Photo: For representational purpose
“Property and law are born together and die together. Before laws were made there was no property; take away law, and property ceases.”
- Bentham
For the Indian economy to retain its momentum, it is necessary to have infrastructure in place in terms of fundamental facilities and systems to serve the country. For this, state backing is required, which includes expropriation.
According to Black’sLaw Dictionary, the word ‘expropriation’ denotes a voluntary surrender of rights or claims; the act of divesting oneself of that which was previously claimed as one's own or renouncing it. The more commonly used definition is that it is the action by the state or an authority of taking property from its owner for public use or benefit.
The action of the state is based on the doctrine of eminent domain, which means the power of the state to acquire land if public purpose is involved. The doctrine of eminent domain is based on two Latin maxims: Salus populi suprema lex (welfare of people is the paramount law) and Necessitas publica major estquam (public necessity is greater than private necessity). Based on the above principles, there have been several laws enacted by the Indian legislature to expropriate in the infrastructure sector. However, most expropriation laws have been marred by disputes.
INDIAN LEGISLATION ON EXPROPRIATION IN INFRASTRUCTURE
After Independence, the Supreme Court faced the issue of expropriation and the power of the state to take steps. In this judgement, the apex court dealt with the legal capacity of the state to acquire the private property of individuals for public purposes. It was held that though this power is recognised, constitutional provisions define safeguards, subject to which this power may be exercised.
In this case, the validity of the Bombay Town Planning Act 1958 was challenged on the ground of inadequacy of compensation when land was acquired for town planning. It was held that the principle of compensation based on “estimated at its market value at the date of the declaration of intention to make a scheme” is correct.
In this case, the Supreme Court, with a Special Bench of 11 judges, delivered a landmark judgement by a majority of 10 to one. Here, on nationalisation of banks, the validity of the Banking Companies (Acquisition and Transfer of Undertakings) Act 1969 was challenged on the ground of compensation to the banks, which was to be paid in the form of bonds, securities, etc, and the principles for the same. The Court held, “The Constitution guarantees a right to compensation—an equivalent in money of the property compulsorily acquired. That is the basic guarantee. The law must, therefore, provide compensation and for determining compensation relevant principles must be specified; if the principles are not relevant, the ultimate value determined is not compensation.”
Though the aforementioned judgements laid down some principles on expropriation and compensation, this was not sufficient. Despite several amendments, in a century, there was no unified national law that addressed the issue of fair compensation and rehabilitation of landowners directly affected by acquisition of private land for the larger public interest. The Government felt the need to bring a law that is comprehensive and provides necessarily for rehabilitation and resettlement when it proceeds to acquire land for public purposes.
Further, to provide for speedy disposal of disputes relating to land acquisition and compensation arising out of the previous amendments, the Land Acquisition Rehabilitation and Resettlement Bill (LARR) was introduced in 2011. It also proposed compensation to affected parties, including landowners in rural and urban areas, traders and artisans, and others. 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 January 1, 2014. The distinguishing features of this Act included consent of the landowners (no consent was required for government projects) and a social impact assessment, which was not considered in any other statute wherein provisions were made for acquisition.
In December 2014, another Land Acquisition Amendment Ordinance was introduced to facilitate infrastructural development. The said Ordinance exempted certain categories from giving consent for acquisition in the provisions of the Act which included national security and defence, rural development, industrial corridors and public-private partnerships (PPPs). The said Ordinance could not become an enactment. In view of this, the Government introduced the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement (Second Amendment) Bill 2015 (‘Bill’). Owing to opposition from various stakeholders and despite the Ordinance being re-promulgated, the amendment Bill could not be passed. Later, the Central Government allowed the state governments to make their own amendments as land comes under the concurrent list in the constitution. Some of the states have also made some changes that are under challenge before the Supreme Court.
Some developed countries have used expropriation to exploit land rents as a source of financing urban infrastructure. Substantial increase in the property value in urban areas has made this option attractive. Before these practices/methods can be made popular in other parts of the country, it would be useful to examine the various facets of these methods and the issues discussed above.
About the Authors:
Ashish Pyasi, Associate Partner, Dhir & Dhir Associates, is a leading lawyer with vast experience in dispute resolution, insolvency and bankruptcy laws; Soumya Dubey is an Associate in the corporate litigation team of the firm.