Union and States as Juristic Persons

The Constitution of India regards both the Union and the States as juristic persons. This means they are capable of:

• Owning and acquiring property

• Making contracts

• Carrying on trade or business

• Bringing and defending legal actions

They enjoy these powers much like private individuals, though subject to specific modifications prescribed in the Constitution.

Modes of Acquisition of Property by Union and States

The Union and the States may acquire property through several means:

(a) Succession:

• Property, assets, rights, and liabilities belonging to the Dominion of India, a Governor’s Province, or an Indian State at the commencement of the Constitution devolved upon the Union or the corresponding State.

• This devolution was effected under Articles 294–295.

(b) Bona Vacantia:

• Any property in India that would have, before the Constitution, accrued to His Majesty or to the Ruler of an Indian State by escheat, lapse, or bona vacantia (for want of a rightful owner), now vests in:

  • The State, if the property is situated within that state.

  • The Union, in all other cases (Article 296).

• For example, if a person dies a civil death (not heard of for more than seven years) without leaving heirs, the property vests in the Gaon Sabha and should be recorded in its name, even if no objection is filed.

(c) Things Underlying the Ocean:

• All lands, minerals, and other valuable resources beneath the ocean within India’s territorial waters vest solely in the Union (Article 297).

(d) Compulsory Acquisition or Requisition by Law:

• Both Union and State Legislatures have the power to compulsorily acquire or requisition property by enacting laws under Entry 42, List III, Seventh Schedule.

• The constitutional obligation to pay compensation was abolished by the 44th Amendment Act, 1978, through the omission of Article 31(2).

(e) Acquisition under Executive Power:

• The Government of India and the State Governments may also acquire property through contracts, purchases, or exchanges, much like private individuals, under Article 298.

• The decisions of government in granting contracts or licences to private entities can be challenged only on grounds such as:

  • Bad faith

  • Irrational or irrelevant considerations

  • Non-compliance with prescribed procedure

  • Violation of constitutional or statutory provisions

• However, compulsory acquisition of property requires a valid law under Article 300A.