On November 4, the Supreme Court has provided vide a 7:2 majority judgement a seemingly Goldilocks solution to the vexing issue of the ambiguous right to property in Property Owners Association vs State of Maharashtra, expressly distancing itself from Justice VR Krishna Iyer’s dogmatic socialistic view on the subject, the bottom line of which was the directive principles of state policy enshrined in article 39(b) of the Constitution prevails over the fundamental rights enshrined in article 14 and 19 insofar as property rights are concerned. His tacit elevation of non-enforceable directive principles to the enforceable status of fundamental rights in State of Karnataka vs Ranganatha Reddy (SC) (1977) was arguably due to the Emergency-era 1971 amendment to the Constitution brought about by the then Prime Minister Indira Gandhi, robbing right to property of its fundamental right status. That amendment was through the insertion of new section Article 31C, inserted through the Constitution (Twenty-fifth Amendment) Act, 1971, which states that no law implementing Directive principles in shall be void for inconsistency with rights under Articles 14 and 19. Parliament added Article 31C to override the SC verdict in R.C. Cooper, where the Court had struck down bank nationalization as violative of Article 14.
If Justice VR Krishna Iyer was swayed by his Marxist views, Justice BV Nagarathna in her dissenting judgement in the recently decided case namely re Property Owners Association has brought to bear on her judgement the same leftist worldview — “material resources of the community” as adumbrated in article 39 (b) encompasses privately owned resources, excepting “personal effects”. With due respect, the citizens of this country deserve something more durable and permanent than personal effects like jewellery, shares and bank deposits. She has outdone Justice Krishna Iyer by saving only “personal effects” from the diluted and truncated property rights.
The November majority verdict is a Goldilocks solution to the extent it has steered clear of dogmatic or rigid approach. It has given a lot of elbow room or latitude to the government to go ahead with its inherent eminent domain power to acquire properties for larger common good. In other words, the recent verdict keeps the door open for future litigation on this vexed issue. It would be case by case, period. Be that as it may.
The socialists of course have their point when they aver that the government is bartering away community rights by giving away public land for private use at throwaway prices. The lasting solution appears to be the universal embracement of the BOOT model for infrastructure projects and the erstwhile DDA model of 99-year lease for residential use. Build-own-operate-transfer is the full expansion of the BOOT model of allotment of land and its corollary right of way. This model is already in vogue in our country post-liberalisation. An expressway project for example is granted to a contractor who guarantees maximum revenue or profit share to the government on the condition that the concession period is 30 years. During these 30 years, the concessionaire owns the land and can make profits but at the end of the concession period, the property vests with the government.
The BOOT model however cannot be extended to other areas and therefore the only practical solution is to charge the market rate for the land allotted to the private capitalist without absurdities and cloying sentimentalities — like allotment free on a token payment of rupee one subject to the condition 25% of the beds would be reserved for the economical weaker section as it happened in the Delhi Apollo hospital land allotment — queering the pitch. Similarly, no latitude should be shown in land use. Such latitude exists today encouraging sweetheart deals. For example, a part of the land on the outskirts of a city is reserved for industrial corridor. A few years down, it is denotified in the sense it is now available for residential use. The one who acquired it originally for his own industrial use now laughs all the way to the bank given the fact that residential land commands greater value. The beneficiary-industrialist of such denotification must be made to share the windfall with the government.
The Delhi Development Authority (DDA) to start with swore by the 99-year lease model. There is no reason why this should not stage a comeback and form the template for land and flat allotment for residential usage. Freehold ownership in contradistinction enables a land owner to enjoy it in perpetuity thus giving his progeny and inheritors an unjust advantage. At the end of the 99-year lease, the owner must be asked to pay lease renewal fee based on the prevailing valuations. Such centenarian fee in a way would be like estate duty which has been in suspended animation since 1985.
Delhi Metro and metro projects in other cities do a fine balancing act by taking over existing properties be they shops or residential houses on the promise of attractive compensation so as to impose no extra financial burden on those deprived of their property rights. Land Acquisition Act, 2013 also provides for attractive compensation for those deprived of their property rights. Yes, the material resources of the community should be used for larger public welfare but if in the process someone is deprived of his property, he must be paid recompense, period. On the flip side if someone gets public land, he must be made to pay the market price for it, period.
S Murlidharan is a freelance columnist and writes on economics, business, legal and taxation issues
