SC on private property: What it means for welfare

What does this ruling say about property?

In a majority judgement authored by Chief Justice D.Y. Chandrachud, the court noted that not all private property can be classed as a “material resource" for public distribution under Article 39(b) of the Constitution. The court clarified that property serving individual needs cannot be appropriated by the state solely for welfare redistribution.

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While Article 39(b) calls for equitable distribution of resources for the common good, the court noted that private property, especially when it serves private interests, cannot be seized by the state just to achieve this goal. This decision strengthens property rights.

What rulings does it overrule?

The majority ruling overrules past judgments that extended the concept of “material resources of the community" to include private property. Notably, it overrules Justice Krishna Iyer’s 1977 minority opinion. The ruling suggested that the state could treat all private property as community resources for redistribution. Although such appropriation normally follows compensation, the present ruling said the earlier ones were influenced by socialism, which no longer aligned with the Constitution’s broader role to support the government to enforce policies for which it “owes accountability to the electorate."

How does private property become the community’s?

The court outlined how this could occur: nationalization, where the state takes control; acquisition, where the state gives fair compensation to the owner; operation of law, where legal processes vest ownership in the state; purchase, where the state buys the property; and donation, where the owner voluntarily donates the property or creates a public trust.

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What does this ruling mean for welfare?

It marks a shift to a market-driven approach, limiting the state’s ability to classify private property as “community resources" for redistribution. Future welfare policies will likely focus on scarce, critical resources essential for public welfare. The ruling suggests the state may adopt more targeted welfare strategies, such as progressive taxation and public schemes, rather than relying on broad interpretations of the law. This will help balance individual property rights with the need for social equity and public good.

Was the decision unanimous?

No. Justice B.V. Nagarathna wrote a separate judgement critiquing Chandrachud’s opinion that Krishna Iyer adhered to a particular political ideology (socialism). Nagarathna instead attributed Iyer’s decision to the dominant political and economic discourse of the time. Justice Sudhanshu Dhulia dissented from the ruling, saying it would limit the power of the legislature to determine which resources can be considered as “material resources". There was no need for such “pre-emptive determination."

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