Real estate

This article has been written by Surbhi Khanna pursuing the Certificate course in Real Estate Laws from LawSikho. This article has been edited by Gloria Gomes (Associate, Lawsikho) and Dipshi Swara (Senior Associate, Lawsikho). 


India, an agriculture-driven country with a high population density, land here is not just a resource or asset, it is a legacy. So acquiring land in a country like India is a very sensitive issue as balancing the interest of the owner along with development is a tedious task. Hence land acquisition has always been a controversial issue. With effect from January 1, 2014, the Central Government passed “Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation And Resettlement Act, 2013” (“New Act”)” repealing the century-old colonial Land Acquisition Act 1894 (“Old Act”).

In this article, we will see the following aspects of the new Land Acquisition Act for more insights on this subject

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I. Special Features of the Act.

II. Merits and Demerits.

III. Practical Scenario with reference to case laws.

IV. Conclusion and key takeaway.

Special features of the Act

The Old Act was more arbitrary in nature on the part of the State, as there were no adequate provisions for redressal of grievance of landowner further the process overall lacks transparency in it. In contrast, the title of the New Act itself clears the intention of lawmakers behind the new law; it is more owner-friendly. It is a time-bound human participative informed and transparent process with the intent to include both sustainability and development hand in hand. Some of its important features are listed below:-

  1. Prior Consent for Acquisition and applicability for Private Players like industrialists

Land can be acquired for such public purposes as defined under the Act, namely strategic purposes relating to the naval, military, air force, infrastructure projects, public-private partnership projects. In case the land is acquired by Government for Public-Private Partnership or on behalf of Private Companies for carrying on Public Purposes then the consent of 70% and 80% respectively of affected families shall be required for Land Acquisition.

The provision relating to rehabilitation and resettlement shall also apply in case Private players acquire land exceeding the limit prescribed by the appropriate government through Private negotiations.

  1. Purpose for Acquisition 

Government cannot acquire land for Private Players except in the case of public-private partnership projects or for Private Companies for public purposes. Further, if Private Players acquire land for any purpose through Private Negotiation over the limit as may be notified by the appropriate Government the provisions for Rehabilitation and Resettlement will become applicable

  1. Social Impact Assessment Study

Before determining whether the land shall be acquired or not, a social impact assessment is conducted on the identified land by the Government in consultation with local bodies (Panchayat, etc) to assess the social impact of the acquisition, its cost, and how it shall be addressed or compensated. Only after receiving a favourable Social Impact report where potential benefits outweigh the social impact of the Project, the subject land is sought to be acquired.

  1. Rehabilitation and Resettlement Package

The Rehabilitation and Resettlement Package under the Acts is broader in terms of elements, apart from monetary compensation it has provision to provide for employment, allotment of alternative housing units, another land, and other entitlements, allowance and grants to make up for the loss of occupation or opportunity owing to displacement, infrastructure facilities at the resettled place.

Additionally, in case of acquisition of land that exceeds one hundred acres a Rehabilitation and Resettlement Committee is constituted containing the representative of various stakeholders to monitor and implement the Rehabilitation and Resettlement scheme.

  1. Special Provisions

 To ensure food security, multi-crop irrigated land shall not be acquired under normal circumstances; it can be acquired only under exceptional circumstances, as a last resort after making suitable provision for another agricultural land for a similar purpose to cover the loss.

No acquisition of land shall be made in the Scheduled Areas (Scheduled Areas means the Scheduled Areas as defined in section 2 of the Provisions of the Panchayats (Extension to the Scheduled Areas) Act, 1996), further without the prior consent of the concerned Gram Sabha or the Panchayats or the autonomous District Councils, at the appropriate level is required in all cases of land acquisition in such areas, including acquisition in case of urgency.

  1. Compulsory Acquisition

In case of defence or national security or any emergencies arising out of natural calamities or any other emergency with the approval of Parliament, subject land can be compulsorily acquired by the Collector on the direction of appropriate government without following the due process of land acquisition under the Act.

  1. Compensation

The most highlighted feature of the New Act which is reflected in its title itself is the fair compensation. The Act stipulates a mechanism to provide for minimum compensation which includes payment of 1 to 2 times the Market Value of land, value of asset attached to the land together with Solatium.

Solatium is the amount payable in addition to compensation equalling 100 % of the Compensation Amount. Nevertheless, the quantum amount of compensation is quite higher than the Old  Act.   

8. Retrospective Effect

In a certain way, this Act also applies to previous transactions initiated under the ‘Old Act’ that is where an award under the previous Act has been made five years or more before the commencement of this Act but the physical possession of the land has not been taken or the compensation has not been paid the land acquisition proceedings under Previous Act shall be deemed to lapse and the appropriate Government, if it so chooses, shall initiate the proceedings of such land acquisition afresh in accordance with the provisions of this Act.

9. Urgency Clause

Only in the case of defence or national security or for any emergencies arising out of natural calamities or any other emergency with the approval of Parliament, the land is acquired without following the whole process of Social Impact Analysis and Public Hearing is waived and possession of land is acquired on the expiration of thirty days from the publication of the notice.

Merits and demerits 

1. Merits

Compared to the previous Act, this Act is a complete 180-degree change in the approach of the Government from Acquirer centric to Owner Centric. Not only is the amount of compensation much higher (four times higher in rural areas and two times in urban areas) than the Old Act, the element of consent for Acquisition and Rehabilitation and Resettlement are included in this Act which was missing in the Old Act. The whole process of Land Acquisition is based on the approach of time-bound decision-making with the proactive participation of stakeholders. It is a transparent process where the government notifies/publishes/informs decisions related to the Land Acquisition process and suitable provisions are made to address their concern/ take their suggestion either directly or through their elected representative.

2. Demerit

Although the amount of compensation is much higher under  New Act, the determinant of Compensation that is the current market value of the subject property does not make up for the potential value that will occur after the development of property which otherwise would be available for the Landowner under Private Negotiations.

Further, the resettlement and rehabilitation, and compensation are only restricted to Landowners, however, there are other dependents like the landless farmer whose livelihoods are affected are not covered under Scheme.

The whole process is time-consuming and complicated, discouraging State and Private Players to comply with the process in letter and intent. Other than Multi Crop Land and Land under Scheduled Area, no special protection is provided under the Act for Farm Land and Forest Land. For all types of rural and urban land, the same procedure has been defined, no provision for a fast-track mechanism other than an urgency clause has been provided in the case where there are no complications

Reference to case laws

To understand major issues/ controversies relating to this law, in this section, we will look into prominent cases.

Acquisition of forest land- POSCO Resistance Movement 


In India, many laws protect the rights of Scheduled Tribes and Forest land. One of these acts is Scheduled Tribes and Other Traditional Forest Dwellers (Recognition of Forest Rights Act) 2006, which provides for prior consent of local people in case of acquisition of Forest Land for any Project. However, practically these laws fail to protect the interest of vulnerable classes because of poor execution Below we will discuss the “POSCO Resistance Movement ” illustrating one such case in this regard:-

Outcome of the case

1. In 2005 Orissa Government entered a Memorandum of Understanding (MOU) with South Korean steel major, POSCO, to offer 4,004 acres of coastal land out of which 3,000 acres were Forest Land for the development of a massive Steel Project.

2. The subject land was the source of livelihood for 20,000 Tribal people who were cultivating betel vines

3. Even after the denial of the consent of Local People under Scheduled Tribes and Other Traditional Forest Dwellers (Recognition of Forest Rights Act) 2006 and rejection of a 70-crore rehabilitation package, the Orissa Government initiated land acquisition in a phased manner. 

4. The First Attempt was made in 2011 after instances of fierce public resistance the Acquisition was suspended. The second attempt was again made in 2013 with additional police deployment, the instance witnessed violence and clashes between the Police and People.

5. Later it was found by India’s National Green Tribunal (NGT) that environmental
clearance granted and social impact assessment had grave inconsistencies and there was the absence of requisite legal approvals. A committee was set up to review the hasty environmental approvals given to the Project in 2011.

6. In 2017, POSCO management withdrew from the project owing to a loss in interest attributable to change in Law and other Regulatory Hurdles.

Acquisition for Private Players- Tata Singur Case


Industrialist, real estate developers seek the support of governing parties to acquire land for commercial use.

Generally, it has become an implied norm for the Government to acquire land at their dedicated terms under the immunity of law and hand it over to Private Players.

Outcome of Case

1. West Bengal Government in May 2006, offered 700 acres of fertile agricultural farm    
land at Singur in Hoogly to Tata Motors for the development of their Tata Nano      Project.

2. Land was forcefully acquired and possession of the land was handed over to Tata   Motors.

3. Said acquisition was heavily agitated by the affected landowner and non-farming households who have been employed in the agriculture-related occupation.

4. Later on their agitation was fuelled by the support of opposition Political parties and other social workers became infamous in the Country.

5. The acquisition was challenged in the High Court and during the court proceedings, it was found that 65% of land out of the total 400 acres had been acquired forcefully for which no consent was taken by the Government.

6. Attributed to the violence and bad publicity, Tata withdrew from the land and developed its industry in Sanand, Gujarat, India.

State laws diluting centre law- Chennai Metro Case


As an aftereffect of the long complicated procedure entailed under New Act it has been observed that States are revising their local laws (similar to the old Act) to acquire Land simply to save themselves from the hassle of the New Act. One such controversial case is the acquisition of land for Chennai Metro by Tamil Nadu using their State Laws.

Judgment/ Decision of the court

1.After enactment of the New Act, the Tamil Nadu Government on December 05 2019 by using their statutory power under Article 254(2) passed a State Law The Tamil Nadu Land Acquisition Laws (Revival of Operation, Amendment, and Validation) Act, 2019 with the intent to exempt the applicability of LARR in three categories of the project for Industrial and infrastructure purpose which constitutes the majority of land acquisition.

2. Their enactment was challenged in the Supreme Court by way of the writ petition, to which the Supreme Court held the enactment valid on the ground that subject to the consent of the president a state can deviate from the Centre Law under Article 254(2)

Conclusion and key takeaways     

From the above case laws, we have seen that whenever the Government forcefully acquires land especially rural and forest land wherein the stakeholders do not accrue any direct benefit the acquisition often fails subsequently snapping the overall development plan. Governments in the wake of social and economic development often exceed their traditional role of “Law keepers” to facilitators for private players in land acquisitions hence disturbing balancing of interest and negotiating power of the Land Owner and Affected Families. Attributable to this disturbance in Balance of Power between Acquirer and Affected People, the Government introduced “New Act” which is owner-centric wherein stakeholders are engaged at each step of land acquisition to make informed decisions and redress their issue and concerns. Further by defining the “Public Purpose” the act discontinues the Government role of Facilitator/ intermediaries of Private Players. In case any Private Player is involved by way PPP Project or acquires more than a specified area the provisions of the New Act are applicable. Thus broadening the scope of the New Act to both Government and Private Acquisition. But is the New Act successful in balancing the objectives of Affected Parties and Acquirer? The answer is debatable, no doubt on one side New Act is capable of protecting the interest of Affected Parties however on the other side it increases the time of the whole process of land acquisition and inflates the cost of acquisition overall affecting the ease of doing business and infrastructure development. That is why States are reluctant to implement them and seek ways to avoid its execution by using the provisions of Article 254(2) they tend to bypass its applicability in their preferred categories. Acquisition by Tamil Nadu for Chennai Metro Rail, Nanar Oil Refinery in Maharashtra are recent examples of State Endeavours for the same. Until the Act facilitate and benefit both parties it will not be successful to achieve its objectives In consideration of the above here are few suggestions to streamline the process of Land Acquisition

1. Development of Area

Government should avoid hasty Ad Hoc acquisition especially of farm and forest land on which large inhabitation is dependant, instead it should have a proactive approach in identifying potential areas well in advance and develop them to reduce the dependence on the land for example, imparting technical training to farmers so that they can slowly divert from their existing livelihood from farm to factories and become a direct part of the development process. 

2. Land Bank for Private Players

The private sector is often hesitant to invest in projects which entail large land acquisition owing to the complications of private negotiation or they tend to acquire in a way that is detrimental for owners. They often seek the support of the State Government in this regard. The State Government should have their land ready before inviting investments. They should pursue a balanced land acquisition policy comforting the interest of both Private Players as well as resettlement of affected families.

3. Long Term Benefits

To self-motivate, the people to contribute their land for the public purpose along with resettlement they should be offered a long-term benefit associated with the development.

For example, if the land is being acquired for developing roads, the toll can be waived for local people whose land is acquired, they can be given a certain rebate in their tax. These perks may inculcate a feeling of pride and may motivate them to contribute their part of the land in nations’ development.

4. Fast Track Mechanism

Under the New Act, the same procedure has been defined for every kind of land acquisition, irrespective of the type of land or the number of stakeholders affected, discouraging Private Players and State Government to get into the cumbersome procedure. A Law should be simple enough to encourage stakeholders to opt for it.

For example, in case of an acquisition under Barren Land or Waste Land, the acquisition procedure shall be simple and time-saving in comparison to Rural Land or Agricultural land.



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