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SEZ AND LAND ACQUISITIONS

DAMODARAM SANJIVAYYA NATIONAL LAW

UNIVERSITY

LAND LAWS

PRESENTED TO
MRS. KAVURI SUDHA

THIS PROJECT IS SUBMITTED BY-

DIWAKAR ADARI

2013003
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ACKNOWLEDGEMENT

I take this opportunity to express my profound gratitude and deep regards to my professor Mrs
KAVURI SUDHA for her exemplary guidance, monitoring and constant encouragement throughout.
The blessing, help and guidance given by her time to time shall carry me a long way in the journey
of life on which I am about to embark.

I am obliged to the library staff for their cordial support, valuable information and guidance, which
helped me in completing this task through various stages.

Lastly, I thank almighty, my parents, siblings and friends for their constant encouragement without
which this assignment would not be possible.
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CONTENTS

1. INTRODUCTION…………………………………………..3

2. PROCESS OF LAND ACQUISITION IN INDIA………..4

3. CONSTITUTIONAL FRAMEWORK……………………5-6

4. PUBLIC PURPOSE………………………………………...6-8

5. PROCEDURE FOR LAND ACUISITION……………….9-11

6. LINK BETWEEN SEZ AND LAND ACQUISITION……11-12

7. EFFECTS OF LAND ACQUISITION BY SEZ…………..12-13

8. GOVERNING SEZ………………………………………….13

9. LOSS OF PUBLIC REVENUE GUE TO SEZ LAND ACQUISITION…..14

10. SEZS OR REZS (REAL ESTATE ZONES)? ............................................14-15

11. SEZS: LEGAL VIOLATIONS………………………………………………15

12. RELIANCE ON SEZ AND LAND ACQUISITION……………………16-18

13. CURRENT ISSUE REGARDING SEZ LANDS ACQUSITION………19-21

14. CONCLUSION……………………………………………………………….22

15. BILIOGRAPHY………………………………………………………………23
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INTRODUCTION

Land acquisition is a process and also a legislation India which has been consistently developed
over the years. At first the land acquisition legislation came up in West Bengal. And at later stage it
grew over the needs of the country. The meaning of land acquisition is been provided in Land
Acquisition Act, 1894. In this project we have described and researched upon the land acquisition
by companies over setting up an SEZ. In India the government is empowered by the central law
passed by the union legislature, which is known as the Land Acquisition Act, 1894. The objective of
this Act is to amend the laws relating to land acquisition for public purpose and for companies and
also to determine the compensation, which is required to be made in cases of land acquisition. The
enactment states that the expression land includes benefits that arise of land and things attached to
the earth or permanently attached to the anything fastened to the earth. A Special Economic Zone
(SEZ) is an especially demarcated area of land, owned and operated by a private company,
which is deemed to be foreign territory for the purpose of trade, duties and tariffs. SEZs will enjoy
exemptions from customs duties, income tax, sales tax, service tax. After the passing of the SEZ Act
by the Parliament in June 2005, the law came into effect in February 2006, though some states, like
Gujarat, had passed provincial SEZ legislation in 2004 itself.

PROCESS OF LAND ACQUISITION IN INDIA

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 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
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In English Law the concept is known as the Law of Compulsory Purchase and under the United
States Law it is known as the Power of Eminent Domain. 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. 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 individual to hold property. The underlining 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.

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 off property according to their wish . !55
!
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 .

CONSTITUTIONAL FRAMEWORK

Originally the Constitution of India consisted of provisions under Article 19(f) and Article 31 which
constituted Right to Property. But there were number of difficulties that the state was confronted
with, Right to property, Articles 14, Articles 19 and Article 31 read in tandem by the Courts proved
to be anti developmental, as the courts struck down various acts of the state. In a number of cases
the courts declared the reforms initiated by the state as being ultra vires, which hampered the
development by means of growth of infrastructure which was essential for development soon after
the independence. It was because of the difficulties in the functioning of the right to property that
had been brought to light by the judicial decisions the Constitution (First) Amendment Act, 1951
was enacted and the Right to Property was done away with. Article 31(A) which was enacted
categorically states that no law which provides for acquisition by the state of an estate can be held
void as being ultra vires Article 14 or Article 19. It also provided for payment of compensation at a
rate not less than market value of the property
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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 law was enacted by the British government and
by virtue of The Indian independence (Adaptation of Central Acts and Ordinances) Order, 1948
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 and the Central Government have amended the
law, evolving it with time and according to the local needs.

Land can be acquired either by the state or the central government for the purposes listed under
state and central list respectively unless the central government delegates the task to the state
government under article 258(1) of the Constitution. The term “appropriate government” in the act
would imply the government weather centre or state that issues a notification under section 4 to
acquire the land.

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

PUBLIC PURPOSE

Article 31(2) categorically states that a land can be acquired by the state only for Public Purpose.
Broadly speaking, public purpose would include a purpose, in which the general interest of the
community, as opposed to a particular interest of the individual, in generally and vitally concerned .
In a generic sense the expression public purpose would include a purpose in which where even a
fraction of the community would be involved. It has been identified as a work from which public in
general would derive benefit or be benefited. Anything which is useful to the public, in the sense
that it confers some public benefit, or conduces to some public advantage, is a public purpose . It is
the requirement of public purpose that is determining factor on the question weather or not a
particular land should be acquired, and the considerations of hardships to the individuals cannot
outweigh the question of public demand . Section 3(f) of The Land Acquisition Act defines public
purpose as the expression “public purpose” includes- 

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(i) the provision of village-sites, or the extension, planned development or improvement of existing
village-sites;

(ii) the provision of land for town or rural planning;

(iii) the provision of land for planned development of land from public funds in pursuance of any
scheme or policy of Government and subsequent disposal thereof in whole or in part by lease,
assignment or outright sale with the object of securing further development as planned;

(iv) the provision of land for a corporation owned or controlled by the State;

(v) the provision of land for residential purposes to the poor or landless or to persons residing in
areas affected by natural calamities, or to persons displaced or affected by reason of the
implementation of any scheme undertaken by Government, any local authority or a corporation
owned or controlled by the State;

(vi) the provision of land for carrying out any educational, housing, health or slum clearance
scheme sponsored by Government or by any authority established by Government for carrying out
any such scheme, or with the prior approval of the appropriate Government, by a local authority, or
a society registered under the Societies Registration Act, 1860 (21 of 1860), or under any
corresponding law for the time being in force in a state, or a co-operative society within the
meaning of any law relating to co-operative societies for the time being in force in any State;

(vii) the provision of land for any other scheme of development sponsored by Government or with
the prior approval of the appropriate Government, by a local authority;

(viii) the provision of any premises or building for locating a public office, but does not include
acquisition of land for companies.

The expression Public Purpose is not to be strictly construed under Section 3(f) of Land Acquisition
Act, it is an inclusive definition of public purpose and from time to time the courts have held
different purposes to be Public Purpose. It is not possible to give an exact and all-embracing
definition of public purpose . Public Purpose includes the following aims:

1. In which general interest of the community, or a section of the community, as opposed to the
particular interests of the individuals, is directly or vitally concerned ;

2. Which would preserve or promote public health, comfort or safety of the public, or a section of it,
weather or not the individual members of public may make use of the property acquired ;
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3. Which would promote public interest, or tend to develop the natural resources of the state ;

4. Which would enable department of the government to carry on its governmental functions ;

5. Which would serve the public, or a section of it, with some necessarily or convenience of life,
which may be required by the public as such, provided that the public may enjoy such service as of
right; or

6. Which would enable individuals to carry on a business, in a manner in which it could not be
otherwise be done, if their success will indirectly enhance public welfare, even if the acquisition is
made by a private individual, and the public has no right to any service from him, or to enjoy the
property acquired; or

7. If the use to which the property would be put, is one of the widespread general public benefit not
involving any right on the part of the general public itself, to use the property or;

8. Which would result in an advantage to the public; it is not necessary that the property, or the
work upon it, should be available to the public as such; the acquisition may be in favour of
individuals, but, in furtherance of scheme of public utility, which would result in enhancement of
public welfare.

One of the test of public purpose is if the purpose would satisfy the expenditure of public funds and
in number of judgements courts have said that government is the best judge of public purpose. The
declaration of public purpose by the government is final except if there is a colourable exercise of
power. To allege mala fide or colourable exercise of power of eminent domain the facts or grounds
should be pleaded in support, which would show at least some nexus between the party for whose
benefit the power is sought to be exercised and the authorities of the state which could support a
reasonable suspicion that there has been an improper exercise, of such power exceeding the ambit
of eminent domain as to constitute a fraud . The power to select the lands is left to reasonable
discretion of the government and the courts cannot interfere in this regard. The view held by court is
that a declaration under Section 6 is a conclusive evidence of public purpose and unless it is shown
that there has been a colourable exercise of power courts cannot go on to look weather it is a public
purpose or not .

With the march of civilization, the notions as to the scope of the general interest of community
changes and widens, with the result that old and narrower notions as to sanctity of private interest or
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individual no longer stem the forward flowing tide of time and give way to broader notions of
general interest of the community.

PROCEDURE FOR LAND ACQUISITION

For the purposes of Land Acquisition Act of proceedings are carried on by an officer appointed by
the government known as Land Acquisition Collector. The proceeding under the Land Acquisition
Collector is of an administrative nature and not of a judicial or quasi judicial character. When a
government intends to occupy a land in any locality is has to issue a notification under Section 4 in
the official gazette, newspaper and give a public notice which entitles anyone on behalf of the
government to enter the land for the purposes of digging, taking level, set out boundaries etc. The
notification puts forward the intention of the government to acquire and entitles government
officials to investigate and ascertain weather the land is suitable for the purpose. The section also
makes it mandatory for the officer or person authorised by the government to give a notice of seven
days signifying his intention to enter any or building or enclosed court in any locality. This is a
mandatory provision of the process of land acquisition

An officer or authorised person of the government has to tender payment for all necessary damage,
and dispute all disputes to insufficiency of amount lie to the collector . Under Section 5(a) any
person interested in land which is notified under section 4 (who is entitled to claim an interest in
compensation) can raise an objection, in writing and in person. The collector after making inquiry
to such objections has to forward the report to the government whose decision in this respect would
be final. After considering such report made by the collector under section 5(a) the government may
issue a declaration within one year of the notification under section 4 to acquire land for public
purposes or company, this declaration is a mandatory requirement of the acquisition.

After the declaration under Section 6, collector has to take order from the appropriate government
weather state or central for the acquisition of land under section 7. The next step in the process of
acquisition is that collector has to cause land to be marked out, measured and appropriate plan to be
made accurately , unless it is already done. Requirement of this section deals only with
approximation and does not require exact measurement. An important process that takes place under
this section is demarcation which consists of marking out boundaries of land to be acquired, either
by cutting trenches or fixing marks as posts. Object is to facilitate measurement and preparation of
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acquisition plan, but also let the private persons know what land is being taken. It is to be done by
requiring body that is the government department or company whichever be the case. Obstruction
under Section 8 and Section 4 are offence punishable with an imprisonment not exceeding one year
and with fine not exceeding fifty rupees.

Section 9 requires the collector to cause a public notice at convenient places expressing
government’s intention to take possession of the land and requiring all persons interested in the land
to appear before him personally and make claims for compensation before him. In affect this section
requires collector to issue two notices one to the locality of acquisition and other to occupants or
people interested in lands to be acquired, and it is a mandatory requirement.

Next step in the process of acquisition requires a person to deliver names or information regarding
any other person possessing interest in the land to be acquired and the profits out of the land for the
last 3 years. It also binds the person by requiring him to deliver such information to the collector my
making him liable under sections 175 and 176 of the Indian Penal Code. The object of this step is to
enable the collector to ascertain the compensation by giving him a vague idea.

The Final set of collector’s proceedings involve an enquiry by the collector into the objections made
by the interested persons regarding the proceedings under section 8 and 9 and making an award to
persons claiming compensation as to the value of land on the date of notification under section 4.
The enquiry involves hearing parties who appear with respect to the notices, investigate their
claims, consider the objections and take all the information necessary for ascertain the value of the
land, and such an enquiry can be adjourned from time to time as the collector thinks fit and award is
to be made at the end of the enquiry. The award made must be under the following three heads:

• Correct area of land

• Amount of compensation he thinks should be given

• Apportionment of compensation

Section 11 makes it obligatory on the part of the collector to safeguard the interests of all persons
interested, even though they might not have appeared before him. In awarding compensation the
Land Acquisition Collector should look into estimate value of land, give due considerations to the
other specific factors. Value of the property in the neighbourhood can be used as a criteria . The
award should be made within 2 years .
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LINK BETWEEN SEZ AND LAND ACQUISITION

SEZs and Land Acquisition are interconnected for in the setting up of SEZs huge amounts of land
are required. Land Acquisition and SEZs have picked up speed in India since the Indian government
has encouraged the setting up of SEZs in the country.

Special Economic Zone means an area of land that has been demarcated and is treated as a foreign
territory for various purposes such as tariffs, trade, and duties. SEZs in India enjoy exemptions from
income tax, service tax, sales tax, and customs duties. The government of India has made several
policies with regard to SEZs in the country. The Indian government is encouraging the setting up of
SEZs in the country for they help in the economic and industrial growth of a nation. According to
the government of India's policy a SEZ in the country has to be built on at least 1 thousand hectares
or more of land. And so Land Acquisition on a massive scale is taking place in India so that more
and more SEZs can be set up in the country.

SEZs and Land Acquisition is taking place mainly in agricultural lands and the central and state
governments are acquiring the land from the farmers. Across India, the total amount of land, which
will be acquired, is around 150,000 hectares and this amount of land is capable of producing around
1 million tons of agricultural produce. The various advantages of SEZs and Land Acquisition in
India are that it has helped to bring in huge amounts of foreign currency into the country, increased
the number of jobs for the people of the country, and has also helped to bring in highly
technologically advanced machines into the country.

The various disadvantages of SEZs and Land Acquisition in India are that it is estimated that more
than 10 lakh people who are dependent upon agricultural lands will be evicted from their lands, it is
estimated that the farming families will have to face loss of around Rs.212 crores each year in total
income, and it will also lead to putting the food security of India at risk. SEZs and Land Acquisition
in India has now resulted in dissent, uproar, and opposition from the farmers, for their livelihood
has been put at stake. Recently due to Land Acquisition in Atchutapuram, which is near
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Visakhapatnam, the farmers have declared war against the setting up of SEZ in their lands. The land
compensation money that the state government is giving is very less in comparison to the actual
market rate of the land and this has angered the farmers even more. Recently, at Nandigram village,
which is in West Bengal, the farmers have also protested against the setting up of SEZ in their
lands. SEZs and Land Acquisition has been taking place in India in a very fast pace over the last
few years. The government of India must make sure that Land Acquisition and SEZs must prove
beneficial for the people of the country and not harmful.

EFFECT OF LAND ACQUISITION BY SEZ

Estimates show that close to 114,000 farming households (each household on an average
comprising five members) and an additional 82,000 farm worker families who are dependent upon
these farms for their livelihoods, will be displaced. In other words, at least 10 lakh (1,000,000)
people who primarily depend upon agriculture for their survival will face eviction. Experts calculate
that the total loss of income to the farming and the farm worker families is at least Rs. 212 crores a
year. This does not include other income lost (for instance of artisans) due to the demise of local
rural economies. The government promises ‘humane’ displacement followed by relief and
rehabilitation.

However, the historical record does not offer any room for hope on this count: an estimated 40
million people (of which nearly 40% are Adivasis and 25% Dalits) have lost their land since 1950
on account of displacement due to large development projects. At least 75% of them still await
rehabilitation. Almost 80% of the agricultural population owns only about 17% of the total
agriculture land, making them near landless farmers. Far more families and communities depend on
a piece of land (for work, grazing) than those who simply own it. However, compensation is being
discussed only for those who hold titles to land. No compensation has been planned for those who
don’t.
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GOVERNING SEZ

Many of the SEZs, like the Maha Mumbai SEZ (to be built by Reliance Industries) will be like a
mid-sized city, over 100 sq km in area (the size of Chandigarh). There will be no elected local
government. A government appointed ‘Development Commissioner’ will govern the SEZ with the
main aim of facilitating economic growth.
SEZs have been a declared “public utilities” under the Industrial Disputes Act, making collective
bargaining and strikes illegal. Infrastructure, like power, roads and water supply has been
guaranteed to investors and developers, not to people of the region. Several lakh people may be
living/working inside the SEZ. In some cases the developer may have the right to tax the
population in order to provide essential services. The Constitutional tenability of private
monopolies running local governments (for a sizeable cluster of the urban population) without
being elected is questionable. All the non-economic laws of the land under the IPC and the CrPC
would be applicable to SEZs. However, internal security will be the responsibility of the developer.
Would the SEZs turn ultimately into sovereign city-states – treasure islands of prosperity in a sea of
poverty and misery – unaccountable to the vast majority of citizens in the neighborhood?

LOSS OF PUBLIC REVENUE DUE TO LAND ACQUSITION BY SEZ

Exemptions from customs duties, income tax, sales tax, excise duties and service tax (even on
luxury hotel facilities, shopping malls, health clubs and recreation centres) given to SEZs, the
Finance ministry estimates a loss of Rs.1,60,000 crore till 2010 in revenue. (The Ministry has also
asked for capping the number of SEZs at 100. Finance Minister P. Chidambaram wrote to Cabinet
colleagues saying: “SEZs per se will distort land, capital, and labour cost, which will encourage
relocation or shifting of industries in clever ways that can’t be stopped. This will be further
aggravated by the proliferation of a large number of SEZs in and around metros.”) The foregone
tax revenue every year is five times the annual allocation for the National Rural Employment
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Guarantee Scheme and is enough to feed each year 55 million people who go to bed hungry
every day.
Furthermore, given the concessions on import duties (not merely for the investors who will produce
exportable items but also for the developer, who will not), there are likely to be foreign exchange
losses (rather than gains). For the five year period ending 1996-97 the foreign exchange outgo on
imports made by units in SEZs and the customs duty forgone amounted to Rs.16461.58 crore
against which exports of only Rs.13563.87 crore were reported. Moreover, these zones are exempt
from sales tax, octroi, mandi tax etc on the supply of the goods from the Domestic Tariff Area (rest
of India).

SEZS OR REZS (REAL ESTATE ZONES)?

What are SEZs likely to become in a few years’ time?

According to a clause in the SEZ Act (Section 5(2)), as much as 75% of the area under large SEZs
(above 1000 hectares) can be used for non-industrial purposes. What will the remainder of the land
be used for? This lacuna in the law is likely to become a loophole for the accumulation of land
banks by private developers and property dealers for the purposes of real estate speculation.(This
explains why so many of them have been buying areas for SEZs.) In fact, it may well be the case
that the rationale for the above clause in the SEZ Act is the uncertainty surrounding the economic
attractiveness (and ultimate viability) of SEZs. If adequate productive investment is not
forthcoming, the SEZ developer can at least cash in on the land value. Conglomerates like Reliance
already own upwards of 100,000 acres of land in the countryside.
Furthermore, the government has enabled foreign direct investment (FDI) in real estate as of
January, 2007, leaving the door wide open to massive amounts of international speculative
investment in property. Far from giving “land to the tiller”, as the original idea of land reform had
promised, the present tendency of the Indian governments is to remove all ceiling on the ownership
and use of land – serving thereby the interests of big business. It is noteworthy that there is no legal
upper limit on the size of land area under an SEZ.
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SEZS: LEGAL VIOLATIONS

The following are the main legal violations because of the SEZ Act, 2005:
• It violates the letter and spirit of the Indian Constitution.
• It infringes the fundamental rights of the citizen guaranteed in Part III of the Constitution.
• Relaxation/inapplicability of many labor laws (including under the Industrial Disputes Act,
Contract Labor Act, Factories Act, Minimum Wages Act, Trade Union Act)
• Environment (Protection) Act is inapplicable to SEZs. No environmental clearance needed.
• Violates Panchayat Raj Act (1996) for local selfgovernment
• Violates laws granting rights and control to Adivasi communities over their land
• Violates many international conventions on human rights

RELIANCE ON SEZ AND LAND ACQUISITION

The economic times has reported that in a major shift in strategy on special economic zones (SEZs)
in Maharashtra, the Mukesh Ambani-led Reliance group has decided to buy land outright from
farmers, instead of involving any government agency to acquire it. So far the debate on the setting
up of special economic zones has been about the role of the Government. Typically a state agency
acquires land and then transfers it on first lease to the developer. Reliance has now begun to buy
land directly from farmers. The economic times reports that nearly 80 purchase deeds have been
registered in the last few days in Raigad district. The company has paid a stamp duty of around Rs
60 lakh on these registrations. This is an additional cost for the company, which is understood to
have paid farmers three times the government-listed rates on direct purchase of land. As per the
earlier plan, the Maharashtra government was to acquire land spread in 45 villages for Reliance
SEZs at government rates, which comes to a couple of lakhs per hectare, against the market rate
ranging Rs 40-Rs 75 lakh per hectare, depending on the location.
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The Reliance Group was planning two mega SEZs in Mumbai —Navi Mumbai SEZ and Maha
Mumbai SEZ. There are apparently 72 SEZ proposals in Maharashtra alone the fate of which
remains unknown due to lack of clarity on land acquisition norms. According to the ET The delay in
the passage of the Maharashtra State SEZ and Designated Areas Act, concerns raised by Congress
president Sonia Gandhi on land acquisition and — most importantly — widespread agitation at
Singur and Nandigram over forced acquisition of agricultural land by the West Bengal government
have resulted in the state government going slow on the plans. Offstumped examines the critical
question of what role the Government or the State must play in fostering economic growth and
opportunity.

The decades old stranglehold of the Social Justice Taliban on public policy specifically in the area
of land reforms has resulted in a plethora of arcane laws that placed ceilings on how much land you
could own legally and restrictions on who and when you could sell them to. A complex web of laws
restricting the freedom of enterprises to acquire land and the freedom of individuals to sell land
came into place all in the name of a dubious cause called Social Justice. The recent Ninth Schedule
verdict by the Supreme Court concerns many of these laws. No wonder the loudest voices of protest
against the verdict came from the Social Justice Taliban. Nothing exemplifies the fallacy of social
justice as practiced in India than the saga being played out in Andhra Pradesh over land cieling laws
and the chief minister Y.S. Rajashekar Reddy.

The net result of the Social Justice resulting from the complex web of laws around land reforms and
land ownership was that the backwards who were given land by the government sold them illegally
to rich individuals and firms getting around the restrictions on sale of land. Over the years these rich
individuals and firms accumulate land in amounts that embarasses the cieling laws. So what ensues
in this day and age is a political witch hunt to enforce the cieling laws and start the re-distribution
drama all over again.

Coming back to the issue of land acquisition, the ulterior agenda of the taliban is to preserve the
role of the state as the middleman brokering social justice. As a result you have the needless drama
that is playing out in Singur, Nandigram and elsewhere in the country where new bureaucracies are
being created and tax payer rupees are being spent by the State to facilitate the acquisition of land
only to be eventually transferred to a private enterprise. This arrangement suits the bureaucracy and
the political parties very well for it creates a new role for the bureaucrats who are increasingly
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becoming irrelvant in areas from which the State is gradually withdrawing its role. For political
parties the benevolent state is the vehicle for currying political favor by choosing where to locate
SEZs, for making grand populist gestures like lavish compensation packages and for cozying upto
industrialists with quid pro quo expectations.

There is no Social Justice in the State playing facilitator to get around a web of laws that were owe
their existence in the first place to the State. The current approach to SEZ Land Acquisition with the
State at its heart fails both the tests of Social Justice. Coerced acquisition by the state means the
freedom and right of refusal is denied to some individuals to justify a quesitonable larger good.
Centralized Bureaucracies making decisions on where and what to acquire means there is no
grassroots consensus from the local community or entities that represent the local communities.
Thus the CPI-M and West Bengal’s Buddhadeb can barely justify their Land Acquisition that have
the state playing an active role. The BJP’s position on SEZs is no different either with the state
playing an active role. The muddled ideological basis for the BJP prescription to the SEZ issue is
another reminder on how the principal opposition fails the Right of Center test when it comes to
economic issues. However in Narendra Modi lead Gujarat which was the first state to pass a SEZ
act and has taken the lead in setting up of special economic zones with flexible labor laws (and
liquor laws) the issue of land acquisition has taken a different hue since most of the SEZs in
Gujarat existed along the wastelands on the 1,600-km-long coastline, Gujarat was not facing the
problems, unlike other States, in terms of land acquisition and displacement of people.

The wasteland aspect of land acquisition by the State is similar to some of the provisions by which
local governments in the United States are allowed to acquire private property to be transferred to
private enterprises. Under what is known as Eminent Domain, the U.S. Supreme Court recently
ruled that the local governments can indeed act to acquire private property if two conditions are
met. First is that the said private land was condemned or blighted that is it is not being put to good
use and second is that the tax revenues generated from the private purpose would exceed the current
revenues by a significant factor.

BOTTOMLINE OF THE ISSUE:-

There is no Social Justice in the State playing an active role in Land Acquisition for private
enterprises. Reliance by directly acquiring land from farmers reminds us of the efficiency of a free
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market for buying and selling land eliminating the role of the State as the middleman. If any the
State’s role must be limited to acquiring blighted and condemned land to facilitate better tax
revenue generation.

Industrialization is a means to economic growth and not an end in itself. Where and how it happens
is best left to free enterprises and free individuals. The State must scrap all laws that limit the
freedom of enterprises and individuals to foster industry and must limit its role to protection of
these freedoms and their responsible exercise.

CURRENT ISSUE REGARDING SEZ LAND ACQUISITION

The controversy over the threatened withdrawal of Tata Motors from Singur in West Bengal has
come not a day too soon. The Singur plant is not located in any designated Special Economic Zone
(SEZ). The acquisition of land from farmers by the company and the support extended, and still
being extended, by the West Bengal Government to Mr Ratan Tata in the interest of attracting
investments into the State in the face of the Opposition onslaught, piloted mainly by the Trinamool
Congress leader, Ms Mamata Banerjee, is something incredible.

There was trouble in Goa too where the SEZ developers are facing the wrath of the State
government despite a few SEZs having been notified by the Centre. Justice demands that the
developers be compensated for their sunk cost in the case of SEZs . This is needed to ensure that the
promises of assured support to industrialists for investing their capital and labour to generate
income, employment and manufacturing activity that would do proud to the State, are redeemed. In
both the cases, the moot point is, how far the Central and State governments would renege on their
commitments to industry, particularly when faced with political choices for survival. In this case,
the domestic investors who could ill-afford to squander their precious capital in endless litigation or
prolonged spell of uncertainty over the future of their proposed activities.

Always courteous and candid and not to mince words in the usual officialese, Mr Pillai gave his
views on SEZ, land acquisition for industrial projects and on how the Commerce Ministry hopes to
transform the country’s manufacturing activity and employment generation through the vehicle of
SEZs in the foreseeable future.
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On SEZs: Since the Special Economic Zones Act, 2005 along with SEZ Rules 2006 came into effect
on February 10, 2006, over 253 new SEZs have been notified, which have established 343 units and
got over a lakh of employment to people. Then, there are also 332 units in other Central
Government SEZs and there are SEZs set up by States numbering 285 units.

Before 2005, there were 927 units under the extant SEZ and, post-SEZ Act and Rules, 970 units
have come in two years.

SEZs get notified and it takes 12-18 months for initial infrastructure like laying roads, giving
electricity and water connections and to put other amenities in place before the first unit comes up.
Of 235 notified SEZs, a little less than 100 are functional, while others are in the process of building
basic infrastructure; the units will be set up subsequently.

Multi-product SEZs, where the area spreads to 1,000 hectares or above, take at least five years to
come up.

On SEZ land ceilings: The empowered Group of Ministers (eGoM) has fixed an upper limit of 5000
ha for the time being for the SEZ. As it is, nobody today has more than 2,000 ha in the SEZs. Let
somebody set up an SEZ with 5,000 ha before the existing ceiling is raised.

The only SEZ that is coming near the ceiling figure now is the Adani Group-promoted Mundra SEZ
with Mundra Port SEZ of 2,700 ha and another multi-product SEZ in adjacent site with the same
acreage or so. At the moment, it is two separate companies. Administratively, it would be
convenient if the two SEZs are run as one, but the question as to whether the existing ceiling should
be eased or not, will go to the eGoM.

On parallel row in Singur and Goa SEZ: In the Goa case, government acquired the land for
industrial purposes in 2002, but the issue today is that the State government does not want the SEZ
and has told the developers to give up the SEZ status and run the factory normally But the fact
remains that neither industrialists nor SEZs can function without the approval of the State. B So if
the developer gets compensation for all the investments he has made, he would go away as he is
responsible to the shareholders.

In the case of the Singur, the West Bengal government has handled the situation badly. When you
had a problem with the acquisition, the parties should have been compensated. There are SEZs
coming up in West Bengal and there is no problem.
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Bharat Forge is acquiring 4,000 ha in Pune, Maharashtra. Social activists, including Ms Medha
Patkar, visited the place and were told by the agriculturists there that the company was formulating
a rehabilitation package, with plans for training and social infrastructure. Sri City SEZ in Nellore,
spread over 5000 acres, purchased the entire land from the farmers without any agitation or protests.
The eGom is meeting this month to resolve some issues plaguing SEZs, following its meeting last
month when it took three important steps.

One, for handicrafts SEZ, it decided to bring down the area to 10 ha from 100 ha. Second, for
SEZ’s authorised activities outside the SEZ, it gets refund of service tax provided the earnings is in
foreign currency. But the SEZ developers buy equipment, steel or cement for infrastructure works
and do not earn foreign exchange to qualify for exemption from service tax.

But the drawback duty had the stipulation that the payment must be in foreign exchange for
purchase of domestic materials to get refund. The Finance Ministry has agreed that, in such cases,
even if the payment is in Indian rupees, you can pay him drawback or DEPB reimbursement.

On ‘vacant’ land issue: The Finance Ministry has taken a stance that the SEZ units in an abandoned
building, even if it has a shed or foundation or a small building, would not qualify for tax breaks.
But the Board of Approval (BoA) for the SEZ has taken a view that if it is a shed, the SEZ
developer/unit can demolish it. Where there is a building inside the vacant land inherited by the
developer that can be used as part of the non-processing area, why ask for it to be demolished?

Because, first, the developer is not claiming tax benefits and if he is asked to demolish the building,
he would re-construct it and then seek reimbursement for building activities. This may look like a
non-issue but the matter has been referred to the Law Ministry.
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CONCLUSION

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 its inevitable in the interest of
equity that the law should be strictly construed and the procedure which provides for various checks
and balances should by 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

As to the brief outline of the Land Acquisition Act, 1894 sections 1 to 3 give the short title, object
and reasons and the important definitions. Sections 4 to 17 deals with the process of acquisition.
Then comes sections 18 to 28 which describes the reference to court and procedure thereupon in the
off chance of a conflict with respect to compensation. Sections 29 and 30 deal with Apportionment
in case of more than one individuals interested, and section 3 to 34 lay down the payment of
compensation. Sections 35 to 38 deal with temporary acquisition of land and finally sections 38 to
44 deal with the acquisition of land for companies.
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BIBLIOGRAPHY

• www.nlsenlaw.org
• www.legalserviceindia.com
• www.thehindubusinessline.com
• www.offstumped.wordpress.com