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Resource centre on India's rural distress
 
 

Agenda for the Land Acquisition Bill by Ram Singh

During the last 10 days two land acquisition notifications have been set aside. The Punjab and Haryana High Court (HC) has quashed a Haryana government’s 2002 notification for inappropriately releasing land to private developers.

Similarly, the Allahabad High Court has repealed a UP government’s notification under which land was acquired for a private project in 2005. Both notifications have been cancelled on account of procedural lapses.

However, these rulings highlight the three most problematic aspects of the land acquisition under eminent domain: namely, excessive misuse of compulsorily acquisition laws by states to serve private interests; inadequacy of compensation provided to the owners; and violent protests against compulsory acquisitions.

The Land Acquisition (Amendment) Act, 1984 provides for compulsory acquisition of private property by the state for making the provisions of public goods and services; such as, roads, dams, schools, etc. Section 38 allows acquisition for private projects as well, provided it serves a public purpose.

The law is ambiguous about what is or is not a public purpose . Unfortunately, this and the other ambiguities have been misused by a nexus of the authorities and the industry to provide subsidised land to the latter.

There are many instances in which the states acquired land for ostensibly public purposes but ultimately used it for notpublic ends. In one such instance, in 2002 the Haryana government acquired land to construct a Metro rail line, evidently a public purpose. However, 90% of the acquired land was subsequently transferred to private developers.

The situation is worse as to the compensation rules. Under Section 23, the owners are entitled to the market-value of the acquired property plus a solatium. The floor price (circle rates), or the average of sale-deeds of similar property can be used to determine the market-value . Generally, circle rates are dated and well below the market rates.

Also, in order to save on stamp-duty , the price quoted in sale-deed is much lower than the actual transaction price. Therefore, neither the sale-deeds nor the circle rates can reflect the market-value .

Besides, since property market is inherently thin, even market-value itself is less than the potential value. On the top of it, due to restrictions regarding changein-land use, etc, the market-value of agricultural land is further suppressed downward . Indeed, the very basis of determining compensation is flawed.

Since the compensation required is significantly less than the potential value, there is a tendency among public as well as private entities to over-acquire . In many instances, the excess land is used to earn profits in the realty sector.

Examination of court cases related to the acquisition for Delhi Metro reveals that the legal ambiguities have other costs too. In most cases, land acquisition collectors (LAC) have awarded compensation on the basis of the lower circle rates. In contrast, courts have used the higher sale-deeds as the basis. So, courts have awarded higher compensation.

The findings are startling. Both the LACs and the courts have applied the same law. Yet, strangely they have awarded drastically different compensations . For example, in Jantar Mantar area while the LAC valued the land at Rs18,480 per sq m, the rate used by the court was Rs 75,878.

Such instances abound. Preliminary examination of high court cases indicates that this is a general phenomenon. It explains why the affected parties invariably resort to litigation. Of course, law suits are costly and entail huge wastage of time and national resources.

Poor farmers cannot afford costly and prolonged litigation and therefore are vulnerable to political manipulations . These people along with labourers resort to violent protests. As a result a large number of infrastructure projects have got delayed. According to an estimate these delays have cost industry as much as $100 billion.

The judiciary is also responsible for this unfortunate outcome. Certainly, the legislature and the executive are better equipped to determine what can or cannot serve public purpose.

But, the judiciary could have ensured that the acquired land is used only for the prestated purpose, that the unused land is released back to its owners, and that the alternatives are explored before acquiring agricultural land.

Similarly, by providing clear and consistent compensation rules, it could have spared the people from agonising litigation. After all, ensuring that people’s entitlements are protected and the executive uses the enacted law according to its spirit is the responsibility of the judiciary.

While some judges are eager to intervene in purely administrative matters, the judiciary has turned a blind eye to the important wish-list in the Land Acquisition Act.

To sum up, serious thinking and wider consultations are required on issues like what is or is not public purpose . It is imperative for the forthcoming bill to have clarity and inbuilt safeguards against potential misuses.

Moreover, in view of the above arguments , the market-value is not an adequate compensation criterion. A suitable mix of cash and equity or annuity compensation needs to be explored. The earlier Land Acquisition (Amendment ) Bill 2007 had paid only lip servicetotheseissuesandwasasdefective as the existing law. Hopefully the prospective Bill will do a better job.

(The author teaches at the Delhi School of Economics)