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Harmonization of the varying interests through the new land acquisition law

November 5, 2013
Introduction:

As the cities are rapidly growing there is a need to create the required infrastructure for smooth flow of traffic and to provide all the requisite amenities such as electricity, water, education etc. Rapid urbanization and growth has forced government to acquire land for executing the infrastructure projects. Due to inadequacy of proper legal regime for providing compensation and / or alternative place for relocation, such land acquisitions have faced considerable opposition from land owners and farmers, which has resulted in delayin execution of projects.

Similarly purchasing land for factories and other commercial development has long been a major stumbling block for investors / business houses looking to set up or expand operations in India, with scores of multimillion-dollar projects being held up in recent years as land owners oppose land-purchase plans, sometimes resorting to violence.

Striking a harmonious balance between the interest of land owners and industrialization growth is the need of the day. The Land Acquisition Act, 1984 has failed to address the concerns of the land owners and to address this issue, the new Land Acquisition Act named “The right to fair compensation and transparency in land acquisition, rehabilitation and resettlement Act 2013” (“New Land Act”) has been passed by the legislature and has received the ascent of the President of India, Pranab Mukherjee on 27 September 2013.The Act will be notified in 2014. This landmark legislation provides humane, participative, informed and transparent process for land acquisition for industrialisation, development of essential infrastructural facilities and urbanization and a fair compensation for land owners whose property is acquired for setting up of industries or for infrastructure projects. The New Land Act is an attempt to streamline the acquisition process, what has till date been very chaotic. The Act also aims to ensure that the cumulative outcome of compulsory acquisition should be that affected persons become partners in development leading to an improvement in their post-acquisition social and economic status.

Background:

The Government of India believed there was a heightened public concern on land acquisition issues in India. Of particular concern was that despite many amendments, over the years, to India's Land Acquisition Act of 1894, there was an absence of a cohesive national law that addressed fair compensation when private land is acquired for public use, and fair rehabilitation of land owners and those directly affected from loss of livelihoods. The Government of India believed that a combined law was necessary, one that legally requires rehabilitation and resettlement necessarily and simultaneously follow government acquisition of land for public purposes.

Why is there a need for a New Land Act? The Land Acquisition Act 1894 suffers from various shortcomings. Some of these include:
  • Forced acquisitions: Under the 1894 legislation once the acquiring authority has formed the intention to acquire a particular plot of land, it can carry out the acquisition regardless of how the person whose land is sought to be acquired is affected.

  • Silent on resettlement and rehabilitation of those displaced: There are absolutely no provisions in the 1894 law relating to the resettlement and rehabilitation of those displaced by the acquisition.

  • Urgency clause: This is the most criticized section of the Law. The clause never truly defines what constitutes an urgent need and leaves it to the discretion of the acquiring authority. As a result almost all acquisitions under the Act invoke the urgency clause. These results in the complete dispossession of the land without even the token satisfaction of the processes listed under the Act.

  • Low rates of compensation: The rates paid for the land acquired are the prevailing circle rates in the area which are notorious for being outdated and hence not even remotely indicative of the actual rates prevailing in the area.

  • Litigation: Even where acquisition has been carried out the same has been challenged in litigations on the grounds mentioned above. This results in the stalling of legitimate infrastructure projects.

  • Recent observations by the Supreme Court: Justice Ganpat Singhvi of the Supreme Court has observed, in the wake of repeated violations that have come to light over the last few months, that the law has “become a fraud”. He observed that the law seems to have been drafted with “scant regard for the welfare of the common man”.

Another bench of the Supreme Court has echoed this sentiment in its observation that the provisions contained in the Act, of late, 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, particularly, Article 300A of the Constitution.

Salient Feature of the New Land Act:
  1. The Act defines the following as public purpose for land acquisition with in India:
    1. Land for strategic purposes relating to armed forces, national security or defense, police, safety of the people;
    2. Land for infrastructure:
      1. items listed in circular of Government of India, Department of Economic Affairs (Infrastructure Section) number 13/6/2009-INF dated the 27th March, 2012 excluding private hospitals, private educational institutions and private hotels

      2. projects involving agro-processing, supply of inputs to agriculture, warehousing, cold storage facilities, marketing infrastructure for agriculture and allied activities such dairy, fisheries, and meat processing as set up or owned by the appropriate

      3. project for industrial corridors or mining activities, national investment and manufacturing zones as designated in the national manufacturing Policy;

      4. project for water harvesting and water conservation structures, sanitation;
      5. project for Government administered and government aided educational and research schemes or institutions;
      6. project for sports, health care, tourism, transportation, space program
      7. any infrastructure facility as may be notified in this regard by the Central Government and after tabling of such notification in Parliament;
    3. Land for the project affected people
    4. Land for planned development or improvement of village or urban sites or for residential purpose to weaker sections;
    5. Land for persons residing in areas affected by natural calamities or displaced
  2. Combining the provisions of rehabilitation and resettlement with the acquisition of land: Rehabilitation and Resettlement (“R&R”) must always, in each instance, necessarily follow upon acquisition of land

    1. Both Land Acquisition (“LA”) and R&R Provisions will apply when:
      1. Government acquires land for its own use, hold and control
      2. Government acquires land with the ultimate purpose to transfer it for the use of private companies for stated public purpose (including PPP projects but other than state or national highway projects)

      3. Government acquires land for immediate and declared use by private companies for public purpose
    2. Only R&R provisions will apply when: Private companies buy land for a project, more than 100 acres in rural areas, or more than 50 acres in urban areas
    3. Only LA provisions will apply to the area to be acquired but R&R provisions will apply to the entire project area even when: Private company approaches Government for partial acquisition for public purpose

  3. Urgency clause: The Urgency Clause can only be invoked in the following cases:
    1. National defense and security purposes R&R needs in the event of emergencies or
    2. natural calamities
  4. Minimum compensation for land : A Comprehensive Compensation Package (Schedule I)
    1. Market value of the land: the minimum land value, if any, specified in the Indian Stamp Act, 1899 for the registration of sale deeds in the area, where the land is situated; or The average of the sale price for similar type of land situated in the immediate areas adjoining the land being acquired, ascertained from fifty per cent of the sale deeds registered during the preceding three years, where higher price has been paid; or whichever is higher;Provided that the market value so calculated for rural areas shall be multiplied by at least a factor of four.

    2. Where land is acquired for urbanization, 20% of the developed land will be reserved and offered to land owning project affected families, in proportion to their land acquired and at a price equal to cost of acquisition and the cost of development. In case the project affected family wishes to avail of this offer, an equivalent amount will be deducted from the land acquisition compensation package payable to it

    3. The Company for whom land is being acquired may offer shares limited to 25% of the Compensation amount. In case the project affected family wishes to avail of this offer, an equivalent amount will be deducted from the land acquisition compensation package payable to it.

  5. R&R in case of Private Purchase of Land:
    1. Where a private company is purchasing land for a project which is more than 100 acres in rural areas or more than 50 acres in urban areas through private negotiations, the Company shall file an application with the District Collector notifying him of:

      1. Intent to Acquire;
      2. Purpose of Purchase;
      3. Particulars of lands to be purchased
    2. Collector shall refer the matter to the Commissioner R&R for the satisfaction of all relevant provisions under this Act related to R&R Based upon the R&R Scheme approved by the Commissioner R&R, the Collector shall pass individual awards covering R&R entitlements

  6. Retrospective Effect Clause:
    1. Where no award under Section 11 of the 1894 Act has been made, the new law will apply with regard to compensation;
    2. Where an award has been made but the affected individuals have not accepted compensation or have not yet given up possession, and the proceedings have been pending for 5 years or more, provisions of the new law will apply.

    3. Where a majority of individuals in an affected area have not received compensation then the new law will apply
  7. Consent:

    Prior consent is required from 70 per cent of land losers and those working on government assigned lands only in the case of public-private partnership projects and 80 per cent in the case of private companies. This consent also includes consent for the amount of compensation payable.

  8. Share in sale of acquired land increased: The share that has to be distributed amongst farmers in the increased land value (when the acquired land is sold off to another party) has been set at 40%.
  9. Process flow:
    S. No. Particulars Remarks
    Proposal is received by the Appropriate Government Nil
    a. Social Impact Assessment (SIA) Conducted by Appropriate Government SIA to be examined by independent Expert Group
    b. Legitimacy of ‘Public Purpose’ and SIA is examined and approved State Government Collector submits report on status of alternative sites
    c. Publication of Preliminary Notification to acquire Consent of 80% of Affected sought
    d. Public Hearing Affected party can put their grievances and negotiate
    e. Draft Declaration& R&R Scheme published Finalization of R&R Scheme (with in 6 months of Notification)
    f. Awards Non-compliance of awards attract penalties
  Observations& Conclusion:

While the new Act is a much improved version of the Land Acquisition Act, 1984.But some of the key features of the Act still stands with some degree of absurdity, one of the major drawback with regard to this Act is that even after the Rehabilitation and Resettlement scheme has been drafted, again a provision is made for public hearing. Having a Public Hearing does not serve any purpose but makes things more complicated.

Another setback to this Act may probably be the Urgency clause. The provisions under this have not been properly drafted. Generally under this Act only after Rehabilitation and Resettlement of all the affected people is done, no authority can acquire land. But under Urgency clause even before R&R scheme is finalised, the land can be acquired. This may sometimes turn against the affected families as they may never receive the resettlement scheme. Despite of all odds, it may be termed as a progressive Act through which the Legislators tried hard to balance the interest of both the capitalist and the land owners, though a bit tilted towards the former.

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