Infrastructure and other development projects in the locality where you own property can be great news as it can lead to price appreciation. The only exception is when your property falls in the region that gets acquired for the project. In the past, this meant practically giving away the property for meagre payment that took many years. However, under the new Land Acquisition and Rehabilitation Act, property owners are given better protection and compensation.

Know your rights

The important point you must realise as owner is that the government has complete rights to acquire any land (or property for the land).

The owner cannot make a choice whether to make the land available to the government or not. “The only right the owner has is to get appropriate compensation”, says Devajyoti Barman, Advocate, High Court of Calcutta and Managing Partner, Ace Legal.

Still, the Government has the onus to establish that the purpose of acquiring land is for the welfare of the public, as the existence of a public purpose is a prerequisite for acquiring private property. The authorities are also required to pay adequate compensation and are under legal obligation to rehabilitate the persons displaced.

The procedure

The first step for the Government is to carry out a social impact assessment study regarding the project. This is done by the local Panchayat, Municipality or Municipal Corporation. Based on the project scope, the land that must be acquired is decided and the owner notified. Within 60 days of the notification, the owner can give his/her objection to the Collector in writing. The owner can contest the area and suitability of land, the justification offered for acquiring or the findings of the Social Impact Assessment report. The objector is given an opportunity to be heard. The Collector then prepares a report with recommendations on the objections, along with the record of the proceedings held.

There is also a report on the approximate cost of land acquisition and resettlement. The Government decides on the recommendations and its decision is binding on the owner. That said, you can still approach the court if you feel there are lapses.

Fixing compensation

The Collector fixes the compensation to be paid to the land owner based on three things: The circle rate for registration of sale deeds in that area; average sale price for similar type of land in the nearest village or nearest vicinity, determined based on the top 50 per cent of actual sales during the preceding three years; the price agreed upon by land owners in case the land is acquired for private companies or public-private partnership projects. The price is fixed as the highest of these three values.

If there are other assets attached to the land — buildings or other developments — its value is added. The value of crops and plantation is also considered in the compensation. A solatium is also added to compensate for the owner’s loss, at 100 per cent of the land value. For rural areas, the value is also multiplied by a factor — one to two — as fixed by the State governments.

If the land required for development is only a part of the owner’s property, there is additional compensation for depreciation of value. Barman notes that unless and until the compensation is paid, the government agency cannot take physical possession of the property. There is also a requirement to add interest if there are delays in payments.

Also, if the owner needs to be resettled, there may be additional allowances — for transportation, resettlement, loss of income — that need to be paid. There may also be job and home entitlement in some cases. And if the land acquired is not utilised for the project, but resold without development, 20 per cent of the appreciated land value must be shared with the original owner.

Other aspects

Owners should work with lawyers to ensure that they follow procedures and meet deadlines in filing objections and submitting the required documents. In case the land is acquired by the Government for private companies, the consent of at least 80 per cent of the project affected families is required before the government uses its power to acquire the remaining land. In case of public-private project, the threshold for consent is 70 per cent. The compensation received by the owner is subject to capital gains if it is non-agricultural land.

The writer is co-founder, RaNa Investment Advisors

comment COMMENT NOW