L AND A CQUISITION IN I NDIA I

As a society changes from an agrarian to an industrial one, landuse patterns change accordingly industrial plants are built on farmland and wide open spaces of sparsely-populated villages give way to apartment blocks housing people by the hundreds. As India witnesses an economic metamorphosis and attendant demographic changes, landuse patterns here are also changing. However, the process is generating considerable friction in the country. Very high density of population, total dependence on land for livelihood and perhaps most importantly, land acquisition policies that have remained broadly the same as those in the colonial era make for a dangerous cocktail that frequently catches fire, singes the ruling dispensation of the day and makes headlines for a few days before dying down till the next cycle erupts. The latest eruption in this long saga of unrest over land acquisition recently occurred in some villages of Uttar Pradesh, where protesting farmers and police clashed in a series of violent confrontations. Unfortunately, it was not long before the entire issue became trivialised into petty politics with charges, counter charges, allegations and rebuttals flying thick and fast. A new law to replace the archaic Land Acquisition Act 1894 has been gathering dust due to lack of political consensus in the ruling alliance. In the meanwhile, land acquisition continues to remain a deeply contentious issue. In two articles, we examine the legal framework for land acquisition in India, highlight its weaknesses, and identify the chief features of the proposed new law and other initiatives taken to make land acquisition less painful for the evictees. In this article, we examine the situation as it exists. Next week, we take a look a proposed reforms pertaining to land acquisition.

L AND A CQUISITION A CT 1894

The Land Acquisition Act 1894 continues to provide the legal framework for acquisition of privately held property by the government. This law facilitates acquisition of land by government for public purposes. Acquisition is different from purchase, as in the case of acquisition, the owners consent is not necessary. Acquisition can be done against the wishes of property owners and compensation is paid for the property being acquired. Quite importantly, this compensation is determined by the government and need not be linked to market prices. A purchase on the other hand, is predicated on the consent of the owner to sell and payment of a mutually-agreed price, which invariably would be market-determined. The logic underlying compulsory acquisition of property flows from the philosophy of Utilitarianism which subsumes individual rights to community good. The state, in this instance, exercises the Power of Eminent Domain, forcing a property owner to surrender his/her ownership to the state or an authorised agency for use by the state or its agencies.

P R OC EDU R E

FOR LA ND A C QU IS IT ION

The procedure for land acquisition as given in the Land Acquisition Act 1894 is outlined below. 1. The government (central/state) determines that it needs land for a public purpose and identifies the piece of land to be acquired for this purpose; 2. A notification to this effect is published in the official Gazette. A summary of this notice is published by the collector(s) of the district(s) where the land to be acquired is located. The government notification must also be published in at least two newspapers, one of which is in the regional language of the place where land acquisition is to take place; 3. Within 30 days of such notification, objections to acquisition have to be given to the Collectors office in writing; 4. At the expiry of the period of 30 days, the collector forwards all objections with comments to the government, whose decision on the matter shall be final; 5. After disposing of the issues raised in the collectors report, the government has to publish a Declaration of Intention to acquire land. This declaration must follow the same guidelines as the earlier notification; 6. The collector issues a notice to all persons interested to appear in an enquiry to be held before him. This enquiry deals with key aspects such as the area of land, compensation etc; 7. After the enquiry, and with approval of the government, the collector makes an award that details the following: a. The true area of the land; b. The compensation, which in his opinion should be allowed for the land; and c. The apportionment of the said compensation among the persons interested. 8. The government can take over possession of the land once compensation is paid. After this, the government has absolutely unencumbered rights over the land and can put the land to any use it deems fit; 9. Under Section 17 of the Act, the government can take over possession of land even without paying compensation, in cases of urgency. Compensation will have to be paid eventually; 10. The actual amount of compensation is determined in accordance with the market value of the land as it exists on the date of the 1st notification; 11. Process of land acquisition has to be completed within 2 years from the date of the first notification, failing which the whole procedure will have to be started from scratch; 12. The process can be cancelled any time before completion, but cannot be reversed once it is finished and possession acquired by the government.

C ONSTITUTIO NAL P ROVISIONS

The Constitution, as originally enacted, had provisions under Articles 19 (1)(f) and Article 31 which constituted the Fundamental Right to Property.

Article 19(1)(f) stated that all citizens shall have the right to acquire, hold and dispose of property. Further, Article 31(1) stated, No person shall be deprived of his property save by authority of law. The government faced legal obstacles to its land reforms programme due to these st rights. In order to surmount this difficulty, 1 Amendment to the constitution, (in part), inserted Articles 31A and 31B, besides the Ninth Schedule to the constitution. Article 31A states (in part) Not withstanding anything contained in Art 13, no law providing for the acquisition by the state of any estate or any rights therein, Shall be void on the ground that it is inconsistent with or takes away or abridges any fundamental rights The Ninth Schedule effectively places the laws put in it beyond the scope of judicial review. After a recent Supreme Court ruling, judicial review for laws placed in the 9th Schedule after the Kesavananda Bharati judgement has been restored. Following a series of amendments that progressively diluted the Right to Property, nd the 42 Amendment of 1976 repealed Article 19(1)(f). Article 31 was repealed and replaced by Article 300A No person shall be deprived of his property save by authority of law. This amendment relegated a fundamental right to the status of an ordinary legal right. This is an important distinction. In case of violation of a persons fundamental right(s), he/she can directly approach the Supreme Court for grant of relief through any of the six appropriate writs Habeas Corpus, Mandamus, Certiorari, Prohibition and Quo Warranto. Perhaps more importantly, the Court cannot refuse to issue a writ, even on the pretext that the litigant has prayed for the wrong writ. In this case, the Court would direct the litigant to file a petition asking for the proper writ. However, for redress in violation of a legal right, a citizen has to go through the grind of the entire judicial system, and his/her appeal can be thrown out at any stage. Thus, the fundamental right to property has been wiped out in India. Acquisition and Requisition of property falls in the Concurrent List, implying both the central and state governments have jurisdiction on the matter. Consequently, a number of state-specific legislations providing for land acquisition exist side-by-side with the Land Acquisition Act 1894.

P UBLIC P URPOSE
As per Article 31(2), the state can acquire land only for public purpose. However, the constitution does not define the term. As per Section 3(f) of the Land Acquisition Act, public purpose as includes (but is not limited to) the following: a. b. Settlement of new villages or development, extension or improvement of village sites; Provision of land for urban or rural planning;

c.

d. e. f.

g. h.

Provision of land for planned development from public funds as per provisions of a Government policy and disposal of the developed land (in whole or parts) by outright sale, lease or by any other mechanism, with the object of securing further development as planned; Provision of land for a public company; Provision of land for developing housing for poor, landless, people affected by calamities or people displaced due to a state scheme/policy; Provision of land for an educational, housing, health or slum clearance scheme sponsored by the state or a body designated for the purpose by the state; Provision of land for any other development scheme of the state; Provision of a premises or building for establishment of a public office, but not office of a company.

In an important ruling, the Supreme Court recently held that ruled that the acquisition of land by a state government for development of a project to serve the larger public good would be legal and valid, even when such project would be executed by a private entity. The Court said that in case of integrated and indivisible project, the project has to be taken as a whole and must be judged whether it is in the larger public interest. A holistic approach has to be adopted in such matters. This ruling legitimizes the role of state in facilitating land acquisition. Acquisition of land for industries has been a contentious issue for quite some while now, with several Special Economic Zones and other industrial projects facing hurdles. So far, a narrow interpretation of public purpose entitled the state to acquire large tracts of land only if every component of the project to be set up on the acquired land passed the test of public benefit. The fallout of this judgment is significant as the court upheld development of infrastructure as legal and legitimate public purpose.

W EAK NESSES M ECHANISM

IN TH E

C URRENT L AND A C QUISITION

The current legal framework for land acquisition has come in for criticism in the light of a number of instances of protests by people whose land is acquired, particularly since the policy of Special Economic Zones (SEZs) was adopted. Major criticisms of the land acquisition framework are: a. b. The question over what constitutes public purpose is not satisfactorily settled yet; Marginalised communities, tribals and backward classes have been the major victims of land acquisition. The present policy has a number of weaknesses with respect to these communities: i. Most of the tribal communities have a system of communal ownership of assets and cannot produce

c.

d.

ownership documents. As such, they are treated as encroachers and paid hardly any compensation, if at all; ii. These communities are heavily dependent on land for sustenance and livelihood. Forced displacement, even with compensation, often causes irreparable damage to their livelihood security; iii. Sharecroppers, tenants and similar occupants of land are not fairly treated by the present laws, as they get a very minor share of the total compensation, even as they suffer the maximum damage to their livelihood Price of land being acquired does not reflect the economic value of the land. Following development, the same land is sold at much higher prices while the original owners do not receive their fair share of the economic value of land; The acquisition policy focuses on immediate payment of monetary compensation, without due regard to educating the people about utilising the money judiciously, and also not paying much attention to their future livelihood. This creates severe disruptions in the lives of the displaced population.

In numerous judgements, the Supreme Court has held that factors such as market value of land, location of the land, the loss of income suffered by the land owner and availability of basic amenities such as water and electricity must be considered while arriving at a fair compensation for acquisition of land. In a judgement, the Court has said that the "fixation of compensation under the Land Acquisition Act involves an element of rational guess work." It is thus clear that the present mechanism of land acquisition in in serious need of an overhaul so that interests of the evictees are better protected than at present. A bill to amend the Land Acquisition Act the Land Acquisition (Amendment) Bill is pending since 2007. In addition, there are numerous suggestions from other sources regarding changes needed in the mechanism. The next weeks lead essay would take a look at these issues in some detail.

L AND A CQUISITION IN I NDIA II

In Part I of this article, we examined the legal framework for land acquisition as it exists at present, and also took note of the deficiencies in this framework. In this part, we discuss the (lapsed) Land Acquisition (Amendment) Bill 2007, proposals by the National Advisory Council (NAC) and also look at Land Acquisition Policies of some states.

L AND A CQUISITION (A MEN DMENT ) B ILL 2007

The Land Acquisition (Amendment) Bill was tabled in the Lok Sabha in December 2007 and referred to a Parliamentary Standing Committee. The Committee th submitted its report on the Bill in October 2008 and it was passed by the 14 Lok Sabha on the last day of its last session. Under provisions of the Constitution, the Bill lapsed on end of the Lok Sabhas term. It will now have to be re-introduced in the Parliament. Main provisions of the Bill were: 1. The 2007 Bill restricted land acquisition by government to only three categories: a. When land is needed for use by the navy, army, air force or for strategic purposes; b. When land is needed for public infrastructure projects; and c. In cases where a project beneficial to public where at least 70% of the land has already been purchased from the public by the project implementing agency. Government role in this case was retained so that large projects, that require contiguous land, are not held up by a minority of landowners. If the land acquisition would displace 400 families (or more) in plains or 200 families (or more) in hilly, tribal and desert areas, a Social Impact Assessment of the project must be carried out to determine if the social benefits of the project would be more than its social costs. In an important provision, lower courts would not hear cases related to land acquisition. All such disputes would be first addressed by a Compensation Dispute Settlement Authority (at state for acquisition by the state government and at the national level for acquisition by the central government). Appeal against decisions of these authorities would be heard by the respective High Courts and the Supreme Court. Time restrictions were introduced on validity of notification for land acquisition: a. The appropriate government would have to issue a notification regarding its intention to acquire land. This has to be published in the Official Gazette and at least two daily newspapers circulating in the locality where acquisition is to take place; b. After this notification is published, government can carry out feasibility studies to assess suitability of the land for intended purposes;

2.

3.

4.

5.

If the land is found suitable, the government must issue a declaration stating the land will be used for public purpose. This declaration has to be issues within one year of the original notification, failing which it (declaration) cannot be issued for one year. In case a declaration is not issued even on expiry of this period, a declaration cannot be made for five years; d. Until a final notification for land acquisition is issued, no further work on notified land can be taken up. The mechanism for computing compensation was completely revised from the Land Acquisition Act 1894 (LAA): a. The mechanism for computing compensation was completely revised from the Land Acquisition Act 1894 (LAA). Whereas the LAA explicitly prohibits taking the intended use of acquired land into consideration for calculating compensation, the 2007 Bill said the reverse. Under provisions of the Bill, market value of the land plus 60% was to be paid as compensation. b. The market value was to be arrived at on the basis of intended use of land. This provision would immensely benefit farmers whose agricultural land is acquired for construction of Special Economic Zones and townships, for example. c. Mechanism to be followed for determining value of land for compensation: i. The highest value among: The minimum land value for the area as per land registry values; The average sale price of at least 50% of the higher priced sales of similar land in the village or vicinity; The average sale price of at least 50% of the higher priced land purchased for the project. ii. Compensation amount would include value of trees, plants, or standing crops damaged; iii. If land registry prices are not available or if the land is in an area where land sales have been restricted, the state government shall set the floor price per unit of land, which would be determined by average prices of at least 50% of the higher priced land in the vicinity. d. In addition to landowners, tenants, tribals and other traditional forest dwellers would also be compensated; If land not being acquired is damaged during the process, compensation has to be paid for the same as well; Compensation must be paid within one year from the date of the declaration. This time can be extended by six months but a penalty @5% per month would be imposed in this case;

c.

6. 7.

8.

For land acquired under urgency provisions, 75% premium over market prices shall have to be paid as opposed to 60% in normal cases; 9. When land is being acquired for a company, 20-50% of the compensation amount has to be offered in the form of shares or debentures of the company. The land owner is free to choose this option or go for a full cash payment; 10. The authority/agency acquiring land will have to bear the following costs in addition to compensation for acquired land: i. Costs for suffering or loss caused by acquisition; ii. Payment for damages to the land during acquisition; iii. Cost of land needed for resettlement of displaced residents; iv. Cost of infrastructure development at the resettlement sites; and, Administrative costs of acquisition and resettlement. 11. If the acquired land stays unused for 5 years from the date of possession, it has to be returned to the appropriate government; 12. On sale of acquired land to another party, 80% of the difference between the sale price and amount paid as compensation has to be shared among the original land owners and their heirs. The Land Acquisition (Amendment) Bill 2007 was tabled with a complementary legislation The Rehabilitation and Resettlement Bill, 2007 that was intended to provide for the rehabilitation and resettlement of people displaced by natural disasters or by the acquisition of land by the government. It also lapsed with the end of the 14th Lok Sabha.

T HE NAC R ECOMMENDATIO NS

ON

L AN D A CQUISITION

The powerful National Advisory Council (NAC), headed by UPA Chairperson Sonia Gandhi, has recently made a number of recommendations on the Land Acquisition Bill. These are summarised below. 1. 2. The Land Acquisition Act 1894 should be repealed; The Land Acquisition Bill and the Resettlement and Rehabilitation Bill should be combined into a new single, comprehensive law - National Development, Acquisition, Displacement and Rehabilitation Act; Landowners should be paid six times the registered sale deed value as compensation and also be compensated for being displaced; Compensation has to be paid to the landowner and all people whose livelihoods were dependent on land being acquired. Non-owners should be paid a grant amounting to 10 days minimum wages every month for 33 years. Compensation should be paid into into accounts held jointly by men and women to minimise the chances of men blowing up the money; The option of acquiring less fertile and wastelands should be explored before turning to agricultural land;

3. 4.

5. 6.

7.

If the acquired land is resold, the original owners should get a 25 per cent share of the transaction, every time; 8. If land acquired for a public purpose was not used within five years, it should be returned to its original owners; 9. The urgency clause should be invoked only if land is needed for national security and defence use; 10. Some press reports also said that the NAC favours full government control of the land acquisition process, as opposed to the 70:30 option in the Land Acquisition Bill 2007. However, the NAC press release is silent on this aspect.

L AND A CQUISITION P OLICY

OF

U TTAR P R ADESH

Following widespread trouble over land acquisition in the state and the pursuant political tamasha, the Uttar Pradesh government recently unveiled a new land acquisition policy that substantially raises benefits for farmers. Key highlights from the policy are summarised below. 1. 2. For purposes of acquisition, land to be classified into three categories; The first category is land for use by the private sector for purposes such as setting up of industries, power projects etc. Provisions applicable in this case are: a. Land to be acquired directly by the private entity. Government role limited to facilitation; b. If 70% of landowners agree to sell land at mutually-agreed prices, government to invoke Land Acquisition Act for the remaining 30% and intervene in land acquisition; c. If 70% landholders do not agree to sell the land, the project would be reconsidered; d. Farmers to have the option of getting back 16% of the acquired land after development. Farmers also have to be paid an annuity @Rs 23,000/acre for the next 33 years (with annual increment of Rs 800) and other benefits as outlined in the state Rehabilitation and Resettlement Policy of 2010; e. If a farmer does not want the entire 16% of redeveloped land, he can choose a mix of cash compensation and redeveloped land; f. No charges, including stamp duties, to be paid by farmers for taking possession of redeveloped land; g. No stamp duty to be paid by a farmer whose land has been acquired if he uses the compensation amount to purchase farmland anywhere in the state within one year of acquisition.

3.

The second category is land for public purposes such as for construction of roads, canals etc being built by the government. Provisions in this case are: a. All those affected by the acquisition would get benefits of the R&R Policy of 2010 which promises an annuity @Rs 23,000/acre (with

b.

annual increment of Rs 800) and other benefits, in addition to the compensation for land; No stamp duty to be paid by a farmer whose land has been acquired if he uses the compensation amount to purchase farmland anywhere in the state.

4.

5. 6. 7.

8. 9.

The third category covers cases where land acquisition is through government agencies such as land development authorities, industrial development authorities etc. Provisions applicable in this case are: a. Farmers have the option of either selling their land at mutually agreed rates or to take back 16% of their acquired land in developed form; b. In both cases, farmers would be eligible for benefits of the R&R policy of 2010 which promises an annuity for 33 years etc. c. The farmers would also get stamp duty waiver for buying agricultural land elsewhere from the compensation amount; d. If the land being acquired by the development authority is for some private company then the farmer can also exercise the option of acquiring equity shares of the company upto 25% of the compensation amount. If farmers do not wish to receive annuities, provision for lumpsum payment has also been made; One member of the family whose entire land holding is acquired for the private sector would be provided a job in the company; For the loss of livelihood, families would also get additional compensation calculated at rates payable to agricultural labour. This compensation would be paid for five years; Families whose landholdings are reduced to small or marginal in size would also get additional compensation calculated at different rates. Developers would also have to construct a Kisan Bhawan and a model school till class 8 in each affected village.

L AND A CQUISITION P OLICY

OF

H ARYANA

The state of Haryana was among the first in India to come up with a land acquisition policy that took care of interests of people whose land (and/or livelihood) were being forcibly taken away for public purpose. In fact, the revised national land acquisition policy and the policy of UP government as discussed above draw a lot from Haryana. Broadly, the land acquisition policy in Harayana has the same features as the UP Policy discussed above, with variations in rates and classification of land. One major innovation introduced by Haryana in 2010 is the No Litigation Incentive. Under this incentive, designed to reduce avoidable litigation around land acquisition, an additional 20% of the basic rate of land determined by the Land Acquisition Collector would be paid as an incentive to landowners do not challenge the acquisition of their land, and accept the compensation awarded as final.

C ONCLUSION
Over two essays, we have examined the statutory and constitutional framework regarding forced acquisition of property by the state and have examined the deficiencies in the present approach, as well as attempts to rectify the same. While the Land Acquisition Bill 2007 has lapsed, the government is likely to introduce a revised version of the same in the coming monsoon session of parliament. However, with the powerful NAC now recommending government role in land acquisition, even for private industries, and also advocating an integrated approach to acquisition, resettlement and rehabilitation, we might see further delays in the process. Some states, most notably Haryana and Uttar Pradesh have come up with fairly progressive acquisition policies. However, there is still lack of total political agreement on the contours that an acquisition policy needs to take. In addition, the draft laws also suffer from some defects. For example, the Land Acquisition Bill 2007 and many state policies make it mandatory for profits from sale of acquired land to be shared with the original landowners or their heirs. When such transactions are part of a larger exercise such as a company takeover, for example, it is not easy to determine the exact profit on a part of assets. In addition, how are the organisations going to keep track of the landowner and/or heirs in perpetuity? Similarly, the NACs idea of paying six times the registered value defies explanation. Why six times? Why not ten times or four times? Such arbitrary valuations would face many challenges if implemented. The need for well thought-out and people friendly land acquisition policies, both at the central and state levels, is imperative because as we grow, a very large volume of land is going to be diverted away from present usage. Some mega projects such as the Delhi-Mumbai Industrial Project, the Freight Corridor Project of Indian Railways, plans to set up nuclear reactors in several states etc., cannot proceed without a land acquisition policy that suitably compensates evictees for loss of land and livelihood.