Recent case law in Real Estate Law

Property Owners Association v. State of Maharashtra

This landmark judgement of the nine-judge bench at the Supreme Court of India dated 5.11.2024 upheld an important aspect related to private property under the Constitution. The key legal issue that was involved in this case was “Does the phrase material resources of the community under Art. 39(b) of the Indian constitution include private properties?”

Factual Matrix:

The State government of Maharashtra in the year 1986, made amendments to the Maharashtra Housing and Area Development Act, 1976 (MHADA) by inserting a new chapter VIII A. This chapter empowered the MBRRB to acquire certain properties for restoration with the consent of 70% of the residents. Such an amendment was claimed to be made under the directive principles of Art. 39(b) of the Constitution. The same was initially challenged as unconstitutional by the Property Owners Association before the Bombay High Court. The court dismissed the petitions as protection to such a government action taken under directive principles is barred from challenges under Art. 31(c) of the Constitution of India.

Art. 31 (c) of the constitution states as follows:

“Notwithstanding anything contained in article 13, no law giving effect to the policy of the State towards securing all or any of the principles laid down in Part IV shall be deemed to be void on the ground that it is inconsistent with, or takes away or abridges any of the rights conferred by article 14 or article 19;”

Therefore, the petition was dismissed as the enactment was made under Art. 39(2) under the Directive Principles of State Policy.

The petitioner approached the Supreme Court where the question was first adjudged by a Division bench, a five judge bench, and a seven judge bench and the matter was waiting to be listed before a nine judge bench.

Amendments were made to the Maharashtra Housing Development Act,1976 in 2019 in pursuant of the same provisions. The same resulted in 24 additional petitions being filed and the matter was then referred to a Nine-Judge Bench.

Law:

Art. 39 of the PART – IV of the Constitution elucidates on Certain principles of Policy to be followed by the State. It includes:

The State shall, in particular, direct its policy towards securing-

• That the citizens, men and women equally, have the right to an adequate means of livelihood;
• That the ownership and control of the material resources of the community are so distributed as best to subserve the common good;

The argument of the State (i.e., the Government of Maharashtra) was that the action of acquiring certain property for restoration was being performed under Art. 39(b) of the Constitution. It stated that the Government has the authority to distribute the ownership and control of properties for the common good.

The key issue that was addressed was whether private properties of individuals shall fall under “Material resources of the community” for it to be distributed by the Government. The Court referred to precedents of the Supreme Court such as State of Karnataka v. Sri Ranganath Reddy (1977).

The Nine-judge bench in its majority opinion held that private properties of individuals cannot fall under the purview of material resources of the community, invalidating the amendments made to Maharashtra Housing Development Act,1976. The judgments of the Supreme Court upholding the acquiring of private property under Art. 39 were OVERRULED by the instant case.

Analysis

Any government actions that acquire private properties under the shelter of Art. 31(c) must initially determine the Directive principles under Part IV that is empowering the state to do so. Art. 39(2) cannot be referred to for such an action. Hence, such governmental actions can be challenged as violative of Art. 14, 19 and 21 of the Constitution of India.