4/6/22, 3:09 PM Legally Speaking: Recent Court Orders On Land Acquisition

Legally Speaking: Recent Court

Orders On Land Acquisition

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When we speak of infrastructure development, land acquisition

and related issues come as a crucial aspect. The complexity of
the matter has led to umpteen disputes taking place, involving
the matter. Let us look at some recent landmark ruling related to
land acquisition. These case studies should give homebuyers and
investors a better understanding of the law in matters of land
acquisition.

1. Are authorities making you run from pillar to post for

your compensation claim?

What the SC say: It is unfortunate that a genuine claim of the

land owner was not satisfied by the state for such a long time.

For infrastructure development purposes, states often acquire

land from the public. In most cases, disputes may arise over the
compensation package. Over that, authorities may take
landowners to the court. However, the Supreme Court (SC) has
taken an adverse view of this approach, especially if the amount
in question is insignificant, and the time taken in the process is
long.

Here is what happened

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4/6/22, 3:09 PM Legally Speaking: Recent Court Orders On Land Acquisition

In a land acquisition case of 1987, the Andhra Pradesh state

government forced the landowner to run from one court to
another for about 20 years over a claim involving an amount of
Rs 50,000. The claimant passed away in the meantime. His
successors failed to appear before the apex court when the state
government approached it for justice. In May 2016, the SC, while
giving its verdict in the Land Acquisition Officer versus Ravi
Santosh case, gave the state a peremptory order to settle all
amounts while criticising it for the “abuse of legal process”.

“In our considered opinion, the state unnecessarily pursued this

petty matter to this court, which does not involve any arguable
point either on facts or in law …nor it involves any point of
public importance, nor does it involve any substantial money
claim. What was involved was only the calculation of payment of
interest. Therefore, it was a sheer abuse of process by the state
which we do not approve (of),” the SC said, adding: “It is
unfortunate that a genuine claim of the land owner was not
satisfied by the state for such a long time.”

2. Are you liable to pay capital gains tax if your land has
been acquired without your assent?

What the SC says: If an owner succumbs to the government only

to avoid litigation, the transaction is not a sale but compulsory
acquisition, and should be exempted from capital gains tax.

There have been cases where landowners did not have a choice
but to handover their property to authorities for project
developments. However, such a landowner is under no obligation
to pay capital gains tax on the compensation he received from
authorities, the SC has ruled.

Here is what happened

In the Balakrishnan versus Union of India case, the state

government acquired about 27 acres of agricultural land in 2006
for extending a Techno Park in south Kerala. Unhappy with the
compensation amount, the landowner tried to contest the matter,
but later agreed to sell the land at the price offered by the state,
solely to avoid litigation.

After the deal was finalised, the state revenue department

demanded capital gains tax on the amount from the landowner,
arguing that the transaction was “sale”, and not compulsory
acquisition exempted under Section 10(37) of the Income-Tax
Act. This view was upheld when the matter reached the high
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4/6/22, 3:09 PM Legally Speaking: Recent Court Orders On Land Acquisition

court. However, the Supreme Court later ruled that the owner
“succumbed to the government” pressure only to avoid litigation.
In light of that, the transaction was not a “sale” but “compulsory
acquisition” and should be exempted from capital gains tax.

3. Your land was acquired under the provisions of the old

state law. Can you challenge the acquisition under the
provisions of the new Central law?

What the SC says: Land acquisition under the state development

Act would not lapse only because it had not followed the
procedure in the Central law.

The apex court has recently ruled that once legal proceedings are
started under a state legislation, the Land Acquisition
Rehabilitation and Resettlement Act that came in force in 2014
will not be applicable.

Here is what happened?

In the Special Land Acquisition Officer vs Anasuya Bai case, the

Supreme Court set aside the ruling of the Karnataka High Court
which had quashed the acquisition of land under the Karnataka
Industrial Areas Development Act on the ground that
compensation was not given within the stipulated period. The
time limit was set by the old Land Acquisition Act in this case.
The issues that whether the old law applies when it has been
replaced in 2014 by the new law called the Right to Fair
Compensation and Transparency in Land Acquisition
Rehabilitation and Resettlement Act was contested.  The SC
ruled that land acquisition under the Karnataka Industrial
Areas Development Act would not lapse only because it had not
followed the procedure in the Central law.

4. Are authorities over-staying their welcome?

What the HC says: If no compensation is paid, the acquisition is

“bad, illegal and without justification”.

In a landmark ruling recently, the Calcutta High Court asked the

West Bengal government and its land acquisition collector to pay
compensation and occupation charges to the aggrieved party,
whose property the state government had been occupying since
1998.

Here is what happened

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4/6/22, 3:09 PM Legally Speaking: Recent Court Orders On Land Acquisition

The state government acquired the premises of Punalur Paper

Mills in the capital's central area in 1973 to set up the office of the
Sugar Industries Development Corporation. The notification in
this regard became invalid in 1998. By another notification in
2000, the premises were acquired while the corporation continued
to hold the property. Punalur Paper Mills, an ailing company,
challenged the acquisition while the government objected to a
sick entity to approach the judicial system.

Observing that no compensation was paid to the ailing company,

the HC said that the acquisition was bad, illegal and without
justification. It directed the government to hand over the
premises to the company within two months.

Also read: Legally Speaking: Recent Court Rulings Homebuyers

Should Know Of

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