Amidst the wealth distribution controversy in the country, in an unrelated case, the Supreme Court has begun hearing the process of interpretation of Article 39(b) of the Constitution, which allows the government to acquire and redistribute privately owned properties if they are deemed as “material resources of the community”.Under the Directive Principles of State Policy, Article 39(b) places an obligation on the state to create policy towards securing the “ownership and control of the material resources of the community are so distributed as best to subserve the common good”.Directive principles are guiding principles for the enactment of laws, which are directly not enforceable by court.The bench comprising Chief Justice DY Chandrachud and Justices Hrishikesh Roy, BV Nagarathna, S Dhulia, JB Pardiwala, Manoj Misra, R Bindal, SC Sharma and AG Masih weighed on the interpretation of Article 39(b) in State of Karnataka vs Shri Ranganatha Reddy case in 1977. The seven-judge bench held that privately owned resources did not fall within the ambit of “material resources of the community”.It was Justice Krishna’s Iyer dissenting views that provide the basis of what community resources are. Justice Iyer held that privately owned resources must be considered material resources of the community. “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,” Iyer contended.

When SC Relied on Justice Iyer’s Opinion

Justice Iyer’s opinion was upheld by a five-judge Supreme Court bench in Sanjeev Coke Manufacturing Company vs Bharat Coking Coal, 1983. The court upheld central legislation that nationalised coal mines and their respective coke oven plants relying on what Justice Iyer had ruled. It stated that the provision “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”.In Mafatlal Industries Ltd v Union of India (1996), Justice K S Paripoornan in the nine-judge Bench further endorsed Justice Iyer’s interpretation of Article 39(b). Justice Paripoornan stated that the term “material resources” encompasses not only natural or physical resources but also movable or immovable property, encompassing both private and public assets.In 1986, invoking Article 39(b), Section 1A was appended to Mumbai Building Repair and Reconstruction Board (MHADA), enabling plans for acquiring lands and buildings to transfer them to “needy persons” and the “occupiers of such lands or buildings”. The amendment also introduced Chapter VIII-A, granting the state government powers to acquire cessed buildings and their land if 70% of occupants made such a request.The Property Owners’ Association in Mumbai contested Chapter VIII-A of MHADA in the Bombay High Court, alleging violations of property owners’ Right to Equality under Article 14 of the Constitution. The court, however, upheld the laws enacted in line with DPSP, citing Article 31C of the Constitution (“Saving of laws giving effect to certain directive principles”).The Association appealed this decision to the Supreme Court in December 1992. The central issue before the SC was whether “material resources of the community” under Article 39(b) encompass privately owned resources, including cessed buildings. In March 2001, a five-judge Bench referred the case to a larger Bench, citing the need to reconsider the views expressed in Sanjeev Coke Manufacturing.In February 2002, a seven-judge Bench took note of Justice Iyer’s interpretation but expressed reservations. “We have some difficulty in sharing the broad view that material resources of the community under Article 39(b) covers what is privately owned.” Consequently, the challenge to Chapter VIII-A of MHADA was referred to a nine-judge Bench, which is presently deliberating on the matter.

What Did CJI Chandrachud Say?

CJI Chandrachud explained why there is a need for the interpretation of Article 39(b) by the nine-judge bench. “The reason for the exercise before the nine-judge bench is that though majority in the Ranganathan Reddy case in 1977 clarified that material resources of the community do not include private property, a five-judge bench in Sanjeev Coke in 1983 relied on Justice Iyer ignoring that it was a minority view,” he said as quoted by The Times of India.

“In the meantime, SC in Mafatlal Industries case in 1997 opined that Article 39(b) needed interpretation by a nine-judge bench,” the CJI said.