Land Acquisition

No. 1/55/78-LR-I/1979
GOVERNMENT OF PUNJAB
DEPARTMENT OF REVENUE
(LAND REVENUE BRANCH) 

To

All the Heads of Departments,

Commissioners of Divisions,

Deputy Commissioners and

Sub Divisional Magistrates

in the State of Punjab.

 Dated, Chandigarh, the 13th March 2000.

Sub:     Amendment of Financial Commissioner's Standing Order No. 28 relating to   Acquisition of Land. - An Explanatory Note.

Sir,

 The question of providing adequate compensation to the landowners for compulsory acquisition of their lands has been engaging the attention of the Government for quite some time now.  The Land Acquisition Act, 1894 provides that a landowner should be paid the market value (plus interest and solatium) for the land compulsorily acquired.  It is, however, observed that as per procedures set forth, what the landowners actually receive in the first instance is only a fraction of the market price.  This is primarily because of the out-dated and faulty procedures followed in assessing the market value of the land.  The Land Acquisition Collectors base their awards on prices of land worked out by the Deputy Commissioners, who in turn base these rates on 'Chhant' i.e. the average sale price of one year as per registration deeds. Even then the sale deeds having unusually high rates are ignored and the situation is worsened by a tendency amongst the farmers to undervalue their land to save on stamp duty, and in urban areas, by a temptation to reduce liability on account of capital gains. The aggrieved landowners have to wage a long and costly battle in different courts to get their legitimate dues. After litigation often lasting 10-15 years, what the landowners manage to get falls far short of the market value. Very often even after securing favourable verdicts from the courts, the farmers have to wait for many years to get the price.  In the meantime, land prices soar up and the farmers whose lands are acquired are altogether unable to purchase any alternative land at reasonable price.  In Punjab, particularly, farmers have a great attachment for land and it is difficult for land owners to get reconciled to its loss particularly when this is the only way of life they are familiar with.  Therefore, in the type of situation which presently prevails, acquisition brings in its wake a sense of physical loss and emotional insecurity.  The money received in instalments is invariably frittered away on unproductive expenditure.

 
2.  Based on this experience, it was decided that the existing procedures should be streamlined to ensure that in case of compulsory acquisition the owners not only get the full market price but are also assured that this price is paid in lumpsum in the first instance itself, and there should be no need for the landowners to waste time and money in going to courts to get their dues through endless litigation.  An assurance  was also given by the Chief Minister, Punjab, on the floor of the House making a commitment that procedures would be simplified to ensure payment of correct market price to the landowners.  In the background of this commitment, the Revenue Department had presented a Memorandum to the Council of Ministers in June, 1997 making certain recommendations.  Based on the decisions taken by the Council of Ministers, two sets of instructions were issued by the Revenue Department on 14th July, 1997, one for setting up of District Land Price Fixation Committees (DLPFCs) for recommending prevailing market rates and the second for raising the powers of the Collectors to sanction the award from the existing limit of Rs. 7.00 lacs to Rs. 30.00 lacs, and for eliminating the level of the Divisional Commissioner in the sanction of the award.

 
3.  The DLPFCs have been in existence for more than two years now. While the working of these Committees has generally been welcomed by landowners, it has met with mixed reaction in official circles. Very often the recommendations of the DLPFCs are sketchy and non-speaking giving an impression of arbitrariness in price fixation. Fears have also been expressed at times by the acquiring departments that these recommendations are too liberal and jeopardize their budgetary estimates. The non-official members of the Committee explain that although they are generally aware of the market price in their areas, it is for the official members to present data necessary for justifying -their decision in a proper manner. Whatever may be the shortcomings in the working of the District Land Price Fixation Committees, the fact remains that the official data does not give a clue to the correct land prices. The information which was collected in this connection revealed that invariably the land awards are enhanced by the courts to more than five to six times of the original price fixed by the Land Acquisition Collector after a period of litigation spreading over ten to fifteen years. Although these figures contained a substantial element of solatium and interest on the enhanced price the fact remains that they result in serious imbalances in budgetary calculations, and non- payment has sometimes invited strictures and even attachment of government property by Courts.  The artificially low prices reflected in the 'chhant' at the initial stage also result in a temptation to acquire more land than necessary, resulting in unwarranted dislocation of local population.

 
4.  Since compensation has to be determined on the basis of market price the only  guiding  factor can  be as to what is the price  on which an owner would be willing to sell his land and what is the price a buyer would be willing to pay if acquisition proceedings were not  to take place.  Therefore some element of subjectivity based on individual perception is bound to creep in.  It is, therefore, all the more necessary that the basic guidelines for determining the land  prices should be laid down so that there are no serious imbalances in the budgetary calculations, the farmers get enough not to indulge in repeated litigation and at the same time the tendency to acquire more land  than necessary is avoided.  With this objective in view the matter has been considered by the Council of Ministers in its meeting dated 12th January, 2000 and detailed procedures have been laid down for the guidance of the DLPFCs and officers connected with land acquisition.  Part  ‘B’  of the Financial Commissioner’s Standing Order No. 28 has been recast in the  light of the decisions taken by the Council of Ministers. The intention is to make available detailed data and other information formally so that the deliberations of the DLPFCs are more meaningful, transparent and self-speaking.  Some consequential amendments flowing out of these decisions have also been incorporated.

 
 5.  The Council of Ministers has also agreed to streamlining of procedures and elimination of unnecessary levels to cut down delays. Presently, concerned departments are issuing their own notifications under Sections 4, 6 and 17 of the Land Acquisition Act and most of them have their own Land Acquisition Collectors also.   Now that the prices are also to be guided by the DLPFCs, the repeated references to the Financial Commissioner Revenue at various stages of acquisition proceedings have been dispensed with. Henceforth, the awards to be announced under Section 11 of the Act shall also be approved by the Administrative Department concerned.  Thus the Revenue Department will only function as the Nodal Department for administration of the Act and notify Land Acquisition Collector under the Act in cases where they are not notified as such ex-officio.   It is expected that this will cut down delays to a very large extent and also make the role of the Administrative Secretary more meaningful and his supervision more effective.

It may be seen that in the past the cases used to come to the Revenue Department at three stages, first at the stage of seeking No Objection Certificate (NOC) where the FCR presided over the meetings of the State Level Land Acquisition Board (SLLAB), the second at the time of approval of the Collector’s rates and the third prior to the announcement of the award.  Now, a reference will be made to the Revenue Department only at the initial stage for placing before the SLLAB and the matter will come to SLLAB again only if there is a difference of opinion between the recommendations of the DLPFC and the Administrative Department concerned.

6.  An important decision which has been taken by the Council of Ministers is that ordinarily, officers not below PCS shall be appointed as Land Acquisition Collectors and officers borne on the cadre of the Revenue Department shall be utilized to render specialized assistance with reference to revenue laws and collection and compilation of the relevant data/information.  The Council of Ministers has also decided that for purposes of Sections 11 and 15-A of the Land Acquisition Act, the word "Government" shall mean Government in the concerned    department   and    the   "authorized   officer"  shall imply   the Administrative Secretary concerned. As a corollary to this, no officer below the rank of the Administrative Secretary shall exercise the powers of the Government. This implies that the powers of Government presently delegated to the departmental heads e.g. Chief Engineers in the Irrigation and Drainage departments under sections 4, 6 and 17 of the Act shall stand withdrawn.

7.  Another significant decision that has been taken is that it shall be no longer necessary to obtain an  NOC from the DC/SLLAB before the issue of notification under Section 4 of the Act.  The collection of data for acquisition and preparation of draft notification is itself a time consuming process. There is also generally a long time lag between site selection, submission of data to SLLAB, approval by SLLAB and the notification under section 4 of the Land Acquisition Act. This leads to land speculation and raises the cost of acquisition in the form of hastily raised structures, benami transactions and trading by property  dealers and middlemen.  This leaves both the landowners and the Government at a disadvantage. Therefore, it has been decided that the practice of obtaining NOC from the DC/SLLAB before the issue of notification under section 4 of the Act should be discontinued.  Instead, notification under section 4 shall be issued immediately after site selection and preparation of detailed data for such notification, and NOC would be applied for immediately after the notification.

8.  As  brought out in para 4  above, the guiding  factor for determining  the   basis  of  market  price would  be what is the price at which an owner would be willing to sell his land and what is the price a buyer would be willing to pay, if acquisition proceedings were not to take place. With increase in urbanization and the land becoming a scarce commodity, locational factors like proximity to a road, a town, an urban agglomeration or even the direction in which a city is expanding have assumed far greater importance than whether a land is ‘chahi’ or 'barani' or even 'Banjar.'  Theoretically, two adjacent ‘chahi' and 'barani' 'taks’ may carry different values for compensation purposes on the basis of 'Chhant’ but there may be hardly any difference in their market price.  Moreover, with development of sophisticated means of irrigation, and advanced watershed management, in a large number of cases now whether the land is 'barani’ or 'chahi’ depends largely on the capital and financial resources at the disposal of the owner or the size of his holding.  A distinction in pricing on the basis of its quality/class may place a premium on economic affluence of the land owner and may also leave a lot of discretion in the hands of the Land Acquisition Collector.  Therefore, the distinction between various classes of land such as 'chahi’ and 'barani' etc. would no longer be considered relevant unless there are strong reasons to act otherwise. Thus a distinction would have to be made if the land is rocky or there are steep hills, 'pahar’, deep depressions and sand dunes, which in the normal course would fetch very little market price as their land use would be very much restricted and the cost of development would be high; Shares of  khewatdars in "nadis" would also fall in the same category.

9.  To   make the meetings of the DLPFC   more purposeful its constitution has   been made more broad based. The district level representative of the acquiring Department/Public Sector Undertakings concerned shall now be associated with every meeting of the DLPFC as also with the site visit, if conducted.  Provision has also been made to arm these Committees with detailed data for purposes of meaningful deliberations. Though the S.D.Ms shall be the conveners of these Committees, the overall guidance and coordination is required to be provided by the concerned DCs.

 
It has come to notice in the past that in a large number of cases a lumpsum amount is recommended by these Committees for each 'quality’ or class of land.  When justification for this figure is sought the amount is merely split into price, solatium, and interest by backward calculation.  It needs to be reiterated that as per legal provisions market price is to be computed on the date of notification under section 4   and not on the date recommendations are made by DLPFC.  A lumpsum amount should only be proposed if it represents negotiated price, and even here, it should be ensured that it is  not too exorbitant as to make a deal with just cause.  It may, however, be kept in view that negotiations may turn out to be cheaper in the long run, as there would be a saving of solatium and interest (unless payment is heavily delayed after that) as also litigation. It may be noted that there is no bar for such negotiation at any stage of the proceedings in compulsory acquisition. The services of DLPFC should be utilised by the Department if there is any hesitation on its part to attempt negotiations single-handedly. The reasons for absence of non-official members shall also be clearly brought out in the proceedings indicating efforts made to ensure their presence.

 
10.  It has been decided to delete pare 87 of the Standing Order No. 28.  The provision was probably inserted in a situation where Government surrendered land voluntarily and that too soon after compulsory acquisition. This provision would be misplaced in a situation where prices have steeply escalated with the passage of time or the original owners have encroached upon the acquired land just because it has not been fully utilised. Even if this land is to be surrendered to the original owners, as  per Rules of Business of the Government of  Punjab, approval of the Council of Ministers would be required in each case after  consultation with Finance Department   as alienation of public land is involved.  In this connection  paras  493,  494,  495 and  495-A of the Land Administration  Manual which are essentially in the form of guidelines shall be separately amended being archaic.

A number of other paras of Standing  Order No. 28 have also been deleted being irrelevant in  the changed context.  A copy of amended Standing Order No.28 is enclosed. 

11.  The Council of Ministers has decided that the Revenue Department will only function as nodal department for the administration of Land Acquisition Act, 1894.   Further, with a view to improve the content and quality of the Awards the Financial Commissioner Revenue would get the important verdicts given by various Courts compiled through some agency for the guidance of the Land Acquisition Collectors. The feed back from the Administrative Departments as well as from the field officers in this connection would be very much welcome !

Yours faithfully,

Sd/-
(RAJINDER SINGH)
Under Secretary Revenue, Punjab.

STANDING  ORDER
(Land  Acquisition  No. 28)
PART  A

A.  A.  Cases of Acquisition to which the provisions of Act I of 1894 are not applicable

1.  Proceedings under the Land Acquisition Act I of 1894 inappropriate - When it is proposed to transfer land in possession of Government, from one Government to another, or from one department to another, proceedings under Act I of 1894 are inappropriate.

Land of this description may fall under the following categories :-

(1)  Land in possession of the Government of India;

(2)  Land in possession of the State Government :-

(a)  (a)  Nazul land;
(b)  (b)  Inferior evacuee land;
(c)  (c)  Other surplus evacuee land;
(d)  (d)  State Government lands (recorded generally in revenue record as

Provincial Government lands);

Land under the possession of various departments such as Irrigation, Forests, etc.

2.  Rules regulating transfer of State lands and buildings between Central and State Governments, Government of India, Finance Department resolution No.D-3428-A, dated the 10th December, 1925 -Where some land under the ownership of the Central Government is surplus to its requirements and the same is required for any public purpose by the State Government, necessary reference for the purpose will have to be made to the Central Government in the Ministry concerned.  Such lands are normally transferred by the Central Government at market price.  A reference for the purpose may be made by the Collector or the Department requiring the land to the Revenue Department indicating the area of land which is required to be transferred alongwith relevant extract from the Jamabandi, the purpose for which it is required, and whether the scheme for which it is required has been sanctioned and included in the Plan or the budget.  It should also be accompanied by an estimate of the market price from the District Collector.

2.1.  Certain surplus camping sites under the Ministry of Defence are available at some places which the Ministry of Defence may be prepared to transfer to the State Government at the market price.  The District Collectors while examining the proposals for land acquisition at those places should specifically examine whether the surplus camping sites cannot be utilized for the purpose.  This will save available agricultural land being acquired land also save the Government payment of 30% solatiums charges payable in the case of compulsory acquisition.

2.2.  The proposals for transfer of surplus State Government land to the Central Government are normally received from the concerned Ministry in the Central Government.  Where a Collector or the Department of the State Government takes up the case for such transfer as the Central Project would be in the interest of the State, the proposal for the same should also be sent by the Administrative Department concerned or the Collector as the case may be, to the Revenue Department indicating the area of land proposed to be transferred, with copy of the relevant extracts from the Jamabandi and the purpose for which it is to be transferred.  The proposals should also be accompanied by an estimate of market price of the land from the District Collector.  Normally such transfers are to be made at the market price.  Where the Collector or the Administrative Department considers that the land should be  transferred free or at a concessional rate, the detailed justification for the same may be indicated in their proposal alongwith the assessment of the market price so that the financial implication of the proposal is available with Government while taking the decision.  These proposals should also include a report from the District Collector that the land is not required for any purpose by a Department of the State Government and its transfer will not adversely affect the utilization of other land under the ownership of the State Government where only a part of a compact area is proposed to be transferred.