The Supreme Court guidelines to assess market value do not take into account human factors.
Determination of the market value of land notified for acquisition by the government has been a ticklish problem since the enactment of the 19th century Land Acquisition Act. This was reflected in recent proceedings and judgements of the Supreme Court. Some cases have been fought for nearly two decades, starting from the subordinate courts, and the value of the land might have gone up several times in this period. Meanwhile, the names of some of the petitioners are suffixed with ‘dead’ in brackets. Since there is no ready reckoner in the matter, the courts have deduced certain principles which throw up more heat than light on this question.
Last fortnight, the Supreme Court reviewed its earlier judgements to arrive at a solution for a set of disputes which started some 19 years ago. In this case, Faridabad Gas Power Project, NTPC Ltd vs Om Prakash, protests started when the Haryana government notified land in five villages in Faridabad district. The public purpose was the construction of a 1,200 Mw project of the National Thermal Power Corporation Ltd, a government-enterprise. Since it was agricultural land, the government offered compensation as low as Rs 42 per square yard. The land-owners argued that the land had potential for residential and commercial purposes and was worth a lot more. The disputes raised by hundreds of land owners wound their way up to the Supreme Court and it gave its final decision two weeks ago. What is significant in the judgement are the norms drawn together from 14 earlier judgements.
The court had earlier done one such exercise in 2003, in the case, Land Acquisition Officer vs Noorkala Rajamallu. According to that decision, the element of speculation could be reduced to a minimum if the market value was fixed with reference to comparable sales. However, such sales should be within a reasonable time of the date of the acquisition notification, they should be bona fide transactions, they should be of land adjacent to the land acquired and should possess similar advantages.
Moreover, the transfer of property should be from a willing seller to a willing, but not too anxious buyer, dealing at arms length (Mehta Ravindrarai vs State of Gujarat, 1989). In Krishi Utpadan Samiti vs Bipin Kumar (2004), the valuation based on the stamp duty paid was held to be unreliable.
In ONGC vs Rameshbai, the Supreme Court held last year that an increase in the market value in urban/semi-urban areas could be taken as about 10 to 15 per cent a year. The corresponding increase in rural areas would at best be around half of it. In Viluben vs State of Gujarat (2005), some positive and negative factors were listed. The positive factors are: Smallness of the plot, proximity to a road, nearness to a developed area, regular shape, level of the land and special reasons. Negative factors are: Largeness of the area, situation in the interior, narrow strip of land with small frontage, lower level, remoteness from developed locality and other special reasons which would deter a purchaser.
All these criteria still do not take into account several human factors which the recent social tension over SEZs highlighted. Owners of agricultural land are not equipped to invest in other areas of economy. They would not be able to adapt to non-agricultural jobs either. Small and medium farmers will get marginal amounts of compensation which would not be adequate to start a viable business. In practice, these farmers burn away their new-found wealth within a few years and turn paupers soon thereafter.
Land acquisitions are not often voluntary, between a willing seller to a willing, but not too anxious buyer, dealing at arms length, as the Supreme Court put it. Recent incidents showed that farmers could be coerced into accepting an unjust price. The role of the developers, backed by a local land mafia, who understands the capitalist economy too well, is an obvious example. They know that new industries will shift to the acquired land and have advance information from the government about the urbanisation plans. They buy the land from farmers at ridiculously low prices and then slowly release pieces of it at enormously inflated rates.
These are realities which the courts will not, or can not, take into account when they are called upon to ascertain the right market price. The law is deplorably vague on public purpose and urgency in acquiring land for corporate purposes. Add to this the quibbling on market price, and we have confusion worse confounded.
