Supreme Court redefines balance between private property and state power

Supreme Court gives a boost to private property rights

In a historic judgment, the Supreme Court of India has moved to restore the balance between private property and state power. A nine-judge Constitution Bench of the Court sat on this important issue, in a matter composed of 16 petitions — the original being one filed by the Property Owners Association in 1992. The matter was progressively referred to larger and larger Benches and drew the attention of multiple senior advocates. The crucial question is whether the Directive Principle outlined in Article 39 (B) of the Constitution, which directs state policy towards ensuring that “the ownership and control of the material resources of the community are so distributed as best to subserve the common good”. Decades-old interpretations of this clause included private property of individuals in the “material resources of the community”. The new ruling, while not completely overturning that interpretation, has made it clearer. According to the majority opinion — with which only one of the nine judges dissented — answering the question of whether private property was also a “material resource of the community” required specific context, and would thus vary from case to case. If all private property is considered a material resource of the community, then the modifiers “material” and “of the community” were introduced to no purpose.

 

The majority judgment, authored by the outgoing Chief Justice of India, D Y Chandrachud, drew some attention because it argued that the previous interpretation, due to Justice Krishna Iyer in 1977, scuttled the constitutional vision by imposing a single economic dogma. This might indeed be a fair description of the socialist principles by which India was governed for decades prior to 1991, and which did undermine the more liberal principles of the Constitution. However, the judgment also claimed that “economic democracy” and the “wisdom” of successive elected governments were responsible for India’s high-growth path. In fact, India’s high-growth path is because of the choice made to reduce state intervention and control by successive governments. While it is important and right that the court recognises no particular and dogmatic view of economic policy principles is enshrined in the Constitution, it is necessary to also consider that electoral outcomes don’t always lead to growth-improving policy perspectives.

 

Courts in India have often used this interpolation of the Directive Principles to allow state power to dominate private property rights. It is vital, now that this interpretation has been rejected, that the legal system rebalance itself more generally. The state does have a responsibility to move the country towards a fairer distribution of material, community-controlled resources. But now it must act within limits, circumscribed by private property rights. However, even this limit will allow for fairer and, indeed, economically favourable, outcomes for all. It may have taken the judicial branch decades to correct what it now sees as a mistake. The other branches of government moved faster. But that is indeed the strength of the judicial branch: It moves slowly and with deliberation. This judgment — for which the entire judicial system and particularly the current chief justice deserve credit — is an important step forward for constitutional principles and institutions in India, and good news for the economy.