The Law of the Land!

01 Feb 2015 Editorial Team

ARADHANA BHANSALI and RUCHIT PARIKH discuss the metamorphosis of law relating to acquisition of land in India.

The Land Acquisition Act, 1894 (´Act of 1894´) was enacted by the British during their regime in India. The Act of 1894, over the past hundred years, revealed five major problems that led to widespread public discontent. First, the Act of 1894 only recognised the rights and interests of landowners and, as such, failed to take into account the interests of those who, though were not owners of the land, were nevertheless dependent on it for their livelihood. Second, the Act of 1894 contained only an inclusive definition of ´public purpose´ and courts consistently deferred to legislative determination of what constituted a public purpose. The third problem derived from the legal requirement that those deprived of their land and livelihood must be paid a fair value of the land as compensation. Fourth, the procedure involved in acquiring the land was criticised by the government for delays in acquisition and by the people for the lack of their participation in the government´s decision to acquire their land and for the delay involved in the determination and payment of compensation. The fifth problem arose on account of wide variation in various state laws in the provisions for acquisition, including the definition of public purpose, the relevant date for determination of the market value of the land, the principles for determining compensation, and the appointment of tribunals to determine the compensation and adjudicate disputes.

The massive displacement and dispossession of poor peasants and traditional communities including extensive environmental damage led to land conflicts in several states. On account of such conflicts, there were several moves for comprehensive amendment of the Act of 1894 since 2007, followed by attempts in 2011 to repeal and replace the Act of 1894, which finally paved way to the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 (´Land Acquisition Act´).

Land Acquisition Act
The Land Acquisition Act that came into force on and from January 1, 2014, inter alia, aims at bringing transparency to the entire process of acquisition, providing better and fair compensation and rehabilitation and resettlement facilities to landowners. Some key highlights of the Act are:

Section 2(1) of the Land Acquisition Act lays down a comprehensive definition of the term ´Public Purpose´ in order to limit the grounds for acquisition of land by the government. The need to provide a comprehensive definition arose on account of misuse of the term for acquisition of several parcels of land under the Act of 1894.
Section 2(2) of the Land Acquisition Act requires the prior consent of at least 80 per cent of the affected families to be obtained where the land is acquired for private companies for public purpose and prior consent of at least 70 per cent of the affected families where the land is acquired for public-private partnership projects (PPPs) for public purpose.
Under the Land Acquisition Act, where land is intended to be acquired for a public purpose, a social impact assessment study in consultation with the concerned panchayat, municipality or municipal corporation is required to be carried out not only to understand the impact of the acquisition but to understand or assess the viability of the subject land for a particular project.
The Land Acquisition Act provides for rehabilitation and resettlement facilities to be provided to the affected families within the time limit prescribed under the Rehabilitation and Resettlement Scheme to be formulated under the provisions of the Land Acquisition Act.
It also provides for a higher amount of compensation to be paid to the affected families and takes into account the value of the assets attached to the land being acquired, for the purpose of determining the compensation payable. It further provides for a ´Solatium´ amount equivalent to 100 per cent of the compensation amount arrived at in terms of the provisions of the Land Acquisition Act to be paid to the affected families over and above such compensation amount.
The Land Acquisition Act provides for the establishment of the Land Acquisition, Rehabilitation and Resettlement Authority to which a reference can be made against the award passed by the Collector.
It also provides for establishment of a national and a state monitoring committee for the purpose of monitoring the implementation of the rehabilitation and resettlement schemes under the Land Acquisition Act.
Where the land acquired under the Land Acquisition Act remains unutilised for the period specified for setting up of any project or for five years from the date of taking over possession of the land, whichever is later, a provision is made to return such land to the original owner.
An option to the appropriate government is provided to take lands on lease instead of acquiring the same.

Issues in the Act
Some issues that may arise on account of the Land Acquisition Act are: òThe scope of the term ´affected family´ as defined under the Land Acquisition Act is wide, which may, in future, lead to complexities and confusion in procuring the consent of all such affected families as required under the Land Acquisition Act.

Projects involving acquisition of land for private and PPPs require the consent of 80 per cent and 70 per cent respectively of the affected families. However, no provision is made in the Land Acquisition Act for obtaining such consent in case of acquisition by public-sector undertakings.
One of the criteria for determining the market value of the land for the purpose of computation of the compensation payable is on the basis of recent reported transactions. This may not provide an accurate picture of the market value on account of underreporting of prices in land transactions.

The Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement (Amendment) Ordinance, 2014 The Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement (Amendment) Ordinance, 2014 (´Ordinance´) was promulgated by the President of India on December 31, 2014, in order to amend the Land Acquisition Act on the basis of the issues faced in implementing the same in its inaugural year.

The Ordinance, inter alia, provides for the following amendments:

The mandatory ´consent´ clause and the social impact assessment may, by the appropriate government, not be made applicable where the land is acquired for any of the following five purposes:

1.National security and defence.
2.Rural infrastructure including electrification.
3.Industrial corridors.
4.Affordable housing and housing for the poor.
5.Infrastructure and social infrastructure projects including PPPs in which the ownership of land continues to vest with the government.

The compensation as well as rehabilitation and resettlement packages in the aforesaid circumstances shall, however, be applicable as provided under the Land Acquisition Act.
Multi-crop irrigated land (which was earlier prohibited from being acquired except under certain conditions) can also be acquired for any of the aforesaid five purposes.
Thirteen Acts, such as The Railways Act, 1989; The Electricity Act, 2003; The National Highways Act, 1956; The Metro Railways (Construction of Works) Act, 1978, etc, are brought within the purview of the Land Acquisition Act with regard to only the compensation and rehabilitation and resettlement provisions of the Land Acquisition Act.
In computing the period referred to in Section 24 of the Land Acquisition Act with regard to lapsing of the acquisition proceedings under the Act of 1894, the period during which the proceedings were held up on account of any stay or injunction issued by any court or the period specified in the award of a Tribunal for taking possession or such period where possession has been taken but the compensation lying deposited in a court or in any account maintained for that purpose, shall be excluded.

In conclusion
The Land Acquisition Act together with the Ordinance are enacted to make developmental and security- related projects much faster without compromising on the benefits or compensation to be paid to the affected families. However, on the one hand, while doing away with the requirement of a social impact assessment and consent of the affected families with respect to certain categories of projects may lead to issues similar to those faced under the Act of 1894, on the other hand, it is imperative that at least certain categories of projects such as defence projects are permitted to be exempt from such requirements to prevent inordinate delays. The question whether the Land Acquisition Act will actually achieve the purpose for which it is enacted is something that can only be answered with the passage of time.

About the Authors:
Aradhana Bhansali, Partner, Rajani, Singhania & Partners, handles the real-estate and trust-related practice of the firm.

Ruchit Parikh is an Associate at Rajani, Singhania & Partners.

ARADHANA BHANSALI and RUCHIT PARIKH discuss the metamorphosis of law relating to acquisition of land in India. The Land Acquisition Act, 1894 (´Act of 1894´) was enacted by the British during their regime in India. The Act of 1894, over the past hundred years, revealed five major problems that led to widespread public discontent. First, the Act of 1894 only recognised the rights and interests of landowners and, as such, failed to take into account the interests of those who, though were not owners of the land, were nevertheless dependent on it for their livelihood. Second, the Act of 1894 contained only an inclusive definition of ´public purpose´ and courts consistently deferred to legislative determination of what constituted a public purpose. The third problem derived from the legal requirement that those deprived of their land and livelihood must be paid a fair value of the land as compensation. Fourth, the procedure involved in acquiring the land was criticised by the government for delays in acquisition and by the people for the lack of their participation in the government´s decision to acquire their land and for the delay involved in the determination and payment of compensation. The fifth problem arose on account of wide variation in various state laws in the provisions for acquisition, including the definition of public purpose, the relevant date for determination of the market value of the land, the principles for determining compensation, and the appointment of tribunals to determine the compensation and adjudicate disputes. The massive displacement and dispossession of poor peasants and traditional communities including extensive environmental damage led to land conflicts in several states. On account of such conflicts, there were several moves for comprehensive amendment of the Act of 1894 since 2007, followed by attempts in 2011 to repeal and replace the Act of 1894, which finally paved way to the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 (´Land Acquisition Act´). Land Acquisition Act The Land Acquisition Act that came into force on and from January 1, 2014, inter alia, aims at bringing transparency to the entire process of acquisition, providing better and fair compensation and rehabilitation and resettlement facilities to landowners. Some key highlights of the Act are: Section 2(1) of the Land Acquisition Act lays down a comprehensive definition of the term ´Public Purpose´ in order to limit the grounds for acquisition of land by the government. The need to provide a comprehensive definition arose on account of misuse of the term for acquisition of several parcels of land under the Act of 1894. Section 2(2) of the Land Acquisition Act requires the prior consent of at least 80 per cent of the affected families to be obtained where the land is acquired for private companies for public purpose and prior consent of at least 70 per cent of the affected families where the land is acquired for public-private partnership projects (PPPs) for public purpose. Under the Land Acquisition Act, where land is intended to be acquired for a public purpose, a social impact assessment study in consultation with the concerned panchayat, municipality or municipal corporation is required to be carried out not only to understand the impact of the acquisition but to understand or assess the viability of the subject land for a particular project. The Land Acquisition Act provides for rehabilitation and resettlement facilities to be provided to the affected families within the time limit prescribed under the Rehabilitation and Resettlement Scheme to be formulated under the provisions of the Land Acquisition Act. It also provides for a higher amount of compensation to be paid to the affected families and takes into account the value of the assets attached to the land being acquired, for the purpose of determining the compensation payable. It further provides for a ´Solatium´ amount equivalent to 100 per cent of the compensation amount arrived at in terms of the provisions of the Land Acquisition Act to be paid to the affected families over and above such compensation amount. The Land Acquisition Act provides for the establishment of the Land Acquisition, Rehabilitation and Resettlement Authority to which a reference can be made against the award passed by the Collector. It also provides for establishment of a national and a state monitoring committee for the purpose of monitoring the implementation of the rehabilitation and resettlement schemes under the Land Acquisition Act. Where the land acquired under the Land Acquisition Act remains unutilised for the period specified for setting up of any project or for five years from the date of taking over possession of the land, whichever is later, a provision is made to return such land to the original owner. An option to the appropriate government is provided to take lands on lease instead of acquiring the same. Issues in the Act Some issues that may arise on account of the Land Acquisition Act are: òThe scope of the term ´affected family´ as defined under the Land Acquisition Act is wide, which may, in future, lead to complexities and confusion in procuring the consent of all such affected families as required under the Land Acquisition Act. Projects involving acquisition of land for private and PPPs require the consent of 80 per cent and 70 per cent respectively of the affected families. However, no provision is made in the Land Acquisition Act for obtaining such consent in case of acquisition by public-sector undertakings. One of the criteria for determining the market value of the land for the purpose of computation of the compensation payable is on the basis of recent reported transactions. This may not provide an accurate picture of the market value on account of underreporting of prices in land transactions. The Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement (Amendment) Ordinance, 2014 The Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement (Amendment) Ordinance, 2014 (´Ordinance´) was promulgated by the President of India on December 31, 2014, in order to amend the Land Acquisition Act on the basis of the issues faced in implementing the same in its inaugural year. The Ordinance, inter alia, provides for the following amendments:The mandatory ´consent´ clause and the social impact assessment may, by the appropriate government, not be made applicable where the land is acquired for any of the following five purposes: 1.National security and defence. 2.Rural infrastructure including electrification. 3.Industrial corridors. 4.Affordable housing and housing for the poor. 5.Infrastructure and social infrastructure projects including PPPs in which the ownership of land continues to vest with the government. The compensation as well as rehabilitation and resettlement packages in the aforesaid circumstances shall, however, be applicable as provided under the Land Acquisition Act. Multi-crop irrigated land (which was earlier prohibited from being acquired except under certain conditions) can also be acquired for any of the aforesaid five purposes. Thirteen Acts, such as The Railways Act, 1989; The Electricity Act, 2003; The National Highways Act, 1956; The Metro Railways (Construction of Works) Act, 1978, etc, are brought within the purview of the Land Acquisition Act with regard to only the compensation and rehabilitation and resettlement provisions of the Land Acquisition Act. In computing the period referred to in Section 24 of the Land Acquisition Act with regard to lapsing of the acquisition proceedings under the Act of 1894, the period during which the proceedings were held up on account of any stay or injunction issued by any court or the period specified in the award of a Tribunal for taking possession or such period where possession has been taken but the compensation lying deposited in a court or in any account maintained for that purpose, shall be excluded. In conclusion The Land Acquisition Act together with the Ordinance are enacted to make developmental and security- related projects much faster without compromising on the benefits or compensation to be paid to the affected families. However, on the one hand, while doing away with the requirement of a social impact assessment and consent of the affected families with respect to certain categories of projects may lead to issues similar to those faced under the Act of 1894, on the other hand, it is imperative that at least certain categories of projects such as defence projects are permitted to be exempt from such requirements to prevent inordinate delays. The question whether the Land Acquisition Act will actually achieve the purpose for which it is enacted is something that can only be answered with the passage of time. About the Authors: Aradhana Bhansali, Partner, Rajani, Singhania & Partners, handles the real-estate and trust-related practice of the firm. Ruchit Parikh is an Associate at Rajani, Singhania & Partners.