On 22 November 1948, the Constituent Assembly debated a proposed amendment to Article 31 of the draft Constitution, which corresponds to Article 39 of the present Constitution. Professor KT Shah proposed that clause (ii) of Article 31 of the draft constitution, which corresponds to Article 39(b) of the present Constitution, be substituted as follows:
“Mr. Vice-President, Sir, I beg to move: “That for clause (ii) of article 31, the following be substituted: ‘(ii) that the ownership, control and management of the natural resources of the country in the shape of mines and mineral wealth, forests, rivers and flowing waters as well as in the shape of the seas along the coast of the country shall be vested in and belong to the country collectively and shall be exploited and developed on behalf of the community by the State as represented by the Central or Provincial Governments or local governing authority or statutory corporation as may be provided for in each case by Act of Parliament’;”
Professor Shah contended that the clause in its then existing form could lend itself to “any interpretation” and expressed an apprehension that if the clause is left vaguely worded it would fail to serve its purpose and “make the proper development of the country or the just redistribution of its wealth, or bringing in a fair measure of social justice, only an empty dream.” Therefore, he suggested that the existing clause should be substituted with the draft provision extracted above.
Professor Shah was of the view that there could be no dispute about the proposition that as regards the natural resources described in the substituted clause, no human being lent any value in their creation by their own labour. Therefore, it was urged, that they are ‘gifts of nature’ and should belong to all people collectively. He stated that if they are to be developed, they must be for and on behalf of the community. He vehemently opposed the utilisation of such resources by ‘private monopolists’, who in his opinion, only sought ‘profit for themselves’. He noted as follows:
“The creation or even the presence of vested interests, of private monopolists, of those who seek only a profit for themselves, however useful, important, or necessary the production of such natural resources may be for the welfare of the community, is an offence in my opinion against the community, against the long-range interests of the country as a whole, against the unborn generations, that those of us who are steeped to the hilt, as it were, in ideals of private property and the profit motive, do not seem to realise to the fullest.
In the resources that are mentioned in my amendment not only is there no creation of any value or utility by anybody’s proprietary right being there, but what is more, the real value comes always by the common effort of society, by the social circumstances that go to make any particular interests or resources of this kind valuable.”
In essence, Professor Shah was of the view that the ultimate ownership, direct management, conduct and development of the natural resources such as mines, mineral wealth and the other natural resources detailed in his proposed amendment, must only be in the hands of the state. He opined as follows:
“Take mines and mineral wealth. Mines and mineral wealth, as everybody knows, are an exhaustible, – a wasting asset. Unfortunately, these, instead of having been guarded and properly protected and kept for the community to be utilised in a very economical and thrifty manner, have been made over to individual profit-seeking concession-holders and private monopolists, so that we have no control over their exploitation, really speaking, for they are used in a manner almost criminal, so that they can obtain the utmost profit on them for themselves, regardless of what would happen if and when the mines should come to an end or the stored up wealth of ages past is exhausted.
I suggest, therefore, that we allow no long range interests of private profit–seekers involved in the utilisation of these mines and the mineral wealth, that on the proper utilisation of these mines and mineral wealth depends not only our industrial position, depend not only all our ambitions, hopes and dreams of industrialising this country, but what is much more, depends also the defence and security of the nation. It would, therefore, I repeat, be a crime against the community and its unborn generations if you do not realise, even at this hour, that the mineral wealth of the country cannot be left untouched in private hands, to be used, manipulated, exploited, exhausted as they like for their own profit.
It is high time, therefore, that in this Constitution we lay down very categorically that the ultimate ownership, the direct management, conduct and development of these resources can only be in the hands of the State or the agents of the State, the representatives of the State, or the creatures of the State, like Provinces, municipalities, or statutory corporations. Another argument may also be advanced here in support of my view.
By their very nature, these resources cannot be exploited economically or efficiently unless they become monopolies. In one form or another, they have to be developed in a monopolistic manner. Now monopolies are always distrusted so long as they remain in private hands and are operated for private profit. If they are to be monopolized, as I believe inevitably they will have to be, then it is just as well that they should be owned, managed and worked by the State.”
Professor Shah stated that the draft provision only provided for vague State control, in the form of a mandate to “sub-serve the common good”. He opined that in order to have a positive guarantee of the ‘proper, social, and wholly beneficial utilisation’ of resources, it was essential to ensure that their ownership, control and management were vested in the public hands. He noted:
“It is not enough to provide only for a sort of vague State control over them as the original clause does; it is not enough merely to say that they could be so utilised as to “sub serve the common good,” every word of which is vague, undefined and undefinable, and capable of being twisted to such a sense in any court of law, before any tribunal by clever, competent lawyers, as to be wholly divorced from the intention of the draftsman, assuming that the draftsman had some such intention as I am trying to present before the House.
We must have more positive guarantee of their proper, social and wholly beneficial utilisation; and that can only be achieved if their ownership, control and management are vested in public hands. Considerations, therefore, of immediate wealth, of the necessity of industrialisation, of national defence, and of social justice have moved me to invite this House to consider my amendment favourably, namely, that without a proper full-fledged ownership, absolute control and direct management by the State or its representatives of these resources, we will not be able to realise all our dreams in a fair, efficient, economical manner which I wish to attain by this means.”
Finally, before concluding, Professor KT Shah clarified that his proposed amendment deliberately did not include ‘land’ in the list of resources, because “the various measures that have been in recent years adopted to exclude landed proprietors – zamindars to oust them and take over the land, would automatically involve the proposition that the agricultural or culturable land of this country belongs to the country collectively, and must be used and developed for its benefit.”
Mr Shibban Lal Saxena supported the amendments moved by Professor KT Shah to draft Article 31(ii). He opined that the proposed amendments, in essence, suggested that the system of our State shall be ‘socialist’. He urged Dr Ambedkar “at least to incorporate the spirit of those amendments somewhere in the Constitution”. In the specific context of the amendment proposed to Article 31(ii), he opined that the enunciation is “very wide”, such that any system of economy could be based on it. The clause in its existing form, according to Mr Saxena, left it open to future Parliaments to evolve an economic plan of their choice.
However, he was of the view, that there must at least be a Directive Principle that states that key industries of the country shall be owned by the State. He noted: “Now, this enunciation “ownership and control of the material resources of the community to be distributed so as to sub serve the common good” is a very wide enunciation of a most important principle. The enunciation is so general that any system of economy can be based upon it. Upon it can be based a system of socialist economy where all the resources of the country belong to the State and are to be used for the wellbeing of the community as a whole.
But a majority in the next Parliament can also come forward and say that the New Deal evolved by Roosevelt is the best system, and it should be adopted. This clause leaves it open to any future parliament to evolve the best plan of their choice. But I feel personally that we should today at least lay down that the key industries of the country shall be owned by the State. […] Unless we lay down in the Constitution itself that the key industries shall be nationalized and shall be primarily used to serve the needs of the nation, we shall be guilty of a great betrayal.
Even if the principle is not to be enforced today, we must lay down in this clause (ii) about directive principles that the key industries shall be owned by the State. That is, according to the Congress, the best method of distributing the material resources of the country. I therefore think that Professor Shah’s amendment has merely drawn attention to this fundamental principle.”
Mr Jadubans Sahay disagreed with the text of Professor KT Shah’s proposed amendments as he was of the view that it was ‘loosely worded’. However, he stated that he was in support of the principles and the spirit underlying the amendment. In his opinion, the Constituent Assembly should not have refrained from incorporating in the Constitution, at least in the form of a Directive Principle, that the ‘means of production’ and the natural or material resources shall belong to the community and through it to the State. The ultimate goal, he urged, must be that all means of production and the ‘gifts of nature’ which belong to the country should belong to the State or the community. He opined:
“…But I may state for the information of the House that, so far as the principles which underlie his amendment are concerned, I support them. The spirit of it also I support. I fail to see why this august Assembly which meets only once in every country, is not keen to the extent of clearly and boldly incorporating in this article that the means of production and the natural or material resources of the country shall belong to the community and through it to the State. I cannot understand this, though the large majority of the amendments, if you scrutinise them, will be found to favour the principles underlying the amendment of Professor Shah. I cannot understand how it is that the Congress, the predominantly majority party here, is not pressing this thing.”
“… After all this is a directive principle. I am not asking you to incorporate it so that the capitalists and the big purses of the country may not have the opportunity to work the mines and the minerals. This is only a directive principle. Are we not going to keep it as our goal that all means of productions and the gifts of Nature which belong to this vast country should belong to the State or to the community? I am sorry, Sir, that the bogey has been raised by the capitalists that if you talk like this they will cease to produce.
I know the large majority of friends here will not be deterred by this bogey raised by the capitalists, because production is not for the welfare of the community. It is for the welfare of the capitalists. They produce for profits. Honourable Members of this House know it better than myself that they produce for profit and they will continue to produce as long as they make profit and, if not, they will not. So we should not be deterred by this slogan. … Sir, in this Chapter and particularly in this article are we not going to suggest that ultimately we have to nationalise them, are we not going to suggest that is the aim of the nation, is the target of the nation? […]”
Mr S Nagappa supported the existing text of clauses (ii) and (iii) of Article 31 and believed that they were intended for the benefit of the “poor man”. He opined that, while it would have been better if the clause had been drafted in more unequivocal language, they represented a “ray of hope for the future”. In his opinion, as long as these clauses stood, there was “no possibility of capitalism thriving in India”. He too was in vehement support of the goal to “nationalize industries and means of production”.
Dr BR Ambedkar opposed the amendments proposed by Mr KT Shah. In his opinion, the language of the draft provision used “extensive language”, which could potentially include the propositions moved by Professor KT Shah. He noted as follows:
“With regard to his other amendments, viz., substitution of his own clauses for sub-clauses (ii) and (iii) of Article 31, all I want to say is this that I would have been quite prepared to consider the amendment of Professor Shah if he had shown that what he intended to do by the substitution of his own clauses was not possible to be done under the language as it stands. So far as I am able to see, I think the language that has been used in the Draft it a much more extensive language which also includes the particular propositions which have been moved by Professor Shah, and I therefore do not see the necessity for substituting these limited particular clauses for the clauses which have been drafted in general language deliberately for a set purpose. I therefore oppose his second and third amendments.”
Eventually, the motion to amend the provision was put to vote. The proposal to substitute the provision was negatived and it was thus introduced in its present form.