Land Acquisition,Rehabilitation & Resettlement Bill, 2011

The Land Acquisition Act, 1894 (“the Act”) is a general law relating to acquisition of land for public purpose and also for companies and for determining the amount of compensation to be made on account of such acquisition. The Singur and Nandigram land acquisition controversies highlighted the discrepancies in the existing legal framework for acquisition of land by the State for public purpose. Further, the recent experiences in the state of Uttar Pradesh leading to a spate of litigations challenging the legitimacy of land acquisition have called for a need to revamp the antiquated law with a law which is sensitive to the needs and aspirations of the various stakeholders

Article 31(A) of the Indian Constitution provides for saving of laws providing for acquisition of estates etc. It states that law can be enacted for the acquisition of the land provided that it ensures payment of compensation at a rate which shall not be less than the market values thereof. Further, Entry No. 42 of List III – Concurrent List of the Seventh Schedule of the Indian Constitution relates to acquisition and requisition of property’.

Under Article 246 (2) of the Indian Constitution, both the Parliament and the Legislature of the States have power to make laws with respect to matters enumerated in the List III. In case of inconsistency between laws made by the Parliament and laws made by the Legislatures of the States, the law made by the Parliament shall prevail and the law made by the State Legislatures shall, to the extent of repugnancy, be void under Article 254 of the Constitution.

The Land Acquisition Act, 1894 (“the Act”) is a general law relating to acquisition of land for public purpose and also for companies and for determining the amount of compensation to be made on account of such acquisition. The Singur and Nandigram land acquisition controversies highlighted the discrepancies in the existing legal framework for acquisition of land by the State for public purpose. Further, the recent experiences in the state of Uttar Pradesh leading to a spate of litigations challenging the legitimacy of land acquisition have called for the need to revamp the antiquated law with a law which is sensitive to the needs and aspirations of the various stakeholders.

The Land Acquisition and Rehabilitation and Resettlement Bill 2011 (“the Bill”) is seen as a significant piece of legislation dealing with complex issues of forced displacement, minimising adverse impacts on people, habitats, environment, bio-diversity, food security and discouraging acquisition of agricultural lands. The Bill is a comprehensive law on both procedures relating to land acquisition and rehabilitation and resettlement of displaced persons.

Acquisition of land by the Government

The Bill introduced in the Lok Sabha in September 2011 contemplates that the Government will only acquire land for its own use or for use by the private sector companies for stated public purpose. Under this category, the Government can acquire land as follows:

1. either for its own use, hold and control, or
2. at the request of the private companies with the ultimate purpose to transfer it for the use of private companies for stated public purpose, or
3. for immediate and declared use by private companies for public purpose.

The provisions relating to both land acquisition (“LA Provisions”) and rehabilitation and resettlement (“R&R Provisions”) will apply to all acquisitions by the Government. It is however provided that acquisition of land by the Government for private companies under (ii) & (iii) above can take place only when 80% of the project affected families1 give their consent thereto.

Thus, under the Bill acquisition of land by the Government for private companies has been restricted and the Government can intervene only where 80% of the affected families have given their consent to the proposed project. This is in line with the longstanding view amongst the members of the civil society that the state should not use its sovereign power to acquire land for private companies which are primarily in the business for profit and not for conferring benefits on the public.

Definition of Public Purpose

The definition of “public purpose” as given in the Act is very wide and the same is being used for acquiring private land for companies as well. This frequently raises a question mark on the desirability of the Government intervention when land could be arranged by the private companies through private negotiations on a “willing seller-willing buyer” basis, which could be seen to be more fair arrangement from the point of view of the land owner. In view of the above, the Bill has broadened the definition of ‘public purpose’ to include acquisition of land for:

1. Strategic purposes: e.g., armed forces, national security;
2. Railways, Highways, Ports, Power and irrigation purposes for use by Government and Public Sector Companies or corporations;
3. Village or urban sites, planned development or for residential purpose for the poor and educational and health schemes;
4. Needs arising from natural calamities or for persons displaced or affected by government schemes;
5. Project Affected People;
6. Provision of land in the public interest for use by the Government for purposes other than the abovementioned purposes, where the benefits largely accrue to the general public;
7. Provision of land in the public interest for PPP Projects for the production of public goods or the provision of public purposes; and
8. Private Companies that is used for the production and provision of a public good and is in public interest.

For acquisition of land for purposes mentioned under (f) to (h) above, consent of at least 80% of the project affected families will have to be obtained. Thus, all infrastructure projects other than Railways, Highways, Ports, Power and Irrigation undertaken by the Government or Public Sector Undertakings will require consent of at least 80% of the project affected families. The Bill however, does not provide for the procedure for obtaining such consent and timelines within which such consent will have to be obtained by the project developer.

Procedure for Land Acquisition by the Government

In case of inconsistency between laws made by the Parliament and laws made by the Legislatures of the States, the law made by the Parliament shall prevail and the law made by the State Legislatures shall, to the extent of repugnancy, be void under article 254 of the Constitution

The acquisition of land by the Government can only be for its own use (doctrine of “eminent domain”) or for private companies in cases where the project sought to be undertaken by the company seeking the Government intervention has been approved by at least 80% of the project affected families. The requirement of obtaining consent of 80% of the affected families is intended to make the process of acquisition more participatory and transparent. The 80% requirement shall however not be applicable in cases where the acquisition is by the Government for its own use, thereby keeping the eminent domain concept intact under the new draft Bill as well.

The key feature under the draft Bill is the requirement for a Social Impact Assessment (“SIA”) which shall be carried out by the respective State Governments after conducting a public hearing in lieu thereof. The SIA Report submitted by the Government shall then be examined by an Independent Expert Group constituted under the Act.

The State Government has also been empowered to appoint an Expert Committee which shall examine the SIA and the legitimacy of acquiring such a land for public purpose. After due consideration of the reports submitted by the Collector and others, the committee shall recommend such area to be acquired. The concerned State Government shall then appoint an administrator for rehabilitation and resettlement who shall be responsible for formulation of rehabilitation and resettlement schemes.

The process flow of land acquisition can be understood with the help of the following schematic diagram:

Compensation

The Bill provides for a comprehensive compensation package in the event of the Government acquiring land under the provisions of the Bill. The compensation to be paid to the landowners shall not be less than four times the market rate in rural areas and not less than twice the market rate in urban areas.

The market value as per the Bill shall be determined on the basis of (a) 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 (b) the average of the sale price for similar type of land situated in the village or vicinity, ascertained from fifty per cent of the sale deeds registered during the preceding three years, where higher price has been paid; or (c) whichever is higher. The market value so calculated shall be multiplied by four in case of land acquired in rural areas. The value of the assets attached to land for the purpose of calculating total compensation payable shall be on the basis of the valuation of building/trees/wells/crops etc carried out by authority.

The approach adopted for ascertaining the market value of the land is the “Comparable Sales Method of Valuation” which is in line with the mandate of the Supreme Court in the cases that have come up for adjudication before it under the Act.

Under the Act, the Supreme Court had given several judgments on the parameters for determining market value under the Act. In the case of Shaji Kuriakose v. Indian Oil Corporation Limited2, the Supreme Court held that, “while fixing the market value of the acquired land, comparable sales method of valuation is preferred than other methods of valuation of land such as capitalisation of net income method or expert opinion method. The comparable sales method of valuation is preferred because it furnishes the evidence for determination of the market value of the acquired land at which a willing purchaser would pay for the acquired land if it had been sold in the open market at the time of issue of notification under Section 4 of the Act. However, comparable sales method of valuation of land for fixing the market value of the acquired land is not always conclusive. In cases where there is dissimilarity in regard to locality, shape, site or nature of land between land covered by sales and land acquired, it is open to the court to proportionately reduce the compensation for acquired land than what is reflected in the sales depending upon the disadvantages attached with the acquired land.”

In another landmark judgment of Viluben Jhalejar Contractor v. State of Gujarat3, the Supreme Court opined that: “One of the principles for determination of the amount of compensation for acquisition of land would be the willingness of an informed buyer to offer the price therefor. It is beyond any civil that the price of the land which a willing and informed buyer would offer would be different in the cases where the owner is in possession and enjoyment of the property and in the cases where he is not. Market value is ordinarily the price the property may fetch in the open market if sold by a willing seller unaffected by the special needs of a particular purchase. Where definite material is not forthcoming either in the shape of sales of similar lands in the neighbourhood at or about the date of notification under Section 4(1) or otherwise, other sale instances as well as other evidences have to be considered. The amount of compensation cannot be ascertained with mathematical accuracy.”

The compensation formula i.e. twice the market value in urban areas and four times in rural will make acquisition of land very expensive thereby enhancing the overall project cost of the companies.

Acquisition of land by private companies without Government intervention

The foreword to the Bill states that the Bill does not preclude private companies from buying land directly from farmers and others. The acquisitions made by private companies on the basis of negotiations with the landowners without any intervention by the Government shall not be subject to the R&R provisions including the requirement for such acquisition to be for a public purpose.

In order to narrow down the asymmetry of power (and information) between those wanting to acquire the land and those whose lands are being acquired, the Bill however provides that, where a private company is purchasing more than 100 acres in rural areas or more than 50 acres in urban areas through private negotiations, provisions relating to R&R provisions will have to be complied before such acquisition can be affected.

Under the Bill, private companies shall be required to file an application with the District Collector notifying him of the (a) intent to acquire; (b) purpose of purchase; (c) particulars of the land to be purchased. The Collector will then refer the matter to the Commissioner R&R for the satisfaction of all the relevant provisions under the Bill relating 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 within timelines for providing R&R entitlements to the land owners and livelihood losers. Monetary R&R entitlements will have to be provided within six months of the date of making of an award and other infrastructure, R&R benefits will have to be extended within 18 months of the award.

The provisions relating to land acquisition as stipulated in the Bill shall however extend to cases where the Government intervention is sought by the private companies in acquiring land for private companies for public purposes. Thus, in cases where a private company after having purchased part of the land needed for the project, for public purpose, seeks the intervention of the Government to acquire the balance of the land, it shall be bound by R&R provisions for the land already acquired and all the provisions of the Bill for the balance area sought to be acquired.

Rehabilitation and Resettlement

Under the Bill, the R&R package would necessarily have to be executed for land acquisitions in excess of 100 acres in rural areas and 50 acres in urban areas by private companies and all acquisitions made by the Government.

Rehabilitation and Resettlement package for land owners shall include: (a) subsistence allowance at '3,000 per month per family for 12 months; (b) '2,000 per month per family as annuity for 20 years, with appropriate index for inflation; (c) if house is lost, a constructed house of plinth area of 150 sq mts of house site in rural areas or 50 sq mts plinth area in urban area; (d) one hectare of land to each family in the command area, if land is acquired for an irrigation project; (e) '50,000 for transportation; (f) where land is acquired for urbanisation, 20% of the developed land will be reserved and offered to land owners, in proportion to their land acquired; (g) Further, upon every transfer of land within 10 years of the date of acquisition, 20% of the appreciated value shall be shared with the original owner whose land has been acquired; (h) The Bill also makes it obligatory upon the acquirer to mandatorily provide employment to one member per affected family or give 2 lakh rupees if employment is not offered; (i) The company acquiring the land must also offer shares up to 25% of the compensation amount.

The land in exchange of land concept has been adopted in cases where land is acquired for urbanisation and irrigation projects. In case of livelihood losers (including those who are landless), the rehabilitation package includes a subsistence allowance at '3,000 per month per family for 12 months; '2,000 per month per family as annuity for 20 years, with appropriate index for inflation; If homeless, a constructed house (plinth area) on 150 sq mts of house site in rural areas or 50 sq mts in urban area, provided free of cost; a one-time ‘Resettlement Allowance’ of '50,000; '50,000 for transportation; mandatory employment for one member per affected family or 5 lakh rupees in case employment is not provided.

If 100 or more Schedule Tribe families are displaced, a Tribal Displacement Plan would be put in place. It would include settling land rights and restoring titles on alienated land and development of alternate fuel, fodder and non-timber forest produce. The Schedule Tribes and Schedule Castes would also get, in the resettlement area, the reservation and other benefits they were entitled to in the displaced area.

The resettlement area should also provide at least 25 infrastructural amenities including schools and playgrounds, health centres, roads and electric connections, assured sources of safe drinking water for each family, panchayat ghars, fair-price shops and seed-cum-fertiliser storage facilities, places of worship and burial and cremation grounds.

The monetary R&R entitlements will have to be provided within six months of the passing of the R&R award while the infrastructure R&R benefits will have to be extended within 18 months of the passing of the award.

Institutional Framework

The Bill provides for the constitution of several authorities to ensure effective implementation of the provisions of the Bill. At the centre, there will be a) a National Land Acquisition & Rehabilitation and Resettlement Dispute Settlement Authority which shall be responsible for adjudication of disputes relating to Central Projects and b) a National Monitoring Committee shall have supervisory powers and will keep an oversight over all central level projects.

At the state level, there shall be a) a State National Land Acquisition & Rehabilitation and Resettlement Dispute Settlement Authority will work as a corresponding body to the Central Authority in resolving disputes relating to State level projects, b) a Chief Secretary Committee which shall be responsible for determining whether projects are for public purpose or not, and c) a State Commissioner RR who shall be entrusted with the overall administration of LA & RR in the state will also be constituted.

Further the District Collector, Administrator R&R and the R&R Committee will operate at the project level and will be responsible for overall implementation and coordination, administrating project level R&R and keeping oversight over R&R implementation respectively.

Current Status

The Bill was again referred to a Group of Ministers (GoM) after some ministers raised reservations on certain provisions of the Bill and their suggestions were not heard adequately. Further, the Bill has been rechristened as ‘The Right to Fair Compensation, Resettlement, Rehabilitation and Transparency in Land Acquisition’. It is further learnt that GoM has since submitted its recommendations to the Government and the Cabinet has cleared the Bill with changes. It is also learnt that the Bill will be introduced in the Budget session of the Parliament.

Footnote:- 1 Section 2 (c) the expression “Affected Family” means- (i) a family whose land or other immovable property has been acquired or which is involuntarily and permanently displaced from their land or immovable property; (ii) a landless family, which includes agriculture labourer or artisans, which has been working in the affected area and whose primary source of livelihood has been affected by land acquisition in such area; (iii) tribals and other traditional forest dwellers, who have lost any traditional rights recognised under the Scheduled Tribes and Other Traditional Forest Dwellers (Recognition of Forest Rights) Act, 2006; (iv) Any individuals who have been assigned land by the State or Central Government under various schemes. Provided that where as a result of the acquisition there is a loss of their primary source of livelihood, families which are dependent on forests or water bodies for their livelihoods, including forest gatherers, hunters, fisher folk and boatmen shall be included. 2 (2001) 7 SCC 650, 3 (2005) 4 SCC 789

Disclaimer – The views expressed in this article are the personal views of the author and are purely informative in nature.