Detailed analysis of Land Acquisition Act

Detailed analysis of Land Acquisition Act

Updated on 15 October, 2019

GS2 Polity
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A five-judge Constitution Bench of the Supreme Court is set to hear a case on the interpretation of the Right to Fair Compensation and Transparency in Land Acquisition Act, Rehabilitation Act (LAAR) from October 15.

  • The SC will specifically interpret a provision of the law, Section 24(2).

Background of the case

About LARR Act, 2013 ●       It mandates that 70% of the affected landowners should consent to the acquisition of land for a public-private participation project. ●       The 2013 Act replaced a colonial land acquisition law and was intended to uphold the farmers’ right to dignity and life. ●       Section 24(2) states that in case of land acquisition proceedings, if a developer fails to take possession of the land acquired under the old laws for five years, or if compensation is not paid to the owner, the land acquisition act process would lapse. The process would then have to be re-initiated under LAAR, which would allow the owner to get better compensation.
  • case to a Constitution Bench as two Benches of the court had delivered conflicting judgments on the issue.
  • A three-judge Bench while interpreting Section 24(2), ruled by a 2-1 majority that if a landowner refuses the compensation offered by the developer, he cannot take advantage of his own wrongdoing, and have the acquisition proceedings lapse under the old law.
  • In doing so, the court also invalidated a 2014 judgment by another three-judge Bench on the same issue, and declared it “per incuriam”, means no legal force or validity.
  • The 2014 verdict by a Bench had said that acquisition proceedings initiated under the 1894 Act would automatically lapse, and would have to be initiated again if the state has not taken control of the land for five years, or if compensation was not paid to displaced farmers.
  • While the 2014 ruling is considered to be in favour of the landowners, the 2018 ruling gave fresh hope for developers.

Why was a referral to a larger Bench made?

  • A three-judge Bench cannot hold a decision by another three-judge Bench to be per incuriam; it can only ask for the matter to be considered by a larger Bench if it disagrees with the precedent.
  • A case decided by Benches of larger or equal strength is binding on other Benches, and since the Supreme Court sits in Benches of two or three, this practice ensures consistency and certainty in the law.

Critical analysis of the Right to Fair Compensation and Transparency in Land Acquisition act, Rehabilitation, and Resettlement Act, or RFCTLARR Act

  • It is considered the biggest reform in land governance.
  • It replaced the colonial Land Acquisition Act, 1894.
Why does the government need to acquire land for private companies as well as public-private partnership projects? ●       Ensuring benefits for livelihood users: If land is purchased then there are no benefits for livelihood losers who are usually far greater in number than the landowners. This bill ensures that they are taken care of and not simply displaced. ●       Safeguarding the farmers: Inequality in terms of bargaining power between large-scale corporations and small farmers increases the likelihood of unfair agreements. That is why the government is required to bridge the gap and bring balance to this relationship. ●       Building public infra: A legitimate need for acquisition by the state itself (to build public goods such as roads, schools, and hospitals) can be undermined and stalled by groups with vested interests. If there is no sovereign power to compel these groups, a single individual or group of individuals can hold a process hostage merely by refusing to part with the land. Why was there a need for a new Act? ●       The Central Act of 2013 was brought to give effect to the pre-existing fundamental right to livelihood of citizens. ●       It ensures that livelihood will not be taken away unless (i) it is in public interest and that is seen by a social impact assessment (ii) The affected citizens are given rehabilitation. 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. No safeguards: There was no real appeal mechanism to stop the process of the acquisition. Silent on resettlement and rehabilitation of those displaced Urgency clause: This is the most criticised 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. This results in the complete dispossession of the land without even the token satisfaction of the processes listed under the Act. Low rates of compensation Supreme Court observations: It noted that 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 ( deals with Persons not to be deprived of property save by authority of law.)

Main features of RFCTLARR Act

  • Public purpose: It defines various types of “public purpose” projects for which, Government can acquire private land.
  • Consent: Prior-consent shall be required from 70% of land losers and those working on government assigned lands only in the case of public-private partnership projects and 80% in the case of private companies. This consent also includes consent to the amount of compensation that shall be paid.
  • Compensation: It proposes the payment of compensations that are up to four times the market value in rural areas and twice the market value in urban areas.
  • R&R: This is the very first law that links land acquisition act and the accompanying obligations for resettlement and rehabilitation.
  • Retrospective operation: To address historical injustice the Bill applies retrospectively to cases where no land acquisition award has been made.
  • Return of unutilized land: Land not used can now be returned to the original owners if the state so decides.
  • Share in the sale of acquired land increased: The share that has to be distributed among farmers in the increased land value (when the acquired land is sold off to another party) has been set at 40%.
  • Income-tax Exemption: All amounts accruing under this act have been exempted from income tax and from stamp duty.
  • Strict restrictions on the multi-crop acquisition: The acquisition of agricultural land and multi-crop land has to be carried out as a last resort. There will be definite restrictions on the extent of acquisition of such land in every state to be determined by the States concerned.
  • Acquisition only if necessary: The Collector has to make sure that no other unutilized lands are available before he moves to acquire farm land.
  • Share in developed land: In case their land is acquired for urbanization purposes, 20% of the developed land will be reserved and offered to these farmers in proportion to the area of their land acquired and at a price equal to the cost of acquisition and the cost of development.
  • Fishing rights: In the case of irrigation or hydel projects, affected families may be allowed fishing rights in the reservoirs.
  • Time-bound social impact assessment: The Bill mandates a social impact assessment of every project which must be completed within a period of six months.
  • Appraisal of social impact assessment report by an expert group:
    • The government has to constitute an independent multidisciplinary Expert Group
    • The Expert Group shall include two non-official social scientists;two representatives of Panchayat/Gram Sabha./MuniciPality or Municipal Corporation, two experts on rehabilitation and a technical expert in the subject relating to the project.

Loopholes in the law

  • The Act leads to delays.
    • The entire acquisition process can take four-and-a-half years to complete and involves multiple steps.
  • No binding recommendations of the expert group,
    • The government can proceed with the acquisition process even if the recommendations suggest otherwise. This gives the government immense powers to silent people’s voice.
  • Vague meaning of the term ‘public purpose’
    • When the Act defines the public purpose, it embraces wide ranging areas.
    • Defense, infrastructure, industry, tourism, sports, and health can, in fact, encompass all purposes.
    • For instance, a tourist resort in the dense forests of Karnataka can qualify as serving a public purpose, irrespective of being privately or government-owned.
  • Lack of monitoring
    • The five-year development plan for people belonging to Scheduled Castes and Scheduled Tribes returns the rights due to people who lose their land, but a big drawback is that the Act does not specify that a monitoring body should watch its implementation.
  • Poor implementation of the Act by the states.

Dilution of the Act

  • Soon after it was enacted on January 1, 2014, the government diluted the Act through an Ordinance. Later, the ordinance lapsed.
  • The excuse was that the new Act was cumbersome, time-consuming and cost-escalating, making its implementation difficult. The Ordinance also makes the process of acquisition simple.
  • The Amendment Bill was introduced in Parliament on February 24, 2015, and passed in the Lok Sabha. But it could not be passed in the Rajya Sabha and was referred to the Joint Committee of Parliament.

The states have modified the Act

  • The states have found it difficult to acquire land for industries. So states tweak legislations to make land acquisition a quick and easy process.
  • While the seven states have more or less adopted the provisions laid down in the Ordinance, 14 states have made minor modifications to RFCTLARR Act.
  • Land for the much-talked-about Mumbai-Ahmedabad bullet train project, funded by Japan International Cooperation Agency, is being acquired under the Gujarat Amendment Act, 2016. It will affect several farmers of southern Gujarat and northern Maharashtra.

What is the impact of small changes done by the states?

  • The amendments made by the states are in violation of Article 21, which guarantees the right to live with dignity and personal liberty.
  • Reducing the notice period for public hearings
    • RFCTLARR Act mandates written consent after public hearings. Some states have reduced the notice period to hold public hearings. This ensures minimum public participation.
    • as per the central Act, 70 percent consent of landowners was necessary for Public-Private Participation (PPP) projects but the state amendments have removed the consent clause.
  • Red tapism
    • To reduce the arbitrary powers of the district collector, RFCTLARR Act directs setting up of independent expert groups and social impact assessment units to assess if the project serves a public purpose.
    • But in some states government officials are part of such bodies. For instance, in Uttarakhand, the expert group is chaired by the chief development officer.
  • Conflict of interest
    • Commissioner Rehabilitation & Resettlement (R&R) has been given the responsibility of the social impact assessment unit in Karnataka, Rajasthan, Andhra Pradesh, Chhattisgarh, Jharkhand, and Kerala, thus creating a conflict of interest.

Way forward Need for a series of committees

  • An independent body has to be set up to conduct a social impact assessment. Its report is appraised by another expert group.
  • An R&R committee, a state-level committee, and a national monitoring committee have to be instituted to evaluate reports presented by junior committees.

Striking a balance between direct and indirect costs:

  • Direct cost is what developers pay to land losers as compensation for the land acquired and to resettle and rehabilitate them.
  • Indirect cost is what developers pay to carry out the procedures, manage multi-layered bureaucracy, as well as the revenue foregone due to the time is taken to acquire land. RFCTLARR Act has increased both the costs.
  • Any amendment to the law should substantially increase direct costs and drastically cut down indirect costs.
  • By delaying the process of acquisition, the Act, unfortunately, does not strike a good balance.

Other ways of obtaining land:

  • NITI Aayog has lauded land pooling as a model for the nation to emulate.
  • As per the land pooling model, for every acre (0.4 hectares) given for development projects, the landowner will get 1,000 square yards of developed residential plot and 450 square yards of developed commercial plots.
  • Farmers have voluntarily offered 13,354 hectares to the Andhra Pradesh Capital Region Development Authority. So far, it is unclear if landowners are benefitting from such methods of acquisition.
  • Also, the unrealistic timeline of the land acquisition process needs to be rectified.

Clarity needed where the law can be applied:

  • Provisions as important as social impact assessment and consent are required in the smallest projects but are not required for projects under these 13 enactments that acquire huge chunks of land. These include railways, national highways, atomic energy, and electricity.

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