25th Constitutional Amendment Act, 1971

The Constitution of India is a living document designed to adapt to the changing needs of society. One of the key features enabling this adaptability is the power of Parliament to amend the Constitution under Article 368. 

The Twenty-fifth Amendment Act, passed in 1971, is one of the most significant amendments in India’s constitutional history. It arose out of a direct confrontation between Parliament and the judiciary concerning the fundamental right to property and the Directive Principles of State Policy.

This amendment aimed to curtail the Fundamental Right to property by substituting the term ‘compensation’ with ‘amount’ and sought to protect laws implementing socio-economic reforms from judicial scrutiny. The amendment generated intense debates on constitutional balance, the scope of judicial review, and the relationship between Fundamental Rights and Directive Principles.

Historical Background: The Need for 25th Constitutional Amendment Act

Before the 25th Amendment, the right to property was guaranteed as a Fundamental Right under Article 31 of the Constitution. Article 31(2) stated that no person shall be deprived of their property except by authority of law and upon payment of adequate compensation.

The conflict arose primarily due to the Supreme Court’s judgement in Rustom Cavasjee Cooper v. Union of India (1970), commonly referred to as the Bank Nationalisation case. In this case, the Court struck down the Banking Companies (Acquisition and Transfer of Property) Act, 1969, which nationalised fourteen major private banks.

The Court ruled that the Act violated Article 31 because it did not guarantee ‘adequate compensation’ to the bank owners. The judgement also emphasised that the government’s acquisition must satisfy the protections offered under Article 19(1)(f), which guarantees the right to practise any profession or carry on any occupation. The Supreme Court held that the compensation must be fair market value and not a nominal or arbitrary amount.

The government viewed this judgement as an obstacle to achieving its socialist goals, particularly land reforms and nationalisation efforts. It felt that the judiciary was limiting Parliament’s ability to enact laws for public welfare. As a result, Parliament passed the 25th Amendment to overcome these judicial restrictions.

Key Provisions of the 25th Amendment

The 25th Amendment introduced major changes to Articles 31 and 31C of the Constitution. Its main objectives were to curtail the Fundamental Right to property and protect laws implementing Directive Principles from judicial review.

Substitution of ‘Compensation’ with ‘Amount’ in Article 31(2)

Before the amendment, Article 31(2) provided that property acquired compulsorily must be paid ‘compensation’. The 25th Amendment substituted this word with ‘amount’, which could be fixed or determined by law. The law could even specify the principles to determine this amount.

Significantly, the amendment declared that no court could question the adequacy of the amount or the mode of payment. The amount could be paid otherwise than in cash, such as through bonds or other instruments.

This change effectively gave Parliament the freedom to fix any amount, even if it was nominal or inadequate, without judicial interference.

There was an exception made for minority educational institutions under Article 30(1). The State was required to ensure that the amount fixed did not restrict or abrogate their rights to establish and administer educational institutions.

Insertion of Clause 2B in Article 31

A new clause 2B was inserted after clause 2A in Article 31, which stated that Article 19(1)(f) – the right to acquire, hold and dispose of property – would not apply to any law relating to acquisition or requisition of property for a public purpose.

This effectively meant that laws concerning compulsory acquisition would no longer be subject to the freedom of property under Article 19(1)(f).

Introduction of Article 31C

The most controversial provision introduced by the amendment was Article 31C. It provided that any law giving effect to the Directive Principles contained in clauses (b) and (c) of Article 39 would not be declared invalid on the grounds of violating Article 14 (equality before law), Article 19 (certain freedoms), or Article 31 (right to property).

Clauses (b) and (c) of Article 39 require the State to ensure equitable distribution of ownership and prevent concentration of wealth.

Furthermore, Article 31C declared that laws containing a declaration that they were enacted to give effect to these Directive Principles could not be challenged in any court.

For laws enacted by State Legislatures, Article 31C’s protection applied only after the law had been reserved for the President’s consideration and received his assent.

Analysis of the 25th Constitutional Amendment Act’s Impact

The 25th Amendment marked a significant shift in the Indian constitutional framework, especially concerning the interplay between Fundamental Rights and Directive Principles.

Before the amendment, Fundamental Rights, especially the right to property, were given priority. Laws conflicting with Fundamental Rights were liable to be struck down by courts. This limited the State’s ability to implement socio-economic reforms effectively.

With the amendment, Parliament sought to elevate Directive Principles over Fundamental Rights, especially concerning property and equality laws.

This created a fundamental tension between the legislature’s reformist ambitions and the judiciary’s role as the guardian of constitutional rights.

Critics argued that the amendment undermined constitutional democracy by granting excessive power to the legislature, potentially enabling arbitrary state action and curtailing individual liberties.

Legal scholar V.G. Ramachandran described it as a “veritable slaughter” of the Constitution, indicating the gravity of the changes.

The Supreme Court’s Response: Kesavananda Bharati Case (1973)

The 25th Amendment’s constitutional validity was challenged in Kesavananda Bharati v. State of Kerala (1973), a landmark case that laid down the Basic Structure Doctrine.

The Case Background

Kesavananda Bharati, the head of a religious institution in Kerala, challenged the Kerala Land Reforms Act, which sought to acquire some of the mutt’s land.

He contended that the 25th Amendment, which protected such laws from judicial review, violated his Fundamental Rights and the basic structure of the Constitution.

The Supreme Court’s Decision

The Court delivered a historic verdict on the scope of Parliament’s power to amend the Constitution.

• It held that while Parliament has wide powers to amend, it cannot alter the basic structure or essential features of the Constitution.
• Judicial review is an essential feature of the Constitution’s basic structure.
• The Court upheld parts of the 25th Amendment, including the substitution of ‘compensation’ with ‘amount’ and Clause 2B.
• However, the Court struck down the provision in Article 31C that barred judicial review of whether a law genuinely gave effect to the Directive Principles.
• The Court said Parliament could not take away the courts’ power to review the substance of laws, preserving judicial oversight.

This decision reaffirmed the judiciary’s role as the guardian of the Constitution and fundamental rights.

Conclusion

The Constitution (Twenty-fifth Amendment) Act, 1971 remains one of the most significant and debated amendments in the history of Indian constitutional law.

It represented Parliament’s effort to facilitate socio-economic reforms by curtailing the Fundamental Right to property and limiting judicial interference.

The Supreme Court’s response in Kesavananda Bharati ensured that while Parliament’s power to amend is broad, it is not unlimited. The basic structure of the Constitution, including judicial review and fundamental rights, must be preserved.