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Analysis of Land Acquisition in India

14 min read

By Jalaj Tokas

Published On: October 27, 2021 at 17:32 IST


Since land is a scarce resource in a populated country like India, the government has formulated certain provisions, rules and guidelines, to facilitate infrastructure development in areas where the land is privately owned, or being used for agricultural purposes.

Compulsory acquisition of property involves expropriation of private rights in the property, it is a restraint on the right of private owners to be able to dispose of property according to their wish.

The law of Land Acquisition is intended to legalise the taking up, for public purposes, or for a company, of land which is private property of individuals the owners and occupiers, and pay equitable compensation therefore calculated at market value of land acquired, plus an additional sum on account of compulsory character of acquisition.

Several controversies have arisen with claims that land owners have not been adequately compensated. Land Acquisition has thus become a vexing problem for policy makers in India.

The following article analyses the aims and objectives of the Act as well as its scope. It provides a brief history of the Act and explains its shape today. It examines its impact on the development process and makes recommendations on the way forward for the central and state governments to lighten the adverse effects on infrastructure, industrialisation and urbanisation.

What is Land Acquisition?

Land Acquisition in India refers to the process of acquiring land  by the central or state government of India for various infrastructure and economic growth initiatives. In return, the government pays a suitable compensation to the land owner, as per the market value and the government is made responsible for the rehabilitation and resettlement of the affected land owners.

Land acquisition refers to the process of acquiring land by government from landowners to fulfil a public purpose. This law empowers the state, as an exception to the general rule, to compel an owner of the property to submit the property to the state or any agency or an entity authorised by the state because the same is required for the use of the state or such an agency or entity of the state.

Acquisition and Requisition of property falls in the concurrent list , which means that both the centre and the state government can make laws on the matter. There are a number of local and specific laws which provide for acquisition of land under them but the main law that deals with acquisition is The Land Acquisition Act, 1894.

The concept that underlines such an act and the rationale behind such an act lies in the concept of Utilitarianism which emphasis on the fact that community good is paramount to the right of individuals to hold property. The underlying principle of Land Acquisition, Power of Eminent Domain or the Law of Compulsory Acquisition whatever it may be called can be summarised by the legal maxim salus propuli est suprema lex, meaning welfare of the people is paramount in law.

History of Land Acquisition

The first piece of legislation in India in respect of acquisition of property was the Bengal Regulation I of 1824. It applied throughout the whole of the provinces immediately subject to the Presidency of Fort William. It provided rules for enabling the officers of Government to obtain, at a fair valuation, land or other immovable property required for roads, canals or other public purposes.

By Act I of 1850, some of the provisions of this Regulation were extended to the town of Calcutta with the object of confirming the title to lands in Calcutta are taken for public purposes. In the middle of the nineteenth century when the railways were being developed, it was felt that legislation was needed for acquiring lands for them.

Act XLII of 1850 declared that railways were public works within the meaning of the Regulation and thus enabled the provisions of Regulation I of 1824 to be used for acquiring lands for the construction of Railways.

Similarly, the Building Act XXVIII OF 1839 was the first piece of legislation in Bombay whereby the machinery for acquisition of land for the purposes of widening or altering any existing public road, street or other thoroughfare or drain within the island of Bombay and Colaba was provided.

The first enactment on the subject for the whole of British India was Act VI of 1857. It repealed all previous enactments relating to acquisition and its object, as stated in its preamble, was to make better provision for the acquisition of land needed for public purposes within the territories in the position and under the governance of the East India Company and for the determination of the amount of compensation to be paid for the same. Under this Act, the Collector was empowered to fix the amount of compensation by agreement or by referring it for arbitration.

This was followed by a series of flaccid Acts until The Land Acquisition Act, 1894 came into the picture. The Land Acquisition Act, 1894 originally applied only to British India. The native states passed their own Acts.

Under the Government of India Act 1919 and the Government of India Act 1935, the provinces had power to legislate with respect to compulsory acquisition of land. In exercise of this power some of the provinces amended in certain respects, the provisions of the Act of 1894.

Post-independence, the law was enacted by virtue of The Indian Independence (Adaptation of Central Acts and Ordinances) Order, in 1948. It still continues to exist as the law of land acquisition in India. Given the fact that land acquisition falls under the concurrent list, both the State Government as well as the Central Government have amended the law, evolving it with time according to the local needs.

Repealing and Replacing the Land Acquisition Act, 1894

The Government of India believed there was a heightened public concern on land acquisition issues in India. Of particular concern was that despite many amendments, over the years, to India’s Land Acquisition Act of 1894, there was an absence of a cohesive national law that addressed fair compensation when private land is acquired for public use, and fair rehabilitation of land owners and those directly affected from loss of livelihoods.

The Government of India believed that a combined law was necessary, one that legally required rehabilitation and resettlement necessarily and simultaneously followed government acquisition of land for public purposes. Since 1947, land acquisition in India has been done through the British-era act. It was in 1998 that the Rural Development Ministry initiated the actual process of amending the act.

LARR Act, 2013

The political turmoil resulting from land acquisition for mining and industrial projects led the UPA government to undertake a wide-ranging overhaul of the Land Acquisition Act, 1894, and the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013, was enacted.

The Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 is a legislation that regulates land acquisition and laid down rules for granting compensation, rehabilitation and resettlement to the affected persons in India. The Act has provisions to provide fair compensation to those whose land is taken away, brings transparency to the process of acquisition of land to set up factories or buildings, infrastructural projects and assures rehabilitation of those affected. The Act replaced the Land Acquisition Act, 1894, a nearly 120-year-old law enacted during British rule.

The enactment of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Rehabilitation Act, 2013, has made sweeping changes in the land acquisition laws of India. By increasing the compensation for acquired land, mandating a social impact assessment to be undertaken and requiring the prior consent of land holders in particular cases, the Act has no doubt corrected the imbalance that existed between the interests of land-owners and of the government as the custodian of public interest in the earlier land acquisition procedures.

It has significantly increased transparency in the land acquisition process and given a voice to land owners in decisions on land acquisition.

But the implementation of the Act, as originally enacted, could also retard the development process by slowing down the building of public infrastructure, and the processes of industrialisation and urbanisation.

It could impede the provision of affordable housing for the vast majority of the population moving from rural to urban areas, which is crucial for controlling the spontaneous development of sprawls taking place across the country. Six states, however, obtained presidential assent for carrying out amendments on the lines of the bill introduced in Parliament.

Salient features of LARR Act, 2013

  • Purpose of land acquisition

Land can be acquired for land needed by the government for its own use, including public sector undertakings and for any public purpose including strategic purposes, infrastructure projects, or urbanisation or housing projects. Land acquisition under the Act can also be made for public private partnership (PPP) projects and for private companies for public purposes, but prior consent of landholders is required.

  • Enhancement of compensation

Important provisions in the Act relate to the steep enhancement of the scale of compensation to land-owners and other project affected persons, the requirement of consent of land-owners for acquisition on behalf of private companies and public-private-partnerships, the need to undertake a social impact assessment of the project for which the acquisition is being undertaken and limits on acquiring multi-cropped and other agricultural land.

  • Social Impact Assessment

In addition to the stipulation for consent of the majority of landholders, there is a requirement for a social impact assessment of the project, somewhat akin to the environmental impact assessment under environmental laws. The social impact assessment begins with a study of all aspects of the project and its impact on the livelihood of affected families and on the facilities and amenities enjoyed by them. A public hearing and involvement of the local body are also mandated. Among other things, the government has to consider whether the potential benefits and public purpose outweigh the social costs and adverse social effects as determined by the Social Impact Assessment.

  • Urgency clause

The Act limits the invocation of the urgency clause, whereby possession can be taken even before the award of compensation is made, only to the minimum area required for the defence of India or national security or for any emergencies arising out of natural calamities or any other emergency with the approval of Parliament.

LARR (Second Amendment) Bill, 2015

The Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement (Second Amendment) Bill, 2015 was introduced in the Lok Sabha by the Minister for Rural Development, Mr. Birender Singh on February 24, 2015. The Bill amends the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 (LARR Act, 2013).

The Bill replaces the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement (Amendment) Ordinance, 2014.

The LARR Act, 2013 outlines the process to be followed when land is acquired for a public purpose. Key changes made by the Bill include-

  • Exemption of five categories of land use from certain provisions

The Bill creates five special categories of land use: (i) defence, (ii) rural infrastructure, (iii) affordable housing, (iv) industrial corridors, and (v) infrastructure projects including Public Private Partnership (PPP) projects where the central government owns the land.

  • Return of unutilised land

The LARR Act, 2013 required land acquired under it which remained unutilised for five years, to be returned to the original owners or the land bank. The Bill states that the period after which unutilised land will need to be returned will be: (i) five years, or (ii) any period specified at the time of setting up the project, whichever is later.

  • Other changes

The LARR Act, 2013 excluded the acquisition of land for private hospitals and private educational institutions from its purview. The Bill removes this restriction. While the LARR Act, 2013 was applicable for the acquisition of land for private companies, the Bill changed this to acquisition for ‘private entities’. A private entity is an entity other than a government entity, and could include a proprietorship, partnership, company, corporation, non-profit organisation, or other entity under any other law.

  • The LARR Act, 2013 stated that if an offence is committed by the government, the head of the department would be deemed guilty unless he could show that the offence was committed without his knowledge, or that he had exercised due diligence to prevent the commission of the offence. The Bill replaces this provision and states that if an offence is committed by a government official, he cannot be prosecuted without the prior sanction of the government.
  • Moreover, to protect food security, this Bill limits any acquisition of irrigated multi-cropped land only for exceptional circumstances. In such an acquisition an equivalent area of culturable wasteland has to be deposited with the government. This Bill stipulates the appointment of an R&R committee to review R&R progress in cases where land acquired is 100 acres or more for public purpose.

The proposed legislation also seeks to enable the government to exempt by notification projects in these categories from the need to undergo social impact assessment as well as exempt land acquisition from the restrictions in respect of agricultural land.


The law of Land Acquisition jeopardises private interest for public interest and hence it denies an individual his right to property. It overrides the right of a person to own a property, so the law in general should be strictly construed . The strict construction of the Law of Land Acquisition has been emphasised by the court for the last 60 years as it does not hold the person whose property is being taken and state at par.

The owner of the property has no bargaining power with the state in such circumstances nor does he have a say in compensation; so it’s inevitable in the interest of equity that the law should be strictly construed and the procedure which provides for various checks and balances should be strictly complied with.

Compulsory acquisition can be effective only in accordance with Acquisition because it is an inroad into citizens’ right to property . On this matter the established law is that if from the purpose for which the land is acquired, it is apparent on the face of it that the purpose is not a public purpose and there can be no two arguments to construe it otherwise, means the act of the government is ultra vires so in this case the public purpose is justifiable i.e. courts can look into the matter . But when the purpose mentioned can be interpreted either ways of being a public purpose or not, it is not justifiable.

Constitutionality of various sections of the Land Acquisition Act has been considered as being in violation of Article 19 and 31 of the Indian Constitution as being confiscatory in nature and it is sought to deprive appellants of their lands.


The land acquisition laws that India inherited from colonial times were undoubtedly heavily loaded against the interests of land owners and other people dependent on land for their livelihood. The Acts passed have certainly enhanced significantly the scale of compensation to be received by landowners and additionally provided for their Rehabilitation And Resettlement (R&R) in the event of displacement.

  • Sharecroppers and others dependent on land for their livelihood have been brought within the purview of compensatory payments and action for R&R. The transparency of the process of land acquisition has been considerably increased through the processes of social impact assessment and prior consent of land owners and other affected persons in certain cases. They not only get more compensation but have a say in whether land acquisition should be undertaken at all.
  • Safeguards have also been introduced against large-scale acquisition of agricultural land that might diminish food production and jeopardise food security.
  • In industrial corridors, the escalation of cost of land may impair the competitiveness of industries. Similarly, the increase in the cost of land for housing projects will result in a situation in which the housing provided will not be affordable for the poorer segment of the population. To remedy the situation in both cases the government will have to grant subsidies to enable the industries set up on acquired land to remain competitive and to assure that the housing constructed on such land remains affordable.
  • Some of the additional requirements for urban areas could come out of barren and unculturable land, other uncultivated land and fallow land, but it would be reasonable to assume that at least fifty per cent of the future requirement of land for urbanisation would come out of cropland.

The changes described above have undeniably resulted in a rebalancing between the authority of government as the custodian of public interest and the rights of individual land owners. While land owners and other affected persons have gained considerably, it can be argued that some of the provisions could prove to be stumbling blocks in the process of development.

Case Laws

  • What amounts to a Valid Acquisition

In Khub Chand Vs State of Rajasthan[i], the Court has held that, the words of Section 4(1) of the Land Acquisition Act, 1984 clearly suggest that the requirement is a mandatory one. Publication of the notification in the manner prescribed in Section 4(1) of the Act, it appears from the subsequent scheme of the Act, is an indispensable condition for a valid acquisition.

  • Public Purpose is Conclusive and cannot be challenged on ground of mala fides

In Habib Ahmed Vs State of Uttar Pradesh[ii], the Court has held that neither the notification nor the declaration can be quashed on the ground that there was no necessity for acquiring the land for a public purpose. Whether the land is required for a public purpose or not, it has to be decided solely by the State Government.

  • Authority to question the Acquisition done for public purpose

In K. Madhava Rao Vs State of A.P.[iii] that Court observed that it is duty of Court to determine whenever question is raised whether acquisition is or not for public purpose. However, prima facie Government is the best judge as to whether acquisition is for public purpose. But it is not sole judge.

  • Importance of Notice

In Satnam Singh Vs State of Punjab[iv], the Court held that a notice is necessary condition precedent for the exercise of the power of the entry, and non-compliance with these conditions make the entry of the officer or his servants unlawful.

  • Payment of Compensation to the true owner of land

In State of Madras Vs B.V. Subramania Iyer[v], the Court held that the word “Dispute” includes any controversy with regard to the title of a single claimant. It is obvious that when the government exercises its power of eminent domain and acquires property, public funds have to be utilized for the payment of compensation to the true owner, and not merely to any claimant who cares to appear on the scene. The government has a special responsibility in this regard, and cannot later take refuge behind the pretext that the compensation was paid to the claimant who actually appeared while others did not appear.


The difficulties that come in the process of Land Acquisition in India are immense, given the population density and the type of land use in the country. This is evident from the fact that the fundamental issue in a number of top stories in the past few years has been the Process of Land Acquisition; be it Narmada Bachao Andolan or the recent Nandigram issue.

With the number of State Governments demarcating lands as Special Economic Zones the problem just is going to get worse. The evolution of Law of Land Acquisition as it exists today in various forms in different statutes in India has undergone an evolution in the last decade.

Originally the wishes of owners of property were totally irrelevant, but at present, the law tries to provide various provisions for objections and alternative remedies in case of inadequacy of compensation.


Jalaj Tokas is a second Year Law student pursuing B.A.LLB from University School of Law and Legal Studies, GGSIPU, New Delhi. He is a life-long learner is self driven towards his ambitions. He strongly believes that expectations are premeditated disappointments and strives not just to be successful but more importantly to be of value.

Edited by: Aashima Kakkar, Associate Editor, Law Insider


[i] Khub Chand Vs State of Rajasthan(1967)1 SCR 120

[ii] Habib Ahmed Vs State of Uttar Pradesh AIR 1965 All. 344 at p. 345

[iii] K. Madhava Rao Vs State of A.P 2006 NOC 589 (A.P.)195

[iv] Satnam Singh Vs State of Punjab (1969)9 Cur. L. J. 75 at p. 79 (P&H)

[v] State of Madras Vs B.V. Subramania Iyer AIR 1962 Mad. 313