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Indian expropriation law acquired corporate dimension in the 1960s, when under Section 55 of the Land Acquisition Act, Centre issued rules for initiating acquisition proceedings on behalf of companies. The applicant had to fulfill certain conditions
before the process was initiated, as having made best efforts to identify suitable land, and failed in negotiating a reasonable price. The land had to be suitable for the purpose of acquisition; and agricultural land acquisition would be considered, only if there was no alternative. The Collector had to determine this in consultation with the district's senior agricultural officer, with public purpose as the ultimate objective of the acquisition. The company was bound by strict compliances and obligations, a breach could entail reversion of the land to the government. After the initial notification and hearing of objections, the Collector was required to prepare a report, and in case of a company, provide reasons as to why the land had to be acquired, and if it was good agricultural land, deal with the objections in accordance with the above rules. If the government was not funding the acquisition, the Collector did not have to justify it against the touchstone of public purpose.

The controversy has gained gargantuan proportions as a result of public protests, manipulation by political parties, and media frenzy. It's important to step down from the political platform, and examine it from a legal perspective, to remove misconceptions from the public mind.

The distinction between land acquisition for a company and for public purpose was made in the 1984 amendments, which specifically excluded land acquisition for firms from the definition of public purpose. Section 6 of the Act, which requires a declaration by the government that a particular land is needed for public purpose, clarifies that no such declaration is required in case of companies, unless any part of the compensation is paid out of public funds.

The conclusion drawn from this is that while other acquisitions are for public purpose, in case of a company, provided it meets the entire cost of acquisition, no such justification is required. Going by the 1963 rules, a company can seek acquisition, if it has failed to renegotiate a reasonable price otherwise. But would that absolve companies from commitment to public purpose under the rules. Public purpose is involved even in acquisition for establishing an industry by the private sector, and no government can be faulted for facilitating acquisition for investors.

The Act is criticized as an imperial legislation, lacking ameliorative measures for the deprived, with obsolete benchmarks for determining compensation. The Act envisages compensation parameters to include market value of property on date of preliminary notification, damages suffered by "interested" person(s) on account of his earnings, other properties, etc., reasonable expenses for relocation, 12 per cent interest up to date of handing over of possession, and a 30 per cent solatium on the above.

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Dr. Gursharan Singh Kainth started his career as Lecturer at Post Graduate Dept. of Economics, Government College, Gurdaspur, and later at Khalsa College; Amritsar, specializes in Quantitative & Development Economics. Has the distinction of serving Punjab Agricultural Univ, Ludhiana, for more than 2 decades and remained Director-Principal of Saint Soldier Management & Technical Institute, Jalandhar. Currently, heading GAD Institute of Development Studies, Amritsar, a self-financed research institute. Has been honoured with various awards, including Guru Draunacharya Samman, Vijay Rattan Award, etc.
Article posted on January 17, 2009.