Monday, April 30, 2012



By Dr T Padma., LLM, Ph D (Law)

“Each person possesses an inviolability founded on justice that even the welfare of society as a whole cannot override.”
- John Rawls[1]


Land Acquisition may be defined as the action of the government whereby it acquires land from its owners in order to pursue certain public purpose or for any company. This acquisition is subject to payment of compensation to the owners or to persons interested in the land. Land acquisitions by the government generally are compulsory in nature, not paying heed to the owner's unwillingness to part with the land.

It is thus different from a land purchase, in which the sale is made by a willing seller. The government has to follow a process of declaring the land to be acquired, notify the interested persons, and acquire the land after paying due compensation. Though land is a state subject, ‘Acquisition and Requisition of property’ falls in the concurrent list, which means that both the centre and the state government can make laws on the matter. There are a number of local and specific laws which provide for acquisition of land under them but the main law that deals with acquisition is the Land Acquisition Act, 1894, a century-old legislation enacted in a very different social, economic and political milieu. Post-Independence, the Indian government has not fundamentally changed the acquisition policy to reflect the values and needs of our times, which has resulted in legal, social, cultural, economic and political fallouts.

The Act authorizes governments to acquire land for public purposes such as planned development, provisions for town or rural planning, provision for residential purpose to the poor or landless and for carrying out any education, housing or health scheme of the Government. It hinders speedy acquisition of land at reasonable prices, resulting in cost overruns.

The issue of compulsory land acquisition has been cropping up at regular intervals with decisive socio-economic and political consequences, acutely witnessed during the Nandigram episode. Despite the raucous noises made about the inequality of the process and outcome of land acquisition, successive Parliamentary sessions have failed to provide a coherent policy response addressing these concerns. 

Undoubtedly, growing urbanization, increasing infrastructure requirements and rapid economic development have imposed high pressure on land in India. Private land is regularly acquired for both state-sponsored development and private projects, which has increasingly become contentious.

Before we proceed to discuss the subject, let us understand the two important basic concepts / Doctrines which are very relevant and perhaps the whole Land Acquisition law has been conceptulised and developed on these concepts.

Doctrine of Eminent domain

Eminent domain’ is the power of government to take private property when it is needed for a public purpose.  Such power is an incident of sovereignty and it generally requires no constitutional recognition. The power of the Government to acquire a private property for a public purpose rests upon the famous maxim “selus populi est suprema lex” which means that the welfare of the people or the public is the paramount law and also on the maxim “necessita public major est quam”, which means public necessity is greater than private. In the context of this doctrine ‘property’ includes both corporeal and incorporeal, movable and immovable, and tangible and intangible. However, this power is invoked generally, to acquire the land of private citizens for a public purpose.  The term ‘eminent domain’ seems to have originated in 1925 by Hugo Grotious who wrote of this power in his work “De Jure Belli Et Pacis”.

The Latin term dominium emines (“supreme lordship”) was used in the 17th century by Grotious to describe the concept explained above.

Eminent domain, compulsory purchase, compulsory acquisition or expropriation in common law legal systems is the power of the state to appropriate private property for its own use without the owner’s consent.  The term eminent domain is used primarily in the United States, where the term was derived in the mid – 19th Century from a legal treatise written by the Dutch jurist Hugo Grotious in 1625.  The term compulsory purchase, also originating in the mid – 19th Century, is used primarily in England and Wales, and other jurisdictions that follow the principles of English law.  Originally, the power of eminent domain was assumed to arise from natural law as an inherent power of the sovereign.

Governments most commonly use the power of eminent domain when the acquisition of real property is necessary for the completion of a public project such as a road, and the owner or the required property is unwilling to negotiate a price for its sale.  In many jurisdictions the power of eminent domain is tempered with a right that just compensation be made for the appropriation.  Some coined the term expropriation to refer to “appropriation” under eminent domain law, and may especially be used with regard to case where no compensation is made for the confiscated property.  Examples include the 1960 Cuban expropriation of property held by U.S. citizens, following a breakdown in economic and diplomatic relations between the Eisenhower Administration and the Cuban government under Fidel Castro.

The term “condemnation” is used to describe the act of a government exercising its authority of eminent domain.  It is not to be confused with the term of the same name that describes the legal process whereby real property, generally a building, is deemed legally unfit for habitation due to its physical defects.  Condemnation via eminent domain indicates the government is taking the property; usually, the only thing that remains to be decided is the amount of just compensation.  Condemnation of buildings on grounds of health and safety hazards or gross zoning violation usually does not deprive the owner of the property condemned but requires the owner to rectify the offending situation.

The exercise of eminent domain is not limited merely to real property; Governments may also condemn the value in a contract such as a franchise agreement (which is why many franchise agreements will stipulate that in condemnation proceedings, the franchise itself has no value).

The power of eminent domain in English law derives from the form of real property.  Many landowners assume that their property right is absolute under the law, but this is rarely the case.  Instead, a county or other authority has created the property in fee simple, a concept that derives from feudal fiefs. The same authority may void (or condemn) the fee and seize the land, as when a landowner fails to pay property tax.  According to William Blackstone,

“The reason of originally granting out this complicated kind of interest, so that the same man shall, with regard to the same land, be at one and the same time tenant in fee-simple and also tenant at the lord’s will, seems to have arisen from the nature of villenage tenure.  Though they were willing to enlarge the interest of their villeins, by granting them estates which might endure for their lives, or sometimes by descendible to their issue, yet did not care to manumit them entirely; and for that reason it seems to have been contrived, that a power of resumption at the will of the lord, should be annexed to these grants, whereby the tenants were still kept in a state of villenage, and no freehold at all was conveyed to them in their respective lands”.

English - speaking countries that never had the feudal system have perpetuated the system of fee-simple property, including the power of eminent domain, for legal continuity.

As pointed out by the Supreme Court of India, “Under the common law of eminent domain as recognized in the jurisprudence of all civilized countries, the state cannot take the property of its subject unless such property is required for a public purpose and without compensating the owner for its loss.  But when, these limitations are expressly provided for and it is further enacted that no law shall be made which takes away or abridges these safeguard, and any such law, if made shall be void.

The Doctrine of Escheat

The Doctrine of Escheat’ denotes that any property which has no owner shall be vested in the state. This principle is based on the belief that the king is the owner of all the properties in his kingdom and that his subjects are only the protectors of his interest.  The Doctrine has been recognized by the Indian Constitution and also the Codified Laws like Hindu Succession Act, 1956 and Indian Succession Act, 1925. Further other personal laws like the Muslim Personal Law relating to Succession and Inheritance also recognized this principle. All Property, real or personal, to which there is no legal owner is escheat and belongs to the State.

Constitutional Provisions

The Constitution originally provided for the right to property under Articles 19 and 31. It also provided that compensation would be paid to a person whose property had been taken possession of or acquired for public purposes. Both the state government as well as the union (federal) government were empowered to enact laws for the ‘acquisition or requisition of property’ (Schedule VII, Entry 42, List III to the Constitution of India). It is this provision that has been interpreted as being the source of the state's 'eminent domain' powers.

The provisions relating to the right to property were changed a number of times. The 44th amendment act of 1978 deleted the right to property from the list of Fundamental Rights. A new article, Article 300-A, was added to the constitution which provided that "no person shall be deprived of his property save by authority of law". Thus, if a legislature makes a law depriving a person of his property, there would be no obligation on the part of the State to pay anything as compensation. The aggrieved person shall have no right to move the court under Article 32. Thus, the right to property is no longer a fundamental right, though it is still a constitutional right. If the government appears to have acted unfairly, the action can be challenged in a court of law by citizens. The liberalisation of the economy and the Government's initiative to set up special economic zones have led to many protests by farmers and have opened up a debate on the reinstatement of the fundamental right to private property.

The Significant Constitutional Questions applying to the exercise of eminent domain power by the government are largely (1) what is a public purpose?  (2) What is taking or acquisition of property? and (3) What is just compensation?  However, this extra-ordinary power can be exercised by the government only under a law which authorizes the taking of property for a public purpose and which provides for payment of just and reasonable compensation to the citizen whose property has been acquired.

Key Controversial Issues

Assembly of land is needed for public purpose and economic development, but the present land acquisition policy is deficient in many respects. Apart from the procedural compliances prescribed under the Act, the primary bone of contention in the present framework relates to public purpose,compensation’ and ‘resettlement and rehabilitation’.

1)     Controversy over Procedural Compliances

The Land acquisition Act, 1894 was enacted for the purpose of compulsorily acquiring of land required for public purpose or for purpose of companies and for determination of the amount of compensation to be paid on account of such acquisition. The Act contemplated that initially a notification would have to be issued under sec. 4(1) indicating the intention of the Government to acquire land or other property. The notification under sec. 4(1) has to be published in the official Gazette. The 1984 Amendments require the sec. 4(1) notification to be also published in two local newspapers of which one at least should be in a regional language, in addition to the public notice of the substance of such notification which has to be made by the Collector at convenient places in the locality where the land is situate. Thus, there are three types of publications of section 4(1) notification. The date of the last of these publications and of such public notice is deemed to be the date of the notification under sec. 4(1). Compensation has to be paid on the basis of the market value as on the date of the notification under sec. 4(1).

After sec. 4(1) notification is issued, section 5A contemplates an inquiry into objections to be filed by those interested in the land or property. That section refers to filing of objections before the Collector, and he has to give an oral hearing and thereafter he has to submit a report to the concerned Government which issued sec. 4(1) notification, for taking further action. The procedure regarding hearing of objections can be dispensed with in case of urgency under section 17(4). If the inquiry is not dispensed with and a report is given after the inquiry, the concerned Government has then to apply its mind independently and decide whether to confirm the acquisition and go ahead. If it decides to go ahead, it has to make a declaration under sec. 6 of the Act. The said declaration will be conclusive proof of the public purpose. The declaration that is made under sec. 6 has to be published, as per a procedure which is similar to the procedure prescribed for publication of a notification under section 4(1).

Initially, under the Act of 1894, there were no time limits prescribed for the making of declaration under sec. 6 after the publication of the notification under sec. 4(1) of the Act. This led to unreasonable delays. In cases, where there was unreasonable delay in the making of the declaration under sec. 6 of the Act, the owner of the property was under a great disadvantage because the market value would have to be determined on the basis of the sec. 4(1) notification published several years earlier. Such unreasonable delays were criticized by the Supreme Court in State of MP vs. Vishnu Prasad[2]

Also the 1984 amended Act provided that the sec. 6 declaration must be made within one year from the date of publication of the sec. 4(1) notification, where such notification under section 4(1) was published after the 1984 Amendment Act.
The section 6, as amended in 1984, reads as follows:

“Section 6. Declaration that land is required for a public purpose:-

(1)     Subject to the provisions of part VII of this Act, when the appropriate government is satisfied after considering the report, if any, made under section 5A, sub-section (2), that any particular land is needed for a public purpose, or for a company, a declaration shall be made to that effect under the signature of a secretary to such Government or of some officer duly authorized to certify its orders and different declarations may be made from time to time in respect of different parcels of any land covered by the same notification under section 4, sub-section (1), irrespective of whether one report or different reports has or have been made (wherever required) under section 5-A, sub-section (2):

Provided that no declaration in respect of any particular land covered by a notification under section 4, sub-section (1)- (i) published after the commencement of the Land Acquisition (Amendment and Validation) Ordinance, 1967, but before the commencement of the Land Acquisition (Amendment) Act, 1984 shall be made after the expiry of three years from the date of the publication of the notification; or
(ii) published after the commencement of the Land Acquisition (Amendment) Act, 1984, shall be made after the expiry of one year from the date of the publication of the notification:

Provided further that no such declaration shall be made unless the compensation to be awarded for such property is to be paid by a company, or wholly or partly out of public revenues or some fund controlled or managed by a local authority.

2)     Judicious Exercise of the Power of Eminent Domain in deciding Public Purpose

Public Purpose has been defined in the Land Acquisition Act as under:-
"(f) The expression "public purpose" includes
(i)          The provision of village-sites, or the extension, planned development or improvement of existing village sites;
(ii)       The provision of land for town or rural planning;
(iii)     The provision of land for planned development of land from public funds in pursuance of any scheme or policy of Government and subsequent disposal thereof in whole or in part in lease, assignment or outright sale worth the object of securing further development as planned;
(iv)     the provision of land for a corporation owned or controlled by the State;
(v)        the provision of land for residential purposes to the poor or landless or to persons residing in areas affected by natural calamities, or to persons displaced to affected by reason of the implementation of any scheme undertaken by Government, any local authority or a corporation owned or controlled by the State;
(vi)     the provision of land for carrying out any educational, housing, health or slum clearance scheme sponsored by Government, or by any authority established by Government for carrying out any such scheme, or, with the prior approval of the appropriate Government, by a local authority or a society registered under the Societies Registration Act, 1860 (21 of 1860), or under any corresponding law for the time being in force in a State, or a co-operative society within the meaning of any law relating to co-operative societies for the time being in force in any State;
(vii)   the provision of land for any other scheme of development sponsored by Government or, with the prior approval of the appropriate Government, by a local authority;
(viii)The provision of any premises or building for locating a public office;
but does not include acquisition of land for Companies."

Public purpose will include a purpose in which the general interest of community as opposed to the interest of an individual is directly or indirectly involved. Individual interest must give way to public interest as far as public purpose in respect of acquisition of land is concerned.

In the Constitution of India, some guidelines can be traced as far as public purpose is concerned in Article 37 of the Constitution. The provisions contained in this Part (Directive Principles of the State Policy) shall not be enforceable by any Court, but the principles therein laid down are nevertheless fundamental in the governance of the country. It shall be the duty of the State to apply these principles in making laws.

According to Article 39 of the Constitution, the State shall, in particular, direct its policy towards securing that the ownership and control of the material resources of the community are so distributed as best to sub serve the common good. The laws made for the purpose of securing the constitutional intention and spirits have to be for public purpose.

Because, Public purpose is bound to vary with times and prevailing conditions in the community or locality and, therefore, the legislature has left it to the State (Government) to decide what is public purpose and also to declare the need of a given land for the purpose. The legislature has left the discretion to the Government regarding public purpose. The Government has the sole and absolute discretion in the matter.

Controversy over Deciding Public Purpose- Judicial Interpretation

In State of Bihar v. Kames war Singh[3], a Constitution Bench of the Apex Court considered the expression 'public purpose'. Mahakam, J. explained the expression 'public purpose' in the following manner:

"The expression "public purpose" is not capable of a precise definition and has not a rigid meaning. It can only be defined by a process of judicial inclusion and exclusion. In other words, the definition of the expression is elastic and takes its colour from the statute in which it occurs, the concept varying with the time and state of society and its needs. The point to be determined in each case is whether the acquisition is in the general interest of the community as distinguished from the private interest of an individual."

In that case, S. R. Das, J. observed as under: "We must regard as public purpose all that will be calculated to promote the welfare of the people as envisaged in the Directive Principles of State policy whatever else that expression may mean."

Almost a century ago, in Hamabai v. Secretary of State[4] Batchelor, J. observed: "General definitions are, I think, rather to be avoided where the avoidance is possible, and I make no attempt to define precisely the extent of the phrase 'public purpose' in the lease; it is enough to say that, in my opinion, the phrase, whatever else it may mean, must include a purpose, that is, an object or aim, in which the general interest of the community, as opposed to the particular interest of individuals, is directly and vitally concerned" received the approval of the Privy Council".

The definition of public purpose has been relied in number of subsequent decisions including the Constitution Bench judgment of the Supreme Court. The concept of public purpose was dealt in great detail in a leading American case Munn v. Illinois[5] and in some other cases. The doctrine declared is that property becomes clothed with a public interest when used in a manner to make it of public consequence, and affect the community at large and from such clothing the right of the legislature is deduced to control the use of the property and to determine the compensation which the owner may receive for it. Field, J. observed as follows: "The declaration of the Constitution of 1870, that private buildings used for private purposes shall be deemed public institutions, does not make them so. The receipt and storage of grain in a building erected by private means for that purpose does not constitute the building a public warehouse. There is no magic in the language, though used in a constitutional convention, which can change a private business into a public one, or alter the character of the building in which the business is transacted."

In United Community Services v. Omaha Nat. Bank [6]the Court observed that a public purpose has for its objective the promotion of the public health, safety, morals, security, prosperity, contentment, and the general welfare of all the inhabitants.

In People ex rel. Adamowski v. Chicago R.R. Terminal Authority[7],  the Court observed that public purpose is not static concept, but is flexible, and is capable of expansion to meet conditions of complex society that were not within contemplation of framers of Constitution.

In Green v. Frazier[8], the Court observed that a public purpose or public business has for its objective the promotion of the public health, safety, morals, general welfare, security, prosperity, and contentment of all the inhabitants or residents within a given political division, as, for example, a state, the sovereign powers of which are exercised to promote such public purpose or public business. In the words of Lord Atkinson in Central Control Board v. Cannon Brewery Co. Ltd[9], the power to take compulsorily raises by implication a right to payment.

The power of compulsory acquisition is described by the term "eminent domain". This term seems to have been originated in 1525 by Hugo Grotius, who wrote of this power in his work "De Jure Belli et Pacis" as follows : "The property of subjects is under the eminent domain of the State, so that the State or he who acts for it may use and even alienate and destroy such property, not only in the case of extreme necessity, in which even private persons have a right over the property of others, but for ends of public utility, to which ends those who founded civil society must be supposed to have intended that private ends should give way. But it is to be added that when this is done the State is bound to make good the loss to those who lose their property." The Court observed that the requirement of public purpose is implicit in compulsory acquisition of property by the State or, what is called, the exercise of its power of 'Eminent Domain'. The Court further observed that the principle of compulsory acquisition of property, is founded on the superior claims of the whole community over an individual citizen but is applicable only in those cases where private property is wanted that public use, or demanded by the public welfare and that no instance is known in which it has been taken for the mere purpose of raising a revenue by sale or otherwise and the exercise of such a power is utterly destructive of individual right.

In the State of Bombay v. R.S. Nanji[10], the Court observed that it is impossible to precisely define the expression 'public purpose'. In each case all the facts and circumstances will require to be closely examined in order to determine whether a public purpose has been established. Prima facie, the Government is the best judge as to whether public purpose is served by issuing a requisition order, but it is not the sole judge. The courts have the jurisdiction and it is their duty to determine the matter whenever a question is raised whether a requisition order is or is not for a public purpose. In the said case, the Court observed that the phrase 'public purpose' includes a purpose, that is, an object or aim, in which the general interest of the community, as opposed to the particular interest of individuals is directly and vitally concerned. It is impossible to define precisely the expression 'public purpose'. In each case all the facts and circumstances will require to be closely examined to determine whether a public purpose has been established. In that case, the Court also referred to the following cases: The State of Bombay v. Bhanji Munji & Another[11] and The State of Bombay v. Ali Gulshan [12].

In Somawanti v. State of Punjab[13], the Court observed that public purpose must include an object in which the general interest of the community, as opposed to the particular interest of individuals, is directly and vitally concerned. Public purpose is bound to change with the times and the prevailing conditions in a given area and, therefore, it would not be a practical proposition even to attempt an extensive definition of it. It is because of this that the legislature has left it to the Government to say what a public purpose is and also to declare the need of a given land for a public purpose.

The Constitution Bench of the Court in Somawanti (supra) observed that whether in a
particular case the purpose for which land was needed was a public purpose or not was for the Government to be satisfied about and the declaration of the Government would be final subject to one exception, namely that where there was a colourable exercise of the power the declarations would be open to challenge at the instance of the aggrieved party.

In Babu Barkya Thakur v. The State of Bombay & Others[14] the Court observed as under: "It will thus be noticed that the expression 'public purpose' has been used in its generic sense of including any purpose in which even a fraction of the community may be interested or by which it may be benefited."

The Constitution Bench in Satya Narain Singh v. District Engineer, P.W.D., Ballia and Anr[15],  while describing public service observed :- "It is undoubtedly not easy to define what is "public service" and each activity has to be considered by itself for deciding whether it is carried on as a public service or not. Certain activities will undoubtedly be regarded as public services, as for instance, those undertaken in the exercise of the sovereign power of the State or of governmental functions. About these there can be no doubt. Similarly a pure business undertaking though run by the Government cannot be classified as public service. But where a particular activity concerns a public utility a question may arise whether it falls in the first or the second category. The mere fact that that activity may be useful to the public would not necessarily render it public service. An activity however beneficial to the people and however useful cannot, in our opinion, be reasonably regarded as public service if it is of a type which may be carried on by private individuals and is carried on by government with a distinct profit motive. It may be that plying stage carriage buses even though for hire is an activity undertaken by the Government for ensuring the people a cheap, regular and reliable mode of transport and is in that sense beneficial to the public".

In Arnold Rodricks v. State of Maharashtra[16], while Justice Wanchoo and Justice Shah dissenting from judgment observed that there can be no doubt that the phrase 'public purpose' has not a static connotation, which is fixed for all times. There can also be no doubt that it is not possible to lay down a definition of what public purpose is, particularly as the concept of public purpose may change from time to time. There is no doubt however that public purpose involves in it an element of general interest of the community and whatever furthers the general interest must be regarded as a public purpose.

In Bhim Singhji v. Union of India[17], as per Sen, J., the concept of public purpose necessarily implies that it should be a law for the acquisition or requisition of property in the interest of the general public, and the purpose of such a law directly and vitally subserve public interest. Broadly speaking the expression 'public purpose' would however include a purpose in which the general interest of the community as opposed to the particular interest of the individuals is directly and virtually concerned.

In Laxman Rao Bapurao Jadhav v. State of Maharashtra [18], this Court observed that "it is for the State Government to decide whether the land is needed or is likely to be needed for a public purpose and whether it is suitable or adaptable for the purpose for which the acquisition was sought to be made. The mere fact that the authorized officer was empowered to inspect and find out whether the land would be adaptable for the public purpose, it is needed or is likely to be needed, does not take away the power of the Government to take a decision ultimately".

In Scindia Employees' Union v. State of Maharashtra & Others[19] the Court observed as under:"The very object of compulsory acquisition is in exercise of the power of eminent domain by the State against the wishes or willingness of the owner or person interested in the land. Therefore, so long as the public purpose subsists the exercise of the power of eminent domain cannot be questioned. Publication of declaration under Section 6 is conclusive evidence of public purpose. In view of the finding that it is a question of expansion of dockyard for defense purpose, it is a public purpose."

The right of eminent domain is the right of the State to reassert either temporarily or permanently its dominion over any piece of land on account of public exigency and for public good.

In the case of Coffee Board v. Commissioner of Commercial Taxes[20] the Court observed that the eminent domain is an essential attribute of sovereignty of every State and authorities are universal in support of the definition of eminent domain as the power of the sovereign to take property for public use without the owner's consent upon making just compensation.

The power of eminent domain is not exercisable in Anglo-Saxon jurisprudence except on condition of payment of compensation.

In United States, the power of eminent domain is founded both on the Federal (Fifth Amendment) and on the State Constitutions. The scope of the doctrine in America stands considerably circumscribed by the State Constitutions. Now, the Constitution limits the power to taking for a public purpose and prohibits the exercise of power of eminent domain without just compensation. The process of exercising the power of eminent domain now is commonly referred to as 'condemnation' or 'expropriation'."

In the State of Karnataka & Another v. Shri Ranganatha Reddy & Another[21], a seven-Judge Bench of the Apex Court explained the expression 'public purpose' in the following words: “ It is indisputable and beyond the pale of any controversy now as held by this Court in several decisions including the decision in the case of His Holiness Kesavananda Bharati Sripadagalaveru v. State of Kerala[22], popularly known as ‘Fundamental Rights case’ - that any law providing for acquisition of property must be for a public purpose. Whether the law of acquisition is for public purpose or not is a justifiable issue. But the decision in that regard is not to be given by any detailed inquiry or investigation of facts. The intention of the legislature has to be gathered mainly from the Statement of Objects and Reasons of the Act and its Preamble. The matter has to be examined with reference to the various provisions of the Act, its context and set up, the purpose of acquisition has to be culled out therefrom and then it has to be judged whether the acquisition is for a public purpose within the meaning of Article 31(2) and the law providing for such acquisition.”

Mindless Acquisition of the Land is to be Stopped – Supreme Court

In the case of Dev Sharan v. State of U.P[23], the Supreme Court has declared that hearing has to be granted to the person whose land is being acquired unless such emergent conditions exist that the grant of hearing would cripple the public interest being addressed. The Court held that the right to property of a person was a natural and legal right, and the Land Acquisition Act permitting the acquisition of land from the citizens was to be construed strictly. Noting that the "Courts must examine these questions very carefully when little Indians lose their small property in the name of mindless acquisition at the instance of the State",

The Supreme Court has also made interesting observations on the concept of land acquisition and the withering of rights over land of the citizens to conclude that a strict regime was required to be implemented before the citizens could be rendered landless. In this context, the Court expressed its opinion in the following terms. (Relevant Extracts from the Judgment are furnished below):

15)  Admittedly, the Land Acquisition Act, a pre-Constitutional legislation of colonial vintage is a drastic law, being expropriatory in nature as it confers on the State a power which affects person’s property right. Even though right to property is no longer fundamental and was never a natural right, and is acquired on a concession by the State, it has to be accepted that without right to some property, other rights become illusory. This Court is considering these questions, especially, in the context of some recent trends in land acquisition. This Court is of the opinion that the concept of public purpose in land acquisition has to be viewed from an angle which is consistent with the concept of a welfare State. 

16)  The concept of public purpose cannot remain static for all time to come. The concept, even though sought to be defined under Section 3(f) of the Act, is not capable of any precise definition. The said definition, having suffered several amendments, has assumed the character of an inclusive one. It must be accepted that in construing public purpose, a broad and overall view has to be taken and the focus must be on ensuring maximum benefit to the largest number of people. 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. Even though the concept of public purpose was introduced by pre-Constitutional legislation, its application must be consistent with the constitutional ethos and especially the chapter under Fundamental Rights and also the Directive Principles.

17)  In construing the concept of public purpose, the mandate of Article 13 of the Constitution that any pre-constitutional law cannot in any way take away or abridge rights conferred under Part–III must be kept in mind. By judicial interpretation the contents of these Part III rights are constantly expanded. The meaning of public purpose in acquisition of land must be judged on the touchstone of this expanded view of Part-III rights. The open-ended nature of our Constitution needs a harmonious reconciliation between various competing principles and the overhanging shadows of socio-economic reality in this country.

18)  Therefore, the concept of public purpose on this broad horizon must also be read into the provisions of emergency power under Section 17 with the consequential dispensation of right of hearing under Section 5A of the said Act. The Courts must examine these questions very carefully when little Indians lose their small property in the name of mindless acquisition at the instance of the State. If public purpose can be satisfied by not rendering common man homeless and by exploring other avenues of acquisition, the Courts, before sanctioning an acquisition, must in exercise of its power of judicial review, focus its attention on the concept of social and economic justice. While examining these questions of public importance, the Courts, especially the Higher Courts, cannot afford to act as mere umpires. In this context we reiterate the principle laid down by this Court in Authorised Officer, Thanjavur and another vs. S. Naganatha Ayyar and others[24] reported in (1979) 3 SCC 466, wherein this Court held:

“……It is true that Judges are constitutional invigilators and statutory interpreters; but they are also responsive and responsible to Part IV of the Constitution being one of the trinity of the nation’s appointed instrumentalities in the transformation of the socioeconomic order. The judiciary, in its sphere, shares the revolutionary purpose of the constitutional order, and when called upon to decode social legislation must be animated by a goal-oriented approach. This is part of the dynamics of statutory interpretation in the developing countries so that courts are not converted into rescue shelters for those who seek to defeat agrarian justice by cute transactions of many manifestations now so familiar in the country and illustrated by the several cases under appeal. This caveat has become necessary because the judiciary is not a mere umpire, as some assume, but an activist catalyst in the constitutional scheme.”

19)  In other words public purpose must be viewed through the prism of Constitutional values as stated above. 

20)  The aforesaid principles in our jurisprudence compel this Court to construe any expropriartory legislation like the Land Acquisition Act very strictly. 

21)  The judicial pronouncements on this aspect are numerous, only a few of them may be noted here.

22)  In DLF Qutab Enclave Complex Educational Charitable Trust vs. State of Haryana and Ors[25]. – (2003) 5 SCC 622, this Court construed the statute on Town Planning Law and held ” Expropriatory statute, as is well known, must be strictly construed.”

23)  The same principle has been reiterated subsequently by a three-Judge Bench of this Court in State of Maharashtra and Anr. vs. B.E. Billimoria and Ors[26]. – (2003) 7 SCC 336 in the context of ceiling law.

24)  These principles again found support in the decision of this Court in Chairman, Indore Vikas Pradhikaran vs. Pure Industrial Coke and Chemicals Ltd. and Ors[27]. – (2007) 8 SCC 705, wherein this Court construed the status of a person’s right to property after deletion of Article 19(1)(f) from Part III. By referring to various international covenants, namely, the Declaration of Human and Civic Rights, this Court held that even though right to property has ceased to be a fundamental right but it would however be given an express recognition as a legal right and also as a human right.

25)  While discussing the ambit and extent of property right, this Court reiterated that expropriatory legislation must be given strict construction.

3)  Controversy over payment of Compensation
a)     Mechanism for Compensation Determination

The Act embodies the doctrine of “eminent domain”, which allows the government to compulsorily acquire private land for a “public purpose” provided it pays just compensation. Compulsory acquisition conflicts with the right to property of an individual, which is compromised every time a person is forced to give up his land against his will. However, the present land acquisition process provides for very minimal involvement of the land owner in determining the value of his land. Such abridgement of one’s rights over land coupled with government’s excessive intervention in compensation determination has led to great resentment and questioning of the State’s role in land assembly in a market-oriented economy.

b)     Adequate and Appropriate Compensation

Compensation is calculated on the basis of prevailing market-value of the land derived primarily from past transactions. This approach is oblivious to the practical realities in India where the market is illiquid due to regulatory restrictions and values are under reported to evade tax implications. Also, the guiding principle in determining compensation is to restitute the landowner to the same position after the acquisition as he was before, neither worse nor better. While this was an acceptable solution a century ago when land prices were less volatile and subject to external conditions, today’s oustees lose out on the potential benefits of the developmental project, especially when there is a shift from agricultural to non-agricultural use. An adjacent land owner who does not lose his land stands to gain from the proposed project due to appreciation in land prices and other benefits of the project, but the person who has lost his land is alienated from the developmental process. These issues regarding compensation result in a highly inequitable outcome to the land owner, resulting in many controversies affecting the overall economic development of the country.
c)     Compensation for the Deserving

Compensation for the loss of assets is presently based on title, and therefore, only land owners and tenants are entitled to compensation. A vast number of people dependent on those assets for their livelihood and sustenance such as sharecroppers, wage-labourers and persons dependent on common property resources are left out as they do not have legal title to land.  Due to India’s high population density, such groups are inevitably the most affected when uprooted from their ecosystem due to land acquisition.

4) In-Human approach as to Resettlement and Rehabilitation

For a vast number of Indians, land is not mere property but also serves as a source of identity and security. Forcible acquisition of land, therefore, not only dispossess a person from his land but also invariably wreaks social havoc by separating families, interfering with traditional livelihoods, and depriving whole communities of sites of religious and cultural significance. Clearly, these disruptions can in no measure be adequately indemnified by mere monetary compensation; hence, it was thought that the Resettlement and Rehabilitation (R&R) has to be an integral part of and precondition for compulsory land assembly. Also, a one-size-fits-all approach cannot be adopted in R&R due to ethnic and cultural diversity in India.

Changes Proposed in the Amendment Bill

The government had introduced a Bill to amend this Act in 2007. That Bill lapsed in 2009 at the time of the general elections. However, the government has stated its intent to re-introduce a similar Bill.

The Bill narrows the uses for which land may be acquired. It also changes the compensation due and links that to the market price for which land is to be used.  There could be significant changes in acquisition for use by private industry. Firstly, they would have to purchase at least 70 pc of the required land from willing sellers (presumably, at fair market price). Second, the compensation amount for the remaining (up to 30 pc of land) could be significantly higher than the current method. This would be at a premium to the average paid to the willing sellers, and it would be based on intended industrial or commercial use which usually commands a higher price than agricultural land.

However, the effect on acquisition for projects such as highways and railways will not be significant, as there is no benchmark for price determination for such use.

The significant changes proposed in the 2007 Bill are discussed below:

1)     The purpose for which land may be acquired

Currently, land may be acquired for a range of uses such as village sites, town or rural planning, residential purposes for poor or displaced persons, planned development (education, housing, health, slum clearance), and for state corporations. Land may also be acquired for use by private companies for the above purposes or if the work "is likely to prove useful to the public".
The 2007 Bill had a narrower list: (a) for strategic naval, military or air force purposes; (b) for public infrastructure projects; and (c) for any purpose useful to the general public if 70% of the land has been purchased from willing sellers through the free market.

2)     The amount of compensation to be paid

The current Act requires market value to be paid for the land and any other property on it (buildings, trees, irrigation work etc) as well as expenses for compelling the person change place of residence or business. It explicitly prohibits taking into account the intended use of land while computing market value.

The 2007 Bill requires payment of the highest of three items: the minimum value specified for stamp duty, the average of the top 50 per cent by price of land sale in the vicinity, and the average of the top 50 pc of the land purchased for the project from willing sellers. For computing recent land sale, the intended land use is to be used. Thus, agricultural land being acquired for an industrial project will be paid the price of industrial land.

3)     The process of acquisition

Several changes are proposed, including the requirement of a social impact assessment. Any project that displaces more than 400 families (200 in hilly, tribal and desert areas) will require an SIA before the acquisition is approved.

4)     Use of the land acquired

The 2007 Bill requires the land acquired to be used for that purpose within five years. If this condition is not met, the land reverts to the government (it is not returned to the original land owners). If any acquired land is transferred to another entity, 80 pc of the capital gains has to be shared with the original land-owners and their legal heirs.

5)     Dispute settlement mechanisms

Currently, all disputes are resolved by civil courts, which results in delays. The 2007 Bill sets up Land Acquisition Compensation Dispute Resolution Authority at the state and national levels. These authorities will have the power of civil courts, and will adjudicate disputes related to compensation claims.


The land acquisition processes in India need reform. Violent protests and politicisation of anti acquisition protests, while most undesirable, are only likely to increase unless the Government acts fast and in a manner as to inspire confidence amongst the public. Undoubtedly, some recent decisions indicate that the Government has woken up to the issue and introduced the Land Acquisition [Amendment] Bill, 2007 and the Rehabilitation and Re- Settlement Bill, 2007.  This determination must be followed through to avoid unsavoury incidents of the sort witnessed in the last few years.

Further, the Land Acquisition (Amendment) Bill and Legislation on Resettlement and Rehabilitation should  incorporate farmer-friendly provisions such as flexibility in fixing land rates after factoring prices prevailing in adjoining areas and employment to project-displaced persons.
To prevent any agitation, the approval for land acquisition should be granted only if the majority or at least 70% of the people being displaced agree to it. In case where a party transfers the land acquired with the help of the government at a profit, then it will have to share the differential to the farmers.

Acquisition can be done only through negotiation, and not by force. Fertile land, as a matter of policy, will not be taken over. And project-affected families will have to be provided with employment.

100% Land Acquisition should be for earmarked projects (for which the government can acquire 100% land) which include establishment of installations pertaining to national security, infrastructure and facilities designated as 'social infrastructure', such as health, education and space research.

For any project other than the above, land would be acquired in the 70:30 ratios, with the company planning to set up the facility on that land should be asked to purchase 70% of it. The state government should  step into the picture only after the private player had done its bit, by agreeing to take over the remaining 30% if it felt the project fell in the 'public purpose' domain.


       [Published in Supreme Court Journal  / Weekly
May, 2011]

[1] John Rawls, A Theory of Justice, (Harvard University Press, USA), 1971, p3
[2] State of MP vs. Vishnu Prasad; AIR 1966 SC 1593.
[3]  State of Bihar v. Kameshwar Singh; AIR 1952 SC 252
[4] Hamabai v. Secretary of State; (1911) 13 Bom LR 1097
[5] Munn v. Illinois; (1877) 94 US 113: 24 L. Ed 77
[6] United Community Services v. Omaha Nat. Bank; 77 N.W.2d 576, 585, 162 Neb. 786
[7] People ex rel. Adamowski v. Chicago R.R. Terminal Authority; 151 N.E.2d 311, 314, 14 III.2d 230
[8] Green v. Frazier; 176 N.W. 11, 17, 44 N.D. 395
[9] Central Control Board v. Cannon Brewery Co. Ltd; (1919) A.C. 744
[10] The State of Bombay v. R.S. Nanji; (1956) SCR 18
[11] The State of Bombay v. Bhanji Munji & Another; (1955) 1 SCR 777
[12] The State of Bombay v. Ali Gulshan; (1955) 2 SCR 867
[13] Somawanti v. State of Punjab; (1963) 2 SCR 774
[14] Babu Barkya Thakur v. The State of Bombay & Others; (1961) 1 SCR 128
[15] Satya Narain Singh v. District Engineer, P.W.D., Ballia and Anr; AIR 1962 SC 1161
[16] Arnold Rodricks v. State of Maharashtra; (1966) 3 SCR 885
[17] Bhim Singhji v. Union of India; (1981) 1 SCC 166
[18] Laxman Rao Bapurao Jadhav v. State of Maharashtra; (1997) 3 SCC 493
[19] Scindia Employees' Union v. State of Maharashtra & Others; (1996) 10 SCC 150,
[20] Coffee Board v. Commissioner of Commercial Taxes; (1988) 3 SCC 263,
[21] The State of Karnataka & Another v. Shri Ranganatha Reddy & Another; (1977) 4 SCC 471
[22] His Holiness Kesavananda Bharati Sripadagalaveru v. State of Kerala; [1973] Supp. 1 S.C.R. 1
[23] Dev Sharan v. State of U.P; 2011 STPL(Web) 227 SC
[24] Authorised Officer, Thanjavur and another vs. S. Naganatha Ayyar and others; (1979) 3 SCC 466
[25] DLF Qutab Enclave Complex Educational Charitable Trust vs. State of Haryana and Ors.; (2003) 5 SCC 622
[26] State of Maharashtra and Anr. vs. B.E. Billimoria and Ors; (2003) 7 SCC 336
[27] Chairman, Indore Vikas Pradhikaran vs. Pure Industrial Coke and Chemicals Ltd. and Ors; (2007) 8 SCC 705

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