Supreme Court on Land Acquisition, Loss of Livelihood and Compensation

In India, typically 60-70 people are linked with agricultural related activities and we have Agricultural based economy. Though we have sufficient fertile land to not only support ourselves but can give support to other countries as well as we belive in sustianable growth of development. A farmer’s connection with the land where he works is unique and special. Agriculture sector contributes to around 17-18 percent of the country’s GDP. In the Indian context, the archaic Land Acquisition Act of 1894, based on the principle of ‘eminent domain’ and has given discretion to government on this matter to acquire any land/property whether it is commercial or residential or agricultural or used for any other purposes for sustainable development. Land is used for residence, shops, buildings, commercial complex, government buildings, offices and big chunks of land is required mostly importantly for agricultural and industrial purposes.

In areas where there is less rates for land having low fertility and high availability will brings lesser compensation in compare to the land situated at places where there is high density of population, high fertility, heavy constructions took places in those area where land is set to be acquired. However, in initial era, there is not much awareness about the land acquisition law but with the advent of time, and increase with value of land, people are more aware of the land acquisition and compensation in lieu of that acquisition. It is be clearly prove from the fact, the area within Haryana, Punjab and borders of Delhi or NCR area which when acquired by the Government to bring sustainable development, proportionally it brings higher compensation.

That process of acquisition starts from notification issued by Govt. of any State u/s 4 of Land Acquisition Act, in which particulars of proposed land which may be acquired is mentioned. After that objection were called from the landowners whose land would be acquired and then objections were decided whether their landfalls in any Govt. policy as to release that land from criteria of acquisition. Thereafter after deciding all objections, another notification u/s 6 will be issued by State Govt. that particular area of land will be finally acquired. Thereafter Award is passed by Collector, who will decide the amount of compensation will be provided to landowners. Afterward, if landowners were not satisfied with the Award passed by Land Acquisition Collector, then reference petition was filed before the District Court, who will, in turn, decided to apply the judicial principles of law. Thereafter if any aggrieved party either it may be landowners or State Govt. is not satisfied with the amount of compensation, they will file the First Appeal before Hon’ble High Court and then finally before Hon’ble Supreme Court.

That litigation in Land Acquisition matters raises various issues like ‘public purpose’, ‘lapse of acquisition’, ‘’colorable exercise of power, ‘no deposit of compensation’ ‘determination of the market value of compensation’ etc.

The power of eminent domain has three essential attributes of sovereignty. First, the power of the state to take over private land; second, this power is to be exercised for public ground; and third, it is the obligation on the State to compensate those whose lands are taken over. In the 2011 Supreme Court case of Dev Sharan vs. State of Uttar Pradesh, the Apex Court itself had critiqued the state’s efforts at diluting the said clause by pointing out that, Any attempt by the State to acquire land by promoting a public purpose to benefit a particular group of people or to serve any particular interest at the cost of the interest of a large section of people especially of the common people defeats the very concept of public purpose.  In Soorma Pratap Reddy and others v. District Collector, Ranga Reddy Dist and others, Supreme Court stated that “public purpose” includes any purpose wherein even a fraction of the community may be interested or by which it may be benefited. As such Special Economic Zones (SEZs), mines, shopping malls, factories, dams, and other large scale projects have been facilitated by expropriation of land under the Land Acquisition Act.  However, landmark judgments in R L Aurora v. State of Uttar Pradesh wherein Supreme Court held that the government could not justify acquiring land for a textile machinery manufacturer as a ‘public purpose’. It further declared that the ‘Land Acquisition Act’ did not contemplate that the government should be made a general agent for companies to acquire lands for them for their private profit”

Although the power to determine what constitutes public purpose is primarily with the government ultimately Court has the power to review such decisions. However, in practice the courts have generally placed limitations on themselves in Sooram Pratap Reddy and others v. District Collector, Ranga Reddy Dist and others, Supreme Court articulated the grounds of review as follows:

  1. Malice exercise of power
  2. A public purpose that is only apparently public purpose but it is, in reality, private purpose or other collateral purpose.
  3. An acquisition without following the procedure established under the Act
  4. When the acquisition is unreasonable or irrational
  5. When acquisition is not a public purpose at all and the fraud on the state is apparent.

Justiciability as to the purpose of acquisition may be challenged before the Courts, if prima-facie evidence is available on the grounds inter alia, that:

  1. The acquisition is mala-fide, since the purpose as disclosed in section 4 of the Land Acquisition Act, 1894 notification is not really a public purpose.
  2. The power exercised by the Government in the acquisition of land is colorable in nature.
  3. The intended acquisition is to benefit a particular individual, firm or company.
  4. The notification is vague and does not either disclose the purpose or is not clear about the purpose of acquisition
  5. Provisions of part VII are not complied with as per the Act.
  6. The activities of the agency on whose behalf the acquisition is sought are not really related to public purpose.

Acquisition of Religious properties: That Allahabad High Court while deciding a matter concerning the acquisition of land of the church by government, the Divisional Bench of V.K. Shukla and Mahesh Chandra Tripathi, JJ. held that land belonging to religious bodies can be acquired by the government if the purpose for which it is acquired is a public purpose.

Non-Deposit of Compensation in Court viz a viz Act 2013. In section 24(2) of the Act of 2013 in the expression ‘paid,’ it is not necessary that the amount should be deposited in court as provided in section 31(2) of the Act of 1894. Non-deposit of compensation in court under section 31(2) of the Act of 1894 does not result in a lapse of acquisition under section 24(2) of the Act of 2013. Due to the failure of deposit in court, the only consequence at the most inappropriate cases may be of a higher rate of interest on compensation as envisaged under section 34 of the Act of 1894 and not lapse of acquisition.

Determination of Market Value of Acquired land

While fixing the market value of the acquired land, the Land Acquisition Officer is required to keep in mind the following factors:

  1. existing geographical situation of the land;
  2. existing use of the land;

iii. already available advantages, like proximity to National or State Highway or road and/or developed area and

  1. the market value of other land situated in the same locality/village/area or adjacent or very near to the acquired land.

It can be broadly stated that the element of speculation is reduced to the minimum if the underlying principles of fixation of market value with reference to comparable sales are made:

(i) when the sale is within a reasonable time of the date of notification under Section 4(1);

(ii) It should be a bona fide transaction;

(iii) It should be of the land acquired or of the land adjacent to the land acquired; and

(iv) It should possess similar advantages.

It is only when these factors are present, it can merit consideration as a comparable case (Special Land Acquisition Officer v. T. Adinarayan Setty)

The fairness of market value herein reflects the estimated price for the transfer of property between willing parties who have the respective interests of those parties. The best method to determine the same is to consider the prices obtained by contemporaneous sale deeds whether of the same land or of lands in the vicinity. Various factors may be taken into consideration, namely the size and shape of the land, the locality and its situation, the tenure of the property, the user, the potential value and the rise or depreciation of valuation of the land in the locality. Where sale instances of comparable lands are available on record, the court can safely take into consideration such sale instances and make the award relying on such sale transactions. It is also a settled law that where there are several exemplars with reference to similar lands the highest exemplars should be taken into consideration for determination of compensation.”

Kapil Chandna Advocate

Practicing in Supreme Court of India