Repercussions of PMC judgement on new land acquisition act

The Pune Municipal Corporation’s decision to expedite the transition from the Land Acquisition Act, 1894 to the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 is a shot in the arm for supporters of the new act. Ranjit Prakash, Senior Partner, and Anshuman Pande, Senior Associate, HSA Advocates, look at the repercussions of the judgement.

The Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 (“LARR13”) came into force from January 2014 repealing the erstwhile Land Acquisition Act, 1894 (“LA1894”). The LARR13 received a decidedly mixed reaction — while applauded for its stated intention of correcting the injustices of the LA1894, there were multiple areas of uncertainties at the time the LARR13 had been released as a draft. One of the areas of the uncertainties is the operation of Section 24(2) of the LARR13. The said provision states that fresh proceedings for land acquisition shall have to be carried out under LARR13 supplanting the proceedings under the LA1894, in case no physical possession of land has been taken or if compensation has not been paid five years after an award has been made under Section 11 of the LA1894. Effectively, this provision makes the applicability of the LARR13 retrospective in that respect and the ambiguity arose as to how the said provision would work in praxis.

The Pune Municipal Corporation judgment:
This retrospective provision of the LARR13 has recently been adjudicated upon, with the January 24, 2014, judgment of a full-judge bench of the Hon’ble Supreme Court of India (“SC”) in the Pune Municipal Corporation¹ case. The SC held that, in a case where an award under Section 11 of the LA1894 was passed in 2008, the land acquisition proceedings had lapsed since compensation for the acquisition had not been “paid” to the landowners, as per Section 24(2) of the LARR13. The SC’s judgment was based upon the fact that the Collector had not made the payments into a court, as required under the provisions of Section 31(2) of the LA1894².

The SC based its judgment upon the following factors:

(a) Section 31(2) provides a collector with only two alternatives – to pay the compensation to the landowners or to deposit the same in court. The fact that neither was carried out by the Collector in the instant case meant that the compensation had not been “paid” for the purposes of Section 24(2) of the LARR13; and

(b) The LA1894 was an expropriatory legislation and all procedures under the said Act had to be complied with strictly³.  Since compensation had not been deposited into court strictly as per Section 31(2), the same implied that the procedure under the LA1894 had not been complied with and the deposit of the amounts in the government treasury was to no avail. In this regard, the SC noted its two precedents wherein it had been held that deposit of the compensation amounts to the state’s revenue account does not imply that the state is absolved of the liability to pay interest for delayed compensation under Section 34 of the LA1894.⁴

Analysis
In a post-hoc analysis, it has been stated that, by the Pune Municipal Corporation ruling, the SC has “tacitly approved the validity of the (retrospective) clause (sic.) itself and provides clarity on the way forward.”⁵ The same appears to be substantially accurate as regards the legality of the said clause (and hence to the first part of the statement). As a counterpoint to the second part of the statement, it can be argued that the Pune Municipal Corporation judgment predominantly appears to have been based on its own facts and there may be other land acquisition proceedings in various stages of completion.⁶ The judgment does not appear (and may not have been intended) to be a thorough exposition of the boundaries of Section 24(2) and the Pune Municipal Corporation case was a case of application of the said section rather than an in-depth explanation. Strictly from a technical perspective, therefore, possibilities exist of certain subsequent cases wherein the ratio of the Pune Municipal Corporation judgment may be distinguished and proceedings under the LA1894 brought to their natural conclusion.

However, the authors agree that the underlying impact of this decision is far-reaching with respect to the transition away from the LA1894 as well as the ambit of the LARR13. Policymakers have been clear in their desire to ensure an expeditious shift and a wide ambit from the old to the new law on the lines that any legislation that takes land away from land-owners has to be skewed in favour of the land-owners.⁷ This desire has been strident – even in the face of the counterpoint that overturning a nearly-concluded land acquisition process would be onerous from the perspective of the acquirers and undesirable from the perspective of economic growth. From a legal viewpoint, as well, critics may argue that making such laws applicable retrospectively may be undesirable.

It is in this light that the Pune Municipal Corporation decision can be read as a shot in the arm for supporters of an expeditious transition to the LARR13. For instance, the issues involved in the precedents cited by the SC related to the payment of interest by the state on delayed compensation (under Section 34 of the LA1894) and the precedents did not explicitly state that compensation was held ‘not paid’ in case of deposit of the amounts by the state into revenue. ⁸  Since both precedents were capable of distinction, there were grounds for the SC to reach a finding to the contrary in the Pune Municipal Corporation case. The fact that the SC chose to strictly restrict the ambit of the LA1894 by stating the same to be an expropriatory legislation can be read as a strong statement of intent and a validation from the SC for a move towards the new law.

As on date, there are various pending matters before the SC wherein the petitioners are seeking to rely upon the Pune Municipal Corporation judgment to overturn land acquisition proceedings and the authors expect that the SC may further invalidate other such acquisition proceedings based on the ratio of the Pune Municipal Corporation judgment.⁹ Even though it may be premature to predict the manner in which such issues may be finally resolved, it is clear that this decision effectively accelerates the burial of the LA1894 and provides momentum towards the operationalisation of the LARR13.

Footnotes

1. Pune Municipal Corporation & Anr. vs. Harakchand Misrimal Solanki & Ors., Civil Appeal 877/2014 arising out of SLP(C) 30283/2008.
2. In the said case, the Collector had deposited the amount in the government treasury since none of the landowners had collected the compensation or had requested a challenge to the award under Section 18 of the LA1894.
3. An expropriatory legislation is a legislation that allows dispossession of the property of the actual owner for a stated public benefit.
4. In the cases of Ivo Agnelo Fernandes & Ors vs. State of Goa & Anr., (2011) 11 SCC 506, itself relying upon Prem Nath Kapur & Anr. vs. National Fertilizers Corporation of India Ltd & Ors., (1996) 2 SCC 71.
5. “SC okays revocation clause in land acquisition law,” Business Standard, dated January 29, 2014.
6. The proviso to Section 24(2), for instance, states that the on-going proceedings would not lapse if the compensation has not reached the accounts of beneficiaries for a “majority of the land holdings” — only the compensation itself shall be as per LARR13. The SC noted the terms of the said proviso; however, it did not (and was perhaps not called upon to) analyse the same in-depth – particularly the ambit of the term “majority of land holdings.”
7. Recent draft rules, which have been released by the Ministry of Rural Development, advocate that landowners may be entitled to the benefits of the LAAR13 if physical possession has not been released for a period of five years, despite the passing of an award under LA1894 and compensation being deposited — although the entire acquisition proceedings shall not be vitiated [Draft Rules For The Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013, October 14, 2013. The draft rules are awaiting promulgation as on date].
8. Supra, note 4 above.
9. As the authors have noted above, the vires of the retrospective provisions does not to be in question anymore, although the judgment may be distinguished on facts.

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