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India – Real Estate Snapshots.

29 April, 2014

 

  • The Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 (‘LA Act’) has replaced the Land Acquisition Act, 1894 and has come into force from January 1, 2014.

 

The LA Act inter alia requires the consent of 80% of the concerned land owners for acquisition of land by a private company for public purpose and consent of 70% of such land owners for acquisition of land for public-private partnership projects. It also requires that a “social impact assessment” and “environment impact assessment” (if required) is conducted by an expert group prior to every acquisition. Such requirements do not apply to irrigation projects that are subject to environment impact assessment under any other law. The award for the compensation amount to be paid to each affected family is to be determined on the basis of the market value of the land, based on prescribed parameters. A rehabilitation and resettlement scheme for affected persons is to be formulated as well as the appointment of a commissioner. The possession of the land by the Collector is to be done only after ensuring payment of full compensation and monetary relief under the rehabilitation and resettlement award within the prescribed time period.

 

Under the Act, the definition of “Public Purpose” inter alia includes (i) strategic purposes i.e., naval, military, air force and armed forces; (ii) infrastructure projects; (iii) project for project affected families; and (iv) housing projects / planned development for villages and residential projects for weaker sections of society, poor, landless, etc.

 

The LA Act also requires unutilised land to be returned to the original owner / heirs if the same is not utilised within five years for the purpose for which it was acquired. The LA Act further provides that if acquired land is transferred to any person for consideration and if no development has taken place for five years from the acquisition, then 40% of the appreciated land value shall be shared with the original owners / heirs. This will be applicable only on the first sale / transfer of such acquired land.

 

Although the LA Act provides adequate safeguards to land owners / occupants in the form of resettlement and compensation packages and transparency in the process of acquisition, compensation, rehabilitation, etc., it also impacts the ability of private owners to purchase land exceeding the prescribed threshold limits (to be prescribed by State Governments) through private negotiations, which was unrestricted under the previous law.

 

  • In Godrej & Boyce Mfg. Co. Ltd. & Anr v. The State of Maharashtra & Ors.,1 the Supreme Court of India (‘SC’) allowed 20 special leave petitions against the State of Maharashtra and others, taking into consideration the facts of the appeal of Godrej & Boyce Manufacturing Company Limited (‘Godrej’).

 

An undated notice had purportedly been issued to Godrej under Section 35(3) of the Indian Forest Act, 1927 (‘Forest Act’) in respect of the land owned by Godrej in Vikhroli (the ‘Disputed Land’) requesting Godrej to show cause why the Disputed Land should not be subject to restrictions on use as contemplated in Section 35 (1) of the Forest Act, which pertains to ‘protection of forests for special purposes’, and such notice was published in the Bombay Government Gazette. It is unclear if such notice was served upon Godrej. No attempt was made by the State Government of Maharashtra to take over possession of the Disputed Land at any time or to take other action under the Forest Act or Maharashtra Private Forests (Acquisition) Act, 1975 (‘Private Forest Act’) based on the notification. In fact, permissions were granted to Godrej from time to time for construction of buildings on the Disputed Land.


However, on or about May 24, 2006, Godrej received six stop-work notices from the Assistant Engineer of Bombay Municipal Corporation (‘Notices’) stating that since the Disputed Land was affected by the reservation of a private forest, no construction could be carried out therein without the permission of the GoI under the Forest (Conservation) Act, 1980. Godrej also learnt of the ex parte mutation of revenue records done by the State of Maharashtra showing the Disputed Land being affected by the provisions of the Private Forests Act. Accordingly, Godrej filed a writ petition in the BHC praying inter alia for declaration that the Disputed Lands are not “forest lands” and the Notices and the mutation be declared illegal. Similar writ petitions were filed by others along with Godrej Which were dismissed by the BHC. Godrej and 19 other petitioners appealed against the State of Maharashtra, before SC.


SC held that: (i)the definition of “private forest” in terms of the Private Forests Act as any land in respect of which a notice has been issued under sub-section (3) of section 35 of the Private Forest Act) was intended to apply to “live” and not “stale” notices issued under Section 35(3) of the Forest Act, (ii) a mere issuance of a notice under the provisions of Section 35(3) of the Forest Act is not sufficient for any land to be declared as a “private forest” in terms of the Private Forest Act, and (ii) even if it is assumed that the disputed lands are forest lands, the State cannot be allowed to demolish the extensive construction made thereon over the last half century.

 

End Notes:

 

1 Civil Appeal No. 1102 of 2014

 

AZB

 

For further information, please contact:

 

Zia Mody, AZB & Partners
zia.mody@azbpartners.com

 

Abhijit Joshi, AZB & Partners 
abhijit.joshi@azbpartners.com


Shuva Mandal, AZB & Partners 

shuva.mandal@azbpartners.com

 

Samir Gandhi, AZB & Partners
samir.gandhi@azbpartners.com


Percy Billimoria, AZB & Partners 

percy.billimoria@azbpartners.com

 

Aditya Bhat, AZB & Partners 
aditya.bhat@azbpartners.com

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