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New Land Acquisition Act - Is fair to Entrepreneurs?

G S Rao , Last updated: 25 September 2014  


The Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013(Referred as New Act) is back in the news with new government is contemplating some changes in the new Act. In other words questions have been raised on its effectiveness on implementation or impact on economic growth. Is it good only for farmers or is it nightmare of entrepreneurs? In this article process of land acquisition is dealt with elaborately comparing it with Old Act, including recent judgments of Apex court for judging its effectiveness.

Why the new law was enacted?

Land acquisition Act 1894 (Referred as LA 1894) has been in existence since British regime till it is replaced with New Law. The LA 1894 provides for monetary compensation at market value only but there is no provision in the Act to address the rehabilitation and resettlement issue. The new Act aims to maintain a balance between the task of acquisition of land for public purpose and ensuring just and fair compensation to the land deprived persons, besides addressing the issue of rehabilitation of affected persons. Moreover there is no uniformity on R & R policy adopted by states based on National Rehabilitation and resettlement policy.

Applicability of New Land Acquisition Act:

The Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 has come into force w.e.f. 01.01.2014.

As per the New Act, Land acquisition and R& R provisions will apply when appropriate Government acquires land

- for its own use  or

- for Public Private Partnership Projects(if land vests in Government prior consent of 70% of those affected families is required)

- for ultimate transfer to private companies for declared public purpose (prior consent  of at least 80% of affected families along with social impact study  and other conditions)

The provisions relating to Rehabilitation and resettlement will apply when private companies purchase land equal to or more than the threshold limits fixed by the appropriate government, through private negotiations.

Land Acquisition process:

The Process of land acquisition involves the following activities:

1. Social impact assessment by the appropriate government

2. Issuance of preliminary notification once legitimacy of public purpose is approved by expert body

3. Rights of displaced person heard in public hearing

4. Preparation of draft rehabilitation scheme and its approval

5. Award.

a. Before we deal with the process, it is necessary to understand the meaning of certain words used in the Act.

b. Public purpose has been defined by section 2(1) of the Act and it includes land acquisition for strategic purposes relating to armed forces, national security, etc, land for specified infrastructure projects, project affected people, calamity affected people.

c. Appropriate government means “the State government” if the land is acquired within the state. Central government is the appropriate government where land acquired falls within 2 states or within union territories.

d. Affected family means whose land or other immovable properties have been acquired under the new Act or traditional dwellers that depend on such land for their lively hood. Administrator is a person who is appointed under the Act to deal with matters arising out of involuntary displacement of persons due to acquisition of land.

1. Social impact

1.1 Social impact assessment

The most notable and good feature of the New Act is that it thrusts responsibility  on the appropriate government to conduct a Social impact Assessment (SIA) study in consultation with panchayat in rural area and with equivalent bodies in urban areas in the manner prescribed by Government by issuance of  notification and conducting public hearing(Section 4). The very purpose of this study is as follows:

- to inform the people about land acquisition and stated public purpose

- to give adequate representation to panchayat, gram sabha, municipality or municipal corporation in social impact study.

- assess the impact of acquisition on the lively hood of the affected families and public properties, infrastructural facilities  as they exist

- to explore feasibility of locating project at an alternative place in case of disruption.

- to justify that benefits of project outweigh cost of  displacement or rehabilitation.

1.2 SIMP: The appropriate Government shall also require the assessing body to prepare a Social Impact Management Plan(SIMP) to mitigate the impact on people and properties and shall make it available along with SIA, environmental impact study in the offices of local bodies and  published in local language  and also on web site for information of the public.{Sections 4-6}

1.3 Appraisal of SIA and Expert group recommendation:

The appraisal of SIA must be done by an expert group constituted as per provisions of Section 7(2). The said expert group should consist of 2 non official social scientists + 2 representatives of Panchayat, Gramsabha, municipality + 2 experts on rehabilitation and 1 technical expert on the subject relating to project. Its recommendations must be made within 2 months from the date of constitution. If the project does not serve public purpose and benefits does not out weigh adverse social cost and social impacts, the project must be abandoned. In this consultative process transparency is ensured and best deal can be expected for community and also for land losers

1.4 Lapsing of SIA Report:

If SIA notification is not issued within 12 months from the date of Social impact assessment report, the said SIA report shall lapse. Government however has power to extend the time of 12 months in writing and display the info on web site. {Section 14}

2. Preliminary Notification on land acquisition.

2.1 Publication of notification: Section 11 mandates that a preliminary notification must be uploaded on web site and published in official Gazettee and in 2 local news papers in the region giving details of land acquisition, purpose of acquisition, and summary of SIA in the affected area, appointed name of administrator R& R in such  manner as may be required. Local bodies are also to be informed about the contents of notification at a meeting called specifically for the purpose. It is comparable with notification u/s 4 of LA1894.

2.2 Prohibition from dealing with lands: Once a notification is issued, the land owners are prohibited from dealing with such land in any manner till process is completed. However collector is empowered to exempt on receiving an application and only after recording in writing the special circumstances. Collector shall update land records within 2 months. This notification is comparable with Section 4(1) notification under the old act.{Section 11(4)}

2.3 Survey by State Govt.:

It is also pertinent to note that onus is cast on the appropriate Government to conduct a survey to assess the requirement of the land to be acquired for the project and it shall examine the recommendation of expert group and report of the collector, if any. Any objections to this land acquisition process shall be heard by the collector (Section 12)             

3. Rights of displaced persons:

Any person interested in land which is notified for acquisition can raise objections as to suitability of land, justification offered for public purpose, findings of SIA report, within 60 days form the date of notification. This is an important right given to the displaced person. This right is comparable with Section 5A of LA,1894. Government shall hear those objections. The Collector after giving an opportunity to the objectors and making further inquiries shall give full details of the land to be acquired, objections, compensation to be paid together with his recommendations to the appropriate government. Government’s decision on the objections shall be final. {Section (15)}.

4. Preparation of Rehabilitation and Resettlement scheme:

After publication of preliminary notification u/s 11(1) by the collector, an Administrator shall be appointed for conducting a survey and census of the affected families in a prescribed manner including public hearing within prescribed time. Such census broadly covers the following:

a. Particulars of lands and immovable properties acquired

b. Livelihoods lost in respect of land losers and landless who are primarily dependent on lands which are subject of acquisition.

c. List of Public utilities, government buildings, amenities and infrastructural facilities affected by resettlement.

d. Details of common property resources

e. Time limit for implementation of Rehabilitation and Resettlement scheme.

The Administrator shall prepare a draft Rehabilitation and Resettlement scheme based on his survey and census. The plan should indicate the entitlements of displaced persons, Government buildings, public amenities to be provided time limit for its implementation. {Section 16(6)}.

4.1 Approved R&R  scheme to be made public

The next stage in the process is that the collector shall review the draft scheme with the R& R committee at the project level and submit it with his suggestions to commissioner of R&R committee for its final approval which should be made available for public. (Section 17 and 18).The administrator shall be responsible for implementation of the R&R scheme and the Commissioner shall monitor the same.

4.2 Publication of Government’s declaration and RR scheme:

When Appropriate Government is satisfied with the Report u/s 15(2) that land is required for public purpose, then a declaration shall be made along with declaration for resettlement area. This declaration has to be made within 12 months from the date of preliminary notification u/s 11.Collector shall publish summary of Rehabilitation and Resettlement Scheme along with declaration of Appropriate Government. Such declaration shall be made only on the land requiring body deposits the amount towards the cost of acquisition {(Section 19)}. This notification is similar to that of section 6 notification under LA,1894.

4.3 Declaration is a conclusive proof: Declaration is a conclusive proof that land is required for public purpose and land may be acquired in the manner prescribed under the Act. If no declaration is made u/s 19(1) within 12 months from the date of preliminary notification u/s 11, then the preliminary notification shall be deemed to have been rescinded. There may be a situation which requires the extension of period of 12 months and appropriate government may extend if circumstances justify such extension.

5. Award: Awards to be granted shall consist of  monetary compensation for acquisition of land  as per First schedule  and  R& R entitlements  determined as per second  Schedule

5.1 Notice to interested parties: Collector has to publish a notice inviting claims from persons interested in land for payment of compensation and rehabilitation and settlement with objections if any after 30 days but within 6 months from the date of publication of notice. (Section 21)

5.2 Time Limit: The collector shall make an Award within a period of 12 months from the date of declaration u/s 19(1) otherwise the entire land acquisition proceedings shall lapse. In exceptional cases, the period can be extended by the appropriate government (Section25).Compensation shall be paid within 3months from the date of award.

5.3 Method for determination of Compensation (Section 26-30)

Undoubtedly the land displaced persons will be getting a better deal as they can claim highest of the valuation options mentioned herein below. Let us see what is the methodology and options specified for determining compensation:

5.4 If market value can be determined the following steps are taken:

First market value is to be determined  on the date of  issuance of notification u/s 11by selecting higher of the following :

- Market value specified under the Indian Stamp Act for registration of sale deed  or agreement to sell in the area in the area  or

- Average sale price for similar lands in nearby village area from data of preceding 3 years) or

- Consented amount for  acquisition of lands for private or public private partnership purpose

Whichever is higher?

5.5 If market value can not be determined for the reason that there are no transactions of sale or prohibited by law, then state government shall specify the floor price or minimum price per unit based on price calculated in adjoining areas.

5.6 Additions to the compensation: (Refer to Sec 26 read with First schedule)

a. Market value determined above shall be multiplied by a factor to be specified in First schedule. Assets attached to lands value shall be included to the market value determined above.

b. Further parameters to be considered in determining compensation:

- Any damages sustained  by dispossession of standing crops and trees on land

- Any damages for severing land from other land, expensed for shifting to new residence, diminution in profit as consequence of acquisition,

- In addition to compensation, 100 of the value determined above shall be added as solatium to the compensation payable

- Award @12 % p.a  on the market value from the date of declaration of notification of SIA till the date of award of the collector or till the date of taking actual possession of land which ever is earlier.

- In case of multiple displacement additional compensation equivalent to the compensation determined for second or successive displacement shall be payable.

6. Other important checks and balances :

6.1 Public purpose once declared can not be changed.

6.2 Possession of land only after collector making payment of compensation as well as rehabilitation and resettlement entitlement within 3 months and 6 months respectively from the date of award as the case may be.

6.3 Protection to Scheduled areas: Land acquisition in scheduled areas is not allowed as far as possible and in addition to R&R package, additional benefits such as  one time financial assistance, land to be given to each family etc

6.4 Ban on acquisition of multi crop irrigated lands: Only under exceptional circumstances and within permissible limits it permits for projects relating to railways, high ways, irrigation canals, power lines etc. Further such acquisition is subject to development of equivalent cultivable land or earmarking the money collected  for agricultural  development{Section 10}

6.5 Urgency clause: When land is required for National defence and security purposes or for resettlement &Rehabilitation needs in the event of natural calamities such as floods or earthquakes as specified in Section 40, the appropriate government may exempt from the requirement of SIA study.

6.6 Pending matters under 1894 Act: There can be different situations in respect of lands acquired under the old act. The new act provides for dealing with those in the following manner (section 24):-

a. If award was passed the proceedings shall continue as if the old Act is not repealed.

b. If no award was passed then provisions of new Act relating determination of compensation shall apply.

c. If award is passed 5 years or more prior to commencement of new Act but physical possession of land has not been taken or compensation has not been paid, the proceedings shall be deemed to lapse.

d. Award has been made but compensation has not been deposited for majority of holdings, then beneficiaries shall be entitled to compensation as per new Act.

Legal controversy: In the following judgments pronounced recently by Hon’ble Supreme court(after new act has come into force), held that land acquisition proceedings under the Old act deemed to have lapsed as award was made 5 years prior to new Act but compensation has not been paid. Mere deposit of compensation into the treasury can not be held to be equivalent to payment to land owners or person interested. However the court has not gone into the merits of the case but relied on plain interpretation of Section 24(retrospective effect clause). In subsequent case it observed that since the land owner has not been afforded an opportunity of personal hearing on his objection as per right conferred by Section 5-A of the Act 1894 and also in view of application of section 24 upheld the judgment of Delhi high court which quashed land acquisition proceedings.

1. Pune Municipal Corporation and Anr. v. Harakchand Misirimal Solanki and Ors., (2014) 3 SCC 183

2. Union of India & Ors. Vs. Shiv Raj & Ors

3. Shree Balaji Nagar Residential Association Vs State of Tamilnadu

In the latest judgment (Sr.no.3) delivered on 10.09.2104, the Hon’ble supreme court has considered the issue whether period of stay /litigation period has to be ignored in computing the period of 5 years or more, in addition to interpretation of section 24 and it expressed a view that plain language of Section 24(2) of the 2013 Act does not indicate for exclusion of such period.

6.7 Free hand to State governments:  States are given free hand to  frame Rules better R& R packages and authorized to determine the threshold limits for applying rehabilitation and resettlement provision for private purchase of lands similarly for determining Multiplicand factor in Schedule -I for enhancing the compensation.

7. Comparison between old and new Act: This article will not be complete with out this. The following good features are   missing in the old Act and present in the new Act.

- The key change is in the definition of public purpose and the requirement of prior consent of 70% or 80% from land losers is not there in the old Act. Transparency in land acquisition through consultative process.

- Award includes monetary compensation based on realistic market value including 100% of Solatium, Additional compensation for multiple displacements.

- Monetary Rehabilitation and resettlement packages for project displaced persons

- Provision for return of unused land infrastructural facilities in Resettlement area


The failure of Tatas’ in Singur, Posco in Odisha, Mittals in Jharkhand to keep their projects going  clearly indicates that good compensation or R& R packages won’t come to their rescue  when politician’s or activists take the centre stage through PILs. The process is highly de-motivating for private players and even for Public private partnerships projects. The elaborate processes in new Act will certainly act as a deterrent for speedy industrial growth. However every one agrees with the fact that that on paper the most favored lot are farmers or land losers and displaced families. Even these favored lot not be lucky, if land acquisition route is not adopted in view of hassles

G S Rao


Tags: Land acquisition, Rehabilitation and Resettlement, Award

Disclaimer: This article contains interpretation of the Act and personal views of the author are based on such interpretation. Readers are advised either to cross check the views of the author with the Act or seek the expert’s views if they want to rely on contents of this article.

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G S Rao
(Deputy General Manager)
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