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Investor protection laws are imperative for the economic growth of a nation and most investment activity requires access and ownership to land. As the availability of land is scarce, an equitable and fair regulatory framework is essential to ensure that land owners are not adversely affected. It is equally important that the process of acquisition is prompt, fair and free from road blocks and delays so that the acquirer does not face situations, such as the Tatas did in West Bengal. Expectedly, the Bill had a stormy passage in the Lok Sabha, in balancing interests, but on including certain changes demanded by the Opposition was passed by both the Houses recently. Having achieved the passage, however, there are some glitches.
Historically, land acquisition laws in India have been in effect since 1824 and till date the 1894 Land Acquisition Act, the existing law which was a Colonial law by purpose and nature and focused on acquisition of rural segments has been applicable. Given the changing nature in the demand of land, acquisitions for urban infrastructure such as construction of metro rail projects, have not been addressed in this Act, the orientation is essentially rural. The treatment for disparate segments is a lacuna which can create problems in going ahead. Ideally, there should have been two separate laws or the two aspects should have been addressed in separate chapters.
The "public purpose" definition seeks to be inclusive but reads in a somewhat inchoate manner nonetheless. The availability of rural land in India is one of the lowest in the world. Therefore, both acquisition and displacement have to be treated as being two sides of the same coin. The rehabilitation of displaced persons is not provided for in the existing law and the legislature in the new Act, in any event, in seeking to address this issue has taken a right step.
On the other hand, by raising the compensation to twice the market price in urban and four times in rural areas, and requiring that 25 per cent infrastructural facilities are to be provided in the areas that require resettlement, while it is a factor necessitated by the past agitations and Court orders, but has increased the cost to the acquirer excessively. Further, stakeholders other than the owners have to be compensated. This again leads to increase in compensation amount and provides opportunities to people without proper title to lay claims on the acquirer. And in spite of paying these high costs, the acquirer has no security in the land acquired.
One of the reasons why the old Act was criticised is that the land or part thereof remained unutilised for long periods. To counter this, a provision for return of the land has been envisaged, as well as acquirer refunding one fourth of the compensation amount to the erstwhile owners if the land is sold. Again this is unfair as the earlier owner should not have any surviving interest in the land being duly compensated. The processes envisaged of the governmental actions and approvals are neither fast-track nor single window, there being five stages that every proposal has to undergo, and no timelines are provided. Given this and the inherent delays in government action, the date of utilisation should be calculated from the date on which all approvals for the purpose are obtained rather than from the date of acquisition.
What is critical, therefore, is the role of the government, which has to be fair and objective, particularly as the Act takes into account rehabilitation and resettlement, an area fraught with palpable tension. Having said all the above, the new Act is certainly an improvement on the existing one and will hopefully create more transparency in the acquisition process for the acquirer in going forward and once the preliminary formalities are closed.
Kumkum Sen is a partner at Bharucha & Partners Delhi Office and can be reached at kumkum.sen@bharucha.in
