Land Acquisition Compensation in India

Introduction

Land acquisition in India refers to the process by which the union or a state government acquires private land for the purpose of development purposes like industrialization, development of infrastructural facilities or urbanization of the private land, and provides compensation to the affected landowners and their rehabilitation and resettlement.

In other words, Land acquisition is the process by which the government forcibly acquires private property for public purposes without the consent of the land owner. It is different from a land purchase, in which the sale is made by a willing seller. India faces serious challenges in creating development processes that generate economic growth while being socially inclusive, ecologically sustainable, politically feasible, and in accordance with the Rule of Law.

Land acquisition in India is governed by the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 (LARR) and which came into effect on 1 January 2014. Before that in 2013, land acquisition in India was governed by the Land Acquisition Act of 1894.

In May 2014, as the Bhartiya Janata Party-led National Democratic Alliance came to power, riding high on its development-driven agenda, it sought to bring about immediate reforms in land acquisition procedures. It was argued by the government that without land acquisition, they will find it difficult to execute their projects, including the “Make in India” programme, which seeks to revive and boost domestic manufacturing.

On 31 December 2014, the President of India promulgated an ordinance with an official mandate to “meet the twin objectives of farmer welfare; along with expeditiously meeting the strategic and developmental needs of the country”.

The land is not only an important economic resource and source of livelihood, it is also central to community identity, history and culture. Unsurprisingly then, throughout India, a dispute over state acquisition of land that deprives people of their land rights spans various dimensions of economic, social, and political life.

Background of Land Acquisition Law

1. Colonial Period

The first land acquisition legislation in India was enacted by the British government in 1824. Called the Bengal Resolution I of 1824, the law applied only to Bengal province subject to the presidency of Fort William.” The law enabled the government to “obtain, at a fair valuation, land or other immovable property required for roads, canals or other public purposes.” In 1850, the British extended the regulation to Calcutta (now Kolkata), through another legislation.

The Act of 1850 “declared that Railways were public works and thus enabled the provisions of Resolution I of 1824 to be used for acquiring lands for the construction of railways.”

However, it was in 1857 that the British enacted legislation that applied to the rest of the provinces or presidencies and the whole of British India. Act VI of 1857 “repealed all previous enactments relating to acquisition and its object as stated in its preamble, was to make better provision for the acquisition of land needed for public purposes within the territories in the possession and under the governance of the East India Company and for the determination of the amount for the compensation to be paid for the same.”

This act, owing to “unsatisfactory settlement”, “incompetence” and “corruption” was further amended in 1861 (Act II) and 1863 (Act XXII) and subsequently led to the enactment of Act X of 1870. The 1870 law, which for the first time, brought a mechanism for settlement, was eventually replaced by the Land Acquisition Act, 1894 (Act I of 1894).

The 1894 law did not apply to princely states like Hyderabad, Mysore, and Travancore, who enacted their own land acquisition legislation. All laws enacted by the colonial administration initially in the then Presidency towns and later spread across the country, to facilitate the easy acquisition of land and other immovable properties for roads, canals and other ‘public purposes’ with compensation to be determined by specifically appointed arbitrators.

2. Independent India

After India gained independence in 1947, it adopted the Land Acquisition Act of 1894 by the “Indian Independence (Adaptation of Central Acts and Ordinances) Order” in 1948.

The new Constitutional frame brought in elements of federalism, universal adult suffrage, and basic fundamental rights. Land Acquisition, in the new Constitutional scheme, was rendered in a Concurrent list subject, with the power to both Centre and States to make laws on ‘requisition and acquisition of immovable property’. The right to property too was initially considered a fundamental right. The State began to show the first signs of internal differentiation, through an emergent independent Judiciary.

Article 141 of the Constitution aided this separation, by explicitly stating that the law laid down by the Supreme Court was the binding law of the land.

In fact, the battle lines between the Executive and the Judiciary were initially drawn over the right to property in 1951 itself. After much constitutional debate, it finally required an innovative heuristic of ‘the basic structure’ doctrine to resolve matters. Subsequently, after the end of the Emergency and the installation of a new Government at the Centre, the right to property was changed from a fundamental right to a legal one and no one could anymore challenge an acquisition of private property on grounds of violation of Fundamental Rights.

The Congress-led United Progressive Alliance (UPA) in its first term (2004-09) sought to amend the act in 2007 and introduced a bill in parliament. It was referred to the standing committee on rural development, and subsequently, cleared by the group of ministers in December 2008, just ahead of its eventual passage.

The 2007 amendment bill was passed in Lok Sabha as the “Land Acquisition (Amendment) Act, 2009” in February 2009, and the UPA returned to power for a second term in May that year. However, with the dissolution of the 14th Lok Sabha soon after, the bill lapsed. The government did not have the required majority in the Rajya Sabha to pass the bill.

After the UPA came back to power with a bigger mandate, it sought to reintroduce the bill in 2011 as the “Land Acquisition Rehabilitation and Resettlement Bill, 2011”. The bill proposed that for a private project, land could be acquired only if 80% of the affected families agree to its acquisition. For a public-private partnership (PPP) project, 70% of affected families must agree. Besides, it proposed compensation for the affected parties—four times the market rate in rural areas and two times of the market rate in urban areas.

It also sought to compensate artisans, traders and other affected parties through a one-time payment, even if they didn’t own land in the area considered for acquisition. The bill was passed in August 2013 as “The Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013” and came into effect on 1 January 2014.

The current BJP government introduced amendments to the previous Act which have been opposed by all political parties, Not only the opposition parties but also other organizations that traditionally supported Bharatiya Janta Party such as Mazdoor Sangh, Bhartiya Kisan Sangh and Akhil Bhartiya Vanvasi Kalyan Ashram have come heavily against the amendments proposed by the Narendra Modi led NDA government including their ally Shiv Sena in the Rajya Sabha.

The BJP’s argument has been that the UPA’s land acquisition law makes it impractical for any public purpose and endlessly delays infrastructure projects. While the amendments were passed in the lower house of the parliament where the BJP enjoys the vast majority, it has been unable to pass this in the Rajya Sabha. Instead, it took recourse in an ordinance to pass the amendment to the bill in December 2014.

The Land Acquisition Act, 1894

The Land Acquisition Act of 1894, allows the Indian Government to acquire the private land in the country. Under this Act, “Land Acquisition” means acquiring land for any public purpose by the government or its agency, as authorized by law, from the individual landowners after paying a fixed compensation in lieu of losses incurred by these landowners due to the surrendering of their land to the concerned government agencies.

According to this Act, the state has the power to exercise its right of eminent domain wherein it is the ultimate owner of all the Land which it can acquire for public purposes after paying full compensation calculated on the basis of market value. Despite numerous amendments to the Act after independence, the two basic principles of land acquisition, that is, a). Public purposes and b). Compensation on Market Value remains unchanged. Although the Central Government determines the content of the law, there can be regional variations in the procedural matters.

As Land is a scarce resource and always has various holders claiming ownership, this Act provided a set of rules for convenient settlement of such disputes. As per the 1894 Act, land can be acquired either under Part-II or Part-VII of the Act. While the former is used when acquiring body is the central or state government or companies that are either owned, partly owned or controlled by the State, the latter is used in the case of private companies.

Another important aspect is that, while land acquisition under Part-II is entirely for “Public Purpose”, acquisition under Part-VII can be for both “Public Purpose” and “Non-public Purpose”, although the scope for “Non-public Purpose” is very limited.

Land Acquisition Under Part-II

Under this part, the acquisition process involves the following steps:

1. NOTIFICATION: The land acquisition process starts with issuing of a preliminary notification in the Official Gazette in two locally circulated newspapers. Also, the collector is to ensure the “public notice of the substance of such notification” is given at a convenient place in the locality. This notice:

• • Makes it lawful for an authorized officer to enter and inspect the land specified in the notice without the owner’s permission.
  • Alerts the owner not to invest any money or labour on any improvements to his land without the Collector’s consent and
  • Informs the public not to acquire any interest in such land.

2. FILING OF OBJECTIONS: Owners and the people who have an interest in the land are then required to file their objections if any within 30 days of the issuing of the notice. These objections are to be submitted to the collector and the collector shall give an opportunity of being heard to all those people who raise objections. After hearing these objections, the collectors submit a report to the government which contains all his recommendations and all the records of the proceedings. Then the government takes a decision of acquisition based on the collector’s report. The right to file objections is regarded as a substantial right when a person’s property is threatened with the acquisition.
3. DECLARATION: After the government takes the decision, a declaration is issued under Sec 6(1) and this declaration must be given equal publicity as the preliminary notification. According to this Act, this declaration shall be issued within one year from the date of issuing of preliminary notification.
4. NOTICE TO INTERESTED PARTIES: After the declaration, the notified land is planned and measured as per Sections 7 and 8 of the Act. A notice is issued by the collector to all the landowners and the parties having an interest in that land to information about the government’s intention to acquire their land and also to call for claims for compensation.
5. ENQUIRY AND AWARD: After the notice is issued, the collector conducts an inquiry into the objection raised and accordingly an award is given. The award contains an area of the notified land, the compensation payable and the share of all the interested persons in the compensation. This award should be made within two years from the date of declaration or else under Sec 6 the acquisition proceedings will lapse. Any appeal against the award can be made by filing an application to the collector who shall then refer the matter to the court. The interested parties cannot file a suit in the ordinary civil courts to establish their claims. The award must be made within the stipulated time period of 2 years under Section 11A. The period of stay if any to be excluded from the time fixed for passing the award.
6. ACQUISITION: After the award is made the government acquires the land and immediately takes possession of the land after paying appropriate compensation.
7. COMPENSATION: The compensation should be based on the market value of the land. If the payment of compensation is delayed even after the acquisition of the land, then an interest of 12% per annum shall also be given. In addition to that, a solatium equivalent to 30% of the market value shall also be given. The recent judicial trends have also seen the refund of compensation at a specific interest rate if the acquired land is not used for the desired purposes.

Land Acquisition Under Part VII

Under part VII, land can be acquired for non-governmental companies. Unlike Part II, where compensation is granted wholly or partly, under Part VII, a company is bound to pay the entire amount of compensation for the notified land. Basically, the process of land acquisition under Part VII is similar to that of Part II, but there are two major exceptions. The exceptions are related to the company in the following ways:

• Getting the government’s consent under Sec 6 (1)
• Entering into an agreement with the government before the declaration is issued under Sec 6(1).

Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation And Resettlement (Amendment) Bill, 2015

The Amendment Bill was introduced in the Lok Sabha by the Minister for Rural Development, Mr. Birender Singh on February 24, 2015. The Bill amends the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 (LARR Act, 2013). The Bill replaces the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation, and Resettlement (Amendment) Ordinance, 2014.

This bill not only provides for land acquisition but also for rehabilitation and resettlement (R&R). The provisions of this bill shall be applicable where the government acquires land either for its own use or for the use of any private company for public purposes. The earlier Act only allowed land acquisition by the government for government-owned companies as well as schemes run by societies/authorities/co-operative societies while the new Bill allows acquisition for a public purpose by privet companies and Public-Private Partnership (PPPs) apart from government-controlled organizations.

According to this bill, private companies are entitled to provide rehabilitation and resettlement if they acquire land through private negotiations. R&R shall be equal to or more than 100 acres in rural areas and 50 acres in urban areas. As per this bill, the term “public purpose” includes:

• National security and strategic defense purposes
• Roads, railways, and ports built by the government and PSEs
• Project affected people
• Planned development or improvement of villages
• Residential purposes for the poor
• Government projects benefit the public.

This Bill creates five special categories of land use which are exempted from certain provisions. This includes:

• Defence
• Rural infrastructure
• Affordable housing
• Industrial corridors
• Infrastructure projects including PPP projects.

However, under the LARR Act, 2013 land could be acquired for all these purposes only when 80% of the project affected people give their consent. But this bill exempts the above-mentioned land uses from this consent clause. This bill apart from limiting the government’s involvement in acquisition and requiring the consent of affected people also talks about the return of the acquired land after a period of 5 years or any period specified at the time of setting up of the project, whichever is later if left unutilized. But no mechanism has been provided for this.

This Bill stipulates the appointment of an R&R committee to review R&R progress in the case where land acquired is 100 acres or more for the public purpose.

Analysis of Compensation for Those Affected By Land Acquisition

There is an improvement in the original act which did not provide any kind of compensation both monetary or non-monetary to those affected by the land acquisition process. This bill makes a start, compensating those who will be affected by land acquisition prior to the setting up of the infrastructure or development project, monetarily and in some cases, non-monetarily. The bill also provides land-for-land compensation in certain cases.

Also, the clause of the lease means that the landowner at least need not lose land ownership, although others may lose their livelihoods in the process and have to be adequately compensated and rehabilitated. But the bill has been criticized mainly for two accounts

First, there is a huge debate on account of whether such a compensation amount would be enough or not. Activists argue that prior to the coming up of a development project, the market price is quite low, particularly in rural areas or semi-urban areas, and so the compensation amount (up to 4 times the market price) may be too little for a landowner or farmer who is losing his livelihood in a big way.

Second, those who would be affected by the establishment of the project, have not been considered at all in the bill although one could say that this was not the primary purpose of the bill, and second, one could address these through proper implementation and enforcement of the environmental regulations for air and water (if not for land). There are issues with those norms though, but for once, this is a secondary problem with the bill itself.

Conclusion

An act that was born in a different context, amended under various compulsions and continues to be in conflict with other laws. While the demand for the land continues to increase, its supply is fixed. In order to meet the rising demand for the land, it has to be acquired and its use pattern has to be changed along with various policies implementation. However, the requirement and availability of lands continue and it has led the successive governments at the centre to look into the Land Acquisition Act, of 1894 time and again in order to find a solution to this problem.

The major question today is whether changing a specific law could overhaul the system of overlapping laws which has allowed the misuse of limited land resources? The current BJP government, however, has completely denied the allegations that the amended bill is anti-poor and anti-farmer. The efforts of the government in power to bring about the changes in the LARR Act are commendable.

Though the need of the hour for the developing country of ours is to expand their infrastructure and welcome the technological advancements with open hearts in order to bridge the gap between developing and developed countries, still the major factor that India is an agricultural-based country cannot be ignored.

The initiatives by the Modi government are praiseworthy as the land acquisition hurdle creates much delay and obstacle in the completion of even public welfare projects i.e. metro, railway, roads etc. The recent proposals regarding compensation based on lease or annuity are worth consideration. The current Act requires the market value to be paid for the land and any other property on it (buildings, trees, irrigation work etc) as well as expenses for compelling the person to change the place of residence or business.

It explicitly prohibits taking into account the intended use of land while computing market value.

The 2007 Bill requires payment of the highest of three items: the minimum value specified for stamp duty, the average of the top 50 per cent by the price of land sale in the vicinity, and the average of the top 50 pc of the land purchased for the project from willing sellers. For computing recent land sales, the intended land use is to be used. Thus, agricultural land being acquired for an industrial project will be paid for the price of industrial land.

No doubt the passing of this bill will surely create a great hue and cry amongst the farmers of the nation but nonetheless the duty to protect the interest of these people lies in the hands of the government.

Amidst all these challenges and controversies faced in the passing of the bill, one cannot deny that this bill has its own pros and cons. Nonetheless, it will be interesting to see whether this bill will be accepted open-heartedly by the Council of the States or would be rejected outrightly. The fate of the much debatable topic of the session is yet to be decided and its consequences for the agro-based society of India rests with the States.

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References

1. Constitution of India.
2. Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013, The Gazette Of India.
3. The Land Acquisition, Rehabilitation and Resettlement Bill, 2011, Ministry of Rural Development, Government of India.
4. Land Acquisition Act,1894.
5. Kameshwar Singh v State of Bihar AIR 1951 Pat 91.
6. His Holiness Kesavananda Bharati, Sripadagalvaru v State of Kerala & Anr. (1973) 4 SCC 225.
7. The Constitution of India (44th Amendment) Act, 1978.
8. Basu Indrani, “What exactly is the contention about the land acquisition amendment?”, 24 Feb 2015 (The Huffington Post)
9. Nandeshwar Prasad v. U.P. Government, AIR 1964 SC 1217
10. Balbir Singh v. Union of India & Ors.: 39 (1989) DLT 233
11. Devinder Singh v. State of Punjab 2008 AIR 261
12. Sharad Sheetal, Jain Shubham & Inamdar Rohit, Impact Analysis: New Land Acquisition Bill, Available Here
13. Sunny, Land Acquisition Act: A Critical Analysis, Youth Forum, (February 9, 2015), Available Here
14. Ventak Ananth, The Evolution of Land Acquisition Cases, Live Mint, (May 22, 2015), Available Here

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