In 7:2 verdict, Supreme Court limits state power to acquire private property for 'common good'

In a majority 7:2 ruling, the Supreme Court on Tuesday held that states do not have sweeping constitutional authority to take over all privately owned resources solely to serve the "common good." The nine-judge Constitution bench, led by Chief Justice D.Y. Chandrachud, held that while states can stake claims over certain private properties, they cannot indiscriminately acquire all private assets for redistribution to subserve the "common good".

The bench had reserved its judgment on May 1.

The ruling overturns previous interpretations of Article 39(b) of the Constitution, a Directive Principle of State Policy which mandates that "ownership and control of material resources of the community are so distributed as best to subserve the common good."

Justice BV Nagarathna partially disagreed with the majority judgement penned by the CJI, while Justice Sudhanshu Dhulia dissented on all aspects.

In the landmark Minerva Mills case of 1980, the top court had declared two provisions of the 42nd Amendment as unconstitutional. In that case, the court struck down the provisions that barred judicial review of constitutional amendments and gave Directive Principles precedence over Fundamental Rights.

The court's decision upholds the unamended Article 31C, which protects certain laws made under Articles 39(b) and (c) that allow the state to acquire resources for the public good, as long as they are necessary to achieve these ends.

"We conclude that the unamended article 31C continues in force," the CJI said.

The top court had heard 16 petitions, including the lead petition filed by the Mumbai-based Property Owners' Association (POA) in 1992.

The POA has opposed Chapter VIII-A of the Maharashtra Housing and Area Development Authority (MHADA) Act, which empowers State authorities to acquire cessed buildings and the land on which those are built if 70 per cent of the occupants make such a request for restoration purposes.

The MHADA Act was enacted in pursuance of Article 39(b), which is part of the Directive Principles of State Policy and makes it obligatory for the State to create a 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".