Land acquisition and inclusive development

Though the 2013 Act aims at achieving a delicate balance between the interests of the various stakeholders, the new concepts introduced have raised new concerns and a question still remains as to how several of these laudatory measures will be implemented.

Introduction and brief legislative history

The Land Acquisition Act, 1894 (1894 Act) was always a matter of controversy. One of the biggest lacunae in the 1894 Act was the protection of the interests of the affected persons. 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. Separate bills for R&R and amendments to the 1894 Act were introduced in Parliament but lapsed before they were passed.

In 2011, the Supreme Court observed that “the provision contained in Act1 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their land although by such compulsory acquisition, their livelihood gets affected To say the least, the Act has become outdated and needs to be replaced at the earliest by fair, reasonable and rational enactment in tune with the constitutional provisions.”

The single bill was passed by both houses of 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 they were addressed in the 2013 Act

• Compensation levels. 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 per cent as compared to 30 per cent under the earlier Act. Further, under the 2013 Act, an additional 75 per cent 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.
• 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. Other provisions also treated the acquisition of land for public purposes and for companies at par. Now, the Government can acquire land for companies only if the acquisition is for a public purpose. Further, the consent of 80 per cent 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 per cent 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 approval2. Further, (i) an additional compensation of 75 per cent of the market value is payable, and (ii) 80 per cent 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 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 acquired within a period of 5 years, failing which the same is required to be returned to the original owner(s) or their legal heirs or a Land Bank.
• 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 projects5. 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.
• 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.
• Application to private companies. 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.

This article 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. The information provided in the article is intended for informational purposes only and does not constitute legal opinion or advice.