DAMODARAM SANJIVAYYA NATIONAL LAW UNIVERSITY

VISAKHAPATNAM, A.P., INDIA

PROJECT TITLE

INDIA’S CONTROVERSIAL LAND ACQUISITION LAWS

LAND LAWS

NAME OF FACULTY : ARVINDNATH TRIPATI SIR

NAME OF STUDENT : M.LALITH KUMAR

ROLL NO. : 2016059

SEMESTER : IX
ACKNOWLEDGEMENT:

I honestly put forward my heartfelt thankfulness to our respected LAND laws lecturer
ARVINDNATH TRIPATI SIR for giving me a golden opportunity to take up this project
regarding India’s Controversial Land Acquisition Laws concerns raised by insolvency plans. I
have tried my best to collect information about the project in various possible ways to depict
clear picture about the given project topic.

Introduction
 Eminent domain law is the essential power of the State to take hold of citizen’s private
property, take away it, or the seizure of a citizen's rights in property with due monetary
compensation, but without the property owner's consent. It is considered to be one of the
most controversial and politically superficial instruments of exercising State power which is
used in several parts of the world. However, implementing the eminent domain law is not
easy task and it is very tough to deal with ground level issues. The execution of eminent
domain (or, compulsory acquisition of land) by the State often results in various social,
cultural, economic and psychological pains for the affected communities i.e. land and
property owners. Such acquisition and the consequent displacement not only leads to loss of
economic assets, habitat and livelihood but also disrupts the communities, social
relationships, cultural identities, local markets for goods as well as labour, consequently
placing the ousted in a “spiral of impoverishment. In view of such painful consequences, a
legal rule representing eminent domain needs to restrict its application only to the cases of
‘compelling public interest’ and further minimise (or, compensate suitably for) the socio-
economic costs of land acquisition and consequent displacement of property owners.
Moreover, it is also necessary that such rule also include provision for a fair reconstruction of
standards of living, community relations and production systems enjoyed by the affected
persons prior to land acquisition so that the community moves on an ascent path (rather than
a descent path.

Depending on how the eminent power is used, it can clear the way for rapid economic
growth, technological progress and infrastructure development; otherwise, it can infringe
upon property rights, the economic interests of poor and vulnerable groups, and fundamental
principles of justice (Gupta 2014). In India, the legal foundation for eminent domain was
established by colonial era law - the Land Acquisition Act 1894, which continued to prevail
and served the purpose until 2000s. The Land Acquisition Act, 1894 allowed government to
acquire private land for public purposes after paying a government-fixed compensation to
cover the losses incurred by landowners from surrendering their land to concerned public
agency. This act was criticized for its tough nature i.e., the State was authorized to acquire the
land even without the willingness of land owners to part with it. Yet it survived over a very
long time due the simple process and also due to undeveloped land markets in an agrarian
dominant economy.

In the last few years, the Government of India has understood the need for bringing up new
acts rather than making small changes so that land acquisition can be achieved while
protecting some of the rights of its own citizens. In the process, the Land Acquisition Act has
been modified and brought out in the form of a new legislation Land Acquisition,
Rehabilitation and Resettlement (LAR&R) Bill, 2013; it has been further been subject to
some more changes and to be brought out as Land Acquisition, Rehabilitation and
Resettlement (LAR&R) Ordinance, 2015. The implications of the changes in land acquisition
act are not fully understood by various stakeholders both legally and operationally. Therefore,
this case paper attempts to bring out the major legislative changes in the form of a
comparative analysis of the provisions of these acts in the next section. The implications of
the changes in the provisions are then brought out in the form of select cases, each of which
brings out these changes in a comparative manner. Finally, the case paper concludes with the
implications of the Land acquisition act changes with reference to the case projects and also
spells out the major learnings.

Eminent Domain Acts in India: A Comparison

On March 10, 2015, the controversial amendments to the land acquisition law were finally
passed by the Lok Sabha1 after facing severe criticism both from the opposition parties as
well as from the government's own allies. Once the amendment bill - Right to Fair
Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement
(Amendment) Bill, 2015 ("2015 Law") - becomes an act2, it will become easier for the
government to acquire private land for public purposes and companies. India has had an
archaic land acquisition law – the Land Acquisition Act, 1894 ("1894 Act") which was
replaced in 2013 by The Right to Fair Compensation and Transparency in Land Acquisition,
Rehabilitation and Resettlement Act, 2013 ("2013 Act"). The 2013 Act was criticized as
being anti-industry – it was too rigorous which made land acquisition process difficult and
long-winding, thereby reducing the availability of land for industry.

The scope of this newsletter is comparing the old land acquisition law (1894 Act) with the
new (2013 Act) by highlighting their key features and also to look at the changes being
brought about now by the 2015 Law.

Land Acquisition Act, 1894

Land Acquisition Act 1894 (LAA 1894) is a well drafted and well served piece of legislation
that served land acquisition purpose for more than a century. In general land acquisition is
composed of three macro-processes:
 First, affected parties and their land ownership are to be identified.

 Second, fair processes by which stakeholders are notified of the acquisition and are given a
chance to voice their views followed by the declaration.

 Finally, an acceptable compensation package to be arrived upon and distributed.

On the face of it, the LAA 1894 seems to take all these three issues into consideration. The
Act contains a definition of “persons interested” in the project which is intended to be used to
determine groups affected by the acquisition of the land, essentially the owners of property
i.e., farm or non-farm land. A detailed land acquisition process consists of public authorities
required to notify land owners prior to acquiring the land and giving the affected stakeholders
with an opportunity to contest both the acquisition of land (on the grounds, for instance, that a
particular parcel of land is not wholly or in part needed for the project, that due process was
not followed, or the purpose of acquisition is not for public good), and determining the
amount of compensation that is to be paid to them. Here again, LAA 1894 defines several
ways by which compensation can be awarded-including a consideration of the market value
of land, assets present on the land, income derived from the land and a solatium for
compulsory acquisition, which is based on the commonwealth experience.

However, there are several shortcomings in the practical implementation of the Act:

First, there is no clear basis as to how affected parties can be determined and the existing
definition is imprecise. Very often, only the minimum subsets of landowners who are
affected are identified. Encroachers, sharecroppers, landless labourers and so on, who have an
interest in the land, are not compensated. Several people practising agriculture are not legally
registered and are thus not eligible for compensation, leading to widespread unrest.

Second, the process of acquisition is very time-consuming and can take up to three years even
if implemented without undue resistance. Further, although the broad steps of the land
acquisition process are outlined in the Act, an enormous amount of discretion is vested upon
the district collector and deputy collector (or tehsildar), who effectively adjudicate on several
objections related to the acquisition as well as on the compensation to be provided. This often
leads to decisions and awards that are ad hoc and are not readily accepted by the local
community.
Finally, no clear formula is given as to how compensation must be calculated. Government
officials often consider the least value derived from all possible compensation approaches
and as a result the final compensation arrived at is often an order of magnitude lower than
that expected by landowners. The real value of this compensation is further reduced due to
the time lag between determining the compensation and awarding it to project-affected
parties. Project-affected stakeholders then need to seek recourse to the judiciary. The
unfairness of the compensation amount has been demonstrated in several cases, where, the
courts have ruled that the government pay compensation more than three times the original
amount, to affected parties. Nevertheless, the process of obtaining such an award is extremely
lengthy and in the interim, affected groups are effectively uncompensated and landless.

Land Acquisition, Rehabilitation and Resettlement Act, 2013

The RFCT LAR&R 2013 had introduced some significant changes to India’s land acquisition
law. The primary among them is the vastly increased compensation for the land owners, who
were also recognised as urban and rural land owners. The law therefore distinguished the
operation of differential forces of land markets operating in urban and rural setting while
determining land value. Therefore, the cash award required was raised to be at least four
times the estimated local market value of land in rural areas, and at least twice in urban areas.
The act also mandates that all affected parties be paid a Rehabilitation and Resettlement
(R&R) package in addition to the cash compensation for lost assets so that the displacement
costs are met by projects. The scope of ‘Affected parties’ was also expanded to the persons
and families whose primary source of livelihood was the land that is being taken, which
therefore includes

the intended beneficiaries as tenants of property, sharecroppers and agricultural workers who
were employed on the seized land.

The stipulated R&R package for affected community includes a variety of entitlements,
including transportation and resettlement allowances, a monthly stipend for one year, and a
job for one family member which can be exchanged for a lump sum payment. The
compulsory R&R benefits may add up to the cash value of nearly Rs. 6.5 lakhs for every
affected family, which were ignored so far. There are, in addition, conditional benefits to be
provided to affected families, such as the provision of constructed housing (with different
built space entitlement for rural and urban areas) when there is loss of homestead, some land-
for-land in the case of irrigation and urbanisation projects, and a share of capital gains if the
land is resold undeveloped. Even industries buying land on the open market will have to meet
R & R obligations if the procured area is 100 acres or more (50 acres in urban areas).

The RFCT LAR&R Act 2013 requires that a Social Impact Assessment (SIA) be conducted
to identify the affected families and calculate the social impact when land is acquired. A
committee of independent experts examines the SIA and approves the social impact
assessment of the project, an administrative committee reviews if it serves the public interest
and also if the benefits outweigh the costs, and the disputes are to be referred to a specially
constituted body instead of civil courts. Multi-cropped land is proposed not to be acquired
except under special circumstances, and, even under such, land acquisition must not exceed
5% of the cultivated area in the district.

The RFCT LAR&R Act 2013 required that if land acquired under it remained unutilised for
five years, it would be returned to the original owners or the government land bank. The
Ordinance states that the period after which unutilised land will need to be returned will be
five years, or any period specified at the time of setting up the project, whichever is later. The
RFCT LAR&R Act 2013 also states that the Land Acquisition Act, 1894 would continue to
apply in certain cases where an award was made under the LAA 1894. However, if such as
award was made five years or more before the enactment of the RFCT LAR&R Act 2013,
and the physical possession of

land has not been taken or compensation has not been paid, the LAR&R Act 2013 provisions
would apply.

The Ordinance also states that while calculating this time period, any period during which
the proceedings of acquisition were held up: (i) due to a stay order of a court, or (ii) a period
specified in the award of a Tribunal for taking possession, or (iii) any period where
possession has been taken but the compensation is lying deposited in a court or any account,
will not be counted.

Land Acquisition, Rehabilitation and Resettlement Bill, 2015 The RFCT LAR&R Bill 2015
is still under the process of becoming a law and it seeks to make some amendments to the
earlier act of 2013. It has been passed by the Lok Sabha but yet discussion of its controversies
is going in Rajya Sabha to get passed. It has same lines as that of RFCT LAR&R 2013 Act
but with some major modifications. The modifications are as below.
The RFCT LAR&R Act 2013 exempted 13 laws (such as the National Highways Act, 1956
and the Railways Act, 1989) from its purview. However, the RFCT LAR&R Act 2015
required that the compensation, rehabilitation, and resettlement provisions of these 13 laws be
brought in consonance with the RFCT LAR&R Act 2015, within a year of its enactment,
through a notification. The Ordinance also brings the compensation, rehabilitation, and
resettlement provisions of these 13 laws in consonance with the RFCT LAR&R Act 2013.

The RFCT LAR&R 2015 Ordinance creates five special categories of land use to be exempt
from the provision of public consent: (i) defence, (ii) rural infrastructure, (iii) affordable
housing, (iv) industrial corridors, and (v) infrastructure projects including Public Private
Partnership (PPP) projects where the central government owns the land. The RFCT LAR&R
Act 2013 requires that the consent of 80% of land owners is obtained for private projects and
that the consent of 70% of land owners be obtained for PPP projects. The new Ordinance
exempts all the five categories mentioned above from

this provision of the Act. In addition, the Ordinance permits the government to exempt
projects in these five categories from the following provisions, through a notification:

The RFCT LAR&R Act 2013 excluded the acquisition of land for private hospitals and
private educational institutions from its purview. The new Ordinance removes this restriction.
While the RFCT LAR&R Act 2013 was applicable for the acquisition of land for private
companies, the new Ordinance changes this to acquisition for 'private entities'. A private
entity is defined any entity other than government entity, and could include a proprietorship,
partnership, company, corporation, non-profit organisation, or other entity under any other
law. It therefore expanded the scope of ‘purpose’ from strictly ‘public agency’ to lenient
‘public-like private body’. The compulsion of the current government to make such change
lies in its drive to propel economic growth through large scale industrial and urban
development. However, taking such legal short-cuts may only harm the citizenry and may
become detrimental in the long term.

Comparative Analysis of Land acquisition Provisions: A Study of Three Cases In this section,
a comparative analysis of land acquisition and R&R under the three legislations is carried out
with the help of three cases:

 The first being Tata Nano Project in Singur;

 Second being Koyambedu Market, Chennai. While first case is examples of failures of land
acquisition and the second case is an example of success. These cases can also help us to
understand further reforms in Land Acquisition Acts. We introduce these three projects first
and later we compare Land Acquisition Acts considering these projects.

Case 1: Tata Motors (Nano) Project, Singur

In 2006, the government of West Bengal acquired 997 acres of prime agricultural land in

Singur to enable Tata Motors to build a manufacturing factory for a type of car. The State
used its powers under the 1894 Act to acquire land and pay compensation to the affected
parties. The local community was dissatisfied by this action as no consent was obtained from
the people and hence, they resisted the State action. This soon turned into a protest movement
involving the opposition party, Trinamool Congress.

As a result of this, the State government offered to improve the compensation rate by
increasing it by 25 per cent. This compensation was only payable to the people who owned
land and not inclusive of agricultural workers who claiming to have lost employment on the
government acquired lands. The matter received national and international media attention
with widespread violence breaking out locally. Eventually, due to the widespread protests and
non-acquisition, after two years, Tata Motors withdrew their plan to set up manufacturing in
West Bengal and moved to Gujarat.

A survey conducted of villages in the Singur area revealed that a significant portion of the
farmers were severely under-compensated, and their plots were also misclassified in the land
record of the State. The workers faced several hardships in gaining employment and unequal
pay in cases where they were able to find jobs in comparison to those workers who remained
unaffected by the acquisition. Therefore, the land acquisition in Singur resulted in economic
hardships on a large number of people including tenants, workers and owners.

Tenants and owners were under-compensated, and workers were not compensated at all. This
case highlights the difficulties faced at the ground level that need to be managed
appropriately to best serve the purpose of land acquisition law, i.e. successful land acquisition
and success of the project in question.

Why the project failed:

As analysed previously, the 2013 Act was introduced to fill the void created by the archaic
legislation of 1894. The old Act failed to take into account various reasons which can be
attributed to the failure of the Tata Motors project. These are:

 No consent from the people while acquiring their land;

 The 1895 Act failed to take into consideration the SIA and affected people later rose
up in protest against unfair treatment along with political support;
 In terms of the compensation, the market prices were determined by land records of
the sold lands. But, the issue was that these were deliberately misclassified to save
Stamp Duty. This ultimately led to farmers being under-compensated, adding to the
frustration;
 The 1894 Act had no provision of R&R and hence, the affected families were left
without jobs, shelter and livelihood; and
 Many of the acquired lands were multi-crops. This led to a food security issues as
production was severely reduced.

Case 2: Koyambedu Market, Chennai

The Chennai Development Authority established the Koyambedu Wholesale Market

Complex with an aim to reduce the congestion in the central business district. The Market is
situated outside the congested areas of Chennai however, remains accessible to the residents
of the city. The Market is connected by highways to the bus terminal and it also connects two
important railway station and the Chennai International Airport. The total area allotted to the
market is 295 acres and this area is further divided into blocks. These blocks include fruits,
vegetables, flower markets and it is estimated that approximately 1 lakh people visit the
Market each day.

In the process of acquiring land, the Chennai Development Authority went beyond the 1894
Act. They paid cash compensation to the landowners on the market value of the land,
standing crops (if any) and paid an interest rate of 12 per cent from the period between
notification and acquisition. Further, a proper R&R process was carried out and the affected
families were effectively relocated. The success of this project can be attributed to: The
calculation mechanism used while giving out compensation; Calculation of the market value
by focusing on recent sale deeds; and
Inclusion of the R&R mechanism even though it was not mentioned in the 1894 Act and thus,
increasing the cost of acquisition while reducing the hurdles during the acquisition stage.
Conclusion
The cases above highlight two instances of an unsuccessful acquisition versus a successful
one.
The Tata Motors project clearly shows where it went wrong and how important it is to
consider the rights and interests of the affected parties for a smooth acquisition. A lot has
been learnt from this case which is reflected in the way the 2013 Act is formulated. Had the
Company relied on the newer Acts in managing its project and acquisitions, the outcome
would have been different to what it was. This project would have contributed significantly to
the economy of the State of West Bengal and created numerous job opportunities as well.

The Koyambedu case is one which leaves behind many lessons. It also shows how various
land laws have seen evolution and the highlights the higher probability of project success if
the Acts of 2013 and 2015 are relied upon. Even though this case did not rely upon the 2013
and 2015 laws, the role played by the authorities to ensure smooth mechanisms is noteworthy
which ultimately led to a successful acquisition.

The important conclusion about the Land Acquisition Acts in India and how they have
transformed over the years to include the interests of the landowners, increase in
compensation for the acquired land and mandatory R&R which was based on various
learning curves right from the enactment of the 1894 Act. The evolution of these Acts from
1894 to 2013 and 2015 can be seen to include large scale development projects. It is
understood that land acquisition can become a hinderance and an impediment if at all not
handled properly and therefore, these need to maintain a correct balance between all
interested parties while keeping in mind the purpose of their enactment.