14 Property Rights and Land Reforms
Dr Rashmi Nagpal
1. Introduction
‗Property and law are born together, and die together. Before laws were made there was no property; take away law, and property ceases‘ Bentham1
The above quoted words explain the interrelationship of property and law in the society. To regulate the institution of property every society has developed the rules and regulation which is influenced by the socio-political-economic conditions of the society. Indian experiences and conception of property and wealth have a very different historical basis than that of western countries. The reality is that the prevalent system of property crop up out of the strange developments in Europe in the 17th to 18thcentury and therefore its experiences were unanimously not applicable. A still more economic area in which the answer is both tricky and significant is the meaning of property rights. The notion of property as it has developed over centuries and it has embodies in our legal codes, has become so much a part of us that we tend to take it for granted, and fail to recognize the extent to which just what constitutes property and what rights the ownership of property confers are complex social creations rather than self evident propositions2
- Doctrine of Eminent Domain
The term ―eminent domain‖ was coined by Hugo Grotius (1583–1645), a Dutch jurist and philosopher of natural law, to explain the control of the state over natural property.3 ―Eminent domain or condemnation is the power of the sovereign to take private property for public use without the owner‘s consent.‖ This power is inherent to the sovereign, to shape the use as it deems fit.4 The doctrine is based upon the following two Latin maxims5
Salus Populi est Suprema Lex6
Necessita Public Major est Quam7
The government has an innate right to take and appropriate the private property belonging to individual citizen for public use.
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4. Position in British Era
In British India the Regulation I of Bengal Code, 1824 was enacted with two fold objectives firstly it facilitates the acquisition of land for construction of Roads, canals and it also covers unusual circumstances of taking the land for the use of salt production. In brief it was the first step initiated by the British Empire to consolidate the property of with legal method. The next step ahead in the process of strengthening the concept of eminent domain in India was the enactment of Land Acquisition Act, 1870. The objective of the above referred Act was acquisition of land for public purpose.
Section 299 of the Government of India Act, 1935 secured the right to property and contained safeguards against expropriation without compensation and against acquisition for a non-public purpose. The debates in the Constituent Assembly when the draft Article 19(1)(f) and Article 31 came up for discussion clearly indicate that the framers of our Constitution attached sufficient importance to property to incorporate it in the chapter of fundamental rights.
Constitutional Debates and Right to Property
The debate in the Constituent Assembly about property rights was passionate, long-lasting, and emblematic of many postcolonial debates regarding the strong protection of property rights and development as well as of the Patel-Nehru divide. The issues debated included whether movable (i.e., personal) property should be covered, whether ―just‖ should modify the term ―compensation,‖ whether the legislature should determine the amount of compensation.9 An attempt was made in the Assembly to introduce into the Constitution the due process clause of the U.S Constitution for protecting the individual right to property. But this was finally withdrawn because of apparent dangers involved in such a clause.
In the Constituent Assembly, focusing on the natural right of individual to own a property, one group11 in the Constituent Assembly argued that the payment of just compensation, while other group12 owing allegiance to the socialistic approach on the right to property went to the extent of arguing that there should be no payment of compensation in case of compulsory acquisition for public good.
The right to acquire, hold and dispose of property was included as a fundamental right. Deprivation of property was prohibited except by the authority of law. The question as to the quantum of compensation that has to be paid in case of acquisition or requisition for public purpose created much difficulty.14 Article 31 of the constitution in fact reflected this approach which appeared to prefer protection of societal interest to individual interest. Thus original Article 31 to the Constitution guaranteed deprivation of property by law alone. It also guaranteed payment of compensation as fixed by the legislature.
6.Constitution and Right To Property : A journey of Amendments
Article 19(1) (f) of the Constitution, as originally enacted, provided that ―All citizens shall have the right to acquire, hold and dispose of property‖
But the right enacted under Article 19(1) (f) was subjected to reasonable restriction in the interest of general public. Article 19(5) read as:
―Nothing in sub-clause (d), (e) and (f) of the said Clause shall affect the operation of any existing law in so far it imposes, prevent the State from making any law imposing, reasonable restriction on the exercise of any of the rights conferred by the said sub-clause either in the interests of the general public or for the protection of the interests of any scheduled tribe.‖
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Article 31 of the Constitution stated that
(1) No Person shall be deprived of his property save by authority of Law. (2) No property, movable or immovable, including any interest in, or in any company owning, any commercial or industrial undertaking, shall be taken possession of or acquired for public purposes under any law authorizing the taking of such possession or such acquisition, unless the law provides for compensation for the property taken possession of or acquired and either fixes the amount of the compensation, or specifies the principles on which, and the manner in which, the compensation is to be determined and given.‖ (3) No Such law is referred to clause (2) made by the legislature of a State shall have effect unless such law, having been reserved for consideration of the president, has received his assent.
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By virtue of Article 31(1) a person cannot be deprived of his property without authority of Law. Article 31(2) property could be taken possession of or acquired for public purpose only by law and that too on payment of compensation. Such law had either to fix the amount of compensation or to specify the principles. As an additional check on abuse by state legislatures, the constitution made it obligatory that such laws made by a state must obtain the assent of the President to get validity.16
The first shock to the right of property was given in Kameshwar Singh v. State of Bihar17 where Patna High Court struck down the Bihar Land Reforms Act, 1950 on the ground of inadequacy of compensation. In the mean time in State of West Bengal v. Mrs Bela Banerjee18the issue was whether the compensation provided for under the West Bengal Land Development and Planning Act, 1948, was in compliance with the provision in Article 31(2). For under the State Act, lands could be acquired many years after it came into force but nevertheless it fixed the market value as it prevailed on December 31, 1946, as ceiling on compensation without reference to the value of the land at the time of the acquisition. The Calcutta High Court’s held that Section 8 of the Act was ultra vires.
As a result of the same Pt. Jawaharlal Nehru immediately took the imitative and told Dr. Ambedkar to come up with changes in the provisions. Dr. Ambedkar came up with a recommendation that the judicial review powers of the Court shall be taken in case there is a Presidential assent for acquisition of property. It was objected by President Rajendra Prasad and this was also supported by Sardar Vallabhai Patel. It is said that the Prime Minister Pt. Nehru rushed Rajendra Prasad to give Presidential assent to the amendment.
By the side of this phase, V. K. Thiruvenkatachari, wrote a letter to the Law Secretary, K.V.K. Sundaram proposing an addition of new schedule in the Constitution. He further suggested that the Laws relating to land Reforms can be made a part of this new schedule. These enactments were retrospectively applicable and would be immune from the test of constitutional validity. On these suggestions the Articles 31A, 31B and the Ninth Schedule were framed. Article 31A specifies the laws relating to the acquisition of estates, nationalization of industries, extinguishment of mineral leases or their premature termination cannot be tested as violative of Article 14, Article 19 and Article 31. Article 31B was step ahead providing a complete immunity to all the Acts and Regulations mentioned in the Ninth Schedule from any fundamental right. There were originally thirteen land reforms Laws covered under the Ninth Schedule. There was later an amendment under Article 31A to widen the scope of the word ‗estate‘ which has a retrospective effect i.e. Constitution (Fourth Amendment) Act, 1955. In the Bela Banerjee case20 all attention was in the construal of the word ―compensation‖ as specified under Article 31(2) though Subodh Gopal21 case focused on the fact that whether the deprivation of the right to evict a tenant would come within the purview of Article 31(2). At the same time Dwarkadas Shrinivas22was construing the expression ‗take possession of‘ under Article 31(2) to comprise even transitory taking over. The interpretation made by the Court in the above referred cases resulted into the Fourth Amendment of the Constitution.
To overcome this difficulty a new sub clause 2A 24 was inserted by the Constitution (Fourth Amendment) Act, 1955. The new sub clause further clarified the meaning of compulsory acquisition and requisition. As per the new sub-clause, only cases in which law provided for transfer of ownership or right to possession would amount to compulsory acquisition and requisition. Thus the damage caused by Dwarkadas25 was rectified. The Constitution (Fourth) Amendment Act, 1955 which enacted that a legislation which provides for the compensation for the property acquired or requisitioned and either predetermined the amount of the compensation or specified the principles on which, and the manner in which the compensation was to be determined or given could not be called in question in any Court on the ground that the compensation provided by the law was not adequate. ]
The next step was the Seventeenth Amendment Act, 1964 through which an effort was made to extend the scope of Article 31-A and Ninth Schedule in order to protect certain agrarian reforms enacted by the Kerala and Madras states. The word ―estate‖ in Article 31-A was now inclusive of any jagir or inam, mauf, or any other grant and janmam right in state of Kerala, Madras and also Ryotwari lands. Subsequently it also added the second proviso to clause (1) to protect a person of being deprived of land less than the relevant land ceiling limits held by him for personal cultivation, except on payment of full market value thereof by way of compensation. It further added 44 additional Acts to the Ninth Schedule.
In Varjaralu v. Special Deputy Collector28 while discussing the question of Land Acquisition (Madras Amendment) Act, 1961 fall within the purview of Article 31-A the Court observed that the object of Art 31-A is to facilitate agrarian reforms. Therefore, the protection is not applicable to a law which seeks to modify the right of the owner without any reference to agrarian reforms. Thus it was held that the Land Acquisition (Madras Amendment) Act, 1961 doesn‘t fall within the purview of Article 31-A. The Act was passed to create modern suburbs, housing scheme and to clear slums. In P Vajravelu Mudalier case29 and Union of India v. Metal Corporation of India30 considered Article 31(2) in the context of compensation and held that if the compensation fixed was illusory or the principles prescribed were irrelevant to the value of the property at or about the time of acquisition, it could be said that the Legislature had committed a fraud on power and therefore the law was inadequate.
Still after the enforcement of Constitution (Fourth Amendment) Act, 1955 the Supreme Court in a celebrated case of R.C. Coopers case32 popularly known as Bank Nationalization case, observed that the compensation under Article 31(2) takes into full monetary equal of the property taken from the owner i.e. the market price at the date of the acquisition. The consequence of the above referred judgment resulted into the Constitution (Twenty-Fifth) Amendment Act, 1971 which substituted the word ―amount‖ for the word ―compensation‖ coming in the new Article 31(2).
But even after this major amendment, the Apex Court in landmark judgment in Keshavananda Bharati‘s case held that the amount which was fixed by the Legislature could not be arbitrary or illusory but must be determined by a principle which is relevant to the acquisition of property. Art 31C was added by the Constitution (Twenty fifth) Amendment, 1971.
Article 31C is a monstrous outrage on the Constitution. In the entire history of liberty, never were so many millions of people deprived of so many fundamental rights in one sweep as by the insertion of Article 31C. De Tocqueville remarked that ―nothing is more arduous than the apprenticeship of liberty.‖ N A Palkhivala rightly remarks with grief in this context that ―It is a measure of our immaturity as a democracy and the utter apathy of our people that the betrayal of our basic freedoms excited hardly any public debate.‖
The Constitution (Twenty-Fifth) Amendment Act inserted a new Article 31C Which contained the following two provisios
1. No law which seeks to implement the socialistic Directive Principles specified in Article 39 (b) and (c) shall be void on the ground of contravention of the Fundamental Rights conferred by Article 14 (equality before law and equal protection of laws), Article 19 (protection of six rights in respect of speech, assembly, movement, etc) or Article 31 (right to property).
2.No law containing a declaration for giving effect to such policy shall be questioned in any court on the ground that it does not give effect to such a policy.
In the landmark case Keshvananda Bharathi v State of Kerala 36 the Apex Court affirmed that the judicial review is the fundamental characteristics of our constitution and which led to declare the above second provision of Article 31C as unconstitutional which tends to take away the power of judicial review. However, Article 31C (1) which seeks to implement the socialistic Directive Principles was upheld as constitutionally valid.
Article 31C (2) which was introduced by the Constitution (Twenty-Fifth) Amendment Act, 1971 was declared unconstitutional in the Kesavananda Bharati‘s case. The Constitution (Twenty-Fifth) Amendment Act, 1976 stretched the extent of earlier part of Article 31C. In the mean time Article 31C was enacted to give effect only to directive principles under Article 39. The Constitution (Twenty-Fifth) Amendment Act, 1976 sheltered legislations that professed to apply any of directive principles and make them resistant from the constitutional validity of Articles 14, 19 and 31. The immediate outcome was the predominance of directive principles over fundamental rights. This stipulation was struck down in the Minerva Mills case.
The Constitution (Forty-fifth Amendment), Act 1978 was another severe blow to fundamental right of property and resulting into the elimination the right to property from the Part III by obliterating Articles 19(1)(f) and 31, resulting into the insertion of Article 300A Right to Property. The Constitution (Forty-fourth) Amendment, Act 1978 ended a journey of right to property as a Fundamental right and continued the same under the constitutional right. Article 300 reads as:
Persons not to be deprived of property save by authority of law—no person shall be deprived of his property save by authority of law.‖
These amendments are hereafter referred to as ―the property amendments.‖ This amendment had two instant repercussion
(i) The Right to Property was no longer a fundamental right but a Constitutional Right.
(ii) Due to the removal of Article 31 the Government no more owes an obligation to pay compensation to the persons whose land had been acquired as per a law passed by Parliament.
Also, Article 31 (1) contained ―no person shall be deprived of his property save by authority of law‖ i.e. the present article 300A. The interpretation of this phrase has been clarified by the Supreme Court in a number of cases. In the case of Bishambhar Dayal Chandra Mohan v. State of U.P.39, the apex court held that “Art. 300A provides that no person shall be deprived of his property save by authority of law. The State Government cannot while taking recourse to the executive power of the State under Art. 162, deprive a person of his property.The word ‘law’ in the context of Article 300A must mean an Act of Parliament or of a State Legislature, a rule, or a statutory order, having the force of law, that is positive or State-made law.
In Basanti Bai v. State of Maharastra40 a Division Bench of the Bomaby High Court held that inspite of deletion of Art. 31(2), there is still obligation on the State to pay adequate amount to the expropriated owner. Further, the law providing for deprivation of property must be fair, just and reasonable as propounded by Hon‘ble Supreme Court in the famous Maneka Gandhi‘s case. 41 In State of Maharastra v.Basanti Bai42 it was further contended that the compensation payable was illusory in its quantum and the procedure prescribed for the acquisition was not fair and reasonable, though the dictum laid down in Maneka Gandhis s case43 ordained so. But the Supreme Court has overruled the judgment propounded by Bombay High Court.
The Hon‘ble Supreme Court in Tinsukhia Electric Supply Co. Ltd. v. State of Assam,44 has observed that even though Article 31 had not been deleted (at the time of the 42nd amendment) ―Its content had been cut-down so much, so that even under a law providing for acquisition of property which did not have the protection of 31-C the adequacy of the ―Amount‖ determined was non-justiciable and all that was necessary was that it should not be unreal or illusory. By then the Constitution had done away with the idea of a just equivalent or full indemnification principle and substituted thereof the idea of an ―Amount‖ and rendered the question of the adequacy or the inadequacy of the amount non-justiciable‖.
In Jilu Bhai Nam Bhai Khachar v. State of Gujarat 45 the Apex Court reiterated that right to property under Art. 300A is not a basic feature or structure of the Constitution. It is only a Constitutional right. The Apex Court further held that after the Constitution Forty Fourth Amendment Act has came into effect, the right to property in Article. 19(1)(f) and 31 had its annihilation from Part III i.e. Fundamental Rights. Its removal and restriction does not get regained the lost position for claiming compensation under the garb of constitutional right of property under Article 300A. The Apex Court also observed that the principle of unfairness or arbitrariness of the procedure established Article 21 does not apply to the acquisition or deprivation of property under Article 300A.
The Apex Court in the State of Jharkhand & Ors v. Jitendra Kumar Srivastava46 held that gratuity and pension are not bounties and an employee earns these benefits by dint of his long, continuous, faithful and unblemished service and the same being hard earned benefit in the nature of property, cannot be taken away without due process of law as provided under Article 300A of the Constitution of India. In the case of Rajiv Sarin and Another v. State of Uttarakhand and Others,47 the Apex Court held that·
The court has always been given the power to examine the legality of legislation which deprives the individual from his property under the grab of Articl2 300A and Entry 42 List III (Acquisition and Requisitioning of Property).
InI.R. Coelho v. State of Tamil Nadu48 the apex Court reaffirmed the principle of judicial review and even the Ninth Schedule can‘t claim exemption from the same.
The State has been given the power to acquire land for specific use by enacting a law through State legislative body or through the Parliament but the prerequisite for the same will be to pay compensation as per the fixed by the legislation.
Though the compensation is not required to be paid at market value but at the same time it should not be illusory.
The concept of ‗no compensation‘ and ‗nil compensation‘ was drawn where Court has can justify nil compensation and ensure to compensate fairly but in no case no compensation will be justified when the acquisition of private property is there for public purpose
7. Conclusion
The Land Acquisition Act of 1894 allows the Government of India to acquire any land in the country. It took nearly 120 years to replace the draconian law of land acquisition with the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act 2013 which came into force from January 1, 2014. This landmark legislation provides humane, participative, informed and transparent process for land acquisition for industrialisation, development of essential infrastructural facilities and urbanization and ensures a fair compensation for land owners whose property is acquired for the above referred purposes. The novel Land Acquisition Act is an endeavor to restructure the acquisition process, what has till date been very messy. The Act also aims to guarantees that the collective outcome of compulsory acquisition should be that affected persons become associates in development leading to an improvement in their post-acquisition social and economic status.49 The significant characteristic of the Act is that the developers will need the consent of up to 80 per cent of people whose land is acquired for private projects and of 70 per cent of the landowners in the case of public-private partnership projects. It also provides for compensation as high as four times more than the existing practice in rural areas and two times in urban areas. 50 The Centre decided to implement the Act early, state governments will have to soon set up at least six bodies, including the state-level Land Acquisition Rehabilitation and Resettlement Authority, in each state to hear disputes arising out of projects where land acquisition has been initiated by the state or its agencies. The state governments should take immediate steps to create and establish the State Social Impact Assessment Unit, the office of the Commissioner Rehabilitation and Resettlement and the State Level Monitoring Committee.
8. Summary:
- Property is an indispensable aspect of human nature but the concept of eminent domain has always created priority of the State‘s right over the property of an individual. The journey of Right of Property started with Fundamental right i.e. Article 31 but ultimately ended up resulting into the Constitutional Right under Article 300A as a result the Constitution (forty-Fourth) Amendment Act, 1978.The principle of Just Compensation on Compulsory acquisition has always been debated and resulted into the plethora of Amendment Acts.Finally, the Land Acquisition Act of 1894 is also replaced by the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act 2013
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