executive as to how it would deal in such matters. In the said judgment, this Court concluded as under:

● Maximization of revenue cannot be the sole permissible consideration, for disposal of all natural resources, across all sectors and in all circumstances, therefore disposal of all natural resources through auctions is clearly not a constitutional mandate.

● Reading auction as a constitutional mandate would be impermissible because such an approach may distort another constitutional principle embodied in article 39(b).

● Out of the two concepts namely, "public trust doctrine" and "trusteeship" referred in 2G case public trust may be accepted as public trust mandates a high degree of judicial scrutiny.

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● A judicial scrutiny of methods of disposal of natural resources should depend on the facts and circumstances of each case, in consonance with the principles of equality and common good. Failing which, the court, in exercise of power of judicial review.

● While distributing natural resources the state is bound to act in consonance with the principles of equality and public trust and ensure that no action is taken which may be detrimental to public interest.

● The state action including distribution of natural resources has to be fair, reasonable, non-discriminatory, transparent, non-capricious, unbiased, without favouritism or nepotism, in pursuit of promotion of healthy competition and equitable treatment. It should conform to the norms, which are rational, informed with reasons and guided by public interest, etc. and this is the mandate of article 14 of the Constitution of India.

While any policy or law which envisages that the goals in Article 39(b) or (c) cannot be called in question in a Court of law on the touchstone of Articles 14 and 19, nevertheless the implementation of the said policy in a discriminatory or arbitrary manner could attract Article 14 or the equality clause. Discrimination and arbitrariness being antithetical to the essence of Article 14, the action of distribution which is essentially an administrative action could be challenged before a Constitutional Law on the basis of the relevant principles applicable in exercise of judicial review of such administrative action."

13.11 While any policy or law may envisage that the goals in Article 39(b) or (c) cannot be called in question in a Court of law on the touchstone of Articles 14 and 19, nevertheless the implementation of the said policy in a discriminatory or arbitrary manner could attract Article 14 or the equality clause. Thus, while the wisdom or correctness of a policy or legislation in furtherance of the goals and objects of Article 39 (b) and (c) cannot be questioned vide Article 31C of the Constitution, it does not bar the questioning of the implementation of the


policy before a court of law. Discrimination and arbitrariness being antithetical to the essence of Article 14, the governmental action of distribution which is essentially an administrative action could be challenged before a Constitutional Court on the basis of relevant principles applicable in exercise of judicial review of such administrative action.

I shall now discuss the opinions in the four judgments which are doubted in the reference order.

Ranganatha Reddy:

14. A seven-Judge Constitution Bench of this Court considered the correctness of the Karnataka Contract Carriages (Acquisition) Act, 1976 (Karnataka Act No.21 of 1976)("Karnataka Act")by which all private contract carriages in the private ownership of persons were sought to be nationalised by acquisition of the vehicles. The High Court had allowed all the writ petitions, struck down the Act as unconstitutional and declared it null and void. There was a direction to restore the vehicles with the relative permits and all other assets to the operators from whom they were taken over. Some consequential directives for determination of damages in some later proceedings were also issued.

14.1 The State of Karnataka had filed the appeals before this Court. One of the contentions raised on behalf of the owners of the contract carriages was that the acquisition was not for a public purpose and that the compensation provided was wholly illusory and arbitrary. The second contention was that Article 31C does not bar the challenge to the Act as being violative of Article 31(2) of the Constitution as there is no reasonable and substantial nexus between the purpose of the acquisition and securing the principles specified in clauses

(b) and (c) of Article 39. Considering the issue of public purpose, the majority held that it is beyond the pale of any controversy now, particularly after the decision of this Court in Kesavananda Bharati that any law providing for acquisition of property must be for a public purpose andwhether the law of acquisition is for public purpose or not is a justiciable issue.

The intention of the legislature has to be gathered mainly

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from the Statement of Objects and Reasons of the Act and its Preamble and various provisions of the Act, its context and set up, and the purpose of acquisition has to be culled out to ascertain whether it is for a public purpose within the meaning of Article 31(2) of the Constitution.

14.2 Considering the provisions of the Karnataka Act, it was observed that in substance, the acquisition of the contract carriages was for nationalisation of the contract transport service in the State of Karnataka which was for a public purpose. On the question as to whether the compensation or amount paid for the property acquired was illusory and, therefore, in violation of fundamental right under Article 31(2), it was observed that on an interpretation of the provisions of the aforesaid Act, the amount so fixed was neither illusory nor arbitrary. In some respects, it may be inadequate but that cannot be a ground for challenge of the constitutionality of the law under Article 31(2) of the Constitution.

14.3 That the State Government on acquisition and the vesting of the acquired property would enable the Road Transport Corporation to run the vehicles. Since the constitutional validity of the Act was upheld, the majority speaking through Untwalia, J. did not consider it necessary to express any opinion with reference to Article 31C read with clauses (b) and (c) of Article 39. It was categorically observed that Krishna Iyer, J. had prepared a separate opinion especially dealing with this point but the majority issued a caveat stating that they had not agreed with all that he had stated in his judgment.

Consequently, the appeals filed by the State were allowed and the writ petitions filed by the contract carriage operators were unsuccessful.

14.4 Krishna Iyer, J. for himself and on behalf of Bhagwati and Jaswant Singh, JJ. penned a separate opinion while agreeing with the majority on the result. The opinion focussed on judicial perspective vis-à-vis constitutionality of economic legislation.

It was observed that the quintessence of the Constitution consists in its Preamble, Articles 38, 39(b) and (c), 31 and the bunch of Articles 31A, 31B and 31C.


14.5 On the question whether the Karnataka Act was in accordance with the public purpose, it was observed that the purpose of a public body, to run a public transport service for the benefit of the people operating in a responsible manner through exercise of public power which is controlled and controllable by society through its organs like the Legislature and, at times, even the Court, is manifestly a public purpose. It was discussed further that there may be a wide range of choices for achieving a public purpose. The State may walk into the open market and buy the items, movable and immovable, to fulfil the public purpose; or it may compulsorily acquire from some private person's possession and ownership the articles needed to meet the public purpose; it may requisition, instead of resorting to acquisition; it may take on loan or on hire or itself manufacture or produce. All these steps are various alternative means to meet the public purpose.

14.6 The State may require several items to run a welfare-oriented administration or a public corporation or answer a community requirement. If the purpose is for servicing the public, as governmental purposes ordinarily are, then everything desiderated for subserving such public purpose falls under the broad and expanding rubric. The nexus between the taking of property and the public purpose springs necessarily into existence if the former is capable of answering the latter.

On the other hand, if the purpose is a private or non-public one, the mere fact that the hand that acquires or requires is Government or a public corporation, does not make the purpose automatically a public purpose. Further, public purpose is vastly wider than the public necessity, even as a mere purpose is more pervasive than an urgency. According to Krishna Iyer, J., "Public purpose" should be liberally construed and neither socialist jurisprudence nor capitalist legal culture can govern the concept of public purpose in India's mixed economy and expanding public sector, in the context of progressive developmental programmes.

14.7 At paragraph 37 of the majority judgment, it has been categorically stated "since we have upheld the constitutional validity of Act on merits by repelling the attack on it by a

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reasonable and harmonious construction of the Act, we do not consider it necessary to express any opinion with reference to Article 31C read with clauses (b) and (c) of Article 39 of the Constitution. Our learned brother Krishna Iyer, J. has prepared a separate judgment specially dealing with this point. We must not be understood to agree with all that he has said in his judgment in this regard." Although Krishna Iyer, J. agreed with the majority on upholding the nationalisation of Contract Carriages by the State of Karnataka, he nevertheless made certain observations on behalf of himself, Bhagwati and Jaswant Singh, JJ. only as a separate afterword. In my view, the same cannot be considered to be the ratio of the judgment but an expression of the constitutional philosophy as understood by them during those decades.

Bhim Singhji:

15. In Bhim Singhji, the Constitution Bench headed by YV Chandrachud, C.J., dismissed the writ petitions while striking down Section 27(1) of the Urban Land (Ceiling and Regulation) Act, 1976. Writing the majority judgment for himself and on behalf of Bhagwati, J., it was observed by the learned Chief Justice that the Act under challenge was passed with the object of preventing concentration of urban land in the hands of a few persons and with a view to bringing about an equitable distribution of land in urban agglomerations to subserve the common good. "Common good" being the writing on the wall, any disposal which does not serve that purpose would be outside the scope of the Act and therefore lacking in competence in diverse senses. More significantly, it was observed that private property cannot, under our Constitution be acquired or allotted for private purposes though an enabling power like that contained in sub-section

(1) of Section 23 of the aforesaid Act may be exercised in cases where the common good dictates the distribution of excess vacant land to an industry, as defined in clause (b) of the Explanation to Section 23 of the aforesaid Act. It was observed that the governing test of disposal of excess land being "social good", any disposal in any particular case which did not subserve that purpose would be liable to be struck down as being contrary to the scheme and intendment of the Act.


15.1 Krishna Iyer, J. agreeing with the learned Chief Justice and in disagreement with Tulzapurkar and AP Sen, JJ. observed that the purpose of the enactment was to set a ceiling on vacant urban land, to take over the excess and to distribute it on a certain basis of priority. "Common good" was the guiding factor for distribution and that public purpose, national development and social justice were the cornerstone of the policy of distribution. This is different from compulsory taking from some private owners to favour by transfer other private owners.

Sanjeev Coke:

16. In Sanjeev Coke, the Constitution Bench of this Court considered the validity of the nationalisation of coking oven plants of the appellants therein. In the said case, the validity of Coking Coal Mines (Nationalisation) Act, 1972 was entitled to protection of Article 31C of the Constitution. In the said case, the observations of Bhagwati, J. in Minerva Mills were relied upon in extenso to give a complete approval of the same with "full concurrence".

16.1 One of the arguments raised in the said case was that the word "distribute" in Article 39(b), if given its proper emphasis would inevitably follow that material resources belong to the community as a whole, that is to say, to the State or the public, before they could be distributed as best to subserve the common good. Since those material resources which belong to the State only could be distributed by the State, it was argued that material resources had first to be acquired by the State before they could be distributed. A law providing for acquisition was not a law for distribution. This Court did not appreciate the said submission by Sri Sen. This is also the argument of Sri Zal Andhyarujina.

16.2 This Court observed that when Article 39(b) refers to material resources of the community, it does not refer only to resources owned by the community as a whole but it refers also to resources owned by individual member of the community.

Resources of the community do not mean public resources only but include private resources as well.

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16.3 It was further observed that the word "distribute" to be used in Article 39(b) cannot be construed in the limited sense, that is, in the sense only of retail distribution to individuals.

It is used in a wider sense so as to take in all manner and method of distribution such as distribution between regions, distribution between industries, distribution between classes and distribution between public, private and joint sectors.

The word "distribute" in Article 39(b) takes within its stride the transformation of wealth from private ownership into public ownership and is not confined to that which is already publicowned. In this regard, reliance was also placed on the observations of Krishna Iyer, J. in Ranganatha Reddy referred to above.

16.4 The next question considered was, whether, nationalisation can have nexus with distribution. It was observed that "socially conscious economists will find little difficulty in treating nationalisation of transport as a distributive process for the good of the community". Therefore, the observations in this case talked about the fact that nationalisation of transport is a part of distributive process for the good of the community.

Ultimately, it was held that expression "material resources of the community" is not confined to natural resources and it is not confined to resources owned by the public. It means and includes all resources, natural and man-made, public and private owned. Ultimately, it was observed that Coking Coal Mines (Nationalisation) Act, 1972 is a legislation for giving effect to the policy of the State towards securing the principles specified in Article 39(b) of the Constitution and is, therefore, immune, under Article 31C, from attack on the ground that it offends the fundamental right guaranteed by Article 14. Consequently, the writ petitions filed by Sanjeev Coke Manufacturing Co. were dismissed by a unanimous judgment.

16.5 In this case, the Constitution Bench arrived at its conclusions on the validity of the Coking Coal Mines (Nationalisation Act), 1972 and upheld the same but while doing so in paragraphs 10 to 14 observations were made with regard to the judgment of this Court in Minerva Mills. In fact, paragraph 10 reads as


follows: "We have some misgivings about the Minerva Mills' decision despite its rare beauty and persuasive rhetoric". In my view, these observations were wholly unnecessary as they lose sight of the outstanding judicial statesmanship exemplified in the majority judgment authored by learned YV Chandrachud, Chief Justice, in Minerva Mills. One has to bear in mind the fact that the hearings in the case of Minerva Mills as well as in Waman Rao were proceeding contemporaneously but before different Benches both headed by learned YV Chandrachud, Chief Justice. Realising the import of the separate opinion of Krishna Iyer, J. in Ranganatha Reddy and the likelihood of the said opinion gaining momentum in Minerva Mills as well as in Waman Rao and rightly so, the then learned Chief Justice took up on himself the responsibility of pronouncing the operative portion of the judgment in Minerva Mills in May, 1980 and supplementing the reasons in July, 1980 and the judgment in Waman Rao was delivered in November, 1980 just prior to Krishna Iyer, J. demitting office. It is another matter that Bhagwati, J. frowned upon such a strategy adopted in Minerva Mills and in fact penned a common separate judgment in Minerva Mills and Waman Rao although the issues were distinct though overlapping in certain areas which were minority opinions. In Waman Rao, only a short order was passed by Bhagwati, J.

16.6 A.N. Sen, J. by his concurring judgment, however, opined that since there was a review of the judgment in Minerva Mills pending before this Court, he refrained from dealing with the said decision and from making any observations or comments on the same.

Abu Kavur Bai:

17. In this case, the Tamil Nadu Stage Carriage and Contract Carriages (Acquisition) Act, 1973 was held to be constitutional and protected under Article 31C as it gave effect to the Directive Principles under Article 39 (b) and (c). Fazal Ali, J. speaking for the Bench headed by Y.V. Chandrachud, C.J. observed that in Sanjeev Coke, this Court had opined that where Article 31C comes in, Article 14 goes out and therefore, there is no scope for treating Article 14 as included in the principle of Article 39(b).

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17.1 In paragraph 72, the expression "public purpose" was discussed and referring to Black's Law Dictionary (Special Deluxe Fifth Edition) at page 1107, it was observed that the term is synonymous with governmental purpose which has for its objective the promotion of the public health, safety, morals, general welfare, security, prosperity and containment of a State. Discussing the expression "material resources of the community" in Article 39(b), it was observed that the argument of Sri Sen that material resources has to be first acquired by the State before they could be distributed and a law providing for acquisition was not a law for distribution was not an argument which could be appreciated.

In my view, a law proving for acquisition is not strictly speaking a law providing for distribution but a law which provides for a public purpose for which acquisition of immovable property could be made. It is only after the vesting of the acquired immovable property with the State that the said property would be available for distribution as "material resources of the community". This could be for either actual distribution to the eligible and deserving citizens or to be retained by the State for being utilised for a public purpose on the strength of the public trust doctrine.

17.2 There was also discussion on the various nuances of the expression "distribute" and "distribution" in the context of nationalisation and ultimately, it was held that nationalisation of State Carriages and Contract Carriages by way of an acquisition met the twin objects of Article 39 (b) and (c) and accordingly allowed the appeals of the State and set aside the judgment of the Madras High Court.

Basantibai:

18. In this case, this Court considered the correctness of the judgment of the Bombay High Court by which the High Court had declared sub-sections (3) and (4) of the Maharashtra Housing and Area Development Act, 1976 (hereinafter referred as, "MHADA") as void and had given certain ancillary directions. It is not necessary to go into the discussion on the merits of the case. However, while considering the validity of the aforesaid provisions on the touchstone


of Article 14 of the Constitution, this Court, at the outset, proceeded to observe in paragraph 13 of the judgment as: "We shall proceed to test the validity of the argument keeping aside for the time being the observation in Sanjeev Coke Manufacturing Co. vs. Bharat Coking Coal Ltd., (1983) 1 SCC 147 : AIR 1983 SC 239". Then reference was made to Kesavananda Bharati and Minerva Mills. On the basis of the aforesaid two decisions, it was observed that in order to ascertain whether the enactment was protected by Article 31C of the Constitution, the Court has to satisfy itself about the character of the legislation by studying all parts of it. The question whether an Act is intended to secure the objects contained in Article 39(b) or not, does not depend upon the declaration by the legislature but depends on its contents. The finding was that MHADA provided for reserving land for securing public amenities without which people could not live there as well as community centres, shopping complexes, parks, roads, drains, playgrounds, all being necessary for civic life and these amenities being enjoyed by all. It was held that this is also a kind of distribution. Reference was made to Ranganatha Reddy which dealt with the question whether nationalisation of bus transport was covered by Article 39(b) and to Krishna Iyer, J's observations extracted as under:

"The next question is whether nationalisation can have nexus with distribution. Should we assign a narrow or spacious sense to this concept? Doubtless, the latter, for reasons so apparent and eloquent. To 'distribute' even in its simple dictionary meaning, is to 'allot, to divide into classes or into groups' and 'distribution' embraces 'arrangement, classification, placement, disposition, apportionment, the way in which items, a quantity, or the like, is divided or apportioned; the system of dispersing goods throughout a community' (see Random House Dictionary). To classify and allocate certain industries or services or utilities or articles between the private and the public sectors of the national economy is to distribute those resources. Socially conscious economists will find little difficulty in treating nationalisation of transport as a distributive process for the good of the community. You cannot condemn the concept of nationalisation in our

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Plan on the score that Article 39 (b) does not envelop it. It is a matter of public policy left to legislative wisdom whether a particular scheme of takeover should be undertaken.

Two conclusions strike as quintessential. Part IV, especially Article 39(b) and (c), is a futuristic mandate to the State with a message of transformation of the economic and social order. Firstly, such change calls for collaborative effort from all the legal institutions of the system : the legislature, the judiciary and the administrative machinery. Secondly and consequentially, loyalty to the high purpose of the Constitution viz. social and economic justice in the context of material want and utter inequalities on a massive scale, compels the court to ascribe expansive meaning to the pregnant words used with hopeful foresight, not to circumscribe their connotation into contradiction of the objectives inspiring the provision. To be Pharisaic towards the Constitution through ritualistic construction is to weaken the socialspiritual thrust of the founding fathers' dynamic faith."

Only the aforesaid portions of Justice Krishna Iyer's judgment were distilled by this Court in this case. Consequently, it was held that the MHADA was brought into force to implement the directive principle contained in Article 39(b) and hence, even if there was any infraction of Article 14, it was cured by Article 31C which clearly was attracted to the case.

18.1 Therefore, it was observed that the MHADA was protected from challenge owing to the applicability of Article 31C of the Constitution and it was immune from the challenge under Articles 14, 19 and 31 of the Constitution.

18.2 It was further observed that land ceiling laws, laws providing for acquisition of land for providing housing accommodation, laws imposing ceiling on urban property etc. cannot be struck down by invoking Article 21 of the Constitution. Consequently, the judgment of the High Court was set aside to the extent that sub-sections (3) and (4) of Section 44 of MHADA had been held unconstitutional and struck down and the appeal was allowed.


18.3 What is significant about the judgment in Basantibai is, firstly, the case was considered in light of only that portion of the judgment of Krishna Iyer, J. which dealt with the aspect of distribution and it did not discuss other aspects of Krishna Iyer, J.'s judgment which dealt with the question whether even private property can be equated as "material resources of the community". Secondly, in this judgment, it has been expressly stated that to test the validity of MHADA, the observations of this Court in Sanjeev Coke were to be kept aside. Venkataramiah, J. who was the author of the judgment in Basantibai and a member of the five-Judge Bench in Sanjeev Coke distanced himself from the observations made by Chinappa Reddy, J. in Sanjeev Coke as well as the other observations of Krishna Iyer, J. in Ranganatha Reddy.

18.4 However what is common in all these cases is the fact that nationalization of contract carriages in Ranganatha Reddy; nationalization of coal mines in Sanjeev Coke and reserving of land for public amenities under MHADA were all upheld and sustained on the touchstone of Article 39(b) and protected from attack by virtue of Article 31C.

18.5 While Krishna Iyer and Chinappa Reddy, JJ. supported their reasoning on the touchstone of the word "socialist" in the Preamble of the Constitution, Venkataramiah, J. in Basantibai considered the validity of the MHADA de hors the observations made by Chinappa Reddy, J. in Sanjeev Coke and selected only certain portions of the separate opinion of Krishna Iyer, J. in Ranganatha Reddy. Thus, this Court was able to consider the validity of MHADA on the strength of Articles 39(b) read with Article 31C without taking note of many of the observations in Ranganatha Reddy and no observation in Sanjeev Coke made by the aforesaid learned Judges on their "socialist philosophy and on socialism". Basantibai is a judgment which was delivered in the year 1986, when Perestroika was taking place even in a country such as Union of Soviet Socialist Republics(USSR), the home to Socialism, and there was also a beginning of a new thinking in India too commencing with five technological missions leading to the Reforms of 1991 which I have discussed in the earlier part of my opinion.

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19. This Court in Tinsukhia Electric Supply Co. Ltd. vs. State of Assam, (1989) 3 SCC 709; and Assam Sillimanite Ltd. vs. Union of India, 1992 Supp. (1) SCC 692, followed earlier judgments of this Court in Ranganatha Reddy and Sanjeev Coke.

Mafatlal:

20. The context of the case in Mafatlal was a claim for refund made by a taxpayer owing to an unconstitutional or illegal levy. With regard to the arguments made by Sri K Parasaran, learned senior counsel on the distinction between the constitutional values as they obtained in countries like United States of America, Canada United Kingdom and Australia and the Indian Constitution which has set the goal of "justice, social, economic and political" - a total restructuring of our society as envisaged in Articles 38 and 39 of the Constitution, certain observations were made by the nine-Judge Bench of this Court headed by learned Ahmadi, C.J. and speaking through Jeevan Reddy, J. in paragraphs 84 to 86. In this context, the observations of Krishna Iyer, J. in Ranganatha Reddy were extracted, which are very apposite to the reference under consideration and which read as under:

"Constitutional problems cannot be studied in a socioeconomic vacuum, since socio-cultural changes are the source of the new values, and sloughing off old legal thought is part of the process of the new equity-loaded legality. … It is right that the rule of law enshrined in our Constitution must and does reckon with the roaring current of change which shifts our social values and shrivels our feudal roots, invades our lives and fashion our destiny."

It is in the above context that reference was made to the expression "the material resources of the community" and the exposition by Iyer, J. in Ranganatha Reddy and in Sanjeev Coke and Abu Kavur Bai. Therefore, those observations could be construed only in the context of the submissions made in the said case on the goal of Justice as envisaged under the Indian Constitution. In this context, the observations of S.C. Sen, J. who wrote a dissenting opinion are instructive. He said, "Article 39 cannot be a basis for retaining


whatever has been gathered unlawfully by the Government for common good. Simply stated, the Directive Principles of the State Policy do not license the Government to rob Peter to pay Paul." They have a persuasive value. Therefore, those observations may be obiter in nature but have persuasive value in view of my aforesaid discussion.

21. In Kolkata Municipal Corporation vs. Bimal Kumar Shah, 2024 INSC 435 ("Bimal Kumar Shah"), Justice P.S. Narasimha has observed that "to hold that all private property is covered by the phrase "material resources of the community" and that the ultimate aim is state control of private resources would be incompatible with the constitutional protection detailed above."

Summary of Conclusion:

22. Having regarding to the lengthy discussion made above, it is necessary to have the summary of conclusions as under:

Articles 37, 38 and 39 of the Constitution of India which are part of the Directive Principles of State Policy have to be interpreted by bearing in mind the changing economic policies of the State and not in a rigid watertight compartment.The flexibility of interpretation is having regard to the dynamic changes in the Indian socio-economic policies meant for the welfare and progress of the people of India. An interpretation of the aforesaid Articles or for that matter any other provision of the Constitution must be viewed in the historical backdrop of the period in which the interpretation was made by this Court during the course of adjudication. Any interpretation which was found to be sound and in consonance with the socio-economic policy of the State during a particular period of time, cannot be critiqued at a later point of time in any quarter including by a court of law merely because the socio-economic policies of the State have changed over a period of time or there is a paradigm shift in the thinking and policies of the State.

II.

Articles 37 and 38 of the Constitution have to be borne in mind by the Courts while considering the validity of any policy or statute which intend to further any of the Directive Principles of State Policy.

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III.

Article 39(b) has to be read in the context of Article 39(c).

Articles 39(b) and (c) supplement and complement each other and cannot be construed in silos.

Article 39(b) comprises of following five components, namely,

(i) ownership and control;

(ii) material resources;

(iii) of the community;

(iv) so distributed; and

(v) as best to subserve the common good.

(i) The expression "ownership and control" must be given its widest connotation in the context of "distribution of" "material resources of the community" "as best to subserve the common good".

(ii) "Material resources" can in the first instance be divided into two basic categories, namely, (i) State owned resources which belong to the State which are essentially material resources of the community, held in public trust by the State; and (ii) privately owned resources. However, the expression "material resources" does not include "personal effects" or "personal belonging" of individuals, such as, clothing or apparel, household articles, personal jewellery and other articles of daily use belonging to the individuals of a household and which are intimate and personal in nature and use. Excluding "personal effects", all other privately owned resources can be construed as "material resources".

Thus, all resources whether they are public resources or privately owned resources which come within the scope and ambit of the expression "material resources" as stated above are included within that expression.

(iii) "Material resources" which are privately owned could be transformed as "material resources of the community", inter alia, in the following five ways:


a. by nationalisation, which could be either by way of an enactment made by the Parliament or a State legislature or in any other manner in accordance with law;

b. by acquisition, which could be by way of a special enactment made by the Parliament or a State legislature having regard to Entry 42 - List III of the Seventh Schedule of the Constitution. Alternatively, the acquisition could be made under the extant Parliamentary or State laws dealing with acquisition;

c. by operation of law, such as vesting of private resources in the State, which could be by virtue of statutes dealing with land reforms, land tenures, abolition of inams, village offices or any other law where by operation of law there would be vesting of private material resources in the State or in any other manner in accordance with law;

d. by purchase of the material resource from private persons by the State, its agencies and instrumentalities in the manner known to law; and

e. by the private owner of the material resource converting his "material resources" as a "material resource of the community" by donation, gift, creation of an endowment or a public trust or in any other manner known to law.

(iv) In (a) to (d) above, the provision of Article 300A which is a constitutional right to property has to be complied with.

(v) The "material resources of the community" have to be "distributed as best to subserve the common good". Distribution could be in two ways:

Firstly, by the State itself retaining the material resource for a public purpose and/or for public use; and

Secondly, privately owned material resources when converted as "material resources of the community" can be distributed to eligible and deserving persons either by way of auction, grant, assignment, allocation, lease, sale or any other mode of transfer known to law either temporarily or permanently depending upon the mode adopted and unconditionally or with conditions depending upon:

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(a) nature of the resource and its inherent characteristics;

(b) the impact of the resource on the well-being of the community;

(c) the scarcity of the resource;

(d) the consequences of such a resource being concentrated in the hands of the private owners; and

(e) any such factors.

(vi) The expression "common good" would, inter alia, mean that the distribution of the "ownership and control of material resources of the community" would not lead to concentration of the wealth and means of production in the hands of few which is a Directive Principle in clause (c) of Article 39. Thus, "distribution of material resources of the community" cannot violate the Directive Principle in clause (c) of Article 39 of the Constitution.

IV.

The majority judgment of this Court in Ranganatha Reddy and the judgment in Abu Kavur Bai relate to nationalisation of contract carriages/State carriages which were upheld by this Court. Nationalisation of coking coal mines was upheld by this Court in Sanjeev Coke. In Bhim Singhji and Basantibai, certain provisions of the Urban Land Ceiling Act and the provisions of MHADA respectively were upheld on the touchstone of Article 39(b) of the Constitution.

The nine-Judge Bench in Mafatlal referred to the judgments of this Court in Ranganatha Reddy, Abu Kavur Bai etc. in the context of the submission made before, i.e., the Indian Constitution envisages Justice - social, economic and political, to all citizens of India as enshrined in the preamble. This was by way of an obiter but having persuasive value.

My Views to the Conclusions arrived at by the learned Chief Justice:

23. My views in response to the conclusions arrived at by the learned Chief Justice to the reference before this Court are summarized as under:


Article 31C to the extent that it was upheld in Kesavananda Bharati vs. Union of India remains in force.

My view: I agree.

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 violated judicial discipline and erred by relying on the minority opinion.

My view: The majority judgment in Ranganatha Reddy, no doubt, did not concur with the views of Krishna Iyer, J. expressed in his separate opinion. However, in Sanjeev Coke the Constitution Bench of five-Judges independently upheld what was challenged in the said case, namely, the Coking Coal Mines (Nationalisation) Act, 1972 and while doing so in paragraphs 19 and 20 referred to the observations of Krishna Iyer, J. in Ranganatha Reddy and made certain observations on the majority judgment in Minerva Mills. However, A.N. Sen, J. did not express any opinion on the judgment of this Court in Minerva Mills.

What is significant is that the judgments in Ranganatha Reddy as well as in Sanjeev Coke upheld the respective Nationalisation Acts. Therefore, on merits it cannot be held that Sanjeev Coke violated judicial discipline.One cannot lose sight of the fact that in Sanjeev Coke this Court did not decide the case only on the basis of the opinion of Krishna Iyer, J. in Ranganatha Reddy but on merits on the validity of the Nationalisation Act.

Therefore, Sanjeev Coke is good law insofar as on the merits of the matter is concerned.

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.

My view: It may be obiter but has great persuasive value.The discussion made above may be noted.

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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".

My view: Yes, privately owned resources except "personal effects" as explained above can come within the scope and ambit of the phrase "material resources of the community" provided such resources get transformed as "resources of the community" as discussed by me above. To reiterate, it would not include personal effects as discussed by me in paragraph 7.6 above.

In view of my aforesaid discussion, I find that the controversy whether every resource owned by an individual can be considered as "material resource of the community" stands clarified.

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".

My view: I agree. In addition, I also reiterate my discussion and conclusion on how privately owned material resource can be transformed as "material resource of the community".


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 nationalisation. In the specific case, the Court must determine whether the distribution "subserves the common good".

My view: The term "distribution" has no doubt a wide connotation but vesting in the State of a particular privately owned "material resource" or nationalisation 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 nationalisation could be utilised 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.

Alternatively, the State could decide to actually distribute the "material resources of the community" to eligible and deserving persons by a way of assignment, lease, allotment, grant, etc.

The same would also come within the scope and ambit of the expression "distribution".

24. 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.

25. Reference is answered in the above terms.

26. The Registry to place the matters before Hon'ble the Chief Justice of India for seeking orders for being listed before the appropriate Bench.

27. I must place on record my sincere appreciation to the learned Attorney General, learned Solicitor General and their teams, learned senior counsel and learned counsel appearing for the respective parties and learned instructing counsel for their valuable assistance to this Bench.

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Sudhanshu Dhulia, J.

I have the advantage of going through the well-researched and erudite judgment of the learned Chief Justice D.Y. Chandrachud.

During the hearing of the case itself, it was difficult to ignore the scope and ambit of the reference and that of Article 31-C in light of the amendments and judgements pronounced by this Court, as they had a crucial bearing on the question on Article 39(b) i.e. whether privately owned resources would be a part of "material resources of the community". Logically, therefore, the arguments which were advanced at the bar, which were both long and scholarly, on both sides, were on these two crucial questions, and it is for this reason that the judgment of learned Chief Justice Chandrachud is in two parts. Part one i.e. Part (C) which is on Article 31-C and part two i.e. (D), which is on Article 39(b). I completely agree with part (C) of the judgment i.e. on Article 31-C.

In Part (C), the question which had come up for discussion was whether Article 31-C still protects Article 39(b) and (c) and if it does, then to what extent? The learned senior counsel Shri Zal Andhyarujina, learned counsel Shri Sameer Parekh, learned counsel Mr. H Devarajan for the appellants and learned senior counsel Ms. Uttara Babbar for one of the intervenors, argued at length and submitted that after the decision in Minerva Mills v. Union of India (1980) 3 SCC 625, Article 31-C does not survive, and logically therefore the laws which are made in furtherance of the constitutional provisions contained in Article 39(b) and (c) will not have the protection of Article 31-C. On the other hand, the learned Attorney General for the respondents i.e., Union of India and Shri Rakesh Dwivedi, Sr. Advocate for the State of West Bengal would argue that even prior to Minerva Mills, the majority in the thirteen Judge Bench decision in Kesavananda Bharati v. State of Kerala

(1973) 4 SCC 225 had upheld the validity of the unamended Article 31-C and to that extent Article 31-C still exists and gives protection to laws made in furtherance of policies in Article 39 (b) and (c). We have also heard Shri Tushar Mehta, learned Solicitor General of India and Senior Advocate Shri Gopal Sankaranarayanan on behalf of the respondents.


As I have already expressed my complete agreement on the opinion given by the learned Chief Justice on this point, nothing further needs to be said. The unamended Article 31-C to the extent held valid in Kesavananda Bharati survives.

But I am afraid, I cannot accept the finding of the learned Chief Justice on the second part of his judgment i.e., on the meaning of the phrase "material resources of the community" given in Article 39 (b).

My reasons for the disagreement are as follows:

The present appeals before us have travelled through three references, which have been discussed by the learned Chief Justice in detail, and finally the reference has been made by a Bench of Seven Judges that the interpretation of Article 39 (b) requires a reconsideration. The reference is as follows:

"5. Having given due consideration, we are of the opinion that this interpretation of Article 39(b) requires to be reconsidered by a Bench of nine learned judges: we have some difficulty in sharing the broad view that material resources of the community under Article 39(b) covers what is privately owned.

6. Given that there is some similarity in the issues here involved and in I.R. Coelho v. State of T.N. [(1999) 7 SCC 580. Ed.: The nine-judge bench decision therein is reported as I.R. Coelho v. State of T.N. (2007) 2 SCC 1] which already stands referred to a larger Bench, preferably of nine learned Judges, we are of the view that these matters should be heard by a Bench of nine learned Judges immediately following the hearing in I.R. Coelho".

The question as to whether privately owned resources are part of "material resources of the community" as used in Article 39(b), has been answered by the learned Chief Justice as "yes", "the phrase may include privately owned resources", but not in the expansive manner as held by the three learned judges in State of Karnataka

v. Ranganatha Reddy (1977) 4 SCC 471 and later in Sanjeev Coke Mfg. Co. v. Bharat Coking Coal Ltd. (1983) 1 SCC 147. The judgment further sets limits on what could be "material resources of the community".

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I am unable to accept the above proposition as this view ultimately holds that not all privately owned resources are "material resources of the community". Not only this it further limits the hands of the legislature to a non-exhaustive list of factors to determine which resources can be considered as "material resources". In my opinion there is no need for this pre-emptive determination.

The definition of "material resources of the community" was purposely kept in generalized and broad-based terms, with which I intend to deal in some detail later in this judgment. I entirely endorse the view taken by the Three learned Judges in Ranganatha Reddy and by the Five learned Judges in Sanjeev Coke, as to the scope and ambit of "material resources of the community". Privately owned resources are a part of the "material resources of the community".

The question which is there before us is not simply a legal or constitutional question. The question is as much rooted in our modern and contemporary history, as it is in law. Therefore, discussions on the historical background immediately preceding independence as well as on the debates in the Constituent Assembly are extremely important, in my consideration.

5. "We may have democracy, or we may have wealth concentrated in the hands of a few, but we cannot have both." This expression is attributed to Justice Louis D. Brandeis,1 an eminent Jurist and a former Judge of US Supreme Court. Without doubt, when Articles 38 and 39 of the Constitution of India were being incorporated in Part IV of our Constitution, a similar thought dominated the minds of the framers of our Constitution. It is for this reason that Granville Austin calls the Indian Constitution, "first and foremost a social document".2 Our Constitution is not merely a roadmap for governance, it is also a vision for a just and equitable society. The members of our constituent assembly were freedom fighters, social reformers, scholars and lawyers. The struggle against colonial rule for them was not just to liberate India politically, but also to change it for the better, both socially and economically, as inequality reigned everywhere in our

1 Louis Dembitz Brandeis was an associate Judge on the U.S. Supreme Court from 1916-1939. See Mr.

Justice Brandeis, Great American: Press Opinion & Public Appraisal (The Modern View Press, Saint Louis, 1941), pg.42.

2 Granville Austin, The Indian Constitution: Cornerstone of a Nation (Oxford University Press, New Delhi, Second Impression 2000), Pg. 50.


society; inequality of wealth, income and status. India's freedom struggle therefore was as much a struggle to overthrow the colonial yoke, as it was to remove inequality and poverty from a deeply caste ridden society. Nothing articulates this idea better than the closing speech of Dr. B. R. Ambedkar in the Constituent Assembly on November 25, 1949. This is what he had said:

"……We must begin by acknowledging the fact that there is complete absence of two things in Indian Society. One of these is equality. On the social plane, we have in India a society based on the principle of graded inequality which means elevation for some and degradation for others. On the economic plane, we have a society in which there are some who have immense wealth as against many who live in abject poverty. On the 26th of January 1950, we are going to enter into a life of contradictions. In politics we will have equality and in social and economic life we will have inequality. In politics we will be recognizing the principle of one man one vote and one vote one value. In our social and economic life, we shall, by reason of our social and economic structure, continue to deny the principle of one man one value. How long shall we continue to live this life of contradictions? How long shall we continue to deny equality in our social and economic life? If we continue to deny it for long, we will do so only by putting our political democracy in peril. We must remove this contradiction at the earliest possible moment or else those who suffer from inequality will blow up the structure of political democracy which this Assembly has so laboriously built up." 3

The Constitution of India has deep roots in our freedom struggle and its Part III and Part IV are the embodiment of the hope that one day the tree of true liberty would bloom in India.4

Our effort here should be to find the true meaning of the expression "material resources of the community", from its historical perspective as well, and not to limit this analysis to legalism alone, considering the

3 Constituent Assembly Debates, Vol. XI, Pg.979.

4 Granville Austin, The Indian Constitution: Cornerstone of a Nation (Oxford University Press, New Delhi, Second Impression 2000), Pg. 50.

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nature of the case. Also we have to go beyond textual interpretation.

Not because text is not important. It is important, but it is only the starting point, not the end point. The meaning of the text has to be located within the general context.5

This Bench has to answer whether private properties or privately owned resources are included in the phrase "material resources of the community", given in Article 39(b) of the Constitution of India.

This question has engaged much attention of our Court already.

Initially the question was referred to a Five Judge Constitution Bench which in turn referred it to a Seven Judge Bench and finally to the present Nine Judge Bench. The journey this reference has taken, has already been covered in detail by the Chief Justice in his judgment, and therefore one need not go into it again.

Interpretation of a Constitution is different from interpreting an ordinary statute. The obvious difference is in the importance of the Constitution, in the hierarchy of the laws of the land, where the Constitution occupies the highest place. Not only this, all laws must adhere to it, and all other laws directly or indirectly find their source or sustenance from the Constitution. The Constitution therefore sits at the top of the normative pyramid. In his seminal work 'Purposive Interpretation in Law', Aharon Barak explains the importance of a Constitution as follows:

"It shapes the character of society and its aspiration throughout history. It establishes a nation's basic political points of view. It lays the foundation for social values, setting goals, obligations and trends. It is designed to guide human behavior over an extended period of time, establishing the framework for enacting legislation and managing the national government. It reflects the events of the past, lays a politics, society, and law. The unique characteristics of a constitution warrant a special interpretive approach to its interpretation, because "it is a constitution we are expounding".6

5 Aharon Barak, The Judge in a Democracy (Princeton University Press, 2006), Pg. 308.

6 Aharon Barak, Purposive Interpretation in Law (Universal Law Publishing Co., 2007), Pg. 370.


A Constitution is also designed by one generation with an eye towards many future generations to come, so that it is able to withstand the vagaries of times. It is a law having special character.7

While interpreting the Canadian Charter of Rights and Freedoms, which is a part of the Canadian Constitution, Chief Justice Dickson of the Canadian Supreme Court wrote:

"The task of expounding a constitution is crucially different from that of construing a statute. A statute defines present rights and obligations. It is easily enacted and as easily repealed. A constitution, by contrast, is drafted with an eye to the future. Its function is to provide a continuing framework for the legitimate exercise of governmental power and, when joined by a Bill or a Charter of rights, for the unremitting protection of individual rights and liberties.

Once enacted, its provisions cannot easily be repealed or amended. It must, therefore, be capable of growth and development over time to meet new social, political and historical realities often unimagined by its framers. The judiciary is the guardian of the Constitution and must, in interpreting its provisions, bear these considerations in mind." 8

In determining the meaning of a provision of a Constitution, we have to explore what was in the minds of the framers of the Constitution and what were the objective realities of the times when it was being written. In other words, there is both a subjective interpretation and an objective interpretation. The subjective interpretation would be to find out what was in the minds of the framers of the Constitution while incorporating a particular provision. This method, though helpful in getting to the meaning, will alone not help us. The reason is again explained by A. Barak:

"The purpose of the constitutional text is to provide a solid foundation for national existence. It is to embody the basic aspirations of the people. It is to guide future generations by its basic choices. It is to control majorities and protect

7 Aharon Barak, Hermeneutics and Constitution Interpretation, 14 Cardozo L. Rev. 767 (1992-93), Pg. 772.

8 Hunter v. Southam Inc (1984) 2 S.C.R 145, Pg. 156. Also see, Aharon Barak, Purposive Interpretation in Law, Pgs. 370-371.

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individual dignity and liberty. All these purposes cannot be fulfilled if the only guide to interpretation is the subjective purposes of the framers of the constitutional text. The constitution will not achieve its purposes if its vision is restricted to the horizons of its founding fathers. Even if we assume the broadest generalizations of subjective purpose, this may not suffice. It may not provide a solid foundation for modern national existence. It may be foreign to the basic aspirations of modern people. It may not be consistent with the dignity and liberty of the modern human being. A constitution must be wiser than its creators".9

Subjective interpretation alone will not give us the full picture and we have to look at the objective purpose for bringing certain provisions in the Constitution. Thus, in our interpretation of the Constitution both subjective and objective purpose is important.

"The objective purpose of a constitution is the interests, goals, values, aims, policies, and function that the constitutional text is designed to actualize in a democracy.

A democratic legal system's values and principles shape the objective purpose of its constitution".10

What was it that the Constitution sought to achieve. What are the foundations on which it stands. What is its purpose and what are its essential values. The debates of the Constituent Assembly will shed some light on why and for what purpose certain provisions were incorporated in our Constitution. But for this we have to first understand what kind of a society, socially and economically, were we to build and what kind of Constitution we thought would best build that society.

The earliest indication of what the Constitution of free India was going to be, can be seen in the Karachi Resolution of the Indian National Congress, adopted in the year 1931, which was read in detail before us by Sri Rakesh Dwivedi, Senior Advocate representing State of West Bengal. Many of the provisions which later came to be incorporated in Part III & IV of the Constitution can be traced

9 Aharon Barak, Hermeneutics and Constitution Interpretation, 14 Cardozo L. Rev. 767, (1992-93), Pg. 772.

10 Aharon Barak, Purposive Interpretation in Law (Universal Law Publishing Co., 2007), Pg. 377.


to this Resolution. The Karachi Resolution can also be seen as a forerunner to Fundamental Rights and Directive Principles of State Policy which are the heart and soul of the Indian Constitution.11

The Karachi Resolution, inter alia, visualised the role of State in free India. The resolution, adopted by the All India Congress Committee, states that "the State shall own or control key industries and services, mineral resources, railways, waterways, shipping and other means of transport ".12 The resolution speaks of democracy as another name for "socialism" and "socialist principles" of equality, distribution of wealth and grassroot participation of people.

The Constituent Assembly, which was formed in 1946, to frame a Constitution for free India consisted of members elected by the newly elected members of the Legislative Assemblies of Provinces (elected in January 1946), as well as nominated members who represented the princely States. What kind of Constitution was to be given to the nation was indicated by Jawahar Lal Nehru in the "Objective Resolution" which he placed before the Constituent Assembly on December 13, 1946. This is a watershed event in the making of the Indian Constitution,13 as it sets forth the task and the objects to be achieved by the Constituent Assembly. The task before the Constituent Assembly was "to free India through a new Constitution, to feed the starving people and clothe the naked masses, and to give every Indian the fullest opportunity to develop himself according to capacity."14

The Objective Resolution moved by Jawaharlal Nehru before the Constituent Assembly, which was adopted by the Assembly in December 1946 speaks of secularism and democratic principles of equality, liberty and fraternity to be a part of our Constitution.

There was an earnest plea before the Assembly by Nehru to adopt socialist principles in order to uplift the economy and the condition

11 Granville Austin calls Fundamental Rights and Directive Principles of State Policy as "Conscience of the Constitution". See Granville Austin, The Indian Constitution: Cornerstone of a Nation (Oxford University Press, New Delhi, Second Impression 2000), Pg. 50.

12 A. M Zaidi et al., The Encyclopaedia of the Indian National Congress (Vol.-10: 1930-1935): The Battle for Swaraj (S. Chand & Co. Ltd., 1980), Pg. 183.

13 Rakesh Batabyal (ed.), The Penguin Book of Modern India Speeches (Penguin Books, 2007), Pg. 365.

14 It was said by Jawahar Lal Nehru in Constituent Assembly of India on January 22,1947. See Constituent Assembly Debates, Vol. II, Pg. 316.

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of the vast majority of its people from poverty and illiteracy. The Objective Resolution was the harbinger of the constitutional values of distributive justice and social engineering in the Indian Constitution.

Many of the provisions later became a part of the Directive Principles, particularly in Articles 38 and 39 of the Constitution of India. This is what was said by Nehru on Dec 13, 1946 while discussing the Objective Resolution:

"Well, I stand for Socialism and, I hope, India will stand for Socialism and that India will go towards the constitution of a Socialist State….. What form of socialism again is another matter for your consideration…. [We avoided an expression which could have given rise to controversy].

Therefore we have laid down, not theoretical words and formulae, but rather the content of the thing we desire." 15

Justice O. Chinnappa Reddy in his book "The Court and the Constitution of India: Summits and Shallows" explains that socialism is another name for humanism: -

"…….After all, what is the essence of Socialism? Socialism is no more than humanism or at any rate the essential step towards humanism. The central problem of socialism (that is, humanism) is the problem of man, and its most essential aspect is that of creating conditions for man's happiness and full development." 16

Apart from the fact that "socialism" is now a part of our Preamble, many of the provisions in Part IV of the Constitution are rooted in socialist philosophy, such as Articles 38, 39, 39A, 41, 42, 43, 43A and 47. A word on socialism, which has a direct influence on Article 38 and Article 39 (b) and (c), would be in order. 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. "Indian socialism is about what the Constitution of India wants to have for the people of India, the establishment of

15 Constituent Assembly Debates, Vol. I, Pg. 62.

16 O. Chinnappa Reddy, The Court and the Constitution of India: Summits and Shallows (Oxford University Press, 2008), Pg. 139.


a welfare state."17 What measures this welfare State has to adopt in a democracy is given in the Charter of Instructions contained in Part IV of the Constitution, that is Directive Principles of State Policy, which we will discuss shortly.

10. In the 1940s, when discussions were on as to what shape the free and independent nation would take, the nascent industrial class in India also understood well that the path independent India was to take will be influenced by socialist principles. The industrial class, though in many ways a beneficiary of the colonial rule, was essentially nationalist in character. It gave broad support to the national movement against imperialism and associated with the nationalist movement both as a segment of Indian society and as a separate and distinct political force; though it did not do so through direct participation.18 "The Indian capitalist class had developed a long-term contradiction with imperialism while retaining a relationship of short-term dependence on and accommodation with it."19

Our industrial community understood well, the role of the State in heavy industries and infrastructure, which was inevitable, even desirable, as till that time there was not enough capital in private hands, which could take large scale infrastructural projects, like dams, roads, railways and heavy industries. The industrial class recognised that it was the State alone which has to be the biggest investor and proponent of industrial revolution in India. For this reason in 1944- 45, a group of industrialists in India took out a paper called "A Plan Of Economic Development For India", which is popularly known as the 'Bombay Plan'.20 Some even refer to it as the Tata-Birla Plan.

The Bombay Plan was a visionary scheme drafted in the year 1944 by the then leaders of Indian industry and commerce. The plan recommended an economic policy for the National government, which would soon be taking power. The following were the prominent signatories to the plan:

17 O. Chinnappa Reddy, The Court and the Constitution of India: Summits and Shallows (Oxford University Press, 2008), Pg. 137.

18 Bipan Chandra, Nationalism & Colonialism in Modern India (Orient Longman, 1979), Pg. 158.

19 Bipan Chandra, Nationalism & Colonialism in Modern India (Orient Longman, 1979), Pg. 145.

20 Sir P.Thakurdas, JRD TATA et al., A Plan of Economic Development For India (Part II) (1944). Also see Sanjay Baru (ed.), The Bombay Plan (Rupa Publications India Pvt Ltd., 2018), Pg. 292.

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JRD Tata, one of India's pioneer industrialists.

G. D. Birla, the leader of the Birla group of industries.

Sir Ardeshir Dalal, an able administrator and technocrat.

Lala Shriram, a prominent north Indian industrialist.

Kasturbhai Lalbhai, a famous Indian Industrialist.

D. Shroff, director of a number of prominent industries including a few of the Tata group.

John Mathai, professor of economics at Madras University and a political personality.

Purushottamdas Thakurdas, a Bombay based businessman and business leader.

According to the Bombay Plan, per capita income in the country would double in 15 years from the implementation of the plan. It also laid down policies and methods for securing a better standard of living, improving medical and educational conditions. It also aimed at increasing agricultural production by 130% mainly through promotion of cooperative farming.

But it is the second part of the Bombay plan which is relevant here, where it recognised nationalisation of key industries and the dominant role of the State in the economic development of the Country. It accepted as fait accompli the dominant role of socialism in the economic policies of the national government, but was nevertheless determined to retain and carve out a new space for private capital.

It admitted that the existing system based on private enterprise and ownership has not provided the desired results, particularly in the distribution of national income and sought to overcome the weaknesses of private enterprises. This is what the Bombay plan says:

"...On the one hand, we recognize that the existing economic organization, based on private enterprise and ownership, has failed to bring about a satisfactory distribution of the national income. On the other hand, we feel that in spite of its admitted shortcomings, it possesses certain features which have stood the test of time and have enduring


achievements to their credit. While it would be unwise to blind ourselves to the obvious weaknesses of the present system, we think it would be equally a mistake to uproot an organization which has worked with a fair measure of success in several directions." 21

According to Professor Aditya Mukherjee, through the Bombay Plan the industrial class in India sought a compromise in the inevitable socialist pattern of our national economy:

"The attempt was to incorporate 'whatever is sound and feasible in the socialist movement' and see 'how far socialist demands could be accommodated without capitalism surrendering any of its essential features'. The eventual plan (Bombay Plan) was, therefore, to seriously take up the questions of equitable distribution, partial nationalization, etc., with this objective clearly in mind. 'A consistent ... programme of reforms' was the 'most effective remedy against violent social upheavals". 22

The purpose of discussing the Bombay Plan is to demonstrate that the 1940s and early 1950s were an era when socialist principles were acceptable to all classes, though with reservations. The young nation short of capital, took a conscious decision to imbibe these principles not only in its economy but also thought it prudent to include some of the provisions in Part IV of the Constitution; the Directive Principles of State Policies.

11. Coming now to the Directive Principles of State Polices. On November 4, 1948, while presenting the draft Constitution to the Constituent Assembly Dr. B. R. Ambedkar elaborated each provision of the Constitution, and laid particular stress on the Directive Principles of State Policies:

"The Directive Principles are like the Instruments of Instructions which were issued to the Governor-General and to the Governors of the colonies and to those of India by the British Government under the 1935 Act. Under the Draft Constitution it is proposed to issue such instruments

21 Sir P. Thakurdas, JRD TATA et al., Introductory, in A Plan of Economic Development For India (Part II) (1944). Also see Sanjay Baru (ed.), The Bombay Plan (Rupa Publications India Pvt Ltd., 2018), Pg. 292.

22 Aditya Mukherjee, Political Economy of Colonial and Post-Colonial India (Primus Books, 2022), Pg.192.

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to the President and to the Governors. The texts of these Instruments of Instructions will be found in Schedule IV of the Constitution. What are called Directive Principles is merely another name for Instruments of Instructions.

The only difference is that they are instructions to the Legislature and the Executive. Such a thing is to my mind to be welcomed. Wherever there is a grant of power in general terms for peace, order and good government, it is necessary that is should be accompanied by instructions regulating its exercise.

The Inclusion of such instructions in a Constitution such as is proposed in the Draft becomes justifiable for another reason. The Draft Constitution as framed only provides a machinery for the government of the country. It is not a contrivance to install any particular party in power as has been done in some countries. Who be, if the system is to satisfy the tests of democracy. But whoever captures power will not be free to do what he likes with it. In the exercise of it, he will have to respect these Instruments of Instructions which are called Directive Principles. He cannot ignore them. He may not have to answer for their breach in a Court of Law. But he will certainly have to answer for them before the electorate at election time.

What great value these Directive Principles possess will be realised better when the forces of right contrive to capture power." 23

Directive Principles of State Policy incorporated in Part IV of the Constitution of India were therefore to be the "vehicles" for the change of a backward and semi feudal society, towards a journey for a modern and equitable society. Socialist principles were thought to be necessary in making economic policies of the State if this change was to become a reality. For a fair distribution of wealth and resources, and for removal of inequality Articles 38 and 39 of the Constitution were incorporated, which largely contain the democratic and socialist principles of equality and fair distribution.

23 Constituent Assembly Debates, Vol. VII, Pg. 41.


12. Initially when Fundamental Rights and Directive Principles of State Policy were debated and discussed in the Constituent Assembly, they were to be a part of the same group of rights. Together they were to be the conscience of the Constitution.24 It was only later that a division was made between them on the basis of justiciable and non-justiciable rights; one being placed in Part III and the other in Part IV of the Constitution. Directive Principles, as we know, are not enforceable by any court, but as it has been stressed multiple times by this Court, these are nevertheless the principles which are fundamental for the governance of the country. This is what Article 37 of the Constitution mandates:

"37. Application of the principles contained in this Part. - The provisions contained in this Part shall not be enforceable by any court, but the principles therein laid down are nevertheless fundamental in the governance of the country and it shall be the duty of the State to apply these principles in making laws."

The heart and soul of Part IV is Article 38 of the Constitution of India, which reads as under:

"38. State to secure a social order for the promotion of welfare of the people. - (1) The State shall strive to promote the welfare of the people by securing and protecting as effectively as it may a social order in which justice, social, economic and political, shall inform all the institutions of the national life.

(2) The State shall, in particular, strive to minimise the inequalities in income, and endeavour to eliminate inequalities in status, facilities and opportunities, not only amongst individuals but also amongst groups of people residing in different areas or engaged in different vocations."

Article 39 of the Constitution of India, which is to be interpreted by us, has to be read in light of Articles 37 and 38. Article 39 reads as under:

24 Granville Austin, The Indian Constitution: Cornerstone of a Nation (Oxford University Press, New Delhi, Second Impression 2000), Pg. 50.

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"39. Certain principles of policy to be followed by the State. - The State shall, in particular, direct its policy towards securing-

(a) that the citizens, men and women equally, have the right to an adequate means of livelihood;

(b) that the ownership and control of the material resources of the community are so distributed as best to subserve the common good;

(c) that the operation of the economic system does not result in the concentration of wealth and means of production to the common detriment;

(d) that there is equal pay for equal work for both men and women;

(e) that the health and strength of workers, men and women, and the tender age of children are not abused and that citizens are not forced by economic necessity to enter avocations unsuited to their age or strength;

(f) that children are given opportunities and facilities to develop in a healthy manner and in conditions of freedom and dignity and that childhood and youth are protected against exploitation and against moral and material abandonment."

Not just the above provisions, but several other provisions in the Directive Principles are based on socialist philosophy of a welfare State. These are:

Article 39A - Equal justice and free legal aid.25

Article 41 - Right to work, to education and to public assistance in certain cases.

Article 42 - Provision for just and humane conditions of work and maternity relief.

Article 43 - Living wage, etc., for workers.

25 Inserted by s.8 of the Constitution (Forty-Second Amendment) Act, 1976.


Article 43A - Participation of workers in management of industries.26

Article 47 - Duty of the State to raise the level of nutrition and the standard of living and to improve public health.

Directive Principles are non-justiciable and therefore Courts cannot direct an authority to implement any of the Directive Principles contained in Part IV of the Constitution, unlike in Part III, the Fundamental Rights. But then should the Courts come in the way of the State which brings a law in furtherance of the Directive Principles? Is the State not following its charter of instructions which are "fundamental in the governance of the Country"? In my opinion, since the directive principles are fundamental in the governance of the Country, the Courts should best apply restraint, unless such implementation is destroying the core principles of the Constitution.

Directive Principles of State Policy lay down the goals which can only be achieved in a welfare economy. The philosophy behind Directive Principles is the welfare of the community, that is removal of poverty, inequality and ensuring fair distribution of wealth. These are some of its governing features. It has never been its aim to generate profit and wealth for individuals.

13. Introduction of Directive Principles in our Constitution was a unique and innovative attempt by the framers of the Constitution, as it had till then hardly any precedent in the written Constitutions of the world, except the Irish Constitution, from where these principles have largely been borrowed. It was still an innovative step for it expands and elaborates Directive Principles, unlike as given in the Irish Constitution. While moving the Constitution (First Amendment) Bill, 1951 in Parliament, the Prime Minister said this:

"The Constitution lays down certain Directive Principles of State Policy and after long discussions we agreed to them and they point out the way we have got to travel.

The Constitution also lays down certain Fundamental Rights. Both are important. The Directive Principles of State Policy represent a dynamic move towards a certain

26 Inserted by s.9 of the Constitution (Forty-Second Amendment) Act, 1976.

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objective. The Fundamental Rights represent something static, to preserve certain rights which exist. Both again are right".27

Again, while moving the Constitution (Fourth Amendment) Bill, 195428 the Prime Minister stressed on the importance of Directive Principles and held them to be more important than Fundamental Rights, it was said as under:

"I would like to draw the attention of the house to something that is not adequately stressed either in the Parliament or in the Country. We stress greatly and argue in Courts of Law about the Fundamental Rights. Rightly so, but there is such a thing also as the Directive Principles of Constitution… Those are, as the Constitution says, the fundamentals in the governance of the Country … if, … there is an inherent contradiction in the Constitution between the Fundamental Rights and the Directive Principles of State Policy,…. It is up to this Parliament to remove the contradiction and make the Fundamental Rights subserve the Directive Principles of the State Policy".29

At the same time, another Member of Parliament M.S. Gurupadaswamy, while speaking on the Constitution (Fourth Amendment) Bill, 1954 underlined the importance of Directive Principles of State Policy and its purpose:

"I may point out that the rights that have been given in the chapter on Directive Principles are more fundamental than some of the so called Fundamental Rights. I feel that the principles enunciated in Part III and Part IV of the Constitution are inconsistent in a way… it is unfortunate that the Directive Principles are treated as less important than the so called Fundamental Rights. Some of the Directive Principles seem to be more fundamental than the Fundamental Rights. The Fundamental Rights chapter

27 See Justice O. Chinnappa Reddy, The Court and the Constitution of India: Summits and Shallows (Oxford University Press, 2008), Pgs. 74-75.

28 This bill led to the Constitution (Fourth Amendment) Act, 1955.

29 See Justice O. Chinnappa Reddy, The Court and the Constitution of India: Summits and Shallows (Oxford University Press, 2008), Pgs. 74-75.


deals only with liberal rights of individuals and they seem to conform to the old school of thought which has outlived its utility, the school of utilitarians and the liberals. As against this the principles enunciated in Part IV approach a Socialist pattern. The sincerity or the goodness of this government will be judged by how far they go to implement these Directive Principles. It is very easy to stick to Fundamental Rights and appear progressive while doing nothing to reduce class difference. But real liberty will have no meaning unless there is economic equality".30

14. To reiterate, the purpose of the Directive Principles is the welfare of the people and of the community. Provisions in Part IV of the Constitution of India are directions to the State to bring such legislation which would make the 'Welfare State' a reality, as it will be the deeds of a 'Welfare State' which will truly make it a 'Welfare State'. Directive Principles have no meaning if they remain in the Constitution as a pious precept, as some members of the Constituent Assembly believed.31 Directive Principles must be enforced through law.

When and how it is done will depend on our Parliament and State legislatures as it is in their domain, but do they must, for these are "fundamental for the governance of the Country". Directive Principles of State Policy are the guide maps which will take our State towards a 'Welfare State'. Justice O. Chinnappa Reddy in Chapter 9 of his book32 writes:

"To any person interested in the building up of a welfare state, it is clear that the Directive Principles of State Policy are at least as fundamental as the Fundamental Rights and far more important from the point of view of the objectives to be attained as stated in the preamble which is the key to the Constitution. It is a mistake to

30 See Justice O. Chinnappa Reddy, The Court and the Constitution of India: Summits and Shallows (Oxford University Press, 2008), Pgs. 74-75.

31 P.S. Deshmukh said "We do not want to depend on mere platitudes and pious wishes" (Constituent Assembly Debates, Vol. V, Pg.341). N. Ahmad referred to them as "pious expressions" (Constituent Assembly Debates, Vol. VII, Pg. 225). B. Das called them "pious hopes and wishes" (Constituent Assembly Debates, Vol. VII, Pg. 539). Kazi Syed Karimuddin also called them "pious wishes" (Constituent Assembly Debates, Vol. VII, Pg. 473).

32 See Justice O. Chinnappa Reddy, The Court and the Constitution of India: Summits and Shallows (Oxford University Press, 2008), Pg. 76.

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suppose, with due respect to some eminent judges who so supposed, that the Fundamental Rights are more 'transcendental' or 'primordial' than the Directive Principles.

The difference between the Fundamental Rights and the Directive Principles lies in this that the Fundamental Rights are aimed at assuring political freedom to citizens by protecting them against excessive state action while the Directive Principles are aimed at securing social and economic freedoms for citizens by state action. The one is concerned with the rights of citizens vis-à-vis the state while the other is concerned with the duties of the state vis-à-vis the body of citizens. In the words of Ambedkar, the Fundamental Rights make India a political democracy and the Directive Principles would make it a social and economic democracy."

It is in the Directive Principles of State Policy that we find a vision of the social revolution that the framers had in mind for our Country. It aimed at making people of India free in a positive sense, "free from the passivity engendered by centuries of coercion by society and by nature, free from the abject physical conditions that had prevented them from fulfilling their best selves".33

15. In the beginning of our functioning as a new Republic, the nonenforceability of Directive Principles vis-à-vis the Fundamental Rights weighed with the Courts as well as some prominent "Legal Scholars",34 which resulted in the importance and significance of Directive Principles being undermined.

In State of Madras v. Champakam Dorairajan, 1951 SCC OnLine SC 30, this Court held as under:

"…..The Directive Principles of State Policy which by Article 37 are expressly made enforceable by a court cannot override the provisions found in Part III which, notwithstanding other provisions are expressly made enforceable by appropriate writs, orders or directions

33 Granville Austin, The Indian Constitution: Cornerstone of a Nation (Oxford University Press, New Delhi, Second Impression 2000), Pg. 51.

34 H.M. Seervai has been extremely critical of the role of directive principles, to the extent of considering it almost superfluous and unnecessary.


under Article 32. The Chapter on Fundamental Rights is sacrosanct and not liable to be abridged by any legislative or executive act or order except to the extent provided in the particular Article in Part III. The Directive Principles of State Policy have to conform to and run subsidiary to the Chapter on Fundamental Rights. In our opinion that is the correct way in which the provisions found in Parts III and IV have to be understood…." 35

16. A subtle change is seen later in the interpretation of Directive Principles, where the Court could see that an attempt should be made to harmoniously construct Directive Principles with Fundamental Rights. In In Re: Kerala Education Bill, 1957, 1958 SCC OnLine SC 8, this Court states as under:

"….The directive principles of State policy have to conform to and run as subsidiary to the Chapter on Fundamental Rights… nevertheless, in determining the scope and ambit of the fundamental rights relied on by or on behalf of any person or body the court may not entirely ignore these directive principles of State policy laid down in Part IV of the Constitution but should adopt the principle of harmonious construction and should attempt to give effect to both as much as possible." 36

In Mohd. Hanif Quareshi and others v. State of Bihar and others, 1957 SCC OnLine 629, this Court again stresses on harmonious interpretation:

"…….a harmonious interpretation has to be placed upon the Constitution and so interpreted it means that the State should certainly implement the directive principles but it must do so in such a way that its laws do not take away or abridge the fundamental rights." 37

17. The Constitution mandates that the Parliament and the legislative bodies of the States must apply Directive Principles in making their laws. They would be failing in their duty if they ignore this

35 1951 SCC OnLine SC 30, para 15.

36 1958 SCC OnLine SC 8, para 8.

37 1957 SCC OnLine SC 629, para 12.

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Constitutional mandate. It will be the same for the Courts if they fail to enforce Fundamental Rights which are enshrined in Part III of the Constitution. These are coordinate functions and must be performed in harmony.38 The earlier position taken by this Court in judgments cited above, in my opinion, did not reflect the correct position of the Constitution. An extremely eloquent expression underlining the significance of Directive Principles was given by Justice Y.V.

Chandrachud in Kesavananda Bharati:

"…..As I look at the provisions of Parts III and IV, I feel no doubt that the basic object of conferring freedoms on individuals is the ultimate achievement of the ideal set out in Part IV. A circumspect use of the freedoms guaranteed by Part III is bound to subserve the common good but voluntary submission to restraints is a philosopher's dream. Therefore Article 37 enjoins the State to apply the Directive Principles in making laws. The freedoms of a few have then to be abridged in order to ensure the freedom of all. It is in this sense that Parts III and IV, as said by Granville Austin, together constitute the 'conscience of the Constitution'. The Nation stands today at the crossroads of history and exchanging the time honoured place of the phrase, may I say that the Directive Principles of State Policy should not be permitted to become 'a mere rope of sand'. If the State fails to create conditions in which the fundamental freedoms could be enjoyed by all, the freedom of the few will be at the mercy of the many and then all freedoms will vanish. In order, therefore, to preserve their freedom, the privileged few must part with a portion of it." 39

Kesavananda Bharati, is a landmark decision which is notable for the strong but positive rupture it makes in our Constitutional journey and lays down a new path of Constitutional understanding and interpretation with its "basic structure" doctrine. Kesavananda Bharati also firmly establishes the importance of directive principles

38 P.K. Tripathy, Spotlights on Constitutional Interpretation (N.M Tripathi Pvt. Ltd., 1972), Pg. 295.

39 [1973] Supp. 1 SCR 1 : (1973) 4 SCC 225, para 2120.


in our Constitution and in interpretation of the legislative measures which have been brought about for the enforcement of Directive Principles.

Later, in Minerva Mills, Justice Y.V. Chandrachud further reiterates this position:

"Part III and Part IV are like two wheels of a chariot, one no less important than the other. In other words, Indian Constitution is founded on the bedrock of the balance between Parts III and IV. This harmony and balance between Fundamental Rights and the Directive Principles is an essential feature of the Basic Structure of the Constitution." 40

In State of Kerala v. N.M. Thomas (1976) 2 SCC 310, Justice K.

K. Mathew while concurring with the majority opinion blends equality in Article 14 and 16 with Part IV of the Constitution of India. What he says is extremely relevant:

"Today, the political theory which acknowledges the obligation of Government under Part IV of the Constitution to provide jobs, medical care, old age pension, etc., extends to human rights and imposes an affirmative obligation to promote equality and liberty. The force of the idea of a State with obligation to help the weaker sections of its members seems to have increasing influence in constitutional law. The idea finds expression in a number of cases in America involving social discrimination and also in the decisions requiring the State to offset the effects of poverty by providing counsel, transcript of appeal, expert witnesses, etc. Today, the sense that Government has affirmative responsibility for elimination of inequalities, social, economic or otherwise, is one of the dominant forces in constitutional law. While special concessions for the underprivileged have been easily permitted, they have not traditionally been required. Decisions in the areas of criminal procedure, voting rights and education in America suggest that the traditional approach may

40 [1981] 1 SCR 206 : (1980) 3 SCC 625, para 56.

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not be completely adequate. In these areas, the inquiry whether equality has been achieved no longer ends with numerical equality; rather the equality clause has been held to require resort to a standard of proportional equality which requires the State, in framing legislation, to take into account the private inequalities of wealth, of education and other circumstances".41

In State of Gujarat v. Mirzapur Moti Kureshi Kassab Jamat and others (2005) 8 SCC 534, this Court held that such restrictions which aim at fulfilling the Directive Principles are reasonable as long as they do not run in "clear conflict" with Fundamental Rights.

A scholarly study on the decisions of Supreme Court of India on social rights divides the period so far in three phases. The initial phase in the 1950s, 60s and even early 70s was a time when by and large this Court treated Directive Principles as subservient to Fundamental Rights. The second phase is when this Court spoke about harmony between the two sets of rights and then the third phase beginning in the 80s and 90s was when some of the rights which fall in Part IV were read as part of fundamental right to life with dignity.42

18. In his acknowledged scholarly work (the three volumes on Constitution of India), H.M. Seervai holds Directive Principles of State Policy of little significance. In the Fourth Edition of his Book "Constitutional Law of India" he has this to say about the Directive Principles:

"… To my knowledge, no one had been able to dispute the proposition that if directive principles had not been enacted, or are struck out, nothing would have happened, and, in my submission, it is incapable of being disputed.

However, the answer to the second question, "What would have happened if fundamental rights had not been enacted or are struck out?" is that the result would have been a disaster and our country would have been in danger of being converted into a dictatorship and Police State".43

(2005) 8 SCC 534, para 67.

42 Shylashri Shankar, Scaling Justice: The Supreme Court, Social Rights and Civil Liberties in India (Oxford University Press, 2009), Pg. 124.

43 H.M. Seervai, Constitutional Law of India (4th Ed., Vol. II, 1993), Pgs. 1923-1924.


The learned scholar expressed his scepticism on the importance of Directive Principles and held them to be superfluous and unnecessary, and his reasons are at least partly based on the fact that a large number of democratic countries do not have Directive Principles and they are also not necessary for a welfare State.44 However, as I write this opinion, about a dozen countries in the world have adopted Directive Principles, in one way or the other, in their Constitution, apart from Ireland and India.

Lael K. Weis in her article 'Constitutional Directive Principles'45 cites examples of eleven Countries (mostly African Countries) who have borrowed the "Drafting Formula" from the Indian Constitution.

In other words, some of the principles in the Directive Principles of State Policy of the Indian Constitution have been made a part of the Constitution of other countries. These are: Constitution of Papua New Guinea, 1975; Constitution of United Republic of Tanzania, 1977; Constitution of Sri Lanka, 1978; Constitution of Zambia, 1991; Constitution of Ghana, 1992; Constitution of Uganda, 1995; Constitution of Gambia, 1996; Constitution of Eritrea, 1997; Constitution of Nigeria, 1999; Constitution of Swaziland, 2005 and Constitution of Nepal, 2015.

In our Constitutional journey, without doubt, it is the provisions of Part III as well as that of Part IV, Fundamental Rights as well as Directive Principles, which have played the major role in influencing our society, politically, socially and economically. It is not without reason that Granville Austin calls Fundamental Rights and Directive Principles of State Policy, together, as the conscience of the Constitution.

19. Coming back to the direct question before this Court on "material resources of the community". A Three Judge Bench of the Supreme Court in Ranganatha Reddy and later a Five Judge Constitution Bench in Sanjeev Coke and then to some extent even a Nine Judge Constitution Bench in Mafatlal Industries v. Union of India (1997) 5 SCC 536 had no difficulty in answering the question that "material

44 H.M. Seervai, Constitutional Law of India (4th Ed., Vol. II, 1993), Pg. 1932; "The framers of our Constitution borrowed the idea of enacting directive principles from the Irish Constitution. However, a large number of free democratic countries, federal and unitary, have no directive principles. And contemporary history shows that the enactment of directive principles is not necessary for introducing a welfare State."

45 Lael K. Weis, Constitutional Directive Principles, 37 (4) Oxford Journal of Legal Studies 916 (2017), Pg. 923.

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resources of the community" includes privately owned resources.

There is no judgment of this Court which has interpretated the phrase "material resources of the community", in any other manner, or has held that private property is not a part of material resources of the community. Only doubts have been raised, and it is on these 'doubts' that this Nine Judge Bench has finally been constituted to give its verdict.

There should be no confusion that the expression "material resources of the community" used in Article 39(b) includes privately owned resources. This has been the consistent view of this Court, as already referred above. It could not have been otherwise. To my mind a reference to material resources in Article 39 (b) without privately owned resources being a part of it, does not even make any sense. It is only when we include privately owned resources, as a part of the "material resources of the community" that the purpose of Articles 38 and 39 is fully realised. It is only then that the socialist and democratic principles incorporated in our Constitution get their true meaning. The aims and objects of our freedom fighters, their vision for a just and equitable society, the extensive debates in the Constituent Assembly, the provisions incorporated in Part IV, even other than Article 39 (b), all have to be taken into consideration and they leave us with no doubt that privately owned resources are a part of "material resources of the community", as given in Article 39(b).

Let us imagine the opposite. What if privately owned resources are not a part of "material resources of the community"? It would then mean that material resources will include only public resources. But public resources are in any case meant to serve the public. It is only when "private ownership" and "private property" are included in "material resources" that the provision acquires a meaning. We also have to read clauses (b) and (c) of Article 39 together, and in light of Article 38 of the Constitution of India, in order to get a better perspective. Article 39(c) mandates that our economic system should not result in concentration of wealth and means of production (in a few hands). Material resources (both private and public) of the community must subserve the common good. The debates in the Constituent Assembly show that efforts made by some of the members to specify the scope of material resources were turned down for this reason.


There is another aspect to the matter. In case private property or privately owned resources are not considered as a part of "material resources of the community", and it would only include public resources and public property then the laws which are made for enforcement of these Directive Principles do not actually require the protection of Article 31-C. Protection of Article 31-C is only required when private property and privately owned resources are being acquired to subserve the common good and while doing so it is violating Article 14 and 19 of the Constitution of India. When public resources are being utilised for common good, there is no violation of Article 14 and 19 of the Constitution of India and consequently there is no requirement of Article 31-C. As we have already referred in the preceding paragraphs, the unamended Article 31-C to the extent its validity has been upheld in Kesavananda Bharati still stands as a part of the Constitution and exists as a protective umbrella to the laws which are made in pursuance of Article 39 (b) and (c) of the Constitution of India.

The unamended Article 31-C to the extent held valid in Kesavananda Bharati is a part of the Constitution and protects the laws made in pursuance of Article 39 (b) and (c). This has also been discussed in detail in Minerva Mills, Waman Rao & Others v. Union of India

(1981) 2 SCC 362 and also in Sanjeev Coke.

20. During the Constituent Assembly debates, an amendment was moved by one of the members, Mr. K. T. Shah, who proposed to elaborate as to what would be "material resources of the community". According to him, these would include all the natural resources, minerals, etc.

This amendment was turned down by the Assembly. Dr. Ambedkar while denying this amendment also gave his reasons, which were that it is always better to keep some expressions in general terms since these are being incorporated in a Constitution. In case one elaborates the phrase "material resources", the Constituent Assembly would be arresting and limiting its meaning. From this it can also be deducted that according to Dr. Ambedkar, a generalised term would include the entire resources of the community, including private property, and that also seemed to be the general consensus.

The precise reasons given by Dr. Ambedkar while disagreeing with the proposed amendment were as under:

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"I think the language that has been used in the Draft is a much more extensive language which also includes the particular propositions which have been moved by Professor Shah, and I therefore do not see the necessity for substituting these limited particular clauses for the clauses which have been drafted in general language deliberately for a set purpose. I therefore oppose his second and third amendments".46

What is important here is that, in turning down the proposed amendment of Shri Shah, the Constituent Assembly did not think it correct to limit "material resources" to specified resources alone and it was deliberately left as a broad-based term - "material resources of the community".

In doing so, Dr. B. R. Ambedkar showed great wisdom and acumen as the Chairman of the Drafting Committee of the Constitution. He understood well that the Constituent Assembly is not in the process of making an ordinary statute, it was the Constitution which was being made. A Constitution has to be drafted in a manner to withstand the test of several years and generations, and therefore, by necessity certain provisions and words have to be in general terms, which is referred to as 'Majestic Generalizations'.

21. A. Barak assigns three reasons as to why in a Constitution some expressions have to be broad based and in general terms; of which two are important. The first is because the constitutional text expresses a general agreement of the Constituent Assembly (as was the case in India). "In order to reach agreement, nations generally must confine themselves to opaque and open-ended terms, reflecting their ability to reach consensus only at a high level of abstraction".47

The second is that the constitutional text is designed to regulate human behaviour of future generations, therefore, by necessity the language which has to be adopted should be flexible enough to include new viewpoints, positions and modes of behaviour which cannot be predicted at the time when the Constitution is being written. "Otherwise, the constitutional text would be obsolete the day it is

46 Constituent Assembly Debates, Vol. VII, Pgs. 518-19.

47 Aharon Barak, Purposive Interpretation in Law (Universal Law Publishing Co., 2007), Pg. 372.


enacted. At the same time, a constitutional text must be definitive enough to bind the branches of government and prevent them from behaving in the future, in a way that is contrary to the viewpoints, positions, and social behavior that the text seeks to preserve. The language of a constitutional text must be both rigid and flexible. "Air valves" or open-ended terms that can be interpreted in a number of ways serve this purpose. Constitutions define human rights in open-textured terms, using "majestic generalities".48

Dr. Ambedkar understood these concepts well and therefore as we have seen "material resources of the community" was not elaborated.

In my opinion, the purpose was not to restrict the meaning of "material resources", by restricting the phrase only to a few given names (as Sri K.T. Shah had proposed) but to leave it to the legislature to include any material resource which would subserve common good. The choice of the words "material resources" and not "natural resources", is also significant.

22. Again, the words 'ownership' and 'control' have to be interpreted both conjunctively and disjunctively depending on the purpose and wisdom of the legislatures. At times, both ownership and control of material resources are required for public purpose while at some other instances it would not be necessary to acquire the ownership but only control of these resources. Shri Tushar Mehta, the learned Solicitor General of India, laid particular emphasis on this aspect.

It will depend from fact to fact, situation to situation, and that should always be left to the wisdom of the legislative bodies, as the learned Attorney General Sri R. Venkataramani and Sri Gopal Sankarnarayanan, Senior Advocate (representing State of West Bengal) would also argue.

23. The first clear opinion by the Supreme Court on privately owned resources being a part of the "material resources of the community", though by a minority of three judges, is in Ranganatha Reddy.

The State of Karnataka had challenged before this Court, the order of the Karnataka High Court, which had set aside a government scheme and also the provisions in the Karnataka Contract Carriages (Acquisition) Act, 1976 (hereinafter referred to as "Karnataka Act")

48 Aharon Barak, Purposive Interpretation in Law (Universal Law Publishing Co., 2007), Pgs. 372-373. Also see Fay v. New York 332 U.S. (1947) (Jackson, J.), Pg. 261, 282.

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for acquisition of all private owned transport buses, which were to be plied by the state-owned corporation. The object and reasons of the Act showed that this was being done to implement Article 39 (b) and (c) of the Constitution. The High Court, however, held that there was no "public purpose" in the acquisition. This order of the High Court was set aside by the Seven Judge Bench, where all the Judges were unanimous in holding that the High Court was wrong in setting aside the scheme of the Government as it was indeed for a "public purpose". This was done by making a harmonious construction and reading down certain provisions of the Act. Three Judges (Justice V.R. Krishna Iyer, Justice P.N. Bhagwati and Justice Jaswant Singh) out of the seven, in their concurring but separate opinion went ahead to emphasise as to what the expression "material resources of the community" would mean in Article 39(b) of the Constitution of India. This opinion is significant for it is here that we get a clear and unequivocal description of what constitutes "material resources of the community". It is respectfully stated that this opinion holds the field even today and has been followed by the Five Judge Bench in Sanjeev Coke and later in many other cases.

24. Although Shri Tushar Mehta, the learned Solicitor General of India, argued at length to convince this Court that the observations in Mafatlal are not obiter dicta and it is a binding precedent for this Court, the argument is not entirely convincing. In Mafatlal, the question before this Court primarily was of unjust enrichment. The observations of Justice Jeevan Reddy are only incidental and were not related to the core issue. I agree with the learned Chief Justice on this point and I adopt the detailed reasoning given by him in holding that the majority opinion in Mafatlal constitutes obiter dicta and is not binding on this Court.

25. Now coming back to Ranganatha Reddy, the reason why a separate opinion was required, was explained by Justice V.R. Krishna Iyer and the other two Judges, as under:

"Because, to put it simplistically, a legislation for the nationalisation of contract carriages by the Karnataka State, where provision has been made for fair compensation under present circumstances, has still been struck down by the High Court on the surprising grounds of absence of public purpose, illusoriness of compensation State


takeover being beyond the orbit of Article 39(b) and the like, and to express ourselves emphatically in reversal ... on the obvious, yet basic, issue we itemise below which is necessary to obviate constitutional derailment again. The public sector, in our constitutional system, is so strategic a tool in the national plan for transformation from stark poverty to social justice, transcending administrative and judicial allergies, that the questions raised and rulings thereon are of larger import for the country than one particular legislation and its vires and one particular Government and its policies. What are those disturbing interrogatories?" 49

The Three Judges have given a very wide meaning to the term material resources, stating:

"81……….. 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. Every thing 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. To exclude ownership of private resources from the coils of Article 39(b) is to cipherise its very purpose of redistribution the socialist way. A directive to the State with a deliberate design to dismantle feudal and capitalist citadels of property must be interpreted in that spirit and hostility to such a purpose alone can be hospitable to the meaning which excludes private means of production or goods produced from the instruments of production".50

(Emphasis supplied)

After Ranganatha Reddy, comes the unanimous decision of the Five Judge Bench of this Court in Sanjeev Coke where 'material resources' were held to be as follows:-

(1977) 4 SCC 471, para 40.

(1977) 4 SCC 471, para 81.

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"And material resources of the community in the context of reordering 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. Every thing 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. To exclude ownership of private resources from the coils of Article 39(b) is to cipherise its very purpose of redistribution the socialist way."

It then goes on to say this:

"We hold that the expression "material resources of the community" is not confined to natural resources; it is not confined to resources owned by the public; it means and includes all resources, natural and man-made, public and private-owned".51

26. Since Sanjeev Coke there has been a long list of judgments of this Court where the findings of Ranganatha Reddy and Sanjeev Coke have been followed. Some of these are as follows: -

State of T.N. v. L. Abu Kavur Bai (1984) 1 SCC 515

Decision by: Y.V. Chandrachud, C.J. and S. Murtaza Fazal Ali, V.D. Tulzapurkar, O. Chinnappa Reddy and A. Varadarajan, JJ.

Tinsukhia Electric Supply Co. Ltd. v. State of Assam

(1989) 3 SCC 709

Decision by: R.S. Pathak, C.J. and Sabyasachi Mukharji, S. Natarajan, M.N. Venkatachaliah and S.

Ranganathan, JJ.

Madhusudan Singh v. Union of India (1984) 2 SCC 381

Decision by: S. Murtaza Fazal Ali and M.P. Thakkar,

JJ.

(1983) 1 SCC 147, para 19.


State of Maharashtra v. Basantibai Mohanlal Khetan

(1986) 2 SCC 516

Decision by: E.S. Venkataramiah And M. P. Thakkar,

JJ.

Assam Sillimanite Ltd. v. Union of India, 1992 Supp

(1) SCC 692.

Decision by: Kuldip Singh and M. Fathima Beevi, JJ.

Jilubhai Nanbhai Khachar v. State of Gujarat, 1995 Supp (1) SCC 596

Decision by: K. Ramaswamy and N.G. Venkatachala,

JJ.

In my opinion it would be unwise to upset the long-settled meaning given consistently by several Benches of this Court to the phrase "material resources of the community", used in Article 39(b) by the framers of the Constitution.

Did Sanjeev Coke fall in error in relying upon the observations of minority judges in Ranganatha Reddy, penned by Justice V.R.

Krishna Iyer, as the opinion of the majority of Judges had expressly stated their inability to agree with such observations of the minority?

Did Sanjeev Coke break judicial discipline by following the law laid down by minority, and not following the binding precedent of majority?

And were the future decisions of this Court wrong in following the decision in Sanjeev Coke too? The question here is essentially one of the binding nature of a precedent. Was that breached?

27. What is a binding precedent and more precisely what would be the value of a minority judgment. This aspect needs to be cleared.

In the common law system, which we follow in India, judicial precedents have to be followed. This we know as stare decisis or 'stare decisis et non quieta movere' (stand by the decisions and not to unsettle what is settled). A co-ordinate bench must follow the law laid down by another co-ordinate bench. Now, the question is what is the law laid down on Article 31-C and Article 39 (b) by the majority of Four Judges in Ranganatha Reddy. With respect, there is none.

The only interpretation on the above provision is by the minority of Three Judges.

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28. The background of Ranganatha Reddy case must be stated again in order to get a proper perspective. The State of Karnataka enacted a statute known as Karnataka Contract Carriages (Acquisition) Act, 1976, by which all the contract carriages which were in private hands in State of Karnataka, were acquired and thus became a part of the Karnataka State Road Transport Corporation (hereinafter referred to as 'Corporation'). The object and reasons of the Act52 clearly state that the primary reason for incorporating the Act is to implement the policy of the State mandated under Article 39(b) and (c) of the Constitution of India. The scheme of the acquisition as well as the vires of the Karnataka Contract Carriages (Acquisition) Act, 1976, was challenged before the Karnataka High Court and these petitions were ultimately allowed and the Act was declared to be in violation of Articles 14 and 19 of the Constitution of India. It was held that the acquisition of private properties in the form of private transport was not in public interest, and it did not subserve common good.

There again, the defence of the State and the corporation was that the Act was to implement a policy of the State in line with Article 39(b) & (c) of the Constitution.

The matter was taken in appeal before this Court and was ultimately referred to a Bench of Seven Judges. All Seven Judges allowed the appeal and upheld the constitutional validity of the Karnataka Contract Carriages (Acquisition) Act, 1976, thereby setting aside the order of the High Court. All the same, the majority of the Judges i.e.

Four out of the Seven Judges upheld the validity of the law by their reading through a harmonious construction of the Act, and did not go into the aspect of Article 39 (b) or (c), as well as Article 31-C of the Constitution of India. This was dealt only in the minority judgment of Justice Krishna Iyer (minority comprising Three Judges). At this juncture, we may also note that the very purpose of the Act, the Constitutional validity of which was challenged before the Supreme Court, was to implement the policy of the State as mandated under

52 From the Statement of Objects and Reasons of Act 21 of 1976 - A large number of contract carriages were being operated in the State to the detriment of public interest and were functioning stealthily as stage carriages. This had to be prevented. Article 39(b) and (c) enjoins upon the State to see that the ownership and control of the material resources of the community are so distributed as best to subserve the common good and that the operation of the economic system does not result in the concentration of wealth to the common detriment.

In view of the aforesaid it was considered necessary to acquire the contract carriages run by private operators.


Article 39(b) & (c) of the Constitution of India. It was also the main argument on behalf of the State Government/the appellant to justify the acquisition under the Directive Principles of State Policies stated above. Nevertheless, it is true that the majority of Four Judges, although upheld the validity of the law and thereby had set aside the judgment of the Karnataka High Court, did so on the basis of harmonious reading of the law. This is what they said:

"37... Since we have upheld the constitutional validity of the Act on merits by repelling the attack on it by a reasonable and harmonious construction of the Act, we do not consider it necessary to express any opinion with reference to Article 31-C read with clauses (b) and (c) of Article 39 of the Constitution. Our learned Brother Krishna Iyer, J. has prepared a separate judgment specially dealing with this point. We must not be understood to agree with all that he has said in his judgment in this regard".53

The minority Three Judges concurred with the view of the majority Four Judges, but gave a separate opinion along with reasons as to why a separate opinion is necessary, which has already been referred above. The minority of Three Judges upheld the validity of the Karnataka Act, primarily, on the touchstone of Articles 31-C and 39(b) & (c) of the Constitution of India. This is what was said:

"This takes us to the non-negotiable minimum of nexus between the purpose of the acquisition and Article 39(b). Article 39(c) was feebly mentioned but Article 39(b) was forcefully pressed by the appellant. Better read Article 39(b) before discussing its full import: "39. (b) Certain principles of policy to be followed by the State- 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."

The key word is "distribute" and the genius of the Article, if we may say so, cannot but be given full play as it fulfils the basic purpose of restructuring the economic order.

(1977) 4 SCC 471, para 37.

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Each word in the article has a strategic role and the whole article a social mission. It embraces the entire material resources of the community. Its task is to distribute such resources. Its goal is so to undertake distribution as best to subserve the common good. It re-organizes by such distribution the ownership and control.

81. "Resources" is a sweeping expression and covers not only cash resources but even ability to borrow (credit resources). Its meaning given in Black's Legal Dictionary is: "Money or any property that can be converted into supplies; means of raising money or supplies; capabilities of raising wealth or to supply necessary wants; available means or capability of any kind."

And 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. Every thing 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. To exclude ownership of private resources from the coils of Article 39(b) is to cipherise its very purpose of redistribution the socialist way. A directive to the State with a deliberate design to dismantle feudal and capitalist citadels of property must be interpreted in that spirit and hostility to such a purpose alone can be hospitable to the meaning which excludes private means of production or goods produced from the instruments of production".54

In other words, the minority judgment agreed with the majority in upholding the validity of the Karnataka Act, but went ahead justifying the acquisition under the Karnataka Act, as it was only following the mandate of the Constitution given in Article 39(b) and (c) of the Constitution of India which had its protection under Article 31-C of the Constitution of India. The minority judgment upheld the Karnataka

(1977) 4 SCC 471, paras 80-81.


law and the acquisition made therein, by justifying the law on the basis of Article 31-C and Article 39 (b) and (c) of the Constitution.

The majority had reached a similar conclusion, but by another reasoning. They did not discuss Article 31-C or Article 39(b) and (c). Although, the legislation in question was passed by the State legislature, declaring in its objects and reasons that the Act was enacted with the purpose of achieving the aim of Article 39 (b) and

(c) of the Constitution of India.

When the Karnataka Act was challenged in the High Court, the State defended the legislation relying upon Article 39 (b) and (c) in the light of Article 31-C of the Constitution. The Division Bench of the High Court rejected the arguments of the State as it saw no public purpose in the acquisition. Again, when the case came to this Court in Appeal, the entire argument of the appellant was built on Article 39(b) and (c) and the protection the law had under Article 31-C.

The minority of Three Judges thus were not answering a question which was never there, but to the contrary, they chose to answer the fundamental question which was before them.

29. My respectful submission here is that the judgment of Three Judges in Ranganatha Reddy does not fall under clause (5) of Article 14555 as a dissenting judgment or opinion, though yes it is also true that what will be called as a judgment and opinion of the Court, will be what was given by the majority of four Judges since "no judgment and no such opinion shall be delivered by the Supreme Court save with the concurrence of a majority of the Judges present at the hearing of the case.." [Article 145(5)]

When later the opinion of the Three Judges is followed by the Five Judges in Sanjeev Coke it was done as the Five Judge Constitution Bench was persuaded by the logic and reasoning of the Three Judges.

In doing this no judicial discipline was broken as the majority of Four

55 Article 145: Rules of Court, etc.:

(1) …

(2) …

(3) …

(4) …

(5) No judgment and no such opinion shall be delivered by the Supreme Court save with the concurrence of a majority of the Judges present at the hearing of the case, but nothing in this clause shall be deemed to prevent a Judge who does not concur from delivering a dissenting judgment or opinion.

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Judges did not give a contrary opinion on the subjects. Admittedly, there was no judgment before Sanjeev Coke which had held a view contrary to what was held in Ranganatha Reddy.

Coming back to Ranganatha Reddy while answering this question, the minority of Three Judges did not go against any of the observations or findings of the majority judges. All they did was give a clear opinion on a question of law, which they were called upon to do.

That was the crucial question before the Supreme Court which the Three Judges had answered.

30. The question now is that when in Sanjeev Coke, the Five Judge Constitution Bench unanimously followed the minority judgement in Ranganatha Reddy did it violate judicial discipline of not following the majority but the minority decision. In my opinion, it did not break any judicial discipline, since in Sanjeev Coke, the Five Judges did not go against the law laid down by the majority Judges in Ranganatha Reddy but only adopted the logic of the Three Judges on which the majority of Four Judges were silent.

31. It is first difficult for me to even come to the conclusion that the Four Judges in Ranganatha Reddy entirely disagreed with the minority opinion of Justice Krishna Iyer. It merely says "we must not be understood to agree with all that he has said in his judgment in this regard." This is not exactly a disagreement. The majority of the Four Judges chose to remain silent on the subject. It cannot be said that the Four Judges, in any way, said anything contrary or in opposition to what was laid down by the Three Judges in Ranganatha Reddy, and therefore, no judicial discipline was broken by Justice O. Chinnappa Reddy when he authored the unanimous judgment in Sanjeev Coke by adopting the logic of the Three Judges in Ranganatha Reddy.

Theoretically speaking there are no judgments of the Supreme Court which may throw any light on what would be the binding nature of a judgment of minority judges given on a subject, where the majority has remained silent.

The logic, however, is very clear, in cases where a Judge or Judges of the Supreme Court in minority have given a decision on a point on which the majority has remained silent, that it would be binding on the High Courts and all other Courts, and for this Court the least


it will have is persuasive value. Reference can be made here to a decision of this Court in KT Moopli Nair v. State of Kerala 1960 SCC OnLine SC 7. In the above judgment, the Supreme Court had held that a tax rate of 2 rupees per acre irrespective of the nature of the land was violative of Article 14, as unequals cannot be treated as equals. The question which was before this Court was whether the impugned levy, although levied as a tax on land, was also applicable on forest land. In other words, it was argued that a similar tax on forest land was invalid. The majority of the Judges noticed this submission in Moopli Nair, but did not deal with it.

This was only dealt with by Justice A.K. Sarkar in his dissenting judgment where it was held that the power to tax under Entry 49 List II, would include taxation of forest land as well. Consequently, when a similar matter came before Kerala High Court in V. Padmanabha Ravi Varma Raja v. Deputy Tahsildar 1962 SCC OnLine Ker 98, it was held by the High Court that it was bound by the minority view of Justice Sarkar on the point and held that State legislature had the competence to levy tax on land on which a forest stood.

Similarly, the Bombay High Court in Mahinder Bahawanji Thakur

v. S.P. Pande 1963 SCC OnLine Bom 28 had held that the minority decision will have a precedential value on a point when the law has not been discussed by the majority in their judgment. Allahabad High Court held a similar view in Sudha Tiwari v. Union of India 2011 SCC OnLine All 253.

The logic therefore would be that the opinion of minority judges on a point where the majority is silent, can be followed by the High Courts but in the Supreme Court it will have only persuasive value.

The five learned judges in Sanjeev Coke relied upon the decision of the minority judges in Ranganath Reddy as they were persuaded by the logic and the interpretation given by Justice Krishna Iyer to the phrase "material resources of the community".

32. There is another aspect to the question which is before us today, which is if we today hold that privately owned resources are not a part of "material resources of the community", we would not only be unsettling Ranganatha Reddy and Sanjeev Coke and all the subsequent decisions of this Court, which followed Sanjeev Coke, but we would also be unsettling the whole body of laws including Constitution Bench decisions of this Court which have held even

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prior to Ranganath Reddy though indirectly that privately owned resources are part of "material resources of the community". There was a clear presumption in all these cases that privately owned resources are part of "material resources of the community".

What is the most important "material resource" of the community in India? Undoubtedly, it is land. At the time of our independence, inequality in land distribution was evident throughout the country.

We had big landlords, on the one hand, and landless masses of poor peasantry on the other, who mostly worked as agricultural labourers on the large farm lands of these landlords. The abolition of zamindars, big landlords and middlemen was a pledge the leaders of the freedom movement had made to the people of this country. This was also now one of the "charters of instructions" for the Government as Dr. Ambedkar would put it under Articles 38 and 39 of the Constitution of India. On September 10, 1949, the then Prime Minister while speaking on Article 2456 before the Constituent Assembly, emphasised the necessity of abolishing the zamindari system. He underlined that this was the pledge they had given to the nation, "and no change is going to come in our way. That is quite clear. We will honour our pledges".57

Since land was in the State List i.e., List II of the Seventh Schedule of the Constitution of India, such changes had to be brought in by the State Legislatures. Land reform legislations were thus the first important legislations passed in different States, by and large on the same lines, taking care of the local provisions and local factors.

These land reform legislations had to first muster the scrutiny of the respective High Court, where these legislations were challenged by the landlords and zamindars. High Courts, though were not unanimous in their verdicts, for example Patna High Court struck down the Bihar Land Reforms Act, 1950, but the validity of a similar legislation in Madhya Pradesh was upheld. Similarly, the Constitutional validity of U.P. Zamindari Abolition Act, 1947 was upheld by the Allahabad High Court.

56 That came to be enacted as Article 31 of the original Constitution.

57 Constituent Assembly Debates, Vol. IX, Pg. 1195.


This was done by Allahabad High Court in Raja Suryapal Singh

v. U.P of Govt., 1951 SCC OnLine All 183. One of the grounds on which the U.P. Zamindari Abolition Act was challenged was that the acquisition under it was not for 'public purpose' and it did not make provisions for adequate compensation, thus, violating Article 31(2) of the Constitution. The High Court went into the question of 'public purpose' as used in the Constitution, and while exploring the meaning of words 'public purpose', enquired as to whether there are any other provisions which can guide the Court to attribute a meaning to these words.

The decision of Allahabad High Court came in the very early days of the Constitution when the relationship between Directive Principles and Fundamental Rights was yet to be explored. It was a time when the First Constitutional Amendment had yet to be introduced. We would like to reproduce here some of the observations of Allahabad High Court:

"41. Now is there to be found in the Constitution of India anything to guid the Cts. as to the meaning to be attributed to the expression "public purpose" when used therein? We think there is. Chap. 4 contains what are described as directive principles of State policy, & although those principles are not enforceable by any Ct.

Article 37 specifically lays down that they are nevertheless fundamental in the governance of the country & that "it shall be the duty of the State to apply these principles in making laws.

42. If then we examine the directive principles we find that Article 39, cls. (b) & (c) provide:

"(b) that the ownership & control of the material resources of the community are so distributed as best to sub-serve the common good;

(c) that the operation of the economic system does not result in the concentration of wealth & means of production to the common detriment..

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47. If, therefore, the acquisition of property sought to be affected (effected?) by the impugned Act is for the purpose of implementing one or more of the directive principles of State policy it will, in our judgment, be for a public purpose within the meaning of the Constitution, & it will be unnecessary for us to consider whether for other purposes it comes within the meaning which the law has given to that expression." 58

33. In order to safeguard land reform laws from the interference of the Courts, the Constitution (First Amendment) Act, 1951 was introduced.

Though there were other reasons as well, they may not be relevant for our purposes.

The Statement of Objects and Reasons of the First Constitution (Amendment) Bill, 1951 states as follows: -

"The main object of the Bill are, accordingly to amend Article 19 for the purposes indicated above and to insert provisions fully securing the constitutional validity of zamidari abolition laws in general and certain specified State Acts in particular."

At that time, the Constituent Assembly was working as the provisional Parliament because the First General Elections were yet to be conducted. The urgency of the provisional Parliament in bringing the First Constitutional Amendment was explained by the Prime Minister on May 16, 1951, who said that the delay was causing injustice to millions of Indians, and there was an urgent need to incorporate Article 31A and 31B and the Ninth Schedule to the Constitution. 59

Then explaining the predictable long delay the land reforms would take in Courts, against which nothing much could be done, he said as follows:

"It is not good for us to say we are helpless before fate and the situation which we are to face at present.

Therefore we have to think in terms of these big changes

58 1951 SCC OnLine All 183, paras 41, 42 and 47.

PARLIAMENTARY DEBATES (PART II-PROCEEDINGS OTHER THAN QUESTIONS AND ANSWERS), Pg. 8830. Prime Minister Nehru explained the urgency as follows :- "……the primary problem is the land problem today in Asia, as in India. And every day of delay adds to difficulties and dangers apart from being an injustice in itself."


land changes and the like and therefore we thought of amending article 31. Ultimately, we thought it best to propose additional articles 31A and 31B in addition to that there is a schedule attached of a number of Acts passed by the State Legislatures, some of which have been challenged or might be challenged and we thought it best to save them from long delays and these difficulties, so that this process of change which has been initiated by the States should go ahead. Many of us present here are lawyers and have had some training in law which is a good training and many of us respect lawyers. But nevertheless a lawyer represents precedent and tradition and not change, not dynamic process. Above all the lawyer represents litigation…" 60

In other words, the Parliament could not wait for decisions of Courts to settle the position in regard to land reforms, as it could take a long time and every day of delay in bringing land reforms would be an injustice to the people to whom they had promised these reforms long before Independence. The Parliament wanted to stabilize the situation as early as possible and did not want these land reforms to remain entangled in the legal battles, at least this is what was thought.

34. The First Amendment, inter alia, introduced Articles 31-A & 31-B and the Ninth Schedule to the Constitution with an aim to strengthen land reform laws with the innovative Ninth Schedule, providing safe harbour to such legislations.

The First Amendment was challenged before the Supreme Court in the famous Shankari Prasad Singh v. Union of India, AIR 1951 SC 458 where it was upheld. The powers of the Parliament under Article 368 of the Constitution of India of amending the Constitution were held to be plenary which could also amend the Fundamental Rights in the Constitution.

Subsequently, decisions of High Courts on land legislations were challenged before this Court in State of Bihar v. Kameshwar Singh

(1952) 1 SCC 528, but now Article 31A, Article 31B and the Ninth

Schedule were there in the Constitution after getting approval of this Court in Shankari Prasad.

60 Parliamentary Debates (Part II- Proceedings Other than Questions and Answers), Pgs. 8831-8832.

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Justice S.R Das in Kameshwar Singh underlined the importance of Articles 38 and 39 in bringing social, economic and political justice.

He stated as under:

"…Indeed, what sounded like idealistic slogans only in the recent past are now enshrined in the glorious Preamble to our Constitution proclaiming the solemn resolve of the people of this country to secure to all citizens justice, social, economic and political, and equality of status and of opportunity. What were regarded only yesterday, so to say, as fantastic formulae have now been accepted as directive principles of State policy prominently set out in Part IV of the Constitution. The ideal we have set before us in Article 38 is to evolve a State which must constantly strive to promote the welfare of the people by securing and making as effectively as it may be a social order in which social, economic and political justice shall inform all the institutions of the national life. Under Article 39 the State is enjoined to direct its policy towards securing, inter alia, that the ownership and control of the material resources of the community are so distributed as to subserve the common good and that the operation of the economic system does not result in the concentration of wealth and means of production to the common detriment… what, I ask, is the purpose of the State in adopting measures for the acquisition of the zamindaries and the interests of the intermediaries? Surely, it is to subserve the common good by bringing the land, which feeds and sustains the community and also produces wealth by its forest, mineral and other resources, under State ownership or control.

This State ownership or control over land is a necessary preliminary step towards the implementation of the directive principles of State policy and it cannot but be a public purpose… Further, it must always be borne in mind that the object of the impugned Act is not to authorise the stray acquisition of a particular property for a limited and narrow public purpose but that its purpose is to bring the bulk of the land producing wealth under State ownership or control by the abolition of the system of land tenure


which has been found to be archaic and non-conducive to the general interest of the community..."61

There was now to be a ceiling on land and the surplus was to be distributed among the marginal and landless farmers, though further legislations would be required. It is true that in years to come, in reality, the rich and powerful landlords defeated much of the provisions of land reforms, yet the land reforms had its positive effects. Professor Aditya Mukherjee in his book "Political Economy of Colonial and Post-Colonial India" states as under:

"Also, though the opportunity to acquire large areas of surplus lands for redistribution was missed because of defective and delayed ceiling laws, in the long run the high population growth and the rapid subdivision of large holdings over several generations (in the absence of the practice of primogeniture for over the ceiling limits. In fact, the number of holding and the areas operated under the category of large holdings and the area operated under the category of large holdings, 25 acres or above (even 15 acres and above), kept falling in the decades since independence right upto the 1990s. Except in certain small pockets in the country, very large landholdings of the semi feudal type now became things of the past.

Inequality among landowners was no longer a key issue, as it was not very skewed any more. By one estimate, by 1976-7 nearly 97 per cent of the operated holdings were below 25 acres and 87 per cent of the holdings were below 10 acres." 62

The eminent scholar of Indian agriculture C.H. Hanumantha Rao who has also been quoted by Aditya Mukherjee has this to say about the land reforms: "The law discouraged concentration of landownership beyond the ceiling level and thus prevented the possible dispossession of numerous small and marginal holders which would probably have occurred through a competitive process in the land market in the absence of a ceiling on landholdings".63

(1952) 1 SCC 528, para 142.

62 Aditya Mukherjee, Political Economy of Colonial and Post-Colonial India (Primus Books, 2022), Pg. 511.

63 C.H Hanumantha Rao, Rural Society and Agricultural Development in Course of Industrilisation: Case of India, 26 Economic and Political Weekly (1991), Pg. 691.

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What is more important is the fact that essentially land reform laws were upheld on these principles by the Supreme Court (See: Kameshwar Singh and Shankari Prasad). In other words, taking away of material resources from private hands for public purposes was held to be constitutional by the Supreme Court. For our purposes, therefore, logically taking away of material resources from private hands for the good of the community was upheld even before Ranganath Reddy. We see no reason as to why there can be any different view now simply because the material resources may not only be land but some other "material resources".

35. In 1964, the Government of India appointed a Commission under the Commission of Inquiry Act, 1952 to inquire into concentration of wealth. The terms of its reference were as follows:

"(a) to inquire into the extent and effect of concentration of economic power in private hands and the prevalence of monopolistic and restrictive practices in important sectors of economic activity other than agriculture with special reference to-

(i) the factors responsible for such concentration and monopolistic and restrictive practices;

(ii) their social and economic consequences, and the extent to which they might work to the common detriment; and

(b) to suggest such legislative and other measures that might be considered necessary in the light of such enquiry, including, in particular, any new legislation to protect essential public interests and the procedure and agency for the enforcement of such legislation." 64

This Commission gave its report in 1965 called the 'Report of the Monopolies Inquiry Commission 1965', which was prepared after taking views from leading businessmen, State governments and various other stakeholders. Chapter II titled 'Causes of Concentration' in the report, earmarked the following as the primary reasons for concentration of wealth in India:

64 Introduction to Report of the Monopolies Inquiry Commission 1965.


(a) Easier Access to Credit: Big enterprises were able to obtain credit from banks on much easier terms than small businesses, which further helped in the growth of concentration, as they can offer much better security.

(b) Only the Indian industrialists had the skill and knowledge to successfully run an enterprise. They were able to raise sufficient capital, from the public through limited liability public companies, so as to afford licences and import raw materials and machinery required to proliferate the nascent economy of independent India.

(c) As a result of the policies to achieve self-reliance, most foreign enterprises were taken over by a few Indian industrialists as only they could afford such an acquisition.

(d) Formation of Industrial Conglomerates: During World War II, the colonial government granted subsidies to certain enterprises to expand their production capacity in order to support the war effort. This helped increase their profits and allowed them to acquire their competitors, leading to an elimination of competition and concentration of economic power in the hands of those few select business houses

The Report referred to the provisions in the Constitution to prove the point that the framers of our Constitution were aware of the tendency of the national economy, which favoured concentration of wealth in a few hands and this had to be remedied:

"It would be wrong to think that the dangers of excessive concentration were not recognised by the Indian statesmen.

The makers of the Indian Constitution were well aware of this potential danger. It was to impress upon the future governments of the country the need of fighting this danger that the following principles were laid down in article 39(b) and (c) of the Constitution." 65

The point which is being made here is that private wealth was only concentrated in a few hands and there was a huge gap between the

65 Report of the Monopolies Inquiry Commission 1965 (Vol-I), Pg. 6.

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rich and the poor and the distribution of wealth was not taking place as it ought to have as there were provisions in the Constitution to bring suitable changes.

36. Measures the Government could take in reducing inequality and redistributing wealth could only be through its laws and the schemes under the law, but then these laws invariably faced challenges before the constitutional courts, which significantly delayed their implementation. One example is the laws for abolition of zamindari as discussed previously. Another important resource, which the State sought to take control of in pursuance of achieving the objectives of Article 39(b) & (c), was financial assistance, to the farmers in particular. It was not difficult for big enterprises to obtain credit. Also, the landowning farmers could mortgage their land to obtain credit but the landless farmers had no collateral to provide as security against credit before the private banks.

Agriculture was the main source of livelihood for a majority of Indians.

All the same, farmers in our country were perpetually indebted to the money lenders and had hardly any other resource to look forward to. The State was required to support the farmers in adopting new techniques if the food-grains production was to increase. Farmers needed financial support in the form of credit which could not have been expected through private banks.

Also, the agrarian reforms in the initial years would have failed to achieve their purpose if farmers, who benefitted from those reforms, were not to be supported in agriculture production. No doubt that agrarian reforms hold great significance in India, but it would be wrong to say that the abolition of zamindaris would be enough for the tillers of the soil. Merely handing over the most precious 'material resource' (land) to the farmers was not sufficient; something more was required to be done. Financial assistance through easy loans were to be made available to farmers, and they were also to be provided with genetic seeds (HYV66 seeds), pesticides etc. This was all to be a part of the Green Revolution of the late 1960s.

Institutional credit support to the farmers would become easier with the nationalisation of the banking system, besides its impacts on other parts of the economy.

66 High-Yielding Variety.


37. To understand the Bank Nationalisation Case, we have to go back a few years prior to when these measures were taken by the State.

In State of West Bengal v. Bela Banerjee (1953) 2 SCC 648, a Five-Judge bench of this Court was dealing with the provisions of West Bengal Land Development and Planning Act, 1948, under which the State could acquire land for public purposes including settling immigrants who had migrated to West Bengal from erstwhile East Pakistan (now Bangladesh). Proviso to Section 8(b) of this Act had fixed the market value as the maximum compensation as on 31.12.1946, for the lands acquired irrespective of the date of its actual acquisition. This Court held the proviso to be unconstitutional on the ground that it offended Article 31(2), which at the time, stood as follows:

"(2) No property, movable or immovable, including any interest in, or in any company owning, any commercial or industrial undertaking, shall be taken in possession of or acquired for public purposes under any law authorizing the taking of such possession or such acquisition, unless the law provides for compensation for the property taken possession of or acquired and either fixes the amount of the compensation, or specifies the principles on which, and the manner in which, the compensation is to be determined and given."

Justice Shastri, writing for the Constitution Bench, observed that the legislature has the discretion of laying down principles on which compensation has to be determined but "such principles must ensure that what is determined as payable must be compensation, that is, a just equivalent of what the owner has been deprived of." 67 Further, it was observed that principles to determine the compensation are justiciable and whether they took into consideration all factors which make up the true value of the property has to be examined.

Apart from this issue of 'just equivalent' doctrine, the Government also realised that the detailed description of the property in the original Article 31(2) would pose a problem for laws not only essentially related to acquisition but also for the legislations which incidentally touched on property rights.

(1953) 2 SCC 648, para 6.

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38. To overcome these difficulties, the Parliament introduced the Constitution (Fourth Amendment) Act 1955, which, inter alia, amended Article 31(2) and excluded 'regulatory laws' from the purview of 'acquisition'. For this, the elaborate description in the original Article 31(2) in the form of the words 'moveable or immoveable, including any interest in, or in any company owning any commercial or industrial undertaking' was removed and the question of adequacy of compensation was made a non-justiciable issue. The amended Article 31(2) was as follows:

"(2) No property shall be compulsorily acquired or requisitioned save for a public purpose and save by authority of a law which provides for compensation for the property so acquired or requisitioned and either fixes the amount of the compensation, or specifies the principles on which, and the manner in which, the compensation is to be determined and given; and no such law shall be questioned in any court on the ground that the compensation provided by that law is not adequate."

The Fourth Amendment, so far as it relates to Article 31(2), was aimed at restricting judicial interference on the question of adequacy of compensation. On 11th April 1955, while discussing the Bill (that led to the Constitutional (Fourth Amendment) Act, 1955), the then Prime Minister had said in Lok Sabha that:

"Remember this, that the sole major change is to make clear one thing which I submitted on the last occasion, was clear to us at the time this Constitution was framed.

That is to say, according to the Constitution as put forward before the Constituent Assembly and as it emerged from the Constituent Assembly, the quantum of compensation or the principles governing compensation would be decided by the legislature. This was made perfectly clear. Now, it is obvious that those who framed the Constitution failed in giving expression to their wishes accurately and precisely and thereby the Supreme Court and some other Courts have interpreted it in a different way. The Supreme Court is the final authority for interpreting the Constitution. All I can say is that the Constitution was not worded as precisely as


the framers of the Constitution intended. What the framers of the Constitution intended is there for anyone to see.

All that has been done now is to make that wording more precise and more in accordance with what the framers of the Constitution at that time meant and openly said. That is the only thing." 68

In other words, the Government of the day was of the view that the framers of the Constitution never intended that compensation be 'just equivalent' to what owners are deprived of and in any case, compensation was to be the sole domain of the legislatures and Courts cannot go into that aspect. The decisions of this Court, however, go against this view that Courts are altogether precluded from going into the question of adequacy of compensation.

39. A Five-Judge bench of this Court in Vajravelu v. Special Deputy Collector, 1964 SCC OnLine SC 22 dealt with the scope of the Fourth Constitutional Amendment qua Article 31(2).69 In this case, this Court declared the Land Acquisition (Madras Amendment) Act, 1961 as unconstitutional on the grounds of violation of Article 14.

Justice Subba Rao observed that though the law fixing the amount of compensation or laying down principles governing such fixation cannot be questioned on the grounds of adequacy, yet the legislature cannot play fraud on the Constitution by determining compensation on irrelevant principles or making the compensation illusory. This is what was said:

"To illustrate: a law is made to acquire a house; its value at the time of acquisition has to be fixed; there are many modes of valuation, namely, estimate by an engineer, value reflected by comparable sales, capitalisation of rent and similar others. The application of different principles may lead to different results. The adoption of one principle may give a higher value and the adoption of another principle may give a lesser value. But nonetheless they are principles on which and the manner in which compensation

68 Lok Sabha Debates (Part II- Proceedings other than Questions and Answers), Vol-III, Pgs. 4833-4834.

69 See State of Madras v. D. Namasivaya Mudaliar 1964 SCC OnLine SC 169, Union of India v. Metal Corporation of India 1966 SCC OnLine SC 15. But also see State of Gujarat v. Shri Shantilal Mangaldas & Ors., AIR 1969 SC 634.

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is determined. The court cannot obviously say that the law should have adopted one principle and not the other, for it relates only to the question of adequacy. On the other hand, if a law lays down principles which are not relevant to the property acquired or to the value of the property at or about the time it is acquired, it may be said that they are not principles contemplated by Article 31(2) of the Constitution.

If a law says that though a house is acquired, it shall be valued as a land or that though a house site is acquired, it shall be valued as an agricultural land or that though it is acquired in 1950 its value in 1930 should be given, or though 100 acres are acquired compensation shall be given only for 50 acres, the principles do not pertain to the domain of adequacy but are principles unconnected to the value of the property acquired. In such cases the validity of the principles can be scrutinized. The law may also prescribe a compensation which is illusory: it may provide for the acquisition of a property worth lakhs of rupees for a paltry sum of Rs 100. The question in that context does not relate to the adequacy of the compensation, for it no compensation at all. The illustrations given by us are not exhaustive. There may be many others falling on either side of the line. But this much is clear. If the compensation is illusory or if the principles prescribed are irrelevant to the value of the property at or about the time of its acquisition, it can be said that the legislature committed a fraud on power and, therefore, the law is bad. It is a use of the protection of Article 31 in a manner which the article hardly intended".70

Thereafter, this Court summed up the position with the following words:

"Briefly stated the legal position is as follows: If the question pertains to the adequacy of compensation, it is not justiciable; if the compensation fixed or the principles evolved for fixing it disclose that the legislature made the law in fraud of powers in the sense we have explained, the question is within the jurisdiction of the court".71

70 1964 SCC OnLine SC 22, para 15.

71 1964 SCC OnLine SC 22, para 16.


In short, the entire acquisition, nationalisation, distribution, etc., could never be properly implemented, or made effective for reasons of "inadequate compensation".

40. In July 1969, the President promulgated an ordinance nationalising 14 banks. We would also like to reproduce the extracts from the speech of the then Prime Minister who addressed the Nation from the All India Radio on the day when the initial ordinance to nationalise banks was promulgated. The Prime Minister explained the decision of nationalising banks as follows:

"...Ours is an ancient country but a young democracy, which has to remain ever vigilant to prevent the domination of the few over the social, economic or political systems… To the millions of small farmers, artisans and other self-employed persons, a bank can be a source of credit, which is the very basis for any effort to improve their meagre economic lot… What is sought to be achieved through the present decision to nationalise the major banks is to accelerate the achievement of our objectives. The purpose of expanding bank credit to priority areas which have hitherto been somewhat neglectedsuch as (1) the removal of control by a few, (2) provision of adequate credit for agriculture, small industry and exports, (3) the giving of a professional bent to bank management, (4) the encouragement of new classed of entrepreneurs, (5) the provision of adequate training as well as reasonable terms of service for bank staffstill remains and will call for continuous efforts over a long time. Nationalisation is necessary for the speedy achievement of these objectives".72

This ordinance soon turned into an Act called the Banking Companies (Acquisition & Transfer of Undertakings) Act, 1969 (Act 22 of 1969), passed in August 1969. This first phase of Bank Nationalisation resulted in the famous RC Cooper v. Union of India (1970) 1 SCC 248 where the majority of 10:1 struck down the Act on the grounds that "Act violates the guarantee of compensation under Article 31(2)". It was not the case that RC Cooper held that the

72 A. Moin Zaidi, The Great Upheaval 1969-1972 (Orientalia, 1972), Pgs. 103-105.

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State was incompetent to nationalise the banks but it held that the Act nationalising the Banks did not apply the right principles in determining the compensation. RC Cooper discussed Bela Banerjee and Vajravelu in the following words:

"89. This Court held in Bela Banerjee case that by the guarantee of the right to compensation for compulsory acquisition under Article 31(2), before it was amended by the Constitution (Fourth Amendment) Act, the owner was entitled to receive a "just equivalent" or "full indemnification". In P. Vajravel Mudaliar case this Court held that notwithstanding the amendment of Article 31(2) by the Constitution (Fourth Amendment) Act, and even after the addition of the words "and no such law shall be called in question in any Court on the ground that the compensation provided by that law is not adequate", the expression "compensation" occurring in Article 31(2) after the Constitution (Fourth Amendment) Act continued to have the same meaning as it had in Section 299(2) of the Government of India Act, 1935, and Article 31(2) before it was amended viz "just equivalent" or "full indemnification".

90. There was apparently no dispute that Article 31(2) before and after it was amended guaranteed a right to compensation for compulsory acquisition of property and that by giving to the owner, for compulsory acquisition of his property, compensation which was illusory, or determined by the application of principles which were irrelevant, the constitutional guarantee of compensation was not complied with………." 73

41. The main reason for holding the Bank Nationalising Act as unconstitutional in RC Cooper was that the principles specified in Schedule II of the Act, for determining compensation, were not appropriate. Many important factors like the goodwill of the bank and the value of unexpired periods of long-term leases were not taken

(1970) 1 SCC 248, paras 89 -90.


into consideration for the determination of compensation. Para 117 and para 121 of the majority judgement summed up the striking down of Bank Nationalising Act as follows:

"117. We are of the view that by the method adopted for valuation of the undertaking, important items of assets have been excluded, and principles some of which are irrelevant and some not recognised are adopted. What is determined by the adoption of the method adopted in Schedule II does not award to the named banks compensation for loss of their undertaking. The ultimate result substantially impairs the guarantee of compensation, and on that account the Act is liable to be struck down.

……………………..

121. Section 4 of the Act is a kingpin in the mechanism of the Act. Sections 4, 5, and 6, read with Schedule II provide for the statutory transfer and vesting of the undertaking of the named banks in the corresponding new banks and prescribe the method of determination of compensation for expropriation of the undertaking. Those provisions are, in our judgment, void as they impair the fundamental guarantee under Article 31(2). Sections 4, 5, and 6 and Schedule II are not severable from the rest of the Act. The Act must, in its entirety, be declared void." 74

Within a week of the pronouncement of the judgment in RC Cooper, the Government came up with another ordinance which turned into the Banking Companies Act, 1970 (Act 5 of 1970). This new Act was the modified form of the earlier Act and this new Act provided for a specific amount to each bank nationalised, in order to facilitate the bank nationalisation. In this way, the first phase of Bank Nationalisation took place in India.

42. Ultimately the Parliament brought the Constitution (Twenty Fifth Amendment) Act, 1971 into force which inter alia further diluted the right to property. This Constitutional Amendment was the direct result

(1970) 1 SCC 248, paras 117 and 121.

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of RC Cooper, as it was evident from the Statement of Objects and Reasons of the Constitution (Twenty-fifth Amendment) Bill, 1971 which reads as follows:

"STATEMENT OF OBJECTS AND REASONS

Article 31 of the Constitution as it stands specifically provides that no law providing for the compulsory acquisition or requisitioning of property which either fixes the amount of compensation or specifies the principles on which and the manner in which the compensation is to be determined and given shall be called in question in any court on the ground that the compensation provided by that law is not adequate. In the Bank Nationalization case [1970, 3 S.C.R. 530), the Supreme Court has held that the Constitution guarantees right to compensation, that is, the equivalent in money of the property compulsorily acquired. Thus in effect the adequacy of compensation and the relevancy of the principles laid down by the Legislature for determining the amount of compensation have virtuality become justiciable inasmuch as the Court can go into the question whether the amount paid to the owner of the property is what may be regarded reasonably as compensation for loss of property. In the same case, the Court has also held that a law which seeks to acquire or requisition property for a public purpose should also satisfy the requirements of article 19 (1) (f).

The Bill seeks to surmount the difficulties placed in the way of giving effect to the Directive Principles of State Policy by the aforesaid interpretation. The word "compensation" is sought to be omitted from article 31(2) and replaced by the word "amount". It is being clarified that the said amount may be given otherwise than in cash. It is also proposed to provide that article 19(1)(f) shall not apply to any law relating to the acquisition or requisitioning of property for a public purpose.

3. The Bill further seeks to introduce a new article 31C which provides that if any law is passed to give effect to the Directive Principles contained in clauses (b) and (c) of


article 39 and contains a declaration to that effect, such law shall not be deemed to be void on the ground that it takes away or abridges any of the rights contained in article 14, 19 or 31 and shall not be questioned on the ground that it does not give effect to those principles. For this provision to apply in the case of laws made by State Legislatures, it is necessary that the relevant Bill should be reserved for the consideration of the President and receive his assent.

(emphasis supplied)

Amongst others, this Amendment substituted the word 'compensation' with the word 'amount' in Article 31(2). It also introduced Article 31-C, making legislations passed under Article 39 (b) & (c) immune from challenges under Articles 14 & 19 of the Constitution. The laws which were made subsequently and their challenge before the Courts have to be seen in the light of the background stated above.

43. It is true that the state of our economy and society has undergone a change since the Constitution was framed in the late 40s and first interpreted in the early 50s. Even till the 70s and early 80s, this Court had no difficulty in interpretating and giving a meaning to the words 'material resources of the community', by including privately owned resources as its part. Doubts have been raised by this Court now, which is only significant of the times we presently live in. When a wider interpretation was given to the words "material resources" in the 60s, 70s and early 80s, it was in an era where socialism was still a principle embedded in our constitutional ethos and definitely in our economy. The political philosophy of that day also recognised and accepted this principle. Times have changed since then, and so has the governing philosophy which is now of a liberal and market driven economy. All the same, as our short but significant constitutional journey demonstrates the crucial Constitutional Amendments and its consequence, the landmark decisions of the Supreme Court relate as much to personal liberty as to wealth and its redistribution, which again is a part of the "material resources of the community", covered under Articles 38 and 39 of the Constitution. These decisions directly or indirectly touch upon "material resources of the community". Will we be

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correct in saying today that, private resources are not a part of the "material resources of the community". Can this be said in the light of the present times since 'Constitution is a living document'!

44. The Constitution is indeed a living document. The words and meanings in the Constitution are not frozen in time, they change and evolve.

The Constitution cannot be limited to the vision of its founding fathers.75 To borrow a phrase from Anatole France if we do that then the dead would be the living and the living the dead.76 "The judge has an important role in the legislative project: The judge interprets statutes. Statutes cannot be applied unless they are interpreted.

The judge may give a statute a new meaning, a dynamic meaning, that seeks to bridge the gap between law and life's changing reality without changing the statute itself. The statute remains as it was, but its meaning changes, because the court has given it a new meaning that suits new social needs. The court fulfils its role as the junior partner in the legislative project. It realizes the judicial role by bridging the gap between law and life." 77

However, the meaning can change to an extent and no further. It can expand to an extent and evolve to a limit. Words and expressions cannot have an entirely opposite meaning to what was initially prescribed to them. In Video Electronics Pvt. Ltd. v. State of Punjab (1990) 3 SCC 87, Justice Sabyasachi Mukharji had said:

"Constitution is a living organism and the latent meaning of the expressions used can be given effect to only if a particular situation arises. It is not that with changing times the meaning changes but changing times illustrate and illuminate the meaning of the expressions used. The connotation of the expressions used takes its shape and colour in evolving dynamic situations." 78

75 Aharon Barak, Hermeneutics and Constitution Interpretation, 14 Cardozo L. Rev. 767 (1992-93), Pg. 772.

76 Anatole France et. al., Crainquebille (Dodd, Mead & Co., Inc., 1922), Pg. 171. "The precise reference is from the following sentence "That which is written by the dead will be erased by the living. Were it not so, the will of those who have passed away would impose itself upon those who yet survive; and the dead would be the living and the living the dead".

77 Aharon Barak, The Judge in a Democracy (Princeton University Press, 2006), Pgs. 4-5.

(1990) 3 SCC 87, para 36.


45. We have earlier referred to the existing philosophy of the day, the purpose of Directive Principles and the speech of Dr. Ambedkar on inequality in the country when the Constitution was being framed.

Has our world changed? Has the inequality in the country decreased?

There are no definite or easy answers to these questions.

Although in absolute terms poverty may have decreased,79 as some reports indicate. Possibly, the lowest strata of our society in economic terms may be better off than what it was say 50 years earlier. But this would not mean that the inequality in our society too has decreased, or the gap between the rich and the poor has narrowed down. There are conflicting reports on inequality and poverty.

All the same, UNDP80 Human Development Report shows India to be lagging behind in human development.81 The Human Development Index ranks India at the 134th position, out of 193 countries, which were examined.82 The Global Hunger Index (GHI) Report, which is based on WHO83 parameters, similarly ranks India at the 105th spot, out of 127 countries evaluated.84

The least the above figures indicate is that there are still large grounds which remain to be covered. The economic conditions as they exist today require the efforts of the State with its welfare measures, inter alia under Article 39(b) & (c) of the Constitution, as interpreted in Ranganatha Reddy and Sanjeev Coke.

46. Undoubtedly this Court has given an expansive meaning to the phrase "material resources of the community". We have seen the background and the historical necessity both for the incorporation of such provisions and its interpretation by this Court.

Ultimately, we the people of India have resolved "to secure to all its citizens"- justice, liberty, equality and fraternity. The Constitution of India secures these values for all its citizens and speaks in an

79 National Multidimensional Poverty Index: A progress review 2023, NITI Aayog, Government of India.

80 United Nations Development Programme.

81 As per the UNDP Development Report, India's Gini coefficient is 0.444. The Gini coefficient measures the dispersion of income or distribution of wealth among the members of a population, where 1 represents perfect inequality while 0 represents perfect equality. Available at https://hdr.undp.org/data-center/ human-development-index#/indicies/HDI.

82 Available at https://hdr.undp.org/data-center/human-development-index#/indicies/HDI.

83 World Health Organisation.

84 Global Hunger Index 2024. Available at https://www.globalhungerindex.org/pdf/en/2024.pdf

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expansive language, particularly for the provisions contained in Part III and Part IV. This is how the Constitution has been interpreted by this Court all along. It is due to the expansive meaning given by the Supreme Court to Articles 14 and 21 that we have today an entire body of case laws, which protects the life and liberty of its people.

47. Articles 14, 19 and 21 of the Constitution have been given an expansive meaning by this Court, which was never perceived by the framers of the Constitution. But this is precisely the task of the Constitutional Courts.

There is a long list of decisions where this Court has protected the fundamental rights by expanding the scope and ambit of Articles 14 and 21 of the Constitution. To mention some of these:

In Maneka Gandhi v. Union of India (1978) 1 SCC 248, this Court expanded Article 21 many folds by establishing its corelationship with Articles 14 and 19. It culminated in a position of law where a law depriving 'personal liberty' has to meet the requirements of Article 19 and 'procedure' under Article 21 has to satisfy Article 14, meaning that such 'procedure' cannot be arbitrary but has to be 'just, fair and reasonable'.

A law which was arbitrary was violative of Article 14 of the Constitution of India.

In MH Hosket v. State of Maharashtra (1978) 3 SCC 544 this Court relied on Maneka Gandhi to recognize the right of prisoners to free legal assistance including help in filing appeals.

In Hussainara Khatoon v. Home Secretary, State of Bihar (I) (1980) 1 SCC 81, it was held that the right to a speedy trial is a fundamental right under Article 21 and any law keeping undertrials behind bars for long cannot be regarded as 'reasonable, just or fair'.

In Sunil Batra v. Delhi Administration (1980) 3 SCC 488 this Court condemned the inhuman and degrading treatment of prisoners, particularly the use of solitary confinement and held that fundamental rights do not end at the prison gates.

It was emphasised that prison authorities must respect the dignity and rights of inmates under Articles 14, 19, and 21 of the Constitution. Thus, 'human dignity', which is apparently


not a fundamental right was read as a part of Article 21 of the Constitution of India.

In Bijoe Emmanuel v. State of Kerala (1986) 3 SCC 615 this Court held that expelling students for not singing the National Anthem, for the reasons that it went against their religious beliefs as Jehovah's Witnesses, was a violation of their Right to Freedom of Religion under Article 25. Further, it was observed that Article 19 also stood violated as no law required individuals to sing the national anthem, provided that they do not disrespect it. Tolerance was read as a part of the fundamental secular culture of this country.

In Vishaka v. State of Rajasthan (1997) 6 SCC 241 this Court, drawing upon constitutional principles and international conventions, established guidelines to address sexual harassment at the workplace, citing the absence of specific legislation and to ensure the protection of women's rights to equality, life, and liberty under Articles 14, 15, and 21.

In K.S. Puttaswamy v. Union of India (2017) 10 SCC 1 this Court affirmed right to privacy as a fundamental right under the Constitution, which was read as a right and a part of 'life and liberty' under Article 21. It was held that privacy encompasses autonomy, dignity, and the freedom to control their own personality.

In Navtej Singh Johar v. Union of India (2018) 10 SCC 1 this Court invalidated Section 377 of the Indian Penal Code, 1860, on the grounds that it contravenes Articles 14 and 15 of the Constitution by discriminating based on gender identity.

Additionally, it was found to infringe upon the right to life, dignity, and autonomy guaranteed under Article 21, as well as the right to freedom of expression under Article 19(1)(a), thereby impeding the ability of LGBT individuals to realise their identity fully.

The words in Articles 14 and 21 apparently do not give the meaning which has come to be given to these two Articles now, through a catena of decisions of this Court. They cover the whole range of Rights as this is how they have evolved and expanded by this Court and the High Courts. A Constitutional provision acquires its meaning only after it is interpreted by a Constitutional Court.

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48. The provisions in Article 39(b) & (c) too have to be read in the light of Article 38 of the Constitution of India. Once we do that, we cannot but give an expansive meaning to the phrase "material resources of the community".

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". To reiterate what was said by Justice Krishna Iyer in Ranganatha Reddy:

"… 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." 85

49. It is for the legislature to decide how the ownership and control of material resources is to be distributed in order to subserve common good. Once the expansive meaning of "material resources of the community" is determined, there is no necessity of drawing further guidelines for the legislatures to determine as to what will constitute material resources. How to control and distribute a material resource is also the task of the Legislature, but while doing so what has to be seen is that the control and ownership of the material resource be so distributed that it subserves common good of the community.

If it does not, then such a legislation can be struck down as the Judiciary is not deprived of its powers of judicial review. The legislation in question has to establish a nexus with the principles specified in Article 39(b) and (c) to be a valid legislation. This is the law in terms of Kesavananda Bharati and Minerva Mills. To put it differently 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

(1977) 4 SCC 471, para 81.


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.

50. The incorporation of Article 38 as well as Article 39(b) and (c) in Part IV of our Constitution was based on the prevalent philosophy of the time and the path of development India chose to follow. The interpretation given to the above provisions by this Court, particularly in Ranganatha Reddy and Sanjeev Coke also has its contextual relevance. Perhaps in some ways situations have changed. What has not changed, however, is the inequality. There is today a political equality and there is also an equality in law, yet the social and economic inequalities continue as cautioned by Dr. Ambedkar in his speech in the constituent Assembly on November 25, 1949.86

The inequality in income and wealth and the growing gap between the rich and the poor is still enormous. It will therefore not be prudent to abandon the principles on which Articles 38 and 39 are based and on which stands the Three Judge opinion in Ranganatha Reddy and the unanimous verdict in Sanjeev Coke.

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.

Before I conclude, I must also record here my strong disapproval on the remarks made on the Krishna Iyer Doctrine as it is called. This criticism is harsh, and could have been avoided.

86 "On the 26th of January 1950, we are going to enter into a life of contradictions. In politics we will have equality and in social and economic life we will have inequality. In politics we will be recognizing the principle of one man one vote and one vote one value. In our social and economic life, we shall, by reason of our social and economic structure, continue to deny the principle of one man one value. How long shall we continue to live this life of contradictions? How long shall we continue to deny equality in our social and economic life? If we continue to deny it for long, we will do so only by putting our political democracy in peril. We must remove this contradiction at the earliest possible moment or else those who suffer from inequality will blow up the structure of political democracy which this Assembly has so laboriously built up." [From: Rudrangshu Mukherjee (ed.), Great Speeches of Modern India, (Random House India, 2007), Page 218-219]

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The Krishna Iyer Doctrine, or for that matter the O. Chinnappa Reddy Doctrine, is familiar to all who have anything to do with law or life.

It is based on strong humanist principles of fairness and equity. It is a doctrine which has illuminated our path in dark times. The long body of their judgment is not just a reflection of their perspicacious intellect but more importantly of their empathy for the people, as human being was at the centre of their judicial philosophy. In the words of Justice Krishna Iyer himself : "The Courts too have a constituency - the nation - and a manifesto - the Constitution". (Bangalore Water Supply & Sewerage Board. vs A. Rajappa & Others).87

Result of the Case: Reference answered.

†Headnotes prepared by: Bibhuti Bhushan Bose

87 [1978] 3 SCR 207 : (1978) 2 SCC 213, Para 7, Page 229.