by Vishrov Mukerjee (Partner) and Yashaswi Kant (Senior Associate), J Sagar Associates
In the modern economy, property is conceptually dynamic connoting varying meanings in different contexts. Legally, whatever the nature of property, ie, movable, immovable, tangible, intangible, etc, every type falls within the rubric of ‘Right to Property’, which is protected by the Constitution of India.
The Right to Property has a chequered history, given inequitable distribution, traditional concept of ‘zamindari’ and reforms associated with ownership of land. Originally included as a fundamental right under Article 19(1)(f) and Article 31, the Right to Property was repealed by the 44th Constitutional Amendment, 1978, which deleted these two Articles and inserted Article 300A in Part XII of the Constitution ‘downgrading’ the Right to Property to a legal right.
This change was ostensibly to ensure that the protection available to fundamental rights would not extend to the Right to Property in order to enable government to bring in legislation for the redistribution of land and to ensure equitable allocation/availability of resources.
Deprived of its significant status as a fundamental right, the Right to Property has been allowed to retain its validity as a legal right. Its applicability, however, has remained limited mainly to cases involving land acquisition, and requisition and takover of property by the State. This is despite the fact that Article 300A holds great promise as not just a defence against deprivation of property but as an affirmative weapon against deprivation of economic rights and in the enforcement of financial obligations.
In a recent Judgment, titled B.K. Ravichandra & Ors. vs Union of India & Ors, the Supreme Court has underscored the importance of the Right to Property as a valuable constitutional right guaranteeing economic liberty and freedom. While recognizing that ‘property’ connotes myriad possibilities, each with its own monetary impact, the Supreme Court held that laws – even those that indirectly impact the enjoyment of properties – should be strictly read by courts on the basis of constitutional law. The Supreme Court elaborated the importance of the Right to Property in the context of regulatory laws, holding that the Right to Property has been termed as a safeguard against government oppression and economic deprivation.
Drawing attention to the similarity in language in Article 300A and Article 21 (right to life and liberty) of the Constitution, the Court ascribed (rightly so) a ‘rule of law’ attribute to this constitutional right by holding that any deprivation of property by the State (or its agencies) is antithetical to the rule of law. This stance assumes importance, given the nature and scope of rule of law as a tool to amplify and effectively enforce constitutional rights.
Over the years, private parties contracting with the State and State entities have faced significant delay in the payment of dues. Cases in point are EPC contracts, construction contracts, infrastructure projects including power projects, wherein delay in payment by State entities has not only precluded enjoyment of property but has also led to complete deprivation and destruction due to non-payment. Such delay has seriously hindered the enjoyment of property.
It is trite that development, especially in infrastructure, requires private participation. Uncertainty and delay in the recovery of costs not only impacts economic sentiment but also increases costs. Moreover, most of these projects are funded by banks and financial institutions deploying public money. A constitutional framework that marries contractual and constitutional rights is the need of the hour to address systemic issues across sectors.
Interpretation of laws must adjust with the times. As traditional concepts of property yield to the new economy, and value becomes more and more intangible, the need of the hour is to expand the contours of this invaluable constitutional right to protect enterprises by enabling their recovery of dues by granting constitutional support to contractual rights. This will ensure greater fiscal responsibility by the State while improving certainty and reducing the cost of doing business in India.
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