State, private property and the Supreme Court

Reinstatement of the fundamental right to property in the Constitution will on its own do little to protect the interests of poor peasants and traditional communities.

The Indian Constitution adopted in 1950 guaranteed a set of fundamental rights that cannot be abridged by Central or State laws. One of these fundamental rights was the right to property enshrined in Articles 19(1)(f) and 31. Article 19(1)(f) guaranteed to all citizens the right to acquire, hold and dispose of property, subject to reasonable restrictions in the public interest. Article 31 provided that any state acquisition of property, whether movable or immovable, must only be upon enactment of a valid law, for a public purpose and upon payment of compensation.

The following decades saw conflict between Parliament and the Supreme Court, with the court invalidating acquisition laws for violating the fundamental right to property and Parliament responding with numerous amendments to the Constitution that redefined property rights. This conflict culminated in the 44th Amendment, which abolished the fundamental right to property in 1978. The same amendment, however, inserted Article 300A in the Constitution, which provided that no person shall be deprived of his or her property without the authority of a valid law.

The courts role before 1978 is vilified in political rhetoric and scholarly discourse as being reactionary and anti-poor. It is criticised for protecting the rights of rich property owners and impeding Parliaments progressive land-reform agenda. Post-1978, however, the court is regarded as progressive and pro-poor. It is credited with developing a rich jurisprudence of socio-economic rights reading into the fundamental right to life and non-enforceable directive principles of state policy, including the rights to food, shelter, livelihood and a healthy environment.

Since the early 2000s, however, there has been growing disenchantment with this narrative. Widespread acquisition of land by the state for dams and infrastructure and industrial projects has received significant public attention owing to the dispossession of poor peasants and traditional communities such as forest dwellers, cattle grazers, fishermen and indigenous tribal groups. Some scholars now argue that the weakening of property rights by Parliament in response to the courts pro-property rights decisions before 1978 has dispossessed the poor rather than the rich. In accordance with this view, in 2009, a public interest petition was filed before the Supreme Court, Sanjiv Agarwal vs Union of India, seeking invalidation of the 44th constitutional amendment and reinstatement of the fundamental right to property. The petitioner cited the large-scale displacements caused by the creation of special economic zones (SEZs) and by projects such as the Narmada dams and the land conflicts in Singur and Nandigram as motivating his demand. In 2010, the Supreme Court dismissed the petition but not on its merits.

Simultaneously, since the late 1990s, many economists and development theorists have argued that strong formal property rights are a necessary precondition for economic growth. Perhaps the most influential proponent of this view is Hernando de Soto. In his book The Mystery of Capital, published in 2000, de Soto argues that strong protection for property rights is the key to unlocking capital, that is, the potential value of assets, which is necessary for economic growth and for the elimination of poverty in developing countries. In line with these prescriptions, the World Bank has supported programmes for the formalisation of property rights and the creation of titling systems to secure such rights in many countries including India.

Assumptions behind rhetoric

The rhetoric for strengthening property rights through constitutional or legislative means is based on the assumption that strong property rights will somehow on their own ensure protection of the interests of poor peasants and traditional communities. This assumption is in turn based on two developments. The first is the hegemonic nature of the rights discourse, which tends to regard the articulation of an interest in the form of a right as valuable per se irrespective of the social and political context within which those rights are exercised and enforced. The second is an implicit faith in the judiciary, an institution whose image, though somewhat tarnished by allegations of corruption and non-transparency in the recent past, still commands enormous public legitimacy as compared with that of Parliament and the executive.

Yet, rights are abstract and are given content only by the social and political context within which they are articulated and enforced. A property right is not the relation between an owner and a thing but between several individuals with respect to a thing. Property law involves relations among people; more broadly, it defines a particular social, economic, and political structure. Consequently, property relations in society are structured differently in each period of the societys development according to the dominant perception of what an ideal society should look like. Therefore, at any given point of time, certain property interests and property rights of certain individuals and groups will be prioritised over others.

Moreover, a review of the Supreme Courts property rights jurisprudence indicates that despite apparent conflict between the court and Parliament in property rights cases, there has existed significant consensus between judges and legislators about appropriate property relations in society stemming from their shared vision of economic development and industrial growth as progress. In what follows, I review the history of the fundamental right to property to demonstrate the nature of this consensus and to evaluate its impact on current debates regarding land acquisition and the reinstatement of a fundamental right to property.

Right to property: A review

The Constituent Assembly debated the inclusion and content of a fundamental right to property for two and a half years before adopting Article 31, a provision taken almost verbatim from Section 299 of the Government of India Act, 1935, with exceptions for certain zamindari abolition laws. Article 31 codified what is often described in political and legal parlance as the eminent domain power of the state. This power inherent in the exercise of a states sovereignty allows the state to compulsorily acquire property belonging to private persons for a public purpose upon payment of just compensation. The twin requirements of public purpose and just compensation are based on the rationale that no individual should have to disproportionately bear the burden of supporting the public good.

Acquisition and requisitioning of property was included as a subject in the Concurrent List to enable both Parliament and the State legislatures to enact laws on the subject. In the last 60 years, over a hundred acquisition laws have been enacted. Acquisitions also continue to be made under colonial laws that have remained in force after the adoption of the Constitution. The most significant of these colonial laws is the Land Acquisition Act, 1894, which, amended frequently by Parliament and the State legislatures since Independence, continues to govern land acquisitions today. The Act provides that compensation for land acquisitions must be computed at the market value of the land acquired. Given the public outrage regarding land conflicts and the widespread displacement of poor peasants and traditional communities, moves started in 2007 for a comprehensive amendment of the 1894 Act, followed by attempts in 2011 for the first time to repeal and replace this Act by the Land Acquisition Rehabilitation and Resettlement Bill, 2011. This Bill is currently pending in Parliament.

Article 31 was drafted with a view to reaching a just compromise between various competing interests. On one end of the spectrum were the zamindars and industrialists who sought protection for their property interests and, failing that, payment of market value compensation for acquisition of their property. On the other end were the democratic socialists who wanted zamindari abolition without compensation, land redistribution and nationalisation of key industries, all of which necessitated altering existing property arrangements and therefore militated against the recognition of a fundamental right to property. Also represented in the Constituent Assembly were those who believed that property rights, particularly those of industry, should be protected even as they believed in the legitimacy of zamindari abolition. The views of the last group were ultimately reflected in the compromise that was reached. Predictably, however, the compromise failed to please both the zamindars and the socialists and merely shifted the battle arena from the Constituent Assembly to the courts.

The distinction between zamindari and industrial property reflected in the compromise adopted in Article 31 was derived from the prevailing development discourse in the post-War period with its focus on economic growth through greater industrialisation and capital formation. The adoption of such a strategy of growth and development based on the rejection of feudal tenure systems in an agrarian society and the acceptance of a state-led capitalist model of development in an industrial society required protection of the property rights of industry.

Judiciary and zamindari rights

Interestingly, despite the so-called disagreements between the Supreme Court and Parliament and the charge often levelled against the court for impeding progressive land reforms, when the zamindars challenged the abolition of their property rights before the court as violating Article 31, with the exception of the Kameshwar Singh case where the court struck down two provisions of the Bihar Land Reforms Act, the court upheld the abolition of zamindari rights in all other cases even when absolutely no compensation was allowed for the extinguishing of particular rights.

Moreover, in each of these cases, the court not only regarded zamindari abolition as a legitimate public purpose but also adopted a highly deferential standard of review in its examination of what constituted public purpose. In successive cases, the court held that the expression public purpose was elastic and could only be developed through a process of judicial inclusion and exclusion in keeping with the changes in time, the state of society and its needs. The court also clarified that acquisitions that benefited particular individuals or entities could satisfy the requirement of public purpose so long as they were in furtherance of a particular scheme of public benefit or utility.

Consequently, even before 1978, when the right to property was a fundamental right, state acquisition of land for private industry was routinely upheld as a valid public purpose. Over time, the list of public purposes has been continually expanded to include acquisitions for SEZs, private cooperative societies, private recreational projects and residential development, all of which have been upheld by the Supreme Court. To date, the Supreme Court has never found a law unconstitutional for violating the requirement of public purpose.

In contrast, the court scrutinised the compensation requirement, strictly emphasising in its early decisions that the payment of compensation for acquisition of property was mandated by Article 31. Parliaments fear that the Supreme Court would insist on this requirement even in the zamindari abolition cases led to the First Amendment of the Constitution in 1951, which ousted judicial review of zamindari abolition laws.

Following the First Amendment, the court heard cases of acquisition of urban land, government takeover of a mismanaged textile mill, and cancellation of motor vehicle licences of private bus operators. In each of these cases, the Supreme Court insisted that acquisition without payment of market value compensation violated Article 31. Overriding the Supreme Courts rulings, Parliament enacted the Fourth Amendment in 1955, which ousted judicial review of the adequacy of compensation in all cases where the deprivations of property did not transfer title or possession of the property to the state. However, in a series of cases following the Fourth Amendment and culminating in the bank nationalisation case in 1970, the court resurrected the compensation requirement and invalidated laws for providing inadequate or illusory compensation. These decisions ultimately led to the abolition of Articles 19(1)(f) and 31 in 1978.

In the 1980s, with the rise of neoliberalism in development discourse, we saw a move away from the nationalisation of resources and a lifting of state control. In 1991, the economy was liberalised, and attempts were made to integrate it with the global economy through the reduction of tariff barriers and the liberalisation of foreign investment laws. In 1999, a Disinvestment Ministry was created and specifically charged with the privatisation of state-owned industries. Finally, with the enactment of the Special Economic Zones Act in 2005, the acquisition of land by the government to hand it over to private industry, which had happened in an ad hoc manner in previous decades, became official government policy.

Abdication of judicial review

During this period, despite the courts so-called progressive socio-economic rights phase, we see an almost complete abdication of judicial review of acquisition laws. This is presumably because of the abolition of Article 31 as it removed the requirements of public purpose and just compensation from the chapter on fundamental rights. However, this is not a satisfactory explanation since the insertion of Article 300A in the Constitution both enabled and required the court to continue its review of acquisitions. Moreover, the court had in the past continued to review the adequacy of compensation even after the Fourth Amendment had expressly ousted judicial review with respect to the same, thereby demonstrating that it could at times choose not to be constrained by constitutional amendments.

As a consequence of the courts abdication of its review powers, since the 1980s we find little or no disagreement between the court and Parliament on property rights issues, even though property relations were significantly altered in order to transfer land from individuals and traditional communities to private industry. For instance, in its 2000 judgment in the Narmada Bachao Andolan case, the Supreme Court, in a highly deferential decision, accepted the governments decision about the necessity and feasibility of the Narmada dam. In doing so, it ignored evidence regarding the economic and environmental unsustainability of the dam, which had resulted in the World Bank withdrawing from the project, and the displacement of thousands of people who were not covered by the governments rehabilitation plans.

Revival of judicial scrutiny

In the last two or three years, however, we have seen a revival of judicial scrutiny. In 2011 the Supreme Court quashed the acquisition of farmland in Haryana on the grounds of violation of procedures under the Land Acquisition Act, 1894. In several pending cases, acquisition of land for housing development projects is under review. Given that this heightened scrutiny is occurring within the confines of the courts review powers under Article 300A and without the reinstatement of a fundamental right to property in the Constitution, clearly the courts complete abdication of its review powers in the last three decades cannot be attributed merely to the abolition of Article 31.

In conclusion, the courts relationship with Parliament on property rights issues has been largely one of consensus marked by occasional disagreement. This is partly a result of the courts concern for its own autonomy from executive and legislative interference. More importantly, however, it follows from consensus between the court and Parliament about appropriate property relations in society, which is in turn derived from their shared vision of economic development and industrial growth as progress.

In the light of this, it is clear that reinstatement of the fundamental right to property in the Constitution will on its own do little to protect the interests of poor peasants and traditional communities. While the court may in the present political climate invalidate acquisitions that smack of blatant arbitrariness and crony capitalism, such isolated cases may not be sufficient to address the needs of those facing displacement on a systemic level. Before we reinstate the fundamental right to property in the Constitution, we need not only a clearer articulation of what such a right would mean in the present context but also sustained resistance to the current model of economic development which privileges property rights of big industry over those of poor peasants, workers, owners of small industrial units and traditional communities.

Namita Wahi is a lawyer and doctoral candidate at Harvard Law School. Her doctoral dissertation is on the socio-legal history of the right to property in India.