Opinion Think

We Didn’t Stop The Fire

In the seventh essay in an eight-part series on The Right to Property, we look at how the Right to Property went up in smoke with the infamous 44th Amendment. Earlier essays: OneTwoThreeFourFive, Six.

Read the 8th and final part of the series here.

In my previous essay in this series, I argued that with the 25th Amendment and the events of the Emergency, there was a severe weakening of the protection provided by Article 31. Luckily, the Emergency did not continue forever. Indira Gandhi called for elections in 1977, and lost to the coalition formed under the leadership of Morarji Desai and Jayaprakash Narayan. It is under their leadership that the final death knell came for protection against the power of eminent domain, when the right to property under Article 31 and Article 19(1)(f) was deleted. It was reintroduced in the same amendment as a constitutional right under Article 300A.

Another Left-Turn

In 1977, the Janata Party formed a coalition government led by Morarji Desai and supported by Jayaprakash Narayan. While this was excellent news for democracy in India, it was a dismal state of affairs for property rights and economic liberty. Desai was a staunch socialist in the Nehruvian mould. He was against bank nationalization and the arbitrary taking-over of entire sectors by the government. Even in the constituency where Mrs Gandhi lost in the 1977 election, the candidate elected was Raj Narain, an old school Gandhian Socialist.

Jayaprakash Narayan was one of the last few remaining members from the pre-colonial Congress party left to witness the decline of the party and the excesses of the Emergency. Narayan was born and raised in India, and left for the United States of America for a university education during the roaring twenties. He went to Berkeley, and had to work in the fields and in many service jobs in hotels, restaurants, and the like to pay for his tuition and living expenses. Due to increases in tuition, he was forced to transfer among the Universities of California, Iowa, Wisconsin and Ohio. During his years as a student, Narayan experienced the difficulties of the working class, and found it difficult to get an education while making ends meet, even in the sophisticated industrial economy of the United States. Simultaneously he was introduced to Marx’s ideas in Wisconsin, which made a big impression on him. Though Narayan studied sociology and not economics, he had strong views on the working of the economic system, and was a true-blue Marxist when he returned to India in 1929.

On his return to India, he became an important grassroots socialist leader and one of the founders of the Congress Socialist Party in 1934 (the socialist caucus of the Indian National Congress party). Unlike most of his Congress colleagues who were Fabians, Narayan married Marxist ideas to the Gandhian grassroots nationalist movement.

He opposed the right to property during the constitution drafting process, and felt that if property rights became fundamental rights, then socialist ideas would not be realized in post-colonial India. He had described Article 31 (in its then draft form) as “Magna Carta in the hands of capitalists of India.”

In short, Jayaprakash Narayan was much farther left than Morarji Desai or Indira Gandhi. He had proposed a 14-point program in 1952, which was rejected by Nehru (as too far left). Ironically, it was eerily similar to Indira Gandhi’s ten-point program that began the spate of nationalizations.

In the elections immediately after the Emergency, Indira Gandhi and the Congress lost most seats in states where nasbandhi or forced sterilizations were aggressively pursued. Many believe that forced sterilization program was the most important reason for her loss, and some historians placed it even higher than the suspension of political and civil liberties. Whether it was the curbing of civil liberties, the horror of the sterilization program, or the general suspension of democracy, we know that it is unlikely that Mrs. Gandhi lost the elections due to her socialist agenda, as the opposition was also explicitly socialist in its manifesto. In Desai and Narayan, the electorate had once more supported the socialism.

Both Desai and Narayan were confirmed democrats, and they campaigned on the promise of restoring democracy and reversing the 42nd Amendment. Armed with the backing of the people, and a flimsy majority, they began the work of undoing the damage. In 1978, under a Desai-led Janata Party government, the 44th Amendment to the Constitution was debated and passed in the Parliament. The 44th Amendment managed to undo almost all the problematic provisions rewritten by the 42nd Amendment (especially the provisions infringing on separation of powers), but retained the socialist features of the 42nd Amendment. This was done both in its symbolism (the word socialism was left in the preamble), and also through the important provisions affecting fundamental rights and directive principles (like Article 31C). Interestingly, their efforts did not attempt to turn back time and revert to the original constitution to eliminate all the excess of the various Constitutional Amendments. They only undid the damage of the Emergency regime and its impact on the constitution, most importantly on aspects related to the judiciary and separation of powers.

The government retained Article 31C and to this day in India, Fundamental Rights, which expressly protected the individual from the excesses of the State, are superseded by the Directive Principles (subject to the basic structure doctrine). The 44th Amendment also deleted what was left of the right to private property, and removed all restrictions on the power of eminent domain. It stated in its Object and Reasons:

[T]he right to property, which has been the occasion for more than one amendment of the Constitution, would cease to be a fundamental right and become only a legal right.

Not Fundamental Enough

While right to property under Article 31 and Article 19(1)(f) was deleted, it was reintroduced in the same amendment under Article 300A as a constitutional right. Article 300A reads, “No person shall be deprived of his property saved by authority of law.”

There are three main differences between the protection of right to property as a fundamental right under Article 31 and the right to property as a constitutional right under Article 300A.

First, Article 300A clearly states that the state may not take property except by the “authority of law.” This ensures that to “deprive” an individual of property, there must be legislation. The state cannot deprive a person of his property by taking recourse to executive power unless that executive order is backed by — and carrying out the clear mandate of — some legislation. This provides a flimsy layer of protection to individual rights. It ensures that an overzealous or arbitrary minister or corporator doesn’t simply issue a diktat to take property, and the actions are at least authorized by state or parliamentary legislation.

There are two reasons I refer to this as flimsy protection. Firstly, just because something has passed a procedure to have the authority of “law” does not imply that it is just or right. The entire purpose of the constitution is to limit the actions of the legislature, to ensure that lawmakers don’t engage in arbitrary and coercive action, even while following the procedure of law. So simply having the authority of law is little protection, if any. One hardly needs to point out that most of the actions of the Nazi regime were perfectly “legal” in the sense of rules and procedures.

Secondly, this protection implies that the executive officers cannot take property unless they can point to a specific rule or provision that authorizes them to take property. While this seems reasonable, it is no real protection. India has developed a very weak set of conventions and jurisprudence on delegated legislation. The extent of legislation that is delegated to the executive authorities in India is astonishing, and most legislation is so poorly drafted that it wouldn’t take much to find a rule that delegates the authority to take property to an executive officer. In reality, the protection against executive overreach in Article 300A is no protection at all.

The second difference between the protection of Article 31 and 300A is of writ jurisdiction. Since the deletion of Article 31, where the state takes property, an individual cannot file a writ petition for violation of a Fundamental Right. In other words, any takings legislation can be challenged on grounds of legislative competence, or for violating other fundamental rights (like Articles 14 and 21). But there is no relief provided by the writ jurisdiction of the Supreme Court under Article 32 for a taking under Article 300.

The third difference between Articles 31 and 300A is one of constructing a just eminent domain policy. Simply requiring the authority of law does not make a policy just. As I wrote in my second essay in this series, a just eminent domain policy requires that the state only take property for public purpose, and for just compensation. This was always the crucial roadblock in the government’s agenda, and therefore the cause of a lot of litigation and constitutional amendments. Since the constitutional amendment was specifically solving for this problem, it is no surprise that Article 300A does not explicitly require that property may be taken only for public purpose, and by providing just compensation.

Many felt that changing the right to property from a fundamental right to a constitutional right will have no real effect since courts will read in the conditions of public purpose and just compensation into the provision. However, we know from my earlier essays (4, 5, 6) that the Indian judiciary never formulated a doctrine to test the limits of public purpose. There was a high degree of deference to the legislature on the question of purpose, and if the legislators believed that the law furthered public purpose or public interest, then the court would not comment on its feasibility, or the intention of the policy. Given that Article 300A does not even mention public purpose, it is a pipe-dream to hope that the courts in this late day will formulate a doctrine.

This implies that as long as legislation is passed by Parliament or the state legislature using proper procedure, there is little judicial recourse to the taking. If legislation states that property will be taken from Ambani and given to Adani, then Ambani will have little recourse in a court of law. This is not so far from reality. We need to remember that Indira Gandhi used legislation to nationalize a single firm, and added it to the Ninth Schedule to immunize the arbitrary action from judicial review (The Alcock Ashdown Company Limited (Acquisition of Undertakings) Act, 1973 which is Entry 101 in the Ninth Schedule). Nothing is there to stop present or future governments from engaging in such private takings.

As described in my fifth essay, the court also allowed private takings under Article 31. Property was taken to build paper mills, and technology parks, and residential and cooperative housing projects. These private takings had a tenuous relationship at best with larger public interest projects. It was literally taking land from Peter and giving to Paul – a cardinal sin in any just eminent domain policy. There is no reason to believe that the courts would provide better protection under Article 300A.

On the question of compensation, the situation is no better and no worse than it was under Article 31. While Article 300A does not have a requirement to provide compensation, or even an amount, for taking property, this provision has been interpreted by courts following their past jurisprudence on compensation.

There are two different directions to develop the court’s jurisprudence on this question. The first is to read 300A very literally; since it does not require compensation for takings, the courts need not enter into any discussion on the adequacy of compensation – eliminating the major issue in the three decades before the 44th Amendment. A second direction is to read in principles of natural justice into this constitutional right; and hold that takings cannot be allowed without compensation – and create a doctrine for adequacy of compensation.

The court decided to go a third way, and follow the jurisprudence developed by previous benches on Article 31. In Jilubhai Khachar v State of Gujarat (1995 Supp 1 SCC 596) the Supreme Court held that it could not question the adequacy of compensation awarded by any takings legislation. It could merely determine if the principles on which compensation was based were relevant, and ensure that compensation is not illusory. This was essentially a reiteration of the principles in Vajravelu Mudaliar v Special Deputy Collector (AIR 1965 SC 1017) and RC Cooper v Union of India (1970 3 SCR 530).

While in theory it sounds wonderful that the court will disallow the worst kinds of excesses, or “illusory” compensation, the problem is that it is not a testable doctrine and open to interpretation. What one court considers inadequate but not illusory may seem to be illusory to another court. In Bhim Singhji v Union of India (1981 1SCC 166) the Supreme Court held that the payment of Rs 2 lakhs as a maximum limit, for a property that was worth Rs. 2 crores, was not illusory compensation! It seems absurd and against any kind of judicial principle, that a compensation of 1% of the value of the property taken is not illusory compensation. But this is the problem with having no doctrine for compensation under Article 31 or Article 300A.

There is an additional absurdity with respect to compensation in the post-1978 world. While removing the blanket requirement of compensation for takings, the 44th amendment added a provision, Article 30(1A), to protect minority institutions from such takings. The provision reads:

In making any law providing for the compulsory acquisition of any property of an educational institution established and administered by a minority, referred to in clause (1), the State shall ensure that the amount fixed by or determined under such law for the acquisition of such property is such as would not restrict or abrogate the right guaranteed under that clause.

Therefore, if if property is taken from a minority institution it the state must pay compensation.

Initially Article 31A was introduced as an exception for zamindari estates, to ensure that the land reform agenda is not hampered. However, in the absence of Article 31, the second proviso in Article 31A also takes an absurd form. It reads:

Provided further that where any law makes any provision for the acquisition by the State of any estate and where any land comprised therein is held by a person under his personal cultivation, it shall not be lawful for the State to acquire any portion of such land as is within the ceiling limit applicable to him under any law for the time being in force or any building or structure standing thereon or appurtenant thereto, unless the law relating to the acquisition of such land, building or structure, provides for payment of compensation at a rate which shall not be less than the market value thereof.

In other words, if property is taken from an estate engaging in personal cultivation, then market compensation (!) is required.

Thus, post-1978 there is no express requirement to pay compensation for takings except to minority institutions and farmers engaging in personal cultivation. This itself runs counter to any principles of equal protection under Article 14, and will hopefully be resolved in the future.

Conclusion

The analysis of the deletion of the fundamental right to property and the introduction of Article 300A seems almost anticlimactic. Is that all? is a reasonable reaction to this change. There are two reasons for this. First, constitutional protection to property rights in India was shaky to begin with, and corroded further through a series of constitutional amendments and poor judicial pronouncements in the fifties and sixties. In this sense, after the 25th Amendment, there wasn’t much of a right or protection left to delete.

Second, the taking of property by the state has become so commonplace in India, and its litigation has become so very lengthy and convoluted, that this has become an integral part of the individual citizen’s relationship with the state. The citizens expect that the state shall only be arbitrary and unjust, and that there will be no respect for property rights. So an alternate system of property rights protection has emerged – one through political patronage. Every big industrialist, builder, farmer, etc has cultivated political connections and spent vast resources on gaining political patronage. This is the main protection against the state taking away property.

In the next (and last) essay in this series, I discuss where Indian jurisprudence on property rights can go from here, and if there are any ways to restore these protections. I also discuss the consequences of living in a system where there is no such protection of property rights, as we move towards a capitalist economy.

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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.