Land acquisition in India refers to the process by which the union or a state government in India acquires private land for the purpose of industrialization, development of infrastructural facilities or urbanization of the private land, and provides compensation to the affected landowners and their rehabilitation and resettlement.
Land acquisition is governed by the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 (LARR) and which came into force from 1 January 2014.
Till 2013, land acquisition in India was governed by the Land Acquisition Act of 1894.
- The Supreme Court reaffirmed its February 2018 ruling on Section 24 on land acquisition compensation awards given by a three-judge bench led by Justice Arun Mishra in the Indore Development Authority.
- It also has overruled an earlier co-ordinate Bench ruling in the Pune Municipal Corporation case of 2014 under the Right to Fair Compensation and Transparency in the Act of 2013.
Land Acquisition, Rehabilitation and Resettlement Act
- The Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation, and Resettlement Act was promulgated in 2013.
- It replaced the Land Acquisition Act, 1894, a nearly 120-year-old law enacted during British rule.
- It regulates the land acquisition and lays down the procedure and rules for granting compensation, rehabilitation, and resettlement to the affected persons in India.
- It has provisions to provide fair compensation to those whose land is taken away, brings transparency to the process of acquisition of land to set up factories or buildings, infrastructural projects and assures rehabilitation of those affected.
- It establishes regulations for land acquisition as a part of India’s massive industrialization drive driven by public-private partnerships.
Scope of the Act
- The Act aims to establish the law on land acquisition, as well as the rehabilitation and resettlement of those directly affected by the land acquisition in India.
- The scope of the Act includes all land acquisition whether it is done by the Central Government of India, or any State Government of India, except the erstwhile state of Jammu & Kashmir.
The Act is applicable when:
- Government acquires land for its own use, hold, and control, including land for Public sector undertakings.
- Government acquires land with the ultimate purpose to transfer it for the use of private companies for stated public purposes. The purpose of LARR 2011 includes public-private-partnership projects but excludes land acquired for state or national highway projects.
- Government acquires land for immediate and declared use by private companies for public purposes.
- The provisions of the Act do not apply to acquisitions under 16 existing legislations including the Special Economic Zones Act, 2005, the Atomic Energy Act, 1962, the Railways Act, 1989, etc.
Criticisms of the Act
- Some criticize the Act citing that it is heavily loaded in favor of landowners and ignores the needs of poor Indians.
- It attaches an arbitrary mark-up to the historical market price to determine compensation amounts, along with its numerous entitlements to a potentially unlimited number of claimants. This according to them shall guarantee neither social justice nor the efficient use of resources.
- LARR proposed mandates that compensation and rehabilitation payments to landowners and livelihood losers be upfront. This misaligns the interests of the land acquirer and those affected. Once the payment is made, one or more of the affected families may seek to delay the progress of the project to extract additional compensation, thereby adversely affecting those who chose long term employment in the affected families.
- The Act fails to adequately define “public purpose”.The current definition, he claims, can be interpreted vaguely. In leaving public purpose too vague and porous, it would ensure that land acquisition will remain hostage to politics and all kinds of disputes.
- The Act inflates the cost of land to help a small minority of Indians at the cost of the vast majority of Indian citizens, as less than 10% of the Indian population owns rural or urban land.
What was the provision under consideration and why it needed interpretation?
- The Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation, and Resettlement Act 2013 (2013 Act) replaced the Land Acquisition Act, 1894 (1894 Act).
- The new Act provides for higher compensation to those deprived of land by the government for both public and private sector projects.
- It also mandates the consent of a majority of land-owners and contains provisions for rehabilitation and resettlement.
- Under Section 24(2) land acquisition made under the old law of 1894 lapses if the award of compensation had been made five years before the new Act came into force, but has not been paid.
- In such cases, the process will have to be gone through afresh under the new Act, which mandates higher compensation.
Issue over compensation
- There are cases in which farmers and other land-owners have refused the compensation, leading to delay in the government taking possession.
- In this situation, the compensation amount is deposited in the government treasury. According to one interpretation, if this is done, the acquisition process is saved.
- Then again, others contend that such cases will fall under the new Act because compensation has not been paid to the land-owners, and the lapsing clause in Section 24 should be applied.
- If through interpretation, a long-pending land acquisition process is closed under the old law and fresh acquisition proceedings started under the new one, the land-owners stand to benefit, but project proponents will have to pay higher compensation.
- Therefore, the provision concerned is often a subject of litigation.
What happened in the case before the Supreme Court?
- On January 24, 2014, the court ruled that the acquisition of a piece of land had “lapsed” because the compensation awarded had neither been paid to the landowners/persons interested nor deposited in the court.
- The deposit of the compensation amount in the government treasury was held to be “of no avail” as it was not equivalent to the compensation being “paid”.
- Based on this judgment, subsequent cases were decided on the same principle: acquisition that had taken place earlier than five years before the new Act commenced would lapse if compensation amount was not paid to the land-owners or, in cases in which the owners refused to accept compensation, deposited in court.
How was this precedent dealt with in another case in 2018?
- The same question arose in the Indore Development Authority vs. Shailendra. Another Bench did not accept the earlier Bench’s view.
- On February 8, 2018, the majority, consisting of the first two judges, ruled that the acquisition would not lapse merely because the compensation amount was not deposited in court, but was instead deposited in the treasury.
- It ruled that the past practice of more than a century, under which the amount was deposited in the treasury, was not taken into account by the earlier Bench.
- Some provisions and orders that allowed this practice was not placed before that Bench. Further, the land acquisition in that particular case had been quashed by a High Court in 2008.
- Since it was not a subsisting process, the question under Section 24(2), whether the acquisition lapsed because of non-payment of compensation or non-deposit in the court, did not arise at all.
- On these grounds, Justice Mishra and Justice Goel overruled the earlier judgment and held that it was per incuriam, that is a verdict passed in disregard of law and, therefore, wrong.
What does the controversy mean for land-owners and project proponents?
- A ruling that old acquisitions lapse for non-deposit of compensation will be more beneficial to land-owners and farmers as they stand to get higher compensation and rehabilitation and resettlement measures.
- On the other hand, project proponents feel such an interpretation would mean that those who refused to take compensation, even after it had been fixed and the money deposited in the government treasury, would be taking advantage of their own wrong.
The present ruling by Hon’ble Supreme Court
- The provision said that in such cases if the physical possession has not been taken “or” the compensation is not paid, the acquisition proceeding is “deemed to have lapsed”.
- The court held that a land acquisition proceeding under Section 24(2) would only lapse if the authorities have neither taken physical possession nor paid the compensation due to the landowner for five or more years prior to January 1, 2014.
- For this, an “or” in the Section was “interpreted” as an “and”.
- Further, the Bench held that Section 24(2) of the Act of 2013 does not give rise to a new cause of action to question the legality of concluded proceedings of land acquisition.
- The government if it so wishes would have to initiate “fresh acquisition proceedings” under the new Act of 2013 which provides for “fair-compensation”.
- The judgment, however, said compensation would be considered paid if the amount is put in the Treasury.
- There was no obligation that the amount should be deposited in the court in order to sustain the land acquisition proceedings under the 2013 Act.
- Thus there is no lapse if possession has been taken and compensation has not been paid. Similarly, there is no lapse if compensation has been paid and possession not taken of the land.
What can be done to make land acquisition farmer-friendly?
Suggesting a new method for determining compensation or mere increment in it can never be a perfect solution for farmers. Pooling in farmers, themselves could chalk out a more feasible solution. One such alternative is holding a land auction.
- Farmers should be asked to submit an asking price at which they are willing to sell their land.
- This includes not only those who own land in the proposed project area but also landowners in the surrounding region.
There are four main advantages to this method.
Reducing state coercion
First and foremost, it vastly reduces coercion. Existing eminent domain law with several amendments and court ordeals gives the citizen no say at all on any aspect of the transfer. The state can not only seize your property at will, but it also dictates the price.
Choice of compensation
Second, our proposal effectively gives the farmer further choice in the form of compensation – either cash or land. One of the enduring objections to eminent domain is that for poor, illiterate farmers who lack financial savvy, cash will evaporate but the land will keep feeding forever.
Involving private players
- Third, among all possible ways to eliminate disaffection and resistance, this should place the least financial burden on the government.
- It will encourage owners to ask for whatever their land is truly worth to them. The key to keeping any seller honest is competition.
- The auction makes landowners from the project area compete with those from outside.
- Finally, this method should help to keep agricultural productivity high. It is very likely that some farmers who owned land in the project area are more productive than some outside.
- Ideally, their lands should be swapped, and the less productive farmers should be the ones leaving agriculture for some other occupation (after due compensation).
- The absence of a well-functioning land market in the area can prevent this from happening. The auction will make sure that those who give up land are the ones who value it least – that is, the less productive farmers.
Rhetoric from the radical left sometimes suggests that the very notion of industrialization or development is a conspiracy to rob the poor, that messing up corporate plans or even state infrastructure projects is, in itself, a triumph of justice. This is a destructive philosophy that needs to be challenged.
- From financial crises to land acquisition, whenever the government tries to play a facilitating role for industry, it draws the ire of both the left and the right.
- To those on the right, a nanny state destroys character and breeds dependency.
- To those on the left, any assistance to capitalists is a betrayal of the poor by some sweeping zero-sum logic.
- The present generation of farmers is destined to toil in an overpopulated agricultural sector blighted by low productivity and low pay.
- If the vision of India includes paved roads, electricity, modern housing, indoor plumbing, functioning schools and equipped hospitals for all of 1.2 billion people, the question must be asked how all this will materialize.
- Unlike the urban intelligentsia who often champion their cause, our millions of farmers lack the human capital needed to play a vital role in the new economy.
- The farmers hold one key to the vault where India’s burgeoning wealth is being stored –his land.
- For our huddled masses, the status quo is no less the enemy than change. What they need is a change in which they can be partners, not victims.