LAND ACQUISITION

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Land Acquisition Act, 1894 Revisited
by K.C. Jain*

Cite as : (1998) 7 SCC (Jour) 9

One of the most significant statute laws concerned with the exercise of the right of eminent domain in India is the Land Acquisition Act, 1894 (in brief "the LA Act"), enacted more than a century ago. Judicial expositions of several of its provisions, made from time to time, coupled with the ground experience, have highlighted several of its lacunae which need to be addressed and the statute suitably amended.

The Standing Committee on Urban & Rural Development of Parliament (10th Lok Sabha) (in short "the Standing Committee") also, after due consideration, made 23 recommendations for its amendment[1] . A Member of the Lok Sabha has also introduced a Private Bill[2] , still pending consideration, proposing several significant amendments. Of late, the Central Government have also felt the pressing need to amend the Act and a proposal in that regard is under its active consideration[3] . All this necessitates a review of the LA Act to ensure de facto achievement of the legislative intent and to remove deficiencies/anomalies therein. Hence, this attempt to focus on some of the pertinent grey areas of the LA Act.

Section 4(1)

Section 4 of the LA Act contemplates preliminary notification for proposed acquisition, but does not require service of its copy upon the person concerned. The Standing Committee, in its Report, recommended in this regard thus:

"The Committee are of the opinion that the very purpose of issuing notices to the affected person is to communicate the decision of the acquiring authority to acquire his/her land for public purposes. The need of the hour is to provide such kind of mechanism through which the affected person can have easy access to notification.... The Committee further recommend that the affected person must also get a copy of the notification by registered post."

There is substance in the above recommendation of the Standing Committee and deserves acceptance. It also needs to be mentioned that a pertinent difficulty, often faced by intending purchasers, is lack of knowledge of pending acquisition proceedings. The problem arises because authorities under the Registration Act are not required to keep any record of the proceedings; the revenue records of such land also do not indicate anything about the LA Act notifications. There is merit in the suggestion that an amendment in the LA Act should make the Collector duty-bound to send a copy of the notification to the registering authority for registration, notwithstanding any other law to the contrary. An entry of such a notification should also be required to be made in the revenue records. It would then caution bona fide purchasers and check unwarranted land transactions after notification, unless a transferee opts for such at his own peril.

Section 11-A

Section 11-A was implanted in the LA Act by the Land Acquisition (Amendment) Act, 1984, (in short "the 1984 Act"). It makes it obligatory for the Collector to declare an award within a period of 2 years from the date of publication of the declaration, otherwise the acquisition proceedings lapse.

Section 11-A came up for construction by the Apex Court on several occasions. Notably, in the first such case, Satendra Prasad Jain v. State of U.P.[4]  Hon'ble Bharucha, J., speaking for the Supreme Court, ruled thus:

"... When Section 17(1) is applied by reason of urgency, Government takes possession of the land prior to the making of the award under Section 11 and thereupon the owner is divested of the title to the land which is vested in the Government. Section 17(1) states so in unmistakable terms. Clearly, Section 11-A can have no application to cases of acquisitions under Section 17 because the lands have already vested in the Government and there is no provision in the said Act by which land statutorily vested in the Government can revert to the owner."

The above dictum that Section 11-A is not applicable to a situation where possession has been taken, has been followed by the Supreme Court subsequently also[5] . This depicts the legislative anomaly that while on one hand, despite dispossession of a landowner, there is no time frame to make an award, on the other hand, where there is no dispossession, the time frame operates. The dispossessed landowners need preferential treatment and more expeditious payment of compensation as compared to those from whom possession is yet to be taken. But, Section 11-A ignores this stark reality. The lacuna, since highlighted by judicial exposition, needs to be urgently rectified by a legislative measure.

Another legislative deficiency regarding Section 11-A is that if acquisition proceedings lapse thereunder, the person concerned is not entitled to receive damages, which he would otherwise be entitled to if acquisition proceedings are withdrawn under Section 48(1) of the LA Act. In Abdul Majeed Sahib v. District Collector[6]  a Bench comprising of Hon'ble K. Ramaswamy and G.B. Pattanaik, JJ., expressed this point thus:

"... The statutory lapse under Section 11-A is distinct (sic) different from a voluntary act on the part of the Government. Therefore, it must be by withdrawal of the notification by voluntary act on the part of the State under Section 48(1). Under these circumstances, the appellant is not entitled to avail of the remedy of sub-section (2) of Section 48."

In fact, whether the proceedings of acquisition are withdrawn voluntarily or they lapse on account of the Collector's failure to make an award in time, the landowner should be recompensed for damage, if any, suffered by him as a consequence of the acquisition proceedings; there is no rationale for discriminatory treatment. Section 11-A, therefore, needs to be amended to provide for award of damages akin to Section 48, sub-section (2) of the Act.

Another question relating to Section 11-A is whether the time prescribed thereunder for making an award should be reduced. The Standing Committee, in its Report, after taking note of Section 11-A, underlined the need for speedy and expeditious acquisition of land, and reasoned that "long gestation period must be slashed down to the minimum so as to reach the benefit of the Land Acquisition Act to the affected persons at the earliest as well as to relieve the Government from financial constraints". The recommendation by the Standing Committee is sound, and should be accepted.

Section 16

The 1984 Act provided a time frame for various steps up to the stage of making of the award under Section 11 of the LA Act. But, strangely enough, Parliament did not prescribe any time frame for taking possession which many a times defeats the legislative intent of speedy and expeditious acquisition, to the detriment of the landowners.

The Standing Committee also considered this aspect and recommended amendments to Sections 11-A and 28 of the LA Act. The amendment suggested in Section 11-A was to insert therein a clause to the effect that "(m)aking of an award within that period by the Collector would mean and include the compliance of mandatory provision of Section 31 of this Act". For Section 28 it recommended that an amendment therein should authorize the Collector to award interest from the date "he took possession of the land or the award is made, whichever is earlier". The underlying idea behind both of these amendments, as proposed by the Standing Committee, was that the award under Section 11 alone does not suffice, unless it is accompanied by payment to the person concerned. The Government, however, did not agree. The Standing Committee, in its subsequent Report, succinctly repelled the Government view thus:

"... The Committee are not satisfied with the arguments posed by the Ministry that making of an award by the Collector under Section 11, taking of possession of the land under Section 16 and payment of compensation to the landowner under Section 31 are all done almost simultaneously. The Committee had observed in their earlier recommendation that the real experience is something different. The physical possession is not taken by the Government even after 5 to 10 years of the completion of the acquisition procedure.... The Committee hence reiterate their earlier recommendation...."

An in-depth analysis of the rival contentions would reveal that instead of amending Sections 11-A or 28, a more acceptable solution lies in postulating an outer time-limit for taking possession, which should be reckoned from the date of award; it should preferably be 30 days, failing which the proceedings of acquisition should ipso facto lapse. Since the making of an award does not necessarily culminate in acquisition[7] , enacting a provision on these lines would also conform to the scheme of the LA Act itself.

Section 18 of the Act

Section 18 of the LA Act, being a potent tool in the hands of a "person interested", entitles such a person to require the Collector to make a reference to the Court, inter alia, for determination of compensation. For this purpose, a written application is to be moved within the period prescribed vide Section 18(2) of the Act.

One of the snags in the scheme of Section 18 is that the Collector has no power to condone delay in moving a reference application, notwithstanding the fact that the person interested has been prevented from moving it in time on account of bona fide or unavoidable reasons. For quite a long time, there was a divergence of judicial opinion as to the Collector's power to condone delay[8] . Of late, it is no longer res integra that the Collector has no authority to extend time for a reference application in view of Officer on Special Duty (Land Acquisition) v. Shah Manilal Chandulal[9]  wherein Hon'ble K. Ramaswamy, J., on behalf of the Court, ruled thus:

"Though hard it may be, in view of the specific limitation provided under proviso to Section 18(2) of the Act, we are of the considered view that sub-section (2) of Section 29 cannot be applied to the proviso to sub-section (2) of Section 18. The Collector/LAO, therefore, is not a court when he acts as a statutory authority under Section 18(1). Therefore, Section 5 of the Limitation Act cannot be applied for extension of the period of limitation prescribed under proviso to sub-section (2) of Section 18...."

Lack of an in-built provision in the scheme of Section 18 for condonation of delay/extension of time is, on the face of it, harsh and unjust. It is contrary to the salutary legislative policy of being just, fair and reasonable. Bona fide and inadvertent delays deserve to be condoned; only then can complete and substantial justice be done. There seems little justification for letting the ex-owner suffer for no fault of his own. Hence there is an imperative need to amend Section 18.

In this context, it would only be just if the Reference Court were also empowered to condone delay in moving reference applications in those cases, where a controversy about limitation arises before the court after a reference has been made.

Another deficiency from which Section 18 suffers is want of a time frame within which the Collector is to make a reference to the court. In Mangat Ram Tanwar v. Union of India[10]  their Lordships of the Supreme Court noticed that "(s)erious view should be taken of the fact that applications for reference are withheld by the Land Acquisition Officer without disposal for time beyond any explanation".

To meet this situation, the State Legislature of Karnataka[11]  amended Section 18 by inserting therein sub-section (3) stipulating that the Collector must make a reference within 90 days of the date of receipt of an application, failing which the applicant may apply to the court to direct the Collector to make a reference. An amendment in pari materia terms deserves to be incorporated in the LA Act also.

Sometimes, the Collector rejects reference applications on legally untenable grounds, compelling the applicants to petition the High Court in its writ jurisdiction for redressal. The State Legislatures of Madhya Pradesh, Maharashtra and Himachal Pradesh[12]  have suitably amended Section 18 by subjecting such rejection orders to the revisional jurisdiction of the High Court under Section 115 of the CPC. It would be appropriate if Section 18 is also amended identically and the easier and less expensive remedy of revision is made available to interested parties.

Section 28

Since the very beginning, judicial opinion has been consistent that the amount of solatium payable under sub-section (2) of Section 23 of the Act is an integral part of "compensation" and should attract statutory interest under Sections 28 and 34 of the Act[13] . A similar view was also taken in regard to the statutory amount payable under sub-section (1-A) of Section 23[14] . Of late however, the Apex Court has taken the contrary view that the amount of compensation means only the "market value" of the land as per sub-section (1) of Section 23 of the Act and solatium does not attract any interest[15] . The later view has led to a judicial controversy, which has not yet been set at rest[16] .

In fact, there seems hardly any logic or rationale for the legislature to restrict payment of interest only to "market value". Whatever is payable in lieu of acquisition of land should constitute "compensation". Whether it be solatium under sub-section (2) (i.e. money comfort) or statutory benefit under sub-section (1-A) (i.e. recompense for rise in prices), it must attract interest, if not paid along with possession. Equity considerations also so require. Hence, Sections 28 and 34 of the Act deserve to be modified with retrospective effect to include the amounts payable under sub-sections (1-A) and (2) of Section 23 of the Act within the term "compensation".

Section 28-A

Section 28-A was inserted by the 1984 Act with a laudable purpose and came as a matter of great relief to the poor and inarticulate people who fail to take advantage of Section 18 of the Act. However, its sub-section (1) prescribes a time-limit of 3 months from the date of the court's award for moving an application for redetermination. Again, like Section 18(2) of the Act, Section 28-A(1) is also deficient. It does not empower the Collector to entertain late applications even though they may not have been filed in time for bona fide reasons. An amendment to give authority to the Collector to condone delay/extend time is required to make Section 28-A more meaningful.

Section 28-A also needs examination to ascertain the true construction of the expression "award of the court" used therein since its sub-section (1) contemplates a three-month period from the date of the "award of the court" to move an application. Whether the expression is restricted only to a Reference Court's award (vide Section 26) or it also comprises therein the judgments of the High Court/Supreme Court (vide Section 54) is unclear. A number of decisions[17]  of the Supreme Court lay down that "award of the court" means only that of the Reference Court.

The literal construction of the expression leads to unjust consequences. To illustrate: in a given case, the Reference Court declines to enhance market value, but, on appeal, the High Court/Supreme Court increases it; since re-determination is not permitted on the basis of the judgment in appeal, the ex-owner would not be entitled to seek redetermination and to get what others would get pursuant to the High Court/Supreme Court judgment. This result is contrary to the legislative spirit of this beneficial provision, which is intended to ensure parity in the matter of compensation.

It may also be recalled that in a case where redetermination is sought on the basis of an award of the Reference Court against which an appeal is pending, the proper course required to be adopted by the Collector is to keep such application pending till disposal of the appeal by the High Court/ Supreme Court[18] . Hence, while the final decision on the award of the reference court is to be awaited, Section 28-A, as construed, does not permit redetermination on the basis of the appellate court's judgment. Here lies the legislative self-contradiction.

It is also settled law that when an appeal is preferred against the Reference Court's award, the impugned award merges in the appellate court's decree, whether the appellate court confirms, varies or sets aside the award[19] . Therefore, after the disposal of an appeal, the award of the Reference Court, in law, does not survive to form the foundation for redetermination of compensation.

It is high time that, by amendment, the connotation of the expression "award of the court" is enlarged to include judgments of the appellate court(s) also.

Section 31(2), second proviso

The second proviso to sub-section (2) of Section 31 of the Act puts an embargo on the right to seek reference under Section 18, if the person concerned has received the amount of compensation without protest[20] .

It needs no emphasis that the 1984 Act made drastic changes in the LA Act to do away with technicalities (e.g., Sections 25, 28-A & 51-A etc.). The message of the 1984 Act was clear and loud: give a fair deal to the ex-landowners. Against this backdrop, it would be fitting if the second proviso is omitted. The omission becomes more pressing, as landowners, being often unaware of the rigours of the provisions, fail to register their protests while receiving compensation, lending them to legal hassles. In any case, since the persons who receive compensation without protest are entitled to seek redetermination under Section 28-A[21] , there is no plausible reason why protest should be made imperative for seeking a reference under Section 18.

Section 48

The acquisition proceedings cannot be withdrawn after possession is taken, as taking of possession both under Sections 16 and 17(1) results in vesting of the land in the State free from all encumbrances. An absolute bar, so contained in Section 48, many a times works to the detriment of either the State or the beneficiary. Therefore, it needs to be removed.

The Government should be at liberty to restore the land to its ex-owner if it is no longer needed for a public purpose or the government/beneficiary finds making use of the acquired land a financially unviable proposition[22] . Of course, in that situation, the ex-owners should get recompense for the damage, if any, suffered by them as a consequence of acquisition.

Section 50

In U.P. Awas Evam Vikas Parishad v. Gyan Devi[23]  it has been held that the local authority/or company, for whom land is acquired, has a right to be given adequate notice under Section 50(2) of the LA Act. However, the LA Act does not postulate any particular form of notice. Many times, the local authority/company concerned possesses complete knowledge and information about reference proceedings even without a formal notice from the court, but raises objections about non-receipt of notice before the appellate courts. Such objections apart from being unfair, are contrary to settled law that "notice" does not necessarily mean "communication in writing" and means giving intimation, whether formally or informally[24] .

It would settle the controversy if actual knowledge of the local authority/ company were, by fiction of law, deemed to be sufficient notice. An amendment to this effect would embody the salutary rule of notice, based on justice, equity and fair play.

Under the law, as it obtains now, the landowner's right to be compensated is enforceable only against the State[25] . An awardee cannot directly recover the amount, as awarded by the reference/appellate court from the local authority/company in the execution proceedings. That is why where the local authority concerned does not make the requisite amount available to the Collector, the Collector is unable to pay off the amount to the landowners for want of funds. This leads to insurmountable difficulties in realisation.

The ratio of Gyan Devi[23] does not also help, since service of notice upon the local authority has alone been made obligatory without making the local authority accountable qua ex-owner. Hence, an acceptable solution would be to make the local authority concerned directly liable to pay the compensation amount in terms of law, and the awardee be made correspondingly entitled to realise the same from it.

Sum up

Besides the above provisions, many others also require an analytical examination. Since acquisition under the LA Act is for pro bono publico, a pragmatic approach to make acquisition of land a smooth affair should be evolved by removing procedural bottlenecks. At the same time, the compensation provisions should also be reworked to give a fair and just deal to landowners.

* Advocate, Supreme Court of India, New Delhi. Return to Text

1. The Report (1994-1995) on the Land Acquisition Act, 1894 of the said Standing Committee (10th Lok Sabha) was presented to Lok Sabha on 15-12-1994 and laid in Rajya Sabha on 13-12-1994. The Report, containing action taken by the Government on the recommendations, was the 24th one (1995-96), and was presented to Lok Sabha on 12-3-1996 and laid in Rajya Sabha on 11-3-1996. Return to Text
2. Mr Bhagwan Shankar Rawat, MP, moved his Bill dated 8-5-1998, being the Land Acquisition (Amendment) Bill, 1998 (Bill No. 53 of 1998). Return to Text
3. The pendency of the proposal for amendments of the Act was stated in Rajya Sabha by Hon'ble Mr Babagoud Patil, Minister of State for Rural Development and Employment. See Hindustan Times, New Delhi dated 30-7-1998. The author also met on 4-8-1998, in person, Hon'ble Mr Patil who confirmed there was such a proposal and also confirmed that the Government intended to introduce a Bill in the next session of Parliament. Please also see: Indian Express, New Delhi dated 31-10-1998. Return to Text
4. (1993) 4 SCC 369 at p. 374 para 15. Return to Text
5. Awadh Bihari Yadav v. State of Bihar, (1995) 6 SCC 31; Allahabad Development Authority v. Nasiruzzaman, (1996) 6 SCC 424; U.P. Jal Nigam v. Kalra Properties (P) Ltd., (1996) 3 SCC 124. Return to Text
6. (1997) 1 SCC 297 (para 8). Return to Text
7. Special LAO v. Godrej & Boyce, (1988) 1 SCC 50 (para 5); G.H. Grant (Dr) v. State of Bihar, (1965) 3 SCR 576; Satendra Prasad Jain v. State of U.P., (1993) 4 SCC 369. Return to Text
8. Bhikhubhai v. State of Gujarat, AIR 1989 Guj 8; Dharam Dass v. State of H.P., 1989 LACC 449. Return to Text
9. (1996) 9 SCC 414 (para 18). Return to Text
10. AIR 1991 SC 1080. Return to Text
11. Kindly see: Land Acquisition (Mysore Extension and Amendment) Act XVII of 1961, Section 4. Return to Text
12. Kindly see: C.P. & Berar Act VII of 1949, Section 3; Land Acquisition (Maharashtra Extension and Amendment) Act XXXVIII of 1964, Section 3(b); Land Acquisition (Himachal Pradesh Amendment) Act, 1979. Return to Text
13. Union of India v. Ram Mehar, (1973) 1 SCC 109; Narain Das Jain v. Agra Nagar Mahapalika, (1991) 4 SCC 212; Periyar & Pareekanni Rubbers Ltd. v. State of Kerala, (1991) 4 SCC 195. Return to Text
14. Raghbir Singh v. Union of India, AIR 1985 Del 228. Return to Text
15. Yadavrao P. Pathade v. State of Maharashtra, (1996) 2 SCC 570; Prem Nath Kapur v. National Fertilizers Corpn. of India Ltd., (1996) 2 SCC 71. Return to Text
16. Kindly see the article "Interest on Solatium - A Judicial Controversy", (1997) 3 SCC (J) 11. Return to Text
17. Union of India v. Bant Ram, (1996) 4 SCC 537; Bhagti v. State of Haryana, (1997) 4 SCC 473; Tota Ram v. State of U.P., (1997) 6 SCC 280; Yelamanchi Ranga Rao v. State of Orissa, (1997) 10 SCC 468. However, the correctness of the ratio was doubted in Jose Antonio Cruz Dos R. Rodrigueses v. Land Acquisition Collector, (1996) 1 SCC 88, but the issue remained unanswered in its fact situation as finds mention in the decision reported in (1996) 6 SCC 746 (para 5). Return to Text
18. Babua Ram v. State of U.P., (1995) 2 SCC 689 (para 39). Return to Text
19. Sushil Kumar Sen v. State of Bihar, (1975) 1 SCC 774. Return to Text
20. State of Punjab v. Satinder Bir Singh, (1995) 3 SCC 330; Wardington Lyngdoh v. Collector, (1995) 4 SCC 428. Return to Text
21. Babua Ram (supra) at 18 above. Return to Text
22. In S.P. Jain v. State of U.P., (1993) 4 SCC 369, the Market Committee, the beneficiary, resolved not to have the land because of shortage of funds and the site being far away. But it was not allowed as possession stood taken. Return to Text
23. (1995) 2 SCC 326. Return to Text
24. Nilkantha v. Kashinath, AIR 1962 SC 666 (para 10); V.V. Joseph v. Union of India, 1993 Supp (2) SCC 627 (para 5). Return to Text
25. Hissar Improvement Trust v. Rukmani Devi, 1990 Supp SCC 806. Return to Text