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On August 31, the Supreme Court in Kedar Nath Yadav v. State of West Bengal delivered one of the most momentous decisions of the year. It invalidated the expropriation of land in Singur by the erstwhile Left Front government in Bengal, and ordered that the acquired properties be returned to their original landowners. In their separate judgments, Justices Gopala Gowda and Arun Kumar Mishra diverged on critical questions of law.
But crucially they agreed on the core issue at stake: the government’s acquisition of land for the purported use by Tata Motors Limited to construct a car factory, they held, was in violation of the procedural mandates of the Land Acquisition Act, 1894. Today, this colonial-era law might stand repealed by the loftily named Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act of 2013 (LARR Act), but still, the court’s ruling, especially Justice Gowda’s judgment, ought to resonate with significance. For it raises important concerns about the extent of the state’s supposedly sovereign power to acquire property, and the nature of what constitutes a “public purpose” permitting such taking.
Under the 1894 statute there were broadly two forms of recognised expropriation: one, acquisition for public purpose for governmental use, and two, forced transfer of land from private individuals to corporations for the latter’s commercial use. In the case of acquisitions intended to benefit companies, a special procedure was prescribed in Part VII of the Land Acquisition Act, which incorporated additional safeguards to ensure that governments don’t abuse their avowed power of eminent domain.
Curiously though, when in 2006 the Communist Party of India (Marxist)-led regime in West Bengal acquired a tract of nearly 1,000 acres of land in Singur, a town located in the State’s Hooghly district, the government altogether ignored the binding requirements of Part VII. Instead, it acquired these lands, which were specifically identified by Tata Motors for constructing a manufacturing plant that would produce the Nano, envisioned as the world’s cheapest car, through a State-owned entity, the West Bengal Industrial Development Corporation. At the time, the government argued that this acquisition was in furtherance of the State’s new industrial policy, and since the plant would create jobs for hundreds of people it also fulfilled a public purpose. In 2008, the Calcutta High Court agreed with the State. But many small and marginal farmers, who had refused to accept compensation, filed appeals in the Supreme Court.
India’s constitutional history is littered with contests such as these, over the scope of an individual’s right to property. In its original form, the Constitution, through Article 19(1)(f), guaranteed to all citizens a freedom, subject to reasonable restrictions in public interest, to acquire, hold and dispose of property. Concomitantly, in Article 31, it also vested in the state an explicit power to expropriate property for a public purpose by paying compensation to the landowner, provided such acquisition was backed by suitable legislation. The promise that these rights provided enabled the judiciary, in the immediate years after the Constitution came into force, to review virtually every act of acquisition. But judicial interventions only further strengthened the government’s resolve to dilute property rights, through measures that were meant to enable the state to bring about greater equality in land ownership.
Ultimately, in 1978, Parliament enacted the 44th amendment to the Constitution and, through it, obliterated both Article 19(1)(f) and Article 31, consigning, in the process, the right to property to a mere non-fundamental status. The ostensible reason for this amendment was the need to provide the state with wide latitude to enable it to achieve land reforms. But the changes had the effect of only further nurturing a culture of inequality. As the continued use of the 1894 Act has shown us, both the Union and the various State governments have routinely acquired land for the benefit of private industry, always couching their laws though in the Orwellian language of “public purpose”. Inevitably, these acquisitions have tended to work to the benefit of the rich, often at grave costs incurred by small farmers.
For its part, the Supreme Court, encumbered by accusations of excessive intervention, has been happy to allow this expansion of the state’s power of eminent domain. It has generally ruled that even a token contribution by the government towards the cost of acquisition is sufficient to escape the requirements of Part VII. Preposterously, in one such case, the court held that “the contribution of Rs.1 from the public exchequer cannot be dubbed as illusory so as to invalidate the acquisition”. Matters reached a crescendo when in 2003, the court found that an acquisition of land to establish a “diamond park”, comprising various units for cutting and polishing diamonds, was valid as it would generate a “good deal of foreign exchange” and would create “employment potential”. In the ultimate analysis, the court wrote, “what is considered to be an acquisition for facilitating the setting up of an industry in private sector could get imbued with the character of public purpose acquisition if only the Government comes forward to sanction the payment of a nominal sum towards compensation.”
Therefore, when hearing the challenge of the farmers who had lost their lands in Singur, the Supreme Court was faced with a mountain of precedent that had allowed a precipitous expansion of the meaning of public purpose. While Justice Mishra accepted the erstwhile CPI(M)-led government’s argument to the limited extent that the expropriation was intended for the benefit of the public — in line with previously decided judgments — Justice Gowda was far more suspicious. Through a scrupulous analysis of Cabinet memoranda and letters exchanged between the State government and Tata Motors, he concluded that the lands in question were acquired solely for the benefit of the company. Hence, the attempt by the government to circumvent the special procedures of Part VII through a claim that the lands were acquired in public purpose, in Justice Gowda’s ruling, was a colourable exercise of power. “Such an acquisition, if allowed to sustain,” he wrote, “would lead to the attempt to justify any and every acquisition of land of the most vulnerable sections of the society in the name of ‘public purpose’ to promote socio-economic development.”
To a limited extent, some of the concerns that Justice Gowda has raised have already been allayed by the enactment of the LARR Act in 2013. The statute not only defines public purpose with greater clarity, but also mandates that where acquisitions are made for the benefit of private companies, the prior consent of at least 80 per cent of the affected landowners ought to be secured. But this legislation doesn’t negate the value in Justice Gowda’s judgment, not least because the power to make laws on acquisitions vests both with the Union and the State governments.
As events since 2013 have shown us, not only is the Bharatiya Janata Party-led government keen on rolling back some of the benefits that the central law offers, several States — Tamil Nadu, Rajasthan and Gujarat, among others — have already either amended the new law or enacted legislation of their own, creating sui generis processes that permit takings even in the absence of a direct public purpose. In other States such as Telangana, plans are afoot to amend the land law in such a manner as to do away with the requirement of consent when acquiring property for private companies so long as the acquisition is for a public purpose.