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Analysis Of Land Acquisition, Compensation And Consequences: Nhai Projects



Land Acquisition Act 1894

Land Acquisition, Rehabilitation and Resettlement Act, 2013

Land Acquisition, Rehabilitation and Resettlement Bill, 2015

Public Purpose

Several uses including development and housing projects, infrastructure etc., are Inclusive of use by certain companies under certain conditions.

No changes.

Exclusion of land for private hospitals and private educational institutions.

Consent from Affected People

No such clauses within the Act.

Consent of 70% of people for Public-Private Partnerships; Consent of 80%  of displaced people for acquisition of private companies.

5 categories mentioned which are exempt from the Act: 1) Defence 2) Affordable Housing 3) Rural Infrastructure 4) Industrial Corridor 5) Infrastructure
Consent for other projects remains the same.

Social Impact Assessment

No Provision

Has to be taken for every acquisition.

The above 5 categories are exempt from this however, there are limits added on irrigated land.

Market Value

Intended use of land is expressly prohibited in determining the market value and is based only on the current use of land.

Value specified in the stamp duty and the average of 50% recorded price in the vicinity in sale of land

Same as the 2013 Act.


Based on market value.

Two times the market value in Urban areas; Four times the market value in Rural areas.

Same as 2013 Act.

Rehabilitation and Resettlement

No provision

R&R necessary for all affected families; Minimum R&R to be provided to each family plus employment to the affected family.

R&R award for each affected family with a mandatory employment of at least one member of the affected family.

Food Security

No provision

Acquiring multi-crop last is only the last resort. If acquired under special circumstances, the States have a duty to cultivate an equal area of land elsewhere.

No limit on the above mentioned 5 categories.





Forced Displacement

Forced displacement occurs when individuals or communities are compelled to leave their homes or land against their will due to land acquisition projects. This can lead to social, economic, and psychological hardships for affected populations, including loss of livelihoods, disruption of social networks, and loss of cultural heritage.

Inadequate compensation

Inadequate compensation refers to situations where affected landowners or communities receive compensation that does not adequately reflect the true value of their land, assets, or livelihoods. This can result in financial hardship, inequality, and resentment among affected populations, undermining the legitimacy and fairness of the land acquisition process.

Environmental concerns

Environmental concerns arise when land acquisition projects pose risks to ecosystems, natural resources, and biodiversity. These concerns may include habitat destruction, deforestation, pollution, water contamination, or disruption of ecological balance. Environmental impacts can have long-term consequences for local ecosystems, wildlife, and human health.

Lack of transparency

Lack of transparency refers to a lack of openness, accountability, and information sharing in the land acquisition process. This can manifest as insufficient public consultation, limited access to project information, opaque decision-making processes, and a lack of clarity regarding project objectives, costs, and benefits. Lack of transparency can erode trust, foster suspicion, and contribute to conflicts and grievances among affected stakeholders.


Risks of Displacement, Rehabilitation and Resettlement: By recognizing these multidimensional risks and losses, policymakers, development practitioners, and stakeholders can better understand the complex impacts of displacement and design interventions that address the diverse needs and vulnerabilities of affected populations. Effective mitigation measures should aim to safeguard human rights, promote social justice, and support sustainable development outcomes for displaced individuals and communities.



Economic Losses

These include tangible economic impacts such as loss of assets (land, property), livelihoods, income, and opportunities for economic advancement. Displacement can disrupt sources of income and result in reduced economic well-being for affected individuals and communities.

Social Losses

Social risks and losses encompass disruptions to social networks, relationships, and community cohesion. Displacement can lead to the loss of social ties, support systems, and traditional community structures, resulting in social dislocation, isolation, and marginalization.

Cultural Losses

Displacement often entails the loss of cultural heritage, traditions, knowledge, and practices that are integral to the identity and well-being of affected communities. Cultural losses can include the erosion of language, customs, rituals, and connection to ancestral lands.

Losses in Cash and in Kind

These refer to both tangible (cash) and non-tangible (in kind) losses experienced by displaced individuals and communities. Tangible losses may include the monetary value of assets lost, while non-tangible losses may encompass intangible aspects such as emotional well-being, dignity, and quality of life.

Loss of Opportunities

Displacement can result in missed opportunities for education, employment, social advancement, and economic development. Displaced individuals may face barriers to accessing opportunities for personal and community growth, hindering their ability to rebuild their lives in resettlement areas.

Loss of Power

Displacement often exacerbates existing power imbalances and inequalities within society. Vulnerable groups, such as women, indigenous peoples, and marginalized communities, may experience a further loss of power and agency in decision-making processes related to development projects and resettlement plans.


Comparative Analysis of Key Clauses in a Concession Agreement in Road Projects: risk-sharing in a concession agreement for road projects involves allocating responsibilities between the authority and the private party based on their respective roles and expertise. This ensures that risks are managed effectively and the project is completed successfully.

Sr. No.


Key Consideration/Clauses

Description of key

Risk Share b/w the Authority and the Private Party


NHAI Model Concession Agreements in Design Build Finance Operate and Transfer (DBFOT) mode

Force Majeure and Termination

This clause covers unforeseeable events beyond the control of either party, like natural disasters or wars. The risk is usually shared between the authority and the private party, meaning both sides are responsible for dealing with the consequences of such events.

Shared Risks


Changes in Law

This clause addresses the risk of changes in laws or regulations that could affect the project. The authority usually bears this risk because it's responsible for ensuring compliance with laws and regulations.

The Authority


Concessionaire event of default

If the private party fails to meet its obligations under the agreement, such as failing to complete construction on time, it bears the risk of default and may face penalties or termination of the agreement.

The Private Party


Government event of default

If the authority fails to fulfil its obligations, such as providing necessary permits or land acquisition on time, it bears the risk of default, and the private party may seek compensation or termination of the agreement.

The authority


Delay in land acquisition

If there are delays in acquiring land required for the project, the authority typically bears this risk, as it's responsible for securing the necessary land for construction.

The authority


Financial risks

Risks related to financing the project, such as fluctuations in interest rates or availability of funds, are usually borne by the private party, as it's responsible for arranging financing for the project.

The private party


Regulatory approvals

Obtaining necessary permits and approvals from regulatory authorities is the responsibility of the private party, so it bears the risk associated with meeting regulatory requirements.

The private party


Design risk

The private party is responsible for the design of the project, so it bears the risk if there are any design flaws or errors that affect the project's performance or completion.

The private party


Construction risk

Similarly, the private party bears the risk associated with construction, including delays, cost overruns, and quality issues.

The private party


Concessionaire risk

This refers to risks specific to the concessionaire's business operations, such as market demand for toll roads or revenue generation from the project. The authority typically bears this risk.

The authority


Risks associated with operation and management

After construction, the private party is responsible for operating and maintaining the road project, so it bears the associated risks, such as traffic management or maintenance costs.

The private party


Technology – related risks

If the project involves new or innovative technologies, the private party bears the risk associated with technology failures or obsolescence.

The private party



The consequences of land acquisition in India are manifold. The empirical and theoretical studies on displacement through the acquisition of land by the government for development projects have so far focused on the direct and immediate adverse consequences of land acquisition. Most of the analytical as well as the descriptive accounts of the immediate consequences of land acquisition for development projects draw heavily from Michael Cernea's ‘impoverishment risk model’, which broadly enumerated eight ‘risks’ or ‘dimensions’ of development-induced displacement. These eight risks are very direct and basic which are:

(i)              Landlessness,

(ii)            Joblessness,

(iii)          Marginalization,

(iv)           Loss of access to common property resources,

(v)             Increased morbidity and mortality,

(vi)           Food insecurity,

(vii)         Homelessness and

(viii)       Social disarticulation

Recently L.K. Mahapatra has added ‘loss of education’ as another impoverishment risk in situations of displacement[1].




Opposition from farmers and landowners

Farmers and landowners may oppose land acquisition projects due to concerns about losing their land, livelihoods, or cultural heritage. They may resist the project through protests, petitions, or legal challenges, citing issues such as inadequate compensation, lack of consultation, or disruption to their way of life.

Legal challenges and court orders

Land acquisition projects may face legal challenges from affected parties, environmental groups, or other stakeholders. These challenges can result in court orders halting or modifying the project, pending resolution of legal issues related to compliance with land acquisition laws, environmental regulations, or procedural requirements.

Environmental concerns

Land acquisition projects may raise environmental concerns related to habitat destruction, deforestation, pollution, or disruption of ecosystems. Environmental activists, conservationists, and local communities may oppose the project on grounds of environmental conservation, seeking to protect natural resources, biodiversity, and ecosystem services.

Delay in finalization of compensation rates

Delays in finalizing compensation rates for affected landowners and farmers can stall land acquisition projects. Negotiations over fair compensation, valuation of land, and disagreements over entitlements may prolong the process, leading to delays in project implementation and increased costs.

Non-cooperation from some landowners and farmers

Some landowners and farmers may refuse to cooperate with land acquisition authorities, impeding access to their land for surveys, negotiations, or project implementation. Resistance from these stakeholders can disrupt the acquisition process and lead to conflicts or legal disputes.

Technical challenges related to land acquisition and survey

Technical challenges such as inaccurate land records, boundary disputes, or land tenure issues can complicate the land acquisition process. Surveying land parcels, verifying ownership, and resolving technical discrepancies may require time-consuming and resource-intensive efforts, contributing to project delays and complexities.





A reviewed the four provisions of the Land Acquisition Act, namely, public purpose, compensation, the procedure of acquisition and the urgency clause, which had been altered by the LARR Act, and that had been the subject of intense contestation prior to and at the time of drafting of the LARR Act.

The emerging narrative is that the claims before the Supreme Court have been largely brought by two categories of land losers.

1.     Those who accept the legitimacy of the acquisition process but seek fair compensation

2.     Those who question the legitimacy of the acquisition process and are unwilling to give up their land

Figure: Distribution of challenges to fair compensation, till 2016


Figure: Distribution of challenges to improper exercise of executive authority, till 2016


Case Name


Description of factors
















Tata Motors (Nano) Project, Singur


[Kedar Nath Yadav vs State of West Bengal & Ors on 31 August 2016]



Land Acquisition




Compensation Issues




Tata Motors Pulls Out



Problems Revealed






Reasons for Failure

The government of West Bengal took nearly 1000 acres of farmland in Singur in 2006 so, Tata Motors could build a car manufacturing factory. They did this without asking the people who owned the land, which made the locals unhappy. They protested against the government's decision, especially with the help of the opposition party.


The government offered compensation to landowners, but not to agricultural workers who lost their jobs because of the land acquisition. This caused more problems, leading to protests and violence.


After two years of protests and problems, Tata Motors decided to cancel their plans to build the factory in West Bengal and moved to Gujarat instead.


A survey showed that many farmers were not compensated fairly, and the land records were wrong, which made matters worse. Workers struggled to find new jobs, and some were paid less than others who weren't affected by the land acquisition.


The old land acquisition law from 1894 didn't consider important things like getting permission from the people whose land was taken, conducting a Social Impact Assessment (SIA), and providing proper compensation and rehabilitation (R&R) to those affected. Also, the land records were messed up, leading to farmers not getting enough money for their land. Plus, the land taken was used for farming, causing food production problems.












Koyambedu Market, Chennai


[Chennai Koyambedu Market vs The Government Of Tamil Nadu on 21 December 2018]







Size and Layout




Land Acquisition








Success Factors

The Chennai Development Authority set up the Koyambedu Wholesale Market Complex to ease congestion in the city center. The market is conveniently located outside the busy areas but is still easily accessible to residents. It's well-connected by highways to the bus terminal, railway stations, and the airport.


The market covers a vast area of 295 acres, divided into different sections for fruits, vegetables, and flowers. It's a bustling hub, with around 100,000 people visiting every day.


Unlike the old 1894 Act, the Chennai Development Authority went beyond the usual methods for land acquisition. They paid landowners cash compensation based on the current market value of their land, including any crops they had at the time. Additionally, they offered a 12% interest rate for the period between notifying landowners and acquiring the land. They also made sure to properly relocate families affected by the project.


The project's success can be credited to the fair compensation calculations, which looked at recent sale prices of similar lands. Additionally, implementing the rehabilitation and resettlement (R&R) process, even though it wasn't required by the 1894 Act, helped smoothen the acquisition process despite the additional costs involved.

Narayan Prasad v. State of Chhattisgarh, 2017 SCC OnLine Chh 1226

Case Background










Key Issues


















Court's Decision







Significance of the Case

In this case, the Supreme Court of India addressed issues related to land acquisition for public purposes under the Land Acquisition Act, 1894, and the subsequent amendments made to it. The case specifically dealt with the acquisition of land by the State of Chhattisgarh for public infrastructure projects.


1.     Validity of Land Acquisition: The primary issue before the court was the validity of the land acquisition process undertaken by the State of Chhattisgarh. The petitioner, Narayan Prasad, challenged the acquisition on various grounds, including procedural irregularities and inadequate compensation.


2.     Compensation for Landowners: Another crucial issue was the adequacy of compensation offered to landowners affected by the acquisition. The petitioner argued that the compensation provided by the state was insufficient and did not reflect the true market value of the land.


3.     Compliance with Legal Requirements: The case also raised questions regarding the state's compliance with legal requirements such as conducting Social Impact Assessments (SIAs) and obtaining consent from affected landowners, as mandated by the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 (RFCTLARR Act).


The Supreme Court ruled in favour of the petitioner, Narayan Prasad, and set aside the land acquisition proceedings conducted by the State of Chhattisgarh. The court held that the acquisition was vitiated by several irregularities, including failure to conduct SIAs, obtain consent from affected landowners, and provide adequate compensation.


The case of Narayan Prasad v. State of Chhattisgarh underscores the importance of adherence to legal procedures and principles of fairness in land acquisition processes. It highlights the need for state authorities to comply with the provisions of the RFCTLARR Act, including conducting SIAs, obtaining consent, and ensuring fair compensation for affected landowners.












NHAI v. M. Hakeem (2017)

Facts of case








Key Principle set by the Judiciary

A landmark case that pertains to compensation claims filed by landowners whose properties were acquired by the National Highways Authority of India (NHAI) for the construction of highways. The case is significant as it clarified the principles and factors to be considered in determining compensation for land acquisition.


The court's ruling in NHAI v. M. Hakeem (2017) emphasized several key principles governing the determination of compensation for land acquisition:

1.     Market Value: The court stressed the importance of assessing the market value of the acquired land to determine fair compensation. Market value refers to the price that a property would fetch in the open market under normal conditions.

2.     Solatium: The court highlighted the provision of solatium, which is an additional amount payable to landowners as a form of consolation or solace for the compulsory acquisition of their land. Solatium is typically calculated as a percentage of the market value of the land.

3.     Interest Rates: The court addressed the issue of interest rates applicable to delayed payment of compensation. It emphasized that landowners are entitled to receive interest on the compensation amount for the period of delay in payment, based on prevailing interest rates.


Underscored the importance of ensuring fair and just compensation for landowners whose properties are acquired for public infrastructure projects such as highway construction. The case clarified the legal principles and factors to be considered in determining compensation, including market value, solatium, and interest rates. By providing clarity on compensation standards, the ruling aimed to uphold the rights of landowners and ensure equitable treatment in land acquisition processes.

Aligarh Development Authority v. Megh Singh (2016)

Principle gives by court

Come and get – NO

Go and Give – YES

  Compensation of Land Acquisition

Indore Development Authority v. Manoharlal

Court was considered

“Possession or Compensation” is replaced by “Possession and Compensation” and must be lapse of one then it will be consider as a lapse of land acquisition.



The original Constitution of 1950 had safeguarded the property right, and recognized the same under part III of the Constitution. However, soon after the Constitution of India came into force a long-drawn-out battle commenced between the persons who were sought to be deprived of their property and the legislature and executive until its final culmination. Ultimately by the forty-fourth constitutional amendment right to property as originally envisaged by the 1950 Constitution was deleted and only a small fraction of the right was retained in Article 300-A as a constitutional right. The whole genesis of the dispute over the property right was the unwillingness of the legislature and executive to pay full compensation or full market value for the property acquired. The Constitutional obligation to pay compensation underwent massive changes because of the word ‘compensation’ used in Article 31(2). Hence tussle between the parliament and the judiciary as a result of which brought a series of constitutional amendments to property rights.

The landmark LARR Act was designed by the then Rural Development Minister, Dr. Jairam Ramesh, to be a pro-poor legislation. There is no doubt that the LARR Act inculcates the three essential requirements of ‘eminent domain’ within its fold: authority of law, public use and just compensation. However, this Act has inadvertently severely strained India's infrastructural and manufacturing potential. As has been discussed in detail, the provisions of this Act have regressive impact on developmental activities. Very recently, the Ministry has bowed to the pressure imposed by business and investor lobbies, and promulgated the pro-industrial amendments to the LARR Act. The authors have consistently maintained that the Ministry must undertake dilatory amendments to restore industry's confidence in India's developmental potential. The authors would nevertheless caution and advice the Ministry to maintain the fine balance between facilitating land acquisition for industries with adequate protection for landowners. The Ministry must make the most of this opportunity to also strengthen the structure to cater to the land owners without impacting developmental activities. The recent amendments must be followed by another set of reforms to tweak the current R&R framework and construct a system that is considerate to the social, religious, cultural and socio- economic ethos of the displaced persons. These changes will help restore confidence of those displaced, and they will complement the developmental activities to be undertaken by the project company.





Author: Abhishek Jaiswal, LL.M, Student of Department of Law, School of Legal Studies, Central University of Tamil Nadu. Email – [email protected]








[1] Guha, A. (2012); Social Impact Assessment in the Draft Land Acquisition and Rehabilitation and Resettlement Bill, 2011: A Critical Overview’. In ‘Anthropological Impact Assessment of Development Initiatives’, (2012) Eds. A.K. Danda, K.K. Basa, K.K. Misra. Jhargram: Indian National Confederation and Academy of Anthropologists

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