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LAND ACQUISITION IN INDIA AND

COMPETING INTERESTS

AUTHORED BY:

SHAILESH MADIYAL

PARTNER, SALVUS PARTNERS

www.salvuspartners.com
LAND ACQUISITION IN INDIA AND COMPETING INTERESTS

The recent developments at Kalinga Nagar in Orissa, Singur in West Bengal and
then at Raigad in Maharashtra have once again drawn the attention of the
country to the question of compulsory acquisition of land by the Government.
Attention to this extremely crucial aspect of governance could not have been
more overdue. Compulsory acquisition in India is still governed by the archaic
Land Acquisition Act of 1894. With a burgeoning population and a growing
economy [notwithstanding the economic crisis that the world is seeing today], the
demand for land – both for industry and for infrastructure is only on the
increase. Juxtapose this against the fundamental want of every individual to own
and hold on to his land, and the incidents at Singur, Kalinga Nagar, Raigad
hardly seem a surprise.

It is of course important to understand the fundamentals of the legal aspects of


land acquisition in India. Conceptually, the genesis of the State’s power to acquire
a land belonging to a private party lies in the right of eminent domain. The right
of eminent domain is the right of the sovereign state, through its regular
agencies, to re-assert its authority, either temporarily or permanently, over any
portion of the soil of the state, including private property, without its owners
consent on account of public exigency or for public good. This principle finds its
way into the codified law of India, by virtue of the Land Acquisition Act, 1894,
which prescribes the circumstances under which the State can acquire a private
person’s land, the procedure to be followed etc.1

The question that begs to be answered at this point is – Can the Government then
acquire any individuals land and if yes, what really is the sanctity of ownership of
property? We must at the outset understand that one of the fundamentals of a
1
The Forty-fourth Amendment to the Constitution of India inserted Article 300-A which states that “No
person shall be deprived of his property save by authority of law.” The same amendment simultaneously
deleted the fundamental right to property which was uptil then included in Article 19(1)(f) and 31.
free society is the ownership of property. Immoveable property has always been
considered a valuable asset to own and today, it is more so than ever. It is for this
reason that the right to compulsorily acquire the land of an individual is checked
and balanced by the provisions of the Land Acquisition Act, 1894. At a very
fundamental level and without being bogged down by legalese, it can perhaps be
stated that the State cannot compulsorily acquire the land of a private party,
except for a public purpose and such acquisition must be accompanied by the
payment of a just compensation. This is in line with the original purpose of the
right of eminent domain – i.e. to allow the State to acquire land for the purpose
of the working of the Government. The idea was that for the working of the
Government, the State would need to have the right to acquire land for roads,
administrative buildings, power projects, etc. and that therefore, the State must
be entitled to acquire and own land at such place as is necessary to make the
work of the State efficient and to serve the larger society, even if it means causing
some inconvenience to an individual or individuals [whose lands are in fact
acquired].

What then do the protests and mass movements in Singur, Kalinga Nagar and
Raigad [and other places] suggest? How should the middle path between public
needs and individual rights be drawn? Should it be made mandatory for the
Government to purchase land only from land owners who are in fact willing to
sell the land?

A lot of the public opinion in recent times seems to suggest so. But is this really
feasible? Surely, a road cannot be expected to be diverted [at the cost of crores to
the public exchequer], simply because a single land owner refuses to part with a
portion of his property. Surely, an irrigation project which would benefit
thousands of water parched farmers cannot be abandoned simply because a few
land owners are unwilling to part with their land.
Where then lies the solution? The solution really lies within the Land Acquisition
Act itself and the manner in which it is worked. The solution lies in making the
land loser’s misery more bearable. It also lies in understanding, as the ancient
adage goes, that ‘a man’s home is his castle’.

To most land owners [especially lands on which houses are built and people live],
the land means a lot more than just its physical existence. It attaches with it a
host of emotional and sometimes historical ties that cannot be measured in terms
of money…. as a result acquisition of such lands can never really be compensated
for. The only way and means to address this issue, to the extent possible, is to
make compulsory acquisitions the very last resort and a means to be used only in
exceptional cases. Let me explain. Compulsory acquisition must not be the
sledgehammer [which it appears to be today] by which the State bulldozes its way
into peoples private properties without a care or exploration as to whether any
alternate land belonging to a willing land owner is available. Such an exploration
must be made and to the extent possible compulsory acquisitions must be
avoided.

To make matters worse, while the Land Acquisition Act prescribes that land can
be acquired only for public purposes, the meaning of the words ‘public purpose’
has been widened to its very extremes over a period of time. So much so,
governments have been acquiring lands for hotels, golf courses, industries,
resorts on the ground that such activities generate employment, earn foreign
exchange, etc. and hence fall within the purview of public purpose [The Tata car
factory at Singur being a case in point] . Would this ever be palatable to an
individual land loser? I would seriously doubt as to whether an unwilling land
loser would ever beam with happiness to see his lands having been acquired by
the State much against his wishes, now in the hands of an entrepreneur who is
raking in the moolah out of that very land, of which the land loser is entitled to
nothing!! It is this that often causes severe dissatisfaction and unrest. ‘Public
purpose’ must therefore be understood in an extremely limited sense….roads,
government offices, power projects, etc. …. not for private hotels and resorts and
manufacturing units enabling the financial well being of already rich business
houses!

Like I have said earlier, even if the State were to show reluctance in compulsorily
acquiring land, it would be a rather extreme step to do away with compulsory
acquisitions altogether and I dare say that such demands cannot be anything
more than uninformed or motivated views. How then can the State make
compulsory acquisitions more palatable? First and foremost – Transparency.
Land acquisition under the Land Acquisition Act involves several levels of
governance and several steps at which Government functionaries [most notable
being the Land Acquisition Officer/Deputy Commissioner] play an important
role, the most crucial of which is the role of identifying the land to be acquired. It
is at this stage that allegations of bias and lack of fair play abound. A large
number of challenges to acquisitions in the Court would undoubtedly claim bias
by the land acquisition officers who often leave out certain lands and acquire
certain others without any logical reasoning or basis. Although extremely hard to
establish, such claims are often made and cannot be wished away. The
Government must formulate a more transparent method of identifying lands for
acquisition and this would undoubtedly reduce the feeling of deprivation that a
land loser must undoubtedly feel.

A second and most critical step to make the loss of land through compulsory
acquisitions more palatable relates directly to the monetary compensation
offered to the land loser. Compensation is determined under the Land
Acquisition Act by the Land Acquisition Officer by taking several aspects into
consideration. Any person dissatisfied with this compensation appeals against
the quantum of compensation before the ‘Reference Court’. Once the Reference
Court comes to its conclusion, the issue can be agitated before the High Court
and then before the Supreme Court. What appears to be increasingly ignored in
this entire gamut of judicial appeals, is that the land loser [often poor farmers]
look and hope for adequate compensation at the first instance itself – i.e. at the
level of the Land Acquisition Officer. Without the support of any empirical
evidence, I dare say that this rarely happens. The Reference Court rather
frequently enhances the compensation granted to such to the land losers if they
have the financial and emotional strength to take the battle to the court and fight
for higher compensation over several years. Unfortunately, not everyone has such
strength or inclination2.

Is it then hard to understand the dissension of those persons whose lands have
firstly been taken away much against their wishes; who then have been made
from pillar to post trying to establish the value of their land; and who then have
been undone by the very Government elected to protect their interests, by having
been handed out compensations which are far below the market value of the
property itself. Efforts must be made by the Government to ensure that persons
whose lands are acquired are adequately compensated quickly, sufficiently and
efficiently.

A third aspect which was heavily debated and written about during the recent
crisis at Singur is the acquisition of lands that are extremely fertile and are
capable of producing rich harvests. So much has already been written and said
about this that I hardly need say any more….except to say that to the extent
possibly, unarable or less used lands must be targeted for acquisition.

It can hardly be gainsaid that the land acquisition processes in India need reform.
Violent protests and politicization of anti acquisition protests, while most
undesirable, are only likely to increase unless the Government acts fast and in a
manner as to inspire confidence amongst the public. Undoubtedly, some recent
decisions indicate that the Government has woken up to the issue and is

2
A manner of determining compensation is by looking at the value of similar lands which are situated in
close proximity. The critical deficiency in this is that in order to avoid higher stamp duties being paid to
the Government, most private owners and purchasers follow the illegal but extremely common practice of
limiting the written value of the property [as shown in the registered documents], to such value for which
the minimum stamp duty must compulsorily be paid [often called the Sub-Registrar Valuation]. The
Government must clamp down on this practice and a means of doing this could be to rationalize the Sub-
registrar Valuation, thereby reducing the incentive in under valuing the land.
determined to act – the decision of the Empowered Group of Ministers [EGoM]
on Special Economic Zones3, the introduction of the Land Acquisition
[Amendment] Bill, 2007 and the introduction of the Rehabilitation and Re-
Settlement Bill, 2007, being cases in point. This determination must be followed
through to avoid unsavoury incidents of the sort witnessed in the last few years.

3
At its meeting held on the 6 th of April, 2008, the EGoM framed guidelines as per which approvals for
pending SEZ Applications would not be given if the State Government was compulsorily acquiring lands
for such acquisition. The compulsory acquisition of lands for SEZs is a critical issue since under the
Special Economic Zones Act, approval for an SEZ can be given only on the applicant having a minimum
amount of land. Private players would normally find it difficult to acquire such huge tracts of land
privately, unless the Government compulsorily acquires it for them. The EGoM at its meeting referred to
above also limited the maximum size of SEZs to 5000 Hectares.