Centre for Policy Studies

Land acquisition legislation III:

Do we need to allow compulsory acquisition for private entities?

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One of the significant amendments to the Act of 2013 proposed in the amending ordinances and the bills is to change the phrase “private company” with “private entity” throughout the Act. The definition of “company” in the original Act was already very wide. It included a Company registered under the Companies Act or a Society registered under the Societies Act of 1860 or “under any corresponding law for the time being in force in a State”. In the amending ordinances and bills, the new term “Private Entity” is defined to include “a proprietorship, partnership, company, corporation, non-profit organisation or other entity under any law”. The amendment thus empowers the government to undertake compulsory acquisition of land on behalf of even unincorporated private owners and sundry NGOs. By including societies registered under different Acts, the original law already allowed acquisition on behalf of the latter; the amendments make this explicit.

It is difficult to comprehend the intention of the government in so extending the scope of compulsory acquisition. In the information note on one of the amending ordinances issued by the Government, it is said that under the Company’s Act, a private company must have a paid-up share capital of one lakh or more; this makes the provisions of the Act of 2013 restrictive; hence, the amendment in favour of private proprietorships, partnerships and NGO’s, etc. This argument does not sound very convincing.



Sumitra Mahajan led Standing Committee on the issue of acquisition for private interests

The Standing Committee on Rural Development in the previous Parliament was chaired by the present speaker and veteran BJP parliamentarian, Shrimati Sumitra Mahajan. It had considered the Land Acquisition Bill which later became the Act of 2013, in great detail. After much deliberation, it had strongly recommended narrowing the scope of acquisition for private interests. This suggestion of the Committee was not accepted by the then Government which retained the provision of acquisition on behalf of private companies; the present Government is further expanding on that provision.

Reviewing the history of compulsory acquisition legislation in this context, the Committee pointed out that the colonial Act of 1894 did not provide for acquisition on behalf of private companies except in the case of Railway Companies. This, of course, does not mean that no acquisition for private interests occurred during the British times; the colonial rulers did not always need to acquire through law, they could simply expropriate. Large scale expropriation of land and other property occurred during the British period; yet the British did not give legal status to compulsory acquisition for private interests. The scope of the Act of 1894 in this respect was considerably expanded after Independence through “a number of amendments in 1962 which permitted acquisition for a Company which is engaged or is taking steps for engaging itself in any industry or work which is for a public purpose.” The Act was again amended in 1984. These latter amendments, according to the Committee, “extinguished any differentiation between acquisition for a ‘State purpose’ and acquisition for a ‘private enterprise’ or ‘State enterprise’.” The courts interpreted the 1984 amendment to mean that any notification of acquisition issued under the amended Act of 1894 did not even need to specify whether the acquisition was for a public purpose or for a Company. This, according to the Standing Committee, “opened the floodgates to acquisition of land by the State for Companies. And this in turn has unleashed the tribal and rural backlash that has caused the current decision of the Government to replace the 1894 Act with an altogether new Act”. Such was the concern that the Standing Committee displayed on this issue.

The Committee wanted to know from the Ministry whether such compulsory acquisition for private interests was allowed in other democratic countries of the world. The Ministry claimed it had no information on it, except  for Pakistan and Bangladesh, both of which have inherited the Land Acquisition Act of 1894. The Committee on its own gathered information about the prevalent legal situation in several other countries, including the United States of America, Canada, the European Union, Japan and Australia, etc.  On the basis of this study, the Committee came to the conclusion that in “all developed democracies, private purchase of land, not State acquisition, is the norm. There is no provision in their laws for the State acquisition of privately held land for profit-making private enterprises, nor, by extension, for public-private enterprises. ...in India alone, the public purpose is defined so  as to include virtually every form of enterprise, particularly after the amendments made in 1962 and 1984...” Having obtained all this information, the Committee found it difficult to go along with the then Government on this issue; it frowned upon the clauses of the new acquisition bill that sought “to permit, and even facilitate, the acquisition of land by the Government for private companies”.

In view of this background of the inclusion of private companies in the Land Acquisition legislation, its deleterious impact on the rural and tribal communities, and its inappropriateness in a democratic polity, compiled so painstakingly by the Standing Committee, it is indeed odd that the present Government has decided to expand the list of private interests and to provide legislative cover for compulsory acquisition of private land for even private proprietorship or partnership concerns and for all kinds of private non-profit organisations.

This particular amendment is beyond comprehension and the Government has so far provided no cogent reason why it feels constrained to make such a provision. If there are some pressing reasons for this amendment, these should be made public or it should be withdrawn.


Inclusion of private hospitals, etc., in the list of public purposes

Another amendment that concerns expanding the scope of acquisition for private interests is the effort to bring private hospitals and educational institutions, etc., in the list of public purposes for which land may be acquired. The Act of 2013 specifically excluded private hospitals, private educations institutions and hotels from its definition of public purpose. The amending bills remove this specific exclusion; these private enterprises may now get covered under the general term ‘infrastructure’ for which acquisition is permitted. To avoid any misunderstanding, it is proper to restore the specific exclusion of these categories, as it was done in the Act of 2013.

 
Tailpiece: The Case of Narita Airport of Tokyo

While discussing the prevailing practices regarding acquisition of land in different countries, the Standing Committee refers to the celebrated case of Japan’s efforts to expand Tokyo’s Narita International Airport. Japan has no law that could force the surrounding paddy farmers to cede their land for the expansion of the Airport. The Government, therefore, had to engage in years of often frustrating negotiations with the owners of the land. Having never come under colonial rule, the State and the Society in Japan continue to retain a healthy respect for the villages, the cultivators, and their fields; none of these can be taken for granted, none of their rights can be taken away by fiat. This sense of deep respect for the people and the paddies may have delayed and constrained the expansion of Narita Airport, but it has certainly not stopped Japan from emerging as one of the most technologically advanced and affluent society of the world. Perhaps there is a lesson in this story for us and our law-makers.

With this post, we are activating the option of receiving comments from the readers. Your opinions and observations on this specific issue are welcome.

— Dr. J. K. Bajaj