LAND LAW

The Fundamental Right to Property in the Constitution

SUBMITTED BY:VIVEK BEDI

A3221517294
BBA LL. B(H)
SECTION – E
 INTRODUCTION
The right to property is probably the oldest real right, much before concepts such
as “right” or “real” (as opposed to “personal”) were outlined. It has often been
regarded as a “natural” right, derived from nature. Therefore, controversies on
property are certainly as old as humanity itself. However, in the revolutionary
period, the right to property was deemed a fundamental right and included as such
in the charters approved at that time.1 This has continued up to our times,
including in modern constitutions and international and regional human rights
treaties. Its rationale is mostly to protect the right to property against governmental
action, even though there are opposite policy preferences as to regulation of
property rights at the domestic level.

The Fundamental Right to Property enjoys the unique distinction of not only being
the second most contentious provision in the drafting of the Constitution,2 but also
the most amended provision, and the only fundamental right to be ultimately
abolished in 1978. Unlike other rights of life, liberty, and equality that can at least
theoretically be conceived as applying equally to all, the especially contentious
nature of the right to property arises because the protection of property rights
inevitably results in entrenching unequal distributions of existing property
entitlements.

In line with the tenets of democratic socialism, the Constituent Assembly sought
to transition to a liberal democratic legal order, which guaranteed rights of liberty,
equality, and property, while simultaneously endeavouring to achieve social and
economic transformation premised on land reform and redistribution of resources.
However, the inherent contradiction between conserving existing property rights
and ushering in a more egalitarian society through redistribution of land led to
intense debate within the Constituent Assembly, ending in an uneasy compromise
between competing interests. As ultimately adopted, Article 19(1)(f) of the
Constitution guaranteed to all citizens the fundamental right to ‘acquire, hold and
dispose of property’.3 This right was however subject to reasonable restrictions by
the union and State legislatures in the public interest, stipulated in Article 19(6).
Moreover, Article 31 of the Constitution provided that any State acquisition of
property must only be upon enactment of a valid law, for a public purpose and
upon payment of compensation. Certain laws were exempted from these
requirements.

The paradox implicit in guaranteeing a fundamental right to property, while

simultaneously embarking on a developmental project of land reform and State
planned industrial growth, predictably resulted in tensions between the legislature
and the executive on the one hand, that sought to implement this development
agenda, and the judiciary on the other, which enforced the fundamental right to
property of those affected. In the decades that followed, judicial enforcement of the
property clause resulted in the invalidation of several laws seeking to bring about
social and economic reform including land reform legislation, provoking several
parliamentary amendments to the constitution. These include the First (1951),
Fourth (1955), Seventh (1956), Seventeenth (1964), Twenty-Fourth (1971),
Twenty- Fifth (1972), Twenty-Sixth (1972), Twenty-Ninth (1972), Thirty-Fourth
(1974) and Thirty- Ninth (1975) constitutional amendments. Of these, the First
(1951), the Fourth (1955), the Seventeenth (1956) and the Twenty-Fifth (1972)
were the most significant constitutional amendments and will be discussed in this
chapter. The Forty Fourth Constitutional Amendment, 1978, deleted Articles 19(1)
(f) and 31 from Part III, the chapter on Fundamental Rights in the Constitution.
Instead, it inserted Article 300A in a new chapter IV of Part XII of the
Constitution, thereby depriving the ‘right to property’ of its ‘fundamental right’
status.

The Fundamental Right to Property in the

Constitution:
Shifts and continuities The controversy surrounding the guarantee of a
fundamental right to property had centred chiefly on the wording of Article 31.
Surprisingly, the wording of Article 19(1)(f) and (5) attracted little debate even
though no such provision had existed in the Government of India Act. ‘Acquisition
and requisitioning of property’ were included as a subject in the Concurrent List
enabling both Parliament and the State legislatures to enact laws on the subject.4
Article 31 was taken almost verbatim from section 299 of the Government of India
Act 1935, but with certain key differences that greatly strengthened the protection
of certain kinds of property rights in post independent India and weakened those of
others. Section 299 in turn gave ‘constitutional’ or ‘entrenched’ status to
restrictions on the State’s power of compulsory takeover of land that had been
enshrined in a series of colonial legislation starting from the Bengal Regulation I
1824 and culminating in the Land Acquisition Act 1894.5 Section 299(1) of the
Government of India act embodied the fundamental principle of the common law
that the executive may not extinguish property rights without the authority of the
legislature. Section299 (2) of the Government of India act was intended to apply
only to the compulsory acquisition of land and undertakings.6 This was done
ostensibly so as not to compromise laws relating to taxation. Section 299(3)
safeguarded certain vested interests, including zamindari and grants of land or
tenure of land free of land revenue or subject to remissions of land revenue like
talukdaris, inamdaris and jagirdaris. As to these ‘particular classes of property’,
there was a requirement that the Governor General (or the Governor of a province)
give his previous sanction for any legislation that would transfer such property to
public ownership or extinguish or modify the rights of individuals in it. It was
precisely this colonial legacy that the Constituent Assembly tried to reverse in the
drafting of Article 31. The Constituent Assembly debate on the drafting of Article
31 had centred on the following aspects of the provision. 1. How do we balance the
individual right to property with social and economic reform? 2. Whether the
meaning of ‘public purpose’ should be restricted to government purpose or could
also include within its ambit broader social purposes? 3. What constitutes an
‘acquisition’ or ‘deprivation’ of property that would justify payment of
compensation? 4. What do we mean by ‘compensation’ and ‘fair’, ‘equitable’ and
‘just’? 5. Who would be the ultimate arbiter of the quantum of compensation and
the form in which it would be paid? Clauses (1) and (2) of Article 31 were taken
almost verbatim from section 299(1) and (2) of the Government of India Act 1935
with two differences. First, section 299 was restricted to cases of ‘compulsory
acquisition of property’ but under Article 31, the protection for property also
extended to ‘taking possession’ of property for public purposes. Thus, Article 31
mandated the payment of compensation even in cases where there was no transfer
of title to the government. Second, Article 31(2) implicitly allowed legislatures to
provide for compensation in some form (eg in bonds) other than monetary
‘payment’ as required under section 299(2) of the Government of India Act.
Clauses (4) and (6) were specially designed to protect land reform legislation. They
created exceptions to the protection for property rights guaranteed in clauses (1)
and (2) but these exceptions were not substantive, insofar as they did not define the
property rights or interests that were exempted from the protections of Article 31.
Instead they referred to periods of time, laws enacted during which, would be
exempt from the requirements of Article 31(2). Thus, clause 4 exempted laws
enacted from bills that were pending at the time that the Constitution went into
effect. Clause 6 exempted laws that were enacted eighteen months before that date.
Laws of both types needed the assent of the President, in effect that of the union
executive. Within the Constituent Assembly, there was a consensus on treating
major land reform programmes on a different footing from other kinds of State
acquisition of property.7 There was however no consensus on the exact terms on
which such land reform should be carried out. Zamindari and other intermediary
tenures were to be abolished upon the payment of ‘some’ compensation though not
‘just’ or ‘market value’ compensation. Cases of ‘individual’ acquisitions were
justiciable even though many believed that the legislators who represented the
interests of the people should be the ultimate arbiters. When it came to actual
drafting however, the only enactments protected from judicial review were those
covered by the express provisions of Article 31(4) and (6). Ultimately, these
clauses proved to be inadequate for the purpose of protecting land reforms
throughout India, in part because the enactment and execution of all the State land
reform laws took much longer than was perhaps anticipated. This in turn created
the need for further amendments to the Constitution at a later date. There were two
other important differences between section 299 and Article 31. First, Article 31(5)
(b)(ii) to which there was no corresponding provision in the Government of India
Act 1935 enabled the State to make laws for the protection of public health or the
prevention of danger to life or property and stipulated that such laws even if they
‘acquired’ or ‘took possession’ of property within the meaning of clause (2), would
be exempt from the requirement of compensation contained in that clause. Zoning
laws that limit construction on an individual owner’s land or property, or laws
requiring the destruction of dangerous structures are examples of laws that would
be saved by clause 5(b)(ii). Second, the inclusion of Article 19(1)(f) in the
Constitution, for which there was no corresponding provision in the 1935 Act
meant that not only must any deprivation of property take place after a validly
enacted law, but the law must satisfy the requirements of Article 19(5) insofar as it
affected the property of a citizen. From the very outset, there was considerable
litigation with respect to the constitutional property clause. Significantly, almost all
of the cases where laws were challenged on grounds of violation of property rights
also involved a challenge on the basis of the Article 14 guarantee of the right to
equality. In the following sections, I will review the most important Supreme Court
and High Court cases that outlined the doctrinal framework for interpretation of the
property clause, at least until such time this framework was superseded by
subsequent constitutional amendments.

Agrarian Reform
Even before the Constitution was adopted in January 1950, zamindars challenged
the constitutional validity of the Bihar, Madhya Pradesh and United Provinces8
zamindari abolition laws as violating the property and equality guarantees of the
Constitution. These challenges were made even though the drafters had sought
specifically, though not expressly, to protect these laws through the adoption of
clauses (4) and (6) in Article 31.

In each of these cases, the petitioners claimed that the impugned acquisition law
served no ‘public purpose’, did not adequately compensate them within the
meaning of Article 31(2) of the Constitution and impermissibly discriminated
against certain landlords in violation of Article 14 of the Constitution. While the
Allahabad9 and Bhopal10High Courts upheld the constitutional validity of the UP
and MP laws, the Patna High Court invalidated the Bihar law for violating the right
to equality.11 The Patna High Court held that Article 31(4) only protected laws
against judicial review under the compensation provisions of Article 31(2) but not
under the provisions of other fundamental rights contained in the Constitution.

All three decisions were appealed before the Supreme Court but before the Court
could give its decision, the Constitution was amended to nullify the effect of the
Patna High Court decision in the Kameshwar Singh case. The Constitution (First
Amendment) Act 1951, enacted Articles 31A and 31B and also introduced the
Ninth Schedule in the Constitution. Through the adoption of these provisions, the
amenders sought to do what had not been attempted in the original Article 31,
namely to define the kinds of interests that should be placed beyond the protection
of the compensation requirement in clause (2) of Article 31 and also of the other
fundamental rights contained in Articles 14 and 19. Article 31A (1) provided that
‘no law providing for the acquisition by the State of any estate or of any rights
therein or for the extinguishment or modification of any such rights’ would be
deemed void on grounds of inconsistency with the fundamental rights contained in
Part III. Clause 2 defined the expression ‘estate’. Clause 2(a) defined ‘estate’ to
have the ‘same meaning as that expression or its local equivalent has in the
existing law relating to land tenures in force in that area’ and stated that it ‘shall
also include any jagir, inam or muafi or other similar grant’. Clause 2(b) defined
‘rights, in relation to an estate’, to include ‘any rights vesting in a proprietor, sub-
proprietor, under-proprietor, tenure-holder, or other intermediary and any rights or
privileges in respect of land revenue’.

The First Amendment also introduced Article 31B and the Ninth Schedule into the
Constitution. Article 31 B stipulated that no provision of any law in the Ninth
Schedule ‘shall be deemed to be void, or ever to have become void, on the ground
that [it]… is inconsistent with, or takes away or abridges any of the rights
conferred by, any provisions of this Part’, that is, the Fundamental Rights. In other
words, Article 13(1), which provided that any law inconsistent with the
fundamental rights was invalid to the extent of that inconsistency, was in effect
repealed so far as laws listed in the Ninth Schedule were concerned. Thirteen laws
were listed in the Ninth Schedule including the Bihar Land Reform Act. The
zamindars of Bihar then attacked the validity of the First Amendment in Shankari
Prasad Deo v Union of India but the Supreme Court upheld it. The Court then went
on to decide the appeals from the Patna, Allahabad and Bhopal High Courts.

In State of Bihar v Kameshwar Singh (hereinafter Kameshwar Singh), the Supreme

Court upheld the constitutional validity of the Bihar Land Reforms Act 1950, but
by a majority of 3:2, found two provisions of the Act to be unconstitutional. Barred
from considering the law against the requirements of Fundamental Rights in Part
III, in a clear stretch on judicial reasoning, the Court found that these provisions
offended against (a) an inherent need in eminent domain that an acquisition be for
a ‘public purpose’ and (b) against Entry 42 in the Concurrent List, which
mentioned ‘principles on which compensation for property acquired or
requisitioned…is to be given’. For almost a decade after the First Amendment, the
High Courts and the Supreme Court were involved in the resolution of cases
involving zamindari abolition. Yet despite its controversial pronouncement in the
Kameshwar Singh case, in all subsequent cases, the Supreme Court upheld
zamindari abolition laws in their entirety. While the Court emphasised that
payment of compensation for acquisition of property was a fundamental right
under Article 31(2) of the Constitution, it recognized that judicial review of laws
infringing this fundamental right was excluded in the case of zamindari abolition
laws in accordance with the Provisional Parliament’s intent as expressed through
the enactment of the First Amendment to the Constitution.

From 1955 to 1964, the Supreme Court interpreted this term expansively to uphold
the constitutional validity of laws involving the abolition of intermediary rights in
non-zamindari areas, including intermediary rights in jagirdari tenures in
Rajasthan,12 alienated and unalienated lands in the State of Bombay,13 and
mahalwari tenures in Punjab.14 In Atma Ram v State of Punjab, the Court
interpreted the expression ‘rights’ in relation to an estate to have an all-inclusive
meaning comprising both horizontal and vertical divisions of the estate. Thus, the
expression included not just the interests of proprietors or sub proprietors but also
lower grade tenants, like ryots or under ryots. Nevertheless, by fashioning the
‘agrarian reforms’ test in KK Kochuni v State of Madras (hereinafter Kochuni), the
Supreme Court made it clear that the ouster of judicial review on questions of
compensation was limited only to cases where the proposed acquisition of land had
a connection with a scheme of agrarian or land reform. In all other cases,
compensation payable under Article 31(2) should be market value compensation.
 The relationship between Articles 19 and 31
In any social system that recognizes private property, the State restricts property
rights in the exercise of powers inherent in the State’s sovereignty. In countries
that have a written Constitution, these restrictions are often expressly embodied in
the constitutional text. Broadly, these powers are classified as police powers,
eminent domain and taxation. Distinguishing between these powers becomes
important because even though State action in the pursuance of each of them may
involve restrictions on existing property rights, the obligations on part of the State
in each instance are different.

In India, the key concepts used in Articles 19, 31(1) and (2) were ‘restriction’,
‘deprivation’, and ‘acquisition’ respectively. The Supreme Court’s interpretation of
these terms involved two main questions. The first question concerned the
interpretation of the term’s ‘deprivation’ in clause (1) and ‘acquisition’ in clause
(2) of Article 31 to determine whether they concerned the same or two different
exercises of State power. The second question concerned the interplay of Article
31 with Article 19 (1)(f). In the Supreme Court’s early decisions,16 SR Das J put
forth an interpretation of Article 31whereby, Article 31(1) related to the police
powers of the State and 31(2) related to eminent domain. When the State
compulsorily acquired property in the exercise of its eminent domain powers under
Article 31(2), such acquisition could only be pursuant to a valid law, for a public
purpose and upon provision of compensation. However, when it deprived a person
of his property for the purposes of the State like ‘razing a building in the path of
fire’ such deprivation occurred in the exercise of the police powers of the State
under Article 31(1).17 Here the only requirement was that such deprivation must
be pursuant to a validly enacted law.

However, another interpretation championed by Sastry CJ was that Article 31,

clauses (1) and (2) should be read together as stating three requirements for
acquisitions pursuant to the exercise of the State’s powers of eminent domain.
Article 31(1) stated the general principle that there shall be no taking or
deprivation of property without a valid law, whereas Article 31(2) elaborated upon
this principle by stipulating the requirements of a valid law, including the existence
of a public purpose and the provision of compensation.

On the second question, that of the interpretation of the relationship between

Articles 19 and 31, the issue was whether the right guaranteed to citizens, ‘to
acquire, hold and dispose of property’ and its companion guarantee of a ‘right to
carry on any occupation, trade or business’ under Articles 19(1)(f) and (g) simply
concerned the capacity of all citizens or protected their concrete interests in a
particular piece of property or business enterprise. Put differently, where there was
an actual deprivation of a concrete property entitlement, did only Article 31 apply?
Here, Sastry CJ took the view that Articles 19 and 31 were mutually exclusive.
Article 19 merely referred to a citizen’s capacity to own property.

This provision had no reference to the property that was already owned by him,
which was dealt with in Article 31. In other words, Article 19 forbade the State
from denying particular individuals or classes the right to own property or to carry
on business, but did not protect a citizen’s interest in a particular piece of property
from State interference. Sastry CJ noted that since Article 31, which was headed by
the caption ‘right to property’, already protected property rights of citizens as well
as non- citizens, whereas Article 19(1)(f) only protected the rights of citizens, any
other interpretation would make Article 19(1)(f) redundant. But if Articles 19(1)(f)
and (5) were understood as dealing only with the capacity to acquire, hold and
dispose of property in general, this distinction made sense. In that case, it would be
justifiable to exclude aliens from such capacity, as had been done in several
countries for the benefit of nationals, particularly with respect to rights in land.
 The Fundamental Right to Property abolished:
Forty Fourth Constitutional Amendment The Constitution (Forty-Fourth
Amendment) Act 1978, abolished Articles 19(1)(f) and 31 and inserted Article
300A into a new chapter IV of Part XII of the Constitution, thereby depriving it of
its ‘fundamental right’ status. Article 300 A provides, ‘No person shall be deprived
of his property save by authority of law’. Following the Forty-Fourth Amendment,
there is no express provision requiring the State to pay compensation to an
expropriated owner except as provided in Article 30(1A) and the second proviso to
Article 31A(1). Article 30(1A) provides for the payment of compensation when the
property of a minority institution has been acquired. The second proviso to Article
31A (1) mandates the payment of market value compensation in the case of
acquisition of estates, where personal cultivation is being carried on. This has
created an anomalous situation, whereby, in all other cases of acquisition, there is
no express constitutional requirement for the State to pay market value
compensation.

In the immediate aftermath of the Forty-Fourth Amendment, some scholars opined

that the amendment would have little effect because the requirements of ‘public
purpose’ and ‘compensation’ would be read into Article 300A.22 On the contrary,
during the 1980s and 1990s, we see an almost complete abdication of judicial
review on these questions. As described in section 5, judicial scrutiny on the
question of ‘public purpose’ always lenient, was almost perfunctory during this
period resulting in continuous expansion of the purposes for which government
could acquire property without payment of market value compensation.

In Jilubhai Khachar v State of Gujarat, the Supreme Court reiterated that

following the Forty-Fourth Amendment, it could not go into the adequacy of
compensation awarded under an acquisition law. All it could do was to determine
that the principles on which the compensation was decided were relevant and the
compensation awarded was not illusory. The Court also rejected attempts to read
the right to property into the right to life guarantee under Article 21.