Big battles and small cars: the Singur judgment

By Deepti Mohan, Vidhii Partners
0
571

In a high profile judgment delivered in September, Calcutta High Court upheld the constitutional validity of the Singur Land Rehabilitation and Development Act, 2011.

The judgment validates the West Bengal government’s move to return 400 acres of land to its original owners.

This was done as the Land Acquisition Act, 1894, does not provide for return of land to its original owners. (For a detailed discussion see Land acquisition: time to return a little, on page 84 of the July/August 2011 issue of India Business Law Journal)

Origins of dispute

In March 2007, the West Bengal government leased 654.67 acres of land in Singur to Tata Motors to set up a factory to manufacture its small car, the Nano. The land was acquired under the Land Acquisition Act and leased to Tata for 90 years, on the condition that the lease could be extinguished if the land remained unused for over three years. Not long after, in 2008, political agitation at the site forced Tata to relocate to Gujarat.

Deepti Mohan Partner Vidhii Partners
Deepti Mohan
Partner
Vidhii Partners

In June 2011, the West Bengal government passed the Singur Act. It provided for the transfer of leased land to the state and return of 400 acres to “unwilling owners” – those who had not accepted compensation when the land was acquired.

The government justified the act on two grounds: the land had been unutilized for more than three years and therefore the object of the lease had failed; in addition public dissatisfaction had to be ameliorated.

As soon as the act was passed, the state government rather impetuously took possession of the leased land. This triggered two writ petitions in Calcutta High Court challenging the validity of the Singur Act and the action of the state.

For and against

Tata argued that the Singur Act is in conflict with the Land Acquisition Act. Crucially, it was still to receive the assent of the president of India as the power to make laws covering acquisition of property can only be exercised under the concurrent list of the constitution of India. It also argued that the acquisition was in exercise of powers of “eminent domain” which can be only be for public purpose and return of land to its unwilling owners did not qualify.

Tata also argued compensation has to be paid immediately on re-possession, but the Singur Act failed to specify how it would be calculated and paid.

Finally it pointed out that the provision in the Singur Act directing Tata to restore vacant possession contained unguided power that did not mean taking possession without notice.

Defending its stand the state said there was a presumption of constitutionality of a statute and the court should at the first instance interpret the act so as to support it. It also argued that the subject matter of the Singur Act was in the state list and distinct from the Land Acquisition Act as it dealt with extinguishment of leasehold interest.

The state relied on three local acts that provided for extinguishment of interest of a tenant without payment of compensation. It also said that any need of a section of people, in this case, the unwilling owners, could be termed as public purpose.

The judgment

Calcutta High Court held that the Singur Act was, at least, partly in exercise of the power of eminent domain. It held that the acquisition can be of an interest in land that is not owned by the state, which in this case was the remainder of Tata’s 90 year lease and hence covered under the concurrent list.

The court concluded that the Singur Act disclosed sufficient public purpose, but did not go into whether the act was in conflict with the Land Acquisition Act which disallows return of land. The court on the contrary justified it by holding return of land qualified as public purpose for acquisition.

The court held that the act contained some vagueness and uncertainty about compensation. But using a “purposive interpretation” of its provisions – as in Seaford Court Estates, Ltd v Asher, which the Supreme Court approved in State of Bihar v Bihar Distillery Ltd – it held that the word compensation in the act meant compensation as contained in sections 23 and 24 of the Land Acquisition Act. Hence there is no reason for strike down the act on that count.

The court also concluded that the state exceeded its powers in taking possession of the land without any notice and appointed special officers to ensure a safe and smooth transition.

Will this judgment mark the beginning of a long court battle or is a watershed in land acquisition laws in India? Either way, its repercussions will be enormous.

Deepti Mohan is a partner at Vidhii Partners and can be reached at [email protected]

Vidhii_Partners_logo-CMYK

Mumbai

102-A, Prathmesh Tower

Premises Co-op. Society Ltd.

Raghuvanshi Mills Compound

Senapati Bapat Marg, Lower Parel,

Mumbai 400 013, India

Tel: +91 22 4355 8555

Fax: +91 22 4355 8550

Email: [email protected]

Kolkata

Ambassador Apartments,

Flat No. 13, Block B,

First Floor, 61A, Park Street,

Kolkata 700 016, India

Tel: +91 33 4001 4224

Fax: +91 33 4001 4225

E-mail: [email protected]