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Our Founders and the Right To Property

In the third essay in an eight-part series on The Right to Property, we look at how the framers of India’s constitution viewed this right. Earlier essays: One, Two.

Read the rest of the essays here: FourFiveSix, Seven, Eight.

Given prevailing political and economic ideology in the 1940s, it was proposed that India become a Republic with a parliamentary democracy, and also a socialist welfare state. On December 13, 1946, outlining an “Objectives Resolution”, Nehru said, “I think also of various Constituent Assemblies that have gone before and of what took place at the making of the great American nation when the fathers of that nation met and fashioned out a constitution that stood the test of so many years … Then my mind goes back to a more recent revolution which gave rise to a new type of State, the revolution that took place in Russia and out of which has arisen the Union of Soviet Socialist Republics, another mighty country, which is playing a tremendous part in the world.”

This dual, often contradictory, set of ideas outlined in the objectives resolution is extremely pertinent for the discussions on property rights. On the one hand, the framers were influenced by the American constitution, the protections afforded by the Bill of Rights and its enforcement by the independent judiciary. On the other hand, they were also affected by the goals of a more equitable society, brought about chiefly through state intervention in the socialist and communist countries, where private property was abolished, and all property was state owned.

The resolution in its entirely was debated by the Constituent Assembly from December 13 to 19, 1946, on December 21, 1946, and again on January 20 to 22, 1947. On the last day, all members standing adopted it unanimously. Following the Objectives Resolution, members were invited to submit drafts, proposals, and responses to various provisions in the constitution. Multiple notes and letters were submitted to the President of the Constituent Assembly, Rajendra Prasad, with suggestions for various clauses of the draft constitution. Constitutional Advisor BN Rau was the other most important voice in the constitution framing process, as he navigated the various drafts submitted by its members and attempted to bridge gaps and enforce compromises. Finally BR Ambedkar, the Chairman of the Drafting Committee, created the mould within which the rights and guarantees enshrined in the constitution were framed. Ambedkar, Prasad, and Rau were the organizational and the intellectual scaffolding on which the constitution was built.

Further, sub-committees were formed for the most important areas and provisions within the constitutional structure. For the purpose of this essay, the most important discussions are from the sub-committee on Fundamental Rights. JB Kripalani served as the chairman for the sub-committee and its other members were Minoo Masani, KT Shah, Rajkumari Amrit Kaur, Hansa Mehta, Alladi Krishnaswamy Ayyar, Sardar Harman Singh, Maulana Abul Kalam Azad, BR Ambedkar, Jairamdas Daulatram, and KM Munshi.

From Madison to Marx

The contradiction in the objectives resolution was also witnessed within the debates of the Constituent Assembly and the sub-committee. LSE-trained socialist professor KT Shah sent a detailed note demanding abolition of all property rights, and provided no protection from takings. Shah wrote: “The Union of India shall be free and entitled to acquire any private property held by any private individual or corporation as may be authorized or permitted under the law.” At the other end of the spectrum was the liberal lawyer KM Munshi, a strong advocate of constitutional protection of property rights and limited government. Munshi suggested a Madisonian takings clause inspired by the American Bill of Rights, which placed significant restrictions on the ability of the government to take property. Somewhere in the middle were members like Ambedkar and Ayyar, who attempted to find a balance between individual rights guaranteed by the constitution against a passion of the government to pursue socialist welfare policies.

Given these extreme views, before one could debate the specifics of an eminent domain policy, the assembly first had to determine whether the right to property would be constitutionally protected and if the state’s authority to acquire property would be limited in any way. After hearing diverse views, the sub-committee decided that it would include a provision along the lines of Section 299 of the Government of India Act, 1935.

In March 1948, the sub-committee on Fundamental Rights drafted the clause as “No property, movable or immovable, of any person or corporation, including any interest in commercial or industrial undertaking, shall be taken or acquired for public use unless the law provides for the payment of just compensation for the property taken or acquired and specifies the principles on which and the manner in which compensation is to be determined.” This provision was the starting point for the debates and various other drafts circulated, before the final wording of Article 31 was determined.

In my previous essay in this series, I argued that there are four basic safeguards that form a part of eminent domain law and policy in order to create robust constitutional protection of the right to property. One, there is a public use or public interest criteria for taking property. Two, there is clarity regarding authorities within the state that are allowed to exercise this power. Three, such takings are only allowed by the due process of law. And four, there is just compensation.

Unsurprisingly, each of these safeguards were rigorously debated by the members of the sub-committee, and broadly by the members of the Constituent Assembly. There were three broad points of view – (1) those from liberals like Munshi, (2) from progressives like BN Rau and Fabians like Ambedkar (on this issue), and (3) from socialists like KT Shah. The back-and-forth between these groups finally led to Article 31 in the Constitution.

There is however one extremely curious fact about these debates. Ordinarily, one would imagine that there is great concern over phrasing certain constitutional provisions to ensure prevention of abuse by the government. In the Indian case however, much of the concern was regarding stalling the government’s socialist welfare agenda. The usual exercise of constraining the government’s power through a constitution played out differently in India. It is in this context that one must read these debates.

Public Use

The question of public use, the authority entrusted with the power of eminent domain, and the question of compensation were intricately linked in the Constituent Assembly debates, mainly because of the issue of zamindari.

Section 299 of the Government of India Act, 1935 used the phrase “public purpose,” and the clause drafted by the subcommittee used the phrase “public use.” There was a great deal of concern on what would and would not be included within the ambit of these phrases.

Govind Ballabh Pant was concerned that the phrase “public use” was ambiguous, and it was unclear if it limited the government only for acquiring land for its own use; or could be extended for social purposes like dismantling zamindari. This is an important concern even in the current political landscape – can, and should the state be allowed to take land from one individual and give it to another for social and economic purposes? In the 1940s, that concern was about the law stalling the abolition of zamindari. Today, the same concern is regarding farmers stalling industrialization.

Pant argued that if the government were to acquire property for its own use (to build roads, etc), then its authority must be curtailed and require payment of compensation. However, when the government pursued socially beneficial legislation, such as zamindari abolition, then that power must not be limited, nor should there be a requirement to pay “just compensation.” Further, that the question of compensation must be left to the legislature and not the courts. So, counterintuitively, he wanted to replace the phrase “public use” with “governmental purpose” so that any legislation falling outside that ambit would not be restricted by the other requirements of the eminent domain clause. It was an odd phrasing where the exception (zamindari) would be broader than the provision (acquisition for government purposes). Pant was not seeking to limit the power of the state, but to expand the power of eminent domain beyond acquiring property for public use.

Ambedkar and Ayyar felt that Section 299 of the Government of India Act, 1935 did not prevent the government from acquiring property, and could be used for acquisition for government purposes as well as social purposes. And therefore the phrasing of the provision would not create problems for future governments.

Rajagopalachari asked, should the provision not clearly state that no property shall be taken except for public use? However, despite his question echoing the American phrasing, he was concerned that if the clause covered every kind of acquisition (including zamindari), then the matters would be stuck in the judiciary over the question of compensation. Munshi’s solution to the problem was simply to exempt zamindari from the provision, and leave the rest of the provision with strong protections for the individual rights against expropriation.

Nehru said while there should be no expropriation of property, there should be a distinction between “petty acquisitions” and “large schemes of social reform,” and believed there is no place for individual rights when so much is at stake for society in abolishing zamindari.

When one considers the core of Nehru and Pant’s argument, it seems inconsistent. If their argument is accepted, then the legislature has to simply convert a “petty acquisition” into a “large scale scheme” to gain immunity from constitutional constraints. It implies that the state has the authority only if it abuses the rights of many and not just one.

There was one issue however that was curiously missing from this debate. By the time the constituent assembly was debating the matter, it became fairly clear that the government had an explicitly socialist agenda. When government owns everything from steel firms, hotels, airline companies, and even bakeries; what is government purpose? What constitutes public use? When it came to the question of use, the assembly was extremely shortsighted, mainly debating zamindari and the immediate problem at hand. There should have been a broader debate, on what would and would not constitute legitimate public use, in the context of a mixed-economy and Fabian/gradual socialism as envisaged by the Nehru government. This lack of debate and thought also permeated the jurisprudence of the courts in later years. Whatever the legislature said was public purpose was assumed to be a valid public purpose, with no effort to create a doctrine for what qualifies as public purpose.

Compensation

There were three main issues concerning compensation. The first was the question of compensation based on the type of acquisition/use. The second was the question of whether compensation must be “just.” And the third was whether such compensation can be challenged in courts or should be left to the legislature.

Socialist members like KT Shah and Jayaprakash Narayan believed that there should be no right to property, and hence debated the overall provisions in a tangential manner that did not consider compensation. Most members believed that compensation must be paid for acquisition for government use, otherwise it would amount to abuse of individual rights. However, they also felt that there was something fundamentally unjust about compensating zamindars. The problem was not concerning zamindars themselves, but with the system of property acquisition in the Indian society. AP Jain, VD Tripathi, RK Sidhwa and VC Keshava Rao felt that the clause was too strict in requiring compensation for acquisition of all property; and that property immorally acquired by feudal lords should be exempt from this requirement.

Even liberal members like Rajagopalachari felt that zamindari was a fundamentally unjust system of property acquisition, and the system was perpetuated in a way that it left a minority in control of most of the wealth.

The standard liberal values that accompany property rights and voluntary exchange were completely missing in the zamindari system, which fundamentally broke the strong link between individual labor and property. The argument from the liberal perspective is that the zamindari system, due to its illiberal nature, does not merit any protection from rights emanating from liberal principles. And therefore the question of compensation must be resolved based on the question of use, i.e. whether property was taken to abolish zamindari or for other purposes.

Syamananda Sahaya, the minority view on this matter, felt that it would be unfair to not give zamindars compensation on the basis of any assumptions made on how they originally acquired their wealth. He was also concerned about the clause backfiring on intended beneficiaries. If the future land reform agenda included forming communes by acquiring tenants’ lands, such social legislation would fall outside the ambit of compensation. Since the provision applied to all movable and immovable property and not just the zamindari system, he was against diluting the provision on the question of compensation.

Vallabhbhai Patel had a similar view, but for entirely different reasons. Being a member of the government, and well versed with the government agenda, Patel felt that much of the debate on property was hijacked by the issue of land acquisition, when the question was much broader. He argued that by the time the provision became the law of the land, most of the zamindari estates would have been liquidated. The real purpose of such a provision protecting property was to authorize the state to acquire land for public purpose, and therefore to subject such acquisition to conditions of public use and just compensation, to prevent expropriation of property.

The second issue was whether the provision should require that the payment be “just.” Ayyar and Sahaya felt that adding “just” before compensation did not achieve much, as compensation in its full meaning had to be just. KM Pannikar, however, was concerned that the word “just” before compensation made the quantum of compensation awarded open to question before the judiciary. Pannikar’s suggestion to drop the word “just” before compensation was accepted by the committee, and “just compensation” became “compensation.”

A related issue on the question of just compensation was the method of payment – should such compensation by paid in cash, and in full, at the moment of acquisition, or over a period of time? Nehru was of the opinion that it would be impossible to pay compensations in cash when it came to zamindari abolition. This was not an unreasonable opinion, since the newly inherited Indian treasury was in a precarious position. Such acquisition would have to be paid for in government bonds. Nehru also felt that the legislature must determine both the quantum and the manner of compensation, and the court had no place to enter this subject unless there was a “gross abuse of the law” or a “fraud on the constitution.”

Pant, echoing the same concern, felt that for these practical reasons, the compensation and its scheme should not be called into question in court. The problem with Pant’s view was that without compensation being enforceable, there was little protection for property rights in the Constitution. Ayyar argued that leaving the question of compensation outside the purview of court gave carte blanche to the legislature, and left the entire protection meaningless, and that the right to property might as well be struck from the list of fundamental rights.

Ambedkar took the middle road on this issue. He felt that there was a distinction between the quantum and the form of compensation, and that it would be absurd to leave the question of principles of determining compensation or the quantum outside the purview of the courts. However, the form of compensation should be left to the legislature.

Munshi was the only member who staunchly argued for compensation to be just and justiciable by courts, both in quantum and the manner in which it was disbursed. He asked the other members what was stopping the legislature from stating that compensation would be paid over a hundred years, if it was outside the purview of being questioned in courts.

Eventually there was a compromise that while it was important for the legislature to have some authority to determine compensation, it must finally be subject to the courts to prevent abuse.

Apart from the liberals, and those supporting social legislation, the third point of view came from socialists who were completely opposed to this clause. Damodar Swaroop Seth and Jayaprakash Narayan were absolutely against a clause that prohibited expropriation without compensation. Narayan described the clause as “Magna Carta in the hands of capitalists of India.” This point of view gained little traction in the proceedings. It is useful to remember that it is the Narayan-inspired Janata government that deleted the right to property as a fundamental right in 1978.

Due Process

The question of due process with respect to protecting the right to property and curtailing the authority of the state came to the fore even before the discussion on eminent domain in the Constituent Assembly. It started with the due process clause, or what eventually became Article 21 (the right to life). The idea of constraining state action by requiring due process to protect life and liberty came from the Fourteenth Amendment to the US Constitution which stated “nor shall any State deprive any person of life, liberty, or property, without due process of law.”

There was a lot of interest in such a provision in the Indian constitution, given the history of preventative detention and arrests during the Indian freedom movement. It was one of the provisions with an enormous amount of support, except on the issue of property, which is integral to the US constitutional scheme.

Munshi was one of the few members of the Constituent Assembly who wanted the right to life to include property. His submission to the sub-committee on Fundamental Rights had provided “No person shall be deprived of his life, liberty or property without due process of law,” reading almost exactly like the Fourteenth Amendment to the US Constitution.

To Munshi’s suggestion, Rau argued that the due process clause in the US had led to a large proportion of the litigation in the US Supreme Court during the Roosevelt administration, and borrowing such a clause and giving it retrospective effect to pre-constitutional laws was likely to result in a flood of litigation. To solve for this problem, Rau suggested adding an additional clause providing an exemption, or a lesser protection for private property, to reconcile individual rights with legislative agenda.

Ayyar also cautioned that a lot of New Deal Progressive legislation had split the American courts into utilitarians supporting social legislation and those in favour of individual property rights. If such a clause were to be included in the Indian constitution, a lot of expropriatory legislation to dismantle zamindari would be stalled by the courts. While he didn’t block the inclusion of “property,” he pointed out this problem that might be faced by future governments and the judiciary. The debate on this issue is really one between lawyers. Munshi, Rau, and Ayyar carefully considered how each word was interpreted by past courts, and how it would be interpreted in the future by different styles of Indian judicial benches – and wanted to balance the rights of the individual against the goals of the socialist state.

GB Pant was also worried more immediately about the due process clause as it related to property specifically on the issue of dismantling the zamindari system. He wanted the legislature to retain the power to acquire property and pass tenancy reform measures without being obliged to pay compensation at market rates, or being challenged in courts. He anticipated the United Provinces zamindari laws and was worried these would be held up in court.

However, Pant’s view of limiting the right to liberty because of zamindari abolition was not generally accepted. There was a significant interest in limiting the states’ ability to make arrests, quash the opposition, and gag protests due to the history with the colonial government. Ambedkar felt there was no need to give the government carte blanche to arrest except in grave emergency. He also believed that the due process clause need not necessary prevent land reform legislation since a separate provision would cover the acquisition of property clearly stating the eminent domain power of the state. The members were therefore moving in a direction where they believed the right to life and liberty was crucial, and wanted to find a way to accommodate property within the scheme of the due process clause.

The Fabian socialist KM Pannikar came up with the solution that was eventually accepted. He argued that the difficulties created by coupling “life and liberty” provision with the “property” provision could be solved by separating the two and removing property from the due process clause. He believed that there was a difference between right to life and liberty, and the right to property; and while the former was absolutely sacred and should not be subject to any other restrictions than public order, the latter should be guaranteed only subject to legislation. His view perhaps best captures the median view of the Constituent Assembly – that individual rights, specifically political rights, were to be protected; however, the right to property which was the foundation of capitalist societies and benefited the wealthy did not merit such protection.

While GB Pant remained unconvinced by the de-coupling of the two provisions, Rajagopalachari and Ambedkar accepted this suggestion. A further dilution was made after separating property from the provision. BN Rau in the draft constitution of Oct 1947, added the word “personal” before liberty because liberty might be construed widely, unless it was qualified by the word “personal.” In other words, liberty included both personal and economic liberty, and where it remained unqualified, courts might protect property rights and other transactions within the ambit of the due process clause. For instance, a price control might be considered an interference to liberty of contract between buyer and seller. The members accepted this qualification it despite Munshi’s objections.

BN Rau further argued that they should remove the words due process of the law and replace it with “except according to the procedure established by law” because the power of judicial review implied in the due process clause was undemocratic and placed an additional burden on the judiciary. In response, Munshi argued that removing the reference to property and qualifying it as personal liberty would remove the difficulties mentioned by BN Rau. However, to remove the requirement of due process and leaving the provision strictly about the procedure of law would make the protections vulnerable to legislative majorities anxious to establish social control. Such legislative majorities could pass legislation and give the executive sweeping powers. For a balance, governments should have to go to court to justify their reasons for infringing on personal liberty. Alladi Krishnaswami Ayyar was in favor of retaining “except according to the procedure established by law” because he believed that 3-5 people on a bench deciding what was due process was undemocratic.

Finally, there was a lot of debate and problem with the wording of the due process clause in India. There was a fear that there would be a lot of arrests by government so they wrote in another additional preventative detention clause. Finally, the clause read “no person shall be deprived of his life and liberty retaining “except according to the procedure established by law.” This was the protection for all issues pertaining to life and liberty, and was not limited to property.

The Original Article 31

In this three-way debate, the Fabians prevailed over the liberals and the Marxists. Finally, Article 31 in its original version read: (1) “no person shall be deprived of his property save by the authority of law.” Article 31(2) in its original version read, “No property, movable or immovable, including any interest in, or any company owning, any commercial or industrial undertaking, shall be taken possession of or acquired for public purposes under any law authorising the taking such possession or such acquisition, unless the law provides for compensation for the property taken possession of or acquired and fixes the amount of compensation, or specifies the principles on which, and the manner in which, the compensation is to be determined and given.” And clauses (3-6) provided various qualifications and exceptions to allow for zamindari abolition and other social reform.

It is also important to note that, while not perfect, the original Article 31 outlined basic principles of use (public purpose), clearly stated the authority (legislature), provided a diluted due process clause (except according to the procedure established by law), and outlined a requirement to provide compensation. In other words, the start to protecting the right to property from the power of eminent domain was imperfect but reasonable.

But did it matter? There are reasons to believe that none of the debates of the Constituent Assembly really mattered. While the Constituent Assembly left some protection of property rights at the time, they failed to protect it from future abuse. First, they made it fairly easy to amend fundamental rights, which has consequently resulted in immense infringement of personal and economic rights over the decades. Second, the members of the Constituent Assembly also formed the Provisional Parliament until the first general election could be completed to form the new government. The provisional parliament, with almost the same membership as the Constituent Assembly, passed the First Amendment to the Constitution in 1951 and severely diluted the protections for property contained in the original Article 31 by adding the exceptions in Articles 31A and 31B. This, and other amendments, will be discussed in detail in my next essay in this series.

One may argue that it hardly matters that India was off to an imperfect start on property rights, given what future governments did to property rights protection. On the other hand, the issues debated by the framers form the ground on which we interpret the provisions in the future. Therefore, by making zamindari a focal issue, and remaining myopic about the other consequences of weak protections to property, the framers have left India with a poor legacy of individual rights.

Most scholars writing about the right to property and the power of eminent domain in India attempt to frame this discussion as a balance between individual rights and social legislation. The truth, however, is that much of the debate was shortsighted and limited. There was a great deal of reference to zamindari, and not enough discussion about issues farther in the future, and the potential for government abuse of power. Any reference to these issues was the minority view, and most of the discussion simply assumed that the government will act benevolently when it came to social legislation. In present times, this concern has become very real. In the United States, the question of private takings for economic development has dominated the conversation for the last decade. And in post-liberalization India, social acquisitions giving land from one group to another have typically quashed poor farmers’ rights and favored wealthy and powerful industrialists.

The truth is that even armed with a great deal of authority for abolishing zamindari, most of the land reform agenda was unsuccessful, and various special interests within and outside the government captured the entire exercise. In present times the beneficiaries and special interests have changed, but the capture continues.

Property rights are the most personal and fundamental human rights, and the idea of such a tradeoff between individual rights and social benefit was one of the costliest mistakes perpetuated into intellectual thought and jurisprudence by the Constituent Assembly. Both hindsight and reality have shown us now that strong property rights are also socially beneficial. There is no trade-off between the two. The instances of state abuse of eminent domain power are rampant, and the examples of genuine social welfare by expropriating property are very few and far between.

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The source material for much of this essay comes from The Framing of India’s Constitution by B Shiva Rao, and the Constituent Assembly Debates.

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Read the next essay here and the previous essay here

Also listen toImagine No Possessions, Episode 26 of The Seen and the Unseen, in which Shruti Rajagopalan talks to host Amit Varma about The Right to Property.

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About the author

Shruti Rajagopalan

Shruti Rajagopalan is an Assistant Professor in Economics at Purchase College, State University of New York, and Fellow at the Classical Liberal Institute, New York University Law School.