Bill amendment sparks debate on land acquisition procedures

Author: | Published: 1 Aug 2012
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The proposal to amend the Land Acquisition Bill, introduced by the Minister of Rural Development in the Lok Sabha, was cleared on September 2011 by the Union Cabinet and is now under review for revision. The amendment, once passed, will revolutionalise legal procedures for acquiring land in India.

The Bill

The Bill proposes 'unified legislation for the acquisition of land and adequate rehabilitation mechanisms for all affected persons', and will replace the Land Acquisition Act, 1894. Once passed, it will be the first national law in the country that governs resettlement and rehabilitation issues involved in land acquisition.

The Bill requires the consent of at least 80% of landowners affected by the acquisition of land for private projects. It has also set out minimal compensation standards for resettlement and rehabilitation in the land acquisition process. In addition, the Bill has proposed a centralised authority for handling land disputes, with appeal to the High Court. And private parties will now need to file intimation with district collectors should they have the intention of purchasing land.

Prior to the Bill, there was no centralised mechanism in India for handling land disputes. Despite much effort spent in amending the Land Acquisition Act 1894, there remained the absence of a national law that addressed fair compensation and fair rehabilitation in cases where displacement was involved in land acquisition. And no previous rules regarding mandatory consent were required when acquiring land.

In recent years, displacement issues relating to land acquisition have received more attention as development and construction projects have been expanding across the country. Villagers and non-government organisations (NGOs) have voiced their concerns and have protested against forced acquisitions and displacements. And recent court decisions have demonstrated a stronger awareness of the rights of landowners.

Farmers' rights to their land were barely protected previously, but various acquisitions by state governments over the last two years have since been quashed by the courts. For example, in July 2011, the Allahabad High Court cancelled the acquisition of 589 hectares of land in Greater Noida by the Mayawati State Government, having decided that the rights of 1,500 farmers to protest or negotiate for the deal were ignored. And in a separate case, in January 2012, the Supreme Court ruled against the Delhi Government's acquisition of private land of Darshan Lal Nagpal for the establishment of an electric sub-station by Delhi Transco.

Mitigating risk

Despite the merits of the Bill, some legal practitioners are concerned about the cost implications of any amendment and have suggested that industry is mostly likely to respond negatively towards such amendment.

Khaitan Sud & Partners' Tanuj Sud says: "The Land Acquisition Bill amendment will completely revolutionalise the procedures involved in acquiring land. The land acquisition process will take much longer and, not surprisingly, developers have responded very negatively towards the proposed amendments. The time and economic costs involved are huge."

Formers chief ministers, including Sharad Pawar, Weerappa Moily, Vilasrao Deshmukh, Sushil Kumar Shinde and Virbhadra Singh, have also expressed concerns about the potential repercussion of the Bill on industrialisation and infrastructure development.

And yet, other members of the legal industry have expressed appreciation of the new land acquisition mechanism, as potential disputes and conflicts will be able to be managed more comprehensively if a centralised system is put in place.

Infrastructure Development Finance Company legal director Raju Doti says: "Most short-term investors have responded negatively towards this development as this certainly will increase the cost and lengthen the time needed for acquiring land. However, I see this as a positive development for foreign investors as the risks involved in land acquisition will be better managed, with more transparency being brought to the land acquisition process."

He adds: "Companies can handle potential legal risk during the early stages of projects when there are more comprehensive regulatory procedures with which to comply. On a long-term basis, such regulatory changes are necessary in mitigating public sentiment triggered by development, as is similar to anywhere else in the world."

On the other hand, some members of the legal industry are doubtful that the new legal procedures stated in the Bill will bring in any positive element to furthering communication between developers and occupants. In India, the Government of India (GOI) acts as agent for land purchase and has substantial interest in selling land to private developers. Land occupants, especially villagers, are very sceptical towards the GOI's initiative in fairly handling land acquisition issues.

JSW Steel's legal and group general counsel Girish Gokhale says: "The government has always been on the developers' side. The rights of the occupants have long been ignored. The profit involved in land selling is simply huge."

He adds: "It doesn't help even when there is a compensation programme. Even if there is a centralised mechanism now, it is unlikely that the system can provide an effective mechanism in resolving conflicts between land occupants and developers. The distrust among rural land occupants is simply too strong. It is almost impossible for them to be confident that the new legal procedures can effectively and fairly balance the rights between developers and occupants."

Recent developments suggest it is no longer possible to deny negotiation and compensation in the land acquisition process, and initiatives by the regulators and the courts have demonstrated the need to accommodate the interests of land occupants. The focus now will be on managing associated risks relating to the acquisition of land.

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