SC sets rules for acquisition of pvt properties by State, stresses on safeguarding rights of owners

New Delhi The Supreme Court on Thursday underscored the constitutional safeguards required before the State can acquire private property, highlighting the necessity of adhering to fair procedures and upholding the rights of property owners under the Indian Constitution.

A bench of justices PS Narasimha and Aravind Kumar held that the deprivation of any person’s immovable property must follow a fair procedure of law – a principle enshrined in Article 300A, which states that “no person shall be deprived of his property save by authority of law”.

The court stated that procedural justice is a cornerstone of Article 300A when the acquisition of private property by the State is for a public purpose and on the payment of compensation. The authority of law is not just the power of eminent domain but includes procedural safeguards to ensure fairness and transparency, underscored the bench, clarifying without a proper procedure, even with compensation, compulsory acquisition would be unconstitutional.

“A valid acquisition of property is premised on the law providing a procedure for such acquisition and the State complying with this statutory procedure. Procedural justice is therefore a significant mandate of Article 300A. The existence of and adherence to procedural safeguards is crucial for the protection of the right to property as they ensure fairness, transparency, natural justice, and non-arbitrary exercise of power in the process of acquisition,” said the judgment authored by justice Narasimha.

The ruling, which reinforced that the power of eminent domain cannot override procedural justice, came as the bench examined Section 352 of the Kolkata Municipal Corporation Act, noting that it lacks any procedure before the compulsory acquisition of private property.

The court outlined seven fundamental procedural rights that must be observed before any valid acquisition of property which included rights to inform the person about the State’s intention to acquire their property, the right to be heard, the right to an informed decision, and right to fair compensation. On the part of the State, the court said acquisition must be only for public purposes, and that the State must conduct the acquisition process efficiently within prescribed timelines. The seventh procedural right is the right to conclusion, meaning the acquisition process must lead to a final conclusion, ensuring the property vests with the State.

“The seven principles that we have discussed may be procedural, but they are integral to the authority of law enabling compulsory acquisition of private property. Union and state legislations have adopted these principles and incorporated them in different forms in the statutes provisioning compulsory acquisition of immovable property. The importance of these principles, independent of the statutory prescription, have been recognised by our constitutional courts and they have by now become part of our administrative law jurisprudence,” noted the bench.

The ruling not only clarified the State’s obligations but also strengthened the procedural protections afforded to property owners, reinforcing the constitutional principles of justice and fairness in property rights.

In the present case, the court repelled the municipal corporation’s attempt to acquire a private property under Section 352 of the Act for constructing a park because the impugned provision was bereft of any procedure before depriving a person of his property.

The Thursday judgment closely follows conclusion of an important hearing before a nine-judge bench of the top court on May 1 on the issue whether state can acquire privately owned property of citizens under a cherished directive principle of state policy contained in Article 39(b) of the Constitution. Article 39(b) says: “State shall direct its policy towards securing that the ownership and control of the material resources of the community are so distributed as best to subserve the common good.”

Articles 300A and 39(b) of the Indian Constitution address property rights and socioeconomic policy, respectively, but they differ significantly in their scope, application, and implications. While Article 300A protects individual property rights from unlawful deprivation, Article 39(b) guides the State in creating policies for equitable resource distribution. The latter reflects the broader goals of social justice and economic equity within the constitutional framework.