One of the most debatable issues under the Land acquisition Act 1894 is interpretation of ‘public purpose’ around which disputes concerning acquisition revolve. Private companies acquire land for infrastructure, power, residential or such similar projects and the notification under sections 4 and 6 of the Act are challenged on the ground that land is being taken over for private purposes or by a private entity. The government acquires private land by applying the principles and rules under the provisions of the Act 1894. However, different states have also enacted own compensation and acquisition rules independent of the Act.
The original Land Acquisition Act was a colonial legislation enacted by the British government primarily to acquire private land to lay railways lines and for other such construction works. The Act was adopted into the Indian Constitution and is being used by the government, albeit a few amendments.
The preamble to the Land Acquisition Act states it is for the acquisition of land needed for public purposes “or for companies and for determination of the amount of compensation to be made on such acquisition”.
The term ‘public purpose’ has been defined in the Black’s Law Dictionary (Fifth Edition) as: “A public purpose or public business has for its objective the promotion of the public health, safety, morals, general welfare, security, prosperity and contentment of all the inhabitants or residents within a given political division, as, for example, a state, the sovereign powers of which are exercised to promote such public purpose or public business”.
The concept was the work of by Hugo Grotius is in his work “De jure Belli et Pacis” in 1525. It deals with the compulsory acquisition of land for public purpose and states that a State can acquire private land for public purpose.
However, under the new Land Acquisition Bill-2011, amended on September 17 last year and passed by the Lok Sabha on August 28 this year, the term ‘public purpose’ has been elaborated by inserting a new clause, 3(za). It states:
Provided further that where a private company after having purchased part of the land needed for a project, for public purpose, seeks the intervention of the appropriate Government to acquire the balance of the land it shall be bound by rehabilitation and resettlement provisions of this Act for the land already acquired through private negotiations and it shall comply with all provisions of this Act for the remaining area sought to be acquired.
In most cases, the ground of attack on ‘public purpose’ is that the land is acquired by a private entity for industrial purpose is not for the benefit of the public at large. The determining factor in such cases is the publication of notification under section6 of the said Act which calls for a declaration that the particular land is needed for a public purpose or for a company “when the Government is satisfied after considering the report, if any, made under Section 5A(2)”.
It has been explicitly made clear that such a declaration shall be subject to the provisions of Part VII of the Act under the chapter ‘Acquisitions of Land for Companies’. Thus, Section 6 reiterates the apparent distinction between acquisition for a public purpose and acquisition for a company.
There is an important and crucial proviso to Section 6 which has a bearing on the question whether an acquisition is for public purpose or for private use. The second proviso states that “no such declaration shall be made unless the compensation to be awarded for such property is to be paid by a company, wholly or partly, out of public revenues or some fund controlled or managed by local authority”.
Explanation 2 then clarifies that where compensation to be awarded it is to be paid out of the funds of a corporation owned or controlled by the State and such compensation shall be deemed to be compensation “paid out of public revenues”. Thus, a provision for payment of compensation, wholly or partly, out of public revenues or some fund controlled or managed by a local authority is sine qua non for making a declaration to the effect that a particular land is needed for public good. If the said company is not involved in public good, the acquisition shall not be deemed to be acquisition for a public purpose unless at least a part of the compensation is payable out of public revenues, including the fund of a local authority or the funds of a corporation owned or controlled by the state.
Another important provision is Sub-Section (3) which entails that such a declaration shall be conclusive evidence that the land is needed for public purpose for a private entity and on the publication of the declaration, the appropriate Government is enabled to acquire the land in accordance with the other provisions of the Act. However, this is subject to the government’s discretion, in the case of which it can be challenged and the declaration can be declared null and void.
In Gayatri Prasad and 5 Others vsS hri Kishore Bhaduri case, the Chattisgarh High Court on September 4, 2012, had referred to various judgments of the Supreme court while discussing the provisions of section 6 of the Land Acquisition Act. On these bases, the court had held that if no part of compensation amount was to be paid out of public revenues, then the declaration that the land was needed for public purpose cannot be validly made and the acquisition cannot be considered to be for a public purpose.
The rider in the amendment that makes mandatory seeking consent of 80 per cent land owners while acquiring land has put private companies in a tight spot. Other amendments under different provisions in new Bill have already raised the compensation bar to be given to land owners, which can now fetch them maximum cost of their land to give consent for it to be acquired.
However, the ambiguity surrounding the ‘public purpose’ under the Act continues to dominate land acquisitions. It would perhaps be wiser to settle such cases outside courts and ensure that a reasonable compensation is paid through amicable settlement in cases between private entities and land owners.
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