INTRODUCTION AND BRIEF LEGISLATIVE HISTORY

As a law that legitimized the ability of the Government to acquire land from private parties, the Land Acquisition Act, 1894 (1894 Act) was always a matter of controversy. The country moved from being a colony to a democratic republic creating an expectation of a regime of greater fairness and equity. The provisions of the 1894 Act were often cited as being anachronistic and not in keeping with modern realities of an independent India. Not only was it seen as inadequate in protecting the interests of persons affected by such acquisitions but it was also seen as slowing down development. Many projects languished in limbo during protracted acquisition processes.

One of the biggest lacunae in the 1894 Act was the protection of the interests of the affected persons. Although the 1894 Act provided for a compensation regime, other consequences such as displacement and loss of livelihood were not contemplated.

Although, the Ministry of Rural Development, in 2007 formulated a National Rehabilitation & Resettlement Policy (NRRP) to address these concerns, to create enforceable obligations, requirements for rehabilitation and resettlement (R&R), legislation was needed. Accordingly, separate bills for R&R and amendments to the 1894 Act were introduced in Parliament but lapsed before they were passed.

In a widely cited judgment passed in 2011, the Supreme Court observed that ‘the provision contained in  Act[1] have been felt by all concerned, do not adequately protect the interest of the land owners/persons interested in the land. The Act does not provide for rehabilitation of persons displaced from their land although by such compulsory acquisition, their livelihood gets affected …To say the least, the Act has become outdated and needs to be replaced at the earliest by fair, reasonable and rational enactment in tune with the constitutional provisions.’

Subsequently a single comprehensive legislation addressing these issues was introduced in 2011 (after being available in the public domain for stakeholder comments). This single bill was passed by both houses of the Parliament in 2013 and was notified as the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 (2013 Act) on September 27, 2013 thereby repealing the 1894 Act. 

ISSUES AND LACUNAE IN THE 1894 ACT AND HOW ADDRESSED IN THE 2013 ACT

  • Compensation levels. A criticism often voiced was that the compensation payable under the 1894 Act was inadequate. The levels of compensation under the 2013 Act are significantly higher, with the entire market value being payable (double in the case of rural areas) together with a solatium of 100% as compared to 30% under the earlier Act. Further, under the 2013 Act, an additional 75% of the market value is payable if the land is acquired on urgency. The 2013 Act also provides that if a State law or policy provides for higher compensation or more beneficial R&R provisions, then PAPs may opt for such higher compensation or more beneficial R&R measures. Accordingly, the State Government of Maharasthra has issued a notification bearing No. LQN.12/2013/C.R.190/A-2 on May 12, 2014 notifying a draft policy providing for higher compensation and inviting objections or suggestions thereto.
  • Public Purpose and Acquisition of Land by Private Corporations. One of the most problematic issues of the 1894 Act was the blurring of the distinction between land being acquired for public purposes and for company. The Preamble itself stated that the legislation was for “the Acquisition of Land needed for public purpose or for companies and for determining the amount of compensation to be made on account of such acquisition”. Other provisions also treated the acquisition of land for public purposes and for companies at par. Para 3.5 of the report of the Standing Committee on Rural Development (Report) stated that “The Courts have interpreted this amendment to mean that any notification of acquisition issued under section 4 need not specify whether the acquisition is for a “public purpose” or for “a Company”. This opened the floodgates to acquisition of land by the State for Companies. And this in turn has unleashed the tribal and rural backlash that has caused the current decision of the Government to replace the 1894 Act with an altogether new Act.”  This was clearly contentious as it opened a pathway for governments to acquire land on behalf of private enterprises without paying heed to the interest of the §  community. This was sought to be addressed in the 2013 Act. Now, the Government can acquire land for companies only if the acquisition is for a public purpose. Further, the consent of 80% of certain project affected families is a prerequisite to such acquisition. 

The definition of public purpose is broadly along the same lines as under the 1894 Act. Additionally, acquisition of land for public private partnerships (PPPs) is also permitted provided that 75% of certain affected families provide their consent.

  • Acquisition of land on urgency. The provisions under the 1894 Act relating to urgency were a cause of great concern. They enabled the Government to acquire land at its discretion for ‘urgency’ within a period of 15 days of publication of the notice of intention to acquire land. The 2013 Act attempts to balance the requirement of the Government to acquire land for genuine emergencies and the interest of affected persons towards ensuring that land is not wrested away from them on any pretext. Accordingly, the term ‘urgency’ has now been defined. Now acquisition on the ground of urgency can only be invoked on the basis of defence, national security or natural calamity or any other emergency with Parliamentary approval[1]. Further, (i) an additional compensation of 75% of the market value is payable, and (ii) 80% of the compensation is payable before the land can be acquired on this ground.
  • Interests of Project Affected Persons (PAP). Apart from issues surrounding compensation, a serious concern in relation to the 1894 Act was that .there were no provisions for R&R of PAPs.  The NRRP attempted to remedy this, however it failed to do so and the need for a legislative edict was felt. The Report noted that the requirement for an overhaul of the 1894 Act was that the provisions of the said Act have been found to be inadequate in addressing certain issues related to the exercise of the statutory powers of the State for involuntary acquisition of private land and property. The Act does not address the issues of rehabilitation and resettlement to the affected persons and their families[2]. To address this, the 2013 Act contains provisions requiring a social impact assessment (SIA) for each proposed acquisition (other than in the case of urgency) and compulsory R&R. Once acquired, the land must be put to use for the purpose for which it was as acquired within a period of 5 years, failing which the same is required to be return to the original owner(s) or their legal heirs or a Land Bank[3].
  • Delays in Acquisition. Disagreements on the price and levels of compensation were often at the root of opposition and delays to project implementation. Acquisition for companies were always suspiciously looked upon. The legitimate requirements of the Government towards the development of infrastructure were also affected. This resulted in stalling of various infrastructure projects. In 2012 it was reported that over 30 highway development projects worth over Rs 8,800 crore were stuck for want of land.

CHALLENGES AND CRITICISMS

While the 2013 Act has sought to remedy the failings of the 1894 Act, certain concerns still remain or have arisen out of new concepts introduced. Some of these are:

  • Calculation of Compensation: Under the 2013 Act as under the 1894 Act, compensation is based on the market value of the land acquired (with potentially double for rural areas). The market value of the land is required to be computed as the higher of (a) the land value specified under the Indian Stamp Act 1899; or (b) the average sale price in respect of sale deed of similar land in nearby areas during the preceding 3 years; or (c) the amount agreed to in case of acquisition of land for private companies or for PPP projects[4]. In addition to the market value, compensation is to include the value of assets attached to the land as well as damages sustained by the PAPs. In addition, solatium is payable to land owners. There are concerns that the market value as defined would still fall short of the actual market value of the land as often land value is underreported.
  • Urgency.  As acquisition on urgency was a large concern, a watered down urgency clause has found a place in the 2013 Act. While urgency has now been defined such that acquisition is to requirements in cases of defence, security or emergencies arising out of natural calamities, it also states that the provision may be extended by to any other emergency with Parliamentary approval[5]. The 1894 Act provided 15 days from notification to taking over of the land, while the 2013 Land Act provides a mere 48 hours. Further, although additional compensation of 75% has been provided for, the same is not payable in case the project affects the sovereignty and integrity of India or security and strategic relations of the states or relations §  with foreign States.
  • Extent of Powers of the Central Government. There is some opposition by the State Governments with respect to the 2013 Act, as some Governments are of the opinion that the Centre is legislating on items that the State Governments have the power to legislate upon under the Constitution. They contend that since ‘land’ is an item on the State List while ‘acquisition’ is on the Concurrent List (the list under which both the Centre and the State have power to legislate upon), the acquisition of land should fall under the purview of the relevant State Government only.
  • Application to private companies. Another concern is that even where private companies acquire land through private negotiations, R&R provisions are applicable to them. The Confederation of Real Estate Developers Association of India (CREDAI) has stated that R&R provisions should not be made applicable to private companies purchasing land from those selling land of their own volition and free accord. According to CREDAI, if this is permitted, then the policies which the State Governments have enacted to accelerate the supply of housing will stand defeated, and the cost of housing will increase.
  • Mandatory SIA. Another concern is that the SIA is mandatory in all cases, notwithstanding the size of the project or the location of the land to be acquired. This could lead to delays in project implementation.
  • Requisition and R&R. Although the Government is empowered to temporarily acquire land (subject to a 3 year limitation), R&R provisions are not applicable. Therefore temporary displacements which may have a permanent impact remain unaddressed.

CONCLUSION

The 2013 Act aims at achieving a delicate balance between the interests of the various stakeholders. Different perspectives look at land acquisition with conflicting points of views- bottlenecks to development, a manner of deprivation of property and livelihood and government excess and interference. The process itself has been besieged with the same systemic infirmities that affect much of the flex of government power. An attempt has been made to address some of the issues involved. SIA, R&R provisions and limiting purpose of acquisition, to some measure provide certainty and relief to PAPs. However, the new concepts introduced have raised new concerns and a question still remains as to how several of these laudatory measures will be implemented.

Disclaimer: This article was first published in the June 2014 issue of the Infrastructure Today magazine. It has been authored by Aakanksha Joshi, who is an Associate Partner and Tarini Menezes, who is an Associate at Economic Laws Practice (ELP), Advocates & Solicitors. They can be reached at aakankshajoshi@elp-in.com or tarinimenezes@elp-in.com for any comment or query. The information provided in the article is intended for informational purposes only and does not constitute legal opinion or advice. The contents of this article/update are intended for informational purposes only and do not constitute legal opinion or advice. Readers are requested to seek formal legal advice prior to acting upon any of the information provided herein.