Vineeta Sharma v. Rakesh Sharma

Full Judgment Text

[Cites 156 , Cited by 0 ]

Supreme Court of India
Property Owners Association vs State Of Maharashtra on 5 November, 2024

Reportable
2024 INSC 835

IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE/ORIGINAL JURISDICTION

Civil Appeal No. 1012 of 2002

Property Owners Association & Ors. …Appellants

Versus

State of Maharashtra & Ors. …Respondents

With
SLP(C) No. 5777 of 1992
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SLP(C) No. 5204 of 1992
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SLP(C) No. 8797 of 1992
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SLP(C) No. 7950 of 1992
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SLP(C) No. 4367 of 1992
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W.P.(C) No. 934 of 1992
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SLP(C) Nos. 6191-6192 of 1992
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SLP(C) No. 6744 of 1993
Signature Not Verified With
Digitally signed by
SANJAY KUMAR
Date: 2024.11.05
SLP(C) No. 2303 of 1995
With
14:18:31 IST
Reason:

SLP(C) No. 13467 of 1995
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W.P.(C) No. 660 of 1998
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W.P.(C) No. 342 of 1999
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W.P.(C) No. 469 of 2000
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W.P.(C) No. 672 of 2000
And With
W.P.(C) No. 66 of 2024

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JUDGMENT

Dr Dhananjaya Y Chandrachud, CJI

Table of Contents
A. Background ..................................................................................................... 6
i. 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
i. 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
i. 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 .................................................................................................................. 96
b. Sanjeev Coke erred in relying on the observations of the minority in
Ranganatha Reddy ......................................................................................... 103
c. 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
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
c. Inferences from the discussions in the Constituent Assembly ................. 150
v. Interpretation of Article 39(b) that has been doubted ........................... 156

Page 3 of 193
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
c. 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

Page 4 of 193
1. 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 Policy 1 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 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.

2. 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;”

1
“Directive Principles”

Page 5 of 193
PART A

3. 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.

4. 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.

A. Background

i. Genesis of the Reference

5. 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 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

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

Page 6 of 193
PART A

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

6. 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

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-portion-of-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-died-in-
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-
toll-rises-to-22-4822665/
Page 7 of 193
PART A

was an unprecedented increase in the rents. To mitigate this, Rent Control

legislations were introduced.

7. 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 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.

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PART A

8. 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.” Pre-existing 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

9. 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. 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,

4
“ MHADA Act ”
5
Section 188 , MHADA Act.
6
Section 1(2) , MHADA Act.
7
Section 84 , MHADA Act.
8
Maharashtra Housing and Area Development (Amendment) Ordinance, 1986
Page 9 of 193
PART A

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

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.
Page 10 of 193
PART A

resources. Thus, a new approach was adopted 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 co-
operative 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 Bombay 13 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

13
“High Court”
Page 11 of 193
PART A

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 Court in State of

Maharashtra v Basantibai Khetan16, 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

14
Property Owners' Association v. State of Maharashtra, 1991 SCC OnLine Bom 521, para 10.
15
Ibid.
16
(1986) 2 SCC 516; 1986 INSC 40.
Page 12 of 193
PART A

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 India18. 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,

1976 20 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 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

17
(1996) 4 SCC 49; 1996 INSC 598 (“three-judge bench order”)
18
(1980) 3 SCC 625; 1980 INSC 142
19
(1973) 4 SCC 225; 1973 INSC 91
20
“Forty-Second Amendment”
Page 13 of 193
PART A

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 India 21 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.

21
(1980) 3 SCC 587; 1980 INSC 216
22
(1983) 1 SCC 147; 1982 INSC 93
Page 14 of 193
PART A

Nariman did 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 five-judge 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

23
(2001) 4 SCC 455 (‘five-judge bench order”)
24
(1977) 4 SCC 471; 1977 INSC 196.
Page 15 of 193
PART A

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 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

Page 16 of 193
PART A

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, 25 a 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. 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 Nadu 27 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

25
1997 (5) SCC 536; 1996 INSC 1514.
26
(2013) 7 SCC 522 (“seven-judge bench order”)
27
(1999) 7 SCC 580; 1999 INSC 394.
Page 17 of 193
PART A

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 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.

Page 18 of 193
PART A

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-A of 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:

Page 19 of 193
PART A

i. 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, 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

Page 20 of 193
PART B

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.

B. Issues

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

two issues:

a. 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

b. 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.

Page 21 of 193
PART B

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. 30 Akin 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

28
Writ Petition No 660 of 1998.
29
(1998) 2 SCC 1; 1997 INSC 831.
30
Civil Appeal No. 16879 of 1996.
Page 22 of 193
PART C

five judges. 31 On 26 February 2016, 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.

C. Article 31C

i. 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.

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?”
Page 23 of 193
PART C

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,

32
1973 (4) SCC 225; 1973 INSC 91
Page 24 of 193
PART C

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

Mukherjea, P Jaganmohan Reddy, and HR Khanna found that the latter half of

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).
Page 25 of 193
PART C

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).
Page 26 of 193
PART C

(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 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:]

Page 27 of 193
PART C

*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

Page 28 of 193
PART C

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:]

*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 (Forty-fourth

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

37
1980 (3) SCC 625; 1980 INSC 142.
Page 29 of 193
PART C

of the challenge, the impugned legislation had already been inserted into the

Ninth Schedule of the Constitution. Thus, to secure the ultimate relief of

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

38
1981 (2) SCC 362;
Page 30 of 193
PART C

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
subject-matter 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 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
Page 31 of 193
PART C

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.

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…”

39
Minerva Mills [75] (Chandrachud CJ).
Page 32 of 193
PART C

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.”

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
Page 33 of 193
PART 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 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
Page 34 of 193
PART C

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
Page 35 of 193
PART C

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:

Page 36 of 193
PART C

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:”

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

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

Page 37 of 193
PART C

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
Page 38 of 193
PART C

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;

Page 39 of 193
PART C

(iii) The decision of a Constitution Bench of this Court in Supreme

Court Advocates-On-Record Association v Union of India 40

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.

40
2016 (5) SCC 1; 2015 INSC 285.
41
1981 (1) SCC 166; 1980 INSC 219.
Page 40 of 193
PART C

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 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

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).
Page 41 of 193
PART C

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 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
Page 42 of 193
PART C

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”…”

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

44
Sanjeev Coke [10]-[13] (Chinnappa Reddy J).
Page 43 of 193
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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 sub-
sections (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

Page 44 of 193
PART C

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 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

Page 45 of 193
PART C

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

45
1952 (2) SCC 1; 1952 INSC 63.
Page 46 of 193
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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 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

Page 47 of 193
PART C

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 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

46
1963 14 STC 355; 1962 INSC 342.
Page 48 of 193
PART C

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

47
ATB Mehtab Majid v State of Madras 1963 14 STC 355.
48
ATB Mehtab Majid v State of Madras 1963 14 STC 355.
Page 49 of 193
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than the decisions in Bhim Singh and Sanjeev Coke which, without providing

detailed reasons, found that Article 31-C stood revived.

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 Oilcakes (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

49
1969 (1) SCC 255; 1968 INSC 335.
50
Ibid [4] (Bhargava J).
Page 50 of 193
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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.”

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

51
Ibid [7] (Bhargava J).
Page 51 of 193
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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)

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
Page 52 of 193
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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 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

52
AIR 1951 Nag 94.
Page 53 of 193
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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 Judge relied on several decisions of the

US Supreme Court, most notably, Frost v Corporation Commissioner 54

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.

53
Ibid [142] (Hidayatullah J); [157] (Mangalmurti J).
54
278 U.S. 505.
Page 54 of 193
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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 Pradesh 55 and in the decisions of this Court that

we shall now advert to.

55
1952 (3) STC 343.
Page 55 of 193
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56. In Mulchand Odhavji v Rajkot Borough Municipality 56 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 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

56
1971 (3) SCC 53.
57
Ibid [10].
Page 56 of 193
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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 bye-laws 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 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
Page 57 of 193
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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 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

58
1977 (1) SCC 643; 1976 INSC 269.
59
Ibid [8] (Beg J).
Page 58 of 193
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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, 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.
Page 59 of 193
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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

60
1986 Supp SCC 20.
Page 60 of 193
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notifications issued by the state government of 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

61
See Ibid [55] (Madon J).
62
Ibid [65], [67] (Madon J).
Page 61 of 193
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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 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
Page 62 of 193
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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 Cohn 64 the Supreme Court of Washington was

tasked with determining whether a 1937 taxation statute continued 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.”

63
278 U.S. 505.
64
8 Wash 2d 360 (17 April 1941, Supreme Court of Washington).
Page 63 of 193
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(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:

“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

65
320 Pa 33 (Pa. 1935) (25 November 1935, Supreme Court of Pennsylvania)
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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
Page 65 of 193
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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. 68 The 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 the effect of

66
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).
Page 66 of 193
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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
Page 67 of 193
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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

Page 68 of 193
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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 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

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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 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

69
1965 (2) SCR 421.
70
1964 (4) SCR 680; 1963 INSC 183.
71
T Devadasan [22] (Mudholkar J).
Page 70 of 193
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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. 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
Page 71 of 193
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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.”

The learned Judge quoted the judgment of the High Court of Andhra Pradesh

where the High Court had held:

72
1974 (2) SCC 376; 1974 INSC 118.
Page 72 of 193
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“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 1967 is 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

Page 73 of 193
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consequences that flow from the decision to invalidate the statute or provision

in question.

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

73
1985 (1) SCC 641; 1984 INSC 231.
74
Ibid [102] (Venkataramiah J).
Page 74 of 193
PART C

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 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

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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 court re-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 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
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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

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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.

Page 78 of 193
PART C

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 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
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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

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
Page 80 of 193
PART C

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 thirteen-judge 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
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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.

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
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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.

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PART D

D. 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.

i. Submissions

a. 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:

a. 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;

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PART D

b. 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;

c. 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;

d. 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 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;

e. 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;

f. 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;

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PART D

g. 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

h. 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:

a. 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

c. The minority opinion authored by Justice Krishna Iyer in Ranganatha

Reddy and subsequently followed in Sanjeev Coke was rendered in the

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PART D

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 intervenors 75 supplemented the

arguments of the counsel for the appellants and made the following

submissions:

a. 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;

b. 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 co-equal 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;

c. 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;

d. 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

75
I.A. No. 28541 of 2024.
Page 87 of 193
PART D

resources of the individual are part of the community, renders the use of the

phrase “of the community” otiose;

e. 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 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;

f. 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

g. 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

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PART D

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.

b. 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:

a. 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;

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PART D

b. 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

c. 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 carriages77, land 78, coke oven plants 79,

assets of sick textile undertakings 80, drugs81, electricity 82, capital 83, licenses

for felling bamboo84, refractory plants 85, grant of dealerships of petroleum

products 86, mines and minerals 87, mining lease 88, refund of excise, 89 natural

gas 90and the grant of natural resource91.

80. Mr Tushar Mehta, the learned Solicitor General, supplemented the arguments

of the learned Attorney General. He argued:

a. 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

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,
Page 90 of 193
PART D

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;

b. 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;

c. 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;

d. 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;

e. 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

92
1984 (1) SCC 515; 1984 INSC 17.
Page 91 of 193
PART D

land is taken over by the government. Therefore, the term ‘and’ must be

read as ‘and/or’;

f. 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;

g. 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;

h. 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’;

i. 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);

j. 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

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k. The preservation of ‘material resources’, such as buildings constitutes the

‘common good’. The principle of ‘inter-generational 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 experimentation by the Parliament, in view of changing

economic priorities. In the context of this formulation, he broadly made the

following submissions:

a. 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;

b. 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.;

c. 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;

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PART D

d. 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”.

e. 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

f. 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:

a. 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,

Page 94 of 193
PART D

wherein this Court struck down the nationalisation of the private rights of

shareholders and banks as violative of Article 14;

b. 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.;

c. 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;

d. 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

e. 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.

Page 95 of 193
PART D

a. 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.
Page 96 of 193
PART D

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,

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.”]
Page 97 of 193
PART D

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 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).

…

Page 98 of 193
PART D

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
Page 99 of 193
PART D

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 sub-
section (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 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?” 94 The 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

94
Ranganatha Reddy [40].
Page 100 of 193
PART D

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)?
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
Page 101 of 193
PART D

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 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

95
Ranganatha Reddy [80-84].
Page 102 of 193
PART D

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.

b. 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

Page 103 of 193
PART D

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. 97 The 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

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.
Page 104 of 193
PART D

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. 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

98
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.
Page 105 of 193
PART D

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? 101 These 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 Maharashtra 102 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 (speaking through Justice Ravindra Bhat) relied on the

observations in Rajnarain Singh v. Patna Administration Committee103 and

101
DD Basu, ‘Constitution of India’, Vol 9, p 9849.
102
(2021) 8 SCC 1; 2021 INSC 284.
103
(1954) 2 SCC 82; 1954 INSC 69.
Page 106 of 193
PART D

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

Page 107 of 193
PART D

necessary 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
Kaikhosrou (Chick) Kavasji Framji v. Union of India, (2019) 20 SCC 705 [40-46]; 2019 INSC 378.
105
(2018) 10 SCC 1 [442-446]; 2018 INSC 790.
106
(2021) 15 SCC 125 [50]; 2021 INSC 210.
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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 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
Page 109 of 193
PART D

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.

c. 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 view in Ranganatha Reddy, have been followed in

subsequent decisions of this Court. These decisions include inter alia SAbu

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
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 Bar Asson. Journal.]
Page 110 of 193
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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

108
(2024) 5 SCC 629 [33]; 2024 INSC 161.
Page 111 of 193
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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.

d. 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

Page 112 of 193
PART D

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 Karnataka111 pithily 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 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

109
HALSBURY, 2nd Edn, Vol 19, para 556.
110
Secundrabad Club v. CIT, 2023 SCC OnLine SC 1004 [13]; 2023 INSC 736.
111
(2003) 6 SCC 697 [2]; 2003 INSC 391.
112
2023 SCC OnLine SC 1004; 2023 INSC 736.
Page 113 of 193
PART D

(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 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

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)
Page 114 of 193
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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 265 115 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

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”.]
Page 115 of 193
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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:

“84. […] Unlike the economically neutral — if not pro-
capitalist — 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)

Page 116 of 193
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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

Page 117 of 193
PART D

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:

“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
Page 118 of 193
PART D

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

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.

116
Islamic Academy of Education [2].
Page 119 of 193
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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 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):

Page 120 of 193
PART D

“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,
Page 121 of 193
PART D

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 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.

Page 122 of 193
PART D

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.

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

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PART D

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

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

Page 124 of 193
PART D

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
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:
Page 125 of 193
PART D

“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.

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PART D

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)

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

Page 127 of 193
PART D

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.

b. 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:

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.

Page 128 of 193
PART D

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 decision-making 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

117
Ashok Kumar Thakur v Union of India, (2008) 6 SCC 1 [173]; 2008 INSC 473.
Page 129 of 193
PART D

Madras v Champakan Dorairjan 118 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, 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

118
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.”
120
HM Seervai, Constitutional Law of India, Vol 2 (4th ed, Universal Law Publishing 2002) 1934–40.
Page 130 of 193
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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

121
1957 SCC OnLine SC 17 [12].
122
1967 SCC OnLine SC 14 [16, 19]; 1967 INSC 45.
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stronger. In Minerva Mills, this Court (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

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restriction imposed on fundamental rights. This has been affirmed in a line of

precedent of this Court. 123 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

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.
124
(2005) 8 SCC 534; 2005 INSC 525.
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PART D

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 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

India 127 and Olga Tellis v. Bombay Municipal Corpn., 128 this Court expanded

the interpretation of Article 21 in light of various Directive Principles and held

125
(1976) 2 SCC 310; 1975 INSC 224.
126
(2008) 6 SCC 1; 2008 INSC 473.
127
(1984) 3 SCC 161 [10]; 1983 INSC 203.
128
(1985) 3 SCC 545 [33]; 1985 INSC 151.
Page 134 of 193
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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 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.

a. Debates about the purpose of Directive Principles

149. On 4 November 1948, Dr B R 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.

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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 B R 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

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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;

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:

Page 137 of 193
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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
Page 138 of 193
PART D

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.

Page 139 of 193
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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, 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

129
Constituent Assembly Debates, Vol VII (15th November 1948)
Page 140 of 193
PART D

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, 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

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PART D

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.
[…]

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)

b. 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’;”

Page 142 of 193
PART D

(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.

Page 143 of 193
PART D

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,
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.

Page 144 of 193
PART D

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.
Page 145 of 193
PART D

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 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

Page 146 of 193
PART D

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
Page 147 of 193
PART D

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 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
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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.”

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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.

c. 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

130
S.R. Chaudhuri v. State of Punjab, (2001) 7 SCC 126; 2001 INSC 373.
131
(2017) 10 SCC 1 [476]; 2017 INSC 1235.
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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 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 ,

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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:

a. 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;

b. 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’;

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c. 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

d. 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

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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

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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.

v. 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 necessary because private
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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?”

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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
re-organizes 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 –

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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 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

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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
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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.”

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

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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. 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

132
Maharao Sahib Shri Bhim Singhji v. Union of India, (1986) 4 SCC 615.
Page 162 of 193
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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. 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
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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”.

Page 164 of 193
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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

133
Sanjeev Coke [16, 17].
Page 165 of 193
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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 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
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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

Page 167 of 193
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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.

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.

Page 168 of 193
PART D

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

134
Abu Kavur Bai [29-31].
Page 169 of 193
PART D

constitutes 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.

135
Abu Kavur Bai [74, 75].
136
Abu Kavur Bai [78-83].
Page 170 of 193
PART D

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 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

Assam 137 and Maharashtra State Electricity Board v. Thana Electric

Supply Co. 138], refractory plants [Assam Sillimanite Ltd. v. Union of India 139]

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

137
(1989) 3 SCC 709; 1989 INSC 128
138
(1989) 3 SCC 616; 1989 INSC 127
139
1992 Supp (1) SCC 692; 1990 INSC 89
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PART D

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 2012140. 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 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

140
(2012) 10 SCC 1; 2012 INSC 428.
Page 172 of 193
PART D

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 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.”

Page 173 of 193
PART D

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:

a. 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;

b. The term “material resources of the community” refers to things capable of

producing wealth for the community and includes all resources – natural

and manmade, private and public. The resources of the individual are the

Page 174 of 193
PART D

resources of the community and thus, privately owned property is covered

by the phrase;

c. 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

d. 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:

a. Do all privately owned resources fall within the ambit of ‘material resources

of the community’?

b. 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

Page 175 of 193
PART D

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).

a. 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:

a. The provision relates to “ownership and control”;

b. The ownership and control of “material resources” is dealt with by the

provision;

c. The material resources which the provision covers are those which are “of

the community”;

d. The policy of the state must be directed to secure the “distribution” of the

ownership and control of such resources;

Page 176 of 193
PART D

e. 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.
Page 177 of 193
PART D

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”

143
Ramanathaier, Advanced Law Lexicon, 3rd Edition., Vol. III.
144
Ranganatha Reddy [81].
Page 178 of 193
PART D

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 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

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.
Page 179 of 193
PART D

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”.

b. 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

Page 180 of 193
PART D

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

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].

Page 181 of 193
PART D

this judgement, the vision of the framers while drafting the Constitution was not

to lay down 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
Page 182 of 193
PART D

decade of the 1990s, or the liberalisation years, there has been a shift towards

pursuing a policy of market-based 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.

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 in a

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 fastest-growing 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

150
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
151

Review, January 2024.
152
Ministry of Finance (Department of Economic Affairs), Government of India, Economic Survey 2023-24,
July 2024.

Page 183 of 193
PART D

the ultimate goal, would undermine the very fabric and principles of our

constitutional framework.

c. 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 & Ors155, 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 constitutional right to property cannot be limited to the twin

conditions of (a) the acquisition being for a public purpose; and (b) payment of

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 INSC 435.
Page 184 of 193
PART D

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
Page 185 of 193
PART D

– 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.

d. 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.

Page 186 of 193
PART D

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 of the provision. The following factors may be borne in mind while

determining whether the resource constitutes a ‘material resource of the

community’:

a. The 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; and

d. 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

Page 187 of 193
PART D

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 Nath 157 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. 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

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
(1997) 1 SCC 388 [22-25]; 1996 INSC 1482.
158
Centre for Public Interest Litigation v. Union of India, (2012) 3 SCC 1 [74-78]; 2012 INSC 68.
Page 188 of 193
PART D

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 of

the 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.

e. 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

Page 189 of 193
PART D

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.

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
Page 190 of 193
PART E

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.

E. Conclusion

229. In a nutshell, the answers arrived at by this Court to the reference before us

may be summarised in the following terms:

a. Article 31C to the extent that it was upheld in Kesavananda Bharati v

Union of India remains in force;

b. 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;

c. 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;

Page 191 of 193
PART E

d. 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’;

e. 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

f. 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’.

Page 192 of 193
PART E

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.

…….……………………………………CJI
[Dr Dhananjaya Y Chandrachud]

….….………………………………………J
[Hrishikesh Roy]

.….…………………………………………J
[J B Pardiwala]

..….…………………………………………J
[Manoj Misra]

..….…………………………………………J
[Rajesh Bindal]

..….…………………………………………J
[Satish Chandra Sharma]

..….…………………………………………J
[Augustine George Masih]

New Delhi;
November 05, 2024

Page 193 of 193
REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE/ORIGINAL JURISDICTION

CIVIL APPEAL NO.1012 OF 2002

PROPERTY OWNERS’ ASSOCIATION & OTHERS …APPELLANTS

VERSUS

STATE OF MAHARASHTRA & OTHERS ...RESPONDENTS

WITH
SPECIAL LEAVE PETITION (CIVIL) NO.4367 OF 1992
SPECIAL LEAVE PETITION (CIVIL) NO.5204 OF 1992
SPECIAL LEAVE PETITION (CIVIL) NO.5777 OF 1992
SPECIAL LEAVE PETITION (CIVIL) NOS.6191-6192 OF 1992
SPECIAL LEAVE PETITION (CIVIL) NO.7950 OF 1992
SPECIAL LEAVE PETITION (CIVIL) NO.8797 OF 1992
SPECIAL LEAVE PETITION (CIVIL) NO.6744 OF 1993
SPECIAL LEAVE PETITION (CIVIL) NO.2303 OF 1995
SPECIAL LEAVE PETITION (CIVIL) NO.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) NO.469 OF 2000
WRIT PETITION (CIVIL) NO.672 OF 2000
WRIT PETITION (CIVIL) NO.66 OF 2024

Civil Appeal No.1012 of 2002 Etc. Page 1 of 139
JUDGMENT

NAGARATHNA, J.

Table of Contents
1. Preface: .............................................................................................................. 3
2. Reference of questions to nine-Judge Bench: ...................................................... 5
3. Re: First issue: ................................................................................................. 10
4. The Constitution of India: A living Tree: .......................................................... 11
5. Re: Second issue: ............................................................................................. 20
6. Submissions: .................................................................................................... 20
7. My view on the aforesaid observations: ............................................................ 27
8. From 1950 to 1991: Planned economy to Liberalization, Privatisation and
Globalisation (“LPG”): ....................................................................................... 31
9. 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

Civil Appeal No.1012 of 2002 Etc. Page 2 of 139
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

Civil Appeal No.1012 of 2002 Etc. Page 3 of 139
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 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

Civil Appeal No.1012 of 2002 Etc. Page 4 of 139
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:

2. 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,

Civil Appeal No.1012 of 2002 Etc. Page 5 of 139
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 1st May, 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

Civil Appeal No.1012 of 2002 Etc. Page 6 of 139
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”.
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.”

Civil Appeal No.1012 of 2002 Etc. Page 7 of 139
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

Civil Appeal No.1012 of 2002 Etc. Page 8 of 139
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
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

Civil Appeal No.1012 of 2002 Etc. Page 9 of 139
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:

3. I respectfully concur 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.

Civil Appeal No.1012 of 2002 Etc. Page 10 of 139
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:

4. 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

Civil Appeal No.1012 of 2002 Etc. Page 11 of 139
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 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

Civil Appeal No.1012 of 2002 Etc. Page 12 of 139
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 quam pereat (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

Civil Appeal No.1012 of 2002 Etc. Page 13 of 139
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

Civil Appeal No.1012 of 2002 Etc. Page 14 of 139
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

Civil Appeal No.1012 of 2002 Etc. Page 15 of 139
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 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

Civil Appeal No.1012 of 2002 Etc. Page 16 of 139
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.

Civil Appeal No.1012 of 2002 Etc. Page 17 of 139
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

doctrine- the 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

Civil Appeal No.1012 of 2002 Etc. Page 18 of 139
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, the

framers 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 of fact, the 42nd Amendment had, inter alia, inserted the

word “Socialist” into the Preamble to the Constitution. By

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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:

5. 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

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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

Civil Appeal No.1012 of 2002 Etc. Page 21 of 139
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:

a. Do all privately owned resources fall within the

ambit of “material resources of the community”?

Civil Appeal No.1012 of 2002 Etc. Page 22 of 139
b. 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 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,

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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

error as the said judgments cast the net wide by holding that

Civil Appeal No.1012 of 2002 Etc. Page 24 of 139
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

Civil Appeal No.1012 of 2002 Etc. Page 25 of 139
“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.

Civil Appeal No.1012 of 2002 Etc. Page 26 of 139
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.

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

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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

Civil Appeal No.1012 of 2002 Etc. Page 28 of 139
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

Civil Appeal No.1012 of 2002 Etc. Page 29 of 139
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

Civil Appeal No.1012 of 2002 Etc. Page 30 of 139
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”):

6. 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, 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

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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 five-year 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

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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

state owned 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

Civil Appeal No.1012 of 2002 Etc. Page 33 of 139
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

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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, 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 credit-

worthiness, 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.

Civil Appeal No.1012 of 2002 Etc. Page 35 of 139
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

Civil Appeal No.1012 of 2002 Etc. Page 36 of 139
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

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non-competitiveness. 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.

Civil Appeal No.1012 of 2002 Etc. Page 38 of 139
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

post-independence has been to focus on a transformative socio-

economic growth of the people of India by way of experimentation

Civil Appeal No.1012 of 2002 Etc. Page 39 of 139
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

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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.

Civil Appeal No.1012 of 2002 Etc. Page 41 of 139
Back to the second issue:

7. 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;
(c) the scarcity of the resource; and
(d) the consequences of such a resource being
concentrated in the hands of the private owners.

Civil Appeal No.1012 of 2002 Etc. Page 42 of 139
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

Civil Appeal No.1012 of 2002 Etc. Page 43 of 139
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

Civil Appeal No.1012 of 2002 Etc. Page 44 of 139
“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:
a. Article 31C to the extent that it was upheld in
Kesavananda Bharati v. Union of India remains
in force.

b. 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.

c. 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.

Civil Appeal No.1012 of 2002 Etc. Page 45 of 139
d. 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’.

e. 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 identity resources which fall within the
ambit of the phrase “material resource of the
community”.

f. 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

Civil Appeal No.1012 of 2002 Etc. Page 46 of 139
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.

Civil Appeal No.1012 of 2002 Etc. Page 47 of 139
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)

privately owned 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

Civil Appeal No.1012 of 2002 Etc. Page 48 of 139
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 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

Civil Appeal No.1012 of 2002 Etc. Page 49 of 139
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 material resource 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

Civil Appeal No.1012 of 2002 Etc. Page 50 of 139
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

Civil Appeal No.1012 of 2002 Etc. Page 51 of 139
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 to not actually distribute the said resource amongst the

citizens but to retain it with the State and utilise the same for the

Civil Appeal No.1012 of 2002 Etc. Page 52 of 139
common good, i.e., in public interest. In such an event, the State

would retain such privately owned 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.

8. The perspective articulated in the proposed judgment of the

learned Chief Justice rests upon certain key deductions, which

are culled out hereinunder:

i. 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

Civil Appeal No.1012 of 2002 Etc. Page 53 of 139
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:

a. Provision relates to “ownership” and “control”;

b. “Ownership” and “control” is over “material
resources”;

c. The material resources which the provision
covers are those which are “of the community”;

d. The policy of the State must be directed to
secure the “distribution” of the ownership and
control of such resources;

e. 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

Civil Appeal No.1012 of 2002 Etc. Page 54 of 139
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.”

v. 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

Civil Appeal No.1012 of 2002 Etc. Page 55 of 139
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:

9. 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

Civil Appeal No.1012 of 2002 Etc. Page 56 of 139
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 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,

Civil Appeal No.1012 of 2002 Etc. Page 57 of 139
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.

Civil Appeal No.1012 of 2002 Etc. Page 58 of 139
(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 securing—
xxx
(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

Civil Appeal No.1012 of 2002 Etc. Page 59 of 139
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 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

Civil Appeal No.1012 of 2002 Etc. Page 60 of 139
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

Civil Appeal No.1012 of 2002 Etc. Page 61 of 139
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

Civil Appeal No.1012 of 2002 Etc. Page 62 of 139
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

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

Civil Appeal No.1012 of 2002 Etc. Page 63 of 139
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

Civil Appeal No.1012 of 2002 Etc. Page 64 of 139
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 about a 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

Civil Appeal No.1012 of 2002 Etc. Page 65 of 139
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

Civil Appeal No.1012 of 2002 Etc. Page 66 of 139
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.

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”.

Civil Appeal No.1012 of 2002 Etc. Page 67 of 139
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

Civil Appeal No.1012 of 2002 Etc. Page 68 of 139
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

Civil Appeal No.1012 of 2002 Etc. Page 69 of 139
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

Civil Appeal No.1012 of 2002 Etc. Page 70 of 139
is in the context of mining of minerals, when a private person

may be the owner of a mine but the 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

Civil Appeal No.1012 of 2002 Etc. Page 71 of 139
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;

Civil Appeal No.1012 of 2002 Etc. Page 72 of 139
(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

Civil Appeal No.1012 of 2002 Etc. Page 73 of 139
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.

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.

Civil Appeal No.1012 of 2002 Etc. Page 74 of 139
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

Civil Appeal No.1012 of 2002 Etc. Page 75 of 139
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

Civil Appeal No.1012 of 2002 Etc. Page 76 of 139
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.

Civil Appeal No.1012 of 2002 Etc. Page 77 of 139
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

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 x x
(f) the expression public purpose includes-

Civil Appeal No.1012 of 2002 Etc. Page 78 of 139
(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;

Civil Appeal No.1012 of 2002 Etc. Page 79 of 139
(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

Civil Appeal No.1012 of 2002 Etc. Page 80 of 139
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:—

“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’

Civil Appeal No.1012 of 2002 Etc. Page 81 of 139
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

Civil Appeal No.1012 of 2002 Etc. Page 82 of 139
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);
(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 sub-clauses (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,

Civil Appeal No.1012 of 2002 Etc. Page 83 of 139
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

Civil Appeal No.1012 of 2002 Etc. Page 84 of 139
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

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

Civil Appeal No.1012 of 2002 Etc. Page 85 of 139
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.

Civil Appeal No.1012 of 2002 Etc. Page 86 of 139
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”.

Civil Appeal No.1012 of 2002 Etc. Page 87 of 139
“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

Civil Appeal No.1012 of 2002 Etc. Page 88 of 139
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 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

Civil Appeal No.1012 of 2002 Etc. Page 89 of 139
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.

Civil Appeal No.1012 of 2002 Etc. Page 90 of 139
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 auction and 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

Civil Appeal No.1012 of 2002 Etc. Page 91 of 139
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

Civil Appeal No.1012 of 2002 Etc. Page 92 of 139
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 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.

Civil Appeal No.1012 of 2002 Etc. Page 93 of 139
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

Civil Appeal No.1012 of 2002 Etc. Page 94 of 139
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 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

Civil Appeal No.1012 of 2002 Etc. Page 95 of 139
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

Civil Appeal No.1012 of 2002 Etc. Page 96 of 139
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

Civil Appeal No.1012 of 2002 Etc. Page 97 of 139
19, in view of Article 31C of the 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

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,

Civil Appeal No.1012 of 2002 Etc. Page 98 of 139
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 private-ownership into public-ownership and is not

confined to that which is already public owned”

Civil Appeal No.1012 of 2002 Etc. Page 99 of 139
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

Civil Appeal No.1012 of 2002 Etc. Page 100 of 139
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.

• 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-

Civil Appeal No.1012 of 2002 Etc. Page 101 of 139
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

Civil Appeal No.1012 of 2002 Etc. Page 102 of 139
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

Civil Appeal No.1012 of 2002 Etc. Page 103 of 139
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 and whether the law of acquisition is for public purpose

or not is a justiciable issue. The intention of the legislature has

to be gathered mainly 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

Civil Appeal No.1012 of 2002 Etc. Page 104 of 139
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.

Civil Appeal No.1012 of 2002 Etc. Page 105 of 139
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

Civil Appeal No.1012 of 2002 Etc. Page 106 of 139
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

Civil Appeal No.1012 of 2002 Etc. Page 107 of 139
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

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

Civil Appeal No.1012 of 2002 Etc. Page 108 of 139
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

Civil Appeal No.1012 of 2002 Etc. Page 109 of 139
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.

Civil Appeal No.1012 of 2002 Etc. Page 110 of 139
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.

Civil Appeal No.1012 of 2002 Etc. Page 111 of 139
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.

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 public

owned. In this regard, reliance was also placed on the

observations of Krishna Iyer, J. in Ranganatha Reddy referred

to above.

Civil Appeal No.1012 of 2002 Etc. Page 112 of 139
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.

Civil Appeal No.1012 of 2002 Etc. Page 113 of 139
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

Civil Appeal No.1012 of 2002 Etc. Page 114 of 139
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

Civil Appeal No.1012 of 2002 Etc. Page 115 of 139
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).

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

Civil Appeal No.1012 of 2002 Etc. Page 116 of 139
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

Civil Appeal No.1012 of 2002 Etc. Page 117 of 139
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

Civil Appeal No.1012 of 2002 Etc. Page 118 of 139
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 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

Civil Appeal No.1012 of 2002 Etc. Page 119 of 139
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.”

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

Civil Appeal No.1012 of 2002 Etc. Page 120 of 139
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

Civil Appeal No.1012 of 2002 Etc. Page 121 of 139
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

Civil Appeal No.1012 of 2002 Etc. Page 122 of 139
missions leading to the Reforms of 1991 which I have discussed

in the earlier part of my opinion.

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

Civil Appeal No.1012 of 2002 Etc. Page 123 of 139
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 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 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

Civil Appeal No.1012 of 2002 Etc. Page 124 of 139
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:

I. 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-

Civil Appeal No.1012 of 2002 Etc. Page 125 of 139
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.

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.

Civil Appeal No.1012 of 2002 Etc. Page 126 of 139
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

Civil Appeal No.1012 of 2002 Etc. Page 127 of 139
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

Civil Appeal No.1012 of 2002 Etc. Page 128 of 139
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,

Civil Appeal No.1012 of 2002 Etc. Page 129 of 139
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:

Civil Appeal No.1012 of 2002 Etc. Page 130 of 139
(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

Civil Appeal No.1012 of 2002 Etc. Page 131 of 139
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:

a. Article 31C to the extent that it was upheld in

Kesavananda Bharati vs. Union of India remains

in force.

My view: I agree.

Civil Appeal No.1012 of 2002 Etc. Page 132 of 139
b. 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.

Civil Appeal No.1012 of 2002 Etc. Page 133 of 139
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.

c. 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.

Civil Appeal No.1012 of 2002 Etc. Page 134 of 139
d. 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,

Civil Appeal No.1012 of 2002 Etc. Page 135 of 139
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.

e. 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

Civil Appeal No.1012 of 2002 Etc. Page 136 of 139
material resource can be transformed as “material

resource of the community”.

f. 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.

Civil Appeal No.1012 of 2002 Etc. Page 137 of 139
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

Civil Appeal No.1012 of 2002 Etc. Page 138 of 139
teams, learned senior counsel and learned counsel appearing for

the respective parties and learned instructing counsel for their

valuable assistance to this Bench.

………………………………J.
(B.V. NAGARATHNA)

NEW DELHI;
NOVEMBER 05, 2024.

Civil Appeal No.1012 of 2002 Etc. Page 139 of 139
1

REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE/ORIGINAL JURISDICTION

CIVIL APPEAL NO.1012 OF 2002

PROPERTY OWNERS’ ASSOCIATION & ORS. …APPELLANT(S)

VERSUS

STATE OF MAHARASHTRA & ORS. …RESPONDENT(S)

WITH

SLP(C) No.5777/1992, SLP(C) No.5204/1992, SLP(C)
No.8797/1992, SLP(C) No.7950/1992, SLP(C) No.4367/1992,
W.P.(C) No.934/1992, SLP(C) No.6191-6192/1992, SLP(C)
No.6744/1993, SLP(C) No.2303/1995, SLP(C) No.13467/1995,
W.P.(C) No.660/1998, W.P.(C) No.342/1999, W.P.(C)
No.469/2000, W.P.(C) No.672/2000 and W.P.(C) No.66/2024
JUDGMENT

SUDHANSHU DHULIA, J.

1. 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
2

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.

2. 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
3

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.

3. 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
4

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”.

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”.

4. 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.
6

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. Brandeis1, 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 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

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.

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

6. 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

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.
8

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 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.

7. Interpretation of a Constitution is different from interpreting

an ordinary statute. The obvious difference is in the importance of

5 AHARON BARAK, THE JUDGE IN A DEMOCRACY (Princeton University Press, 2006), Pg. 308.
9

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

A Constitution is also designed by one generation with an eye

towards many future generations to come, so that it is able to

6 AHARON BARAK, PURPOSIVE INTERPRETATION IN LAW (Universal Law Publishing Co., 2007), Pg.

370.
10

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

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.
11

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 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

9 Aharon Barak, Hermeneutics and Constitution Interpretation, 14 CARDOZO L. REV. 767, (1992-

93), Pg. 772.

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.

8. 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

10 AHARON BARAK, PURPOSIVE INTERPRETATION IN LAW (Universal Law Publishing Co., 2007), Pg.

377.
13

later came to be incorporated in Part III & IV of the Constitution

can be traced 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.

9. 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

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.
14

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 Constitution13, 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

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

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.
15

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 ,

15 CONSTITUENT ASSEMBLY DEBATES, VOL. I, Pg. 62.
16O. CHINNAPPA REDDY, THE COURT AND THE CONSTITUTION OF INDIA: SUMMITS AND SHALLOWS
(Oxford University Press, 2008), Pg. 139.

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 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

17 O. CHINNAPPA REDDY, THE COURT AND THE CONSTITUTION OF INDIA: SUMMITS AND SHALLOWS
(Oxford University Press, 2008), Pg. 137.

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

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.

government, which would soon be taking power. The following were

the prominent signatories to the plan:

1. JRD Tata, one of India's pioneer industrialists.
2. G. D. Birla, the leader of the Birla group of
industries.
3. Sir Ardeshir Dalal, an able administrator and
technocrat.
4. Lala Shriram, a prominent north Indian
industrialist.
5. Kasturbhai Lalbhai, a famous Indian
Industrialist.
6. D. Shroff, director of a number of prominent
industries including a few of the Tata group.
7. John Mathai, professor of economics at Madras
University and a political personality.
8. 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
19

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'.

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.

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

22 ADITYA MUKHERJEE, POLITICAL ECONOMY OF COLONIAL AND POST-COLONIAL INDIA (PRIMUS BOOKS,

2022), Pg.192.
21

proposed to issue such instruments 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

23 CONSTITUENT ASSEMBLY DEBATES, VOL. VII, Pg. 41.
22

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.

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

24 GRANVILLE AUSTIN, THE INDIAN CONSTITUTION: CORNERSTONE OF A NATION (Oxford University Press,

New Delhi, Second Impression 2000), Pg. 50.
23

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:

“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;
24

(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 aid25.
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.
Article 43A - Participation of workers in
management of industries26.
Article 47 – Duty of the State to raise the level of
nutrition and the standard of living and to improve
public health.

25 Inserted by s.8 of the Constitution (Forty-Second Amendment) Act, 1976.
26 Inserted by s.9 of the Constitution (Forty-Second Amendment) Act, 1976.
25

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
26

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 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

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 .
27

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 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

29 See JUSTICE O. CHINNAPPA REDDY, THE COURT AND THE CONSTITUTION OF INDIA: SUMMITS AND

SHALLOWS (Oxford University Press, 2008), Pgs. 74-75.
30 See JUSTICE O. CHINNAPPA REDDY, THE COURT AND THE CONSTITUTION OF INDIA: SUMMITS AND

SHALLOWS (Oxford University Press, 2008), Pgs. 74-75.
28

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 suppose, with due
respect to some eminent judges who so supposed,

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.
29

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

non-enforceability of Directive Principles vis-à-vis the

Fundamental Rights weighed with the Courts as well as some

33 GRANVILLE AUSTIN, THE INDIAN CONSTITUTION: CORNERSTONE OF A NATION (Oxford University Press,

New Delhi, Second Impression 2000), Pg. 51.

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 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

34 H.M. Seervai has been extremely critical of the role of directive principles, to the extent of

considering it almost superfluous and unnecessary.
35 1951 SCC OnLine SC 30, para 15.

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 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 harmony38. The earlier position taken by this

36 1958 SCC OnLine SC 8, para 8.

37 1957 SCC OnLine SC 629, para 12.

38 P.K. TRIPATHY, SPOTLIGHTS ON CONSTITUTIONAL INTERPRETATION (N.M Tripathi Pvt. Ltd., 1972),

Pg. 295.

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
cross-roads 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

39 (1973) 4 SCC 225, para 2120.

understanding and interpretation with its “basic structure”

doctrine. Kesavananda Bharati also firmly establishes the

importance of directive principles 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

40 (1980) 3 SCC 625, para 56.

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 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

41 (2005) 8 SCC 534, para 67.

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

The learned scholar expressed his scepticism on the importance of

Directive Principles and held them to be superfluous and

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.
36

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 State44.

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.

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.
37

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 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.
38

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
39

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
40

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
41

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:

“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”.

46 CONSTITUENT ASSEMBLY DEBATES, VOL. VII, Pgs. 518-19.
42

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

47 AHARON BARAK, PURPOSIVE INTERPRETATION IN LAW (Universal Law Publishing Co., 2007), Pg.

372.
43

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 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

48AHARON 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.
44

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
45

referred to as “ Karnataka Act ”) 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
47

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:-

“And material resources of the community in the
context of reordering the national economy
embraces all the national wealth, not merely

49 (1977) 4 SCC 471, para 40.
50 (1977) 4 SCC 471, para 81.
48

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: -

1. 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.

2. 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.

51 (1983) 1 SCC 147, para 19.
49

3. Madhusudan Singh v. Union of India , (1984) 2
SCC 381
Decision by: S. Murtaza Fazal Ali and M.P.
Thakkar, JJ.

4. State of Maharashtra v. Basantibai Mohanlal
Khetan , (1986) 2 SCC 516
Decision by: E.S. Venkataramiah And M. P.
Thakkar, JJ.

5. Assam Sillimanite Ltd. v. Union of India , 1992
Supp (1) SCC 692.
Decision by: Kuldip Singh and M. Fathima Beevi,
JJ.

6. 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
50

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.

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
51

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

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.

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 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
53

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. 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.

53 (1977) 4 SCC 471, para 37.

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:

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

54 (1977) 4 SCC 471, paras 80-81.
55

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 law and the acquisition made therein, by

justifying the law on the basis of Article 31-C and Article 39 (b) and

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

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
56

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 Judges did not give a contrary opinion on

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.
57

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
58

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
59

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 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

56 That came to be enacted as Article 31 of the original Constitution.
57 CONSTITUENT ASSEMBLY DEBATES, VOL. IX, Pg. 1195.
62

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.

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..
……

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
64

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

58 1951 SCC OnLine All 183, paras 41, 42 and 47.
59 PARLIAMENTARY DEBATES (PART II-PROCEEDINGS OTHER THAN QUESTIONS AND
ANSWERS), Pg. 8830. Prime Minister Nehru explained the urgency as follows :-
65

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 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

“……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.”

60PARLIAMENTARY DEBATES (PART II- PROCEEDINGS OTHER THAN QUESTIONS AND ANSWERS), Pgs.
8831-8832.
66

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.
67

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
68

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.

61 (1952) 1 SCC 528, para 142.
69

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

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

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.
70

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.
71

(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
72

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 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

65 REPORT OF THE MONOPOLIES INQUIRY COMMISSION 1965 (VOL-I), Pg. 6.
73

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
74

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.

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:

66 High-Yielding Variety.
75

"(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

67 (1953) 2 SCC 648, para 6.

not only essentially related to acquisition but also for the

legislations which incidentally touched on property rights.

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
77

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

68 LOK SABHA DEBATES (PART II- PROCEEDINGS OTHER THAN QUESTIONS AND ANSWERS), VOL-III, Pgs.

4833-4834.
78

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 is determined. The court
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.
79

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,
70 1964 SCC OnLine SC 22, para 15.
80

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

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
neglected- such 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

71 1964 SCC OnLine SC 22, para 16.
81

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 staff- still
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 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
72 A. MOIN ZAIDI, THE GREAT UPHEAVAL 1969-1972 (Orientalia, 1972), Pgs. 103-105.
82

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 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
73 (1970) 1 SCC 248, paras 89 -90.
83

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.

74 (1970) 1 SCC 248, paras 117 and 121.

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 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
85

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
86

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 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’!
87

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.

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.
88

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

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 decreased79, 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

78 (1990) 3 SCC 87, para 36.

NATIONAL MULTIDIMENSIONAL POVERTY INDEX: A PROGRESS REVIEW 2023, NITI AAYOG, GOVERNMENT OF INDIA.
89

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 evaluated84.

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

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
90

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 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:

1. In Maneka Gandhi v. Union of India , (1978) 1 SCC
248, this Court expanded Article 21 many folds by
establishing its co-relationship with Articles 14 and
19. It culminated in a position of law where a law
depriving ‘personal liberty’ has to meet the
91

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.

2. 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.

3. 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’.

4. 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.

5. 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.
92

6. 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.

7. 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.

8. 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.

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

85 (1977) 4 SCC 471, para 81.

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 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, 194986.

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.

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]
96

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.

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
97

manifesto – the Constitution”. (Bangalore Water Supply &

Sewerage Board. vs A. Rajappa & Others)87.

……...……….………………….J.
[SUDHANSHU DHULIA]

New Delhi.

November 5, 2024.

87 (1978) 2 SCC 213, Para 7, Page 229.

Vineeta Sharma v. Rakesh Sharma

Ratio Decidendi

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