Property rights play a vital role in shaping people’s opportunities, making them essential to the trading process within an economic system. It’s important for individuals to clearly understand what they are buying or selling, the nature of the good or service involved, and how the rights and opportunities linked to a physical transaction function. Property itself isn’t merely the item being exchanged; rather, it’s a stream of benefits derived from that property or item that is actually being traded. However, there are always limitations on those rights. A property owner may have the right to use their land in certain ways, but there are restrictions on what they can do. While the idea of property rights is fundamental to all market transactions, these rights are specific, clearly defined, and can vary from one transaction to another.
Right as social agreement
A right only exists when you and other members of society come together, supported by the state, to consent to, recognize, and accept its existence. Dan, an agricultural economist at the University of Wisconsin, emphasizes that rights, as explained by Bromley, are not merely connections between an individual and an object, but rather involve relationships between individuals and other people. Therefore, property rights are acknowledged only in contexts that receive government approval, within a societal framework where the exercise of rights is widely accepted. Once there is popular support, the government reinforces and secures the link between the exercise of these rights and their ownership. Rights hold little value without enforcement and lack substantial meaning. The limits of your rights are defined by what you and others consider acceptable. The allowances you grant me, both formally and informally, shape my ability to act.
Right to property as a statutory right
The concept of the right to property has changed over time due to several amendments, including the First, Fourth, Seventeenth, Twenty-fifth, Forty-second, Forty-third, and the Forty-fourth Amendment, which was ratified by the Janata Party in 1978. The 44th Amendment Act of 1978 removed the “right to property” from the list of fundamental rights, reclassifying it as a constitutional or legal right. A part of Article 300 A, which pertains specifically to Article 31(1), has been included in a new Chapter V titled “Right to Property,” while Articles 19(1)(f) and 31 were taken out of Part III of the Fundamental Rights. As a result, the fundamental right to own property has been transformed into a statutory right. This amendment enhanced the government’s power to confiscate property for social welfare purposes. The 44th Amendment abolished the basic right to purchase, own, and dispose of property. However, Article 31 was only partially repealed; Article 31(1), which stated that “no person shall be deprived of his property, save by the authority of the law,” was relocated from the chapter on fundamental rights to Chapter IV of Part XII, where it is now designated as Article 300A.
Abolition of right to property as a fundamental right
The fundamental right to property has been abolished due to its conflict with the principles of justice, social, economic, and political equality of status and opportunity, as well as the Constitution’s aim to establish a social democratic republic. Article 300A’s right to property is not a fundamental right within the Constitution; it is merely a constitutional right. Although Article 31 had not been repealed at the time of the 42nd amendment, the Hon. Supreme Court observed in Tinsukhia Electric Supply Co. Ltd. v. State of Assam, AIR 1990 SC 123 at p. 138, that its provisions had been so significantly reduced that even under laws for property acquisition lacking the protection of 31-C, the adequacy of the “Amount” determined was non-justiciable. All that was required was that the amount should not be unreal or illusory. By that time, the idea of a just equivalent or full indemnity principle had been removed from the Constitution, replaced instead by the concept of an “Amount.” Consequently, the adequacy of that amount was no longer open to judicial review.
In the case of Elizebath Samuel Aaron, a full bench of the Kerala High Court observed: “The legislative history surrounding the removal of Article 31 and the introduction of Article 300-A clearly indicates that Parliament aimed to eliminate the notion of just equivalent or adequate compensation for property deprivation, instead providing a limited right that no individual shall be deprived of their property except by the authority of law.” Essentially, the constitutional protection that was meant to be preserved (not as a fundamental right) was that there must be a law that authorizes and justifies any property deprivation, ensuring that no one is deprived solely by executive order. Article 300A does not extend beyond stating that the law must outline compensation and either determine the amount or at least clarify the principles for calculating and providing that compensation. It is evident that Parliament sought to shield all laws related to property acquisition or requisition from being contested on any grounds that the Supreme Court has identified, such as claims of insufficient or illusory compensation or that the principles for determining compensation were irrelevant or irrational. One might wonder why Parliament would have taken all the necessary measures to completely remove Article 31(2) from the Constitution if this was not the objective of the various constitutional amendments and their implementation.
In a recent case, Jilubhai Nambhai Khachar v. State of Gujarat, the Apex Court ruled that following the enactment of the Constitution’s Forty Fourth Amendment Act, the right to property as outlined in Articles 19(1)(f) and 31 has been removed from Part III, which covers Fundamental Rights. The reduction and limitation of this right do not restore its previous status, nor can it be reclaimed with renewed strength by seeking compensation under the guise of “deprivation of property” in Article 300-A. Additionally, the court stated that the principle of procedural unfairness, which is relevant to Article 21, does not apply to the acquisition or deprivation of property under Article 300A, thereby upholding the Directive Principles. Currently, if someone’s property is taken or requisitioned for private purposes, they may not receive any compensation. Under the law, the owner cannot voice complaints about this situation, and the Legislature is no longer obligated by the Constitution to ensure adequate compensation. If a person feels that the compensation they received was minimal, they cannot bring this issue to court. Legal recourse is only available if the government has taken property without the necessary legal authority, as this would violate Article 300A of the Constitution.
Meaning of ‘Deprived’ under Article 300A
Deprivation of property can happen in various ways, such as through destruction or confiscation, the removal of a private owner’s rights, or the seizure of goods or real estate by the state exercising its “police power.” Thus, if a substantial portion of property rights is stripped away—like when a trustee is dismissed from managing a public trust or when a leaseholder loses the right to occupy, transfer, assign, or sublet their interest—this constitutes a “deprivation” as outlined in Article 31 (1). Although the right to property is not classified as a fundamental right, it is acknowledged as a legal right under the constitution and does not arise from a contract between parties in contract law. In instances where a public road was built on private property, it was ruled unlawful when it could not be demonstrated that the property owner had consented to the road’s construction without seeking compensation.
Recent amendments by the Supreme Court
A recent Public Interest Litigation (PIL) filed in the Supreme Court is currently under consideration, challenging the relevance of the right to property linked to a legislative right established in the late 1970s. This right was formalized as a statutory right in 1978 to address the issue of large landholdings by zamindars and wealthy individuals, redistributing land to landless peasants. Harish Salve, the learned counsel for the petitioners, argued strongly that the government should take new measures to reinstate the right to property as a fundamental right, now that the objectives of the legislative action from the late 1970s have been achieved. In the landmark Keshavanandan Bharti case of 1973, the Supreme Court identified certain fundamental and unalterable aspects of the Indian state and its constitution as part of its fundamental structure, which cannot be changed, even through constitutional amendments, similar to the democratic framework of the nation. However, in the ruling, Justice H.R. Khanna noted that the fundamental rights granted to citizens would not be considered a fundamental aspect of the Constitution. This has opened the door for potential modifications or reductions in citizens’ fundamental rights. Later, in 1975, Justice Khanna sought to clarify that his earlier comment had been misinterpreted while adjudicating another significant case involving Raj Narain, a prominent politician and former prime minister. Despite this clarification, the Janata Party government amended the Constitution to remove the right to property from the list of fundamental rights, following the advice of then-law minister Shant Bhushan.
Property rights and economic performance: theory
When a resource has open access, no one can legally prevent others from using it, and it is not owned by anyone. This leads to external costs, as consumers do not account for the reduced availability of resources. A straightforward solution to the issue of open access is to create and distribute private ownership, which can significantly internalize externalities. In a system of ideal private ownership, owners reap the full benefits of their decisions and bear the related costs by restricting others from using the resource. This creates a strong incentive for optimal resource use, maintenance, and investment. Furthermore, because resources in this system can be transferred to others through sale or gift on mutually agreed terms, private property rights are highly valued. Thus, transferability becomes an effective means of reallocating resources from less productive owners to more productive ones. Private ownership also reduces the costs associated with defining rights and ensuring compliance compared to other property rights systems, such as common property regimes, since “monitoring boundary crossings is easier than overseeing the behavior of individuals within boundaries.”
Private ownership can be understood as a claim that is enforceable against others through formal law, often supported by public authorities like courts. It is believed that formal property rights, which are established and maintained by the state—an entity that has a comparative advantage in the use of force—are clearer and more secure than informal property rights that rely on government or social norms. Consequently, these formal rights are seen as more advantageous for economic growth. By establishing an impartial judicial system, the state acts as a reliable third party, helping to lower the transaction costs related to property rights. This approach facilitates significant economies of scale by providing consistent enforcement of property rights across a larger population and geographic area, while also enhancing the legitimacy of penalties for wrongdoing by keeping enforcers separate from those they are meant to punish.
The universal declaration of human rights
The contemporary human rights movement saw a revival of the idea that the right to property should exist independently of state law after World War II. In 1948, the United Nations General Assembly adopted the Universal Declaration of Human Rights, which emerged from this effort. The Universal Declaration was intended as a nonbinding document that outlined aspirational goals rather than enforceable legal obligations, so using the term “rights” in this context can be misleading. The distinction made by Cass Sunstein and Stephen Holmes between “moral rights” and “legal rights” is particularly relevant here. Their approach would categorize the articles of the Universal Declaration as unenforceable “moral rights.” The provisions of the Universal Declaration impose “moral duties on all mankind, not legal obligations,” as they are “not backed by legal force” and are, by definition, “toothless”.
The Declaration recognized the right to property as a moral right in Article 17. It states that everyone has the right to own property, whether individually or jointly, and that no one can have their property taken away without just cause. The first clause generally acknowledges this right to property. The second provision limits a country’s ability to interfere with private property, outlining the boundaries of that right. While a country can seize someone’s property, it cannot do so without following due process. This limitation is similar to the Due Process Clause found in the U.S. Constitution.
Many people thought that the Universal Declaration marked the beginning of a legally binding agreement that would transform its moral rights into legal rights. Later, during the negotiations for the 1966 International Covenant on Economic, Social, and Cultural Rights (“ICESCR”) and a study conducted between 1986 and 1993, the U.N. Human Rights Commission (“Commission”) made two attempts to establish the right to property from the Universal Declaration as a legally binding obligation. Unfortunately, both attempts were unsuccessful.
Conclusion
The right to own property has been the subject of various laws and court cases. Initially, it served as a legal safeguard against arbitrary actions by the state, such as seizing someone’s property without just cause or a public purpose, provided that the individual who lost their property received fair compensation. Before it was included in the Constitution, this privilege was outlined in the Land Acquisition Act of 1894 and Bengal Regulation 1 of 1824. Subsequently, Section 299 of the Government of India Act 1935 elevated this right to the status of a constitutional right.
The adoption of the constitution in 1950 elevated the right to the status of a fundamental right. Legislation also restricted the government from lifting limitations on its capacity to acquire land and subjected this right to judicial review. However, due to several constitutional amendments, the fundamental right to property was allowed exceptions, indicating that certain restrictions on the State’s ability to buy property—particularly the requirement to provide market value compensation—did not apply in specific circumstances.
By removing the “fundamental” right status from property, the Forty-fourth constitutional amendment of 1978 limited the State’s ability to acquire property in a non-justiciable manner. However, in the last five years, there have been legal efforts aimed at restoring the right to its original status as a basic right prior to the Fourth Amendment. Concurrently, the Land Acquisition Act of 1894 was repealed and replaced by the LARR of 2013, which enhanced the legal standards for “public purpose” and “compensation.”
The government’s failure to gain parliamentary backing for the LARR Amendment Bill, 2015, even after the LARR Act was modified by the three-promulgated LRR Amendment Ordinance within a year of its introduction, highlights the intense social and political discussions regarding the limits of property rights as both a legal and constitutional entitlement.
The evolution of property rights legislation in India mirrors the country’s ongoing efforts to redefine property relationships in contemporary society. The government has frequently sought to achieve social redistribution alongside economic growth. With each amendment to the legislation, certain groups’ property rights were strengthened while those of others were diminished. These groups actively utilized the legislature and the judiciary to advance their own interests.
References
[1] Salin, Sushanth. History of the Removal of the Fundamental Right to Property, New Delhi: Centre for Civil
[2] Society. p. 254.
[3] Paranjape, Dr. N.V. Studies in Jurisprudence and legal theory. Allahabad: Central law Agency. 2010. p. 343.
[4] “Right to Property is a Constitutional Right: Supreme Court”, The Times of India, April 18, 2011.
[5] State of Maharashtra v. Shandrabhai, AIR 1983 SC 803.
[6] Jilu Bhai Nam Bhai Khachar v. State of Gujarat, AIR 1995 SC 142.
[7] Tinsukhia Electric Supply Co. Ltd. v. State of Assam, AIR 1990 SC 123.
[8] AIR 1991 Ker. 162 (FB).
[9] Singh M.P., Constitution of India, Lucknow: Eastern Book Company. 11th
[10] ed. 2008. p. 211.
[11] Budhi Ram alias Bidhi Chand v. State of H.P., AIR 2006 HP 16 (DB).
[12] (1981) 1 SCC 166.
[13] The Times of India, 24th September, 2008.
Author: Navodita Kaushik, Christ University
