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Proposed new land acquisition bill

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The New Land Acquisition Bill – A fraud on farmers.

What was initiated by the British in the year 1824 as a regulation applicable to Bengal Province only, culminated into a full fledged self-contained land acquisition act, covering the whole of British India in 1894. Post independence in 1947, the Indian government adopted the 1894 Land Acquisition Act (LA ACT 1894). Since then several amendments have been made from time to time but the basic provisions have remained the same. Several other Central Laws pertaining to the same land acquisition were subsequently passed with different compensation packages, mostly falling short of what LA Act 1894 offers. Therefore many land owners who lost their lands to these Acts have been fighting in various courts of Law in the country. These people have been hoping that the proposed New Act would be comprehensive and would answer their woes as well.

The present Government is hopeful of finally replacing the colonial, 119-year-old Land Acquisition Act with a fairer law. However, in reality, the so called generous and fairer Compensation offered falls woefully short. The compensation under Sections 26 to 29 and Section 63 of the proposed new Act comprises of the following.

  1. Market Value. This is computed as per Section 26 which is the minimum or average value of the sale deeds of preceding 3 years, multiplied by a factor of 2 in case of rural areas or 1 in case of urban areas.
  2. Award Amount. This is The Market Value as mentioned above plus the rehabilitation element (as per 2nd Schedule) where applicable.
  3. Total Compensation. This is computed as the Award amount as mentioned at 2 above plus value of the assets on the land plus interest at the rate of 12% per annum on the market value mentioned at 1 above.
  4. Solatium. This is 100% over the total compensation which should mean double the amount mentioned at 3 above.


The hidden catch.   According to the above method of determining the Market Value, it is minimum or average of prices of sale deeds registered in the preceding three years which can amount to as low as 20 to 25 percent of the actual market value as on the date of declaration. In certain cases of growing urban areas, it can be even lower, at 10% of the existing market value. Further, it is a well known fact that the prices mentioned in the sale deeds are only guidance values, meant for the collection of stamp duty and therefore are not the true reflection of the actual market values. Therefore, it makes no sense at all in multiplying such an unrealistic low value by 2 or 1 while deciding the Market Value.

Under the existing LA Act 1894, Section 23, the value to be determined by the Collector is stated as simply ‘the Market value as on the date of publication’ and not in the preceding three years. Accordingly, the LA authorities have been fixing higher values of the sale deeds registered, as Market Value.

Not satisfied with the procedures followed, in the past, several land owners had approached the courts and obtained favourable directions which should have been considered by the drafters of the proposed New Land Bill.

Madras High Court, in their judgment on Market value, in Appeal Suit Nos.563 of 2006 and 238 of 2007 dated 6 Apr 2010 ruled that  proximity from time angle and  proximity from situation angle should be taken as comparable instance. Therefore, an instance that occurred 3 years ago, as contemplated in the new bill, can not be comparable.

A Bench of Supreme Court of the country, in CIVIL APPEAL NO. 4005 OF 2012 (Arising out of SLP (C) No. 26866 of 2009 Mehrawal Khewaji Trust (Regd.), Faridkot & Ors. .... Appellant (s) Versus State of Punjab & Ors. .... Respondent(s) clearly ruled that when the land is being compulsorily taken away from a person, he is entitled to the highest value which similar land in the locality is shown to have fetched in a bona fide transaction entered into between a willing purchaser and a willing seller near about the time of the acquisition. The honorable court has also ruled in the same judgment that averaging of the prices is not justified.

Thus, the New Land Bill too should adopt the above guide lines for deciding the market value and incorporate under Section 26.

Applicability of the proposed New Act to the other similar Central Acts such as NH Act 1956 etc.

Under paragraph 22 of the STATEMENT OF OBJECTS AND REASONS in the New Bill, it is stated that-

“ Certain Central Acts dealing with the land acquisition have been enlisted in the Bill. The provisions of the Bill are in addition to and not in derogation of these Acts. The provisions of this Act can be applied to these existing enactments by a notification of the Central Government”

However, in reality, what the proposed act, Section 98 says about it is,

98. (1) Subject to sub-section (3), the provisions of this Act shall not apply to the enactments relating to land acquisition specified in the Fourth Schedule.

(2) Subject to sub-section (2) of section 99 the Central Government may, by notification, omit or add to any of the enactments specified in the Fourth Schedule.

(3) The Central Government may, by notification, direct that any of the provisions of this Act relating to the determination of compensation in accordance with the First Schedule and rehabilitation and resettlement specified in the Second and Third Schedules, being beneficial to the affected families, shall apply to the cases of land acquisition under the enactments specified in the Fourth Schedule or shall apply with such exceptions or modifications as may be specified in the notification, as the case may be.

(4) A copy of every notification proposed to be issued under sub-section (3), shall be laid in draft before each House of Parliament, while it is in session, for a total period of thirty days which may be comprised in one session or in two or more successive sessions, and if, before the expiry of the session immediately following the session or the successive sessions aforesaid, both Houses agree in disapproving the issue of the notification or both Houses agree in making any modification in the notification, the notification shall not be issued or, as the case may be, shall be issued only in such modified form as may be agreed upon by both the Houses of Parliament.


It would have been, however,  very simple to add one sentence in the New Act that “ The provisions of the proposed Bill are in addition to and not in derogation of the provisions contained in other central Acts which are listed in Schedule IV.”


 Though it is stated by the Minister, Shri Jairam Ramesh that,

 “the exempted laws, listed in Schedule 4 of the bill will have to comply within one year with the compensation and R&R provisions of the new land acquisition law”,

nowhere such a clause of compliance is mentioned in the proposed Act. However, one wonders why  the Government chose the most painful and bureaucratic process of subsequently issuing a notification to be placed in the Parliament, if they already knew that the compensation and R&R provisions of the new acquisition law were more beneficial!

The fair and compassionate provisions of the Land Acquisition Act 1894 regarding compensation, are agreeably not fair enough. But the very fact that a term called "Solatium" was included in the compensation package, reflects that the heartless colonial Lords also acted with 'heart'. However, while enacting the National Highways Act 1956, they had copied all the provisions of the LA Act 1894 except the benevolent provisions regarding the compensation. The solatium which was provided for the compulsory nature of acquisition was altogether eliminated. Further, a provision under sub clause 3(J) states that the provisions of LA Act 1894 will not be applicable to this NH Act! This has been contested by our hapless poor farmers in several courts in the country and the courts had given verdicts in favour of the land owners, stating that the sub clause 3(J) of the NH Act is unconstitutional.

The judgment dated 4 Mar 2011, given by the Madras High Court in W.P.Nos.15699, 15818, 15819 of 2008, 22912, 22913,28122 to 28133, 28314 to 28321, 28917 to 28922 of 2010 reflects poorly on the so called benevolent and generous attitude of the Government toward our poor and illiterate farmers. The relevant and operative portion of this lengthy, detailed and landmark judgment is given below.

“36. Consequently, all the writ petitions are allowed, while upholding other provisions of the Act, Section 3-J of the Highways Act is held to be unconstitutional, being hit by Article 14 of the Constitution of India, being in excess of legislative competence. The petitioners, therefore, are held entitled to the compensation of additional market value under Section 23(1)(a), solatium under Section 23(2) and interest as provided under the Land Acquisition Act.”

 Instead of gracefully accepting the above exhaustive and fair judgment, our so called "benevolent, just and fairer" rulers have gone in appeal dragging the poor farmers into never ending litigation. To make things worse, NH Act is placed out side the purview of the proposed new Act by including it in schedule IV.


CONCLUSION.   It is quite evident from the above that the proposed New Land acquisition Act appears to be progressive in letter but totally regressive in spirit. The Bill in its present form is a fraud on the poor farmers and land owners in India.  It is indeed very simple to enact a progressive and benevolent land acquisition Law, by the government, if it takes note of what Courts of law have said about the Market Value instead of inventing a lopsided and intricate procedure which can be manipulated and misinterpreted by the bureaucrats. The government should not push the already suffering poor farmers who have lost their lands to other Central Acts by not covering those Acts under the proposed LA Act.



silkboard's picture

Thanks for the detailed analysis

156 users have liked.

Thanks Commander for a detailed brief. Read articles on this in newspapers. One question, on the tricky issue of market value. Like you said, seems the root cause of complexity in legislation is this line

Further, it is a well known fact that the prices mentioned in the sale deeds are only guidance values, meant for the collection of stamp duty and therefore are not the true reflection of the actual market values.

What is your solution or existing proposals around today to address this. The factor of 2 for rural areas is mainly to work over this root cause only, right?

Commander V Joshua's picture

The Factor of 2 for rural areas as an answer in the new LA Bill?

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I covered the above point in my article. The factor of 2 is a very clever way of cheating the land owners because the market value determined by the provisions of the new bill is likely to be as low as 20% of the current value on the date of declaration!

I don't have to give the solution as the Courts have already spelled out the process of determining the fair market value. Please go through the judgment reference given in the article. The detailed judgment can be viewed on the net. comment guidelines

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