The Supreme Court judgment in the Singur case has reopened the debate on what constitutes legitimate ‘public purposes’ for which the state may forcibly acquire privately owned land. By holding that the West Bengal Industrial Development Corporation’s (WBIDC) acquisition of land for Tata Motors did not constitute a ‘public purpose’, Justice Gopala Gowda, has signalled strict judicial scrutiny of whether the forcible acquisition of land for companies in and of itself is legitimately a “public purpose” or not. In doing so, Justice Gowda has created an opportunity for a judicial rethink on how we understand ‘public purpose’ and what level of judicial scrutiny of governmental declaration of ‘public purpose’ is legitimate when land is acquired on behalf of companies.
The Land Acquisition Act, 1894, a British-era law, permitted forcible acquisitions of land by the government for a “public purpose” and upon payment of “compensation” provided the “procedure” prescribed by the Act was followed. The twin requirements of public purpose and compensation are based on the rationale that no individual should disproportionately bear the burden of the ‘public good’, which the government, as the representative of the people, legitimately executes. The procedure prescribed under the Act gives land losers a fair hearing as to why their land should not be acquired and whether the compensation assessed for their lands is adequate.
The 1894 Act prescribed different procedures for land acquisition for a ‘public purpose’ and for a ‘company’. Part VII of the Act provided that when the government sought to acquire land for a company, it must declare that the acquisition of land was necessary for a work that was “likely to prove useful to the public.” In fact, the legislative history of the 1894 Act indicates that the law was not intended for the “acquisition of land for all companies”. Acquisition of land for companies was legitimate only if the public could directly use the works carried out by the company. This was specified so that the government could not use the Act in furtherance of “private speculations”.
The Supreme Court interpreted ‘public purpose’ for government acquisitions under Part II of the 1894 Act expansively, holding that the term was “elastic and could only be developed through a process of judicial inclusion and exclusion in keeping with the changes in time, the state of society and its needs”. The court rejected the notion that ‘public purpose’ meant ‘public use’. Instead, all that the government needed to show was that the acquisition benefitted the “public or a section of the public in some way.”
However, with respect to land acquisitions for companies, in 1959, the Supreme Court in R.L. Arora v. State of UP case laid a different test, noting that the work executed by the company must be “directly useful” to the public, like a school or a hospital. It was insufficient that the “product of the work” was directly useful to the public. Moreover, the court would scrutinise whether the government’s declaration of ‘public purpose’ when acquiring land on behalf of companies met this test. This was a strict scrutiny test that understandably made the government unhappy as another instance of ‘judicial usurpation’ of executive functions.
In 1962, however, the Supreme Court made a U turn. In Somavanti v. State of Punjab, the court held the government’s declaration of “public purpose” when acquiring land on behalf of companies was “conclusive evidence” of such a purpose, and that the court would not intervene unless there was a fraud or colourable exercise of power by the government. The court also held that a nominal contribution by the government towards the expenses of acquisition on behalf of a company would make it a “public purpose” acquisition.
This permissive interpretation allowed the government to bypass the stricter procedure for land acquisition on behalf of companies under Part VII of the Act merely by declaring such an acquisition to be for a “public purpose”, and making a token contribution to the expense of acquisition, and thereby availing the easier procedure under Part II of the Act. The WBIDC’s forcible acquisition of land on behalf of Tata Motors for compensation that was entirely financed by Tata Motors was not in any way atypical.
In an exhaustive study of all land acquisition cases decided by the Supreme Court during the period 1950-2015 conducted at the Centre for Policy Research, we found that almost 40% of the cases involved a challenge to the validity of the procedure whereby land was acquired. In almost four of the 10 challenged cases, both the high court and the Supreme Court invalidated the acquisition for non-compliance with the existing procedures. But in accordance with the court’s deferential view since Somavanti, we found that the Supreme Court invalidated the government’s finding of public purpose in less than 1% of cases.
The Singur land losers were using the land for cultivation and agro-processing industries. Though they objected to the acquisitions in the manner prescribed by the 1894 Act, the government ignored their objections. The land losers then challenged the acquisition before the high court. While their appeals were pending, the WBIDC took possession of the land, compensated those who were willing and displaced the unwilling. This led to continued protests and blockades by the land losers, eventually forcing Tata Motors to abandon their project in 2008.
Justices Gowda and Arun Mishra disagreed on whether the acquisition for Tata Motors was done by the government for a ‘public purpose’ under Part II of the Act, or “for a company” under Part VII of the Act. But they were unanimous in their opinion that whichever procedure was applicable, the government had not followed it. In a scathing indictment of government action in this case, the judges found “no application of mind” in the conduct of the acquisition proceedings, labelling the collector’s inquiry into the land losers’ objections a “farce and an eyewash”. Significantly, the court ordered the West Bengal government to restore possession of lands to all land losers within 10 weeks.
However, in a departure from 44 years of precedent, Justice Gowda held that where there was no scheme of industrial development fulfilling a general public need, nor was the cost of acquisition serviced by public revenue, acquisition of land by the government on behalf of a company did not satisfy the requirement of ‘public purpose’ under the 1894 Act. In effect, Justice Gowda’s opinion reclaimed the court’s position in the R.L. Arora case.
Justice Mishra disagreed with Justice Gowda on law and facts. In line with Somavanti and other cases, he held that since the funds for compensation though deposited by Tata Motors, were paid to the land losers by WBIDC, a statutory corporation, the government’s declaration of ‘public purpose’ was insulated from challenge, even when acquisition was on behalf of a company.
Since Singur, and in part because of it, the 1894 Act was repealed and replaced by the Land Acquisition Act, 2013. The 2013 Act mandates that any acquisition of land involving a company must have the prior consent of 80% of the affected families. Attempts by the central government to amend this provision through ordinance failed last year. But several state legislatures have amended or are in the process of amending the 2013 Act to circumvent this provision. In this context and especially for pending cases under the 1894 Act, Justice Gowda at least has indicated that the Supreme Court may no longer defer, but strictly scrutinise whether any governmental acquisition of land for a company is indeed for a public purpose. Since the court did not decide the case on grounds of ‘public purpose’, precisely because the two judges could not find agreement on this issue, the law on public purpose will remain ambiguous until the Supreme Court makes a definitive pronouncement on this issue.
Namita Wahi is a fellow at the Centre for Policy Research.