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A Comparative Analysis of the Land Acquisition Laws in India: 1894, 2013 and 2015

Land acquisition in India is governed by the Land Acquisition Act of 1894 (the 1894 Act), Land Acquisition, Rehabilitation and Resettlement Bill of 2013 (the 2013 Act) and Land Acquisition, Rehabilitation and resettlement Ordinance, 2015 (the 2015 Bill).

Hence, the laws concerning compensation are intertwined with laws relating to acquisition of land. The intent behind these legislations is to strike a balance between smooth acquisition of land while keeping in mind the interests and rights of the landowners and also, to avoid the misappropriation of land. The two intrinsic conditions essential for a valid acquisition are: the right of the owner to get compensation and; strict adherence to the purpose of acquisition being limited to a public purpose only.

The aim here, is to draw a comparison between the Land Acquisition Act of 1894 and 2013. The idea behind such a comparison is to compare the purpose of both these Acts as the former was enacted keeping in mind acquisition of land and the latter was enforced with the main principle being fair compensation which is to be achieved via resettlement and rehabilitation with complete procedural transparency.

Land acquisition in India is governed by the Land Acquisition Act of 1894 (the 1894 Act), Land Acquisition, Rehabilitation and Resettlement Bill of 2013 (the 2013 Act) and Land Acquisition, Rehabilitation and resettlement Ordinance, 2015 (the 2015 Bill).

Land acquisition laws are powers vested with the State to acquire a private citizens property while paying compensation with due regard to various circumstances. These laws surround themselves in controversy and may be considered to be excessive powers that lie with the State. Land acquisition and its subsequent effects relating to displacement lead to loss in economic assets, livelihood and disruption in the overall functioning of a community. Hence, implementation of land acquisition laws in India are not easy with various issues at the basic ground level.

The correct use of such a power can have advantageous effects such as increased economic growth, development of infrastructure, significant progress in technology etc., These need to be appropriately balanced in order to safeguard the individual interests of stakeholders i.e. landowners and to ensure that their property rights are not infringed upon.

The first legislation pertaining to land acquisition was established in the colonial era and known as Land Acquisition Act 1894. Major criticisms of this Act arose from the nature of the power entrusted to the State i.e. authorization of acquiring the land even when there is no consent from the landowners. Yet, this Act survived for over a decade due to the underdeveloped markets in our agrarian economy and the less complex procedures of the Act.

In the recent past, the government recognized the urgent need of enacting new legislations rather than modifying or amending the previous laws in order to be more inclusive of the changing needs of our society while protecting the individual interests of its citizens. The Land Acquisition, Rehabilitation and Resettlement Act of 2013 was a result of such deliberation. The 2013 Act was subject to more modifications to fill the void wherever needed by the Land Acquisition, Rehabilitation and Resettlement Ordinance of 2015, all of which are explained below.

Land Acquisition Act, 1894

The 1894 Act has remained the primary source of legislation for the purpose of acquiring land for more than a century. It is a well drafted piece of legislation which includes three processes:

Affected parties within the Act
As per the Act, ‘persons interested' are those individuals who are affected by the acquisition of the land. These are usually the owners of the land.

Upon being notified of the acquisition, affected parties must be given a fair chance to voice their concerns and views.

The reason behind this provision is to give the affected stakeholders with an opportunity to contest the acquisition. For example, if a proper procedure was not followed in acquiring the land or the land in question is not needed for that specific project or compensation is not appropriately decided, it may be contested in court.

Derivation of an acceptable compensation package to be arrived upon while considering other factors in determining the numbers.

The Act contemplates various ways in which compensation may be paid such as market value of the acquired land, number and kind of assets present on the land and whether or not income may be derived from the land.

However, Raghuram et al. identified several issues and shortcoming in terms of practical implementation of the Act.
  1. Lack of transparency in determining who the affected parties are as the existing definition is vague. More often than not, encroachers, landless laborer's etc., are not taken into consideration and not compensated even when they have an interest in the land. Also, it makes it difficult for those individuals to claim compensation who practice agriculture but, are not registered.
     
  2. The process of acquisition under the Act can take up to three years even in cases where there are no disputes and hence, it is very time consuming. The amount of discretion vested with the district and the deputy collector is massive even when the Act provides steps for the acquisition of land. They have been entrusted with the responsibility to adjudicate on objections pertaining to compensation as well as acquisition leading to ad hoc decisions and arbitrariness which ultimately is met with resistance from the community.
     
  3. The Act does not contain a straight-jacket formula in term of how to calculate the compensation for a land. This often leads to arriving at a valuation which is way below what is expected by the landowners. The compensatory value is reduced further due to the interplay between determination of compensation and awarding compensation to the affected parties. In cases like these, the parties have no other recourse but to approach the judiciary in hopes of getting a fair amount of their land however, this process is way too lengthy, time consuming and in the meanwhile, the affected groups remain without land and uncompensated.

Land Acquisition, Rehabilitation and Resettlement Act, 2013

The 2013 Act introduced significant changes to land acquisition laws in India and with an aim to fill the gaps left behind by the previous archaic legislation. The most important aspects of this Act include a significant increase in compensation for owners of the land and their categorization into urban and rural land owners. Therefore, there is a recognition of the differences in the way markets operate in rural and urban settings in determining the value of the land.

On the basis of this, the award payable as compensation had to be increased almost 4 times to the estimated local market value in rural areas and at least two times the market value in the urban areas. The Act makes Rehabilitation and Resettlement (R&R) package to be paid to all affected parties along with compensation for lost assets as mandatory. In terms of determining the ambit of who constitutes as an affected party, the Act expands it to be inclusive of individuals and families who depended upon the land as their primary source of livelihood. This also includes tenants, agricultural workers, beneficiaries etc., The contents of the R&R package are inclusive of resettlement allowances, transportation costs, a stipend for a year etc.,

The Act requires a Social Impact Assessment (SIA) to be conducted which helps in identifying who the affected families are and how to calculate the social impact on the acquired land. An independent committee of experts examine the SIA while the administrative committee reviews it to see how well it serves the needs of the public along with a comparison between the costs and benefits of a project. In case of a multi-cropped land, the Act proposes to not acquire such a land however, this is subject to certain special circumstances. Further, disputes arising from there are referred to a specially constituted body and the civil courts have no jurisdiction over matters arising thereof.

If the land acquired under the Act is not utilized for five years or any period specified during the setting up of the project (whichever is later), it would be returned to its original owners or to the government land bank. The Act also states that in calculating the time period during which the proceedings of acquisition were at a halt due to courts stay order or if possession has been taken but compensation has not been paid, this period shall not be counted in determining the five year period. The Act specifies that its provisions would continue to apply in cases where an award was made under the Land Acquisition Act of 1894.

Land Acquisition, Rehabilitation and Resettlement Bill, 2015

This Bill is yet to become law and has been passes by the Lok Sabha but not yet discussed in the Rajya Sabha. The Bill seeks to make certain amendments and modifications to the 2013 Act which will be discussed below.

The 2013 Act exempted a total of 13 legislations from its purview such as the National Highways Act 1956 and the Railways Act of 1989. However, the 2015 Bill required all these laws to be brought in consonance with the Bill as well as the 2013 Act in terms of compensation, rehabilitation and resettlement within a year of its enactment. Five special categories have also been introduced to be exempt from public consent such as defence, affordable housing, industrial corridors, rural infrastructure and public private partnerships in the land owned by the central government. The 2013 Act requires the consent of 80 per cent of land owners to be obtained for private projects and 70 per cent of consent be obtained for Public Private Partnerships projects.

The 2015 Bill makes an exemption to all five categories enumerated above from this provision of the 2013 Act.

The restriction on acquiring land for private hospitals and educational institutions is removed from the 2015 Bill. While the 2013 Act was applies to land acquisition for private companies, the new Bill changes this to include ‘private entities' meaning to include, proprietorship, partnership, company, corporation etc., essentially, any entity other than the government and under any other law. Hence, the 2015 Act expands the scope of purpose within the Bill to include a more lenient view of including public-like-private body versus a stricter approach as seen in the 2013 Act to be inclusive of only public agency. The intention behind such an expansion is to promote economic growth via large scale development.

Table 1: Comparison between the three Acts.
Parameter Land Acquisition Act 1894 Land Acquisition, Rehabilitation and Resettlement Act, 2013 Land Acquisition, Rehabilitation and Resettlement Bill, 2015
Public Purpose Several uses including development and housing projects, infrastructure etc., Inclusive of use by certain companies under certain conditions. No changes. Exclusion of land for private hospitals and private educational institutions.
Consent from Affected People No such clauses within the Act. Consent of 70% people for Public Private Partnerships; Consent of 80%  displaced people for acquisition of private companies. 5 categories mentioned which are exempt from the Act: 1) Defence 2) Affordable Housing 3) Rural Infrastructure 4) Industrial Corridor 5) Infrastructure
Consent for other projects remains the same.
Social Impact Assessment No Provision Has to be taken for every acquisition. The above 5 categories are exempt from this however, there are limits added on irrigated land.
Market Value Intended use of land is expressly prohibited in determining the market value and is based only on the current use of land. Value specified in the stamp duty and the average of 50% recorded price in the vicinity in sale of land Same as the 2013 Act.
Compensation Based on market value. Two times the market value in Urban areas; Four times the market value in Rural areas. Same as 2013 Act.
Rehabilitation and Resettlement No provision R&R necessary for all affected families; Minimum R&R to be provided to each family plus employment to the affected family. R&R award for each affected family with a mandatory employment of at least one member of the affected family.
Food Security No provision Acquiring multi-crop last is only the last resort. If acquired under special circumstances, the States have a duty to cultivate an equal area of land elsewhere. No limit on the above mentioned 5 categories.


A. 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:
  1. No consent from the people while acquiring their land;
  2. 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;
  3. 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;
  4. The 1894 Act had no provision of R&R and hence, the affected families were left without jobs, shelter and livelihood; and
  5. Many of the acquired lands were multi-crops. This led to a food security issues as production was severely reduced.

A. 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:
  1. The calculation mechanism used while giving out compensation;
  2. Calculation of the market value by focusing on recent sale deeds; and
  3. 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.

References:
  • Koyambedu Wholesale Market Complex' (Cmdachennai.gov.in)
  • Divya Gupta, Law And Economics: Analysis Of Land Acquisition Issues In India - Case Study Of Singur' (2014) 4 International Interdisciplinary Research Journal
  • Preeti Jain Das, Social Impact Assessments Under The RFCTLARR Act, 2013: A Critical Analysis' (2018) 15 Journal of Resources, Energy and Development
  • Arnold Sangma and R. Dhivya, 'A Comparative Study On The Land Acquisition Act, 1894 & 2013' (2018) 120 International Journal of Pure and Applied Mathematics.
  • Debayan Gupta, 'Mapping Dilutions In India's 2013 Land Acquisition Law | Centre For Policy Research' (Cprindia.org, 2017)
  • Bill No. 152 of 2015
  • The Right To Fair Compensation And Transparency In Land Acquisition, Rehabilitation And Resettlement (Amendment) Ordinance, 2015' (Pib.gov.in, 2015)
  • Act No. 30 of 2013
  • Aditi Vyas and Ashwin Mahalingam, 'Comparative Evaluation Of Land Acquisition And Compensation Processes Across The World' (2011) 46 Economic and Political Weekly
  • Arnold Sangma and R. Dhivya, 'A Comparative Study On The Land Acquisition Act, 1894 & 2013' (2018) 120 International Journal of Pure and Applied Mathematics.
  • Act No. 1 of 1894
  • Aditi Vyas and Ashwin Mahalingam, 'Comparative Evaluation Of Land Acquisition And Compensation Processes Across The World' (2011) 46 Economic and Political Weekly
  • G. Raghuram, Samantha Bastian and Satyam Shivam Sundaram, 'Megaprojects In India: Environmental And Land Acquisition Issues In The Road Sector' [2010] Engineering Earth.
  • Siddhartha Mukerji, 'Land Acquisition In Contemporary India: The Growth Agenda, Legislation And Resistance' (2017) 63 Indian Journal of Public Administration
  • Smitu Kothari, 'Whose Nation The Displaced As Victims Of Development' (2019) 31 Economic and Political Weekly.
  • Kenneth Nielsen, 'Land, Law And Resistance' (2011) 46 Economic and Political Weekly.
  • Divya Gupta, 'Law And Economics: Analysis Of Land Acquisition Issues In India - Case Study Of Singur' (2014) 4 International Interdisciplinary Research Journal
  • G Seetharaman, 'Five Years On, Has Land Acquisition Act Fulfilled Its Aim?' (The Economic Times, 2018)

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