The GOI is repromulgating land acquisition, despite opposition from several sources. This paper suggests that Government has no role to play as an intermediary in land acquisition. The role of Government is ensure a level playing field and equality amongst the citizens (individuals) or corporates. A regulator model is proposed on the lines of urban real estate

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LAND ACQUISITON
There is significant controversy around the Ordinance promulgated in 2014 and
the bill introduced in 2015 in the Parliament to amend the Right to Fair
Compensation and Transparency in Land Acquisition, Rehabilitation and
Resettlement Act, 2013.
Without going into the controversies surrounding the bill introduced in 2015 –
which has seen 9 amendments already prior to putting it to vote in the Lok Sabha,
and with the PM acknowledging during the Mann ki Baat (March 2015) that the
ordinance was brought out in a hurry.
This write is to explore other options and the pathway for moving from the present
to the future using the alternative options.
But before that a little bit of history.
Land Acquisition for public use/ purposes is also known as the power of the state
called “Eminent Domain”. It was first coined by a Dutch Jurist Hugo Grotius in
1625 in his legal treatise De Jure Belli et Pacis. 1
The concept of Eminent Domain has been accepted in India too. In Supreme Court
judgement dated May 02, 1952 in The State of Bihar vs. Kameshwar Singh [1952 1
SCR 889]. It has been defined as
“…..The Power of the sovereign to take property for public use without the
owner’s consent upon making just compensation” 2 {emphasis added}
The judgment continues to go on to state in the same Paragraph
The meaning of the power in its irreducible terms is
(a) Power to take
(b) Without the owner’s consent
(c) For Public use.
The concept of public use is inextricably related to an appropriate exercise of the
power and is considered essential in any statement of its meaning.
Payment of compensation, though not an essential ingredient of the connotation of
the term, is an essential element of the valid exercise of such power.
This judgement was related to the act of abolishing zamindari.
The Right to Property was enshrined in Articles 19(1)(f) and 31 of the Constitution
as a fundamental right. However, with the 44th Amendment of the Constitution in
1978, the fundamental right was replaced by a statutory right – that is the right
could be abrogated by an act. This was done by deleting the Articles cited above
and replaced in Article 300A.
1 Wikipedia http://en.wikipedia.org/wiki/Eminent_domain and SC court judgment cited
2 Para 47 of the judgement cited

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The Right to Fair Compensation and Transparency in Land Acquisition,
Rehabilitation and Resettlement Act, 2013 has attempted to break one of the
shackles of Eminent Domain by introducing the concept of participation of the local
self governments and Gram Sabhas for land acquisition for industrialisation,
development of essential infrastructural facilities and urbanisation with the least
disturbance of the owners of the land and other affected families. The affected
persons are expected to be partners in the development leading to their post
acquisition social and economic status.3
What is the alternative?
The concept of the alternative process for land acquisition is embedded in
economics and some of the associated regulatory environment prevailing globally.
The fundamentals of economics is based on certain concepts, which are
 Economics is the science of allocation of scarce resources
 It is for improving the overall development of the people
 It recognises 4 factors of production (economic development). These are
o Land
o Labour
o Capital
o Entrepreneurship.
The current models for each of the factors of production are as follows
Capital Government has moved from controlling and active participation in
the process of raising capital for economic enterprises to establishing
a regulator – viz., Securities and Exchange Board of India: SEBI. It is
a generally acknowledged fact that SEBI is doing good work and is
managing the affairs of capital markets well.
In addition, capital (in the economic sense) is also being managed by
the Reserve Bank of India – RBI. And the work done by RBI in the
monetary management of the country has been applauded globally,
particularly after the Asian crisis and the global financial crisis.
Thus SEBI and RBI are functioning as regulators of this aspect of the
factor of production.
Entrepreneurship The government is always providing incentives for
development of the entrepreneurship in the citizens through various
measures – through building an enabling environment for its growth.
Land acquisition is also a measure in this regard. However, it is the
opinion of the author that time has come for the Government/ State
to change its role in this aspect.
3 Preamble to the 2013 Act.

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Labour This is an area identified for reforms and Rajasthan has taken the
lead in amending the labour laws. Unionisation is an accepted form of
negotiations and government has no role to play except through the
chief labour commissioner. The intervention of the Regional Labour
Commissioner is related to dispute resolution. It is time for change in
its role also as that being recommended for land.
Land In the regulatory environment for land, Government/ State is playing
the role of an intermediary between the land owner and the intended
land user. The function of Government is governance and ensuring
level playing field for the players is ensured, except in cases of
national emergency, when it may acquire rights of access to property.
The intention of this write is to promote the concept of a regulator for
land acquisition and all other matters related to real estate. This is
further elaborated in this write.
Land Acquisition has been a contentious issue and resulted in many unwarranted
situations in peaceful areas. According to a study, there have been 252 land
conflicts spread over 165 districts, spanning practically all states during 2013-14.
This is an increase of over 40% over 2012, when an earlier study recorded 177
disputes over 130 districts. 4
Highlights of issues with State functioning as an Intermediary in Land
Acquisition
The Supreme Court definition of Eminent Domain has included public use and just
compensation as embedded concepts in the land acquisition process. What is just
compensation? And who will decide whether the compensation is just?
The current dispensations with the State acting as an intermediary does not justify
that either of the two qualifiers for Eminent Domain have been satisfied, when the
acquisition is by the State.
Public Use
 Special Economic Zones attracted significant attention resulting in massive
acquisition of land by the State for economic development. According to CAG
report no 21 of 2014,
o 52.81% of the land allotted remained idle even though approvals
dated back to 2006. [Audit conducted between November 2013 and
January 2014]. 576 formal approvals of SEZs covering 60,374.76
hectares has been granted in the country. Of which 392 SEZs
covering 45,635.63 hectares have been notified till March 2014. And
of the 392 SEZs, only 152 have become operational – 28,488.49
hectares. The land allotted to the remaining 424 SEZs – 31,886.27
hectares was not put to use.
4 http://economictimes.indiatimes.com/news/politicsandnation/landacquisitionignitesmutiniesstudy/
articleshow/46754871.cms?prtpage=1

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o Land acquired for public purposes was subsequently diverted (up to
100% in some cases) after de- notification.
o The monitoring mechanism, in the opinion of CAG, was inadequate –
although it was stated to be adequate by DCs, Developers and Units.
o The acquisition of land from the public by the government is proving
to be a major transfer of wealth from rural populace to the corporate
world.
 It has been observed that PSUs are also not failing to develop the land
acquired, and sometimes land acquisition takes place by PSUs even without
a pre-feasibility report being prepared. 5
Just Compensation
 The matter related to the rehabilitation and resettlement of the Sardar
Sarovar Dam is well documented. The Supreme Court is still hearing the
matter for grievance redressal, and the next date has been fixed for April 24,
2015. 6 This reflects that the Grievance Redressal Authority established as
an arm of the State is not a good solution for such activities.
 As land is a State Subject under the Constitution, the price will be decided
by the State. As has been adjudged by Bombay High Court in a recent
judgement – State does not fix appropriate price for land acquisition. 7 In the
case, the State had cited financial constraints in fixing a lower price under
the 2013 Act.
o This clearly provides evidence that the 2013 Act is an improvement
over the 1894 Act.
 The following are the comments of the author on just compensation.
o Compensation is a function of maintaining status quo in the lifestyle
of all the affected persons by the acquisition. This has been
appreciated by the 2013 Act, in that agricultural labourers are also
covered. Status quo since the decision is forced on the affected
families and not a voluntary decision.
o The 2013 Act links compensation to the market price of the land, and
a multiple thereof to be decided by the State Government. The fact
that State Governments do not take appropriate decisions is reflected
in the Bombay High Court, Aurangabad bench judgment cited above.
o This judgement also highlights the incapacity of the District Collector
to act independent of the State, as the functionary was also a party to
the decision. Under the 2013 Act, the District Collector plays an
important role in the acquisition, rehabilitation and resettlement
process, as also in fixing the compensation.
5 http://www.businessstandard.com/article/printerfriendlyversion?article_id=115033001003_1
6 http://ibnlive.in.com/news/supreme-court-asks-3-states-about-steps-on-rehabilitation-of-narmada-dam-
oustees/533773-3.html
7 Aurangabad bench judgment dated March 09, 2015 in Writ Petition no 4274 of 2014:
Panjabrao vs. State of Maharashtra & Others.

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o In finance theory, Valuation of assets has different methodologies
defined. It is therefore a function of the individual’s valuation, which
may differ from person to person.
 Land has different connotations in a rural scenario in India, as
has been highlighted in several reports.
 The rural populace is trained in agricultural practices that are
peculiar to that area. Hence taking away the source of
livelihood and not providing “just compensation” is in violation
of Article 21 of the Constitution.
 That is the foundation for trading of assets on an exchange.
o Taking a cue from the price determination process from the stock
markets, any news affects the price of the stock. Any news of the
establishment of an infrastructure project or industrial activity
certainly impacts the price of the land being acquired. However the
price determination by the District Collectors is based on the
historical notified market prices of land in that area. Hence it is not a
just determination – the multiplication factor provided for in the 2013
Act may also not be an adequate measure – as has been highlighted
by the judgment of the Aurangabad bench of the Bombay HC,
reference above.
o Governments have also been selective in action in real estate matters
 Irregular colonies are being regularised across the countries,
whilst some irregular colonies are being demolished – Campa
Cola Society in Mumbai is a classic case of such
discrimination, where the law is being selectively applied.
 Land allocated for a public purpose is being converted to
private purpose – illustratively, SEZs.
o There are two very significant aspects of market pricing of land
 Change from Agricultural use to Non Agricultural use
 Change of land use by the Government from the original land
use purpose notified for acquisition.
This is best highlighted by the issues in Gurgaon – where certain
persons have made significant monies by getting the terms of land use
changed using their “powers”.

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Alternative Approaches defined
The Planning Commission in their submission “The Manufacturing Plan: Strategies
for Accelerating Growth of Manufacturing in India in the 12th Five Year Plan and
Beyond” has recommended the formation of an autonomous and independent
regulator for land acquisitions. 8
This recommendation was also made by an eminent economist, Pranab Bardhan, to
the West Bengal Government. WB Government has clarified that it will not acquire
land for industry, and that the industry should acquire directly. 9
In March 2015, UP has initiated a programme for a consultative approach for land
acquisition, much on the lines behind the intent of the 2013 Act as indicated in its
Objectives statement, but lacking in the content of the Act. 10
Hence this concept is not novel, and some action is being taken, only it has to be
formalised on the national scale.
The government in 2013 had brought forth a bill titled “The Real Estate (Regulation
and Development) Bill, 2013. This bill was introduced to regulate the transactions
between buyers and promoters of residential real estate projects by establishing
state level regulatory authorities called the Real Estate Regulatory Authorities. This
bill was introduced in the Rajya Sabha on August 14. 2013, as such it continues to
be a valid bill and has not been abrogated due to the dissolution of the 15th Lok
Sabha.
The current track record of regulatory framework in India is significantly better
than the Government’s work in those very areas – Illustratively, telecom, electricity.
Such regulatory framework reduces the political interference, reduces the dispute/
grievance resolution process.
8 Paras 1.3.6 and 5.6.4 of the report.
9 http://www.thehindubusinessline.com/news/states/economistmootsregulatorforlandacquisition/article4282877.ece?css=print
10 http://economictimes.indiatimes.com/news/politicsandnation/landacquisitionsimplifiedinuttarpradesh/articleshow/46609685.cms?prtpage=1

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CONCLUSION
The current format of land acquisition will not improve the situation. The way
forward is to form an autonomous and independent regulatory authority at the
national level. This would be supported by Regulatory Authorities at State Level,
which in turn will have representation at the District Level.
Such authority will look at all matters relating to urban and rural land and real
estate issues.
The process for acquisition may be that followed by IPCL in Gujarat11 – which
would be appropriate for industrial activities. However, for infrastructure projects,
the proposer of the project (private or public) should provide several alternatives for
the land that would be adequate for the purpose. The State would first look at the
land bank that it already has, and then identify other options.
In the process of developing other options, participation of the affected people
would be encouraged. The regulatory authorities thus established would provide a
level playing field to both the parties, and the government will ensure that the
regulatory authorities work within the formulated framework. Our current
regulatory framework in other sectors provides comfort, that we have a capable
regulatory framework in place.
11 http://www.businessstandard.com/article/printerfriendlyversion?article_id=115033000983_1