Summary of Landmark Constitution Bench Judgments of 2024 (Part III of III)

This article is a round-up of all the Constitution Bench judgments delivered in the year 2024 inclusive of all the judgments that showcased consideration, interpretation and evolution of important principles of Constitution law. This is Part — III of III compendium comprising 4 judgments of the Constitution Bench out of the total 13 Constitution Bench judgments rendered in 2024.

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The judgments of Part III are as follows:

(1) Order of Punjab and Haryana High Court dated 17-7-2024 and Ancillary Issues, In re¹

(Delivered on 7-8-2024)

Coram: 5-Judge Bench of Justices Dr D.Y. Chandrachud, C.J. and Sanjiv Khanna, B.R. Gavai, Surya Kant and Hrishikesh Roy, JJ.

Majority Opinion Authored by: Dr Justice D.Y. Chandrachud

Abbreviations for various common terminologies in the judgment

CB — Constitution Bench	DB — Division Bench
HC — High Court	SC — Supreme Court

The Court had taken up the proceeding suo motu in the context of an order dated 17-7-2024 passed by Judge of the Punjab & Haryana High Court, whilst entertaining contempt proceedings against the IASofficer. Certain observations were made in regard to the Supreme Court of India, which became a matter of grave concern. Referring to the judgment of Tirupati Balaji Developers (P) Ltd. v. State of Bihar² it was stated that judicial discipline in the context of the hierarchical nature of the judicial system is intended to preserve the dignity of all the institutions, whether at the level of District Court, High Court or Supreme Court. Gratuitous observations in regard to previous orders passed by Supreme Court are unwarranted and compliance with orders of Supreme Court of India is not a matter of choice, but a matter of binding constitutional obligation. This compulsion arises bearing in mind the structure of the Indian legal system and authority of the Supreme Court which heads the process of judicial adjudication of the country.

Therefore, when through unwarranted remarks and observations where the authority of the Supreme Court is undermined made by a Single Judge, it is the plain function of the Court to set right any attempt to dislocate the sanctity of judicial authority and maintenance of judicial discipline. Whether individual Judges agree with the merits otherwise or not, the order passed by the superior Court is irrelevant as he/she is bound by the discipline which the hierarchical nature of the judicial system imposes within the system. No Judge is personally affected by the orders passed by either the Division Bench of the High Court or by the Supreme Court. Therefore, Judges must exercise due restraint and responsibility in the observations which are made in the course of proceedings, especially when they are being video recorded. Accordingly, the remarks made in the order dated 17-7-2024 were expunged by the Constitution Bench with an expression of a note of caution. And the proceedings were accordingly disposed of.

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(2) Property Owners Assn. v. State of Maharashtra³

(Delivered on 5-11-2024)

Coram: 9-Judge Bench of Justices Dr D.Y. Chandrachud, C.J. and Hrishikesh Roy, J.B. Pardiwala, Manoj Misra, Rajesh Bindal, Satish Chandra Sharma, Augustine George Masih, B.V. Nagarathna and Sudhanshu Dhulia, JJ.

Majority Opinion Authored by: Dr Justice D.Y. Chandrachud

Abbreviations for various common terminologies in the judgment

Art. — Article	HC — High Court
COI — Constitution of India	CAD — Constituent Assembly Debates
CB — Constitution Bench	Govt. — Government
GOI — Government of India	CG — Central Government
Kesavananda Bharati judgment — Kesavananda Bharati v. State of Kerala⁴	Ranganatha Reddy judgment — State of Karnataka v. Ranganatha Reddy⁵
MHADA — Maharashtra Housing and Development Act, 1976	Minerva Mills judgment — Minerva Mills Ltd. v. Union of India⁶
Prof. — Professor	DPSP — Directive Principles of State Policy
Mafatlal judgment — Mafatlal Industries Ltd. v. Union of India⁷	Abu Kavur Bai judgment — State of T.N. v. L. Abu Kavur Bai⁸
SL — State Legislature	SG — State Government
Sanjeev Coke judgment — Sanjeev Coke Mfg. Co. v. Bharat Coking Coal Ltd.⁹	SC — Supreme Court
UOI — Union of India	Basantibai judgment — State of Maharashtra v. Basantibai Mohanlal Khetan¹⁰
Waman Rao judgment — Waman Rao v. Union of India¹¹	JB — Judge Bench
LPG — Liberalisation, privatisation and globalisation	FDI — Foreign direct investment.
	FR — Fundamental right

The reference to the Constitution Bench raised issues pertaining to interpretation of Articles 39(b) and 31-C of the Constitution of India ¹². Once it is established that particular legislation (parliamentary or State) has nexus with the principles enshrined under Articles 39(b), (c) and 31-C provides such legislation a safe harbour and lifeboat insulating it from the challenge under Articles 14 and 19.¹³

Background and the genesis of the reference to the Constitution Bench

Dispute originally arose from Mumbai city, the history of which was traced by the Court briefly. The most populous city in India with persistent problems of existence of a large number of old common dilapidated buildings faced by its residents. Erstwhile Bombay was originally a group of seven islands at the turn of India’s independence. These islands were merged by a series of land reclamation projects to create what is known as island city of Bombay. This island city emerged as a major textile hub, leading to phenomenal industrial, residential and commercial development in the city. Consequently, housing accommodation became more and more scarce and unaffordable to tackle which rent control and housing regulations were introduced. One of such legislations was the Maharashtra Housing and Development Act, 1976, towards consolidating the loss relating to housing, repair and reconstruction of various buildings and housing projects in the State. Its principle provision provided for repair reconstruction of dilapidated buildings and in respect thereof cess and other charges were levied on the residents of the city. A declaration was inserted in the Maharashtra Housing and Development Act, 1976 declaring it to be a legislation for giving effect to Article 39(b). The constitutionality of the same was laid challenge to, which matter travelled up to the Supreme Court and the Division Bench of the Bombay High Court dismissed all the writ petitions relying on the earlier judgment of the Supreme Court in Basantibai judgment¹⁴. The High Court held that provisions of the Maharashtra Housing and Development Act, 1976 were saved by Article 31-C, being the harbour of legislation giving effect to Article 39(b).

The appeals filed against the Bombay High Court judgment passed through three separate reference orders before being placed before the 9-Judge Bench. The primary argument made on behalf of the petitioner was that doctrine of revival does not apply to Constitution amendments as it applies to ordinary statutes. Thus, when part of the 42nd Amendment¹⁵ amending Article 31-C was invalidated in Kesavananda Bharati judgment¹⁶, it did not result in automatic revival of the unamended Article 31-C (prior to amendment as introduced by the 42nd Amendment). The view taken in the judgments of Minerva Mills judgment¹⁷ and Waman Rao judgment¹⁸ was therefore argued to be requiring clarification accordingly the appeals were then placed before the 5-Judge Bench. On 21-3-2001, the 5-Judge Bench, which heard the aforementioned submission as also the need to reconsider the view taken earlier by the Supreme Court in Sanjeev Coke judgment¹⁹ by placing reliance on the concurring opinion authored by Justice Krishna Iyer in Ranganatha Reddy judgment²⁰. The 5-Judge Bench then further opined that Sanjeev Coke judgment²¹ requires reconsideration and referred it to a larger Bench further of not less than 7-Judge Bench. On 19-2-2002 the 7-Judge Bench then again took the view that interpretation of Article 39(b) requires reconsideration by a larger Bench of 9-Judge Bench then accordingly referred it to the 9-Judge Bench.

Whilst explaining the scope of the reference to 9-Judge Bench, Court held that it must first answer the fundamental question regarding survival of Article 31-C post Kesavananda Bharati judgment²². This is because Article 31-C is inherently intrinsically connected to interpretation of Article 39(b) and if Article 31-C does not survive, then automatically the Maharashtra Housing and Development Act, 1976 would also disappear. The question about survival of Article 31-C had never been conclusively answered by the Court despite being raised again and again and the question of its survival was therefore necessary to be answered.

Issues framed by the Court for the reference

The Court framed the following two issues for answering them, which were as follows:

(a) Article 31-C: Whether Article 31-C (as upheld in Kesavananda Bharati judgment²³) survives in the Constitution after the amendment to the provision by the 42nd Amendment was struck down by this Court in Minerva Mills judgment²⁴.

(b) Article 39(b): Whether the interpretation of Article 39(b) adopted by Justice Krishna Iyer in Ranganatha Reddy judgment²⁵ and followed in Sanjeev Coke judgment²⁶ must be reconsidered. Whether the phrase “material resources of the community” in Article 39(b) can be interpreted to include resources that are owned privately and not by the State.

Brief history of Article 31-C

Article 31-C provides statutes with immunity against constitutional challenges for alleged breaches of Articles 14 and 19, once the statute gives effect to the principle set out under Articles 39(b) and (c). Inserted in 1971 through the 25th Amendment to the Constitution, it read as follows:

31-C. Saving of laws giving effect to certain directive principles.—Notwithstanding anything contained in Article 13²⁷, no law giving effect to the policy of the State towards securing the principles specified in clause (b) or clause (c) of Article 39 shall be deemed to be void on the ground that it is inconsistent with, or takes away or abridges any of the rights conferred by Articles 14, 19 or Article 31²⁸; and 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 not give effect to such policy:

Provided that when such law is made by the legislature of a State, the provisions of this article shall not apply thereto unless such law, having been reserved for the consideration of the President, has received his assent.

Article 31-C is thus in two parts; the first part providing immunity against Part III rights and second part making it immune from judicial review. The majority in Kesavananda Bharati judgment²⁹ upheld the constitutional validity of the first part of Article 31-C, providing immunity against Part III rights, while struck down the second part which excluded judicial review. Applying the doctrine of severability, it was held that second part of Article 31-C (excluding judicial review) from the remaining part and its invalidity would not affect the validity of the remaining part. Thus, the first part remained constitutionally consistent on the statute book and post Kesavananda Bharati judgment³⁰, it read as follows:

31-C. Saving of laws giving effect to certain directive principles.— Notwithstanding anything contained in Article 13, no law giving effect to the policy of the State towards securing the principles specified in clause (b) or clause (c) of Article 39 shall be deemed to be void on the ground that it is inconsistent with, or takes away or abridges any of the rights conferred by Articles 14, 19 or Article 31; *[and 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 not give effect to such policy:]

*(No longer enforceable after Kesavananda Bharati judgment³¹)

Thereafter through 42nd Amendment, Article 31-C was further amended, wherein the phrase Articles 39(b) and (c) was replaced with “all or any of the principles laid down in Part IV”. Meaning thereby that if any law was made towards enforcement of any of the Directive Principles of State Policies, then the same shall not be assailable or unconstitutional on the ground of being violative of Articles 14 and 19.

Thereafter two judgments came, Waman Rao judgment³² and Minerva Mills judgment³³. In Waman Rao judgment³⁴, the Constitution Bench dealt with arguments concerning the validity of Article 31-C as it stood prior to 42nd Amendment, whilst in Minerva Mills judgment³⁵, the Constitution Bench decided the validity of the changes brought to Article 31-C by the 42nd Amendment.

In Minerva Mills judgment³⁶, the Constitution Bench of 5 Judges invalidated the 42nd Amendment, that replaced Articles 39(b) and (c) with “all” or “any” of the principles laid down in Part IV. The majority opinion held that the 42nd Amendment had the effect of abrogating Articles 14 and 19 in regard to the vast category and expands of laws described under amended Article 31-C. Even if the law was in total defiance of the mandate of Articles 13, 14 and 19, its validity could not be questioned so long it is to secure a Directive Principles of State Policy. Since it severely undermines the fundamental protections granted to the citizens, therefore it was resultantly declared unconstitutional.

In Waman Rao judgment³⁷, constitutionality of the Maharashtra Lands (Ceiling on Holdings) Act, 1961 was challenged, which was placed in the IXth Schedule of the Constitution of India. The majority accordingly held that the validity of Article 31-C as it was upheld earlier in Kesavananda Bharati judgment³⁸ was so existing and continued to survive.

Question of revival of pre-amendment clauses of Article 31-C, as it existed prior to Minerva Mills judgment

The issue which the Court was called upon to answer was the effect of Minerva Mills judgment³⁹ on the text of Article 31-C. The petitioners contended that after invalidation of 42nd Amendment substituting Articles 39(b) and (c) with “all or any of the principles laid down in Part IV”, cannot revive words specifically omitted by the Parliament at the time of 42nd Amendment. The respondents to the contrary contended that the consequence of Minerva Mills judgment⁴⁰ to be that words existed in Article 31-C prior to 42nd Amendment stood revived. In other words, the 42nd Amendment which has been struck down by the Court Article 31-C, will now read as it did after the decision in Kesavananda Bharati judgment⁴¹, but prior to 42nd Amendment.

The Constitution Bench in Sanjeev Coke judgment⁴² proceeded on the basis that Article 31-C was outdated and that it ought to be interpreted as it stood prior to the 42nd Amendment. However, no explanation about exact legal mechanics that led to continued legal operation of the unamended Article 31-C was offered in Sanjeev Coke judgment⁴³ or any other one. The Court then proceeded to refer to two parallel lines of precedents on the doctrine of revival of pre-amended statutory provisions, after the amending provisions were struck down by the constitutional courts. Referring to the “pen and ink theory”, as discussed in the judgment of Shamarao V. Parulekar v. DM, Thana⁴⁴, it was discussed that whenever an amending statute effectuates a substitution, it replaces the original statutory text by omission and inserting certain other words. The statute must be read to exclude the omitted words and to include the inserted words. The aforesaid view was followed in the judgment of A.T.B. Mehtab Majid & Co. v. State of Madras⁴⁵, wherein it was held that the old rule does not revive on the amended rule being invalidated by a court.

On the other side of the divide, the Court then referred to judgments which held to the contrary, viz. the automatic revival of the pre-amended provisions on the amending provision being declared unconstitutional. Referring to the two judgments of Laxmibai v. State of M.P.⁴⁶ and Frost v. Corpn. Commission State Oklahoma⁴⁷, the Court discussed that where an amendment is invalidated, both the amendment’s omission of old words and insertion of new words have no legal effect. Thus, giving effect only to the legislative intent of repeal, while simultaneously striking down the new enactment could lead to a truncated statutory provision rendering the law unworkable, since the repeal is accompanied by substituted provisions. Reference was made to Mulchand Odhavji v. Rajkot Borough Municipality⁴⁸, to state that it would be an anomalous situation whereby the Court invalidated a freshly enacted rule, but simultaneously enforced the repeal of the earlier rule, leading to absurd consequences. Therefore, entirety of the legislative circumstances must be examined and both omission and insertion must be invalidated to reverse the situation to pre-amendment scenario. The judgment of State of Maharashtra v. Central Provinces Manganese Ore Co. Ltd.⁴⁹ and D.K. Trivedi & Sons v. State of Gujarat⁵⁰ were referred to state that repeal cannot be split into two separate steps. Absent clear legislative intent to independently repeal without substitution, where the legislature has indulged into a “single indivisible process of amendment” the effect of the Court invalidating the amended text is to bring back the unamended text.

The Court then referred to the Constitution Bench judgment in Supreme Court Advocates-on-Record Assn. v. Union of India⁵¹ (NJAC judgment) which examined the consequence of nullification of the 99th Constitutional (Amendment) Act, 2014, introducing the NJAC judgment⁵². The majority opinion held that an interpretation cannot be made whilst invalidating the enactment that leaves a deep lacuna in the law or a “constitutional crisis”. The argument was repelled that post invalidation of the constitutional amendment introducing NJAC, the previous dispensation would not revive the collegium system. It was held that if such interpretation is accepted, then the President would become imperium in imperio, and graver perpetuation of the harms would occur, which were sought to be prevented by striking down the amendment itself. Thus, it depends upon the totality of the circumstances and the context in which the amending provisions are used for the Court to hold that previous unamended legislation stood revived.

Applying the aforesaid principles, it was held that if appellants contention is accepted, the consequence would be absurd, and constitutional provisions could not be shaped properly. If the appellants contention that unamended Article 31-C never stood revived with 42nd Amendment being invalidated by the Court, then it would leave the original article truncated. For this reason, to avoid an anomalous situation where Article 31-C was without any immunity to any legislation (neither to Article 39(b) or Article 39(c), nor to any of the articles of Directive Principles of State Policy), the doctrine of revival has to be applied to avoid absurdity. Lest it also run contrary to the majority opinion in Kesavananda Bharati judgment⁵³.

The Court thus answered the issue by holding that constitutional text of unamended Article 31-C was automatically revived on the 42nd Amendment being struck down in Minerva Mills judgment⁵⁴, and it returned to its fold of basic structure.

Articles 39(b) and (c) & Ranganatha Reddy judgment

The Court then proceeded to deal with the issue pertaining to Articles 39(b) and (c), as to whether it can be interpreted to include “resources that are owned privately and not by the State”.

Ranganatha Reddy judgment⁵⁵ was rendered by a Constitution Bench of 7 Judges, wherein the issue relating to constitutional validity of the Karnataka Contract Carriages (Acquisition) Ordinance, 1976. This legislation provided for nationalisation of contract carriages, which was initially struck down by the Karnataka High Court. The High Court examined the nexus between Articles 39(b) and (c) of the legislation and whether resultantly it was protected by Article 31-C. It was held by the High Court that there was no substantial nexus between the purpose of the acquisition by the legislation and Articles 39(b) and (c). The matter was taken in appeal before the Supreme Court, wherein majority setting aside the High Court judgment affirmed the constitutionality of the impugned act holding it to be protected by Article 31(2). Referring to Kesavananda Bharati judgment⁵⁶, Supreme Court held that the amount payable for the acquired property fixed by the legislature or determined on the basis of principles of acquisition cannot be said to be wholly arbitrary or illusory.

However, the majority view in Ranganatha Reddy judgment⁵⁷ categorically held that they should not be understood to be agreeing with the separate judgment of Justice Krishna Iyer. Justice Krishna Iyer observed that all resources that satisfy material needs of the community including privately owned resources fall within the ambit of the phrase “material resources of the community” used under Articles 39(b) and (c).

Subsequently, even though the opinion of Justice Krishna Iyer was a separate one, not agreed to by the majority and thus being a minority opinion, was resurrected in Sanjeev Coke judgment⁵⁸, discussed below.

Sanjeev Coke judgment and the error inherent in its reasoning

In Sanjeev Coke judgment⁵⁹, challenge was made to the legislation nationalising coke oven plants, whilst leaving many others on the ground of violation of Article 14. The Supreme Court repelled the challenge to the Coking Coal Mines (Nationalisation) Act, 1972, holding that it gives effect to the policy specified under Articles 39(b) and (c) and therefore immune to challenge to its constitutionality under Article 14. Whilst repelling this challenge, the Court relied upon the concurring opinion of Justice Krishna Iyer in Ranganatha Reddy judgment⁶⁰ to conclude that “material resources of the community” are not confined to public owned resources but include “all resources, natural and manmade, public and privately owned”. Thus, minority opinion of Justice Krishna Iyer in Ranganatha Reddy judgment⁶¹ got resurrected in Sanjeev Coke judgment⁶².

Whilst discussing the principles of binding nature of precedents, vide paras 96 to 105, Court laid down the following broad principles and practice to be followed by the Bench of lesser strength when confronted with a judgment of a larger Bench:

(a) A Bench of lesser strength cannot disagree or dissent from the view taken by larger coram. In case of any doubt, it may be referred to the larger Bench to lay down the correctness of the law or the decision which is doubted.

(b) Separate dissenting/concurring judgments may be pronounced by Judges of this Court, but it is the decision of the majority of the Judges which constitutes the binding judgment. The binding nature of the judgment depends on the Bench strength and not on numerical strength of the majority taking a particular view. For e.g., in a Bench of 7 Judges, 4 Judges constituting the majority and remaining 3 Judges taking a dissenting view, the majority judgment will constitute the binding judgment of the whole Bench of 7 Judges and not a Bench of 4 Judges.

(c) A dissenting judgment is different from a concurring judgment, with the former being signed by the minority of Judges. However, in case of latter (concurring opinion), the majority opinion is being identified from the conclusions and concurring observations of each of their judgments.

(d) Two tests are to be applied to determine whether observations in the concurring opinion of a numerical minority of Judges constitutes a binding precedent, viz. Firstly, when only the concurring opinion expounds the law on a particular point does the majority opinion indicate a difference of opinion from that view or distance itself from such reasoning. Secondly, are the observations in the concurring opinion essential to the ratio decidendi, for being regarded as an expression of opinion on behalf of this Court as a whole. For observations in a concurring opinion to be binding on a smaller or co-equal Bench, the observations in the concurring opinion must be both free from disagreement or difference by the majority of Judges and also be a part of the ratio decidendi of the judgment.

(e) Therefore, where several opinions are authored in a judgment on the same question of law, the greatest common measure of agreement by majority of Judges would be binding on future Benches, otherwise not; referring to the judgments of Navtej Singh Johar v. Union of India⁶³ and Nitisha v. Union of India⁶⁴, it was held that where there is absence of disagreement by a majority of Judges (either express or implied) nothing precludes subsequent Benches of the Court from relying on observation made in the concurring opinion, which are not discussed by the other Judges at all.

(f) It is assumed in all such cases that all the Judges on the Bench have read their mutual opinions and have decided not to disagree with the opinions of their brother/sister Judges.

In view of the above, therefore the observations made in Ranganatha Reddy judgment⁶⁵ by the majority clearly clarified that they never agreed with the concurring opinion or observations in Justice Krishna Iyer’s judgment. In Sanjeev Coke judgment⁶⁶, the reliance was placed simpliciter on the concurring minority opinion of Justice Krishna Iyer, which was against the judicial discipline. There is no discussion of the majority opinion, or the reservation expressed by them in Ranganatha Reddy judgment⁶⁷. This is the fundamental error that crept in Sanjeev Coke judgment⁶⁸.

Carrying forward of the error of Sanjeev Coke judgment in subsequent decisions and Mafatlal judgment

The error in Sanjeev Coke judgment⁶⁹ as aforestated, adopting the minority view in Ranganatha Reddy judgment⁷⁰ had been followed consistently in subsequent decisions of the Supreme Court in Abu Kavur Bai judgment⁷¹, Basantibai Khetan judgment⁷², and Mafatlal judgment⁷³. It was argued by the Union of India that the Supreme Court should refrain from unsettling a position of law that has “acquired the status of stare decisis”.

Repelling the submission of Union of India and relying upon the judgment of Sita Soren v. Union of India⁷⁴, it was held that Court may review its earlier decisions if it believes that there is an error or likelihood of grave harm to the public interest. If the Court finds that the view taken in earlier decisions is inconsistent with the legal philosophy of the Constitution⁷⁵, then the Court should review its earlier views more readily as not rectifying a manifest error would be harmful to the public interest and the polity. The correctness of Sanjeev Coke judgment⁷⁶ therefore remained untested, especially when it committed a fundamental error of law while relying on the minority opinion.

Insofar as the observations made in Mafatlal judgment⁷⁷ that “material resources of the community” include privately owned property as well under Articles 39(b) and (c), it was held that the said observations constituted obiter dicta. Being obiter dicta, therefore they would not bind the current Bench of co-equal strength, as it is only the ratio decidendi or the propositions of law that were necessary to decide on the issues between the parties are binding on co-equal Benches or Benches of lesser strength. Referring to the judgments of Islamic Academy of Education v. State of Karnataka⁷⁸ and Secunderabad Club v. CIT⁷⁹, it was held that one of the basic ingredients which any earlier decision contains is the statement of the principle of law applicable to the legal problem disclosed by the facts. Not everything said by a Judge in the judgment constitutes a precedent. It is the principle only upon which the case is decided which constitutes the ratio decidendi.

In view of the above, therefore the Constitution Bench held that issue whether Articles 39(b) and (c) includes privately owned property was never a matter of dispute in Mafatlal judgment⁸⁰ and single line observation of Justice Jeevan Reddy in the majority opinion constitutes obiter dicta, not binding on the Court. Even if a numerical majority of Judges or opinions of the Court affirm an observation, it would not automatically constitute the ratio decidendi of the case but must be independently established that the observation relates to an issue which was in dispute before the Court.

Thus, it was held that earlier judgments following Sanjeev Coke judgment⁸¹ had perpetuated and continued the error, without putting into test ever and the observations made in Mafatlal judgment⁸² were not binding.

Historical context of Articles 39(b) & (c) and its necessity for claiming protection under Article 31-C

The majority in Kesavananda Bharati judgment⁸³ upheld the constitutionality of Article 31-C as discussed above. Prior to the said decision, a declaration in any law that it is to give effect to Articles 39(b) and (c) was enough and could not have been questioned in any court of law. In other words, such a declaration could not be questioned in any court on the ground that it does not actually give effect to such a policy. Resultantly, all laws which purport to affect Articles 39(b) and (c) are subject to judicial inquiry and review on the question of whether they actually bear an excess with the provision. The question therefore whether they are of such character or not is justiciable. The Court may whilst judicially reviewing any statute examine the nature and character of the legislation for finding whether there is a direct and reasonable nexus between the law and Articles 39(b) and (c). The Court may also tear the veil to see the real nature of the statute. There is no absolute authority to include any legislation within the fold of Articles 39(b) and (c) without a governing principle, which is a unique Directive Principles of State Policy. The DPSPs however are subsidiary to the chapter of fundamental rights. Subsequently the Constitution Bench in Kesavananda Bharati judgment⁸⁴ and Minerva Mills judgment⁸⁵ both relied upon and referred to the academic works of Granville Austin, to observe that they are two wheels of a chariot and one no less important than the other. To give absolute primacy to one over the other is to disturb the harmony of the Constitution. Referring further to the judgment of State of Gujarat v. Mirzapur Moti Kureshi Kassab Jamat⁸⁶ it was held that Directive Principles of State Policies and fundamental rights are complementary and supplementary, with the former playing an integral role in constitutional interpretation.

Referring to the Constituent Assembly Debates, especially the provisions and proposal of Mr Damodar Swaroop Seth, member of the Constituent Assembly, there was a request to specially establish a “democratic socialist order”. However, the suggestion of Mr Seth was never accepted, which was declined by Dr Ambedkar.

Prof K.T. Shah also proposed that ownership, management of all the natural resources like mines, mineral wealth and natural resources must only be in the hands of the State, which was supported by Mr Shibban Lal Saxena. However, all these amendments were opposed and declined by Dr Ambedkar stating that existing language was extensive enough to include the propositions and proposal of Prof K.T. Shah. Accordingly, the said proposal was negated by the majority of the members of the Constituent Assembly.

The Court in the ultimate analysis deduced following inferences from the discussions in the Constituent Assembly Debates about the nature of DPSPs:

(a) Dr Ambedkar’s landmark speech on 4-11-1948 evinces that Directive Principles, including the present-day Articles 39(b) and (c) were understood to be guiding principles or “instructions” to the executive and legislature. While they would not be enforceable under law, it was believed that the values enshrined in them would assume importance at the time of elections and the electorate would hold future Governments accountable.

(b) The discussions in the Constituent Assembly indicate the objection of Dr Ambedkar to any proposals to expressly lay down a particular form of social structure or economic policy for future Governments in the Constitution. He noted that the Constitution, including in the Directive Principles, did not intend to prioritise one form of Government or economic structure over the other, but instead only laid down the ideal of “economic democracy”.

(c) Dr Ambedkar did not intend to locate the idea of “economic democracy” within a single economic or political school of thought. Instead, it was believed that future Governments and electorates would identify the socio-economic structure which best suits the needs of society. It was to be left to future generations to persuade the electorate and determine the “best way” of achieving the ideal of an “economic democracy”.

(d) When members such as K.T. Shah and Damodar Seth sought greater inclusion of what they termed as “socialistic” thought, Dr Ambedkar’s response was always that such principles can be accommodated within the ambit of the widely worded provisions, as they exist. Not only were such proposals to specify an economic structure opposed by Dr Ambedkar but in all the examples discussed above, they were also negated by a majority when the draft amendments were put to a vote.

The Court thus held that the Constitution must not be interpreted in a way, which imposes a rigid “economic structure” or any rigid economic policy.

Reverting back to Ranganatha Reddy judgment⁸⁷ and Sanjeev Coke judgments⁸⁸, majority accordingly discussed the line of judgments that followed it up to Natural Resources Allocation, In re, Special Reference No. 1 of 2012⁸⁹In Special Reference No. 1 of 2012, it was restated that “distribution” under Articles 39(b) and (c) mandates no single mode of distribution of community resources and secondly it interpreted the phrase common good to have a wide import. This judgment clarified that revenue maximisation by the Government is not always the only way to subserve the common good. Thus, in effect, all the line of judgments that followed the minority view of Justice Krishna Iyer in Ranganatha Reddy⁹⁰ and Sanjeev Coke⁹¹ laid down the following broad principles:

(a) The purpose behind Articles 39(b) and (c) is to allow the State to carry out a “restructuring of the economy”. The goal of the article is to prevent the concentration of wealth in a few hands.

(b) The term “material resources of the community” refers to things capable of producing wealth for the community and includes all resources — natural and manmade, private and public. The resources of the individual are the resources of the community and thus whole of the privately owned property is covered by the phrase.

(c) The nationalisation of privately owned resources may give effect to Articles 39(b) and (c). The expression “distribution” must be given a wide construction so as to include the acquisition of private resources by the State.

(d) The decisions which advance the above precepts ground their interpretation of Articles 39(b) and (c) in the observations of Justice Krishna Iyer in Ranganatha Reddy judgment⁹² and the subsequent affirmation in Sanjeev Coke judgment⁹³ and Abu Kavur Bai judgments⁹⁴.

Thus, following two questions were framed by the Court for its consideration, in view of the above prescriptions of community resources stated to be covered by Articles 39(b) and (c):

(a) Do all privately owned resources fall within the ambit of “material resources of the community”?

(b) Is the acquisition of private resources by the State a form of distribution recognised by Articles 39(b) and (c)?

Correctness of the above view and interpretation of Articles 39(b) and (c)

Articles 39(b) and (c) is not a source of legislative power, but only protects the law against the challenge under Articles 14 and 19 vide the protection conferred by Article 31-C. It can be challenged under other provisions of the Constitution as well, including Article 300-A⁹⁵. The Court in the process of reasoning explained the meaning of expressions — “resources”, “material”, “community” and stated that none of the terms excluded private property from the provision. Justice Krishna Iyer in Ranganatha Reddy judgment⁹⁶ cast the net so wide whilst holding that all resources meeting material needs are covered by the phrase “community” and would be within the scope of Articles 39(b) and (c). Any interpretation of Articles 39(b) and (c) which places all private properties within the net of “material resources of the community” only satisfies one of the requirements of the article that goods in question must be a resource. However, it ignores the qualifiers that they must also be “material” and “of the community”. The Court held that it cannot adopt the construction of the provision, which renders these terms otiose and the words “of the community” must be understood as distinct from the “individual” implying necessarily that not all privately owned resources would fall within the ambit of the phrase, but only some private resources may be covered. To the extent therefore the previous judgments where they held all the resources of an “individual” are part of the community under Articles 39(b) and (c) is incorrect.

It was held that it also amounts to endorsing a particular economic ideology and structure for our economy, as Justice Krishna Iyer cited Karl Marx in his judgment. The interpretation of Justice Iyer thus was rooted in a particular economic ideology, which prioritised acquisition of private property by the State as beneficial for the nation. Clearly this was against the intent of the Constitution framers as they always refrained from laying down any particular form of social structure economic policy for future Governments. Prevalence of one dogma as a fundamental principle was rejected as is clear from the Constituent Assembly Debates. Successive Governments were always allowed to experiment and adopt an economic structure for governance which would subserve the policies for which it owes accountability to the electorate any policy which postulates rigid economic theory of greater State control over private resources would therefore be against the constitutional spirit of the country.

Earlier interpretation of Articles 39(b) and (c) is incompatible with right to property

The right to property is constitutionally protected under Article 300-A, which is both a constitutional and human right. Referring to the judgment of Kolkata Municipal Corpn. v. Bimal Kumar Shah⁹⁷ it was held that merely providing compensation does not justify compulsory acquisition by the State unless procedural safeguards are followed. It was held that post-colonial reading cannot be limited to the acquisition and payment of compensation. The interpretation of Articles 39(b) and (c) cannot run counter to the guaranteed constitutional right of private property. Therefore, to hold that all private property is covered by the phrase material resources of the community and then that ultimate aim is State control would be incompatible with the constitutional protection against illegal and arbitrary acquisition of private property under Article 300-A.

The following factors may be borne in mind while determining whether the resources constitute a “material resource of the community” or not:

(a) the nature of the resource and its inherent characteristics;

(b) the impact of the resource on the well-being of the community;

(d) the consequences of such a resource being concentrated in the hands of private owners.

Whilst distributing natural resources owned by the community, the State is bound to act in consonance with the principles of public trust doctrine. The State must ensure that no action is taken which is detrimental to the public interest. The distribution may be piecemeal of the community resources, which may be kept in the control of Government agency or through a regulated private agency, so long as the benefits percolate to the people as a common good. At times it is not necessary that vesting of the private resources and the Government serves the common good, while in other cases it may do so. For example, a large privately owned pond may be acquired and put in control of the Government agency or a cooperative society so that a pond as a natural resource is preserved. Similarly material resources of spectrum may be auctioned to the highest bidder, who may be a private company, who would then utilise the spectrum along with the technology to best serve the common good. All these are questions of economics and social policy, to be decided by the Government concerned. The Court however cannot permit endorsement of the particular economic ideology and hold that the term “distribution” cannot encompass the vesting of the private resource. Accordingly, the majority opinion vide para 229 concluded as follows:

(a) Article 31-C to the extent that it was upheld in Kesavananda Bharati v. Union of India⁹⁸ remains in force.

(b) This Court in Sanjeev Coke judgment⁹⁹ erred by relying on the concurring opinion of Justice Krishna Iyer.

(c) The single-sentence observation in Mafatlal judgment¹⁰⁰ to the effect that “material resources of the community” include privately owned resources is not part of the ratio decidendi of the judgment. Thus, it is not binding on this Court.

(d) The direct question referred to this Bench is whether the phrase “material resources of the community” used in Articles 39(b) and (c) includes privately owned resources. Theoretically, the answer is yes, the phrase may include privately owned resources. Not every resource owned by an individual can be considered a “material resource of the community” merely because it meets the qualifier of “material needs”.

(e) The inquiry about whether the resource in question falls within the ambit of Articles 39(b) and (c) must be context-specific and subject to a non-exhaustive list of factors as enumerated above. The public trust doctrine will help identify resources which fall within the ambit of the phrase “material resource of the community”.

(f) The term “distribution” has a wide connotation. The various forms of distribution which can be adopted by the State cannot be exhaustively detailed. However, it may include the vesting of the resources concerned in the State or nationalisation.

Concurring opinion of Justice B.V. Nagarathna

The concurring opinion started with the quote of Justice Benjamin N. Cardozo, one of the greatest American Judges who authored the book The Nature of Judicial Process, 1932.

The judgment raises a question as to whether principles of LPG adopted in India from 1991 onwards, ushering in economic reforms and structural changes in the country can hold a mirror against the socio-economic policies that were followed in the decades immediately following India’s independence.

One the first issue of revival of original text of Article 31-C prior to invalidation of 42nd Amendment of the Constitution of India, this judgment concurred with majority. It was held that invalidation of Section 4 of the 42nd Amendment in Minerva Mills judgment¹⁰¹, automatically resulted in the restoration of the unamended Article 31-C.

Constitution as a living organic tree and an ever-evolving document

The concurring judgment elaborated the living tree doctrine applicable to our Constitution by quoting the following prominent scholars and academicians:

(a) Emile Durkheim, the French sociologist and the proponent of academic discipline of Sociology who stated that Constitutions are built to clothe societies and therefore be treated as living organisms capable of growth and change.

(b) Woodrow Wilson, former President of United States of America, who stated that Constitution is a vehicle of life, which must grow and develop as the life of the nation changes.

(c) Canadian jurisprudence, which greatly shaped and largely inspired the living tree doctrine of the Constitution in India. Canadian Federal Court speaking through Sir Maurice Gwyer CJ stated that Constitution is a living and organic thing, and which operates in a manner that keeps it going rather than becoming null.

(d) Justice Vivian Bose, who in a concurring judgment rendered in State of W.B. v. Anwar Ali Sarkar¹⁰² stated that “provisions of the Constitution must not be interpreted without regard to the background out of which they arose”.

(e) Constitution Bench in NJAC judgment¹⁰³, wherein Constitution was termed as an “ever evolving organic document” and a living tree planted by the Framers of the Constitution.

Quoting all the above scholars, academicians and observations from the landmark judgments, it was held that living tree doctrine has been applied in many cases for interpreting the Constitution. It has two principle elements; the original understanding in the roots of the constitutional tree and the possibility of growth and development within its natural limits. The concurring opinion thus observed that Krishna Iyer J. adjudicated on the construction of “material resources of the community” in the backdrop of a constitutional, economic and social culture where State has the primacy over the individual in the then prevailing socio-sovereign status of the country. Therefore, former Judges could not have been castigated or alleged with “disservice” only for reaching a particular interpretive outcome. Merely because of the paradigm shift in the economic policies of the State to LPG, also known as the Reforms of 1991, “Judges of yesteryears cannot be branded as doing disservice to the Constitution”.

From 1950-1991: State planned economy to LPG

The concurring opinion thereafter discussed the changing phases and nature of the Indian economy immediately post-independence. India adopted a mixed economy model where both public and private sectors could coexist and flourish after independence. To start with, the State controlled all the necessary industries with the development of public sector and ushering in of licence raj. In 1956, establishment of a socialist pattern of society was a national objective and the private sector was subjected to the licence raj. There was no competition from the private sector and State control enabled it to develop major projects in the country. In 1969, with the aim of financial inclusion and ready access to credit facilities for lowest strata agriculturists, 14 private banks were nationalised, which in fact severely hampered the efficiency and health of the banking system.

Around the 1980s’ in view of the previous bad experiences arising out of excessive State control, appreciating the merits of the market led economy, notable steps were being taken which marked the beginning of the end of the licence raj. In 1983, Government of India and Suzuki entered a joint venture to develop the Maruti car.

The new industrial policy of 1991 eventually put an end to Government shackles binding the Indian industry, whilst promoting the foreign direct investment (FDI) in the Indian economy. The reforms that were introduced and followed were colloquially known as LPG reforms, which saw the complete dismantling of the licence raj. Therefore, it is in the above backdrop that the judgments of the Court must be viewed as reflective of the extent of the economic model adopted by the State, then viewing the Judges who authoured the judgments as a disservice to the Constitution.

Partial concurrence with the majority opinion

The concurring opinion thereafter held that privately owned material resources can be transformed and can indeed acquire a status of “material resource of the community”. The phrase/expression “of the community” would include all those privately owned material resources, which have the potential to be transformed as material resources, excluding personal effects. Personal effects imply and are referable to things required for satisfying daily needs and means such tangible property as is worn or carried about the person or the designate articles associated with the person. Material resources belonging to private persons cannot be distributed by the State, unless the said resources are first transformed and converted to “that of the community”. It is only when they are so transformed that the State acquires the right to distribute them to subserve the common good.

The State may, after converting the private property into that of the community may not actually distribute the said resource among the citizens but might retain with it and continue utilising the same for the common good. Therefore, the distribution may not in all cases be actual distribution by giving it to the citizen necessarily. Towards this end, for identifying the category of resources that qualify as “material resources of the community”, the public trust doctrine may prove handy, instructive and be a proper guide.

“Material resources” include both public as well as private resources and cannot per se be distributed unless it becomes that of the community, if it is under the ownership of a private person. There are certain common denominators in the methods adopted by the State for the conversion of private resources into that of the community and such methods must comprise of the following three ingredients:

(a) The first process is to convert the private resources into resources of the community by vesting in the State.

(b) The second process is to utilise these community resources for the purpose of distribution for the common good. Distribution could be in two ways: firstly, by actual distribution to the deserving and eligible persons as per the policy to be implemented. Secondly, the State could retain ownership and/or control having regard to the nature of the resources and other relevant factors.

(c) The third process is that the private owners of these resources are fairly compensated when they lose all rights, title and possession over such material resources when it becomes a material resource of the community.

Explaining the above three tests, it was then held that when private persons are deprived of ownership as well as the control of resources under their ownership, then they must be compensated justly and fairly, otherwise such acquisition or nationalisation would be violative of Article 300-A of the Constitution of India depriving the person of his property by the authority of law.

Private resources are not straightway distributed or handed over to other private persons by the State in the garb of distribution under Article 39. Private resources first become the community resources and thereafter used in the larger interest of the community, which is the ultimate beneficiary. The phrase “common good” occurring under Article 39(c)¹⁰⁴ is an indicator of end use of the converted resource from private to community. It implies that private resources cannot be transferred after conversion to community resources to another set of private persons by excluding the public at large. State cannot act as an agent for distribution of privately owned material resources by taking ownership and control of the same and thereafter handing it over to other private persons selectively. Such a practice would never serve the “common good”. While the wisdom or correctness of a policy or legislation enacted under Articles 39(b) and (c) cannot be questioned being protected by Article 31-C, however its implementation before a court of law is not so immunised. The governmental action of distribution which is essentially an administrative action could be challenged before a constitutional court based on relevant principles applicable in exercise of judicial review.

Summary of conclusions

The concurring opinion thereafter recorded the summary of its conclusions, which were as follows:

(a) Articles 37, 38 and 39 of the Constitution of India ¹⁰⁵ have to be interpreted in view of the changing economic policies of the State and not by adopting a rigid watertight compartment.

(b) All resources whether they are public resources or privately owned, include within their ken all those which have the potential of being converted as “resources of the community”.

(c) On merits it could not be held that Sanjeev Coke judgment¹⁰⁶ violated judicial discipline. In Sanjeev Coke judgment¹⁰⁷, the Court did not decide the challenge to coking plants nationalisation only based on opinion of Krishna Iyer J. in Ranganatha Reddy judgment¹⁰⁸ but also on the merits of the validity of the Coking Coal Mines (Nationalisation) Act, 1972 Sanjeev Coke judgment¹⁰⁹ is therefore a good law still insofar as the merits of the matter are concerned.

(d) The term “distribution” has a wide connotation; it may include the vesting of concerned resources in the State or nationalisation. A resource vested in the State could be utilised by the State to subserve the common good, to which the public trust doctrine would apply. The State may also utilise the resource for granting it to deserving and eligible persons by fixing the minimum transparent benchmarks for the same.

(e) Earlier judgments of the Supreme Court in Ranganatha Reddy judgment¹¹⁰, Sanjeev Coke judgment¹¹¹, Abu Kavur Bai judgment¹¹² and Basantibai judgment¹¹³ correctly decided the issues that fell for consideration and do not call for any interference. The observations of the Judges in those decisions also would not call for any critique in the present times. Accordingly, the concurring opinion answered the reference in the above terms.

Dissenting opinion of Justice Sudhanshu Dhulia

The dissenting judgment stated that the majority judgment two crucial questions, Part I i.e. Part (C) on Article 31-C and Part II i.e. Part (D) on Articles 39(b) and (c). The judgment agreed with the decision on the third issue i.e. Part (C) of the judgment upon Article 31-C. The issue was whether Article 31-C still protects Articles 39(b) and (c) and if it does, then to what extent? The judgment stated that the unamended Article 31-C to the extent held valid in Kesavananda Bharati judgment¹¹⁴ provides such protection and this interpretation does not require further elaboration as it aligns with the precedent.

The point of dissent

The judgment stated that the dissent is upon the second part of the judgment i.e. on the meaning of the phrase “material resources of the community” given in Article 39(b). The reference has been made by a 7-Judge Bench to reconsider the interpretation of Article 39(b). The dissent is upon the issue that whether privately owned resources are part of “material resources of the community” as used in Articles 39(b) and (c).

The judgment stated that if “privately owned resources” are not a part of “material resources of the community” then only public resources are included and they are in any case meant to serve the public. Then neither the Directive Principles of State Policy requires protection under Article 31-C nor the Articles 39(b) and (c) read with Article 38 will have meaning if “private ownership” and “private property” are not included. There is no violation of Articles 14 and 19 of the Constitution of India, if the public resources are being utilised for common good, and thus consequently there would be no requirement of Article 31-C.

Referring to the decisions in Ranganatha Reddy judgment¹¹⁵ and Sanjeev Coke judgment¹¹⁶, the judgment stated that with respect to Articles 38 and 39 the expression “material resources of the community” must be interpreted to include privately owned resources.

Material resources of the community has wider meaning

The judgment stated that the expression “material resources of the community” has wider meaning. Relying on the separate opinion by 3 Judges given in Ranganatha Reddy judgment¹¹⁷, wherein Justice Krishna Iyer reiterated that:

81. … material resources of the community in the context of re-ordering the national economy embraces all the national wealth, not merely natural resources, all the private and public sources of meeting material needs, not merely public possessions.

The judgment further referred to the decision in Sanjeev Coke judgment¹¹⁸ wherein it stated that the expression not only includes natural resources but all private and public resources for meeting all material needs in this world. The judgment further referred to a long list of judgments of the Court where the findings of Ranganatha Reddy judgment¹¹⁹ and Sanjeev Coke judgment¹²⁰ have been followed, stating it as unwise to upset the long-settled meaning given consistently by several Benches of the Court to the phrase “material resources of the community”, used in Articles 39(b) and (c) by the framers of the Constitution.

Relying upon minority opinion not erroneous if majority opinion is silent to concur with it

The judgment raised concerns in relation to Ranganatha Reddy judgment¹²¹ penned by the 7-Judge Bench. This is because of the issue that Sanjeev Coke judgment¹²² unanimously followed the minority opinion of Ranganatha Reddy judgment¹²³ and would that be against the doctrine of stare decisis or “stare decisis et non quieta movere” (stand by the decisions and not to unsettle what is settled) which is to be followed.

The judgment stated that the majority opinion decided the issue through a harmonious construction of the Act, and did not go into the aspect of Articles 39(b) and (c), as well as Article 31-C of the Constitution of India. These Articles were significant being part of the arguments of the State and the issue dealing with implementation of the policy of the State as mandated under Articles 39(b) and (c) and it was dealt only in the minority judgment of Justice Krishna Iyer (minority comprising 3 Judges). It observed that the majority opinion was silent to concur with the minority opinion since, both the opinions had the same conclusion but had separate ways to infer it. Therefore, the opinion of the 3 Judges does not fall under the ambit of Article 145(5) of the Constitution of India ¹²⁴ as a dissent and while being persuaded by the logic and reasoning of the 3 Judges Sanjeev Coke judgment¹²⁵ never broke any judicial discipline.

The judgment stated that holding “privately owned resources” not a part of “material resources of the community”, will not only have the effect of unsettling Ranganatha Reddy judgment¹²⁶, Sanjeev Coke judgment¹²⁷ and all the subsequent decisions but will also unsettle whole body of laws including Constitution Bench decisions of this Court which had held or presumed, though indirectly that privately owned resources are part of “material resources of the community” even prior to Ranganatha Reddy judgment¹²⁸.

Referring to the decisions in State of Bihar v. Kameshwar Singh¹²⁹ and Shankari Prasad Singh Deo v. Union of India¹³⁰ the judgment reiterated the existing principle that taking away of the material resources from private hands for public purposes is constitutional and there cannot be any reason for having a different view if simply the material resources change from land to some other “material resources”. The judgment stated that the provisions under Article 38 have to be read along with Articles 39(b) and (c) of the Constitution of India to give an expansive meaning to the phrase “material resources of the community”, as given in minority opinion by 3 Judges in Ranganatha Reddy judgment¹³¹.

Time still not ripe for exclusion of “privately owned resources” from the expression

The judgment highlighted how the state of the economy and the society has undergone changes, but the inequality in income and wealth and the growing gap between the rich and the poor is still enormous. It will therefore not be prudent to abandon the principles on which Articles 38 and 39 are based upon and on which stands the 3 Judge opinion in Ranganatha Reddy judgment¹³² and the unanimous verdict in Sanjeev Coke judgment¹³³.

Though the issue of distribution of ownership and control of material resources is solely upon the legislature and they must ensure that it takes place in order to subserve common good. Once the expansive meaning of “material resources of the community” is determined, there is no necessity of drawing further guidelines for the legislatures to determine as to what will constitute material resources. The legislature has to keep the legislation in nexus with the principles specified in Articles 39(b) and (c) to be a valid legislation. This is the law in terms of Kesavananda Bharati judgment¹³⁴ and Minerva Mills judgment¹³⁵. Therefore, the judgment stated that what and when do the “privately owned resources” come within the definition of “material resources” is for the legislature and not for the Court to declare.

Conclusion

The judgment finally concluded, stating that the jurisprudential value and relevance of the broad and inclusive meaning given to expression “material resources of the community” by Justice Krishna Iyer and Justice O. Chinnappa Reddy in Ranganatha Reddy judgment¹³⁶ and Sanjeev Coke judgment¹³⁷ respectively, has stood till date and will remain a beacon of light illuminating the path of those who appreciate its value.

***

(3) Central Organisation for Railway Electrification v. ECI SPIC SMO MCML (JV) A Joint Venture Co.¹³⁸

(Delivered on 8-11-2024)

Coram: 5-Judge Bench of Justices Dr D.Y. Chandrachud, C.J. and J.B. Pardiwala, Manoj Misra, Hrishikesh Roy and P.S. Narasimha, JJ.

Majority Opinion Authored by: Dr Justice D.Y. Chandrachud

Abbreviations for various common terminologies in the judgment

AT — Arbitral Tribunal	A&C — Arbitration and Conciliation Act, 1996
AG — Attorney General	Govt. — Government
Art. — Article	PNJ — Principles of Natural Justice
COI — Constitution of India	w.r.t. — with respect to
CB — Constitution Bench	LCI — Law Commission of India
Sec. — Section	CORE — Central Organisation for Railway Electrification
UOI — Union of India	JB — Judge Bench
Model Law — Uncitral Model Law on International Commercial Arbitration 1985	ECHR — European Convention on Human Rights
SC — Supreme Court	IOCL — Indian Oil Corpn. Ltd.
US — United States	DTC — Delhi Transport Corpn.
SAIL — Steel Authority of India	MADA — Mineral Area Development Authority
SCOTUS — Supreme Court of the United States	CORE judgment — CORE v. ECI-SPIC-SMOMCML (JV) A Joint Venture Company¹³⁹ (CORE)
	Voestalpine judgment — Voestalpine Schienen GmbH v. DMRC Ltd.¹⁴⁰

The Court was called upon to decide the contours of independence and impartiality of ATs under the Arbitration and Conciliation Act, 1996 ¹⁴¹. The reference to the Constitution Bench raised important issues of the interplay between party autonomy and independence and impartiality of the AT.

Background of the reference to the Constitution Bench

The Law Commission of India in its 246th Report recommended that party autonomy cannot be stretched to disregard the principles of impartiality and independence of the arbitral process, specifically at the stage of constituting of any AT. Therefore, automatic disqualification of certain categories of persons were recommended on their relationship with the parties as specified under the named categories. Accepting the Law Commission of India Report, Parliament amended the Arbitration and Conciliation Act, 1996 in 2015 to incorporate Section 12(5)¹⁴², disqualifying automatically the persons whose relationship with the parties fell under any of the categories specified under the 6th and 7th Schedule.

Various parties filed applications under Section 11(6) seeking invalidation of appointment procedures giving dominance to one party in appointing arbitrators in view of the 2015 Amendment. In CORE judgment¹⁴³, the arbitration clause 64 under challenge stipulated for AT to consist of 3 retired railway officers who had retired from the railways, to be selected from amongst the panel of at least fall names prepared by the railways. This Clause 64 was challenged, in which the Bench of 3 Judges examined whether appointment of retired railway officers as arbitrators was valid specifically in view of Section 12(5) read with VII Schedule. The Court however upheld the validity of the arbitration clause and directed the constitution of AT in terms of the agreement.

In Union of India v. Tantia Constructions Ltd.¹⁴⁴, a 3-Judge Bench prima facie disagreed with CORE judgment¹⁴⁵ observing that once the appointing authority itself is incapacitated from referring the matter to arbitration, it does not then follow that appointments may be valid depending on the facts of the case. The reference was accordingly made to 5-Judge Bench, which initially gave time to the AG for reconsidering and suggesting amendments to the Arbitration Act. However, when the Union Government failed to address and incorporate amendments to the Arbitration and Conciliation Act, 1996 in view of suggestions of the Expert Committee on Arbitration Law (chaired by Dr T.K. Viswanathan) then the Constitution Bench itself decided to take up the reference for final hearing.

Issues before the Court

The following issues fell for the determination of this Court:

(a) Whether an appointment process which allows a party who has an interest in the dispute to unilaterally appoint a sole arbitrator, or curate a panel of arbitrators and mandate that the other party select their arbitrator from the panel is valid in law.

(b) Whether the principle of equal treatment of parties applies at the stage of the appointment of arbitrators.

(c) Whether an appointment process in a public-private contract which allows a government entity to unilaterally appoint a sole arbitrator or majority of the arbitrators of the AT is violative of Article 14 of the Constitution.

Party autonomy vis-à-vis mandatory provisions under the Arbitration and Conciliation Act

Court referred to Section 28 of the Contract Act, 1872 ¹⁴⁶ wherein parties can contract out of the traditional justice dispensing mechanism to refer their disputes to arbitration. The Arbitration and Conciliation Act, 1996 brings the domestic arbitration law in consonance with the Uncitral Model Law on International Commercial Arbitration, 1985 (for short, “Model Law”) with the primary objective of having an arbitral procedure that is fair, efficient and capable of meeting the needs of specific arbitration. Article 2-A of the Model Law provides that issues not expressly settled under the arbitration law to be settled in conformity with the general principles on which the law is based. Thus, resorting to general principles is for filling the gaps in the domestic/national arbitration laws, which are a set of principles widely accepted by legal systems and equally applicable to the Arbitration and Conciliation Act, 1996.

Party autonomy principle is the bedrock and fundamental to arbitration, as it allows the parties to design the arbitration proceeding to suit their needs and commercial reality. It is the “brooding and guiding spirit” and “backbone” of arbitrations, with minimum judicial interference and prohibition of courts from interfering in arbitral proceedings unless mandated by law. The Court in the process referred to certain provisions of the Arbitration and Conciliation Act, 1996, that reflect the dominance of principles of party autonomy in the Indian arbitration context.

Section 4 of the Arbitration and Conciliation Act, 1996 ¹⁴⁷ distinguishes between derogable (non-mandatory) and mandatory provisions. Whereas a party may waive its right to object if it proceeds with the arbitration without objecting to non-derogable provisions. However, at the same time Section 4 also necessarily implies that parties cannot proceed with arbitration in derogation of a mandatory (non-derogable) provisions. Referring to Holtzmann and Neuhaus certain examples of mandatory provisions under the Model Law were referred to, some of them being full opportunity of presenting the case to each party; supply of necessary materials to the other party by the AT, filed by the first party, etc. The composition of the AT or the arbitral procedure also falls within the purview of mandatory provisions. Under the Arbitration and Conciliation Act, 1996, the mandatory provisions are deduced from the content of the provision concerned, text and context of the provision operating under the Act. As opposed to the Indian regime, the United Kingdom Arbitration Act lists mandatory provisions under Schedule 1.

Appointment, independence and impartiality of arbitrators

Court referred to Section 10 of the Arbitration and Conciliation Act, 1996 ¹⁴⁸ permitting the parties to determine the number of their arbitrators, which should not be an even number. On the failure of the parties to determine the arbitrator’s recourse to Section 11 can be taken to. Thus Section 11(6) allows judicial involvement as a default mechanism, and not as an independent basis for choosing the arbitrators irrespective of the parties’ agreement.

Party autonomy is the governing feature of the Constitution of the AT, wherein they have full freedom to choose arbitrators with peculiar experience and expertise along with the procedure for their selection. The appointing authority under Section 11 has to ensure that appointment of independent and impartial arbitrators happens under Section 11(8), which is based on Article 11¹⁴⁹ of the Model Law.

Referring to Section 12, especially after the 2015 Amendment, the Court stated that duty of disclosure is a continuing duty, and the arbitrator must disclose in writing any circumstances that give rise to justifiable doubts as to his independence or impartiality. Prior to 2015 Amendment, the Court generally upheld arbitrator appointment clauses that gave one party unfettered discretion to appoint a sole arbitrator holding that there is no such bar under the Arbitration and Conciliation Act, 1996 for an employee of a Government or public sector undertaking to be the sole arbitrator. A person who is ineligible to be appointed as an arbitrator under Section 12(5) becomes de jure unable to perform functions according to Section 14 and his mandate being an ineligible person gets automatically terminated liable to be substituted by another one.

The duty of disclosure on the part of persons nominated as arbitrators is a continuing duty and requirement to:

(i) provide the information to any party who did not obtain it before the arbitrator’s appointment; and

(ii) secure information about circumstances that only arise at a later stage of the arbitral proceedings, that is, new business affiliations or share acquisitions.

Equality in public private arbitral proceedings

Court referred to Section 18¹⁵⁰ under Chapter V of the Arbitration and Conciliation Act, 1996 regarding “conduct of arbitral proceedings”, premised upon Article 18¹⁵¹ of the Model Law. Both the parties are mandated to be treated with equality with a right to a fair hearing.

In cases of public private arbitrations, there cannot be any special treatment given to the Government as a party. Referring to the judgment of Pam Developments (P) Ltd. v. State of W.B.¹⁵², it was stated that under the Arbitration and Conciliation Act, 1996 no distinction is made qua the Government, whilst deciding an application for grant of stay of a money decree in proceedings under Section 34 of the Arbitration and Conciliation Act, 1996 ¹⁵³. Therefore, public private arbitrations stand on the same footing as arbitrations between two private entities.

Principle of equality at the stage of appointment of arbitrators

Referring to the judgment of Jaswant Sugar Mills Ltd. v. Lakshmi Chand¹⁵⁴, Court elaborated the tests to be applied for determining whether any statutory authority is performing judicial/quasi-judicial functions and went on to observe that duties of an arbitrator are derived from conjunction of contract and status granted by national/domestic laws. Referring to the judgment of ONGC Ltd. v. Afcons Gunanusa JV¹⁵⁵, it was stated that an AT performs a quasi-judicial function as it substantially determines the rights and liabilities of competing parties through adjudicative means. There is a procedural framework to regulate the composition of AT and incorporation of Section 12(5) is a recognition that such proceedings must be consistent with PNJ. The substance of the law cannot be divorced from the procedure under the Arbitration and Conciliation Act, 1996. Since AT is an effective alternative to traditional justice dispensing mechanism, for it to be effective and credible. The decisions emanating from them must be delivered in a process that is independent and impartial.

Referring to the judgments of Union of India v. Vedanta Ltd.¹⁵⁶ and Indian Oil Corpn. Ltd. v. Raja Transport (P) Ltd.¹⁵⁷ it was stated that equality under Article 14 of the Constitution of India enshrines the principle of equality of treatment of all persons under like circumstances. Therefore Article 14 implies that all litigants similarly situated are entitled to avail themselves of the same procedural rights for relief and for defence with like protection and without discrimination. Referring to the judgment of Union of India v. Madras Bar Assn.,¹⁵⁸ it was stated that right to equality enjoins upon a person the right to be adjudicated by a judicial forum which is impartial and independent.

Therefore, the Court held that without equality at the stage of appointment of arbitrators, party may not have any equal say in facilitating the appointment of an unbiased AT, a principle reflected also under Section 11(8) of the Arbitration and Conciliation Act, 1996. Referring to various provisions and Schedule incorporated vide 2015 Amendment, it was stated that the amendment has reinforced certain mandatory standards of independent and impartial ATs.

Protection against bias in arbitral proceedings (Nemo Judex Rule)

PNJ is an important facet of Article 14, in administrative, judicial and quasi-judicial decision-making process, which demands fair play and action. Referring to the judgment of Madhyamam Broadcasting Ltd. v. Union of India¹⁵⁹ it was held that principles of procedural fairness are rooted in rule of law and good governance. These inherent principles apply to resolution of disputes by ATs as well for upholding the integrity of arbitration in India.

Referring to the judgments of J. Mohapatra v. State of Orissa¹⁶⁰ and Ashok Kumar Yadav v. State of Haryana¹⁶¹ it was held that rule against bias (nemo judex Rule) extends to all cases where an independent mind has to be applied for adjudicating the rival claim of parties.

The Court traced the development of law relating to various tests for determining bias in United Kingdom, wherein the test of “real possibility of bias” has gained firm grounds. Referring to the host of judgments of courts in the United Kingdom, it was held that the bias test has undergone significant developments over the last four decades and as on date the current bias test is the “real possibility of a bias”.

The position followed in the United Kingdom is followed by other jurisdictions as well, viz. ECHR, which has consistently held that an arbitration agreement between the parties does not constitute a waiver of the fair procedure guarantees, especially the pre-condition of an independent and impartial tribunal.

However, the Court noted two important distinctions between the position in India and the United Kingdom; firstly, the latter does not require an arbitrator to be completely independent of the parties and secondly, mandatory duty of disclosure on potential arbitrators vide Section 12 of the Arbitration and Conciliation Act, 1996 Bias test in India

The courts in India have consistently adopted the real likelihood test to determine bias in the arbitrator. Referring to the judgment of HRD Corpn. v. GAIL (India) Ltd.¹⁶² it was held that if there is a likelihood that an arbitrator may be influenced by factors other than the merits of the case in reaching his or her decision, then doubts become justifiable. Referring to the judgment of State of Haryana v. G.F. Toll Road (P) Ltd.¹⁶³ the Court stated that the Arbitration and Conciliation Act, 1996 does not disqualify a former employee from acting as an arbitrator, till and until the independence and impartiality are not under a cloud. Same standards of bias are adopted as that applicable to judicial authorities. The categories listed under the Vth and VIIth Schedules must be construed by taking a “broad commonsensical approach” without restricting or enlarging the words.

Court also referred to Voestalpine judgment¹⁶⁴, wherein distinction between independence and impartiality was explained by the Court whilst determining bias. Independence of an arbitrator is generally considered w.r.t. to the relationships or links between the arbitrator and one of the parties of any nature, whereas impartiality is inferred from facts and circumstances surrounding an arbitrator’s exercise of quasi-judicial functions. The party challenging the appointment of an arbitrator just needs to show there are “possible doubts” upon his independence or impartiality. The purpose behind the word “justifiable” under Section 12 is to establish an objective standard for impartiality and independence, to be derived from the objective circumstances disclosed by an arbitrator or inferred from circumstances relating to discharge of his function. In Voestalpine judgment¹⁶⁵, the Supreme Court observed that merely because individual who had previously served in the Government, but had no connection with the party in dispute could not be held to be ineligible for appointment as an arbitrator.

Referring to the provision for waiver under Section 12(5) of the Arbitration and Conciliation Act, 1996, it was held that parties can by an express agreement waive the objection to the bias of an arbitrator/adjudicator, after a dispute has arisen. In a way therefore Section 12(5) also gives primacy to party autonomy, but with the necessity of express agreement in writing for the said waiver.

Validity of unilateral appointment of arbitrator clauses vis-à-vis Section 18

A person having financial interest in the outcome of the arbitral proceedings cannot unilaterally nominate the sole arbitrator as such an arbitrator would owe his appointment to one party making it difficult to decide against that party for fear of displeasure. An arbitral process, therefore, where one party or its proxy has a power to unilaterally decide who will adjudicate on a dispute is fundamentally contrary to the adjudicatory function of arbitrary tribunals. However, in case of a three-member Arbitral Tribunal, the situation is different from that of a sole arbitrator. Equal participation of both the parties counterbalances appointment of in-house arbitrator by one of the parties.

Therefore, curation of a panel of arbitrators, from which one of them is to be selected by one party at the instance of one of the parties (having a dominant position in the agreement) is inherently against the principles of equal treatment under Section 18. Since the contractor has to select its arbitrator from a curated panel, prepared by the Government (or Railways in the present case) the arbitration clause does not allow the former equal participation in the appointment of their arbitrator. Since the Presiding Officer in CORE judgment¹⁶⁶ allowed the GM to unilaterally nominate the Presiding Officer, out of the panel of 3 arbitrators, it became inherently unequal and prejudiced in favour of Railways. Such a clause therefore cannot be treated as a valid clause. The option is always available to the contractor to either select the arbitrator from the panel of arbitrators or by expressly waiving their objections.

Impartiality and independence of arbitrator as a facet of public policy

Referring to the judgment of DTC v. DTC Mazdoor Congress¹⁶⁷ it was stated that courts can rely upon the Constitution of India as a source of public policy. Relying upon the judgment of Central Inland Water Transport Corpn. Ltd. v. Brojo Nath Ganguly¹⁶⁸ it was stated that courts can always refuse to enforce any unfair and unreasonable clause in a contract entered into between the parties, unequal in bargaining power. Likewise, principles of non-arbitrariness continue to apply in situations where a government instrumentality and a private party enter into a contract with each other. An arbitration agreement must comply with the “operation of law”, which includes the grundnorm. These grundnorms include the Constitution of India, any Central or State law and fundamental rights under the Constitution of India.

The SCOTUS held that the doctrine of unconscionability is a part of American contract law, allowing courts to refuse enforcement of unconscionable contracts or limit their application. The unconscionability doctrine seeks to balance the freedom of contract with the values of protecting the weaker parties from imposition and oppression of onerous conditions. The US courts have consistently held that arbitration agreements providing for unilateral formation of a panel of arbitrators by one of the parties is inherently inequitable and unconscionable and against “fundamental notions of fairness”. Reference was made in this regard to the judgments of Hooters of America Inc. v. R. Phillips¹⁶⁹ and McMullen v. Meijer Inc.¹⁷⁰

The aforesaid principles have been borrowed and enshrined under the Arbitration and Conciliation Act, 1996 as well, one of the examples of which is Section 34, employing the phrase “fundamental policy of Indian law”. Referring to the judgment of OPG Power Generation (P) Ltd. v. Enexio Power Cooling Solutions India (P) Ltd.¹⁷¹ the aforesaid phrase was held to be inclusive of those fundamental principles that provide a basis for administration of justice and enforcement of law in India. In Avitel Post Studioz Ltd. v. HSBC PI Holdings (Mauritius) Ltd.¹⁷² it was held that “public policy” will include rule against bias as also basic notions of morality and justice. In a public private contract, therefore the responsibility lies on the Government and its instrumentalities ensure that arbitral process under the contract is fair to the other party to avoid arbitrariness, which includes protection against unilateral appointment clauses as well. Unilateral appointment clauses are therefore against the principle of arbitration and impartial resolution of disputes between parties. They are violative of Article 14 of the Constitution of India as also violative of equality principle under the Arbitration Act (Section 18).

However, examining the scope of Section 11 scrutiny, it was held that referral Court must only determine the existence of arbitration agreement and not the validity of the arbitration clause providing for the procedure for appointment of the arbitrators. The issue should be left to be decided by the Arbitral Tribunal on law and facts in view of the doctrine of competence, wherein the Arbitral Tribunal is competent to rule on its own jurisdiction including the issue of validity of the arbitration clause for violating the equality principle.

Invocation of prospective overruling

To avoid large scale social and economic disruption, resorting to Article 142¹⁷³, the Court held it has powers to give prospective effect to its decisions. Referring to the Constitution Bench judgment of Mineral Area Development Authority v. SAIL¹⁷⁴ it was stated that the doctrine of prospective overruling is applied to bring about a smooth transition of the operation of law without unduly affecting the rights of people who acted upon the overruled law.

Accordingly, it was held that the law laid down in the present reference shall apply prospectively only to arbitrator appointments to be made after the date of the present judgment, including those for 3-member tribunals.

Accordingly, the Court returned the following conclusions in its reference judgment:

(a) The principle of equal treatment of parties applies at all stages of arbitration proceedings, including the stage of appointment of arbitrators.

(b) The Arbitration and Conciliation Act, 1996 does not prohibit PSUs from empaneling potential arbitrators. However, an arbitration clause cannot mandate the other party to select its arbitrator from the panel curated by PSUs.

(c) A clause that allows one party to unilaterally appoint a sole arbitrator gives rise to justifiable doubts as to the independence and impartiality of the arbitrator. Further, such a unilateral clause is exclusive and hinders equal participation of the other party in the appointment process of arbitrators.

(d) In the appointment of a three-member panel, mandating the other party to select its arbitrator from a curated panel of potential arbitrators is against the principle of equal treatment of parties, because parties do not participate equally in the process of appointing arbitrators.

(e) Unilateral appointment clauses in public-private contracts are violative of Article 14 of the Constitution; the principle of express waiver contained under the proviso to Section 12(5) also applies to situations, where the parties seek to waive the allegation of bias against an arbitrator appointed unilaterally by one of the parties. After the disputes have arisen, the parties can determine whether there is a necessity to waive the nemo judex rule.

Concurring opinion of Justice P.S. Narasimha

Arbitration as a substitute dispute resolution

The Arbitration and Conciliation Act, 1996 provides for simple, efficient, cost-effective and fair dispute resolution coupled with two enviable values of arbitration, viz. party autonomy and an independent and impartial Arbitral Tribunal. Party autonomy is the “brooding and guiding spirit in arbitration” and the “grundnorm” of arbitration. The party autonomy includes the following facets:

(a) Freedom to enter into an agreement decided entirely between the parties, including the law governing the arbitration agreement.

(b) Freedom to determine composition of the Tribunal, number of arbitrators, nationality and procedure for appointment of arbitrators, etc.

(c) Freedom to determine the conduct of arbitral proceedings, viz. the procedure, place, date of commencement, language, etc. to be used in the arbitral proceedings.

(d) Freedom to determine everything from the beginning to end point (terminal of the proceedings), the rules applicable, time-limit for completion, grant of interest and extent of powers to grant the award.

(e) Freedom to determine the procedure for seeking enforcement of the award.

Obligation of parties to have an independent and impartial AT

Referring to Sections 10 and 23 of the Contract Act, 1872 ¹⁷⁵, the concurring opinion held that public policy considerations limit contractual freedoms, whenever both collide with each other. It is presumed that parties cannot agree or contract to terms under a contract which has a tendency to harm public good and public interest. Unconscionability of the contract is a facet of public policy. Since the Arbitration and Conciliation Act, 1996 simply replaces the forum with the traditional courts and justice dispensation system, the essential features of the remedy such as the credibility, efficiency must continue to inhere in the substituted forum as well. Basic features of judicious remedy, most important being an independent and impartial tribunal must therefore inhere in the arbitration process of adjudication as well.

Challenge to arbitrators under Section 12 on the grounds of impartiality and independence

There are two categories of challenge available to the appointment of arbitrator under Section 12, which are as follow:

(a) Firstly, a challenge mounted under Section 12(3), based on justifiable doubt regarding its impartiality and independence, read with Vth Schedule. It encapsulates circumstances giving rise to justifiable doubts about the arbitrator, adopted from the Red and Orange Lists of the IBA Guidelines. There is no bar to the appointment itself of the arbitrator, but the appointment may later be challenged before the Arbitral Tribunal.

(b) The second category is provided under Section 12(5), wherein by virtue of their relations with the parties, certain persons have been declared automatically ineligible to be appointed as arbitrators, as mentioned under VIIth Schedule. Disability under Section 12(5) read with VII Schedule is a de jure one, and the appointment need not be challenged before the Arbitral Tribunal under Section 13 but gets automatically terminated under Section 14(1)(a). In view of the statutory bar, the appointment is invalid from the very beginning and what is to be seen is whether the arbitrator falls under one of the prohibited categories of the VII Schedule. Section 12 is therefore a statutory incorporation of the public policy principle of the access to justice, which is fair, independent and credible and inspires public confidence in the adjudicatory process.

Stage at which court can constitute an independent Arbitral Tribunal

The power of the Court is to ensure that the AT is not only independent and impartial but also seems so. The Court will examine the contention of the party that independence of the arbitrator stands compromised in an application filed under Section 11(6). Provisions of Section 12 read with Vth and VII Schedules shall come to the aid of the Court whilst deciding the said application under Section 11(6). Section 11(8) empowers the Court to secure the independence and impartial AT, dehors the provision of the arbitration agreement. Even though the Court should give due deference to the party autonomy, it is not bound by the said principle, when the question of appointment of arbitrator is involved. Section 11(8)(b) obligates the Court to weigh “other considerations as are likely to secure appointment of independent and impartial arbitrator”. Thus, when there is material to create a reasonable apprehension that the proposed arbitrator may not act independently, then in light of Section 11(8)(b) the Court may exercise such powers by deviating from the procedure, for reasons to be recorded in writing and will proceed to appoint an independent arbitrator. Reference was made to the judgment of Indian Oil Corpn. Ltd. v. Raja Transport (P) Ltd.¹⁷⁶ for the said proposition.

Court correlated the concept of access to justice with arbitration, holding that arbitral remedies too must withstand constitutional scrutiny and provide access to independent and impartial tribunals as they are equally relevant for the common man, the poor and the humble, for the “butcher, the baker and the candlestick maker”.

Precedents of the Supreme Court on Section 12(5) after its amendment

The concurring opinion then went on to refer to a host of judgments and precedents, that interpreted Section 12(5) after the 2015 Amendment to the Arbitration and Conciliation Act, 1996. Reference was made to the following judgments for elaborating how Supreme Court interpreted the amended provision and the public policy consideration inherently embedded in it, whilst declaring certain kinds of arbitration agreements, being violative of Section 12(5). They were as follows:

(a) Voestalpine judgment¹⁷⁷

(b) TRF Ltd. v. Energo Engg. Projects Ltd.¹⁷⁸

(d) CORE judgment¹⁸⁰

(e) Glock Asia-Pacific Ltd. v. Union of India¹⁸¹

After quoting all the above precedents with the ratio laid down therein respectively, the concurring opinion held that Section 12(5) read with Vth and VIIth Schedules incorporates the laudable public policy considerations, and overrules the party autonomy to the said extent of ensuring an independent and an impartial AT. The Court in these circumstances is thus not bound by the arbitration agreement.

International perspectives and position of law

Apart from making reference to the Model Law, judgments of the SCOTUS, Geneva Protocol on Arbitration Clauses, European Convention providing a uniform law on arbitration, which have also been referred herein above in the majority opinion, the Court referred to host of judgments from the courts in US. Referring to the judgment of Murray v. United Food and Commercial Workers International Union 400¹⁸², it was mentioned that an arbitration agreement becomes unconscionable because the arbitrator was selected from a list of potential arbitrators curated by one of the parties to the dispute. Such an arbitration clause has been found utterly lacking in the rudiments of evenhandedness, rendering the arbitral forum as not an effective substitute for a judicial forum. For the same proposition, reference was made to a judgment of Supreme Court of West Virginia in Board of Education of Berkley County v. W. Harley Miller, Inc.¹⁸³, England and Wales Court of Appeal in Sumukan Ltd. v. Commonwealth Secretariat¹⁸⁴. Eventually after undertaking comparative analysis of judicial pronouncements across the globe and jurisdictions, it was held that though party autonomy is often respected in the appointment of arbitrators, courts internationally are varied of provisions granting one sided control over the AT.

The concurring opinion further referring to the majority opinion authored by the Chief Justice of India (CJI), stated that real issue is about the imbalance caused due to unilateral power of one of the parties to constitute the AT. The power is always coupled with the duty of the Court to ensure that procedure under the arbitration clause does not lead to creation of an independent tribunal and this scrutiny or inquiry by the Court is at the stage of considering application under Section 11. The courts must inquire on a case-to-case basis by closely scrutinising the arbitration agreements and ascertain whether the independence has been compromised or not, at the stage of Section 11 applications. Mere existence of some relationship with the appointing authority does not ipso facto inherently undermine autonomy.

Accordingly, the concurring opinion concluded that the Court must not give an advance declaration that all such agreements which enable one of the parties to unilaterally constitute an AT would be void per se. Rather Court must examine the text and context of the agreement to eventually declare such agreements as void if in effect they are found to compromising the independence and impartiality of the AT. Accordingly, the majority opinion answered the reference and delegated the matter to the appropriate Benches for deciding the pending applications and proceedings pending before them.

Concurrent view of Justice Hrishikesh Roy

The judgment stated upon the opinion of the Chief Justice of India that it is appropriate that the principle of equality under Section 18 of the Arbitration and Conciliation Act, 1996 applies at all stages of the proceedings including the stage of appointment of arbitrators and that the Arbitration and Conciliation Act, 1996 does not provide special or different treatment to Government or Government undertakings involved in arbitration.

Issue of dissent

The judgment canvassed the point that the feature of party autonomy and impartiality in the appointment of arbitrator can be preserved by not invoking constitutional and administrative law principles and rather can be dealt through framework of the Arbitration and Conciliation Act, 1996, while dealing with issue related to principle of equality between arbitrating parties.

Referring to the decision in the judgment of Interplay Between Arbitration Agreements under Arbitration and Conciliation Act, 1996 and Stamp Act, 1899, In re¹⁸⁵ the judgment stated that critical scrutiny in the Section 11 stage would be antithetical to the objective of the Arbitration and Conciliation Act, 1996 as Section 11(8) itself provide for the requirement of disclosure under Section 12 and therefore importing principles of constitutional law to justify intervention at the Section 11 stage, would not only infringe upon the principle of party autonomy but would also be a departure from the expected norm of minimal judicial intervention and would defeat the objectives of the Arbitration and Conciliation Act, 1996.

Unilateral appointments per se not prohibited

The judgment stated that the interpretation that all unilateral appointments are automatically nullified under Section 12(5) of the Act underscores the emphasis on party autonomy, in the arbitral process, does not stand true as if the legislature had intended such a rigid restriction, there would be no need for the proviso to Section 12(5), which explicitly permits parties to waive this requirement through an agreement in writing. Referring to the decision in Voestalpine judgment¹⁸⁶, the Court stated that a “broad-based” panel, subject to the rigours of Section 12, is imperative to secure the principle of impartiality and independence of the Arbitrator.

The judgment stated that Sections 12 and 14 read with the Vth and the VIIth Schedules of the Arbitration Act, makes the arbitrator de jure barred from being appointed if there is a reasonable apprehension of bias against the arbitrator due to any relationship with any of the parties. Post-appointment also, the appointment can be challenged under Section 13(2) of the Arbitration and Conciliation Act, 1996 ¹⁸⁷. The provisions, Section 34(2)(iii) or Section 34(2)(v) also allow to set aside an award for procedural violations, under the Arbitration and Conciliation Act, 1996.

Referring to the 2015 Amendment, the judgment stated that specific concerns with regard to fairness, potential advantage to one party as well as independence and impartiality of a unilaterally appointed arbitrator were addressed under the IBA Guidelines. An eligible arbitrator, not otherwise disqualified under VII Schedule of the Act, can be appointed unilaterally, and courts should refrain from imposing their own opinion countermanding the clear intent of the parties. The statutory safeguards, under the Arbitration Act provide a checklist and a counterbalance and thereby rule out inequality for the arbitrating parties. Thus, the Arbitration and Conciliation Act, 1996 does not per se prohibit unilateral appointment of arbitrators and only intend to provide level playing field to the arbitrating parties.

Referring to the decision in Perkins Eastman Architects DPC case¹⁸⁸, wherein the question was whether the Managing Director of the respondent, who is ineligible to be appointed as an arbitrator under Section 12(5) read with VIIth Schedule, can nominate the sole arbitrator, the judgment stated that the distinction between “ineligibility” and “unilateral” appointments must be borne in mind and “ineligibility” of the Managing Director cannot be understood to conclude that unilateral appointments are impermissible.

The choice of the parties in the agreement should not be disregarded without compelling reasons, through judicial intervention especially when the Arbitration Act provides clear remedies under Sections 12, 13, 14, and 15 of the Arbitration Act. It is only when there is a complete lack of consensus between the parties that the Court’s interference under Section 11 could be justified. The judgment finally concluded that the Court must not declare void all the unilateral appointments as 2015 Amendment in Section 12(5) itself provides for a specific waiver i.e.: (a) an express consent in writing; and (b) the consent must be obtained after the dispute has arisen. Therefore, an agreement between the parties (provided it satisfies the specific waiver requirements under Section 12(5) can effectively cure any concerns about impartiality or independence in such cases.

Conclusion

Flowing from the concurring judgment, the following are the conclusions:

(a) Section 18 applies to all stages of arbitration including the stage of appointment of an arbitrator.

(b) Unilateral appointment of arbitrators is permissible as per the legislative scheme of the Arbitration Act. There is a distinction between “ineligibility” and “unilateral” appointment of arbitrators. As long as an arbitrator nominated by a party is eligible under the VII Schedule of the Act, the appointment (unilateral or otherwise), should be permissible. It is only in cases of a complete lack of consensus that the court should exercise its power under Section 11(6) of the Arbitration Act to appoint an independent and impartial arbitrator as per Section 11(8) read with Sections 12 and 18 of the Arbitration Act. At the appointment stage, the scope of judicial intervention is otherwise extremely narrow.

(c) The independence and impartiality of the arbitrator must be examined within the statutory framework of the Arbitration Act, particularly Section 18 read with Section 12(5). Public law constitutional principles should not be imported to arbitration proceedings particularly at the threshold stage of Section 11.

***

(4) Aligarh Muslim University v. Naresh Agarwal¹⁸⁹ ¹⁹⁰

(Delivered on 11-11-2024)

Coram: 7-Judge Bench of Justices Dr D.Y. Chandrachud, C.J. and Sanjiv Khanna, J.B. Pardiwala, Manoj Misra, Surya Kant, Dipankar Datta and Satish Chandra Sharma, JJ.

Majority Opinion Authored by: Dr Justice D.Y. Chandrachud

Abbreviations for various common terminologies in the judgment

Art. — Article	MAO College — Muhammadan Anglo-Oriental College
AMU Act — Aligarh Muslim University Act, 1920	Anjuman-e-Rahmaniya judgment — Anjuman-e-Rahmaniya v. District Inspector of Schools¹⁹¹
COI — Constitution of India	EI — Educational institution
CB — Constitution Bench	Govt. — Government
GOI — Government of India	CG — Central Government
r/w — Read with	MEI — Minority educational institution
SL — State Legislature	SG — State Government
AMU — Aligarh Muslim University	BHU — Banaras Hindu University
Sec. — Section	HC — High Court
HCJI — Chief Justice of India	SC — Supreme Court
UOI — Union of India	CJAR — Campaign for Judicial Accountability and Reforms
JB — Judge Bench	Azeez Basha judgment — S. Azeez Basha v. Union of India¹⁹²
DAV — Dayanand Anglo Vedic	CAD — Constituent Assembly Debates
Dawoodi Bohra Community judgment — Central Board of Dawoodi Bohra Community v. State of Maharashtra, (2005) 2 SCC 673	UGC — University Grants Commission
Yashpal judgment — Yashpal v. State of Chhattisgarh, (2005) 5 SCC 420	DAV College judgment — Dayanand Anglo Vedic College Trust and Management Society v. State of Maharashtra, (2013) 4 SCC 14
RPI — Real positive indicia	Ncmei Act — National Commission for Minority Educational Institutions Act, 2004
TMA Pai Foundation judgment — TMA Pai Foundation v. State of Karnataka, (2002) 8 SCC 481	St. Stephen’s College judgment — St. Stephen’s College v. University of Delhi, (1992) 1 SCC 558

Entry 13 List I	(for short, “E 13 L I”)
Entry 63 List I	(for short, “E 63 L I”)
Entry 17 List II	(for short, “E 17 L II”)
Entry 25 List III	(for short, “E 25 L III”)

The judgment related to interpretation of Article 30 of the Constitution of India ¹⁹³ guaranteeing the right to establish and administer educational institutions of their choice available to religious and linguistic minorities. The reference to be answered by the Constitution Bench pertains to the criteria to be fulfilled to qualify as a minority educational institution under Article 30(1).

Background facts and events leading to the reference to the Constitution Bench

In 1977, the Muhammadan Anglo-Oriental College was established in Aligarh, affiliated originally to Calcutta University and thereafter to Allahabad University. The Imperial legislature at the relevant point of time (prior to independence) passed the Aligarh Muslim University Act, 1920 ¹⁹⁴. Certain amendments were effected to the Aligarh Muslim University Act, 1920 in 1965 that were assailed before the Supreme Court, that culminated into a Constitution Bench judgment of S. Azeez Basha v. Union of India¹⁹⁵ wherein constitutional validity of the Amendments of 1965 were affirmed. The Constitution Bench in Azeez Basha judgment¹⁹⁶ broadly held as follows:

(a) The phrase “establish and administer” under Article 30(1) has to be read conjunctively, implying that religious minorities cannot claim the right to administer minority educational institutions, which they have not established, even if they were administering them for some reason in the pre-Constitution period. The word “establish” means “to bring into existence”. AMU was not established by the Muslim minorities for the reasons mentioned thereunder. Since the Muslim minority did not establish AMU, therefore it could not have claimed any right to administer it.

(b) In view of the above, therefore amendments to the Aligarh Muslim University Act, 1920 would not militate against Article 30 rights. The argument of the AMU administration that it was vested in the Muslim community, even though not established by them, was rejected. It was even held that administration of AMU never vested in the Muslim minority for the reasons assigned thereunder, the principle being that the various authorities within the administrative setup of AMU, which were never conceived to be Muslims exclusively or in majority. The Governor General possessed overriding powers in the administration of the AMU and therefore it could not have been said to be administered by the Muslim community.

Thereafter in 1981 a 2-Judge Bench of the Supreme Court in Anjuman-e-Rahmaniya judgment¹⁹⁷ questioned the correctness of Azeez Basha judgment¹⁹⁸ and referred it to a 7-Judge Bench. The 2-Judge Bench of Anjuman-e-Rahmaniya judgment¹⁹⁹ held that Azeez Basha judgment²⁰⁰ required reconsideration since a vital question about interpretation of Article 30(1) was not answered; whether Article 30(1) envisages an institution which is established by minorities alone without the participation of the factum of establishment from any other community and whether soon after the establishment of the institution if it is registered as a society under the Societies Registration Act, 1860 it loses or retains its “minority character”.

Thereafter, the Aligarh Muslim University Act, 1920 was amended in December 1981 to mention AMU as a minority educational institution established by the Muslims to promote the educational and cultural advancement of the Muslims in India.

In 2002, an 11-Judge Bench in TMA Pai judgment²⁰¹ framed an issue to answer about the indicia for any institution as a minority educational institution for the applicability of Article 30. However, TMA Pai judgment²⁰² never answered the said question, but left it to the regular Bench in due course to decide so. Thereafter AMU proposed a policy of 50% reservation of its seats for Muslim candidates, which was accepted by the Union of India at the relevant point of time. The Allahabad High Court relying on Azeez Basha judgment²⁰³ declared the said reservation. policy unconstitutional on various grounds, primarily being AMU could not be treated as a minority educational institution under Article 30. The Division Bench affirmed the judgment of the Single Bench in Aligarh Muslim University v. ²⁰⁴, against which the matter traveled to the Supreme Court, which through its judgment in February 2019 held that questions and the reference made in Anjuman-e-Rahmaniya ²⁰⁵ on the correctness of Azeez Basha ²⁰⁶ was yet to be answered and determined. Accordingly, the 3-Judge Bench then referred the matter to the 7-Judge Bench on the issues arising thereunder. Accordingly, the reference came to be settled by the 7-Judge Bench.

Issues framed by the Constitution Bench

In view of the comprehensive submissions made by the various parties, the Court framed the following issues to be answered by the Constitution Bench, which were as follows:

(a) Whether an educational institution must be both established and administered by a linguistic or religious minority to secure the guarantee under Article 30.

(b) What are the criteria to be satisfied for the “establishment” of a minority institution? Whether Article 30(1) envisages an institution which is established by a minority with participation from members of other communities.

(c) Whether a minority educational institution which is registered as a society under the Societies Registration Act, 1860 ²⁰⁷ soon after its establishment loses its status as a minority educational institution by virtue of such registration.

(d) Whether the decision of this Court in Yashpal v. State of Chhattisgarh²⁰⁸ and the amendment of National Commission for Minority Educational Institutions Act, 2005 in 2010 have a bearing on the question formulated above and if so, in what manner.

Answer to the preliminary objection of the Union of India

A preliminary objection was raised by the Union of India relying on the judgment of Dawoodi Bohra Community judgment²⁰⁹ that a 2-Judge Bench of the Supreme Court in Anjuman-e-Rahmaniya judgment²¹⁰ could not have referred the correctness of a 5-Judge Bench judgment of Azeez Basha judgment²¹¹ directly to the 7 Judges, which reference could have been made only by a Bench of 5 Judges not otherwise. The reference made by Anjuman-e-Rahmaniya judgment²¹² was therefore against the principles, modality and procedure for reference to larger Bench by smaller Benches for reconsideration of any judgment was laid down at length. The reference made by the Division Bench in Anjuman-e-Rahmaniya judgment²¹³ was therefore held to be in the teeth of the procedure and modality laid down in the judgment of Dawoodi Bohra Community judgment²¹⁴ and thus it was per incuriam.

Answering the aforesaid preliminary objection, the majority opinion held that though the correctness of the opinion in Azeez Basha judgment²¹⁵ was doubted by the 2-Judge Bench, however it was so done without disagreeing with it and the CJI was requested to have the matter heard by a Bench of 7 Judges. This falls clearly within the procedure prescribed vide para 7(b) of Dawoodi Bohra Community judgment²¹⁶ and thus was permissible to be done by the 7-Judge Bench directly on a request made by the 2-Judge Bench to the CJI. Clause 7(b) of Dawoodi Bohra Community judgment²¹⁷ reads thus:

“(a)). Decisions of this Court rendered by a Bench of larger strength are binding on Benches of a less or equal strength;

(b)). If a Bench of lower strength is doubtful about the correctness of a judgment delivered by a Bench of larger strength, it cannot disagree or dissent from the view taken by the larger Bench. In case of doubt, it can invite the attention of the Chief Justice of India to its opinion and request the Chief Justice to list the matter before a Bench, the strength of which is greater than that which delivered the judgment which has been doubted”²¹⁸

***”

Accordingly, the Court overruled the preliminary objection, which was though even withdrawn by the Union of India later and proceeded to answer the reference made to it.

Scope and purpose of Article 30

The majority opinion then traced the scheme of Articles 25 to 28²¹⁹ so placed under the heading “right to freedom of religion”. Articles 29²²⁰ and 30 are placed under the heading “cultural and educational rights”, which especially confer rights on a section of citizens residing in the territory of India or a part thereof. These articles are in the nature of guarantees and protections given by the Constitution not to any specific denominations by an identity, but to any sections of Citizens that can be distinguished on the basis of language, script or culture. It is a manifestation of the idea that India is a pluralistic society with different religions, practices, cultures and languages. The two crucial expressions arising for interpretation before the Constitution Bench were the words “establish” and “administer”, employed under clause (1) of Article 30.

Article 30(1) guarantees the minority educational institutions the right not to be discriminated against, the purpose of which was interpreted by a 7-Judge Bench of Supreme Court of India in P.A. Inamdar v. State of Maharashtra²²¹, Article 30(1) obligates the State to ensure circumstances and conditions that preserve the “minority character” of the institution and whilst preventing the State from discriminating against religious and linguistic minorities, it therefore guarantees a special protection as well.

Special protection envisaged under Article 30(1) and indicia for determining minority educational institutions (MEIs)

Referring to the judgments of P.A. Inamdar case²²² and TMA Pai judgment²²³, it was stated that restrictions on the administration of any minority educational institution (MEI) can be imposed within the limited sphere permitted under Article 30 and thus the right or the protection under Article 30 is not absolute, but codified and a special one. The majority opinion referred to a host of precedents, including judgments of Constitution Benches on explaining the scope of rights and special protections guaranteed under Article 30(1), which were as follows:

(a) Rev. Sidhajbhai Sabhai v. State of Bombay²²⁴

(b) State of Kerala v. Very Rev. Mother Provincial²²⁵

(d) P.A. Inamdar case²²⁷

The ratio of the above aforesaid judgments as deduced by the majority judgment was essentially that regulations imposed by the State on any minority educational institution (MEI) must be relevant to the purpose of granting recognition (wherever such recognition in necessary for imparting education) and/or aid and that the effect of such education must not infringe or dilute the “minority character” of the institution. The following principles thus emerged from the line of precedents referred to above as explained in the judgment:

(a) The purpose of Article 30(1) is to ensure that the State does not discriminate against religious and linguistic minorities which seek to establish and administer educational institutions (the non-discrimination purpose).

(b) The purpose of Article 30(1) is also to guarantee a “special right” to religious and linguistic minorities that have established educational institutions. This special right is the guarantee of limited State regulation in the administration of the institution. The State must grant the minority institution sufficient autonomy to enable it to protect the essentials of its minority character. The regulation of the State must be relevant to the purpose of granting recognition or aid, as the case may be. This special or additional protection is guaranteed to ensure the protection of the cultural fabric of religious and linguistic minorities.

The Court then explained the indicia for determining any institution as a Minority Educational Institution. The import of words “establish” and “administer”, whether be read conjunctively or disjunctively. As stated above Azeez Basha judgment²²⁸ and thereafter the Constitution Bench in St. Stephen’s College judgment²²⁹ both held that the minority will have the right to administer Minority Educational Institutionof their choice provided that they have established it, but not otherwise. Thus, for determining indicia, whether it is necessary that the InstitutionMinority Educational Institutionmust do both or even if it does do not establish it but administers it under its control then Article 30(1) is attracted.

Referring to the phrase “of their choice”, it was held that it is an expression of an expansive nature indicating that such choice extends to full range of educational institutions a formalistic test cannot be rigidly applied or is not sufficient as to whether the institution was established by a person or group of persons belonging to minorities. Rather the tests adopted must elucidate the purpose and intent of establishing any educational institution for the minority. Distinguishing the judgment of Durgah Committee, Ajmer v. Syed Hussain Ali²³⁰ (for short, “Durgah Committee Ajmer judgment), it was held that in the aforesaid matter, the whole Endowment Committee as well as members of the Committee were appointed by the Central Government, in which context the Constitution Bench held that the Durgah Committee will not have any right to administer the property. Thus, reliance of Azeez Basha judgment²³¹ on the precedent of Durgah Committee Ajmer judgment²³² was misplaced as no parallels could have been drawn between Articles 26²³³ and 30(1).

Applicability of Article 30 to any university established before the Constitution of India

It was argued by the respondents that Article 30 could not have applied to institutions established before the commencement of the Constitution, unless and until the claimant proved that they were linguistic or religious minority when the institution was established and not when the Constitution commenced. Since at the relevant point of time “universities” could have been established only by the Imperial Government therefore there was no question of the university being so established by any group of persons before the Constitution was adopted and therefore such a claim under Article 30 is not maintainable. The Court thus framed two sub issues to be answered under this larger issue to answer various contentions raised by the respondents:

(a) whether “universities” established before the commencement of the Constitution are excluded from the purview of Article 30(1); and

(b) whether those who established an educational institution have to prove that they were a minority at the time of establishment.

Referring to the 7-Judge Bench judgments of Kerala Education Bill 1957, In re²³⁴ and St. Stephen’s College judgment²³⁵, the Court held that distinction cannot be made between educational institutions established before and after the commencement of the Constitution for the purpose of Article 30, lest it shall stand diluted and weakened if held to apply only prospectively. Relying on Articles 395 and 372 of the Constitution of India ²³⁶, it was held that both the articles represent the threat of continuity between the old and new system of governance with Article 372 continuing the operation of all the laws that were in force in the territory of India before the commencement of the Constitution to continue as such. Nowhere Article 13 or Article 372 postulate that laws predating the constitution cannot receive the additional protection which fundamental rights under Part III offer, of which Article 30(1) is also one of the specie. Thus, educational institutions established by religious and linguistic minorities before the commencement of the Constitution shall also receive special protection under Article 30(1). It was further held that the Constitution never envisaged an incongruous and unpalatable situation of having two sets of minority educational institution operational in the country, viz. those established before the Constitution, being deprived of Article 30(1) rights and as opposed to those minority educational institution (MEIs) established after the commencement of the Constitution and enjoying all the rights under Article 30(1).

Court further held that by its very scheme, Article 26 or Article 30 does not contemplate any distinction between “universities” and “colleges” established before the commencement of the Constitution. Tracing the distinction between a college and a university, it was stated that whilst the latter has the power to confer degrees to students for having undertaken studies, the former is an ingredient of the latter providing studies in the form of formal education to its students. The Court traced the history of various universities established in pre-independence India with the enactment of various legislations by the Governor-General of India, viz. Calcutta, Bombay, Madras and thereafter 16 enactments for the establishment of universities prior to commencement of the Constitution.

Subsequent to independence, the UGC Act, 1956²³⁷ was enacted, which vide Section 2(f) includes Educational Institution established or by or under any Central Act or a Provincial Act or a State Act. Subsequent to independence, the UGC Act, 1956²³⁸ was enacted, which vide Section 2(f) includes educational institution established or by or under any Central Act or a Provincial Act or a State Act. Thus, all the provisions of the UGC Act would apply to universities as defined under Section 2(f). The Court held that though prior to independence intervention of the Imperial legislation was necessary for incorporation of any university, the intervention of the State or the Central Legislature became necessary after the commencement of the Constitution until the enactment of the UGC Act. It could not be held that no person had the power to establish a university merely because intervention of the legislative body (Imperial Legislature) was required for the incorporation of an institution or a legislation was required to be enacted for its establishment. It was held that “incorporation” and “establishment” are two different terminologies, it cannot be used interchangeably. Referring to Annamalai University being established through the Annamalai University Act, 1928, University of Punjab, it was held that the word “established” employed under Article 30(1) cannot and should not be understood in a narrow and strict sense. It has to be interpreted in view of the object and purpose of the article and the guarantee along with the protection it confers. It is not dependent on the basis or the manner in which the minority educational institution (MEI) came to be incorporated, but it concerns the people who founded and created the establishment. The incorporation by a statute or the procedure and requirements in law for the establishment of minority educational institution (MEIs) cannot be treated as determinative factors. A mere attribution of a legal character to any educational institution (EI) through State legislation or sovereign action does not ipso facto lead to an inference that Article 30(1) protection is not available to such legislatively incorporated institutions.

The Court accordingly held that no distinction between teaching universities and colleges as their ingredients can be drawn for the purposes of Article 30(1) and it cannot be held that a person did not have the power to “establish” the university, only because the same could have been done only through a legislative enactment. Further the “minority character” of the institution is not ipso facto surrendered upon the incorporation of the university. Any educational institution does not lose its “minority character” merely because it subjects itself to regulatory measures essential to avail the benefits of affiliation or as a precondition for granting it provided such conditions are designed to maintain the standards of education and larger public interest.

In view of the above therefore, the view taken in Azeez Basha judgment²³⁹ holding that “minority character” of the institution stands surrendered upon enactment of Central Imperial legislation according to it the status of university was incorrect and against Article 30. Referring to the judgment of Dalco Engg. (P) Ltd. v. Satish Prabhakar Padhye²⁴⁰, it was held that the term “established by or under” does not necessarily imply that companies incorporated and registered under the Companies Act, 1956 ²⁴¹ are necessarily established by it.

“Minority” as on the date of commencement of the Constitution

The Court then examined what is the relevant point to determine if the educational institution was established prior to commencement of the Constitution, it was so done by the minority. Whether it be determined on the basis of the time of establishment or the date of commencement of the Constitution or time when such right was claimed. Answering the aforesaid question, the Court held that the relevant point would be the date when the Constitution was adopted and the right under Article 30 accrued. The question whether the person establishing the educational institution were or were not minority has to be answered with reference to the date of enforcement of the Constitution and not before. Accordingly, the Court rejected the argument that it should be determined on the date when the institution was established in the pre-independent India. The status of the group/community that established the institution on the date of the commencement of the Constitution should be considered and Article 30 protection cannot be denied to the founders on the ground that at the relevant point of time they were not establishing it as a minority.

Insofar as determining the indicia for “establishment” of any minority educational institution, the Court then proceeded to examine the various factors to so determine. Referring to the two landmark Constitution Bench judgments of Right Rev. Bishop S.K. Patro v. State of Bihar²⁴² and Very Rev. Mother Provincial case²⁴³, it was held that the “minority character” of the institution must be elucidated in the process of establishment of the institution. The Court framed 4 questions for determining such indicia and answered them point wise. They are summarised as discussed by the Court:

(A) Ques.: What is the meaning of the phrase “minority character”?

Ans. It was held that it is not necessary that the minority educational institution so established to conserve culture, and language must be so done only for the said purpose. Reliance was placed on the judgments of Rev. Father W. Proost v. The State of Bihar²⁴⁴ and Ahmedabad St. Xavier’s College Society case²⁴⁵.

(B) Ques.: Are special rights guaranteed by Article 30(1) only if educational institutions are established “for” the minorities, towards the purpose of protecting minority interests?

Ans. A minority educational institution (ME)I would not lose its minority character by merely admitting students belonging to non-minorities, and that Article 30(1) contemplates an institution with a sprinkling of outsiders. An aided minority educational institution (MEI) is mandated to admit students from other faiths and that in itself does not erode the minority character of the institution. Reference was made to the judgment of Kerala Education Bill 1957, In re case²⁴⁶.

Ans. The word “choice” under Article 30(1) expands the scope of the provision to include not only religious but also secular education and therefore any minority educational institution would not lose its minority character when secular education is taught.

(D) Ques.: What are the “core essentials” of minority character?

Ans. In an aided minority educational institution, no student can be forced to participate in religious instruction, nor religious instructions can be imparted.

The Court thus held that the “minority character” of any institution is not a rigid concept. However, to ascertain its “minority character”, the courts must consider the genesis of the educational institution, origin of the idea and the purpose at the time of establishment of the institution; who was the brain behind its establishment and such proof may be found in the documents, correspondences, letters existing at the time of its establishment. The institution must predominantly be for the benefit of the minority.

The next test for determining the “minority character” are the steps taken towards the implementation of the idea towards funding and financing of the institution. The funding and financial part must be prior to or at the time of establishment of the institution, but not thereafter. However, insofar as the test of administrative structure or control of the minority educational institution is concerned, it is not necessary that persons belonging to the community for which it is established are at the helm of the administrative affairs. The test rather should be whether the administrative setup of the minority educational institution affirms the minority character of the institution. It should be evaluated in the present time, viz. on the date of commencement of the Constitution of India and not sometime in the remote past.

It was further held that the courts can always pierce the veil to identify if the University was established by a minority for the purpose of promoting the interest of the community, with the indicia of establishment be considered as a whole. The predominant control of the minority community for which the educational institution (EI) is established must be shown to be existing for drawing an inference that the administration vests under the control and management of the minority community.

Entry 63 List I read with Entry 25, List III and Entry 17 List II of the VIIth Schedule and its impact on the minority status

Entry 63 List I under VIIth Schedule deals with eminent institutions of national importance. Entry 13 List I read as “Banaras Hindu University and the Aligarh Muslim University”. The effect of these entries was that Parliament retained the exclusive power to legislate upon Aligarh Muslim University (AMU), Banaras Hindu University (BHU) and Delhi University. The mere inclusion of AMU as an institution of national importance never amounted to abrogation of its “minority character” or alteration of such status. As a matter of principle nothing prevented a minority educational institution (MEI) from being an institution of national importance. Entry 63 List I was merely a field of legislation and could not lead to subservience of Article 30 to the terminology or expression employed thereunder. Thus, placement of AMU within the legislative competence of the Parliament never compromised with its “minority character”.

Likewise, registration as a society under the Societies Registration Act, 1860 would not denude AMU of its “minority character” nor would it lose such status on its registration as a society. It is a statutory process as a precondition of grant of recognition, which cannot lead to dilution or denial of fundamental right under Article 30 of the Constitution of India.

Accordingly, the Court gave the following conclusions on the various issues frame by it:

(a) The reference in Anjuman-e-Rahmaniya case²⁴⁷ of the correctness of the decision in Azeez Basha case²⁴⁸ was valid being within the parameters laid down in Dawoodi Bohra Community judgment²⁴⁹.

(b) Article 30(1) can be classified as both an anti-discrimination provision and a special rights provision. A legislation or an executive action which discriminates against religious or linguistic minorities in establishing or administering educational institutions is ultra vires Article 30(1). This is the anti-discrimination reading of the provision. Additionally, a linguistic or religious minority which has established an educational institution receives the guarantee of greater autonomy in administration. This is the “special rights” reading of the provision.

(c) Religious or linguistic minorities must prove that they established the educational institution for the community to be a minority educational institution for the purposes of Article 30(1).

(d) The right guaranteed by Article 30(1) is applicable to universities established before the commencement of the Constitution.

(e) The right under Article 30(1) is guaranteed to minorities as defined upon the commencement of the Constitution. A different right-bearing group cannot be identified for institutions established before the adoption of the Constitution.

(f) The incorporation of the University would not ipso facto lead to surrendering of the minority character of the institution. The circumstances surrounding the conversion of a teaching college to a teaching university must be viewed to identify if the minority character of the institution was surrendered upon the conversion. The Court may on a holistic reading of the statutory provisions relating to the administrative set-up of the educational institution deduce if the minority character or the purpose of establishment was relinquished upon incorporation.

Accordingly, the view taken by the previous Constitution Bench in Azeez Basha judgment²⁵⁰ was overruled, being an incorrect view and it was held that the question of whether AMU is a minority educational institution (MEI) be decided based on the principles laid down in the judgment. The reference was accordingly answered and matter referred to the regular Bench.

Dissenting opinion of Mr Justice Dipankar Dutta

The judgment started with a celebrated quote — “the past refuses to lie buried”. In the opening paras, the dissenting opinion lamented the severe shortage of time at the disposal of the learned Judge in authoring a better articulated and more compact opinion. Since the judgment authored by Chief Justice of India was circulated 10 days before Chief Justice of India was to demit his office, therefore exercise of true democratic spirit to build up a consensus had taken up a back seat in view of immense pressure of work. The dissenting opinion quoted the dilemma faced by the youngest member of the Bench, Justice M.P. Thakkar in Union of India v. Tulsiram Patel²⁵¹ in somewhat similar circumstances, when the learned Judge was left with very little duration to finalise his independent viewpoint and deliver his judgment.

Validity of the reference

The reference was made in Aligarh Muslim University v. Naresh Agarwal²⁵² by a Bench of 3 Judges in February 2019, it was held that an issue of law can be overruled by subsequent decisions, but a decision on questions of fact should not be reopened once finally sealed in proceedings relating to the same subject-matter. The doctrine of stare decisis must also be given due credence, whilst referring to the judgment of Maganlal Chhaganlal (P) Ltd. v. Municipal Corpn. of Greater Bombay²⁵³. Views of the Supreme Court, especially larger Benches that have held the field for long should not lightly be overruled, except for compelling reasons. In light thereof, Azeez Basha judgment²⁵⁴ was a judicial verdict more than half a century old, having a strong foundational basis and anchored in robust legal reasoning should not have been overruled lightly.

It was further held that Anjuman-e-Rahmania judgment²⁵⁵ which referred Azeez Basha judgment²⁵⁶ to Bench of 7 Judges for reconsideration never involved any factual similarity or issues similar to that of Azeez Basha judgment²⁵⁷. Further the reference made by the 2-Judge Bench in Anjuman-e-Rahmania judgment²⁵⁸ was against the practise of binding precedential value of a larger Bench judgment and that straightaway reference could not have been made to larger Bench of 7 Judges by the 2 Judges. It was not open to the 2-Judge Bench in Anjuman-e-Rahmania ²⁵⁹judgment²⁶⁰ to have not followed the verdict of 5-Judge Bench of Azeez Basha judgment²⁶¹. Thus, the reference itself made in Anjuman-e-Rahmania judgment²⁶² was per incuriam, being contrary to the judgment of Dawoodi Bohra Community judgment²⁶³. It was held that if a Bench of 2 Judges concluded that earlier judgment of a Bench of larger composition is incorrect, the only course available was to have referred the matter to a Bench of 3 Judges setting out the reasons, if the Bench of 3 Judges thereafter came out to the conclusion that earlier view is incorrect, then a reference could have been made to a Bench of 5 Judges. There could not have been a kind of command or order directing the Chief Justice of India to constitute a Bench of a particular composition by the 2-Judge Bench. Relying on the judgment of Campaign for Judicial Accountability and Reforms v. Union of India²⁶⁴ such a practice of reference to larger Benches from smaller Benches was deprecated. The majority opinion therefore misdoubts the directions contained in Dawoodi Bohra Community judgment²⁶⁵. It was held that the course of action adopted in AMU case with the reference being made by Anjuman-e-Rahmania judgment²⁶⁶ was ex-facie against the law and equally the re-reference order of February 2019 was also incompetent and unnecessary. The reference even otherwise on merits did not call for answers from the 7-Judge Bench.

Establishment of AMU

The Court then proceeded to assess the status of AMU as a minority educational institution (MEI), in view of its unique characteristics. However, it was held that whilst doing so, the indicia for treating any educational institution (EI) as a minority educational institution (MEI) should also be in view of the test laid down in Azeez Basha judgment²⁶⁷.

Tracing the history of AMU, it was mentioned that its institutional predecessor Muhammadan Anglo-Oriental College was established in January 1877 by late Sir Syed Ahmed Khan. It was established for the educational advancement of the Muslims and indisputably at the time when AMU came to be established as a university its statement of objects and reason never acknowledged the founder members of the predecessor college. The Court compared this with the Preambles and objects of Annamalai University, Visva-Bharati University and many such other Universities to state that they had specifically mentioned names of their founders who contributed to the establishment of the University. This was not so in the case of AMU, as the Preamble of the Aligarh Muslim University Act, 1920 never mentioned so. This shows that AMU was not directly established and shown to have been administered by the minority community. Even though certain contributions were made by way of a corpus of Rs 30 lakhs stated to be in the establishment of AMU, however it was used as a fund to meet recurring expenditure, but such grant of donations was not solely spent in the establishment of AMU. The “minority character” which it possessed as Muhammadan Anglo-Oriental College stood dissolved upon the Aligarh Muslim University Act, 1920 coming into force. Since the power to establish University was the sole preserve of the British Government by virtue of the Imperial legislations, the establishment of AMU could not possibly be owed to the Muslim community only. Referring to the judgment of Very Rev. Mother Provincial case²⁶⁸, wherein the Supreme Court held that the word “establishment” implies factum of bringing into existence of the University, and not the founding of the institution. Referring to the judgment of A.P. Christians Medical Educational Society v. State of A.P.²⁶⁹ it was held that courts must pierce the veil to gauge whether an institution is truly a minority educational institution , and not to pay a lip service to the claims made by the minority management of the institution claiming the institution to be theirs. The factum of establishment therefore has to be factually established in words, deeds and functioning of the University, and not otherwise. Thus, the view taken in Azeez Basha judgment²⁷⁰ that AMU having been brought into existence by the Central Legislature by virtue of the Aligarh Muslim University Act, 1920 therefore lost its “minority character” was correct and appropriate one and did not deserve overruling.

Administration of AMU

The Court then examined whether administration of AMU vested with the Muslim community and was so administered. It was held that administration means carrying out all the functions essential for the functioning of any institution. It involves decision-making, processes relating to faculty, course curriculum and admitting students. The test which must be satisfied is the test of ultimate control to show that any University is administered by a minority community. Referring to the composition of administrative hierarchy of AMU under the Aligarh Muslim University Act, 1920, it was held by the Court that deep involvement of the State and governing structure of AMU showing deep and pervasive control of the State over the administration and affairs of the University thus showed that it was never intended to be administered by any minority community at any point of time.

Conjunctive interpretation of establish and administer under Article 30(1)

The dissenting view then dealt with interpretation of expression “establish” and “administer”. Referring to the Hindi version of the same, it was stated that the said expression supports conjunctive interpretation of existence of both the elements for any institution to be treated as minority educational institution. Referring to Minority Educational Institution. Referring to the DAV College judgment²⁷¹, it was held that both the facets must exist for the institution to be treated as a minority institution. Thus, a minority will have the right to administer any educational institution, provided they have established them, but not otherwise. Thus, the majority opinion was held to be erroneous by treating establishment as the predominant reason for treating any institution as minority educational institution (MEI).

Entry 63 List I and Entry 17 List II of the VII Schedule & their impact on AMU

The Court referring to the Entry 63 List I read with Entry 17 List II held that at the time of drafting of the Constitution AMU was not even remotely being considered as a minority institution and the framers of the Constitution also proceeded on the said basis. Reference was made to the Constituent Assembly Debates, especially the Speech of Mr Naziruddin Ahmad, wherein the idea of treating AMU as a communal institution was shot down. The inclusion of AMU in Entry 63 List I conferred it as a distinct status of being an “institution of national importance”. It displayed its stature of national importance having secular traits at the time of commencement of the Constitution. Therefore, AMU cannot now retroactively be reclassified as minority educational institution (MEI) in 2024 without violating the secular principles underpinning our Constitution. Further such Universities of national importance cannot also be subordinated to the control of any minority community as they remain under the control of Central Government. Right to administer cannot be stretched to such an extent as to override the powers of Central Government or Parliament in governing the affairs of the institution.

Accordingly, the view taken in Azeez Basha judgment²⁷² about AMU being a non-minority institution was correct and never required any reconsideration.

Conclusion

For the aforementioned reasons, the dissenting opinion recorded its disagreement with the majority opinion. Whether or not an educational institution has been established by a particular community has to be judged bearing in mind all the attending, antecedent and surrounding circumstances existing at the relevant point of time. The tests employed for identifying post Constitution minority educational institutions (MEIs) cannot be the same for identification of pre-Constitution minority educational institution (MEIs), when it comes to indicia to be adopted under Article 30. When there is a serious doubt as to who established the educational institution (EI) and how it was established, it is immaterial who were in management of the same, since the concept of minority was totally absent in the pre independence days and the protective umbrella of Article 30 was not at all available to AMU. The right to establish and right to administer must go hand in hand.

In the pre-independence period, the Hindus relented and BHU came to be established in 1915 on their demand by the Imperial Government. Likewise, the Muslim community also relented in the same manner as the Hindus and got AMU established on the same lines as BHU. The loyalists mixed their priorities with pragmatism and focused their priority on the establishment of AMU after realising their limitations that they were unable to administer a university under British control. Once AMU came to be established in 1928 through an Imperial legislation, it became a body corporate and thus there was total relinquishment of all claims. Safely it can therefore be said that even then their “minority character” was lost. Today by extending the protection of Article 30 to the AMU, other constitutional provisions, meant for the benefit of Scheduled Caste (SC) and Scheduled Tribe (ST) communities under Article 15²⁷³ cannot be extended or applied. Despite being an institution of national importance, the reservation provisions for beneficial advantage of SCs and STs could not be applied in the case of AMU after being accorded a minority character. Thus, the courts must be loathe in finding rights which were never explicitly set forth in Part III of the Constitution of India and according to a status to the University, which it was never entitled to.

Accordingly, it was held that the claim of the appellants of treating AMU as a minority institution was not substantiated, nor could AMU qualify as a minority educational institution (MEI) for protection under Article 30(1). The reference was accordingly answered in view of the above observations by the dissenting judgment.

Dissenting opinion of Justice Surya Kant

The reference was made by the 2-Judge Bench in Anjuman-e-Rahmania ²⁷⁴judgment²⁷⁵, stating doubt upon the correctness of 5-Judge Bench decision in Azeez Basha judgment²⁷⁶.

After the reference in Anjuman-e-Rahmania ²⁷⁷judgment²⁷⁸, came the magnum opus decision of the Supreme Court of India in TMA Pai judgment²⁷⁹, where the 11-Judge Bench of the Supreme Court of India analysed the issue of extent of intervention permissible by the State and the meaning of the term “minority” within the scope of Article 30 of the Constitution of India. While the matter was pending, Anjuman-e-Rahmania judgment²⁸⁰ was disposed of, subject to the decision in TMA Pai judgment²⁸¹. The unanswered question of minority status of AMU was raised through the 2019 reference order in the batch of appeals from judgments rendered by the High Court of Judicature at Allahabad. A 3-Judge Bench of the Supreme Court of India examined the decisions that followed Azeez Basha judgment²⁸².

Issues for determination

The judgment listed several questions and divided them to adjudicate upon maintainability and interpretation of the Constitution of India in the following manner:

Prefatory issues

(i) What are the requisite parameters of reference to a larger Bench?

(ii) Whether appellant has the locus standi to bring the present challenge?

Questions on constitutional interpretation

(iii) Whether the expressions “establishment” and “administration” should be read conjunctively or disjunctively?

(iv) What is the meaning of the term “establish” in Article 30?

(v) What is the meaning of the term “administer” in Article 30?

(vi) Whether AMU satisfies the test of “establish” and “administer” and is thus entitled to the protection under Article 30?

(vii) Whether the Union of India is obligated to defend the AMU Amendment Act, 1981?

The reference is against principle of stare decisis

The reference was made by the 2-Judge Bench in Anjuman-e-Rahmania ²⁸³judgment²⁸⁴ against the decision of 5-Judge Bench in Azeez Basha judgment²⁸⁵, even in the absence of the Chief Justice of the Court. Referring to the principles enunciated in Dawoodi Bohra judgment²⁸⁶, the judgment stated that such reference has undermined both the Chief Justice’s authority as the master of roster and the principle of stare decisis. The dissent with the view of the Chief Justice that the 2-Judge Bench merely “doubted” and “not disagreed” with the judgment, stated that both the terms carry similar connotations and such a reference strikes upon the law laid down by the precedents.

Locus of pre-Constitution institution

The judgment took into consideration the argument made by the appellants that pre-Constitution Muslims did constitute minority in the State of Uttar Pradesh and institutions of that era can invoke the right under Article 30. It further stated that it would be absurd and unjust to disallow the claim only because AMU came into existence before Article 30. The courts cannot turn a blind eye to the rights conferred by the Constitution of India to any institution set up before the commencement of the Constitution of India.

Referring to the judgment of Right Rev. Bishop S.K. Patro case²⁸⁷ the judgment held that while fundamental rights cannot be applied retrospectively to disrupt pre-constitutional practices, the appellant is not barred from asserting a claim under Article 30 as long as the necessary conditions of this provision are met. Therefore, the appellant has locus standi in the present matter and cannot be dismissed on the basis of pre-constitutional existence.

The locus also depends upon two more following issues:

(i) Whether a small group of individuals from a community can bring a claim under Article 30, as opposed to requiring the entire community to assert the claim collectively?

(ii) Whether the Muslim community in the present case were presumed to be a “minority” at the time AMU was established?

Firstly, the protection envisaged under Article 30 is for the individuals belonging to the minority community and can be exercised by an individual or a group of individuals even though it is granted to a minority community at large. Thus, while the right exists for the benefit of the whole community, it can be exercised qua its individual members rather than requiring collective action by the whole community.

Secondly, the true meaning of the expression “establish” and “administer” need to be understood for resolving the prefatory issues of locus and maintainability

Tests to seek protection under Article 30

To determine whether the AMU can enjoy the status of minority institution or not, it is necessary to answer whether the prongs of “establishment” and “administration” ought to be construed conjunctively or disjunctively. The judgment clearly states that Article 30 provides the right to continue the administration by the minority community, free from unreasonable Government interference. The judgment stated that “administration” is a prerequisite for claiming the right under Article 30 and provided multifarious reasons for holding administration as a prerequisite as follows:

Firstly, if the contingency under Article 30 was only based on the establishment by the minority community, it would have rendered the provision susceptible to significant misuse as individuals from majority communities would have purchased or taken over institutions established by minorities and then administered such institutions so as to attain special protection under Article 30 in perpetuity.

Secondly, if wider interpretation is given to Article 30, it would call for reduced State interference undermining governmental control over educational institutions and would compromise the quality of higher education.

Referring to the decision in A.P. Christians Medical Educational Society case²⁸⁸ and St. Stephen’s College case²⁸⁹, the judgment stated that for an institution to claim protection under Article 30, it should have a RPI. It further stated that to ascertain the real character of the institution, it is permissible to “pierce the veil” as the minority status cannot be bestowed on illusionary claims.

Lastly, it is an established principle of statutory interpretation that a provision has to be read as a whole, and the accompanying text may be employed in interpreting the meaning of another clause. The Article 30(1-A)²⁹⁰ consciously employed the term “and” instead of “or” to make it clear that the provision itself envisages the conditions to be read conjunctively. Therefore, the institutions claiming any benefit under Article 30 must satisfy the two-pronged tests of establishment and administration and these two-prongs are conjunctive in nature.

Meaning of “establish” in Article 30

Referring to the 6-Judge Bench decision in Very Rev. Mother Provincial case²⁹¹, the judgment stated that the term “establish” means bringing the institution into existence for the benefit of the minority community. It further stated that to ascertain as to when an institution can be said to have come into existence and what it means to establish it for the benefit of the community.

It is stated that “bringing into existence” is the coming into existence of an institution. It is not any event frozen at a single point of time, but it operates in a continuum, and it requires that all the relevant facts i.e. the origin, the point of finality and the whole process in between that brought the institution into being are to be analysed. It further provided an illustrative list of factors to determine whether the minority community has established the institution or not.

The judgment stated that these factors must be analysed holistically and not individually, as determination of minority status do not concern itself with the belief that the minority community be solely responsible for fulfilling the role prescribed by a factor as it is possible that aid of external is taken for setting up the institution, but still the minority community takes the lead role in that establishment.

The judgment further stated the condition also apply conversely that mere contributions from a member of the minority community would not be sufficient to attribute the establishment itself to the minority if the lead role in establishing an institution is played by an external party. This is necessary to prevent any potential misuse allowing institutions established by the majority community to claim benefits arising out of minority status based on some insignificant contribution through the minority community. The judgment laid down the test to determine who plays the lead and decision-making role in fulfilling the requirements for establishing an institution.

Referring to the decision in Yashpal judgment²⁹², the judgment states that this explanation of “bringing into existence” has also been confirmed by the decision. It stated that the decision in Azeez Basha judgment²⁹³ that if the university is established by the Parliament and not the minority community, the establishment prong is said not to have been followed, would run contrary to the amendment to the Ncmei Act²⁹⁴ and would also concomitantly lead to the conclusion that minorities can never establish a university under this provision.

Statute not the only one to bring the institution into existence

Referring to the judgments of Executive Committee of Vaish Degree College v. Lakshmi Narain²⁹⁵ and St. Stephen’s College judgment²⁹⁶, it was held that the statute merely recognises an existing institution and does not take away the role of the minority community in bringing the institution into existence. Accordingly, when a college is affiliated with a university and follows the statutory requirements, this cannot deprive the institution of its minority character.

Referring to Section 22 of the UGC Act, 1956²⁹⁷, the judgment stated that it mandates that degrees can be conferred only by those universities that have been established “by or under” a statute. The apparent controversy that the judgment identified was between Azeez Basha judgment²⁹⁸ and the Ncmei Act, where the former stated that such minorities are established by the legislature while on the other hand the latter enabled a minority community to establish a university on its own. The judgment stated that in ascertaining the nature of the university the determinative factor is legislative object and intent of the statute. The legislature providing authority to grant degrees is an important but not the sole facet that constitutes a university and it encompasses numerous other significant factors that also contribute to its existence and thus the presence of this external factor does not render the entire existence attributable to the legislature.

Referring to the provisions of the Ncmei Act, UGC Act, and the rationale of Yashpal judgment²⁹⁹, the judgment stated that each holds its own independent and distinct field and operates validly within that sphere. Thus, the minority community can establish a university under Article 30 and to that extent Azeez Basha judgment³⁰⁰ deserves to be modified and clarified. The institution can be said to have been brought into existence by the legislature if other roles like ideating the institution, providing funds and infrastructure for its set-up, making its charter documents and finally operationalising it through different bodies are fulfilled by the legislature itself.

Establishment shall be for the benefit of the community

The prong of establishment is fulfilled when along with fulfilling the requirement of bringing into existence by the minority community, it is also proved that it was established for the benefit of that community. For the purpose of Article 30, it needs to be essentially analysed that the establishment is for the upliftment of the minority community. It can be analysed through the overall functioning of the institution and the primary object for which it has been established. If the institution is not aligned with this purpose, it would not be covered under the purview of Article 30 and thereby would also not enjoy extra administrative autonomy, even if the existence is owed to a minority community. Therefore, it is necessary for it to have been brought into existence by the minority community and must also be working towards the benefit of that community.

Meaning of “administer” in Article 30

Referring to TMA Pai judgment³⁰¹, the Court stated that regulatory measures imposed by the State that merely regulate the educational standards are not included within the right of administration. Whether a minority community has the right to administer the institution is not affected by mere presence of the outsiders if the core part of the administration remains in the control of the minority community. The judgment stated it as a requirement that the institution of the minority community must largely be free from external control and the community must have broad autonomy to mould the institution’s functioning and administration for their idea of what would be best for the community.

Referring to the decision of Gandhi Faiz-e-am-College v. University of Agra³⁰² the judgment stated that if the decisions lie with the community, but there is an outside authority with the power to change those decisions, it would imply that the minority community does not have pervasive control over the administrator and its status would only remain as a “paper tiger” and would only imply that the control lies externally. Thus, the administration shall cover both the active and the reactive aspects, such that the minority community can take active steps to effect changes in the institution without outside restrictions and can also veto decisions taken or changes made from the outside.

The judgment further stated that the test for administration under Article 30 is identifying who holds effective and overall control within the institution. The decisive influence and control must rest with the members of the minority community and external authorities may assist in its administration. Thus, in order to benefit under Article 30 a minority community must retain both de jure and de facto control over the institution.

True import of Entry 63 List I of the Constitution

Entry 63 has two significant components i.e. procedural and substantive. The procedural feature is that it flows from Article 246³⁰³. The substantive part gives Parliament the exclusive power to declare any institution to be an institution of National importance but in no manner rest any power to the Parliament to take away the status of an institute of national importance. The constitutional declaration of status of institutions of national importance to BHU and AMU is the substantive part of Entry 63 and it can be inferred that the Constituent Assembly was determined to confer such an elevated status on both BHU and AMU, therefore the status cannot be taken away except by means of an amendment to the Constitution of India.

Conclusion

The judgment summarised the conclusion as follows:

(a) There is no substantial difference between “doubting” or “disagreeing” with a judgment. That being so, the reference by a 2-Judge Bench in Anjuman-e-Rahmania judgment³⁰⁴ doubting the correctness of the 5-Judge Bench in Azeez Basha judgment³⁰⁵ and referring it to a 7-Judge Bench not just suffers from judicial impropriety but a challenge to the authority of the Chief Justice of India being the master of the roster and in derogation of the special powers enjoyed upon under Article 145 of the Constitution read with Order 7 Rule 2 of the Supreme Court Rules, 1966 (as was applicable). Consequently, the said reference is not maintainable.

(b) The Constitution Bench in Azeez Basha judgment³⁰⁶, when it holds that since Section 6 of the Aligarh Muslim University Act, 1920 ³⁰⁷ stipulates that degrees conferred by AMU would be recognised by the Government, it could not have been “brought into existence by a private individual or body”, is seemingly incorrect. Accordingly, the said decision to that extent is hereby modified and clarified.

(c) The minority institutions established in the pre-Constitution era are also entitled to the protection conferred by Article 30. Educational institutions, with reference to Article 30 include universities as well.

(d) In order to seek protection under Article 30 of our Constitution, the minority institution must satisfy the conjunctive test, namely, that it was established by a minority community and has been/is being administered by such a community.

(e) The true import and meaning of the expressions “establish” and “administer”, which comprise the very core of Article 30, are to be construed and understood strictly in accordance with the indicia.

Dissenting opinion of Mr Justice Satish Chandra Sharma

Issues framed for consideration

The dissenting judgment adjudicated upon the question of establishment of the AMU and took into consideration the arguments presented including the facts surrounding it, the history of Muhammadan Anglo-Oriental College and the Aligarh Muslim University Act, 1920 and emphasised upon the relevancy of the uncontested historical facts in the matter while outlining the following issues:

(a) Whether the 2-Judge Bench in Anjuman-e-Rehmania judgment³⁰⁸ could have referred the matter to a 7- Judge Bench directly, without the Chief Justice of India, being a part of the Bench?

(b) Whether the terms “establish” and “administer” are used disjunctively or conjunctively in Article 30 of the Constitution?

(c) What is the meaning of the term “establish” in Article 30 of the Constitution and what are the RPI for determining the question of establishment of an institution?

(d) What is the true meaning and purport of the judgment in Azeez Basha judgment³⁰⁹?

(e) What must be the approach of the Court in balancing the conflicting narratives of history presented before it in such cases?

(f) What was the legislative scenario governing the universities in India prior to the UGC Act, 1956 and how does the same impact the judicial enquiry in the present matter?

(g) Whether the legislature using the terms “establish” and/or “incorporate” in the Preamble of a legislation would be determinative of the question of establishment?

(h) What is the impact of the Constitution coming into force and the subsequent legislative amendments made to the Aligarh Muslim University Act, 1920 on the present proceedings?

(i) Whether the presence of members of the minority community in the governance of the institution, without any necessary legal requirement for the same, would impact the question of the institution falling under Article 30?

(j) Whether Article 30 exists to protect institutions from “majoritarianism by default” approach?

(k) Whether the UGC Act, 1956 and the judgment in Yashpal judgment³¹⁰ impacts on the correctness of the judgment in Azeez Basha judgment³¹¹?

(l) Whether the Ncmei Act, 2004 impacts on the correctness of Azeez Basha judgment³¹²?

Parameters on which reference can be made to a larger Bench

Referring to the decision in Kantaru Rajeevaru (Right to Religion, In re-9 J.) (2) v. Indian Young Lawyers Assn.³¹³ the judgment stated that undoubtedly there is no bar on the exercise of jurisdiction as in the absence of any express provision in the Constitution, Supreme Court being a superior Court of record has the jurisdiction in every matter and if there is any doubt, the 7-Judge Bench has the power to determine its jurisdiction. Thus, the reference made by the 2-Judge Bench is valid as per law.

Establishment is necessary

Referring to the decisions in Kerala Education Bill, 1957, In re case³¹⁴, Very Rev. Mother Provincial case³¹⁵ and DAV College judgment³¹⁶, the judgment stated that the institutions established pre-Constitution could claim rights under Article 30 of the Constitution of India and the minority community can claim those rights only on proving that it is a religious or linguistic minority and that the institution was initially established by it. As a legal principle this mandatory requirement has attained the status of stare decisis, which is a fundamental pillar of our legal framework.

The judgment remarked that if the minority status for any institution could be attainable without necessitating the requirement of initial establishment by the minority community, then it could have resulted in a widespread proliferation of institutions claiming to be minority institutions despite being established by the individuals of the majority community.

Meaning of establishment and RPI

Referring to the decisions in St. Stephen’s College judgment³¹⁷ and A.P. Christians Medical Educational Society case³¹⁸, the Court stated that a RPI is required for the claim of an institution to have been established by a minority and it is permissible to “pierce the veil” in order to ascertain the real character of the institution so that benefit of minority status are not bestowed upon illusionary claims.

The judgment highlighted the relevance and significance of the funding source to ascertain the fact of establishment during inception of the institution. It further stated that the character of an institution at the time of establishment should be evaluated against the criterion that it must be envisaged primarily as a minority institution. Thus, it is clear that to benefit by Article 30, institutions must principally embody a minority character and be instituted to safeguard the minority language, culture, or religion. Also in some situations, specific emphasis can be shown to the source of funding from the minority community or the fact that management of lands vest with the minority.

The judgment stated that the objective of Article 30 is not to afford a false sense of security and confidence to pretenders posing as minorities, referring to them as “masked phantoms”, and the benefit is extended only to institutions genuinely representing the minority community, in substance and not merely in appearance. Therefore, the minority community seeking to assert rights under Article 30 must substantiate that the institution in question was indeed physically, demonstrably, and conclusively brought into existence by the minority.

“Choice” and “intent” are not enough to answer the question of establishment

The choice to establish a minority institution is operationalised by the decision of the minority as to the kind of institution that the minority seeks to establish. Referring to the judgment of Ahmedabad St. Xavier’s College Society case³¹⁹ the judgment stated that the choice is regarding the type of the institution and cannot be conflated with the administration of an institution. Also, it further stated that when a minority seeks to provide secular education it may appoint non-minority individuals as teachers. This would not raise any assumption that the managerial and superior administrative setup can be “outsourced” by the minority.

Nature of administration at the time of establishment

Referring to the judgment of Ahmedabad St. Xavier’s College Society case³²⁰, the Court stated that the meaning of the term “administration” and its link with the question of establishment is to be ascertained by locating who exercised the “choice” with regard to the crucial aspects of an institution and to what extent did the minority decide to delegate. It further stated that the “choice” of the minority resonates with the “administration” by the minority community and admitting non-minorities to the institution would not alter its minority character. Therefore, if the minority community is present at the helm of the administrative set-up, the choice can be said to have been exercised by the minority community.

Locating the RPI

To discern the RPI for adjudging the question of establishment, the judgment while considering the era, type and nature of the institution, relied on illustrative factors that can be considered while adjudicating the question of establishment. These factors are as follows:

(i) Firstly, to claim “establishment” the role played by the minority community must be tangible and predominant, in fact almost complete to the point of exclusion of all other forces. The indicia in this regard may be the nature of the institution, the legal/statutory basis required for establishing the institution, whether the establishment required any “negotiation” with outside forces, the role in acquiring lands, obtaining funds, constructing buildings, and other related matters. Accordingly, on secular lines the staff can be outsourced but the decision-making authority regarding hiring teachers, curriculum decisions, medium of instruction, admission criteria, and similar matters must rest under the purview of the minority community.

(ii) Secondly, the purpose of the institution must be to predominantly serve the interests of the minority community or the sole betterment of the minority community.

Azeez Basha judgment

The judgment stated that Azeez Basha judgment³²¹ ought to be understood in the correct historical perspective and it would be incorrect to suggest that the Court in Azeez Basha judgment³²² adopted an approach which has not been adopted in future cases. This is so because the Court had never dealt with such a situation, where a university which had been established by the Legislative Council during the British period has claimed minority status.

The judgment further observed that the Court while adjudicating in Azeez Basha judgment³²³, that whenever a university is established by way of an enactment, it cannot be a minority institution, it adopted a suitably modulative approach because it faced a unique situation. Azeez Basha judgment³²⁴ does not preclude minorities from establishing universities but rather highlights the importance of legislative intent and statutory provisions in determining an institution’s character. As a matter of law, it is within the purview of the legislature to enact any such legislation for the establishment of a minority university, but that legislation must expressly provide/indicate that the institution is established by the minority community and its administrative authority is conferred to such community.

Conflicting narratives of history need to be balanced

The judgment took into consideration the versions of history highlighted by both sides and stated that the Court before adjudicating must survey the important events and incidents that laid to the formation of the AMU. In the conflict of narratives surrounding the century old history, the Court cannot be swayed by one side of the story or the other. In a complex historical context such as in the case of AMU, the Court must weigh carefully the role played by the minority as against that played by the government in the establishment of the institution to determine who was responsible for the positive effect of such establishment.

Therefore, an institution with limited minority characteristics cannot be given the status of a minority institution. In such cases, the Court must weigh the narratives carefully and analyse which influences were more significant in establishment and the resultant institution.

Pre-independence universities and other institutions

The judgment, while referring to the position of educational institutions and universities prior to the advent of the Constitution of India and the UGC Act, 1956, stated that in that era numerous universities came into existence whose degrees for eligibility and employment within crown services did not carry recognition from the British Government. Despite this deficiency, many of those institutions rose to prominence and became leading national educational establishments.

The judgment stated that with regard to the Muhammadan Anglo-Oriental College, the authorities had three options i.e. firstly, to request the British Indian Government to establish a university under its control to have the benefit of recognition to the degrees conferred to its students which would require foregoing of the character and the control over the institution. Secondly, to continue as a college, affiliated to the pre-existing universities while preserving its control and character as a denominational institution subject to regulatory controls that came along with the affiliation with a legislation-based university. Lastly, it could establish a University/Vidyapeeth/Jamia under its own name or any other name and could have chosen to maintain its character and avoid British governmental control.

The question of administration and the 1920 Act

The judgment stated that the link between the administration and establishment is to be ascertained by locating who exercised the choice and decision making with regard to the material aspects of an institution at the time of establishment. At the same time, the judgment noted that the 1920 Act and the nature thereof also bestows the AMU with its character at the time of inception, which would be useful in ascertaining if the institution was predominantly established for the minority community with a “sprinkling of outsiders” or not.

All employees and staff of Muhammadan Anglo-Oriental College were automatically deemed as employees of AMU with the same tenure, terms, rights and privileges. The donations, received from the Muslim community were allocated as the reserve fund to be managed by the AMU, all students of Muhammadan Anglo-Oriental College became the responsibility of AMU upon commencement, and also the provisions were incorporated in the Aligarh Muslim University Act, 1920 specifically benefiting the Muslim community, such as the promotion of oriental and Islamic studies, instruction in Muslim theology and religion and furtherance of arts science and other branches of learning.

“Incorporated” or “established” by or under a statute not enough to decide establishment

The judgment stated that in the Aligarh Muslim University Act, 1920, the establishment is done by and under the statute and at the same time the establishment of the previous institution is recognised to be done by the minority community. The judgment took examples of enactments from the Sam Higginbottom University of Agriculture, Technology and Sciences, Uttar Pradesh Act, 2016, The Era University, Lucknow, Uttar Pradesh Act, 2016, etc. that established and incorporated the universities and still bestowed them with minority characteristics. Therefore, the use of the words“established” and “incorporated” by the legislature may be relevant in the larger enquiry but cannot be said to be determinative of the factum of the establishment by the minority community.

The factors such as the history of the establishment, the nature of the act, the nature of the university are necessary to ascertain the question of establishment, and the phrase “established” and “incorporated” should be of limited importance only. The judgment further observed that assuming neutral institutions are majoritarian by nature, would be ignoring the mandate of other provisions of the Constitution which specifically provide for equal treatment for all, protect individuals and communities against arbitrariness.

The de facto position would not decide upon establishment

The judgment stated that if by some reason, a person of one community has manned the positions in the administration in an institution, the same would not ascribe character of having been established by a minority. The de facto position of the AMU, regarding the electors in the Court, the “Court” or the “Vice-Chancellors”, would therefore not be the deciding factor for the purpose of the claim of status under Article 30. Before the year 2005, the AMU from the time of its establishment had never sought any reservations on the basis of religion. The AMU till the year 1981 and after Azeez Basha judgment³²⁵, had always been considered to be a non-minority institution. Therefore, asserting minority status and advocating for religious reservations based on the university’s historical contributions to the minority community were held to be self-contradictory.

The Ncmei Act and the amendment

The judgment noted that the Ncmei Act and its definition clause excluded universities from being certified as minority educational institution minority educational institution (MEI) and that’s why the Amendment in 2010 was made to provide that the universities can be considered under the provisions of the Ncmei Act. Then the requirement under the amendment to “establish” and “administer” for claiming minority status, was in line with Azeez Basha judgment³²⁶. The Amendment of 2010 in the Ncmei Act and position after Yashpal judgment³²⁷, since a university can only be established by a statute the purported finding in Azeez Basha judgment³²⁸ that a university established and incorporated by a statute cannot be held to be “established” by a minority community for the purpose of Article 30 became erroneous. The whole controversy is the product of wrong interpretation of Azeez basha judgment³²⁹ as it ought to have been understood in its historical context and it did not lay down a proposition that if a university is established by way of a legislative enactment, it cannot be a minority institution. The judgment concluded that the amendment in the Ncmei Act does not come to the aid of the parties questioning the correctness of the decision in Azzez Basha judgment³³⁰.

Conclusion

The judgment summarised the conclusion as follows:

(a) The 2-Judge Bench in Anjuman-e-Rahmaniya judgment³³¹ could not have referred the matter to a 7-Judge Bench directly, without the Chief Justice of India, being a part of the Bench.

(b) The “establishment” of an institution by the minority is necessary for the said minority to claim right of administration under Article 30. The words “establish” and “administer” are used conjunctively in Article 30 of the Constitution of India.

(c) The term “establish” in Article 30 means “to bring into existence” or to “create” and cannot be conflated with generic phrases such as “genesis of the institution” or the “founding moment of the institution”.

(d) The RPI for determining the question of establishment of an institution would have to be developed on a case to case basis with broad parameters of: Firstly, role played by minority community in establishment of the institution where the complete decision making authority is in the hands of minority community; Secondly, the purpose of the institution must have been to predominantly serve the interests of the minority community or the sole betterment of the minority community; and lastly, if as per the choice of the minority community, an institution may have secular education, it must be predominantly meant for the overall betterment of the minority community.

(e) The notion that Azeez Basha judgment³³² categorically prohibits minorities from establishing universities due to statutory requirements is unfounded. The Bench in Azeez Basha judgment³³³ and Bench in the present case faced a unique situation and adopted a suitably modulated approach. Azeez Basha judgment³³⁴ did not preclude minorities from establishing universities but rather highlighted the importance of legislative intent and statutory provisions in determining an institution’s character.

(f) If any institution established had primacy of governmental efforts and control, then such institution cannot be held to be predominantly established by the efforts and actions of the minority community.

(g) If by the use of the phrase “establish and incorporate” the intention of the legislature is to recognise a minority University, the legislatures have incorporated suitable provisions to colour the University with a minority identity.

(h) There were no rights, fundamental or otherwise, prior to the Constitution coming into force and therefore, there is no question of surrendering any right. The coming into force of the Constitution of India and fundamental right after 1950, cannot alter the events that occurred during the decade of 1910-1920 which led to the establishment of the AMU.

(i) The assertion that “neutral” institutions or non-minority institutions would in the natural course of things be “majoritarian” or that Article 30 contemplates constitutionally protecting certain educational spaces from such “majoritarianism-by-default” tendencies, is wholly erroneous. The purpose of Article 30 is not to create “minority only” ghettos, but rather provide positive rights to minorities to establish educational institutions of their choice and kind.

(j) The crux of Article 30(1) lies in its mandate to ensure parity between “neutral” institutions and minority institutions. Its fundamental aim is to prevent any form of discrimination or preferential treatment to non-minority communities, thereby advocating for equal treatment under the law for one and all.

*Practising Advocate at the Supreme Court of India and Delhi High Court.

**3rd year student at Dharmashastra National Law University, Jabalpur.

1. 2024 SCC Online SC 1906.

2. (2004) 5 SCC 1.

3. 2024 SCC OnLine SC 3122.

10. (1986) 2 SCC 516.