Legally Speaking: Recent Court Orders On Land Acquisition

When we speak of infrastructure development, land acquisition and related issues come as a crucial aspect. The complexity of the matter has led to umpteen disputes taking place, involving the matter. Let us look at some recent landmark ruling related to land acquisition. These case studies should give homebuyers and investors a better understanding of the law in matters of land acquisition.

Are authorities making you run from pillar to post for your compensation claim?

What the SC say: It is unfortunate that a genuine claim of the land owner was not satisfied by the state for such a long time.

For infrastructure development purposes, states often acquire land from the public. In most cases, disputes may arise over the compensation package. Over that, authorities may take landowners to the court. However, the Supreme Court (SC) has taken an adverse view of this approach, especially if the amount in question is insignificant, and the time taken in the process is long.

Here is what happened

In a land acquisition case of 1987, the Andhra Pradesh state government forced the landowner to run from one court to another for about 20 years over a claim involving an amount of Rs 50,000. The claimant passed away in the meantime. His successors failed to appear before the apex court when the state government approached it for justice. In May 2016, the SC, while giving its verdict in the Land Acquisition Officer versus Ravi Santosh case, gave the state a peremptory order to settle all amounts while criticising it for the “abuse of legal process”.

“In our considered opinion, the state unnecessarily pursued this petty matter to this court, which does not involve any arguable point either on facts or in law …nor it involves any point of public importance, nor does it involve any substantial money claim. What was involved was only the calculation of payment of interest. Therefore, it was a sheer abuse of process by the state which we do not approve (of) ,” the SC said, adding: “It is unfortunate that a genuine claim of the land owner was not satisfied by the state for such a long time.”

Are you liable to pay capital gains tax if your land has been acquired without your assent?

What the SC says: If an owner succumbs to the government only to avoid litigation, the transaction is not a sale but compulsory acquisition, and should be exempted from capital gains tax.

There have been cases where landowners did not have a choice but to handover their property to authorities for project developments. However, such a landowner is under no obligation to pay capital gains tax on the compensation he received from authorities, the SC has ruled.

Here is what happened

In the Balakrishnan versus Union of India case, the state government acquired about 27 acres of agricultural land in 2006 for extending a Techno Park in south Kerala. Unhappy with the compensation amount, the landowner tried to contest the matter, but later agreed to sell the land at the price offered by the state, solely to avoid litigation.

After the deal was finalised, the state revenue department demanded capital gains tax on the amount from the landowner, arguing that the transaction was “sale”, and not compulsory acquisition exempted under Section 10(37) of the Income-Tax Act. This view was upheld when the matter reached the high court. However, the Supreme Court later ruled that the owner “succumbed to the government” pressure only to avoid litigation. In light of that, the transaction was not a “sale” but “compulsory acquisition” and should be exempted from capital gains tax.

Your land was acquired under the provisions of the old state law. Can you challenge the acquisition under the provisions of the new Central law?

What the SC says: Land acquisition under the state development Act would not lapse only because it had not followed the procedure in the Central law.

The apex court has recently ruled that once legal proceedings are started under a state legislation, the Land Acquisition Rehabilitation and Resettlement Act that came in force in 2014 will not be applicable.

Here is what happened?

In the Special Land Acquisition Officer vs Anasuya Bai case, the Supreme Court set aside the ruling of the Karnataka High Court which had quashed the acquisition of land under the Karnataka Industrial Areas Development Act on the ground that compensation was not given within the stipulated period. The time limit was set by the old Land Acquisition Act in this case. The issues that whether the old law applies when it has been replaced in 2014 by the new law called the Right to Fair Compensation and Transparency in Land Acquisition Rehabilitation and Resettlement Act was contested.  The SC ruled that land acquisition under the Karnataka Industrial Areas Development Act would not lapse only because it had not followed the procedure in the Central law.

Are authorities over-staying their welcome?

What the HC says: If no compensation is paid, the acquisition is “bad, illegal and without justification”.

In a landmark ruling recently, the Calcutta High Court asked the West Bengal government and its land acquisition collector to pay compensation and occupation charges to the aggrieved party, whose property the state government had been occupying since 1998.

Here is what happened

The state government acquired the premises of Punalur Paper Mills in the capital's central area in 1973 to set up the office of the Sugar Industries Development Corporation. The notification in this regard became invalid in 1998. By another notification in 2000, the premises were acquired while the corporation continued to hold the property. Punalur Paper Mills, an ailing company, challenged the acquisition while the government objected to a sick entity to approach the judicial system.

Observing that no compensation was paid to the ailing company, the HC said that the acquisition was bad, illegal and without justification. It directed the government to hand over the premises to the company within two months.

Also read: Legally Speaking: Recent Court Rulings Homebuyers Should Know Of