Can govt take over your property and distribute it among the poor?

medium nocaption109941924As India votes to elect the 18th Lok Sabha, Bharatiya Janata Party (BJP) and the Opposition have clashed over a critical question: how much inequality is acceptable? While the rich-poor divide has been growing globally, a recent study by World Inequality Database says India now has more wealth inequality than it did under British rule. Congress has flagged the concentration of wealth in some hands and promised, in its manifesto, a nationwide caste census to determine the socio-economic conditions of various castes and sub-castes. BJP has hit back, accusing Congress of appeasement politics and terming the proposed census an attempt to extract private wealth for redistribution among minorities. medium nocaption109504218Beyond politics, growing inequality raises a philosophical point: to whom do a country’s material resources belong? Far from election rallies and TV newsrooms, Supreme Court is quietly preparing to answer this question. While deciding a set of property disputes originally filed in 1992, SC felt the need to re-interpret Article 39(b) of the Constitution – a directive principle of state policy (DPSP) which urges the state to make policies to ensure “ownership and control of the material resources of the community are so distributed as to best subserve the common good”. Not just an academic questionGenerally, courts cannot enforce DPSPs, which one Constituent Assembly member described as a ‘dustbin of sentiment’. But Article 39(b) is different. It is underwritten by Article 31C, which provides that a law made by Parliament in furtherance of Article 39(b) is not invalid even if it violates fundamental rights, such as equality and freedom of trade. The linkage between these two provisions is also an issue before SC in this case.Question pending for 32 yearsThe expression ‘material resources’ in Article 39(b) obviously includes public resources. The question is: does it include private resources as well? After deciding the matter one way 46 years ago, SC has been re-examining it since 2002.1978: As part of a 2-judge bench, Justice Krishna Iyer holds that Article 39(b) covers both public and private resources. Other judge does not express any opinion on this point.1982-1996: Justice Iyer’s opinion upheld by a series of SC judgments, making it law of the land.2002: SC starts hearing petitions filed in 1992, challenging amendments to Maharashtra Housing and Development Act that allowed government to acquire residential properties from owners for redevelopment on grounds of safety and hygiene if 70% of residents agreed. After redevelopment, property would be returned to residents with ownership rights, and compensation would be paid to owners of the building/land. A provision in the Act said it was made in furtherance of Article 39(b). While deciding the matter, a 7-judge SC bench reopens the question of whether private property comes under Article 39(b). Expressing concern about an overly broad interpretation of the provision, it refers the question to a 9-judge bench.2002-2024: Case goes unheard for 22 years. Since it was originally filed in 1992, it has remained undecided for 32 years.2024: Chief Justice of India DY Chandrachud constitutes a 9-judge bench, hears the matter and reserves judgment. medium109941800More power to market or state?The real significance of this case lies in how SC interprets the constitutional guarantee of equality, and how much power it gives to the state to fulfil this guarantee. A restrictive interpretation will assign the role of reducing inequality to market forces, while a broader interpretation will empower the state to interfere in private affairs to ensure proper redistribution of wealth. While government intervention has sometimes reduced inequality, that’s not always the case. For example, nationalisation of 14 private banks in 1969 to ensure credit flow to a larger section of the population was successful, but government control of businesses like Air India, without adequate governance structures, bred inefficiencies. Less Marx, more Gandhi?During hearings, CJI Chandrachud said Article 39(b) could not be interpreted in a purely communist or socialist sense. “We should not be sending a message by interpreting 39(b) and (c) in such a wide sense that there is no protection of private rights in the society at all,” he said, hinting at a Gandhian interpretation:“Our DPSPs are in pursuance of the Gandhian ethos and ideology…. We hold a property in trust for the succeeding generations in the family but broadly we also hold the property in trust for the wider community, that’s the whole concept of sustainable development – that’s what we call intergenerational equity.”It is hence likely that SC will give us a more nuanced interpretation of Article 39(b). Private property may not be wholly excluded, but certain kinds of private property may be declared to be held in trust.boxcontentHow redistribution could work One way Parliament could deal with growing inequality is by enacting a ‘wealth tax’ applicable to all citizens above a certain net worth who would be taxed 2% of their wealth.Challenging the law because it violates fundamental rights such as equality, life and personal liberty, and freedom of trade would be futile, because Article 39(b), backed by Article 31C, would kick in.Government could also make a law to acquire all privately held forest land and distribute it among tribal communities who are displaced by climate change, infrastructure projects, internal conflict, etc. A mere reference in such an Act to Article 39(b) will save it from being struck down. Lead illustration: Uday DebThe authors are with Vidhi Centre for Legal Policy