www.icl-journal.com R. Rajesh BabuConstitutional Right to Property in Changing Times:The Indian ExperienceABSTRACT:The constitutional right to property has undergone a significant change sinceIndia's independence. In the past few decades, the guarantee of property forboth alien and domestic right holders went for considerable dilution to sanctionthe unrestrained power of eminent domain. The arbitrary expropriation of propertywas justified in the then social and political context of a nascent state. However,since India embarked on the path of liberalization with the policy of promotinginternational trade and foreign investments, there appeared a progressive andselective modification if its legal regime on property rights to favour alienproperty and corporate interests. Part of the policy shift involved guarantee andstrengthening of the legal environment for protection of foreign property andinvestment. India's international commitments under the WTO Agreements andseveral investment protection treaties guaranteed capital and IP exporting statessafe and secure property rights in the host state – India, much beyond theexisting protection for citizen's property. Remedies for breach and standard ofcompensation for expropriation, direct or indirect, were judged by internationalrules and practices, beyond the control of local courts. To the extent thatinternational expropriation and compensation rules provide foreign investors andIPR holders with stronger rights than India's laws, they are also likely to providethem with stiffer property rights. In addition, change was evident in the nature ofownership of expropriated property. Nationalization (state ownership), which wasthe primary character of expropriations, was replaced by 'corporate' ownershipwith no respect for public purpose or just compensation. The recent stints ofcompulsory acquisition of land for SEZ underline the 'reverse-discrimination' ordouble standards perpetrated by the Indian state. The paper attempts to highlightthis paradox in India's property rights regime in the changing global context. Thepaper argues for a constitutional rethinking on right to property, in the postliberalization context, considering the new social and political realities, particularlyfrom the viewpoint of individual private owners whose identity and livelihood areattached to the property.1. INTRODUCTION

The legal and political history of the rise and fall of property rights in India iswell documented. After decades long tussle over state's power of eminentdomain, the right to property stand relegated from a fundamental right to a ARTICLES Babu, Constitutional Right to Property in Changing Timeswww.icl-journal.com Vol 6 2/2012, 214constitutional right. The fundamental right to "acquire, hold and dispose ofproperty" envisaged under Article 19(1)(f) and Article 31 of the Constitution ofIndia was diluted and replaced by Article 300A through an amendment in 1978.1Article 300A provides that the state could expropriate, nationalize or acquireprivate property provided the legislature has established a 'law' for the same.The amendment, in other words, broadened the state's power of compulsoryacquisition of private property for 'public purposes' or for a 'company' and decideon the appropriateness of compensation. Most importantly, the Parliament ensuredimmunity for state's arbitrary exercise of power of 'taking' from judicial reviewand constitutional remedies. The exercise of eminent domain and the constitutionalconsistency of laws sanctioning expropriation were justified, rightly so, in thegeneral social and political context of India. Such measures were felt necessaryfor a newly independent state with the majority of its population underprivileged,the need for agrarian reforms, and in the light of the constitutional mandateembedded in the preamble and the directive principle of state policy.2Since the early 1990s, India embarked on the path of liberalization, grantingmarket access for foreign trade and investment. India entered extensively intobilateral and multilateral agreements and committed itself to several internationalobligations. The obligations under the World Trade Organization (WTO) Agreement3and commitments under investment protection treaties4 necessitated India to alterits laws conducive for providing a safe, secure and attractive legal environmentfor foreign private property, both tangible and intangible.5 Breach of India'scontractual and treaty-based obligations and the compensation thereof are judgednot by the Indian courts, rather by specialized international arbitral tribunalssuch as the International Centre for Settlement of Investment Disputes (ICSID),the WTO Dispute Settlement Body (DSB) or numerous other private international

arbitration institutions. The standard of determining legality of breach and quantumof compensation are based on rules and jurisprudence of which are murkier andtilted towards a 'prompt, adequate and effective compensation' standard set by1 The Constitution (Forty-fourth Amendment) Act 1978 (came into force on 20 June 1979).2 See The Constitution of India 1950, Part IV – Directive Principles of State are Policy, arts 36 to50. The Directive Principles are 'fundamental in the governance of the country.' The SupremeCourt of India has referred to these principles as the 'conscience' of the Constitution, intendedto ensure 'distributive justice' for removal of inequalities and disabilities and to achieve a fairdivision of wealth amongst the members of the society. Pathumma and Others v. State ofKerala and Ors. [1978] 2 SCC 1.3 Agreement Establishing the World Trade Organization 1994 <www.wto.org/english/docs_e/legal_e/04-wto.pdf>. accessed 20 April 2011.4 The common type of investment protection treaties are: Bilateral Investment Treaties (BITs)and FTAs); Preferential Trade and Investment Agreements (PTIA); Free Trade Agreements(FTA) etc. See generally, United Nations Conference on Trade and Development, 'BilateralInvestment Treaties 1995–2006: Trends in Investment Rulemaking' (2007) United Nations,Geneva 1-157 <http://www.unctad.org/en/docs/iteiia20065_en.pdf> accessed 31 April 2011;Prabhash Ranjan, 'Definition of Investment in Bilateral Investment Treaties of South AsianCountries and Regulatory Discretion' (2009) 26(2) J Int Arb 219-243.5 In the case of Entertainment Network India Ltd. (ENIL) v. Super Cassette Industries Ltd.(SCIL) [2005] (Civil Appeal no. 5114) the Supreme Court noted that 'the ownership of any

copyright like ownership of any other property must be considered having regard to theprinciples contained in Article 19(1)(g) read with Article 300A of the Constitution, ....' ARTICLES Babu, Constitutional Right to Property in Changing Timeswww.icl-journal.com Vol 6 2/2012, 215western practices. The manifest shift towards protection of foreign rights andinterests impose considerable limitation on India's policy space and control overforeign capital and property.6 In addition, the trend seems to confer owners offoreign property/interests additional or higher level of protection than thoseprovided under domestic laws. In other words, the international andtransnational obligations claim supremacy over the dictates and priorities ofnational legislations.This scenario presents a serious anomaly. India seems to progressively andselectively modifies its legal regime on property rights to suit the interest offoreign capital and corporate interests, affording higher protection than thoseenjoyed by the citizens under the Indian Constitution. To the extent thatinternational expropriation rules and remedies provide alien investors andintellectual property right-holders with stronger rights and protection than theConstitution and laws of India, they are also likely to provide them with greaterproperty rights.7 The paradox in India's approach towards private property seemsconspicuous in the context of the compulsory land acquisition for Special EconomicZones (SEZ) and other 'developmental' projects. The state appears to extensivelyuse eminent domain to expropriate land to serve private commercial interests,both foreign and domestic. The new policy, couched in the language of'development', appears to disregard 'public purpose' and go beyond the state'sauthority sanctioned by the Constitution in general and Part III and Part IV, inparticular. Time is ripe for a serious introspection, particularly in the changingpolitical and economic context and the underlying constitutional spirit and goals,which redefined constitutional status of property rights since 1970s.This paper invites a debate on individual's property rights in India in thechanging global context. The paper in the first and second part analyses the legalframework for protection of alien investments and intellectual property in hostcountries. In the third section, the paper examines the constitutional frameworkfor the protection of property rights in India from a historic perspective andidentifies the social and political context that led to its demise as a fundamental

right. Part four attempts to highlight the contradictions in the current legalframework for land acquisition and double standards in India's policy towardsprotection affording higher protection foreign investors and intellectual propertyowners vis-à-vis Indian citizens. The paper argues that the current legal andpolicy framework in India guarantees higher protection for alien property, whereasthe status and treatment of Indian citizen's property rights remained static since1978. The paper urges for a constitutional rethinking on the protection of privateproperty rights in India, in the post liberalization context, considering the new6 Chimni notes that 'the TCC seeks the adoption of international economic laws which facilitatethe globalization of production and finance through creating and protecting global propertyrights, codifying the rights of transnational corporations, and limiting the economic autonomyof sovereign states.' BS Chimni, 'Prolegomena to a Class Approach to International Law',(2010) 21 EJIL 57–82, 71. See also B.S. Chimni, 'International Institutions Today: An ImperialState in the Making' (2004) 15 EJIL 1, 2; B.S. Chimni, 'The World Trade Organization, Democracyand Development: A View from the South' (2006) 40 JWT 1.7 Matthew C. Porterfield, 'International Expropriation Rules and Federalism' (2004) 23(1) StanEnvtl L J. 43-62 ARTICLES Babu, Constitutional Right to Property in Changing Timeswww.icl-journal.com Vol 6 2/2012, 216social and political realities, particularly from the viewpoint of citizens whoseidentity and livelihood are attached to the property.2. EXPROPRIATION AND FOREIGN INVESTMENT PROTECTIONThe recent years have seen an explosion of bilateral agreements for investmentprotection between states. Known commonly as Bilateral Investment Treaties(BITs), Free Trade Agreements (FTAs) and Regional Economic IntegrationAgreements, the declared intend of these agreements is to create such favourableconditions which could foster greater investments by the private investors fromdeveloped countries in the territory of the developing countries. As per therecent estimate there are more than 2800 such agreements currently in force.8

For instance, India has concluded BITs with 68 countries.9 Bulk of these agreementsis concluded between developed and developing countries.10 Devised to promoteone-way flow of capital, the agreements cater to developed countries' attempt toprotect their foreign investments and insulate the same from the host countrylegal process.11Often seen as a response against expropriations, BITs guarantee 'minimumstandard' of protection for foreign investments in the territory of developingcountries, i.e., not less than similar protection afforded to their own nationals.12In principle, the foreign owners are given 'the protection accorded to private rightsof nationals, provided that this protection involves the provision of compensationfor any taking.'13 The agreement ensures foreign investments fair and equitabletreatment, full and constant legal security, and 'prompt, adequate, and effective'compensation for expropriation.14 In addition, BITs 'consciously seek to approximate8 There are 2600 BITs and 250 other trade agreements with investment provisions. SeeUNCTAD, 'Recent Developments in International Investment Agreements (2008 – June 2009)'(2009) 3 IIAM (UNCTAD/WEB/DIAE/IA/2009/8) <http://www.unctad.org/en/docs/webdiaeia20098_en.pdf> accessed 24 March 2011. See also Kenneth J. Vandevelde, 'A Brief History ofInternational Investment Agreements' in Karl P. Sauvant and Lisa E. Sachs, The Effect ofTreaties on Foreign Direct Investment: Bilateral Investment Treaties, Double Taxation Treaties,and Investment Flow (OUP, New York 2009) 3.9 According to UNCTAD, the total number of Bilateral Investment Treaties concluded by India (ason 1 June 2010) <http://www.unctad.org/sections/dite_pcbb/docs/bits_india.pdf> accessed18 March 2011.10 40 percent of BITs are concluded between developed and developing countries. UNCTAD, World

Investment Report (2007) 17. See also Andrew T. Guzmán 'Explaining the Popularity ofBilateral Investment Treaties: Why LDCs Sign Treaties That Hurt Them' (1989) JeanMonnetPaper (26 August 1997) <http://centers.law.nyu.edu/jeanmonnet/papers/97/97-12.html>accessed 12 December 2011.11 Vandevelde (n 8) 15.12 ibid 13. Foreign investment has been defined 'the transfer of tangible and intangible assetsfrom one country into another for the purpose of use in that country to generate wealth underthe total or partial control of the owner of the assets' in M. Sornarajah, The International Lawon Foreign Investment (Cambridge University Press, Cambridge 1994) 4.13 Ian Brownlie, Principles of Public International Law (4th ed., OUP, Oxford 1990) 532.14 Nearly all of the 91 BITs concluded by UK the standard of compensation payable to a foreigninvestor whose property has been expropriated or nationalized is to be judged against theclassic Hull formula. The UK-India BITs (1995), Art 5 uses the term 'fair and equitable ARTICLES Babu, Constitutional Right to Property in Changing Timeswww.icl-journal.com Vol 6 2/2012, 217in the developing, capital-importing state the minimal legal, administrative, andregulatory framework that fosters and sustains investment in industrialized, capitalexportingstates.'15 In other words, for capital-exporting states BITs offer theirinvestors vital insurance against expropriation or other arbitrary treatment.Part of this trend is the proliferation of investment guarantee agencies andmultilateral dispute resolution mechanisms to serve and support foreign capitaland investment. The most popular among them are the Multilateral InvestmentGuarantee Agency (MIGA)16 and the Overseas Private Investment Corporation(OPIC) of the US Government, which guarantee protection against political risksin developing countries. The function is supplemented by multiple institutions likeInternational Centre for Settlement of Investment Disputes (ICSID) established

with a view to settle disputes between the investor and the host state17 and otherprivate international arbitration institutions, such as the American ArbitrationAssociation (AAA), International Chamber of Commerce (ICC), Paris, LondonCourt of Arbitration (LCA).18 The BITs often include provisions granting jurisdictionto one of these institutions the proceedings of which are usually secret. The 1958New York Convention ensures smooth enforcement of arbitral awards usingdomestic legal system.19Any claim or breach of contractual or treaty obligations shall have recourseto the aforementioned international tribunals, bypassing the national judicialprocess.20 In other words, the investor could initiate the compulsory disputesettlement process agreed under investor-state contract. The internationaltribunals shall determine the 'applicable law' based on which the lawfulness ofexpropriation and compensation thereof shall be determined. The investor couldalso advance a claim for compensation against investment guarantee agencies,compensation' amounting to 'genuine value'. See N. Jansen Calamita, 'The British BankNationalizations: An International Law Perspective' (2009) 58(1) ICLQ 119-149 at 125.15 Robert D. Sloane and W. Michael Reisman, 'Indirect Expropriation and its Valuation in the BITGeneration' (2004) 74 BYIL 115, 118; also in Boston Univ. School of Law Working Paper No.06-43, <http://ssrn.com/abstract=943430> accessed 23 September 2011.16 MIGA another wing of the World Bank provides insurance for companies investing in itsdeveloping member countries in the form of guarantees against political risk. Since itsinception in 1988, MIGA has issued guarantees worth over $21 billion for over 600 projects in100 developing countries <http://www.miga.org/whoweare/index.cfm> accessed 22 February2012.17 ICSID is an arbitration forum established in 1966 to facilitate the settlement of disputes

between governments and foreign investors in the hope that such a facility would help fostergreater international investment flows.18 Gloria Miccoili, 'International Commercial Arbitrartion' <http://www.asil.org/erg/?page=arb>accessed 1 February 2013.19 Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958 (New YorkConvention) (entered into force on 7 June 1959). As on date, including India there are 146parties to the Convention. The Convention entered into force on October 11, 1960. SeeUNCTAD, 'List of Contracting States and other Signatories of the United Nations Convention of1958 on the Recognition and Enforcement of Foreign Arbitral Awards' (UNCITRAL 2009)<http://www.uncitral.org> accessed 30 November 2009.20 Government of India, 'Bilateral Investment Promotion and Protection Agreement (BIPA)'Business.Gov.in, Business Knowledge Recourse online <http://business.gov.in/doing_business/bipa.php> accessed 19 March 2011. ARTICLES Babu, Constitutional Right to Property in Changing Timeswww.icl-journal.com Vol 6 2/2012, 218which in turn could initiate recovery proceedings against the host state under thelegal framework provided by BITs. The BITs act as a protective umbrellainsulating foreign investments and contracts from host governments' actions.21In other words, the investment protection treaties not only limit the role of hoststate's right in regulation of foreign investment, in particular, the exercise of thepower of eminent domain but also deny the legitimate role of the national judicialsystem.22 The belief that foreign investment aid economic development hasprompted most states to be more accommodating in terms of regulatoryconstrains towards foreign investments.23 In fact, since the 1970s developingeconomies have shifted from their approach from rigorous regulations to one of'more flexible and pragmatic approach aimed at facilitating and speeding upforeign investment inflows.'242.1 Conditions for lawful expropriation

The right of a state to expropriate property is well entrenched in internationallaw.25 However, views are divergent over the scope and limit of such a power andquantum of compensation to be paid in such eventuality.26 Considered as acorollary of sovereign power, expropriation may be considered lawful or unlawfuldepending on the context and situation. Expropriation is lawful or legitimate onlyif the host state acts on a non-discriminatory basis, for public purpose and withadequate compensation.27 For instance, the World Bank Guidelines on foreigninvestment28 and the United Nations General Assembly (UNGA) resolutions2921 Sloane & Reisman (n 15).22 B. S. Chimni, 'Third World Approaches to International Law: a Manifesto' (2006) 8 Intl. Com. LRev. 3 at 12.23 Sornarajah (n 12) 91. See also Michael S. Minor, 'The Demise of Expropriation as anInstrument of LDC Policy, 1980-92' (1994) 25(1) JIBS 177-188.24 Report of the United Nations Centre on Transnational Corporations, Third Survey p. 57 inSornarajah (n 12) 91.25 G.C. Christie, 'What Constitutes a Taking Under International Law' (1962) 38 BYIL 307. Seealso Certain German Interests in Polish Upper Silesia (Germany v Poland) [1926] PCIJ RepSeries A. No. 7 and Norwegian Shipowners Claims (Norway v U.S.) (1922) I RIAA 307. Seealso 'International law permits [a state] to expropriate foreign-owned property within itsterritory for a public purpose and against the payment of adequate and effectivecompensation'. Compañia del Desarrollo de Santa Elena,S.A. v Costa Rica [2000] ICSID CaseNo. ARB/96/I.26 US v Sabbatino [1964] 374 US 398. see Ibrahim Shihata, MIGA and Foreign Investment(Dordrecht, Boston, Lancaster 1988) 234.27 Sornarajah (n 12) 277. See also Lucy Reed, Jan Paulsson, Nigel Blacka, Guide to ICSIDArbitration (Kluwer Law International 2004) 53.

28 World Bank Guidelines on Treatment of Foreign Direct Investment 1992 <http://italaw.com/documents/WorldBank.pdf> accessed 20 November 2011.29 'Nationalization, expropriation or requisitioning shall be based on grounds or reasons of publicutility, security or the national interest which are recognized as overriding purely individual orprivate interests, both domestic and foreign. In such cases the owner shall be paid appropriatecompensation, in accordance with rules in force in the State taking such measures in theexercise of its sovereignty and in accordance with international law.' Louis Henkin, Richard ARTICLES Babu, Constitutional Right to Property in Changing Timeswww.icl-journal.com Vol 6 2/2012, 219stresses on the public purpose, non-discrimination nature of lawful expropriation,coupled with compensation for a lawful taking.30 A similar set of criteria needs tobe fulfilled in the North American Free Trade Agreement (NAFTA)31 to makeexpropriation lawful: (a) for a public purpose; (b) on a non-discriminatory basis;(c) in accordance with the due process of law; and (d) on payment ofcompensation.32Such conditions are invariably found in most investment protection treatiesfor determining the lawfulness of expropriation by host states. Often investmenttreaty provisions includes an 'umbrella clauses' which act as a broad legalframework for protection of all foreign investors and interests (including investment,IPRs) from unwanted host state interventions.33 The 'umbrella clause', it hasbeen said, could elevate any breach of simple state-investor contract to thestatus of a breach of international law obligation,34 i.e., 'a violation of such acontract becomes a violation of the BIT.'35The 'treaties may … elevate contractualundertakings into international law obligations, by stipulating that breach by onestate of a contract with a private party from the other state will also constitute abreach of the treaty between the two States.'36 The umbrella provision, in otherPugh, Oscar Schachter and Hans Smit, International Law (2nd ed., St. Paul, Minnesota 1987)1111.

30 Guideline VI.1, The World Bank Guidelines on Legal Treatment of Foreign Investment<http://italaw.com/documents/WorldBank.pdf> accessed 22 January 2012.31 NAFTA Art. 1110 (1).32 NAFTA Article 1110 (1), subparagraph 2- 6, provides that compensation must: be 'equivalentto the fair market value of the expropriated investment immediately before the expropriationtook place;' be paid without delay; be fully realizable; include interest; and be freely transferable<http://www.nafta-sec-alena.org> accessed 1 May 2011.33 For as standard umbrella clause, see Article 13 of Switzerland-India BIT 1997 which provides:'Each Contracting Party shall observe any obligation it may have entered into with regard to aninvestment of an investor of the other Contracting Party. …' Similar language in an umbrellaclause, see the Germany-India BIT 1995 and Denmark-India BIT 1995. See Katia Yannaca-Small, 'Interpretation of the Umbrella Clause in Investment Agreements' (2006) OECD WorkingPapers on International Investment No. 2006/3, 11 <http://www.oecd.org/dataoecd/3/20/37579220.pdf> accessed 22 March 2011.34 See Prosper Weil 'Problèmes relatifs aux contrats passés entre un Etat et un particulier' (1969-III) 129 Recueil des Cours 132; F.A. Mann 'British Treaties for the Promotion and Protection ofInvestments' (1981) 52 British Yearbook of International Law 241 at 246 in OECD, InternationalInvestment Law: Understanding Concepts and Tracking Innovations (OECD 2008) 107. Seealso Alan Redfern, Law and Practice of International Commercial Arbitration (Sweet & Maxwell2005) 498.35 C. Schreuer, 'Travelling the BIT Route: of Waiting Periods, Umbrella clauses and Forks in The

Road' (2004) JWI 231-256. See also R. Dolzer and M. Stevens Bilateral Investment Treaties(Kluwer Law, 1995) 81-82. See Tribunal decisions in Sempra Energy International v. Republicof Argentina (Decision on Objections to Jurisdiction) [2005] ICSID Case No ARB/02/16, para100-101; Noble Ventures, Inc v. Romania [2005] ICSID Case No ARB/01/11; LG&E EnergyCorp., LG&E Capital Corp., LG&E International Inc. v. the Argentine Republic (Decision onLiability) [2006] ICSID Case No ARB/02/1, paras.169-175.36 I. Shihata, 'Applicable Law in International Arbitration: Specific Aspects in Case of theInvolvement of State Parties' in I. Shihata and J.D. Wolfensohn (eds.), The World Bank in aChanging World: Selected Essays and Lectures, Vol. II (Brill Academic Publishers, Leiden 1995)601. ARTICLES Babu, Constitutional Right to Property in Changing Timeswww.icl-journal.com Vol 6 2/2012, 220words, may have the effect of suitability altering the national legal regime andmake private contracts subject to the rules of international law.37Most recent investment protection treaties afford protection beyond the outrightor direct expropriation of foreign property. It also covers other circumstanceswhere certain acts of states could be construed as meeting the conditions ofexpropriation. In other words, an act of state which has the effect of renderingproperty rights so useless that it will be deemed to have expropriated wouldcome under this category.38 These practices are often known as creeping orindirect expropriation.39 The lack of clarity in defining indirect expropriation hasoften imposed additional onus on host government's regulatory control over foreigninvestment.40 Explaining the scenario, the tribunal in Phillips Petroleum Co. v.Iran held that a deprivation of property may be effected by 'a series of concreteactions rather than by any particular formal decree' may as well constituteexpropriation. 41NAFTA, for instance, bring within its scope not only direct takings, but indirectexpropriations and measure tantamount to expropriation.42 The NAFTA Tribunal

in Metalclad Corp vs. Mexico noted that:Expropriation under NAFTA includes not only open, deliberate and acknowledged takingof property, such as outright seizure or formal or obligatory transfer of title in favour ofthe host State but also covert or incidental interference with the use of property whichhas the effect of depriving the owner, in whole or in significant part, of the use ofreasonably to the expected economic benefit of property, even if not necessarily to theobvious benefit of the host State.43Similarly, the ICSID panel in Compañia del Desarrollo de Santa Elena, S.A. v.Costa Rica emphasized the 'ample authority for the proposition that property has37 UNCTAD, Bilateral Investment Treaties in the mid-1990s (UN, New York 1998) 56.38 Sloane & Reisman (n 15) 119-120. The underlying premise of this argument is that ownershipinvolves a bundle of rights and the curtailment of any part of the bundle of rights amount toexpropriation under law. Sornarajah (n 12) 294. However, does not usual means nondiscriminatoryregulatory measures for the common good of the society.39 The term 'creeping expropriation' is defined as state action which seeks 'to achieve the sameresult by taxation and regulatory measures designed to make continued operation of a projectuneconomical so that it is abandoned', Restatement (Third) of the Foreign Relations Law of theUnited States, 712(1) (1986). See Bryan W. Blades, 'The Exhausting Question of LocalRemedies: Expropriation Under NAFTA Chapter 11' (2006) 8 Or. Rev. Int'l L. 31. The US's FTAwith many countries provides explicit criteria to determine indirect expropriation.40 See generally, Jan Paulsson, 'Indirect Expropriation: Is the Right to Regulate at Risk?' (2006)3(2) TDM; L. Yves and Stephen L. Drymer, 'Indirect Expropriation in the Law of International

Investment: I know it when I see it, or Caveat Investor' (2004) 19(1) FILJ 293-327; VaughanLowe, 'Regulation or Expropriation?' (2002) 55 CLP 447.41 Phillips Petroleum Co. v Iran, (1989) 21 Iran-US CTR 79 at p. 115-16, in Sloane & Reisman (n15) 120.42 Fortier, L. Yves, 'Caveat Investor: The Meaning of 'expropriation' and the protection affordedinvestors under NAFTA' 20(1) News from ICSID / International Centre for Settlement ofInvestment Disputes, 10 in Ibrahim Shihata, MIGA and Foreign Investment (Martinus NijhoffPublishers, Dordrecht 1988) 242.43 Metalclad Corp vs. Mexico [2000] NAFTA ILM 408. See also TECMED vs. Mexico [2003] ICSIDCase no. ARB (AF)/00/2. ARTICLES Babu, Constitutional Right to Property in Changing Timeswww.icl-journal.com Vol 6 2/2012, 221been expropriated when the effect of the measures taken by the state has beento deprive the owner of title, possession or access to the benefit and economicuse of his property.' 44The Indian Government's involvement with the controversial Dabhol powerplant investment has been categorized as a case of indirect expropriation.Several arbitration proceedings were initiated by the US and European investorsagainst India, in relation to alleged losses arising out of their financing of thefailed Dabhol power plant project.45 The Indian government's action, specificallythe use of the Indian judicial system to contravene contractual requirements wasconsidered to satisfy OPIC's definition of total expropriation.46 The Governmentsof India and the US have successfully negotiated a settlement regarding theseclaims. India settled these claims out of public glare fearing negative fallout onits image as an investment friendly destination for foreign capital. In short, theconcept of indirect expropriation or creeping expropriation has become anestablished feature of international law on state responsibility towards aliens.472.2 Standard of compensation for expropriationOscar Schachter notes that "apart from the use of force, no subject ofinternational law seems to have aroused as much debate – and often strongfeelings – as the question of the standard for payment of compensation when

foreign property is expropriated."48 What must be the appropriate level ofcompensation for expropriation that the host state should pay? What rules andstandards would apply for determining compensation? State practice andscholarship are divided on the issue and there exist no universally acceptedprinciple. The developed countries have always maintained the official position of"prompt, adequate and effective" compensation tantamount to 'full' compensation.4944 Compañia del Desarrollo de Santa Elena, S.A. v Costa Rica [2000] ICSID Case No. ARB/96/I,439 ILM 1317, 1330, para. 77 in Sloane & Reisman (n 15) 120.45 Claims were made by GE, Bechtel, and a string of foreign banks involved in the financing ofthat project. See 'India faces 6 new investment treaty claims in relation to Dabhol investment'INVEST-SD News Bulletin (November 14, 2003) and 'Bechtel and GE mount billion dollarinvestment treaty claim against India' INVEST-SD News Bulletin (September 26, 2003).46 Preeti Kundra 'Looking Beyond the Dabhol Debacle: Examining its Causes and Understandingits Lessons' (2008) 41 VandJTransnatl 907 at 935. The Export-Import Bank and the OverseasPrivate Investment Corporation (OPIC) were critical sources of funding and loan guarantees.An AAA tribunal ruled in September 2003 that the Government of India was liable for theexpropriation of investments made by GE and Bechtel in the failed Dabhol project. Followingthis ruling, OPIC settled two insurance claims lodged by GE and Bechtel, as well as separateclaims lodged by Enron (the majority investor in the project) and Bank of America (whichfinanced part of the investment). After paying out these claims, OPIC turned its sights torecovering the sums from the Government of India.47 Sloane & Reisman (n 15) 122.48 Oscar Schachter, 'Compensation for Expropriation' (1984) 78 AJIL 121.

49 'Prompt' means that the compensation must be paid at or before the time of taking or thatprovision has been made for its subsequent determination, with interest at compensatory ratesfrom the time of taking. 'Effective' means that the payment must be made in realizable ARTICLES Babu, Constitutional Right to Property in Changing Timeswww.icl-journal.com Vol 6 2/2012, 222Known popularly as the "Hull formula," it was proposed by the US Secretary ofState, Cordell Hull to the Mexican Government in 1938.50 The developing countriesofficial position has ranged from one extreme of no compensation (for whichthere not much support),51 to the generally accepted view that 'appropriate'compensation must be paid.52The 1962 UNGA resolution on Permanent Sovereignty over Natural Resourcesstates that '…. the owner shall be paid appropriate compensation, in accordancewith rules in force in the State taking such measures in the exercise of itssovereignty and in accordance with international law.'53 Since then, the term'appropriate' compensation has come to mean a standard that is lower than thetraditional Hull Rule. 54 A later UNGA resolution in 1975, however, stated that:nationalize, expropriate or transfer ownership of foreign property in which case appropriatecompensation should be paid by the State adopting such measures, taking into account its relevantlaws and regulations and all circumstances that the State considers pertinent. In any case wherethe question of compensation gives rise to a controversy, it shall be settled under the domestic lawof the nationalizing State and by its tribunals....55exportable form; payment in nonconvertible currency, unmarketable bonds is not effective.'Adequate' means that the owner must be compensated for the full value of the property ofwhich he has been deprived, which in the case of an ongoing business will normally be goingconcernvalue.' Bruce M. Clagett, 'Present State of the International Law of Compensation for

Expropriated Property and Repudiated State Contracts' in The Southwestern Legal Foundation(ed.), Private Investors Abroad, (Dallas 1989) 12-13. See also C. F. Amerasinghe, 'Issues ofCompensation for the Taking of Alien Property in the Light of Recent Cases and Practice' (1992)41 ICLQ 23; Orrego Vicufia, 'The International Regulation of Valuation Standards andProcesses: A Reexamination of Third World Perspectives' in Richard B. Lillich (ed.), The Valuationof Nationalized Property in International Law, vol. 3 (University Press of Virginia 1975) 131-148.50 Christoph Schreuer, The ICSID Convention: A Commentary (Cambridge University Press2001).51 'Calvo doctrine' advocated that the intervention of the states of foreign nationals in disputesresulting from the taking of property by their host states was a violation of the territorialjurisdiction of the latter states. This position has been traditionally maintained by LatinAmerican countries and is generally reflected in the UN Charter of Economic Rights and Dutiesof States. See Shihata (n 42) 23452 Sornarajah (n 12) 208-209. The draft TNC code of conduct and the AALCC Model 'B' BITs refersto the formula of 'appropriate' compensation. Peter Muchlinski, 'The Framework for theInvestment Protection: The content of BITs' in Karl P. Sauvant and Lisa E. Sachs, The Effect ofTreaties on Foreign Direct Investment: Bilateral Investment Treaties, Double Taxation Treaties,and Investment Flow (Oxford University Press New York 2009) 62.53 UNGA Res 1803 (XVII) on Permanent Sovereignty over Natural Resources (PSNR) 1962

adopted by 87 votes to two, with twelve abstentions an the part of ten Communist states andGhana and Burma)54 Andrew T. Guzmán, 'Explaining the Popularity of Bilateral Investment Treaties: Why LDCs SignTreaties That Hurt' (1997) The Jean Monnet paper 26 August 1997 <http://centers.law.nyu.edu/jeanmonnet/papers/97/97-12.html> accessed 3 September 2012.55 Emphasis added. UNGA Res 3281 on the Charter of Economic Rights and Duties (UN DocA/9631, 1974), reprinted in 14 ILM 251 (1975) at art. 2(2)(c). Adopted by a majority of 120states over the objection of 6 industrialized countries (and with the abstention of 10 others).See Shihata (n 42) 238. See also UNGA Res 3201 on New International Economic Order (UNDoc A/9559, 1974). ARTICLES Babu, Constitutional Right to Property in Changing Timeswww.icl-journal.com Vol 6 2/2012, 223The resolutions reflect the rejection of Hall formula by the majority of statesas binding customary law and place the host country government in full control.56Shihata, however, does not rule out Hull formula altogether, but notes that this'should not exclude the possibility that in certain situations full compensationwith the three characteristics described in the Hull letter could be the mostappropriate compensation to be imposed by a Court of law under the circumstancesof a specific case.'57 In Schachter words, '… when a dispute over compensationfor a particular taking reaches a court or arbitral tribunal, the property owner isquite likely to get fair market value and a satisfactory award even though themagic words of the Hull formula are not invoked.'58In the context of BITs, the behavior of the developing countries is in starkcontrast from their official position. Although developing countries as a grouphave been a persistent objector to the Hull formula, they have signed hundredsof BITs that incorporate obligations equivalent to the Hull formula or much greaterprotection. The approach was that of accepting Hull formula or higher standards

for compensation, nullifying the independence and control that developing countriesfought hard to protect.59 Though, there is also an ongoing debate on the role ofBITs in formation of customary international law, the current trend has influencedthe development of a jurisprudence based solely on BITs practiced by internationalcourts and arbitration tribunals.The evidence from practices of international courts and arbitration tribunalsshow a trend predominately towards recognizing 'full' compensation standard. Inthe famous Chorzow Factory case, the ICJ laid down a duty on the expropriatingstate to effect restitution in kind or, if this is impossible, payment of a sumcorresponding to the value which restitution in kind would bear together with theaward."60 This case was cited as authority for claims ranging from full compensationto just compensation.61 However, Charzow was a case of "unlawful" expropriationand the Court suggested that a "lawful" expropriation require 'payment of faircompensation'62 Restitutio in integrum could be the basis for calculating damages56 'At the domestic level, the Hull rule is today a 'maximum standard' which is not fully observedin the major capital-exporting countries.' Dolzer, 'New Foundations of the Law of Expropriationof Alien Property' (1981) 75 AJIL 553 at 569.57 Shihata was noting the view adopted by the U.S. Court of Appeals for the Second Circuit inBanco Nacional de Cuba v. Chase Manhattan Bank, 658 F2d 875, 892 (2d Cir. 1981). Afterdeclaring that the Standard of 'appropriate compensation' would 'come closest to reflectingwhat international law required,' the Court added that an "appropriate compensation requirementwould not exclude the possibility that in some cases full compensation would be appropriate.'Shihata (n 42) 238.58 Oscar Schachter, 'Compensation cases – Leading and Misleading' (1985) 79 AJIL 420, 421.

59 Sornarajah explains the behaviors thus: '[K]nowing the confused state of the law (oncompensation), [countries] entered into such treaties so that they could clarify the rules thatthey would apply in case of any disputes which may arise between them.' See Sornarajah (n12) 233.60 Case Concerning the Factory at Chorzow (Ger. v. Pol.) (Merits) [1928] PCIJ (ser. A) No. 17, 3at 47. Such payment should cover 'the just price of what was expropriated' and 'the value ofthe undertaking at the moment of dispossession, plus interest to the day of payment.'61 Sornarajah (n 12) 379.62 Case Concerning the Factory at Chorzow (n 60) 46 ARTICLES Babu, Constitutional Right to Property in Changing Timeswww.icl-journal.com Vol 6 2/2012, 224in case of unlawful expropriation.63 The Court, in contrast, in a similar instancealso observed that full compensation for expropriation could be made a 'prerequisiteof international cooperation in the economic and financial fields.'64The obvious trend among the international arbitration tribunals is to awardfull compensation.65 For instance, the Iran-United States Claims Tribunal, inparticular, has stated on several occasions that under customary international law'full' compensation should be awarded.66 Similar trend is evident from the awardsof ICSID arbitrations. In AGIP v. Congo67 and Benvenuti et Bonfant v. Cango68the ICSID held Congo to indemnify for loss as well as future profits lost becauseof expropriation.69 One of the ICSID arbitrators in Mihaly International Corporationvs. Sri Lanka arbitration, went to the extent of observing that pre-investmentexpenditure must also to be included in the 'investment' for compensation,notwithstanding the fact the proposed investment project failed to materializeand was ultimately abandoned.70 The private arbitration tribunals have consistentlyfavored a standard that supports investor's interest.The revival of 'prompt, adequate and effective' standard could be found in the

Energy Charter Treaty 1994. Article 13 of the Charter contains a provision akin tothat found in NAFTA on expropriation. However, the Charter departs in thecontext of compensation by stating that expropriation must be 'accompanied bythe payment of prompt, adequate and effective compensation.'71 Similar provisioncould be found in the World Bank Guidelines on Legal Treatment of ForeignInvestment 1992,72 which was to serve as an important step in the progressivedevelopment of international practice in investment area.73 The Guideline laysdown that 'compensation for a specific investment taken by the State will … be63 Sornarajah (n 12) 408.64 Anglo – American Oil Company [1952] ICJ Report 93 at 151.65 Delgoa Bay case – the award included future profits also. See also Schufeldt claims,Sornarajah (n 12) 381.66 American International Group, Inc. and American Life Insurance Co. v. Islamic Republic of Iranand Central Insurance of Iran [1984] 23 ILM 1. See Shihata (n 42) 241.67 [1982] 21 ILM 726.68 [1982)] 21 ILM 740.69 Sornarajah (n 12) 384.70 In the ICSID Arbitration in Mihaly International Corporation vs. The Government of Sri Lanka[2002] Case no. ARB/00/2, one of the arbitrator observed that 'the ICSID should be availableto those who are encouraged to embark on large scale expensive private foreign investmentinfrastructure projects.' A Rohan Perera, 'Current Trends in International InvestmentAgreements – New Legal Challenges for Developing Countries' in AALCO, CommemorativeEssays in International Law (New Delhi 2006) 116 <http://www.aalco.int/publicationsnew/index.htm> accessed 18 March 2011.71 Energy Charter Treaty 1994, art. 13 (d). See also Thomas W. Waelde, The Energy CharterTreaty: an east-west gateway for investment and trade (Kluwer Law International 1996).

72 Almost all countries present in the meeting of the Development Committee 1992 supportedexplicitly the adoption of the Guideline. See Ibrahim Shihata, Legal Treatment of ForeignInvestment: The World Bank guidelines (Martinus Nijhoff Publishers 2003) 143. Guidelines onthe Treatment of Foreign Direct Investment has been listed as 'binding instrument' in theofficial website of the WTO. See <http://www.wto.org/english/news_e/pres96_e/pr057_e.htm> accessed 24 March 2011.73 Development Committee, Communiqué of the Development Committee, in Presentations to the44th Meeting of the Development Committee 108 (1992). See Shihata (n 72). ARTICLES Babu, Constitutional Right to Property in Changing Timeswww.icl-journal.com Vol 6 2/2012, 225deemed 'appropriate' if it is adequate, effective and prompt.'74 Compensation willbe deemed 'adequate' if it is based on the 'fair market value'75 of the taken assetas such value is determined immediately before the time at which the takingoccurred or the decision to take the asset became publicly known. Determinationof the 'fair market value' will be acceptable if conducted according to a methodagreed by the state and the foreign investor or by a tribunal or another bodydesignated by the parties. Compensation shall include interest and has to bemade effectively, i.e. in freely convertible currency based on the market rate ofexchange existing for that currency on the valuation date or in any othercurrency accepted by the investor, and prompt, i.e. without undue delay or, incase of established foreign exchange stringencies, by payment in installmentswithin a period which will be as short as possible not exceeding five years fromthe time of the taking.In short, a resurgence of Hull formula both at the multilateral and bilaterallevel is evident. The provisions in Energy Charter and the World Bank Guidelinesreiterate the growing acceptance of Hull formula in dealing with expropriation offoreign property.76 Indeed, the host states committing to such internationalstandards, has the effect of guaranteeing higher level of protection andcompensation for alien rights and interests. The host states exercise of eminentdomain must meet international standard followed by full compensation. Any

inconsistent practice would result in expropriation unlawful, resulting in higherthan full compulsion. On the contrary, use of eminent domain against Indiancitizen's property seldom needs to meet these conditions. Indeed, the IndianConstitution allows unrestricted power of eminent domain and does not distinguishbetween alien and citizen's property. However, the Government of India seems topursue two distinct policies in terms of property rights, one sanctioned by itsinternational commitments and the other of total arbitrariness under the LandAcquisition Act and similar legislations. At the international stage, India continuesto espouse 'appropriate' compensation for expropriation determined by the hoststate. Quite the reverse, in practice, India by accepting BITs and FTAs obligationshave accepted 'full' compensation standard.3. PROTECTION OF INTELLECTUAL PROPERTY RIGHTSAnother area where property rights have witnessed considerable intensificationon a global scale is in 'intellectual property'.77 The World Intellectual Property74 Expropriation and unilateral alterations or termination of contracts, Guideline IV.2, The WorldBank Guidelines on Legal Treatment of Foreign Investment. See also World Bank GuidelinesIV.7 and 8.75 World Bank Guideline IV.4. Such compensation shall amount to the fair market value of theInvestment expropriated with interest at a commercial rate established on a market basis fromthe date of Expropriation until the date of payment.76 B.S. Chimni, 'Prolegomena to a Class Approach to International Law' (2010) 21 EJIL 57–82 at 71.77 For the purposes of TRIPs Agreement, the term 'intellectual property' refers to Copyright andRelated Rights, Trademarks, Geographical Indications, Industrial Designs, Patents, LayoutARTICLES Babu, Constitutional Right to Property in Changing Timeswww.icl-journal.com Vol 6 2/2012, 226Organization (WIPO) provides for a comprehensive regime for IP protection. Thereal thrust, however, came with the WTO Agreement on Trade Related Aspects ofIntellectual Property Rights 1994 (TRIPs).78 The TRIPs Agreement guarantee'minimum standard' of protection for all intellectual property and mandates a

remarkably efficient protection and enforcement regime within national jurisdictions.While the states are free to offer higher protection, the 'minimum standard' initself was much higher level than the pre-TRIPs regime in most developingcountries.79 The TRIPs goes beyond its provisions and mandates compliance withother intellectual property conventions.80 Moreover, unlike WIPO conventions, thepresence of a strong WTO DSU makes implementation and enforcement of TRIPseffective.81International protection and enforcement of IPRs per se have been the majorconcern of developed countries whose nationals/multinational corporations (MNCs)own majority of the registered IP. It was their concern over the global dimensionof misappropriation of IP that prompted developed countries to include TRIPs inthe negotiating agenda and successfully push through the Agreement on TRIPsduring the Uruguay Round of trade negotiations.82 The TRIPs Agreement tends tofavour IP owners, against any state intervention. This is more obvious in thecontext of 'patents' the protection of which has a wide socio-economic dimension.The legal regime under TRIPs Agreement significantly expands the protection forpatent holder's rights. For instance, TRIPs confer on the patent owner exclusiverights,83 and prevent third parties from making, using, selling, or importing of thepatented products.84 On the other hand, the responsibilities of the patent holderand the regulatory control of the host governments have been considerablywatered down.85 The Government's power to tamper with the 'exclusive rights' ofDesigns of Integrated Circuits, Protection of Undisclosed Information. The Agreement on TradeRelated Intellectual Property Rights 1994 (The TRIPs Agreement).78 The TRIPs Agreement is Annex 1C of the Marrakesh Agreement Establishing the World TradeOrganization, (signed in Marrakesh, Morocco on 15 April 1994).79 See Rajeev Dhawan, Lindsay Harris & Gopal Jain, 'Whose Interest? Independent India's PatentLaw and Policy' (1990) 32 JILI 429; Rajeev Dhavan et.al., 'Power without Responsibility: On

Aspects of the Indian Patents Legislation' (1991) 33 JILI 1. Rajeev Dhavan and Maya Prabh,'Patent Monopolies and Free Trade: Basic Contradiction in Dunkal Draft' (1995) 37 JILI 194.Sudip Chaudhuri, 'TRIPS Agreement and the Amendment of Patents Act in India' (2002)37(32) EPW 3354-3360.80 In respect of Parts II, III and IV of this Agreement, Members shall comply with Articles 1through 12, and Article 19, of the Paris Convention (1967). Article 2, TRIPS Agreement.Members shall comply with Articles 1 through 21 of the Berne Convention (1971) and theAppendix thereto. Article 9, TRIPs Agreement.81 The universal membership enjoyed by WTO makes its impact global. There are 153 Membersas on 1 May 2011 <http://www.wto.org/english/thewto_e/whatis_e/tif_e/org6_e.htm> accessedon 4 April 2011.82 V.G. Hedge, 'Intellectual Property Rights and Asian-African States' in AALCO, CommemorativeEssays in International Law (New Delhi 2006) 133.83 TRIPS Agreement, art. 27.1.84 TRIPS Agreement, art. 26.85 Biswajit Dhar and Niranjan Rao, 'Dunkel Draft on TRIPS: Complete Denial of DevelopingCountries Interest' (1992) 27 EPW 275. Sudip Chaudhuri, 'Dunkel Draft on Drug Patents:Background and Implications' (1993) 28(36) EPW 1861-1865. ARTICLES Babu, Constitutional Right to Property in Changing Timeswww.icl-journal.com Vol 6 2/2012, 227the owner is restricted to exceptional circumstances, 'provided that such exceptionsdo not unreasonably conflict with a normal exploitation of the patent and do notunreasonably prejudice the legitimate interests of the patent owner….'86The flexibility known as 'compulsory licensing' i.e., unauthorized use of the IPis limited to exceptional circumstance, permitted under stringent conditions. The

scope and duration of compulsory licensing must be strictly limited to the purposefor which such unauthorized use has been authorized.87 Any deviation wouldamount to breach of TRIPs provisions. Further, in all circumstances, suchcompulsory licensing shall be followed by adequate remuneration to the IP holder.For instance, under the Indian Patent Act when the government allowscompulsory license to make, use or sell the patented technology without theconsent of the patent owner – the patent owner shall continue to have rightsover the patent, including a right to be paid royalty for authorized use.88 TheTRIPs Agreement does not define 'adequate remuneration,' however, determiningadequate remuneration in each case, shall 'taking into account the economicvalue of the authorization.'89 In India, such amount shall be determined by theauthorities, keeping in view the nature of invention, its utility, expenses incurredin maintaining patent grant, etc.90 These requirements can only be waived incase of national emergency or other circumstances of extreme urgency or in casesof public non-commercial use.91 Compulsory licensing, in that sense, is differentfrom expropriation were the ownership in the property shifts.The legitimacy of granting compulsory licencing or the continued existence ofcircumstances, or the adequacy of remuneration, shall be subjected to judicialreview or other independent review by a distinct higher authority, with anauthority to order prompt and effective provisional measures.92 The TRIPsAgreement also mandates that any decisions on the merit of the case shall bebased on reason.93 The procedures for enforcement of IPRs must be fair and86 TRIPS Agreement, art. 30. See also TRIPS Agreement, art.13.87 Article 84, Patent Act: An application to the Controller for grant of compulsory license onpatent on any of the following grounds, namely: (a) that the reasonable requirements of thepublic with respect to the patented invention have not been satisfied, or (b) that the patentedinvention is not available to the public at a reasonably affordable price, or (c) that the patentedinvention is not worked in the territory of India.88 Indian Patent Act, s. 83.89 TRIPS Agreement, art. 31 (h).

90 WTO, Compulsory licensing of pharmaceuticals and TRIPs, <http://www.wto.org/english/tratop_e/trips_e/public_health_faq_e.htm> accessed 19 March 2011.91 See Article 31, TRIPS Agreement and Section 92, Patents Act 1970. The TRIPS Agreementdoes not specifically list the reasons that might be used to justify compulsory licensing.However, the Doha Declaration on TRIPS and Public Health confirms that countries are free todetermine the grounds for granting compulsory licenses. India has included public healthcrises, including those relating to HIV/AIDS, tuberculosis, malaria and other epidemics, canrepresent a national emergency or other circumstances of extreme urgency. The Patents Act1970 s 92 (3).92 TRIPS Agreement, art. 31 (i) and (j). See also TRIPs Agreement, art. 41 (4). Review must alsobe guaranteed in case of revocation/forfeiture of a patent. Review must also be guaranteed incase of revocation/forfeiture of a patent.93 TRIPS Agreement, art. 41. See also TRIPs Agreement, art. 42. ARTICLES Babu, Constitutional Right to Property in Changing Timeswww.icl-journal.com Vol 6 2/2012, 228equitable. The procedure shall not designed to create unnecessarily complicationor costly or cause undue delays. The state must also notify the WTO Council forTRIPs of the grant of the license and its conditions. Although the notifications byimporting and exporting members do not need approval by the WTO, themechanism is subject to an annual review by the Council for TRIPS where India'spractices could be openly challenged by any Member. The existence of judicialscrutiny, in addition to the international scrutiny, of any interference by the hostgovernment, enables higher protection and enforcement of IPRs.India as a founding member of the WTO has fulfilled all stipulations in theTRIPs Agreement. India has from time to time adopted new legislations oramended existing legislations such as the Patent Act and the Copyrights Act toachieve the stipulated level of protection.94 The major beneficiaries of theseamendments are the foreign IP owners who control more than two-third of the

registered IP in India.95 The Patent Act 1970 was amendment thrice, whichincludes narrowing the scope of compulsory licensing by deleting the 'publicinterest' requirement under section 97 of the unamended 1970 Patent Act.96Instances where the Indian IP law has fallen short, the WTO has ensured India'sprompt compliance. For instance, India was forced to bring into effect the Patents(Amendment) Act, 1999 with retrospectively from 1st January, 1995.97 Thisamendment was the consequence of the WTO DSB adverse decision in India –Patent case which compelled India to amend the Act with retrospective effect.98The dispute was initiated in the WTO by the US over the question whether Indiahas provided adequate protection for pharmaceutical and agricultural chemicalproducts or has an adequate mailbox system, as required under the TRIPs94 See also The Trade Marks Act 1999, Design Act 2000, Geographical Indication Act 2000.95 During the year 2008-09, the total number of patents granted was 16,061 out of which only2,541 were granted to Indian applications. Of the total patents of 30,822 in force as on 31March 2009, only 6,158 patents are held by Indians. See Annual Report of office of theController General of Patents, Designs, Trade Marks and Geographical Indications, 2008-09<http://www.ipindia.nic.in/> accessed on 20 July 2011.96 The first amendment was through an ordinance which was issued on 31st December 1994.Another ordinance was issued in 1999 when the first Ordinance ceased to operate after sixmonths. The second amendment to the 1970 Act was made through the Patents (Amendment)Act, 2002 (Act 38 0f 2002). The third amendment to the Patents Act 1970 was introduced bythe Patents (Amendment) Act 2005. The third amendment to the Patents Act 1970 wasintroduced through the Patents (Amendment) Ordinance, 2004 which was replaced by thePatents (Amendment) Act 2005 which was brought into force from 1-1-2005. See 'History of

Indian Patent System' <http://www.ipindia.nic.in/ipr/patent/patents.htm> accessed on 20June 2011.97 The Amendment was designed to provide filing of applications for product patents in the areasof drugs, pharmaceuticals and agro chemicals though such applications were to be examinedonly after December 2004 (mail-box system) when the flexibility given to developing countriesunder the TRIPs agreement ends. Meanwhile, the applicants could be allowed ExclusiveMarketing Rights (EMR) to sell or distribute these products in India, subject to fulfilment ofcertain conditions.98 WTO, India: Patent Protection for Pharmaceutical and Agricultural Chemical Products, Report ofthe Appellate Body and Panel (19 December 1997) WT/DS50/AB/R and (5 September 1997)WT/DS50/R. For a critical analysis of this case, see R. Rajesh Babu, 'Interpretation of the WTOAgreements, Democratic Legitimacy and Developing Nations' (2010) 50(1) IJIL 45-90. ARTICLES Babu, Constitutional Right to Property in Changing Timeswww.icl-journal.com Vol 6 2/2012, 229Agreement. The mailbox system in TRIPs was to accept patent applications madeeven though they could not be granted until the appropriate patent regimes hadbeen instituted.99India argued in vain that WTO Members 'are free to determine how best tomeet their obligations under the TRIPs Agreement within the context of their ownlegal systems.'100 India also contended that 'administrative instructions' are a'means' consistent with Article 70.8(a) of the TRIPs Agreement and they arelegally valid in Indian law. The Appellate Body upheld the panel's finding thatIndia's method for receiving such patent applications was inconsistent withArticle 70.8(a) of the TRIPs Agreement. According to the Appellate Body '... theUnited States put forward evidence and arguments that India's 'administrativeinstructions' pertaining to mailbox applications were legally insufficient to prevailover the application of certain mandatory provisions of the Patents Act.'101 The

Appellate Body concluded that it had 'reasonable doubts' that the 'administrativeinstructions' would prevail over the mandatory provisions of the Patents Act if achallenge were brought in an Indian court.'102 The Appellate Body also found thatIndia failed to fulfill that obligation to pass legislation to establish a system ofexclusive marketing rights, with effect from 1 January 1995.103 The experience isevidence of strong enforcement regime designed to implement WTO coveredagreements, including the TRIPs obligations.The practice relating to compulsory licensing is also reveling. As noted above,the TRIPs Agreement and the Patent Act does provide the state with freedom todetermine the grounds upon which such compulsory licenses or unauthorized usecan be granted. This offers the state, some domestic policy space for regulatingIP for public interest.104 However, the comprehensive procedural requirementsset out in TRIPs Article 31 have left the flexibilities with limited field of practical99 The measure at issue was (i) India's 'mailbox rule' – under which patent applications forpharmaceutical and agricultural chemical products could be filed; and (ii) the mechanism forgranting exclusive marketing rights to such products.100 WTO, India: Patent, Report of the Appellate Body (n 98) para 59.101 ibid para. 74.102 ibid. Neither the Panel nor the Appellate Body considered it relevant that, between 1 January1995 and 15 October 1997, India had received over 1,924 mailbox applications and that nonehad been rejected or invalidated. WTO, India's Statement at the DSB Meeting, Minutes of theDSB Meeting held on 27 January 2000 (WT/DSB/M/40, 16 January 1998) 5.103 This was with respect to Article 70.9 of the TRIPs Agreement. See also India – PatentProtection for Pharmaceutical Products, a case filed by EC, where the WTO Panel concludedthat 'India has not complied with its obligations under TRIPs Article 70.8(a) because it hasfailed to establish a sound legal basis for adequately preserving novelty and priority in respect

of applications for product patents in respect of pharmaceutical and agricultural chemicalinventions during the transitional period to which it is entitled under Article 65 of the TRIPSAgreement; and that India has not complied with its obligations under Article 70.9 of theTRIPS Agreement because it has failed to establish a system for the grant of exclusivemarketing rights. WTO, India: Patent Protection for Pharmaceutical and Agricultural ChemicalProducts, Report of the Panel (24 August 1998) WT/DS79/R, para. 9.1.104 Henning Grosse Ruse-Khan, 'Policy Space for Domestic Public Interest Measures Under TRIPs'South Centre Research Paper No. 22, July 2009, 21 <http://www.southcentre.org/ARCHIVES>accessed 21 March 2011. ARTICLES Babu, Constitutional Right to Property in Changing Timeswww.icl-journal.com Vol 6 2/2012, 230application.105 In other words, although theoretically, India could employcompulsory licensing, the practices are now circumscribed by a legal frameworkthat 'imposes strict conditions and procedural requirements for such issuance.'106To quote one of the commentators:Indeed, Article 31 does impose many new procedural or substantive conditions. Under the newrules, each grant of a compulsory license must be considered on a case-by-case basis. Thegovernment must first make efforts to obtain a voluntary license. The patent holder must receive'adequate remuneration.' Production must be predominantly for the domestic market. The licensemust be non-exclusive. Judicial review must be afforded for any decisions related to the compulsorylicense. And finally, the 'scope and duration' of the license must be 'limited to the purpose for whichit was authorised,' and must be liable to termination if the reasons underlying that authorization

cease to exist.…These new rules certainly narrow the opportunity for countries to grant compulsorylicenses…107Predictably, India has never used the option of compulsory licensing forunauthorized use of IPRs.108 On the contrary, India has spared no effort towardsgranting higher protection for IPRs, including discriminating information amongthe public on the need for protecting the IP.109 The only exception was in thecontext of pharmaceutical inventions submitted between 1999 and 2005, whichwill be subject to an automatic compulsory license to generic companies if thegeneric companies were producing the said drug prior to 2005 and continue toproduce the drug after the issuance of the patent. Apart from this instance,compulsory license for patents has never been granted in India.110This token flexibility is further constrained by the provisions in the BITs andFTAs. Most BITs and FTAs require developing countries to undertake commitmentsbeyond those in TRIPs.111 Known as TRIPs-plus or TRIPs-plus-plus obligations,105 ibid 22.106 Daniel Gervais, The TRIPs Agreement: Drafting Analysis and Negotiating History 165 (1998)at 368 in Patent Exclusions, Exceptions & Limitations, ITSSD Comments ConcerningDocument (SCP/13/3) <http://www.wipo.int/export/sites/www/scp/en/meetings/session_14/studies/itssd_2.pdf>.107 ibid.108 On 12 March 2012, the Controller General of Patents, Designs and Trademarks authorized forfirst time a compulsory license was granted against a patented drug Nexavar, or sorafenib,produced by Bayer to Natco Pharma, an Indian company. The Controller General invoked theprovision which states that a compulsory license may be granted if an invention is notavailable to the public at a 'reasonably affordable price.' Vikas Bajaj and Andrew Pollack,'India Orders Bayer to License a Patented Drug' The New York Times (12 March 2012)

<http://www.nytimes.com/2012/03/13/business/global/india-overrules-bayer-allowing-generic-drug.html> accessed 13 March 2012.109 For instance, the Government of India, Ministry of Human Resource Development under thescheme of Intellectual Property Education, Research and Public Outreach (IPERPO) hasestablished and funding 18 IPR Chairs in various universities and institutes <http://copyright.gov.in/frmlistiprchair.aspx> accessed 25 February 2012.110 NATCO Pharma a generic drug maker may initiate the compulsory licensing process in India ifvoluntary licensee is not granted to make a version of Pfizer's maraviroc HIV pill. SeeEconomic Times (Kolkata, 5 January 2011) <http://articles.economictimes.indiatimes.com/2011-01-05/news/28426847_1_natco-pharma-pfizer-hiv-patients>.111 Sangeeta Shashikant, 'More countries use compulsory license, but new problems emerge'TWN Info Service on Health Issues No. 4, Geneva, 19 May 2005 <http://www.twnside.org.sg/title2/health.info/twninfohealth004.htm> accessed 19 March 2011. ARTICLES Babu, Constitutional Right to Property in Changing Timeswww.icl-journal.com Vol 6 2/2012, 231these provisions 'constrain flexibilities and undermine the balance of rights in theTRIPs Agreement.'112 The TRIPS-plus obligations are aimed at increasing thelevel of IP protection for the right holders beyond what is stipulated in the TRIPsAgreement. For instance, in the proposed India-EU FTA, the EU wants to includeIPR issues like Regulatory Data Protection or Data Exclusivity. Regulatory DataProtection is a TRIPs-plus provision, and its inclusion will delay the launch ofgenerics.113 Introducing such provisions could further restrict the use of compulsorylicenses, and totally immune the IP from government interventions.In short, 'intellectual property' majority of which are owned or controlled bythe foreign interests is granted near absolute protection in India. IP cannot be'expropriated' for public purpose or any other purpose, except for nationalemergency or other circumstances of extreme urgency, which must terminate as

soon as such event pass. Moreover, irrespective of granting of compulsorylicensing or government use in case of emergency, the ownership remains withthe patent owner, and only the monopoly of the owner over IP is affected. Withstrong remedial mechanisms in place, any violation of these stipulations wouldattract national and international enforcement action. In addition to specialtribunals and access to higher judiciary at the national level, additional recoursemay rest with international tribunals or the WTO dispute settlement system asthe IP right owner deems to pursue.4.RIGHT TO PROPERTY IN INDIAThe constitutional right to property in India was envisaged by the framersbasis on the Constitution of the United States (US) 1787.114 Article 19(1)(f) ofthe Constitution of India as it stood before 1978 lays down that 'every citizen hasthe individual right to acquire, to hold and dispose of property.'115 The ConstitutionArticle 31 also guarantees that 'no person shall be deprived of his property saveby the authority of law' and set the boundaries on the power of eminentdomain.116 Couched in positive and negative language, both provision assurancesright to property, for 'citizens' and 'persons' respectively, similar to the fifth andfourteenth amendments to the US Constitution. The right, however, are subject112 'China, India to raise concerns at WTO about 'TRIPS-plus' measures' ACTA' IntellectualProperty Watch 3 June 2010 <http://www.ip-watch.org/weblog/2010/06/03/chinaindia-to-raise-concerns-at-wto-about-%E2%80%9Ctrips-plus%E2%80%9D-measures-acta/>accessed 13 April 2011.113 'Data Exclusivity still key hurdle to India-EU FTA' Business Standard (Kolkata, 27 January2011).114 The Constitution of the United States 1787, Fifth Amendment – Trial and Punishment,Compensation for Takings. 'No person shall be … deprived of life, liberty, or property, withoutdue process of law; nor shall private property be taken for public use, without justcompensation.'

115 The Constitution of India, art. 19(1)(f) as it stood before the 44th ConstitutionalAmendment.116 The Constitution of India, art. 31(1) as it stood before the 44th Constitutional Amendment. ARTICLES Babu, Constitutional Right to Property in Changing Timeswww.icl-journal.com Vol 6 2/2012, 232to limitations prescribed in the respective provisions.117 Reasonable restrictionscould be imposed in the enjoyment of property rights for 'public interest', andprivate property could be forcefully acquired by state only for 'public purpose'.118The first two decade of constitutional right to property was eventful. Sincethe Constitution came into force in 1951, Article 19(1) (f) and Article 31, the twoarticles which guaranteed fundamental right to property, became the subject ofconstant and contentious judicial interpretations and parliamentary interference.The tussle fought both in the floor of the Parliament and in the Supreme Courtcentred on the scope of individual's right to property vis-à-vis the power ofeminent domain. The Constitution (Forty-fourth Amendment) Act 1978 ended thedebate when the Parliament repealed the right to property from Part III of theConstitution.119 A similarly worded provision on right to property albeit relegatedin status, was included in Article 300A, which provides that 'no person shall bedeprived of his property save by the authority of law.'120 The amendment reducedthe status of right to property to that of a statutory right.121 In other words,under the current constitutional framework, the legislature could deprive propertyrights by enacting a 'law' for compulsory acquisition.122 Neither fair compensationnor 'public purpose' remains an essential perquisite for expropriation of property.Payment of compensation at market value is mandated only for compulsoryacquisition of land under personal cultivation.123 Land acquisition laws cannot beheld void on the ground that it is inconsistent with or takes away any of the rightsconferred by Articles 14 or 19 of the Constitution of India.124 The Constitution117 V.R. Ramachandran, The Law of Land Acquisition and Compensation (8th edn, Eastern BookCompany 2000) 7.

118 See The Constitution of India, arts. 19(6) and 31(2).119 The Constitution of India, arts. 19(f) (Right to Property) and Article 31 (Compulsory acquisitionof property) Repealed by the Constitution (Forty-fourth Amendment) Act 1978, section 2 and6 (w.e.f. 20-6-1979).120 Part XII: 'Chapter IV – Right to Property, 300A of the Constitution of India: Persons not to bedeprived of property save by authority of law – no person shall be deprived of his propertysave by authority of law.'121 On the debate, see generally, The 44th Amendment – right to property no longer a fundamentalright, in H. M. Seervai, Constitutional Law of India Vol. II, (3edn, Universal Law Publishers1983) 1072-92; K. K. Mathew, 'Basic Structure and Fundamental Right to Property' (1978) 2SCC 65. Jaivir Singh, '(Un)Constituting Property: The Deconstruction of the 'Right to Property'in India' (2005) Centre for the Study of Law and Governance Working Paper Series JNU, NewDelhi, CSLG/WP/04-05. Jaivir Singh, 'Separation of powers and the erosion of the 'right toproperty' in India' (2006) 17(4) Constit. Polit. Economy 303-324.122 Articles 31A, 31B and 31C, Constitution of India.123 See The Constitution of India, art. 31A (1). In case of a land 'held by a person under hispersonal cultivation, it shall not be lawful for the State to acquire any portion of suchland…unless the law relating to the acquisition of such land, building or structure, provides forpayment of compensation at a rate which shall not be less than the market value thereof.This paragraph was inserted by the Constitution (Seventeenth Amendment) Act 1964, s. 2.124 Article 31C first part provides that '[n]otwithstanding anything contained in article 13, no law

giving effect to the policy of the State towards securing all or any of the principles laid downin Part IV (Directive Principles of State Policy) shall be deemed to be void on the ground thatit is inconsistent with, or takes away or abridges any of the rights conferred by Article 14 orArticle 19; ….' in Minerva Mills v. Union of India [1980] AIR SC 1787, only those laws whichseek to implement or give effect to Articles 39 (b) or (c) shall be validated. ARTICLES Babu, Constitutional Right to Property in Changing Timeswww.icl-journal.com Vol 6 2/2012, 233forbids judicial interference and any arbitrary actions sanctioned by the 'law' shallbe immune from the scrutiny of courts, denying recourse to due process.125A background on the context that led to the demise of property rights wouldpermit us to judge the status of property rights in the current socio-economiccontext.1264.1 A prelude to the demise of right to properlyThe concept of eminent domain127 i.e., the power of a government to takeaway private property by force for public use, is well entrenched in the constitutionalpractice of nation states.128 It is an essential attribute of state sovereignty129 andhas special importance in the socialization context.130 Most modern constitutions,at the same time, recognize certain limitations in the exercise of eminent domain.As Cooley notes, the concept is founded onthe superior claims of the whole community over an individual citizen but is applicable only in thosecases where private property is wanted for public use, or demanded by the public welfare and thatno instance is known in which it has been taken for the mere purpose of raising a revenue by saleor otherwise and the exercise of such a power is utterly destructive of individual right.131125 Article 31C second part provides that '… no law containing a declaration that it is for giving

effect to such policy shall be called in question in any court on the ground that it does notgive effect to such policy.' In Kesavananda Bharati vs. The State of Kerala [1973] Supp. SCR1, the Supreme Court held the provisions in italics to be invalid.126 The Constitution (Forty-fourth Amendment) Act, 1978, s. 2 and s. 6 (came into force on 20June 1979).127 The earlier understanding of the concept was that: '[t]he property of subjects belongs to thestate under the right of eminent domain; in consequence the state, or he who represents thestate, can use the property of subjects, and even destroy it or alienate it, not only in cases ofdirect need [ex summa necessitate], which grants even to private citizens a measure of rightover others' property, but also for the sake of the public advantage . . . .' Hugo Grotius, DeJure Belli Ac Pacis Libri Tres (1646) 807 (Francis W. Kelsey trans., Clarendon Press, Oxford1925) in A.W.B. Simpson, 'Constitutionalizing the Right of Property: The U.S., England andEurope' (2008) 31(1) Uni Hawai'i L Rev 4.128 The doctrine is based on the following Latin maxims: Salus Populi est Suprema Lex (Welfareof the People is the highest Law), and Necessita Public Major est Quam (Public Necessity isGreater than Private Necessity). See Sackman and Van Brunt (eds), Nichols on EminentDomain Vol. 1 (3rd edn, Matthew Bender and Co, New York 1950) 2, where 'eminent domain'is defined as 'the power of the sovereign to take property for public use without the owner'sconsent.'129 Coffee Board, Karnataka v. Commissioner of Commercial Taxes [1988] 3 SCC 263 at 369.

The Supreme Court noted that 'It is trite knowledge that eminent domain is an essentialattribute of sovereignty of every state and authorities are universal in support of thedefinition of eminent domain as the power of the sovereign to take property for public usewithout the owner's consent upon making just compensation.'130 See, John P. Frank, Book Review: Nichols on Eminent Domain by Van Brunt; Sackman Brunt'(1951) 51(6) Col L Rev 795-800 at 795 <http://www.jstor.org/stable/1119263> accessed 19March 2011.131 Thomas M. Cooley, A Treatise on the Constitutional Limitations Which Rest Upon theLegislative Power of the States of the American Union Vol. II (4th Ed. Boston: Little Brown &Co 1878) 113. ARTICLES Babu, Constitutional Right to Property in Changing Timeswww.icl-journal.com Vol 6 2/2012, 234More specifically, state needs to satisfy three prerequisites for a legitimateexercise of eminent domain – a 'law' authorizing expropriation; the 'public purpose'requirement; and 'just compensation'. In addition, judicial review over state'saction provides a check on any abuse of power of eminent domain. A classicexample is the Fifth Amendment of the US Constitution which provides that 'noperson shall be … deprived of life, liberty, or property, without due process of law;nor shall private property be taken for public use, without just compensation.'132In other words, lawful 'taking' of property must be for 'public purpose', requiresthe owner of any appropriated land entitled to reasonable compensation, usuallydefined as the fair market value of the property with recourse to due process.Following the US Constitution, Article 31 (1) of the Constitution of Indiaassures protection against deprivation of property except by 'authority of law,'with a deliberate omission of the 'due process' clause.133 Clause 2 of Article 31,informs of the state's power to acquire property for 'public purpose,' provided'due compensation' is given to the affected party.134 Thus, the Constitution ofIndia, as initially conceived in line with the US Constitution, warrants satisfaction

of three prerequisites i.e., the 'authority of law' (the law being fair and reasonable),'public purpose'135 and 'compensation', to be satisfied for legitimate exercise ofeminent domain.136 Article 32 of the Constitution guarantees access to judicialreview through a writ in the highest court. These constitutional boundaries onthe power of eminent domain set the background for the long drawn legal tusslebetween the two branches of government – the Parliament and the Judiciary –for years to follow until 1978 when the status of right to property was finally putto rest.The Parliament and the judiciary differed widely in their understanding on thenature and scope of fundamental right to property. The tussle began with judicialchallenges over the land reform and zamindari abolition laws, passed by theParliament and the state legislatures to promote agrarian reforms and engineereconomic, social and political change within the country. To effectuate some ofthe Directive Principles of State Policy137 and establish a socialistic pattern ofsociety, the Parliament felt imperative to carry out land reforms and redistribution132 Emphasis added. See also Fourteenth Amendment – Citizenship Rights. '1. ... No State shall… deprive any person of life, liberty, or property, without due process of law, ….' US Constitution1787.133 P. K. Tripathi, 'Right of Property after 44th Amendment Better Prosecuted Than Ever Before'(1980) AIR J 49.134 This provision has its roots in Government of India Act 1935, s 299 (2).135 Public purpose has been defined to include a purpose in which the general interest of thecommunity as opposed to the particular interest of individuals is vitally and directlyconcerned. State of Bihar v. Kamashwar Singh [1952] SCR 869. The court also noted thatlaws calculated to advance public welfare as formulated in the directives in arts. 38 to 49 ispublic purpose.136 See generally, Chiranjit Lal Chowdhary v. Union of India [1951] AIR SC 41, 54; State of Bihar

v. Kameshwar Singh [1952] AIR SC 252. See also Samaradditya Pal and Rama Pal (eds), M.P.Jain – Indian Constitutional Law, vol II (6th edn, LexisNexis Butterworth's Wadhwa, Nagpur2010) at 1803.137 The Constitution of India, Part IV. ARTICLES Babu, Constitutional Right to Property in Changing Timeswww.icl-journal.com Vol 6 2/2012, 235of wealth.138 The Court was faced with two competing rights, the power of thestate to acquire property, and the individual's fundamental right to property. Thecourt adopted a restrictive view on the state's power of compulsory acquisitionand inclined towards protecting the right to property and payment of adequatecompensation.139 The result was a series of decisions were the Supreme Courtdeclared unconstitutional several laws and pursuant state actions, in particular, inview of Articles 14, 19 and 31 of the Constitution.140To overcome the impediment created by the apex court, the Parliamentinitiated a series of amendments, starting with the Constitution (First Amendment)Act, 1951, barely fifteen months since the Constitution was adoption. TheParliament justified that the dilatory litigations over the validity of agrarianreform measures have delayed their implementation affecting large numbers ofpeople.141 To secure the constitutional validity of zamindari abolition and landreform laws, two new articles – Articles 31A and 31B were incorporated alongwith a new Ninth Schedule.142 The intent of Article 31A was to declare that landreform 'laws' shall not be called into question on the ground of its consistencywith Part III – fundamental rights. Article 31B added another level of protectionby created an umbrella called the 'Ninth Schedule' – to insulate land reform lawsfrom judicial action.143 The Amendment added thirteen state laws to the Ninthschedule ostensibly to keep them beyond any challenge from courts.144 In the138 More specifically, Article 39 mandated the State direct its policy towards securing inter alia,(b) that the ownership and control of the material resources of the community are sodistributed as best to subserve the common good; and (c) that the operation of the economicsystem does not result in the concentration of wealth and means of production to the

common detriment;139 Jain (137) 1803.140 Sir Kameshwar Singh (Darbhanga) v The Province of Bihar AIR 1950 Patna 392. DwarkadasSrinivas v The Sholapur Spinning and Weaving Company Ltd. [1951] AIR Bombay 86. Stateof West Bengal v. Mrs. Bela Banerjee [1954] AIR SC 170, Karimbil Kunhikoman v The Stateof Kerala [1962] (1) SCR 829.141 Statement of Objects and Reason by Jawaharlal Nehru, appended to the Constitution (FirstAmendment) Bill, 1951 which was enacted as the Constitution (First Amendment) Act, 1951,<http://indiacode.nic.in/coiweb/amend/amend1.htm> accessed 20 May 2011.142 ibid.143 If any of the Acts and Regulations is incorporated in the Ninth Schedule, the same shall notbe void even of it is inconsistent with, or takes away or abridges any of the rights conferredby Part III, and place those laws above judicial challenges. See The Constitution of India, art.31B. There are around 284 legislations which has be incorporated under the protectiveumbrella of the Ninth Schedule <http://lawmin.nic.in/coi/coiason29july08.pdf> accessed 22January 2012.144 More laws were added to the Ninth Schedule through 4th, 17th and 29th Amendment Acts;34th Amendment (17 Acts); 39th Amendment (38 Acts); 42nd Amendment (64 Acts); the47th Amendment (14 Acts), 66th Amendment (55 Acts); 75th Amendment Act, 1994 hasbeen passed by the parliament, which includes Tamil Nadu Act providing for 69 percentreservation for backward classes under the Ninth Schedule. An addition of 27 more Acts

to the Schedule by made by the 78th Amendment Act of 1995 raising the total to 284.See Sushanth Salian, 'History of the Removal of the Fundamental Right to Property' Centrefor Civil Society <www.ccsindia.org/policy/rule/studies/wp0041.pdf> accessed 23 May2011. ARTICLES Babu, Constitutional Right to Property in Changing Timeswww.icl-journal.com Vol 6 2/2012, 236words of the Supreme Court, Article 31-B represents novel, innovative and drastictechnique of amendment and immunity from judicial review.145The Supreme Court, however, continued to attribute wide meaning to clauses(1) and (2) of Article 31 of the Constitution, imposing severe constrain on thestate's power to expropriate private property paying nominal compensation.146Though Article 31 does not qualify the term 'compensation' with 'just' or'adequate' as in the US Constitution, the Court interpreted that compensationmust be 'just equivalent' of what the owner had been deprived of and that it wasa justiciable matter which the courts could adjudicate upon.147 To overcome theinterpretative hurdles, the Parliament amended Article 31 in several respectswith the primary intent to place such 'laws' above challenge from courts and 'restatemore precisely the State's power of compulsory acquisition and requisitioningof private property ….'148 Since the Constitution's Fourth Amendment, the Courthas shown a less rigorous approach towards compensation than found in BellaBanerjee's case. The new formula supported a compensation which was far lessthan market value, provided the principles to determine compensation were notarbitrary.149 The Court, it seems, finally have come in terms with the governmentpolicy on private property rights.But this letup did not prevent the Supreme Court from preventing theparliament's amending power from abridging fundamental rights in subsequentcases. Several land reform laws were struck down on the ground that the provisionsof those Acts were violative of Articles 14, 19 and 31 of the Constitution and thatthe protection of Article 31A was not available to them.150 This led to another145 N. B. Jeejeebhoy v. Asst. Collector, Thane, [1965] AIR SC 1096.146 For instance, in State of West Bengal v. Bella Banerjee [1954] AIR SC 170, the amount of

compensation payable for compulsory acquisition was made unjustifiable. See also State ofW.B v. Subodh Gopal [1954] SCR 587. The US and England courts also follows a similarapproach in terms of interpretation of right to property. See Ramachandran (n 117) 8.147 State of West Bengal v. Bella Banerji, [1954] AIR SC 170. On the requirement of justcompensation, see also Chairanjit Lal Chowdhry v. Union of India [1951] AIR SC 41, at 51and State of Bihar v. Kameshwar Singh [1952] AIR SC 252; Union of India v. Metal Corporationof India Ltd. [1967] AIR SC 634.148 The Constitution of India, Article 31 (2): '…no such law shall be called in question in any courton the ground that the compensation provided by that law is not adequate”. Statement ofObjects and Reasons appended to the Constitution (Fourth Amendment) Bill, 1954 which wasenacted as the Constitution (Fourth Amendment) Act, 1954 <http://indiacode.nic.in/coiweb/amend/amend4.htm> accessed 23 March 2011. As Justice Douglas of the US Supreme Courtsummarised: '…India, like America, ranked property rights high among the fundamentalrights of man. What effect the 1955 Amendment will have remains to be seen. If Parliamentby law appropriates private property for nominal compensation, the spectre of confiscationwould have entered India contrary to the teaching of her outstanding jurists.' Justice WilliamO. Dougles 'Tagore Law Lecture' delivered on July 1955 (Eastern Law House Publishers, 1955)224-25, in Ramachandran (n 117) 19-20.149 See Vajravelu Mudliar v. Special Deputy Collector [1956] AIR SC 1017 in Jain (n 136) 1822.

150 The Supreme Court in Kochunni vs State of Madras [1960] AIR 1080, did not accept the pleaof the state that Article 31(1) after amendments gave an unrestricted power to the state todeprive a person of his property. It held that Article 31(1) and (2) are different fundamentalrights and that the expression 'law' in Article 31(1) shall be valid law and that it cannot bevalid law unless it amounts to a reasonable restriction in public interest within the meaning ofArticle 19(5). ARTICLES Babu, Constitutional Right to Property in Changing Timeswww.icl-journal.com Vol 6 2/2012, 237round of amendments to clarify, consolidate and strengthen the Parliament'samending power, including Part III – fundamental rights.151 The unbridled powerbestowed on itself was challenged before the Supreme Court in the landmarkGolaknath's case.152 There, the petitioner questioned the validity of the First,Fourth and Seventeenth Amendments of the Constitution on the ground that theyabridged the scope of the fundamental rights. The Supreme Court, by a narrowmargin, held that the Parliament has no power to amend the Constitution to takeaway or abridge the fundamental right of the people.153The Parliament attempted to cure the damage caused by the decision inGolaknath's case through the Constitution (Twenty-fourth Amendment) Act, 1971.The Amendment added a new sub-section (1) in Article 368, which grantedabsolute power on the Parliament to amend any part of the Constitution. Thefollow-up Constitution (Twenty-fifth Amendment) Act in 1971, amended the word'compensation' in Article 31(2) and replaced by the word 'amount', primarily todilute the consequence of 'just equivalent' interpretation given to 'compensation'in Bella Banerjee and other cases. The immediate reason for the Parliament tointroduce this amendment was to mitigate the effect of the decision in the BankNationalization case,154 wherein the Supreme Court by ten to one declared thatthe Constitution guaranteed right to compensation, that is, the equivalent in moneyof the property compulsorily acquired.[Compensation] is the basic guarantee. The law must therefore provide compensation, and for

determining compensation relevant principles must be specified; if the principles are not relevantthe ultimate value determined is not compensation.The broad object underlying the principle of valuation is to award to the owner the equivalent of hisproperty with its existing advantages and its existing potentialities. Where there is an establishedmarket for the property acquired the problem of valuation presents little difficulty. Where there isno established market for the property, the object of the principle of valuation must be to pay tothe owner for what he has lost, including the benefit of advantages present as well as future,without taking into account the urgency of acquisition, the disinclination of the owner to part withthe property, and the benefit which the acquirer is likely to obtain by the acquisition.155The Court reiterated its power to review the adequacy as well as therelevancy of the principles for determining compensation. The Court also heldthat a law which seeks to acquire or requisition property for a public purposeshould also satisfy the requirements of Article 19 (1) (f) of the Constitution.151 The Constitution (Seventeenth Amendment) Act, 1964 by which the state extended the scopeof Article 31-A and Ninth Schedule.152 Golaknath vs State of Punjab [1967] AIR SC 1647, 2 SCR [1967] 762 (the first fundamentalrights case).153 The court reversed its own earlier decisions upholding the power of Parliament to amend allparts of the Constitution including Part III relating to fundamental rights. To avoidcomplications, the Court ordered prospective overruling, that all the amendments made bythe Parliament up to the date of the judgment were and would continue to be valid.154 R.C Cooper v. Union of India [1970] (2) SCC 298.155 Rustom Cavasjee Cooper vs Union of India, [1970] SCR (3) 530, 539. See also State of West

Bengal vs. Bella Banerji [1954], where the Supreme Court interpreted the word 'compensation'simplicitor as full compensation i.e. market value of the property on the date of acquisition. ARTICLES Babu, Constitutional Right to Property in Changing Timeswww.icl-journal.com Vol 6 2/2012, 238The validity of twenty-fourth, twenty-fifth and twenty-ninth constitutionalamendments was challenged in the famous Kesavanada Bharathi case(Fundamental rights case ).156 The Supreme Court by a narrow majority laid downthe concept of 'basic structure', i.e., the Parliament in exercise of its constituentpower under Article 368, cannot amend certain provisions, the amendment ofwhich would alter the fundamental character of the Constitution.157 In otherwords, the Parliament could abridge any part of the Constitution, whereas, theamending power does not extend to damage or destroy any of the essentialfeatures of the Constitution.158 The Court, however, upheld the constitutionalvalidity of all property related amendments, thereby negating the status ofproperty right as 'basic feature' of constitution.159 Nevertheless, the right toreceive an 'amount' was considered as fundamental right.160 This was reiteratedin the Indira Nehru Gandhi v Raj Narian case,161 which paved the way for theremoval of property as a fundamental right.162 The Parliament, however, throughthe Forty-second Amendment Act sought to expand the scope of Article 31C byextending it to any law giving effect to the policy of the state towards securing'all or any of the principles laid down in Part IV' and that is how the Article readstoday.163 The Parliament did the final blow to the private property rights throughthe Forty-fourth amendment which finally repealed Article 19(1)(f) from Part III,completing the demise of right to property as a fundamental right.4.2 Property rights: current state of playThe constitutional right to property as it stands today imposes minimal restrainon the power of state against compulsory 'taking' of property without adequatecompensation. Since the decisions in Kesavanada Bharathi and Indira Nehru Gandhiv Raj Narian, the apex court has upheld the right of the State to expropriate underArticle 300-A, and restrained itself not to entertain any discussion on adequacy of156 Kesavananda Bharati v. State of Kerala [1973] AIR SC 1461. The petitioners had challenged

the validity of the Kerala Land Reforms Act 1963, along with the 24th, 25th and the 29thamendments.157 See also Indira Nehru Gandhi v. Raj Narain [1975] AIR SC 2299); Minerva Mills Ltd. v. Unionof India [1980] AIR SC 1789; Sanjeev Coke Mfg. Co. v. Bharat Coking Coal Ltd. (AIR 1983 SC239); L. Chandra Kumar v. Union of India [1997] AIR SC 1125.158 The amendment of Article 368(4) excluding judicial review of a constitutional amendment wasunconstitutional. The amendment of Article 31C containing the words 'and no law containinga declaration that it is for giving effect to such policy shall be called in question in any courton the ground that it does not give effect to such policy' was held invalid.159 K. K. Mathew, 'Basic Structure and Fundamental Right to Property' [1978] 2 SCC 65.160 Kesavananda Bharati v. State of Kerala [1973] AIR SC 1461, 1606.161 Indira Nehru Gandhi v Raj Narian [1975] Supp SCC 1.162 Jaivir Singh, '(Un)Constituting Property: The Deconstruction of the 'Right to Property' in India'(2004) CSLG Working Paper Series, Jawaharlal Nehru University, CSLG/WP/04-05, 17.163 But this attempt was frustrated by Minerva Mills v. Union of India [1980] AIR SC 1787, andthe above freedom now stands restricted only to laws seeking to give effect to Articles 39 (b)or (c). ARTICLES Babu, Constitutional Right to Property in Changing Timeswww.icl-journal.com Vol 6 2/2012, 239compensation.164 In Bhim Singhju v. Union of India, the Court upheld theadequacy of compensation of Indian Rs. Two lakhs for a property worth IndianRs. Two crores.165 The Court through Justice Krishna Iyer observed:Full compensation or even fair compensation cannot be claimed as a fundamental right by theprivate owner and that short of paying a 'farthing for a fortune' the question of compensation is out

of bounds for the courts to investigate.166The decision summarise the status of property rights, and the Indian politicaland intellectual community appeared satisfied by the arrangement.167The principal instrument for compulsory land acquisition was the coloniallegislation, the Land Acquisition Act of 1894.168 Both parliament and statelegislatures (with suitable modifications) have made extensive use of the LandAcquisition Act to expropriating large tracts of land holding for public purposeand for companies. The Act indeed provides a caveat that individuals whoseproperty is taken over have a right to receive compensation. However, thediscretionary power and ambiguities in the Act are often misused by the executiveto serve private interests.169 For instance, under the Act a declaration to theeffect that the land is required for a 'public purpose' or for a Company shall beconclusive evidence that the land is indeed for a public purpose or for a company,as the case may be.170 The District Collector shall direct the acquisition of theland, who shall have the power to receive objections and determine the valueand compensation for the land. The amount of compensation awarded could bechallenged in the civil court. The Act provides the civil court with clear directionin determining compensation, including matters to be ignored while computingcompensation.This Act is complimented by several special legislations. The legislation whichis worth special mention is the SEZ Act 2005.171 The SEZ policy unraveled in2000 states that 'with a view to overcome the shortcomings experienced onaccount of the multiplicity of controls and clearances; absence of world-classinfrastructure, and an unstable fiscal regime and with a view to attract largerforeign investments in India.'172 The Act sanctions acquisition of agriculture and164 Jilubhai Nanbhai Khachar v. State of Gujarat [1995] AIR SC 142.165 Bhim Singhju v. Union of India [1981] AIR SC 234).166 ibid 239.167 A central law, with state amendments, the Act has been amended periodically withsubstantial amendments being made in 1984.168 The Land Acquisition Act 1894, a colonial legislation and the basis of land acquisition in India,provides that the state could acquire land in any locality if needed or is likely to be needed forany public purpose or for a company by paying compensation based on the market-value of

the land determined by the Collector of that region.169 ibid, s. 3(f). The term 'public purpose' is not defined in the Act, though such 'public purpose'is illustrated by heads such as provision of land for village sites, planned development, publicoffices, education, health and other schemes sponsored by the government, to name a few.170 ibid, art. 6(1) and (3), Declaration of intended acquisition.171 The Special Economic Zones Act 2005 (No. 28 of 2005).172 Special Economic Zones in India <http://www.sezindia.nic.in/about-introduction.asp> accessed12 November 2011. ARTICLES Babu, Constitutional Right to Property in Changing Timeswww.icl-journal.com Vol 6 2/2012, 240non-agriculture land for 'economic development' which has the potential ofdisplacing large number of people.5. CHANGING DIMENSIONS OF PROPERTY RIGHTSThe India's policy towards private property was justified in the political, socialand economic context of the time. The Constitutional amendments which overtime water down the status of property rights were justifiable in the context ofdirective principles of state policy which mandated securing equitable distributionof wealth. A survey of the earlier experience on expropriation reveals that mostacquisitions were for larger national or public interest in line with the directiveprinciples of state policy, which justified measures involving land reforms,zamindari abolition and for national development goals. Similarly, the majority ofacquisitions were in the nature of nationalization, meaning, state ownership ofthe expropriated property. However, the gradual shift in policy since the 1990shas raised questions on the nature of expropriation and ownership. Increasingly,in the recent years, the state seems to exercise it power of eminent domain toserve private commercial interests, both foreign and domestic, contrary to thelong established understanding of 'public interest' requirement and eminentdomain.India's external commitments under the WTO and other bilateral and multilateraltreaties has by implication, necessitated modification of the domestic regime toguarantee safe, secure and attractive legal environment for protection of IP andforeign capital entering India. The superimposing international regime limit theexercise of eminent domain against alien property since the repercussions and

reputational cost of such action shall be heavy owing to the internationalizationof protection and remedy. Providing a stronger and safer investment environmentfor foreign capital or domestic commercial interests is per se not problematic.However, the policy becomes questionable when the same results in de factodiscrimination against individual property owners, whose security and identity areconceded in favour of commercial interests. International rules and constitutionalprinciples demands de facto and de jure non-discrimination treatment in theapplication of laws, rules or regulations. However, the conscious shift in India'spolicy towards commercial interests seems to discriminate nationals and confershigher protection for owners of foreign and domestic commercial interest andproperty.In other words, the select modification of India's legal regime tantamount togranting higher property rights and protection to private business interests. Theparadox and arbitrariness in India's approach towards Indian private propertyowners are palpable in the land acquisition policy under Special Economic Zones(SEZ). The SEZ policy sanctions demarcation of land as foreign territory for thepurposes of trade operations, duties and tariffs, with across-the-board tax holidayto companies. Land, cultivable and non-cultivable, is compulsorily acquired mostlyfrom farmers to establish SEZ which are owned and operated by a privatecompany. While SEZs economic sustainability is debatable, its social and politicalimpact is ostensible from the controversies, protests and violence which marred ARTICLES Babu, Constitutional Right to Property in Changing Timeswww.icl-journal.com Vol 6 2/2012, 241land acquisition for SEZ in India.173 Protests against acquiring agricultural land,internal displacement, loss of livelihood, inappropriate compensation had beenthe main reasons for these protests. 174 Although the Land Acquisition Act meansacquiring land for some public purpose by the government as authorized by thelaw, the state seems to misuse its power under the Act to acquire land fromfarmers and ordinary citizens only to be given back to private corporate promotersand developers, both foreign and indigenous. Challenged as land grabbing policy,the state seems to justify the same in the name of 'economic development' forthe nation and the people.175 However, the constitutional spirit and internationallaw demand the exercise of eminent domain for a public purpose, as opposite toprivate purpose. The Parliament and the executive branch seem to negate theunderlying rational for granting such discretionary power in a democraticconstitution.

Indeed, any compulsory acquisition of land must satisfy 'public purpose.'176 Solong as the public purpose subsists, the exercise of the power of eminent domaincannot be questioned. Public purpose or public use is thus the key criteria indetermining the legality of compulsory 'taking'. In other words, legitimate use ofeminent domain depends on the question whether the land has been acquired forpublic purpose or which has been or is being put to use for the said purpose. Butwhat constitute 'public purpose' or public interest is indeterminate. The definitionchanged with time and context. The Black Law Dictionary, for instance, definespublic purpose as 'a public purpose or public business has for its objective thepromotion of the public health, safety, morals, general welfare, security, prosperityand contentment of all the inhabitants or residents within a given politicaldivision, as, for example, a state, the sovereign powers of which are exercised topromote such public purpose or public business.' 177 The US courts seem to sharea similar definition of public purpose.178173 Few instance of unrest among the local population against land acquisition are: Protestagainst SEZ in Raigad against land acquisition by Reliance in Greater Mumbai and Indiabulls;Successful protest in Singur and Nandigram (West Bengal) against SEZs and displacement;Protest against Reliance SEZ in Jhajjar, Haryana; Protest against land acquisition for TridentSEZ in Barnala Punjab etc.174 'Ugly side of land acquisition in India' <http://business.rediff.com/slide-show/2010/may/31/slide-show-1-ugly-side-of-land-acquisition-in-india.htm> accessed 20 May 2011.175 The Government has given formal approval to 439 SEZs, which covers a total area 220,000hectare (550,000 acres) as on 2008. Estimates show that close to 114,000 farminghouseholds (each household on an average comprising five members) and an additional82,000 farm worker families who are dependent upon these farms for their livelihoods, will bedisplaced. Formal approvals granted in the Board of Approvals after coming into force of SEZ

Rules <http://www.sezindia.nic.in/writereaddata/pdf/ListofFormalapprovals.pdf> accessed 3May 2011.176 His Holiness Kesavananda Bharati vs. State of Kerala [1973] Supp. 1 SCR 1.177 Black Law Dictionary (West Publishing, 1990).178 A 'public purpose' has been defined as that which 'has for its objective the promotion of thepublic health, safety, morals, general welfare, security, prosperity, and contentment of all theinhabitants or residents within the municipal corporation.' See Gaylord v Gaylord City Clerk[1966] 378 Mich 273, 300, quoting Hays v Kalamazoo, [1947] 316 Mich 443, 454. SeeCounty of Wayne v. Edward Hathcock and others, Michigan Supreme Court (July 30, 2004). ARTICLES Babu, Constitutional Right to Property in Changing Timeswww.icl-journal.com Vol 6 2/2012, 242The Indian judiciary has taken its own approach towards defining publicpurpose. In State of Bihar v. Kameshwar Singhi, the Supreme Court explainedthat the:expression 'public purpose' is not capable of a precise definition and has not a rigid meaning. It canonly be defined by a process of judicial inclusion and exclusion. In other words, the definition of theexpression is elastic and takes its colour from the statute in which it occurs, the concept varyingwith the time and state of society and its needs. The point to be determined in each case iswhether the acquisition is in the general interest of the community as distinguished from theprivate interest of an individual.179It must 'include an object in which the general interest of the community, asopposed to the particular interest of individuals, is directly and vitally concerned.'180The purpose of such a land acquisition law must 'directly and vitally subservepublic interest.'181 In other words, there must be a direct correlation betweenland acquisition and public purpose, barring which the acquisition may become

illegal. The question then is whether compulsory acquisition of land for SEZ schemesestablishes the correlation? Can the definition of 'public purpose' broader toinclude absolute transfer of property to private entities for private use?Indeed, 'public purpose' or 'use' requirement is no absolute bar against transferof expropriated property to private entities. The prohibition is against transferringexpropriated property to private entities for a private use.182 In the US, thecourts have held that economic development qualified as a valid public use underboth the Federal and State Constitutions.183 However, this 'public use' requirementmust be supported by the need to determine, first, whether the takings at issuewere 'reasonably necessary' to achieve the intended public use and, second,whether the takings were for 'reasonably foreseeable needs'.184 In County ofWayne v. Edward Hathcock case, the Michigan Supreme Court held that of privateland could be constitutionally transferred by the state to a private entity only if itinvolved "public necessity of the extreme sort otherwise impracticable.'185 'Theexercise of eminent domain for private corporations has been limited to thoseenterprises generating public benefits whose very existence depends on the useof land that can be assembled only by the coordination central governmentalone is capable of achieving.'186 In addition, the transfer is consistent with the179 State of Bihar v. Kameshwar Singh [1952] AIR SC 252, 259.180 Somawanti v. State of Punjab [1963] 2 SCR 774; Bhim Singhji v. Union of India [1981] 1SCC 166.181 ibid.182 See Hawaii Housing Authority v. Midkiff [1984] 467 U. S. 229 at 245 (A purely private takingcould not withstand the scrutiny of the public use requirement; it would serve no legitimatepurpose of government and would thus be void.)183 ibid and Berman v. Parker [1954] 348 U. S. 26.184 Susette Kelo v. City of New London, Connecticut, US Supreme Court, No. 04.108 (June 23,2005).185 County of Wayne v. Edward Hathcock and others, Michigan Supreme Court (July 30, 2004).

186 Dissenting judgment of Justice Ryan in Poletown Neighborhood Council v Detroit, [1981] 410Mich. 616, 675-676 at 678 in County of Wayne v. Edward Hathcock and others Michigan ARTICLES Babu, Constitutional Right to Property in Changing Timeswww.icl-journal.com Vol 6 2/2012, 243constitution's 'public use' requirement only when the private entity remainsaccountable to the public in its use of that property. The Court further noted that:This Court disapproved condemnation that would have facilitated the generation of waterpower bya private corporation because the power company "will own, lease, use, and control" the waterpower. In addition, [we] warned, "Land cannot be taken, under the exercise of the power of eminentdomain, unless, after it is taken, it will be devoted to the use of the public, independent of the willof the corporation taking.187The Court further stated that:Every business, every productive unit in society, does … contribute in some way to the commonwealth.To justify the exercise of eminent domain solely on the basis of the fact that the use of thatproperty by a private entity seeking its own profit might contribute to the economy's health is torender impotent the constitutional limitations on the government's power of eminent domain.188Unfortunately, the exercise of eminent domain in India seems to undermineall these assumptions and pursue on an altogether different logic determined byconsideration not permitted by the concept of 'public interest'. Indeed, India didpractice a different brand of 'public interest' with socialist inclinations. However,port-liberalization India has moved away from the much cherished socialisticprinciples, as is evident from the policy shift. Despite the shift, India seems tocontinue land acquisition clinging on to principles that was justified in a historicalcontext and time. The transfer of expropriated property to private entities forprivate use strike at the root of the constitutional edifice on which the arbitrarypower sanctioned under eminent domain is justified in a democratic context. Thepower has been transgressed and misused often resulting in displacement and

loss of livelihood for meager land-holders. The impact of such a dispossessionoften falls heavier on the marginalized segment and tantamount to denial ofeconomic and social security. The state as the guarantor of individual's propertyrights has now emerged as the prime violator.Part of the reason for the current state of affairs is the assumption that thefinal determination as to what constitute 'public purpose' rests with the Parliamentand the Executive branch. Despite observations by the court that '[public interest]can only be defined by a process of judicial inclusion and exclusion', the Executivecontinues to have a sway in defining public interest. The limits imposed on judicialreview add to the drawback. The leeway has been used to broaden the scope of'public interest' to suit vested interest and legitimize excesses. The judiciary onits part has supported the assumption and shown deference to the legislative andexecutive determination and judgment.189 In Somawanti v. State of Punjab, theSupreme Court (July 30, 2004). Justice Ryan listed 'highways, railroads, canals, and otherinstrumentalities of commerce' as examples of this brand of necessity.187 Dissenting judgment of Justice Ryan in Poletown Neighborhood Council v Detroit [1981] 410Mich. 616, 675-676, 678 citing Berrien Springs Water-Power Co v Berrien Circuit Judge,[1903] 133 Mich 48, 51, 53. The opinion become majority view in County of Wayne v.Edward Hathcock and others Michigan Supreme Court (July 30, 2004).188 Emphasis added. ibid. County of Wayne v. Edward Hathcock and others, Michigan SupremeCourt (July 30, 2004) 45.189 Jain (n 136) 1831. ARTICLES Babu, Constitutional Right to Property in Changing Timeswww.icl-journal.com Vol 6 2/2012, 244Court noted that 'whether the purpose for which land was needed was a publicpurpose or not was for the Government to be satisfied about and the declarationof the Government would be final subject to one exception, namely that wherethere was a colourable exercise of the power the declarations would be open tochallenge at the instance of the aggrieved party.'190 In Laxman Rao BapuraoJadhav v. State of Maharashtra the Court reiterated this point and observed that'it is for the State Government to decide whether the land is needed or is likely to

be needed for a public purpose and whether it is suitable or adaptable for thepurpose for which the acquisition was sought to be made. The mere fact that theauthorized officer was empowered to inspect and find out whether the land wouldbe adaptable for the public purpose, it is needed or is likely to be needed, doesnot take away the power of the Government to take a decision ultimately.'191The government's insensitivity in addressing the problem is evident from theRehabilitation and Resettlement Bill 2009 and the Land Acquisition AmendmentBill 2009 which attempts to reintroduce certain fairness in the acquisition process.192Both Bills seeks to secure the monetary and livelihood interest of the peopledisplaced by land acquisition purchases or any other involuntary displacement andattempts to address the lacunas and arbitrariness in the land acquisition.193 TheBills were introduced owing to pressure from people's movements and civilsociety groups. However, there is a great deal of opposition against the bills in itscurrent form. The major opposition has been about Bill's clearly endorsement ofthe view that 'private purpose' implying corporate and private commercial interests,is synonymous with 'public' purpose.194 The only positive development is thepassing of the Scheduled Tribes and Other Traditional Forest Dwellers (Recognitionof Forest Rights) Act, 2006. This landmark legislation deals with protection ofmarginal and tribal communities over their rights to forestland. This Act, it isbelieved, would mitigate the historical injustice committed against forest dwellersand recognize their property rights. Since then attempts have been made toreinitiate the Bills with further modifications. However, these piecemeal190 Somawanti v. State of Punjab [1963] 2 SCR 774. See also Scindia Employees' Union v. Stateof Maharashtra & Others [1996] 10 SCC 150, where the court observed that publication ofdeclaration under Section 6 is conclusive evidence of public purpose. However if acquisitionwould not serve any purpose, or where it was for a 'private purpose', it could be challengedas being 'colorable'.

191 Laxman Rao Bapurao Jadhav v. State of Maharashtra [1997] 3 SCC 493. See also The Stateof Karnataka & Another v. Shri Ranganatha Reddy & Another [1977] 4 SCC 471; Daulat SinghSurana & Others vs. First Land Acquisition Collector & Others Appeal (civil) 6756 of 2003 (13November 2006) <http://judis.nic.in/supremecourt/chejudis.asp> accessed 4 December 2011.192 Bill no. 98-C of 2007. The Bill was initially introduced in 2007 and was passed by the LokSabha on 25th February 2009. Bill was preceded by Cabinet approval for the NationalResettlement and Rehabilitation Policy in October, 2007 a response to the popular oppositionto the takeover of agricultural land for the creation of SEZs.193 Bill no. 97 of 2007. The Land Acquisition (Amendment) Bill was introduced by the government.It was passed in the Lok Sabha on 25th February 2009 but was not cleared by vote in theRajya Sabha.194 D. Bandyopadhyay, 'Why We Must Oppose the Land Acquisition (Amendment) Bill of 2009'Vol. XLVII (35) Mainstream (August 15, 2009) <http://www.mainstreamweekly.net/article1586.html> accessed 4 December 2011. ARTICLES Babu, Constitutional Right to Property in Changing Timeswww.icl-journal.com Vol 6 2/2012, 245amendments to the existing Act shall neither restore right to property as wasknown earlier, nor put an end to state's arbitrariness. Only a change in theconstitutional status of property rights with an effective remedial mechanismcould restore the balance for the 'citizens' of India.Indeed, state is not the only instrumentally though which the 'citizens' interestcould be protected. The judiciary as the constitutional interpreter could play asignification role in redefining property rights in the changing context. Though,judicial attempt to check arbitrariness of laws sanctioning compulsory acquisitionhad limited success, the Court has shown an inclination towards declaring

unconstitutional 'laws' which are blatantly unreasonable. For instance, the SupremeCourt in the Maneka Gandhi case held that each and every provision of theConstitution had to be interpreted in a just, fair and reasonable manner. Therefore,any law depriving a person of his property shall have to do so in a reasonablemanner. Similarly, in I.R. Coelho vs. State of Tamil Nadu, the court also held thatthe ninth schedule does not guarantee absolute protection for laws, and itsvalidity could be tested in the context of basis structure.195 Further, judiciary hasattempted to read into fundamental rights some aspect of property rights. InBhim Singh v. UoI case, the Supreme Court took recourse to Right to Equality(Reasonableness) under Article 14 for invalidating certain aspects of the urbanland ceiling legislation.196In ENIL v. Super Cassette Industries Ltd. (SCIL), on theother hand, the Court referred the right to property not just a constitutional rightor statutory right but also a human right.197 Whether human rights have equalstatus of fundamental rights in constitutional parlance is worth exploring.In a Public Interest Litigation (PIL) filed in the Supreme Court in 2009 it wasargued that the very purpose (abolish zamindaris system and distribution of landamong landless peasants) for which the right to property was relegated in 1978is not no longer relevant. Harish Salve, arguing for the petitioner, pointed outthat having achieved the purpose, the government should now initiate freshmeasures to put right to property back in the fundamental rights.198 An apex courtbench presided over by the Chief Justice said that such a right was inconsistent withthe principle of socialism enshrined in the preamble of constitution. While therational of the judgment is debatable, the PIL has certainly contributed towardsremind the debate on property rights in the changing global context. Indeed,time is ripe for policy makers to acknowledge the need to restore right to property195 I.R. Coelho (Dead) By Lrs vs State of Tamil Nadu & Ors, [1976] Supreme Court, Appeal (civil)1344-45 of 1976 (judgment dated on 11 January, 2007).196 Bhim Singh v. Union of India [1981] 1 SCC 166.197 Justice S. Sinha noted that 'an owner of a copyright indisputably has a right akin to the right

of property. It is also a human right .... Property rights vis-'-vis individuals are also incorporatedwithin the 'multiversity' of human rights. Entertainment Network India Ltd. (ENIL) v. SuperCassette Industries Ltd. (SCIL) [2005] Civil Appeal no. 5114, para 76.198 Salve also said that 'It is an irony that the very same enactments that were aimed atameliorating the lot of the poor and underprivileged are now being used to take away theirlands to be handed over to the rich, including large corporations and foreign conglomerates.'Satya Prakash, 'Restore fundamental right to property: PIL' Hindustan Times New Delhi,February 27, 2009 <http://www.hindustantimes.com/Restore-fundamental-right-to-property-PIL/Article1-384640.aspx> accessed 26 April 2011. ARTICLES Babu, Constitutional Right to Property in Changing Timeswww.icl-journal.com Vol 6 2/2012, 246as a Fundamental Right to ensure protection of elementary and basic proprietaryrights of poor Indian 'citizens' against compulsory land acquisition. In some ofthe recent decisions, one finds reverberation of the concern over arbitraryexercise of eminent domain.1996. CONCLUDING OBSERVATIONSWhile the relationship between property rights and civil liberties should notbe casually overlooked, one must acknowledge the correlation between propertyand social identity, dignity, livelihood and sense of belonging, particularly forthose people whose life for generations are permanently attached to land.200 Untilfew decades ago in many parts of the world, ownership of property determined aperson's social standing, right to vote, and most other civil rights. Compulsoryacquisition of property or land rights, where rural or urban, tribal or indigenous,cannot be justified even in the supreme of social justice initiatives, let alone thecurrent trend of state sponsored 'development policies' to serve corporate India.Indeed, for many Indians, property rights assume more value than some of thefundamental rights guaranteed under Part III. Fundamental rights, such as rightto life, liberty and equality may also become meaningless without a guarantee ofproperly rights. Furthermore, land acquisition has the tendency to exacerbate

inequality and lower trust in the state.201It is the context and time that justified relegation of fundamental right toproperly in the first few decades of India's independence. Since then time haschanges, and the change in scenario warrants serious introspection by both theParliament and judiciary. The debate is now 'commercial vs. individual interests',not any more 'public vs. individual interests'. India's policy today espouses strongerprotection for alien and domestic business interests and investments, than itsindigenous population. The obligations under WTO and other multilateral andbilateral investment treaties ensure that such higher standard of protection andcompensation remain. The internationalisation of protection of property rightshas ensured that the local judicial system give way for international adjudicationbased on rules and standards internationally recognised. Neither the Indianconstitutional framework nor the socialistic outlook defended by the Indianparliament and judiciary would deter international tribunals in providing a higher199 The Allahabad High Court has quashed acquisition of nearly 600 hectares of land in twovillages in Greater Noida. The Greater Noida Authority, allegedly using loopholes in the LandAcquisition Act, acquired 15,000 hectres of land at dirt cheap rates and sold it to developers.Around 200 cases are scheduled to come up for hearing in the next few days. See 'GreaterNoida: HC scraps land acquisition' Headlines Today Greater Noida, July 19, 2011<http://indiatoday.intoday.in/site/story/allahabad-hc-annuls-land-acquisition-near-greaternoida-village/1/145464.html> accessed 26 April 2011.200 Freeman, identity is 'what we know and what we feel. It is an organizing framework for holdingtogether our past and our present and it provides some anticipated shape to future life' in M.Freeman, ' The new birth right?: Identity and the child of the reproductive revolution' (1996)4 Int'l J Children's Rts 273-297 at 290.201 Pratap Bhanu Mehta, 'It's land, stupid' The Indian Express (Delhi, August 2010) 8. ARTICLES Babu, Constitutional Right to Property in Changing Times

www.icl-journal.com Vol 6 2/2012, 247remedy not guaranteed for its own people. In the process, India has weakenedits power to exercise eminent domain by yielding to international commitments,which guarantee the safety and security for foreign investments and intellectualproperty. Institutions such as the MIGA and OPIC could use its coercion power toensure the guarantee that the host governments meet their international obligationsat all times.Such discriminatory policy and double standards in the application of eminentdomain call into question the legitimacy of the compulsory taking of land andpresents a reasonable argument for higher constitutional protection for citizens.The commercial interest that dominates the current acquisition policy needs tobe overcome with a justification purely driven by genuine 'public interest.' Thiscould be achieved only by rethinking the role of state in the context of eminentdomain and the fundamental right to livelihood, economic security and identity.This does not mean the state's power of eminent domain must be curtailedsignificantly. The state's interference with individual property must be reservedfor instances where it is imperative in the general public good. The problematicarea has been the use of eminent domain for private commercial interest. In awelfare state, ensuring equitable distribution of wealth demands intelligible exerciseof such power with proper check and balance. The present social-economiccontext, were liberalization has made privatisation of all aspects of governance,guaranteeing private rights shall go a long way in securing most of the fundamentalrights enshrined in Part III, without compromising the directives under Part IV ofthe Constitution. If the current trend is to continue, the social legitimacy ofcapital as an instrument of development could be put at risk. The circumstancethat justified arbitrary acquisition has come to pass and changing context demandschange in laws to redefine properly rights in India. R. Rajesh Babu is Assistant Professor (Law) at thePublic Policy and Management Group of the IndianInstitute of Management Calcutta. The author wishto acknowledge the support of Graduate Instituteof International and Development Studies (IHEID),Geneva, and the Indian Institute of Management

Calcutta (IIMC) in completing this paper. The authorthanks Anindya Chaudhury for his comments onthe earlier draft. Usual disclaimers apply. Email:rajeshbabu@iimcal.ac.in.

State, private property and the Supreme Court NAMITA WAHI

Posted on September 20, 2012 by admin

FROM FRONTLINE

Reinstatement of the fundamental right to property in the Constitution will on its own do little to protect the interests of poor peasants and traditional communities.

The Indian Constitution adopted in 1950 guaranteed a set of fundamental rights that cannot be abridged by Central or State laws. One of these fundamental rights was the right to property enshrined in Articles 19(1)(f) and 31. Article 19(1)(f) guaranteed to all citizens the right to acquire, hold and dispose of property, subject to reasonable restrictions in the public interest. Article 31 provided that any state acquisition of property, whether movable or immovable, must only be upon enactment of a valid law, for a public purpose and upon payment of compensation.

The following decades saw conflict between Parliament and the Supreme Court, with the court invalidating acquisition laws for violating the fundamental right to property and Parliament responding with numerous amendments to the Constitution that redefined property rights. This conflict culminated in the 44th Amendment, which abolished the fundamental right to property in 1978. The same amendment, however, inserted Article 300A in the Constitution, which provided that no person shall be deprived of his or her property without the authority of a valid law.

The court’s role before 1978 is vilified in political rhetoric and scholarly discourse as being reactionary and anti-poor. It is criticised for protecting the rights of rich property owners and impeding Parliament’s progressive land-reform agenda. Post-1978, however, the court is regarded as progressive and pro-poor. It is credited with developing a rich jurisprudence of socio-economic rights reading into the fundamental right to life and non-enforceable directive principles of state policy, including the rights to food, shelter, livelihood and a healthy environment.

Since the early 2000s, however, there has been growing disenchantment with this narrative. Widespread acquisition of land by the state for dams and infrastructure and industrial projects has received significant public attention owing to the dispossession of poor peasants and traditional communities such as forest dwellers, cattle grazers, fishermen and indigenous tribal groups. Some scholars now argue that the “weakening of property rights” by Parliament in response to the court’s pro-property rights decisions before 1978 has “dispossessed the poor” rather than the rich. In accordance with this view, in 2009, a public interest petition was filed before the Supreme Court, Sanjiv Agarwal vs Union of India, seeking invalidation of the 44th constitutional amendment and reinstatement of the fundamental right to property. The petitioner cited the large-scale displacements caused by the creation of special economic zones (SEZs) and by projects such as the Narmada dams and the land conflicts in Singur and Nandigram as motivating his demand. In 2010, the Supreme Court dismissed the petition but not on its merits.

Simultaneously, since the late 1990s, many economists and development theorists have argued that strong formal property rights are a necessary precondition for economic growth. Perhaps the most influential proponent of this view is Hernando de Soto. In his book The Mystery of Capital, published in 2000,

de Soto argues that strong protection for property rights is the key to unlocking “capital”, that is, the potential value of assets, which is necessary for economic growth and for the elimination of poverty in developing countries. In line with these prescriptions, the World Bank has supported programmes for the formalisation of property rights and the creation of titling systems to secure such rights in many countries including India.

Assumptions behind rhetoric

The rhetoric for strengthening property rights through constitutional or legislative means is based on the assumption that strong property rights will somehow on their own ensure protection of the interests of poor peasants and traditional communities. This assumption is in turn based on two developments. The first is the hegemonic nature of the “rights” discourse, which tends to regard the articulation of an interest in the form of a “right” as valuable per se irrespective of the social and political context within which those rights are exercised and enforced. The second is an implicit faith in the judiciary, an institution whose image, though somewhat tarnished by allegations of corruption and non-transparency in the recent past, still commands enormous public legitimacy as compared with that of Parliament and the executive.

Yet, rights are abstract and are given content only by the social and political context within which they are articulated and enforced. A property right is not the relation between an owner and a thing but between several individuals with respect to a thing. Property law involves relations among people; more broadly, it defines a particular social, economic, and political structure. Consequently, property relations in society are structured differently in each period of the society’s development according to the dominant perception of what an ideal society should look like. Therefore, at any given point of time, certain property interests and property rights of certain individuals and groups will be prioritised over others.

Moreover, a review of the Supreme Court’s property rights jurisprudence indicates that despite apparent conflict between the court and Parliament in property rights cases, there has existed significant consensus between judges and legislators about appropriate property relations in society stemming from their shared vision of economic development and industrial growth as progress. In

what follows, I review the history of the fundamental right to property to demonstrate the nature of this consensus and to evaluate its impact on current debates regarding land acquisition and the reinstatement of a fundamental right to property.Right to property: A review

The Constituent Assembly debated the inclusion and content of a fundamental right to property for two and a half years before adopting Article 31, a provision taken almost verbatim from Section 299 of the Government of India Act, 1935, with exceptions for certain zamindari abolition laws. Article 31 codified what is often described in political and legal parlance as the “eminent domain” power of the state. This power inherent in the exercise of a state’s sovereignty allows the state to compulsorily acquire property belonging to private persons for a public purpose upon payment of just compensation. The twin requirements of public purpose and just compensation are based on the rationale that no individual should have to disproportionately bear the burden of supporting the public good.

“Acquisition and requisitioning of property” was included as a subject in the Concurrent List to enable both Parliament and the State legislatures to enact laws on the subject. In the last 60 years, over a hundred acquisition laws have been enacted. Acquisitions also continue to be made under colonial laws that have remained in force after the adoption of the Constitution. The most significant of these colonial laws is the Land Acquisition Act, 1894, which, amended frequently by Parliament and the State legislatures since Independence, continues to govern land acquisitions today. The Act provides that compensation for land acquisitions must be computed at the market value of the land acquired. Given the public outrage regarding land conflicts and the widespread displacement of poor peasants and traditional communities, moves started in 2007 for a comprehensive amendment of the 1894 Act, followed by attempts in 2011 for the first time to repeal and replace this Act by the Land Acquisition Rehabilitation and Resettlement Bill, 2011. This Bill is currently pending in Parliament.

Article 31 was drafted with a view to reaching a just compromise between various competing interests. On one end of the spectrum were the zamindars and industrialists who sought protection for their property interests and, failing that, payment of market value compensation for acquisition of their property. On the other end were the democratic socialists who wanted zamindari abolition without

compensation, land redistribution and nationalisation of key industries, all of which necessitated altering existing property arrangements and therefore militated against the recognition of a fundamental right to property. Also represented in the Constituent Assembly were those who believed that property rights, particularly those of industry, should be protected even as they believed in the legitimacy of zamindari abolition. The views of the last group were ultimately reflected in the compromise that was reached. Predictably, however, the compromise failed to please both the zamindars and the socialists and merely shifted the battle arena from the Constituent Assembly to the courts.

The distinction between zamindari and industrial property reflected in the compromise adopted in Article 31 was derived from the prevailing development discourse in the post-War period with its focus on economic growth through greater industrialisation and capital formation. The adoption of such a strategy of growth and development based on the rejection of feudal tenure systems in an agrarian society and the acceptance of a state-led capitalist model of development in an industrial society required protection of the property rights of industry.

Judiciary and zamindari rights

Interestingly, despite the so-called disagreements between the Supreme Court and Parliament and the charge often levelled against the court for impeding progressive land reforms, when the zamindars challenged the abolition of their property rights before the court as violating Article 31, with the exception of the Kameshwar Singh case where the court struck down two provisions of the Bihar Land Reforms Act, the court upheld the abolition of zamindari rights in all other cases even when absolutely no compensation was allowed for the extinguishing of particular rights.

Moreover, in each of these cases, the court not only regarded zamindari abolition as a legitimate public purpose but also adopted a highly deferential standard of review in its examination of what constituted “public purpose”. In successive cases, the court held that the expression “public purpose” was “elastic and could only be developed through a process of judicial inclusion and exclusion in keeping with the changes in time, the state of society and its needs”. The court also clarified that acquisitions that benefited particular individuals or entities could

satisfy the requirement of public purpose so long as they were in furtherance of a particular scheme of public benefit or utility.

Consequently, even before 1978, when the right to property was a fundamental right, state acquisition of land for private industry was routinely upheld as a valid public purpose. Over time, the list of public purposes has been continually expanded to include acquisitions for SEZs, private cooperative societies, private recreational projects and residential development, all of which have been upheld by the Supreme Court. To date, the Supreme Court has never found a law unconstitutional for violating the requirement of public purpose.

In contrast, the court scrutinised the compensation requirement, strictly emphasising in its early decisions that the payment of compensation for acquisition of property was mandated by Article 31. Parliament’s fear that the Supreme Court would insist on this requirement even in the zamindari abolition cases led to the First Amendment of the Constitution in 1951, which ousted judicial review of zamindari abolition laws.

Following the First Amendment, the court heard cases of acquisition of urban land, government takeover of a mismanaged textile mill, and cancellation of motor vehicle licences of private bus operators. In each of these cases, the Supreme Court insisted that acquisition without payment of market value compensation violated Article 31. Overriding the Supreme Court’s rulings, Parliament enacted the Fourth Amendment in 1955, which ousted judicial review of the adequacy of compensation in all cases where the deprivations of property did not transfer title or possession of the property to the state. However, in a series of cases following the Fourth Amendment and culminating in the bank nationalisation case in 1970, the court resurrected the compensation requirement and invalidated laws for providing inadequate or illusory compensation. These decisions ultimately led to the abolition of Articles 19(1)(f) and 31 in 1978.

In the 1980s, with the rise of neoliberalism in development discourse, we saw a move away from the nationalisation of resources and a lifting of state control. In 1991, the economy was liberalised, and attempts were made to integrate it with the global economy through the reduction of tariff barriers and the liberalisation of foreign investment laws. In 1999, a Disinvestment Ministry was created and specifically charged with the privatisation of state-owned industries. Finally, with

the enactment of the Special Economic Zones Act in 2005, the acquisition of land by the government to hand it over to private industry, which had happened in an ad hoc manner in previous decades, became official government policy.Abdication of judicial review

During this period, despite the court’s so-called progressive socio-economic rights phase, we see an almost complete abdication of judicial review of acquisition laws. This is presumably because of the abolition of Article 31 as it removed the requirements of public purpose and just compensation from the chapter on fundamental rights. However, this is not a satisfactory explanation since the insertion of Article 300A in the Constitution both enabled and required the court to continue its review of acquisitions. Moreover, the court had in the past continued to review the adequacy of compensation even after the Fourth Amendment had expressly ousted judicial review with respect to the same, thereby demonstrating that it could at times choose not to be constrained by constitutional amendments.

As a consequence of the court’s abdication of its review powers, since the 1980s we find little or no disagreement between the court and Parliament on property rights issues, even though property relations were significantly altered in order to transfer land from individuals and traditional communities to private industry. For instance, in its 2000 judgment in the Narmada Bachao Andolan case, the Supreme Court, in a highly deferential decision, accepted the government’s decision about the necessity and feasibility of the Narmada dam. In doing so, it ignored evidence regarding the economic and environmental unsustainability of the dam, which had resulted in the World Bank withdrawing from the project, and the displacement of thousands of people who were not covered by the government’s rehabilitation plans.

Revival of judicial scrutiny

In the last two or three years, however, we have seen a revival of judicial scrutiny. In 2011 the Supreme Court quashed the acquisition of farmland in Haryana on the grounds of violation of procedures under the Land Acquisition Act, 1894. In several pending cases, acquisition of land for housing development projects is under review. Given that this heightened scrutiny is occurring within the confines of the court’s review powers under Article 300A and without the reinstatement of

a fundamental right to property in the Constitution, clearly the court’s complete abdication of its review powers in the last three decades cannot be attributed merely to the abolition of Article 31.

In conclusion, the court’s relationship with Parliament on property rights issues has been largely one of consensus marked by occasional disagreement. This is partly a result of the court’s concern for its own autonomy from executive and legislative interference. More importantly, however, it follows from consensus between the court and Parliament about appropriate property relations in society, which is in turn derived from their shared vision of economic development and industrial growth as progress.

In the light of this, it is clear that reinstatement of the fundamental right to property in the Constitution will on its own do little to protect the interests of poor peasants and traditional communities. While the court may in the present political climate invalidate acquisitions that smack of blatant arbitrariness and crony capitalism, such isolated cases may not be sufficient to address the needs of those facing displacement on a systemic level. Before we reinstate the fundamental right to property in the Constitution, we need not only a clearer articulation of what such a right would mean in the present context but also sustained resistance to the current model of economic development which privileges property rights of big industry over those of poor peasants, workers, owners of small industrial units and traditional communities.

Namita Wahi is a lawyer and doctoral candidate at Harvard Law School. Her doctoral dissertation is on the socio-legal history of the right to property in India.

SOURCE: http://www.frontlineonnet.com/stories/20121005291903600.htm

Right to Property as a Constitutional Rightby Deesha Suri

Categories: constitutional law, Property laws

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Published on: January 26, 2013

The right to property under the Indian constitution tried to approach the question of how to handle property and pressures relating to it by trying to balance the right to property with the right to compensation for its acquisition through an absolute fundamental right to property and then balancing the same with reasonable restrictions and adding a further fundamental right of compensation in case the properties are acquired by the state.This was exemplified by Article 19(1)(f) balanced by Article 19(5) and the compensation article in Article 31. This was an interesting development

influenced by the British of the idea Eminent Domain but overall it struck an interesting balance whereby it recognized the power of the state to acquire property, but for the first time in the history of India for a thousand years or more, it recognized the individual’s right to property against the state.However, when the state realized that an absolute property and the aspirations of the people were not the same the legislature was subsequently forced to make the said right to property subject to social welfare amid amendments to the constitution. Articles 31-A, 31-B and 31-C are the indicators of the change and the counter pressure of the state when it realized the inherent problems in granting a clear western style absolute fundamental right to property (even though it was balanced by reasonable restrictions in the interest of the public), specially Article 31-C, which for the first time brought out the social nature of property.

INTRODUCTIONThe Indian Constitution does not recognize property right as a fundamental right. In the year 1977, the 44th amendment eliminated the right to acquire, hold and dispose of property as a fundamental right. However, in another part of the Constitution, Article 300 (A) was inserted to affirm that no person shall be deprived of his property save by authority of law. The result is that the right to property as a fundamental right is now substituted as a statutory right. The amendment expanded the power of the state to appropriate property for social welfare purposes. In other words, the amendment bestowed upon the Indian socialist state a license to indulge in what Fredric Bastiat termed legal plunder. This is one of the classic examples when the law has been perverted in order to make plunder look just and sacred to many consciences.Indian experiences and conception of property and wealth have a very different historical basis than that of western countries. The fact the present system of property as we know arises out of the peculiar developments in Europe in the 17th to 18thcentury and therefore its experiences were universally not applicable. A still more economic area in which the answer is both difficult and important is the definition of property rights. The notion of property as it has developed over centuries and it has embodies in our legal codes, has become so much a part of us that we tend to take it for granted, and fail to recognize the extent to which just what constitutes property and what rights the ownership of property confers are complex social creations rather than self-evident propositions.This also seems to be the hidden reason why the right to property is suddenly much contested throughout India today and why the state is coming up

unexpectedly against huge resistance from unexpected quarters in attempting to acquire land in India. The action of the state to assert the Eminent Domain over subsidiary claims on property and the clash which resulted there from Singur, Nandigram and other parts of India is precisely a manifestation of a clash of cultures. To put in Samuel Huntingtons words, the ideas of the west of development and liberalization propagated by the present ruling elite and the old Indic ideas which shape the views of the majority of the people.

DOCTRINE OF EMINENT DOMAINDOCTRINE OF EMINENT DOMAIN v HISTORYFew hundred years old and first used when an English king needed salt petre (form of Potassium Nitrate, used in the manufacturing of fire work) to make gun powder and when he was not able to find any land, he grabbed hold of a private mine. The owner of the private mine approached the House of Lords, the House of Lords held that, the sovereign can do anything, if the act of sovereign involves public interest.WHAT IS THE POWER BESTOWED BY THE DOCTRINE TO THE STATE???Basically this doctrine entitles sovereign to acquire private land for a public use, provided the public-ness of the usage can be demonstrated beyond doubt.

PRESENTLY THE DOCTRINE DOES THE DUTY OF:In the present context this doctrine raises the classic debate of powers of State v. Individual Rights. Here comes the DID Development Induced Displacement which means, The forcing of communities even out of their homes, often from their home lands for the purpose of economic development, which is viewed as a Human Right violation in the International level.

ESSENTIAL INGREDIENTS OF THIS DOCTRINE

1. Property is taken for public use2. Compensation is paid for the property taken.

The above said are the two limitations imposed on the power of Eminent Domain by the repealed A.31 whereas the new article 300A imposes only one limitation on this power i.e. authority of law

MAXIMSThe doctrine is based on the following two Latin maxims:i. Salus Populi est Suprema Lex Welfare Of The Public Is The Paramount Law;ii. Necessita Public Major est Quam Public Necessity Is Greater Than Private Necessity.Every government has an inherent right to take and appropriate the private property belonging to individual citizen for public use. This power is known as Eminent Domain. It is the offspring of political necessity. This right rests upon the above said two maxims. Thus property may be needed and acquired under this power for government office, libraries, slum clearance projects, public schools, parks, hospitals, highways, telephone lines, colleges , universities, dams, drainages etc. The exercise of such power has been recognized in the jurisprudence of all civilized countries as conditioned by public necessity and payment of compensation. But this power is subject to restrictions provided in the constitution.In the United States of America, there are limitations on the power of Eminent Domain—1. There must be a law authorizing the taking of property2. Property is taken for public use3. Compensation should be paid for the property taken.

RIGHT TO PROPERTY

MEANING OF PROPERTYThe word property as used in Article 31 the Supreme Court has said should be given liberal meaning and should be extended to all those well recognized types of interest which have the insignia or characteristic of property right. It includes both corporeal and incorporeal right. It includes money, Contract, interest in property e.g., interest of an allottee, licensees, mortgages or lessees of property. The Mahan ship of a Hindu Temple, and shareholders of Interests in the company are recognizable interest in property. The right to receive pension is property.SUPREME COURT APPROACH TO THE RIGHT TO PROPERTYThe Supreme Courts approach to the right to property can be divided into two phases:-• THE TIME TILL THE RIGHT TO PROPERTY WAS A FUNDAMENTAL RIGHT (PRE 1978)

• THE TIME AFTER THE CONVERSION OF RIGHT TO PROPERTY AS A CONSTITUTIONAL RIGHT (POST 1978)

PRE 1978 THE FUNDAMENTAL RIGHT TO PROPERTYThe Ninth Schedule was inserted in the constitution by the Constitution (First Amendment) Act, 1951 along with two new Articles 31 A & 31 B so as to make laws acquiring zamindaris unchallengeable in the courts. Thirteen State Acts named in this schedule were put beyond any challenge in courts for contravention of fundamental rights. These steps were felt necessary to carry out land reforms in accordance with the economic philosophy of the state to distribute the land among the land workers, after taking away such land from the land lords.By the Fourth Amendment Act, 1955, Art 31 relating to right to property was amended in several respects. The purpose of these amendments related to the power of the state o compulsory acquisition and requisitioning of private property. The amount of compensation payable for this purpose was made unjustifiable to overcome the effect of the Supreme Court judgment in the decision of State of West Bengal v. Bella Banerjee. By the constitution (Seventeenth Amendment) Act, 1964, article 31 A was amended with respect to meaning of expression estate and the Ninth Schedule was amended by including therein certain state enactments.During this period the Supreme Court was generally of the view that land reforms need to be upheld even if they did strictly clash against the right to property, though the Supreme Court was itself skeptical about the way the government went about exercising its administrative power in this regard. The Supreme Court was insistent that the administrative discretion to appropriate or infringe property rights should be in accordance with law and cannot be by mere fact. The court however really clashed with the socialist executive during the period of nationalization, when the court admirably stood up for the right to property in however a limited manner against the over reaches of the socialist state

In this juncture the court in this Bank Nationalization case has clearly pointed out the following two points:a. The constitution guarantees the right to compensation which is equivalent in money to the value of the property has been compulsorily acquired. This is the basic guarantee. The law must therefore provide compensation and for determining compensation relevant principles must be specified: if the principles

are not relevant the ultimate value determined is not compensation.b. The constitution guarantees that the expropriate owner must be given the value of his property (the reasonable compensation for the loss of the property) That reasonable compensation must not be illusionary and not reached by the application of an undertaking as a unit after awarding compensation for which go to make up the undertaking and omitting important items amounts to adopting an irrelevant principle in the determination of the value of the undertaking and does not furnish compensation to the expropriated owner.

POST 1978 THE CONSTITUTIONAL RIGHT TO PROPERTYIt was at this period the Supreme Court had gone out of its way to hold against the right to property and the right to accumulate wealth and also held that with regard to Article 39, the distribution of material resources to better serve the common good and the restriction on the concentration of wealth. The court however is also responsible in toning down the excesses on the right to property and wealth by the socialist state. During the period of Liberalization, the Supreme Court has attempted to get back to reinterpret the provisions which give protection to the right to property so as to make the protection real and not illusory and dilute the claim of distribution of wealth. However, this has been an incremental approach and much more needs to be done to shift the balance back to the original in the constitution. This means that the acquisition of property is not merely temporal but to be accepted as valid it must conform to spiritual guidelines as well as the Indian conceptions recognize quite clearly that though property can be enjoyed which has not been acquired strictly in terms of the law, it cannot be called real property of the person concerned. Property therefore is not merely an individual right but a construction and part of social and spiritual order. The basis of conception of property in the societies of India is not a rigid and clear demarcation of claims belonging to an individual but is a sum total of societal and individual claims all of which need not be based on clear individual legal demarcation.44TH AMENDMENT TO THE CONSTITUTION & THE PRESENT SCENARIO

The outburst against the Right to Property as a Fundamental Right in Articles 19 (1) (f) and 31 started immediately after the enforcement of the Constitution in 1950. Land reforms, zamindari abolition laws, disputes relating to compensation, several rounds of constitutional amendments, litigations and adjudications ultimately culminated first in the insertion of the word socialist in the Preamble

by the 42nd Amendment in 1977 and later in the omission of the Right to Property as a FR and its reincarnation as a bare constitutional right in Article 300-A by the 44th Amendment in 1978.Today, the times have changed radically. India is no more seen through the eyes of only political leaders with a socialist bias. It is India Shining seen through the corporate lenses of financial giants like the Tatas, Ambanis and Mahindras, with an unfathomable zeal for capitalism, money and markets. There is another angle. There is a scramble by industrialists and developers for land all over the country for establishment of Special Economic Zones. Violent protests by poor agriculturists have taken place to defend their meager land-holdings against compulsory acquisition by the State. In particular, the riots and killings in Singur, Nandigram etc. in a State (of West Bengal) ruled by communists has turned the wheel full circle. Socialism has become a bad word and the Right to Property has become a necessity to assure and assuage the feelings of the poor more than those of the rich.Soon after the abolition of the Fundamental Right to property, in Bhim Singh v. UOI, the Supreme Court realized the worth of the Right to Property as a Fundamental Right. In the absence of this Fundamental Right to property, it took recourse to the other Fundamental Right of Equality which is absolutely the concept of Reasonableness under Article 14 for invalidating certain aspects of the urban land ceiling legislation. Today, the need is felt to restore the right to property as a Fundamental Right for protecting at least the elementary and basic proprietary rights of the poor Indian citizens against compulsory land acquisition. Very recently, the Supreme Court, while disapproving the age-old Doctrine of Adverse Possession, as against the rights of the real owner, observed that the right to property is now considered to be not only a constitutional right or statutory right but also a human right. Thus, the trend is unmistakable. By 2050, if the Constitution of India is to be credited with a sense of sensibility and flexibility in keeping with the times, the bad word socialist inserted in the Preamble in 1977 shall stand omitted and the Right to Property shall stand resurrected to its original position as a Fundamental Right.

RECENT APPROACH BY THE SUPREME COURTIn a very recent PIL filed in the Supreme Court which was still pending in the Honble Court, it was held that the very purpose for which the right to property relegated to a mere statutory right in the late 1970s is not no longer relevant. It was argued by Harish Salve, the learned counsel for the petitioners that:

The right to property is made a statutory right in 1978 to abolish large land holdings with zamindars and rich and their distribution among landless peasants;Having achieved the very purpose behind the legislative action in the late 1970s, the government should now initiate fresh measures to put right to property back in the fundamental rights.Earlier, the apex court in its famous Keshavanandan Bharti case of 1973 had first termed some basic and unalterable parameters and features of the Indian state and its constitution like the country’s democratic form of government, as its basic structure, which could not be changed at all even by constitutional amendment. But, in the judgement of the case, Justice H.R. Khanna had made a passing observation to the effect that fundamental rights accorded to the citizens’ might not be a basic structure of the Constitution. This had left the scope open for changing or diluting the fundamental right of the citizens. Though later in 1975, while adjudicating another famous law suit between erstwhile Prime Minister Indira Gandhi and prominent political leader of his times Raj Narain, Justice Khanna had tried to clarify that his observation had been misconstrued. Despite that clarification, the Janata Party government, under the advice of then law minister Shanti Bhushan, had changed the Constitution, removing the right to property from the list of fundamental rights.

THE FUNDAMENTAL RIGHTS CASE AND ITS ATTITUDE TOWARDS THE RIGHT TO PROPERTY

This decision which changed the entire scenario of the Indian Constitution did the three following important changes:1. Through Article 31 C took away the right to acquire, hold and dispose of the property under Article 19(1) (f)2. Right to property under Article 19(1) (f) did not pertain to the basic structure of the constitution (Honble Justice. H.R.Khanna)3. Article 19(1) (f) conferred citizens the right to acquire, hold and dispose of the property under Article 19(1) (f) which formed a part of group of articles under the heading Right to Freedom4. There is no necessity for an elaborate argument to demonstrate that property is intimately connected with the Right to Freedom.Right to Property, 300A. Persons not to be deprived of property save by authority of law no person shall be deprived of his property save by authority of law.

The 44th amendment act which deleted article 19(1) (f) and introduced this article brought out the following important changes:1. In view of the special position sought to be given to fundamental rights, the 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. Necessary amendments for this purpose are being made to Article 19 and Article 31 is being deleted. It would however be ensured that the removal of property from the list of fundamental rights would not affect the rights of the minorities to establish and administer educational institutions of their choice.2. Similarly, the right of persons holding land for personal cultivation and within ceiling limit to receive market compensation at the market value will not be affected.3. Property, while ceasing to be a fundamental right, would, however, be given express recognition as a legal right, provision being made that no person shall be deprived of his property save in accordance with law.

Problems Posed by the Removal of Right to Property from Fundamental Rights:The rights conferred by Article 19(1)(f) and Article 31 read with the undernoted entries were so closely interwoven with the whole fabric of our Constitution that those rights cannot be torn out without leaving a jagged hole and broken threads. The hole must be mended and the broken threads must be replaced so as to harmonize with the other parts of the Constitution. The task is not easy, and courts will be called upon to answer problems more formidable than those raised by the Article 31 after it was amended a number of times.

However some of the problems which will arise and the probable lines of solution, are considered below:(i) That Articles 19(1) (f) and 31(2) dealt with a different, but connected, aspects of the right to property is clear from several Supreme Court decisions which dealt with the co relation of those two Articles.(ii) The correct view was that the two Articles were mutually exclusive. But one judgement which was soon corrected and another judgement which was a judgement per incuriam, to the view that Articles 19(1)(f) and 31(2) were not mutually exclusive. This judicial conflict was resolved by 25th Amendment, which introduced in Article 31 a new clause (2-B) which provided that Nothing in Article 19(1)(f) shall effect any such law as is referred in clause (2). The validity of this Amendment as unanimously upheld in the Kesavananda case. The reason for this

mutual exclusiveness was that when property is acquired for a public purpose on payment of compensation, the right of a citizen to hold property is gone and the question of his right to hold property subject to reasonable restrictions does not arise.(iii) Further, Article 19(1)(f) that conferred citizens the right to acquire, hold and dispose of property formed part of a group of articles under the heading Right to Freedom. It requires no elaborate argument to demonstrate that property is intimately connected with the right to freedom. Article 31 appeared under the heading Right to Property; for the right to freedom conferred by Article 19(1)(f) would be worth little if the property when acquired could be taken away by law. Hence Article. 31 provided that private property could be acquired only for a public purpose and on payment of compensation (later amount). There is nothing in the Statement of Objects and Reasons to show that Parliament no longer looks upon the right to acquire, hold and dispose of property as a part of the Right to Freedom.

(iv) The retention of Article. 19(1)(a) to (e) and (g) is a clear indication to the contrary. That sub-clauses (d), (e) and (f) of Article. 19(1)(f)(1) were interlinked is clear from their provisions as well as from sub-Article (5) which governed each of those sub-clauses. The meaning of Article 19(1) (f) has been considered and it is being submitted that the Supreme Court correctly held that the right conferred by Article 19(1)(d) was not a right of free movement simplicities, but a special right to move freely throughout the territory of India with a view to secure, among other things, the unity of India which a narrow provincialism would deny.(v) This right of free movement was not limited to travelling throughout India, because it was accompanied by the further right conferred by Article 19(1) (e) to reside and settle in any part of India, as also the right conferred by Article 19(1)(f) to acquire, hold and dispose of property, in any part of India. But a right to settle in any part of India means not only a right to have a place to live in, but also a place to work in, for Article 19(1)(g) confers on every citizen the right to practice any profession, or to carry on any occupation, trade or business.(vi) Further, Article 19(1)(a) confers on every citizen the right to the freedom of speech and expression, which right includes the freedom of the press[43]a right which is basic to democracy. But a press needs a building or buildings to house it, and movable property to work it, so that without the right to acquire, hold and dispose of property, there can be no freedom of the press. And the same is broadly true of the fundamental right conferred by Article 19(1)(c)-the right to

form associations or unions-for normally the working of associations and unions involves the right to acquire, hold and dispose of property. What then is the effect of deleting Article 19(1)(f), which conferred the right to acquire, hold and dispose of property, and of deleting Article 31 which provided for the acquisition of property for public purpose on payment of compensation (later called amount)?To these questions the Statement of Objects and Reasons gives no answer-it is doubtful whether those who framed the property amendments were even aware of their effect on other fundamental rights retained in Article 19(1)(f)(1), and on the political unity of India which Article 19(1)(f)(1)(d), (e), (f) and (g) was intended, inter alia, to sub serve, along with other provisions of our Constitution. At any rate, the framers on these amendments have provided no solutions for the problem, which the property amendments inevitably raise.One further complication must be noted here. Although Article 19(1)(f) and Article 31(2) had been made mutually exclusive by Article 31(2-B), there was no such mutual exclusiveness between Article 31(2) and the right to practice a profession or to carry on any occupation, trade or business conferred by Article 19(1)(g). This right was subject to restrictions mentioned in Article 19(1)(f)(6). But trade and business is capable of being acquired, as Section 299(2) of the Government of India Act, 1935, clearly showed.

By what test is the validity of the law acquiring property, and a law acquiring trade or business, including industrial and commercial undertakings, to be judged?The 25th Amendment inserted in Article 31 a new sub clause (2) with the following proviso:Provided that in making any law for the compulsory acquisition of any property of an educational institution established and administered by minority, referred to in clause (1) of Article 30, the State shall insure that e 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.This proviso recognized the fact that the valuable right conferred by Article 30(1) on minorities to establish educational institutions of their choice would be destroyed if adequate compensation was not made for acquisition of the property of such institutions. Political expediency may require that minorities should not be alienated by depriving them of their cherished rights, especially when minorities are as large as they are in India. Special rights are conferred on minorities because in a democratic country with adult universal suffrage, majorities by virtue of their

numbers can protect themselves. But it does seem illogical and unjust to leave out majority educational institutions from the same protection, unless it was believed that majorities, deprived of their power to oppress minorities, would not wish to oppress themselves

DEFECTS OF THE 44TH AMENDMENT ACTThe amendment was brought out without realizing the following draw backs:(1) The close relation of property with other fundamental rights, which the Janata Party was pledged to restore;(2) The effect of this change on the legislative power to acquire and requisition property; and(3) The correlation of fundamental rights to Directive principles of state policy.

IMPLICATIONS:(i) The Right to Property would now be a Constitutional Right and not a Fundamental Right. A legislation violating the constitutional right to property could now be challenged only in High Courts and not directly in the Supreme Court.(ii)Due to the deletion of Article 31 the Government was no longer under an obligation to compensate persons whose land had been acquired as per a law passed by Parliament.Deprivation of property without compensation is still legally tenable especially in light of the Supreme Court’s ruling, in the Maneka Gandhi case, which held that each and every provision of the Constitution had to be interpreted in a just, fair and reasonable manner. Therefore any law depriving a person of his property shall have to do so in a reasonable manner. It could be argued that the only reasonable manner to deprive a person of his property would be to offer him, reasonable compensation for the same. This discussion however is not completely relevant for the purpose of this post. The only relevant point is the fact that under the Constitution no person can be deprived of their property without the authority of law.

The two relevant concepts that now require to be examined are ‘property’ & ‘Authority by law’.

‘Property’ as understood in Article 300A:The obvious first question is as to whether or not ‘intellectual property’ such as

‘clinical trial data’ would fall within the definition of ‘property’ as understood in Article 300A. There seems to be

Enough authority to support the proposition that ‘property’ as understood in Article 300A is wider than just ‘immovable property’. One such authority in the context of ‘intellectual property rights’ is the judgment of the Supreme Court in the case of Entertainment Network India Ltd. (ENIL) v. Super Cassette Industries Ltd. (SCIL).In pertinent part the Court held the following:The ownership of any copyright like ownership of any other property must be considered having regard to the principles contained in Article 19(1) (g) read with Article 300A of the Constitution, besides, the human rights on property; the judgment goes on further to say that; but the right of property is no longer a fundamental right. It will be subject to reasonable restrictions. In terms of Article 300A of the Constitution, it may be subject to the conditions laid down therein, namely, it may be wholly or in part acquired in public interest and on payment of reasonable compensation. The fact that the Supreme Court recognizes ‘copyright’ to fall within Article 300A is indicative that even ‘clinical trial data’, collected after extensive experimenting, should in all likelihood fall within the definition of ‘property’ as understood in Article 300A.‘Authority by law’ as understood in Article 300A:The term ‘law’ as defined in Article 300A is understood to mean only legislation or a statutory rule or order. The term ‘law’ as understood by Article 300A will not include executive fiats. The source of the ‘law’ depriving a person of his property has to be necessarily traced, through a statute, to the legislature.

CONCLUSIONThe right to property under the Indian constitution tried to approach the question of how to handle property and pressures relating to it by trying to balance the right to property with the right to compensation for its acquisition through an absolute fundamental right to property and then balancing the same with reasonable restrictions and adding a further fundamental right compensation in case the properties are acquired by the state.The owners of these properties must be paid compensation based on market value in the event of the state or a corporation owned by the state acquiring them for public purpose. While these types of property can be justified as a necessary condition of a free and purposeful life, no such considerations are

available in respect of the property in the means of production not worked or directly managed by their owners as it is not an instrument of freedom since it gives power not only over things but through things over persons. It is precisely the concentration of this type of property which the framers of the Constitution wanted to break up under Article 39 and distribute among the have-nots and there is no injustice in determining the compensation payable to the deprived owners on principles of social justice.But this is where we have to really spare a thought Justice K K Mathew had the most eloquent and liberal view in support of property rights. However, at the end of his pursuit of defending property rights even he seems to have got misguided by the so-called conflict between directive principles and fundamental rights. Granting absolute right to property and also having to uphold the sanctity of a directive principle against concentration of wealth becomes almost an impossible thing to rationally achieve for any fair state which emerges and thrives on the foundation of rule of law. So let the Owl of Minerva take flight. Fundamental right to property is dead. But long live right to property.

1 RIGHT TO PROPERTY AND COMPENSATION UNDER THE INDIAN CONSTITUTION M.L. Singhal Director, IJTR, UP, Lucknow Elevated to Hon‟ble High Court subsequent to publication of this Article 1 W.e.f. 10.6.1979. 2 Jilubhai Nanabhai Khachar v. State of Gujarat, AIR 1995 SC 142 at p. 158; Bishambhar Dayal Chandra Mohan v. State of U.P., AIR 1982 SC 33. 3 AIR 1954 SC 170.

At present the Right to Property viz. “No person shall be deprived of his property save by authority of law” is enshrined in Art. 300A, inserted by Constitution 44th

Amendment.1 The Constitution of India, as originally adopted safeguarded the Right to Property in a number of ways. Firstly, it guaranteed that “All citizens shall have the right to acquire, hold and dispose of the property.” The State, however, could impose reasonable restrictions (i) to serve the exigencies of public welfare and (ii) to protect the interest of any Scheduled Tribe [vide Art. 19 Clauses (1) (f) & (5)]. Secondly, in the phraseology of Art. 300A, the Constitution makers in Art. 31(1) guaranteed that “No person shall be deprived of his property save by the authority of law”. The provision indicated that a person can be deprived of his property only through an Act passed by the Parliament/State Legislature and not by executive order or fiat. The word „Law‟ in Art. 300A means an Act of Parliament or a State Legislature, a rule or a statutory order, having the force of law, that is positive or State-made law.2 Thirdly, as provided in ARt. 31(2) (now deleted), the property of a person could be acquired or requisitioned only under two contingencies viz. (i) the acquisition or requisition could be for public purpose and (ii) the law must provide for payment of compensation to the owner of the property either by fixing the amount of the compensation or by specifying the principles upon which it could be determined or fixed. The obligation to pay compensation, however went on diluting continuously by the Constitution First, Fourth, Seventh, Twenty-fifth and Forty-second Amendment Acts. The Supreme Court in Bela Banerjee‟s case3 propounded that the word “Compensation” deployed in Art. 31(2) implied „full compensation‟, that is the market value of the property at the time of the acquisition. The Legislature must “ensure that what is determined as payable must be compensation, that is, a just equivalent of what the owner has been deprived of”. The Government realized that due to paucity of resources, it was not feasible for it to pay the full market 2

value of the property acquired and as such the National Planning and Development undertaken by the Government immediately after the independence of the country were bound to be hampered. Hence, the Parliament came forward with Constitution Fourth Amendment Act, 1955 which enacted that a law which provided for compensation for the property acquired or requisitioned and either fixed the amount of the compensation or specified the principles on which, and the manner in which the compensation was to be determined or given could not be called in question in any Court on the ground that the compensation provided by the law was not adequate. But even after the Constitution 4th Amendment (1955) the Apex Court in famous R.C. Cooper‟s case4 popularly known as Bank Nationalization case, held that the compensation in Art. 31(2) implied full monetary equivalent of the property taken from the owner, that is its market value at the date of the acquisition. The Court observed: “Art 31(2) before and after it was amended guaranteed a right to compensation for compulsory acquisition of property and that by giving to the owner, for compulsory acquisition of his property, compensation which was illusory or determined by the application of principles which were irrelevant. the constitutional guarantee of compensation was not complied with”. The result was the Constitution 25th Amendment (1971) which replaced the word „amount‟ for the word „compensation‟ appearing in repealed Art. 31(2). But even after this major amendment, the Apex Court in landmark judgment in Keshavananda Bharati‟s case5 held that the amount which was fixed by the Legislature could not be arbitrary or illusory but must be determined by a principle which is relevant to the acquisition of property. 4 AIR 1970 SC 1461 5 AIR 1973 SC 1461 6 Dr. Basu‟s Introduction to the Constitution of India, 17th Ed. Page 118.

The fundamental „right to property‟ had been modified by the Parliament by several other Constitution Amendments. Art. 31-A, inserted by the Constitution First Amendment Act, 1951 with retrospective effect, saved laws providing for acquisition of estates of the nature referred to in various clauses thereof, declaring that such laws shall not be deemed void on the ground that they are inconsistent with, or take away or abridge any of the rights conferred by Art. 14 or 19 of the Constitution. The object of taking out the acquisition of intermediate interests in land from the obligation to pay compensation was to make it possible for the Government to effect agrarian reform which was so urgently needed to protect the interests of the tenants as well as to improve the agricultural wealth of the country.6

New Art. 31-B added by Constitution 1st Amendment, like Art. 310A, saves Acts and Regulations mentioned in Ninth Schedule. Art. 31-C added by 25th

Amendment Act, 1971 protects laws giving effect to the policy of the State securing all or any of the principled laid down in Part IV of the Constitution, apart from extending the same protection as 3

extended by Arts. 31-A and 31-B, and also declared that no such law shall be called in question in any court on the ground that it does not give effect to such policy. The Constitution 44th Amendment Act, 1978, robbed the „right to property‟ of its fundamental right-character, and adorned it with status of Constitutional/legal right. Arts. 19(1)(f) and 31 were deleted from the Part III-“Fundamental Rights” and only a fraction in the form of Art. 300 A which corresponds to Art. 31(1) only, has been inserted in Part XII under a separate Chapter V “Right to Property”. What is important to note is that Art. 19(1) (f) which had guaranteed freedom to all citizens to acquire, hold and dispose of property and remaining clauses (2) to (6) of Art. 31, which hedged the right of the Legislature, to acquired property with limitations for public purposes and only on payment of adequate compensation, not illusionary one, as interpreted by the Apex Court, have been omitted altogether by the Legislature. The effect of this amendment of vast magnitude is that the „right to property‟ is no more a fundamental right but is only a constitutional/legal right and in the event of breach thereof, the remedy available to an aggrieved person is to approach the High Court under Art. 226 of the Constitutional India and not the Supreme Court under Art. 32 of the Constitution, a speedy remedy available earlier. However, two exceptions have been created by the 44th Amendment to the aforesaid general rule. First, where the property acquired belongs to an educational institution established and administered by a minority, 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 of minorities “to establish and administer educational institutions of their choice” guaranteed by Art. 30(1)7 Secondly, where the State seeks to acquire any estate and where any land comprised therein is held by a person under this personal cultivation and such land is within the ceiling limit applicable to him under any law for the time being in force, or any building or structure therein or appurtenant thereto, the State must pay compensation at the market value for such land, building or structure acuired.8 7 Vide Art. 30(1A), added by the 44th Amendment Act, 1978 w.e.f. 30.6.79. 8 Inserted by Constitution (Seventeenth Amendment) ACt, 1964. 9 AIR 1984 Bombay 366.

It has been repeatedly canvassed that even though clauses (2) to (6) of Art. 31 which postulated provisions for payment of compensation when land was acquired/requisitioned, have been omitted from the Constitution Statute books, the obligation to pay adequate amount of compensation to the owner of the property still survives. In Basanti Bai‟s case9, a Division Bench of the Bomaby High Court held that inspite of deletion of Art. 31(2), there is still obligation on the State to pay adequate amount to the expropriated owner. Further, the law providing for deprivation of property must be fair, just and 4

reasonable as propounded by Hon‟ble Supreme Court in the famous Maneka Gandhi‟s case.10 In special appeal before Supreme Court, against the judgment of the Bomaby High Court titled “State of Maharashtra v. Basanti Bai11 it was urged that the provisions of sub-sections (3) and (4) of Sec. 44 of Maharashtra Housing and Development Act, 1977, which contained the basis for the determination of compensation in respect of the land were violative of Arts. 14, 19 and 31 of the Constitution and as such were liable to be declared as void. it was further contended that the compensation payable was illusory in its quantum and the procedure prescribed for the acquisition was not fair and reasonable, though the dictum laid down in Maneka Gandhi‟s case ordained so. The Supreme Court reversed the judgment of the Bombay High Court without finally deciding the mooted points. The Court held that even if it was assumed that the law should be fair and reasonable and not arbitrary and the law should also satisfy the principle of fairness in order to be effective, all those conditions were satisfied by the impugned law in the case under appeal. All the requirements of a valid exercise of the power of eminent domain even in the sense in which it was understood in the United States of America where property rights are given greater protection than what is required to be done in our country were fulfilled by the impugned Act. As to the contention that the impugned Act violated the provisions of Art. 21 of the Constitution, their Lordships of the Supreme Court observed. “Then in the end we have to consider the argument based on Article 21 of the Constitution which is urged on behalf of the respondents. Article 21 essentially deals with personal liberty. It has little to do with the right to own property as such. Here we are not concerned with a case where the deprivation of property would lead to deprivation of life or liberty or livelihood. On the other hand, land is being acquired to improve the living conditions of a large number of people. To rely upon Art. 21 of the Constitution for striking down the provisions of the Act amounts to a clear misapplication of the great doctrine enshrined in Art. 21. We have no hesitation in rejecting the argument. Land ceiling laws, laws providing for acquisition of land for providing housing accommodation, laws imposing ceiling on urban property etc. cannot be struck down by invoking Art. 21 of the Constitution.” Thus the Supreme Court jettisoned the argument that the law relating to acquisition of property must also satisfy Art. 21. 10 AIR 1978 SC 597. 11 AIR 1986 SC 1466. 12 State of Maharashtra v. Shandrabhai, AIR 1983 SC 803.

The fundamental „right to property‟ has been abolished because of its incompatibility with the goals of justice, social, economic and political and equality of status and of „opportunity‟ and with the establishment of a social democratic republic, as contemplated by the Constitution.12 The „right to 5

property‟ under Art. 300A is not a basic feature or structure of the Constitution. It is only a Constitutional right.13 The Hon‟ble Supreme Court in Tinsukhia Electric Supply Co. Ltd. v. State of Assam, AIR 1990 SC 123 at p. 138 has observed that even though Article 31 had not been deleted (at the time of the 42nd amendment) “Its content had been cut-down so much, so that even under a law providing for acquisition of property which did not have the protection of 31-C the adequacy of the “Amount” determined was non-justiciable and all that was necessary was that it should not be unreal or illusory. By then the Constitution had done away with the idea of a just equivalent or full indemnification principle and substituted thereof the idea of an “Amount” and rendered the question of the adequacy or the inadequacy of the amount non-justiciable”. 13 Jilu Bhai Nam Bhai Khachar v. State of Gujarat, AIR 1995 SC 142. 14 AIR 1991 Ker. 162 (FB). 15 AIR 1995 SC 142.

A Full Bench of the Kerala High Court in Elizebath Samuel Aaron‟s case14

observed- “The legislative history behind the deletion of Article 31 and the introduction of Article 300-A eloquently shows that Parliament intended to do away with the concept of a just equivalent or adequate compensation in the matter of deprivation of property, and to provide only a limited right, namely that no person shall be deprived of his property save by authority of law. In other words, the limited constitutional protection intended to be continued (not as a fundamental right) was only that there should be a law authorising and sustaining any deprivation of property, and that none shall be so deprived by mere executive fiat. Article 300A does not provide for anything more. it does not go further and provide that the law should provide for compensation and either fix the amount, or at least specify the principles on which the compensation is to be fixed and given. Evidently, Parliament intended to shield all such legislation for acquisition or requisitioning of property from challenge on any of the grounds on which they could be challenged as per the various decisions of the Supreme Court on the ground that the compensation was inadequate or illusory or that the principles laid down for fixing the compensation were irrelevant or irrational. If this were not the intent of the series of Constitutional amendments, and if this were not achieved thereby, one wonders why Parliament should have under taken all the exercise and effaced Article 31(2) altogether from the Constitution.” In a very recent case of Jilubhai Nambhai Khachar v. State of Gujarat15 the Apex Court held that after the Constitution Forty Fourth Amendment Act 6

has come into force, the right to property in Arts. 19(1)(f) and 31 had its obliteration from Part III, Fundamental Rights. Its abridgment and curtailment does not get retrieved its lost position, nor gets restituted with renewed vigour claiming compensation under the garb „deprivation of property‟ in Art. 300-A. The court further held that the principle of unfairness of the procedure attracting Art. 21 does not apply to the acquisition or deprivation of property under Article 300A giving effect to the Directive Principles. Now, if the property of a person has been acquisitioned/requisitioned even not for a public purpose, and without payment of compensation though under the authority of law, the owner cannot grouse or grumble against the same, the Legislature is no more under a Constitutional obligation to pay the compensation what to say of adequate compensation. Such a person cannot ventilate grievance before the Court that the compensation granted is illusory one. Only where a person is deprived of his property by the executive without the authority of law, in that event he would be entitled to legal relief on the ground that such executive action abridges the provisions of Art. 300A of the Constitution. The Constitution makers bestowed right on every citizen of the country to acquire, hold and dispose of property and also provided ample safeguards against deprivation of the property by Legislature by confining such deprivation for public purpose only and only on payment of compensation to the expropriated owner either by fixing the amount of compensation or by specifying the principles upon which it could be determined or fixed. Even in pre-Independence era, under the Government of India Act, 1935, similar safeguards were provided in as much it was envisaged therein that no person could be deprived of his property in British India save by the authority of law and that neither the Federal nor Provincial Legislature had power to make any law authorizing the compulsory acquisition of land etc., unless the law provided for the payment of the compensation for the property acquired and either fixed the amount of the compensation or specified the principles on which, and the manner in which, it is to be determined16. All such injunctions and safeguards have been done away with by the Constitution 44th

Amendment, and even the prime condition „public purpose‟ which appeared in ARt. 31(2) of the Constitution has been eliminated. Dr. Durga Das Basu has observed that “the Author (he) would be happy if the Supreme Court could devise some means to nullify any Legislative attempt to deprive the expropriated owner of any compensation at all”. 16 Vide Government of India Act, 1935 Sec. 299(2).

Other provisions which voice concern are that the property owned by Minority Educational Institutions and the property under personal cultivation of an agriculturist as seen above, have been placed in envious position. Dr. Durga 7

Das Basu has observed- “The net result is that if a poor man‟s hut is taken away without compensation, by a law which provides for accommodation to the office of the political party in power, the former shall have no legal remedy under the sky. This is contrary to Art. 13 of the 1977 Constitution of the U.S.S.R. which says that “the personal property of citizen and the right to inherit it are protected by the States”, and this personal property includes “articles of very day use, personal consumption and convenience, a house and earned savings”. Article 9 of the 1978 Constitution of China similarly protects the right of a citizen to own private property which includes his “lawfully earned income, saving, houses and other means of subsistence.”17 17 Dr. D.D. Basu‟s Shorter Constitution of India 11th Ed. Pae 932. 18 Introduction to the Constitution of India 17th Ed. Page 120.

As regards the concession in favour of Minority Institutions given by Constitution 44th Amendment, Dr. Durga Das Basu has remarked- “It is somewhat inexplicable why no such guarantee should be made in favour of educational institutions managed by members of a majority community. Is not a education as pure and adorable whether it comes through the Ganges or the Jordan? In their over-zealousness for the addition of a special guarantee in favour of the minority which the fathers of the original Constitution did not envisage, the fathers of the 44 th

Amendment took no time to ponder that by eliminating Art. 31(2), they were taking away a right which had been guaranteed to all persons in India. Legally speaking, the new provision in Art. 30(1A) is a tail which has lost its head by the repeal of Art. 31(2)”.18 [J.T.R.I. JOURNAL – First Year, Issue – 2 - Year – April – June, 1995]