Sunday, November 1, 2015

25 Land Acquisition Acts in India-I. Eminent domain and the colonial LA Act

Land acquisition is not a new phenomenon in India, but it has become a highly contentious political issue of late. At the heart of the matter is need to find a balance between the aspirations of the development protagonists and the interests of the present land holders and others dependent on the existing configuration of natural resources and economic  inter-relations. These latter tend to be the poorest in the society, marginalized both economically and socially (by the centuries of operation of an unyielding caste system), and therefore highly vulnerable to such shocks as could be taken in the stride by better-off groups.

Principle of ‘eminent domain’ and forcible acquisition

The debate has been pitched in terms of forcible acquisition in the public interest, and how to define the public interest. However, there is an underlying and deeper question on whether any action can be taken on the basis of what is known as ‘eminent domain’, or the overall power of the State with regard to the citizens, under which the ‘taking’ of private property also comes in.

The State, whether in a democracy or other form of government, does pass various laws to control actions of individuals and groups. In a democracy, however, there is an underlying understanding that any individual liberties (such as are guaranteed in the Constitution) will not be curtailed unless there is a very significant public, or collective, cause or benefit. In other words, the State cannot take from one group in order to benefit another group. This is of course a narrow concept of ‘public interest’, but too broad an interpretation would allow the state, i.e. the government in power, to bend the law in favour of a particular group or even individual, by dressing up the cause for action as serving some national interest. The support to private entrepreneurs, for example, is projected as the State’s duty to keep the economy moving. This sort of reasoning can justify the taking of private property and common resources (water, soil) from some sections (e.g. the rural poor) and transferring them to the industrialists. No doubt the economy develops through private enterprise and private capital, but the question is, how far should the State use its power as ultimate owner of the nation’s resources, in favour of what are after all individual commercial players.

Individual rights have been historically over-ridden in countries that were run by personal dictatorships, and ironically even in advanced states which claimed to be socialist or people’s dictatorships. In modern liberal democracies, however, the dominant power of the State has been moderated by the need to follow a prescribed process to come to a decision that a certain cause is in the public interest, and to accomplish the ‘taking’ in a transparent and equitable manner (by giving a reasonable compensation for the resources taken by the State). In the USA, the acquisition of land is also termed ‘condemnation’ (this does not imply any prejudicial finding against the state of the property in question). The judicial ruling  (quoted in the website of the Environment & Natural Resources Division of the US Department of Justice (www.justice.gov/enrd/history-federal-use-eminent-domain), is that eminent domain “appertains to every independent government. It requires no constitutional recognition; it is an attribute of sovereignty”. However, the Fifth Amendment to the US Constitution declared that “…nor shall private property be taken for public use, without just compensation”. There is therefore a whole judicial machinery for the appraisal of the just value in acquisition proceedings, and the “Federal courts have generally found that just compensation is measured by the market value (paid in money) of the property at the time of the taking” (www.justice.gov/enrd/appraisal-unit). Accordingly, the Appraisal Unit of the US Justice Department annually reviews about 350 to 400 appraisal reports for the guidance of the judicial officers. The prescribed standards are provided in the so-called “Yellow Book” developed by the land acquiring agencies of the federal government,  the Uniform Appraisal Standards for Federal Land Acquisitions, and the Uniform Standards of Professional Appraisal Practices of the Appraisal Foundation in the United States. The 2000 edition of the Yellow Book (published by the Appraisal Institute, Chicago “in cooperation with” the US Department of Justice) is available for download at www.justice.gov/sites/default/enrd/legacy/2015/04/13/Uniform-Appraisal-Standards.pdf.

The US courts have upheld the right of government to acquire private real property in a variety of cases, e.g. for transportation (communications), water supply, construction of public buildings, defence readiness, and most of all, for establishing public parks and setting aside open space, preserving places of historic interest and natural beauty, and protecting environmentally sensitive areas.

Land acquisition and eminent domain in India

The position of eminent domain has been a subject of intense investigation and discussion in India since colonial times. The problem arose because private property had apparently not been clearly recognized and codified in traditional Indian administrative and jurisprudential systems. In any study of the Indian land tenure system(s), however, it becomes evident that there is a whole range of situations and arrangements that can be given different labels to be comparable with tenures obtaining in the more advanced home countries (Britain or Western Europe). It is often assumed that the ruler has total propriety rights on all property, and in fact even the great political writer Karl Marx held that traditional Indian land tenure epitomised the ills of  “oriental despotism”, and that the emancipation of the suffering masses would not be realised unless the system of private property titles were developed (see Draper, 1977). Under such circumstances, the argument was put forth that the British colonial government also inherited this absolute proprietorship of all land and property once they took over the territorial jurisdictions of the Indian rulers or chiefs, big or small, whether by military conquest or by agreement:

Baden-Powell, for instance, after an exhaustive multi-volume survey of land tenure in India (the first volume of which he incidentally dedicated to Dr.Dietrich Brandis, the founder of the forest service in India), has this to say:

“There can be no doubt that in the latter part of the eighteenth century, when British administration began, the different native rulers who preceded us, had asserted rights as the universal landowners. That being the case, our Government succeeded, legally, to the same claim and title”. (Baden—Powell, 1892, Vol.I, p.216)

Land Acquisition Act (LAA) 1894 (as amended)


This of course was a ground for issuing the first official Land Acquisition Act, 1894 in British India (which we will refer to as the LAA). This Act, with periodic amendments, served the country even after independence, until it was replaced by the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act of 2013, one of the flagship legislations achieved under the UPA-2 government (Ramesh & Khan, 2015), known popularly as the LARR Act. The LAA 1894, as modified up to 01 September 1985, with the most significant excerpts from the amendments of 1962 and 1984, is available on the web at dolr.nic.in/hyperlink/acq.htm.

The LAA (1894) follows the pattern that will be familiar to those who have dealt with the Indian Forest Act (indeed, the IFA itself can be seen as another vehicle for the sequestration, rather than acquisition, of a sizeable chunk of land and natural resources or uncultivated revenue ‘waste’ (which may not necessarily be wasteland in the literal sense). These lands were partly used as village commons, and the remoter tracts were part of the royal domains. In any case, they were not in private hands, but it called for some accommodation of traditional uses and compensation for some interests when the State proceeded to take possession of them for an overarching public interest (the preservation of the vegetation, and with it the soil and water balance of the country, which would be termed environmental conservation today; see Barton, 2002).  The intent to acquire land in the LAA 1894 is first notified (even the section number, Section 4, is the same for the parallel section to notify intent to form reserved forest in the IFA), then the parcels measured and marked out, a detailed hearing held, and a decision arrived at by the authorised official (the District Collector).  There is provision for appeal to the Court, and guidelines on arriving at the compensation to be paid.

One of the interesting issues is the definition of “public purpose”, which is to include the provision and development of village-sites, town and rural planning, including schemes intended for later disposal of the developed land by lease, assignment, or outright sale “with the object of securing further development”; providing land for a “corporation owned or controlled by the State”; provision of land for residential purposes to the poor or landless persons etc., provision of land for educational, housing, health, slum clearance, scheme etc., land for “any other scheme of development sponsored by Government or with the prior approval of the appropriate Government, by a local authority”; and for locating a “public office”, but “does not include acquisition of land for companies” (presumably, apart from those State corporations referred to above). The second interesting point is that any person “interested” in the notified land may file objections, but only those persons are recognised as interested parties “who would be entitled to claim an interest in compensation if the land were acquired”, so apparently the Act at this stage did not envisage taking on board objections in the broader public interest.  

The third matter of interest here is, of course, the basis of arriving at the compensation value, contained in Section 23, “Matters to be considered in determining compensation”, and Sec.24, “Matters to be neglected”. Thus, the Court (or the Collector in the first instance) should “take into consideration” 1) the market-value of the land on the date of notification, 2) damage to any crops, trees at the time of taking possession by the Collector, 3) damage due to severing of the land, 4) any other damage  at the time of taking possession, 4) damage at the time of taking possession, to any other land, or his earnings (Italics added), 5) reasonable expenses for change of residence, if called for, 6) any loss suffered due to diminution of profits between notification and taking possession. In addition, the Court was also to award an amount calculated at 12% of the market value “so calculated” from the date of notification to the date of award of the Collector or the date of taking possession, whichever is earlier. A further sum of 30% on “such market value” was to be added “in consideration of the compensatory nature of the acquisition” (this is what is sometimes termed the “solatium”, i.e a payment to assuage the injured feelings of the awardee.

Of the matters that should not figure in the Court proceedings, the interesting item is “any increase to the value of the land acquired likely to accrue from the use to which it will be put when acquired”, or equally any such increase to any other land of the awardee; apparently, the Act did not entertain any desire to make the awardee a partner in any capital gains that would accrue due to the later use.  This would be a major sticking point in recent years, when erstwhile owners have tended to get enraged at the windfall capital gains enjoyed by downstream beneficiaries. Interestingly, this is also indicated in the US Uniform Appraisal Standards (“Yellow Book”, 2000, p.18 and footnote 52): “The use to which the government will put the property after it has been acquired is, as a general rule, an improper highest and best use. It is the value of the land acquired which is to be estimated, not the value of the land to the government. If it is solely the government’s need that creates a market for the land, this special need must be excluded from consideration by the appraiser.” Further on, the Yellow Book (p.19) provides the basis of assessing market value, that is by support from “confirmed sales of comparable or nearly comparable lands having like optimum uses.” If these are not available the “development approach” can be used (ibid.).

Another matter of interest is the separate chapter in the LAA 1894 on “Temporary occupation of waste or arable land” (Part VI). Even for such purposes, the Collector is to give notices and decide compensation to anyone having an interest in such land, subject to appeal to the Courts. At the expiry of the period of taking over, the land will be restored and additional compensation paid for any damage to it.

Part VII of the original LAA provides for “Acquisition of Land for Companies”. Here the company has to first get consent from the government for the acquisition of the required land, for the purposes of building dwellings for the workers, or for the construction of some work, that is “likely to prove useful to the public”; and enter into an agreement with the government for the cost of the land to be acquired, etc. However, a further clause states that land acquisition for a private company can be agreed to only for one of the purposes, i.e. providing dwelling houses for employees.


We will next deal with the perceived shortcomings of the older LAA (1894 amended in 1962, 1984).

References


Baden-Powell, B.s H. 1892. The Land-Systems of British India. Clarendon Press, Oxford. Reprint, 1974 by Oriental Publishers, Delhi.

Barton, Gregory A. 2002. Empire Forestry and the Origins of Environmentalism. Cambridge University Press, Cambridge, UK.

Draper, Hal. 1977. Karl Marx’s Theory of Revolution. Vol.I. State and Bureaucracy. Monthly Review Press, New York, 1977. Reprinted 2011 by Aakar Books for South Asia, Delhi-110091.

Ramesh, Jairam and Muhammad Ali Khan. 2015. Legislating for Justice. The Making of the 2013 Land Acquisition Law. Oxford University Press, New Delhi.

United States Department of Justice. 2000. Uniform Appraisal Standards for Federal Land Acquisitions. Interagency Land Acquisition Conference. Published by  the Appraisal Institute, Chicago. 

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