Land acquisition laws in a nutshell

Shekhar K. Agrawal

How is it that the Government and PSUs can arrange for large tracks of land for public projects concerning Defense, Railways, Airports, Refineries, Dams, Mines, Factories for Steel and Fertilizers, roads, etc., when for citizens and the private sector, buying even small pieces of land requires an enormous effort for title verification and negotiation for fair price? The answer lies in the law relating to compulsory acquisition of land. Under the law, the government is empowered to acquire land compulsorily for public purpose and is obligated to provide only fair compensation to the owners / other right holders.

Land Acquisition Act, 1894

The first law relating to compulsory acquisition, Land Acquisition Act, 1894, was enacted by the British and was in force until 2013. The Act provided for issuance of a preliminary notification, hearing objections and thereafter-final notification for acquisition. A Land Acquisition Collector would determine the compensation according to the market price on the date of preliminary notification. In addition to the compensation, solatium @ 30% and interest was required to be paid. If there was a disagreement regarding the compensation amount, landowners could approach the District Court for a revision in rates.

Over time, the definition of ‘public purposes’ came to be expanded as the government entered into housing, urban development and industrial sectors and acquired land from farmers for developing housing colonies, industrial estates and even private industries. After the economic liberalization, the share of private initiative in various sectors increased exponentially and large-scale acquisition of land was done in rural areas for companies under Part VII of the 1894 Act. Acquired land was handed over to private builders for construction of multi storey residential and commercial complexes, industries etc. However, the compensation decided was extremely low based on recorded prices of transactions in the area. To dispense hearing of objections by aggrieved landowners, the government often misused the urgency clause. Farmers, landowners and social activists started criticizing the law as it did not adequately provide for rehabilitation and settlement, but instead, led to displacement of people living in rural areas under the guise of development.

2013 Act

To address the growing criticism, the government enacted the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013. This new law introduced several critical requirements such as:

1. Social Impact Assessment study:

The 2013 Act requires the government to conduct a social impact assessment study in consultation with the local authority prior to acquisition. The study should include: -

a. an assessment as to whether the proposed acquisition serves public purpose;

b. estimation of affected families and the number of families among them likely to be displaced;

c. extent of lands, public and private, houses, settlements and other common properties likely to be affected by the proposed acquisition;

d. whether the extent of land proposed for acquisition is the absolute bare- minimum extent needed for the project;

e. whether land acquisition at an alternate place has been considered and found not feasible;

f. study of social impacts of the project, and the nature and cost of addressing them and the impact of these costs on the overall costs of the project vis-a-vis the benefits of the project:

The government must also prepare a Social Impact Management Plan listing the ameliorative measures required to be undertaken for addressing the impact of the acquisition. The Assessment Study and management plan is to be made available to the local authority and the District Collector. Further, it must be ensured that there is no unutilized land which has been previously acquired in the area and it is only the minimum area that is acquired. An independent multi-disciplinary Expert Group must be constituted to evaluate the Report within 2 months to determine whether the project serves public purpose and if the potential benefit outweighs social impact. The final decision rests with the government whether to acquire the land or not, after reviewing the study, plan and the Expert Group’s evaluation. It can also exempt itself from conducting the study if the land is acquired by invoking the urgency provisions.

2. Food Security

Although the law discourages the acquisition of irrigated multi-cropped land, it may be acquired under exceptional circumstances, as a demonstrable last resort. If the land is acquired, an equivalent area of culturable wasteland shall be developed for agricultural purposes or an amount equivalent to the value of the land acquired shall be deposited with the Government for investment in agriculture for enhancing food-security. The Government must ensure that it does not exceed the notified limits for acquiring such land. The limits for all projects in a district or State are fixed considering the relevant State specific factors and circumstances.

Projects that are linear in nature, such as those relating to railways, highways, major district roads, irrigation canals, power lines, etc., are exempted from this provision.

3. Preliminary notification

After the Social Impact Assessment study has been appraised by the Expert Group and a report has been published, the government can issue a preliminary notification within 12 months of the appraisal. Prior to the acquisition of any land for a public purpose, the government must publish a preliminary notification in the official gazette and 2 newspapers (including 1 in the local language), upload it on the website of the appropriate Government and ensure that a copy is sent or displayed at the local authority and District Collector’s office. The notification must mention the nature of the public purpose involved, reasons necessitating the displacement of affected persons, summary of the Social Impact Assessment Report and particulars of the Administrator appointed for the purposes of rehabilitation and resettlement. After this notification:

a. the Government shall be entitled to enter upon, measure, dig or bore and test soil, and carry out the survey to determine if the land is suitable and the extent of land required; and

b. Any transactions done in respect of such land by the previous owners/right holders would be disregarded.

4. Hearing of objections:

Any person any person interested in any part of land for which preliminary notification has been issued object to the area, justifications offered for ‘public purpose’ or the findings of the Social Impact Assessment report. The District Collector can hear such objections and submit a final report to be considered by the government, which then will take the final decision relating to the acquisition.

5. Preparation of Rehabilitation and Resettlement Scheme by the Administrator –

After the publication of the preliminary notification, the Administrator for Rehabilitation and Resettlement shall conduct a survey and prepare a draft Rehabilitation and Resettlement Scheme. The draft scheme, to be made known locally by wide publicity, shall include particulars of the rehabilitation and resettlement entitlements of each land owner and the people whose livelihoods are primarily dependent on the lands being acquired. Further, a public hearing shall be conducted, in the affected area. Subsequently, the Administrator shall submit the draft Scheme for Rehabilitation and Resettlement along with a specific report on the claims and objections raised in the public hearing to the District Collector. After reviewing the draft scheme, the Collector shall submit it (along with any suggestions) to the Commissioner Rehabilitation and Resettlement for approval of the Scheme. The approved scheme must be then be made available in the local language to the local authority, the offices of the District Collector and must be uploaded on the website of the appropriate Government.

6. Final Declaration notification –

If the government is satisfied that a particular land is required for a public purpose, a declaration shall be made to that effect, along with a declaration for an area identified for the purposes of rehabilitation and resettlement of the affected families. This declaration has to be made within a year of the preliminary declaration, otherwise the acquisition process is deemed to have rescinded. The Collector shall publish the declaration in the same manner as the preliminary notification, along with a summary of the Rehabilitation and Resettlement Scheme The declaration is considered to be conclusive evidence that the land is required for a public purpose and has been acquired.

7. Enquiry and Award –

The Collector is obligated to enquire into any objections raised relating to the measurements or value of the land at the date of the publication of the notification, as well as into the respective interests of the persons claiming the compensation and rehabilitation and resettlement. Pursuant to such an enquiry, the Collector is entitled to make an award within a period of twelve months from the date of publication of the final declaration. Such an award must include area of the land, compensation and the apportionment of the said compensation among all the persons interested in the land. Provisions of the 2013 Act relating to an award shall apply to any pending acquisition proceedings initiated under old 1894 Act. Furthermore, fresh acquisition proceedings can commence under the 2013 Act, if more than 5 years have passed since the passing of award under the 1894 Act but same has not been paid or possession has not been taken. This has been provided so that the landowners can take advantage of the more beneficial 2013 Act provisions relating to awards.

8. Determination of market value of land by Collector –

To determine the market price of any land, the Collector will first refer to the highest price amongst the following:

a. the price fixed under the Indian Stamp Act for particular area;

b. average sale price for similar type of land in the area;

c. consented price as agreed for acquisition for private sector.

Subsequently, the said price will be multiplied by 1 or 2 for urban and rural area, as decided by State Government and a solatium amount @ 100 % shall be added to the price. As such, final price determined will be about 4 times the average recorded transaction price.

9. Possession –

Only after the full payment of compensation as well as the rehabilitation and resettlement entitlements are paid or tendered to the entitled persons within the stipulated time, the Collector shall be entitled to take possession of the land. However, in cases of urgency, Collector may take possession within 30 days of the notification, even when an award has not been made. In such cases, safeguards have been provided to prevent abuse. The Collector shall ensure payment of 80% of the estimated compensation before taking possession and only the minimum area required will be taken under the urgency provisions.

Therefore, these provisions demonstrate that the 2013 Act provides for a much more humane, participative, informed and transparent process for land acquisition with just and fair compensation to the displaced landowners. In particular, the provisions related to the rehabilitation and resettlement to the affected families are a welcome departure from the 1894 Act. The 2013 Act aims to balance between need to develop essential infrastructural facilities, and proceed with industrialization and urbanization while protecting the property rights of citizens in an efficient manner.