The government's acquisition of land for projects has been facing protests across the country, the violence in Uttar Pradesh being only the latest. What is Land Acquisition? Land acquisition is the process by which the government forcibly acquires private property for public purpose without the consent of the land-owner. It is thus different from a land purchase, in which the sale is made by a willing seller. How is this process governed? Land Acquisition is governed by the Land Acquisition Act, 1894. The government has to follow a process of declaring the land to be acquired, notify the interested persons, and acquire the land after paying due compensation. Various state legislatures have also passed Acts that detail various aspects of the acquisition process. Land is a state subject. Why is Parliament passing a law? Though land is a state subject, "acquisition and requisitioning of property" is in the concurrent list. Both Parliament and state legislatures can make laws on this subject. Is there a new Act being proposed? The government had introduced a Bill to amend this Act in 2007. That Bill lapsed in 2009 at the time of the general elections. The government has stated its intent to re-introduce a similar Bill, but has not yet done so. What are the major changes being proposed? There are significant changes proposed in the 2007 Bill with regard to (a) the purpose for which land may be acquired; (b) the amount of compensation to be paid; (c) the process of acquisition; (d) use of the land acquired; and (e) dispute settlement mechanisms. We explain these briefly below. Purpose: Currently, land may be acquired for a range of uses such as village sites, town or rural planning, residential purposes for poor or displaced persons, planned development (education, housing, health, slum clearance), and for state corporations. Land may also be acquired for use by private companies for the above purposes or if the work "is likely to prove useful to the public". The 2007 Bill had a narrower list: (a) for strategic naval, military or air force purposes; (b) for public infrastructure projects; and (c) for any purpose useful to the general public if 70% of the land has been purchased from willing sellers through the free market. Compensation: The current Act requires market value to be paid for the land and any other property on it (buildings, trees, irrigation work etc) as well as expenses for compelling the person change place of residence or business. It explicitly prohibits taking into account the intended use of land while computing market value. The 2007 Bill requires payment of the highest of three items: the minimum value specified for stamp duty, the average of the top 50 per cent by price of land sale in the vicinity, and the average of the top 50 pc of the land purchased for the project from willing sellers. For computing recent land sale, the intended land use is to be used. Thus, agricultural land being acquired for an industrial project will be paid the price of industrial land. Process of acquisition: Several changes are proposed, including the requirement of a social impact assessment. Any project that displaces more than 400 families (200 in hilly, tribal and desert areas) will require an SIA before the acquisition is approved. Use of land acquired: The 2007 Bill requires the land acquired to be used for that purpose within five years. If this condition is not met, the land reverts to the government (it is not returned to the original land owners). If any acquired land is transferred to another entity, 80 pc of the capital gains has to be shared with the original land-owners and their legal heirs. Dispute Settlement: Currently, all disputes are resolved by civil courts, which results in delays. The 2007 Bill sets up Land Acquisition Compensation Dispute Resolution Authority at the state and national levels. These authorities will have the power of civil courts, and will adjudicate disputes related to compensation claims. Does the proposed Bill address the major issues? The Bill narrows the uses for which land may be acquired. It also changes the compensation due and links that to the market price for which land is to be used. There could be significant changes in acquisition for use by private industry. Firstly, they would have to purchase at least 70 pc of the required land from willing sellers (presumably, at fair market price). Second, the compensation amount for the remaining (upto 30 pc of land) could be significantly higher than the current method. This would be at a premium to the average paid to the willing sellers, and it would be based on intended industrial or commercial use which usually commands a higher price than agricultural land. However, the effect on acquisition for projects such as highways and railways will not be significant, as there is no benchmark for price determination for such use. This article appeared in Rediff News on May 12, 2011 and can be accessed here.
The Specified Bank Notes (Cessation of Liabilities) Bill, 2017 is being discussed in Parliament today.[1] The Bill replaces an Ordinance promulgated on December 30, 2016 to remove the Reserve Bank of India’s (RBI) liability and central government’s guarantee to honour the old Rs 500 and Rs 1,000 notes which were demonetised on November 8, 2016 through a notification.[2] These notes were allowed to be deposited in banks by December 30, 2016. In light of this, we explain the provisions of the Bill and possible implications.
What does the Bill say?
Under the RBI Act, 1934, RBI is responsible for issuing currency notes, and is liable to repay the holder of a note upon demand. The Bill provides that, from December 31, 2016, RBI would no longer be liable to repay holders of old notes of Rs 500 and Rs 1,000, the value of these notes.[3] Further, the old notes will no longer be guaranteed by the central government.
Can a person keep old notes?
A person will be prohibited from holding, transferring or receiving the old notes from December 31, 2016 onwards. It exempts some people from this prohibition including: (i) a person holding up to 10 old notes (irrespective of denomination), and (ii) a person holding up to 25 notes for the purposes of study, research or numismatics (collection or study of coins or notes).
What happens if a person continues to hold old notes after December 30, 2016?
Any person holding the old notes, except in the circumstances mentioned above, will be punishable with a fine: (i) which may extend to Rs 10,000, or (ii) five times the value of notes possessed, whichever is higher.
Are there any issues with this provision?
There may be two issues.
No window to deposit old notes before imposing penalty: The notification of November 8th allowed old currency notes to be deposited till December 30, 2016 and specified that people unable to deposit them till this date would be given an opportunity later.2 However, the Ordinance which came into force on December 31, 2016 made it an offence to hold old currency notes from that day onwards and imposed a penalty. This overnight change did not provide a window for a person holding the notes on that day to exchange or deposit them. Therefore, not only did the holder lose the monetary value of the notes but he was also deemed to have committed an offence. This implies that a person who had the notes did not have an opportunity to avoid committing an offence and attracting a penalty.
Unclear purpose behind penalty on possessing old notes: The purpose and the objective behind imposing a penalty for the possession of old currency notes is unclear. One may draw a comparison between holding an invalid currency note, and an expired cheque since both these instruments are meant to complete transactions. Currently, a cheque becomes invalid three months after being issued. However, holding multiple expired cheques does not attract a penalty.
Is it still possible to deposit old notes?
The government has specified a grace period under the Bill to allow: (i) Indian residents who were outside India between November 9, 2016 to December 30, 2016 to deposit these notes till March 31, 2017, and (ii) non-residents who were outside India during this period to deposit notes till June 30, 2017. The government may exempt any other class of people by issuing a notification. In addition, RBI has permitted foreign tourists to exchange Rs 5,000 per week. No other person can exchange or deposit old notes after December 30, 2016.
Would this satisfy Constitutional norms?
While the notification issued on November 8 specified that after December 30, 2016, any person unable to exchange or deposit old notes would be allowed to do so at specified RBI offices, the Bill does not provide such a facility except in the circumstances discussed above.
On may question whether this violates Article 300A of the Constitution, which states that no person will be deprived of his property except by law. Though this Bill will be a “law”, one may want to think about whether its provisions meet the standards of due process and are not arbitrary. Given that earlier notifications had indicated that a facility for exchanging or depositing old notes would be provided after December 30, 2016, would the action of not providing such facility under the Bill qualify as an arbitrary action which violates due process? [4] A few examples will be useful in examining this question.
Case 1: A person unable to deposit notes due to poor health
A person may have been unable to deposit old currency notes owing to various reasons such as poor health, old age or disability till the deadline of December 30, 2016. The Bill does not provide any facility for such persons to deposit old notes, except if they were not in India during the period between November 8 and December 30, 2016.
Case 2: A person without a bank account
A person without a bank account may have held over Rs 4,500 in old currency notes. The notification (and future modifications) allowed a person to exchange up to Rs 4,500 over the counter once till November 24, 2016.[5] Such a person would have to incur a monetary loss if he possessed old notes above this value, given his inability to deposit them in a bank account.
Case 3: Indian citizens living abroad
There may be Indians working or studying abroad holding old currency notes. The government has notified the last date for depositing old notes for these non-resident Indians as June 30, 2017.[6] However, these people may not visit India between November 8, 2016 and June 30, 2017. In such a scenario, these people may have to incur a monetary loss.
Case 4: Foreign nationals entering India before demonetisation
Foreign tourists in the country may have held old currency notes before demonetisation on November 8, 2016. Such tourists can only exchange old currency notes of up to Rs 5,000 per week till January 31, 2017.[7] Given that such foreigners may not have bank accounts in India, they may also suffer a monetary loss for whatever amount could not be exchanged within the period they were in India. For example, a person who had Rs 10,000 and left India on November 13, 2016 would not have been able to get the value of notes they had, over Rs 5,000.
In addition, Indian currency notes are used legally in neighbouring countries such as Nepal and Bhutan. The Bill allows only Indian citizens to deposit old notes for an extended period under certain conditions. However, it does not make any provisions for foreigners to deposit or exchange old notes held by them. Such foreign nationals who are not Indian residents would not have bank accounts in India.
[1] The Specified Bank Notes (Cessation of Liabilities) Bill, 2017,http://www.prsindia.org/uploads/media/Specified%20Bank%20notes/specified%20bank%20notes%20bill%202017-compress.pdf.
[2] S. O. 3407 (E), Gazette of India, Ministry of Finance, November 8, 2016, http://finmin.nic.in/172521.pdf.
[3] The Specified Bank Notes (Cessation of Liabilities) Ordinance, 2016,http://www.prsindia.org/uploads/media/Ordinances/Specified%20Bank%20Notes%20%28Cessation%20of%20Liabilities%29%20Ordinance,%202016.pdf.
[4] Section 2 (ix) of the notification issued on November 8, 2016 (No. S. O. 3407 (E)) states that any person who is unable to exchange or deposit the specified bank notes in their bank accounts on or before the 30th December, 2016, shall be given an opportunity to do so at specified offices of the Reserve Bank or such other facility until a later date as may be specified by it.
[5] S. O. 3543 (E), Gazette of India, Ministry of Finance, November 24, 2016, http://finmin.nic.in/172740.pdf.
[6] S. O. 4251 (E), Gazette of India, Ministry of Finance, December 30, 2016,http://dea.gov.in/sites/default/files/24Notification%2030.12.2016.pdf.
[7] Exchange facility to foreign citizens, January 3, 2017, https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=10815&Mode=0.
