It took more than two decades to be delivered, but it’s better late than never. The verdict of the nine-judge bench of the Supreme Court that not every resource of an individual can be considered the “material resources of the community” is hugely welcome, as it puts to rest the ambiguities on an issue that impacts every private individual and corporation in the country. No doubt, the argument that in an egalitarian society, the government of the day should have blanket powers to take over private properties to subserve the “common good” looks appealing on paper. However, its impact in real life can be troublesome. In an earlier hearing in the case, Chief Justice DY Chandrachud himself gave an example of how such overriding powers of the State could play out in a country which is already perceived to be a difficult place to do business in.
Imagine inviting a foreign company to manufacture in India with the caveat that the operations can be taken over by the State whenever it identifies the products to be “material resources of the community”. The response from the foreign company should be obvious. And it’s not only about foreign companies. Such a move will in fact lead to a situation where no private investor would come forward to invest. The impact on ordinary citizens will be no different — say you are the owner of a house or a farmland, and the State all of a sudden decides to take it over by paying you a compensation it has decided — all in the name of public good. There will thus be no constitutional sanctity of any private ownership. The case was filed in 1978 by the Mumbai-based Property Owners Association, challenging the constitutionality of Chapter VIII-A of the Maharashtra Housing and Area Development Act, 1976, which allows the State to acquire private property with compensation set at 100 times the monthly rent.
The best aspect of the judgment is that it hasn’t slammed the door on State takeover of private property. The ruling clarifies that, to qualify as a “material” of the community, a resource should be assessed through multiple lenses: nature and characteristics of the resource; impact on public welfare; scarcity and availability of the resource; and implications of concentrated ownership among private entities. The court has also indicated that the “public trust doctrine” can serve as a guiding principle for identifying such resources. This doctrine asserts that certain resources like water, forests, and mines should be preserved for public use and that the government holds them in trust for the benefit of all citizens.
Tuesday’s judgment sets aside the one delivered by Justice Krishna Iyer in 1978 that material resources of the community covered all resources — natural and man-made, publicly- and privately-owned over which the State has absolute right. The fact is that legal interpretations have to move with the times — what looked justified 46 years ago in a certain context need not remain so forever. A purely socialistic economy has indeed transitioned from the dominance of public investment to the coexistence of public and private investment. The SC has thus created a perfect balance between the State’s powers and a citizen’s right over her hard-earned assets. Taking over private assets in the name of the common good would now require a more rigorous justification. That’s what democracy is all about.