A landowner who has just been served with an acquisition notice under the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 does not need a lecture on eminent domain. The landowner needs the LARR compensation and consent rules as machinery to be operated, and needs them in a particular order: the arithmetic by which the compensation on the notice will be turned into an award, so the figure can be checked line by line; the consent position, so it is known whether the acquisition needed anybody’s agreement and whether that agreement was properly counted; the remedy route, with its clocks, so a wrong figure can be carried to the forum that can correct it before the time for doing so expires; and the answer to the question that has generated more land litigation in India than any other in this statute, which is whether an old acquisition under the repealed 1894 Act has lapsed, so that the land must be given back or acquired afresh. This article works through that machinery in that order.

The statute underneath the machinery is Act 30 of 2013, which received the assent of the President on 26 September 2013 and came into force on 1 January 2014. Its structure, its passage record and its design choices are treated in the pillar account of the LARR Act 2013 explained, which owns the statute as a whole. What belongs here is the operative layer: Sections 26 to 30 and the First Schedule, which build the money; the proviso to Section 2(2), which builds the consent; Chapter VIII, which builds the forum; and Section 24, which governs the border with the old law and produced the litigation. A reader who finishes this article should be able to take an award, recompute it, identify which of its components is wrong if one is wrong, and state exactly which application, to which officer, within how many weeks, puts the error before the body empowered to correct it.

Who holds the rights: the person interested and the affected family

Two definitions decide who can operate the machinery, and they are not the same definition. The wider of the two is the person interested, which runs through the compensation and dispute provisions. A person interested is anyone claiming an interest in the compensation payable for the land, and the concept reaches beyond the recorded owner to mortgagees, lessees, and others whose rights in the land the acquisition extinguishes, including a person interested in an easement affecting the land. It is the person interested who receives notices, who may object, who is heard at the award inquiry, who may accept or refuse the award, and who may require a reference to the Land Acquisition, Rehabilitation and Resettlement Authority under Section 64. Standing to fight about the money follows interest in the money, and the first practical question in any acquisition is therefore not what the land is worth but whose names the proceeding recognises as interested in it, because a claimant the record does not recognise must first get recognised, and every clock in the Act runs while that argument is happening.

The second definition is the affected family in Section 3(c), and it governs the rehabilitation track and the consent count. An affected family includes a family whose land or other immovable property is acquired; families among the Scheduled Tribes and other traditional forest dwellers who have lost forest rights recognised under the Forest Rights Act 2006; families whose primary source of livelihood stands affected, expressly including tenants, sharecroppers, agricultural labourers and others who worked the land or depended on it for the three years before the acquisition; urban families on the same three year footing; and families holding land assigned under government schemes. For the purposes of rehabilitation, an adult of either gender, with or without a spouse, children or dependants, is treated as a separate family, so one household can contain several affected families, each owed its own entitlement under the Second Schedule.

The two money tracks of the Act follow these two definitions, and keeping them apart prevents the commonest error in reading an award. Compensation follows interest: it is computed by formula on the land and the assets on it, and it is paid to the persons interested in proportion to their interests. Rehabilitation follows affectedness: it is owed to families because of what the acquisition does to their housing and their livelihood, in the fixed elements of the Second Schedule, and a family can stand high in one track and absent from the other. The recorded owner who lives elsewhere takes a large compensation and little rehabilitation. The landless labouring family on the same field takes no compensation, having no interest in the land to value, and takes the Schedule’s package entire. A landowner checking an award must therefore check two documents, the compensation award under Section 30 and the Rehabilitation and Resettlement Award under Section 31, because an error can sit in either, and the reference machinery described below carries disputes about both.

Step one: market value under Section 26

The computation begins with market value, and Section 26 fixes it by a comparison the Collector is not free to shortcut. The Collector must adopt the highest of three measures. The first is the market value, if any, specified in the Indian Stamp Act, 1899 for the registration of sale deeds or agreements to sell in the area where the land is situated: the stamp value, known in most districts through the circle rate or guidance value at which registrations are assessed. The second is the average sale price for similar land situated in the nearest village or the nearest vicinity area. The third, available only where land is acquired for private companies or for public private partnership projects, is the consented amount of compensation agreed upon under Section 2(2) in the consent process. Whichever of the applicable measures is highest is the market value, and the date on which it is determined is the date of the preliminary notification under Section 11, so later price movements in either direction do not enter the award.

The second measure carries the section’s real discipline, in its Explanations. The average sale price is determined from the sale deeds or agreements to sell registered for similar land in the nearest village or vicinity during the three years immediately preceding the year in which the acquisition is proposed. Within that set, only the higher half counts: one half of the total number of deeds in which the highest sale prices have been mentioned are taken into account, and the average is struck across that higher half alone. The design answers the oldest defect of the 1894 regime, in which registered prices, systematically understated at the registration counter to save stamp duty, dragged every average down to the level of the understatement. Averaging the top half of the deeds does not eliminate understatement, because the deeds themselves are the understated record, but it discards the cheapest half of the evidence before averaging, and it forbids the Collector to reach for the lowest transactions in the file. Two further Explanations fence the exercise: a price paid as compensation for land acquired earlier in the same district under this Act is not to be taken into consideration, so acquisition prices do not bootstrap themselves into market evidence; and a price which in the Collector’s opinion is not indicative of the actual prevailing market value may be discounted, a discretion that cuts both ways and is one of the first things to examine in an award that arrives low.

A worked comparison shows the mechanism. Suppose the stamp value for the class of land in question stands at eleven lakh rupees for the parcel, and the registered deeds for similar land in the vicinity over the preceding three years, once the higher half is taken, average twelve lakh rupees. The market value is twelve lakh rupees, because the second measure is the higher. If the deeds had averaged ten lakh rupees, the market value would have been the stamp value of eleven lakh, because the statute takes the highest of the measures and not an average of them. The landowner’s evidentiary task at the inquiry follows from the text: the record of registered deeds for similar land nearby is the battleground, and a family that can place genuine higher priced transactions for comparable land in the vicinity before the Collector is working on the one input that every later figure in the award multiplies.

The higher half rule deserves a computation of its own, because it is the least understood step in the section and the one where an award most often goes quietly wrong. Suppose ten sale deeds for similar land in the vicinity were registered in the three preceding years, at prices per parcel of nine, nine and a half, ten, ten and a half, eleven, eleven and a half, twelve, twelve and a half, thirteen and thirteen and a half lakh rupees. An average across all ten deeds would be eleven lakh twenty five thousand rupees. The statute forbids that average. Explanation 2 directs that one half of the total number of deeds in which the highest sale prices have been mentioned be taken into account, so the five highest deeds alone are averaged: eleven and a half, twelve, twelve and a half, thirteen and thirteen and a half lakh, which average twelve lakh fifty thousand rupees. The market value input rises by one lakh twenty five thousand rupees on the strength of the Explanation alone, before any argument is heard, and at the maximum rural factor with solatium that single step is worth five lakh rupees in the final figure. An award that averages all the deeds in the file, or that takes the deeds of a different and cheaper vicinity, or that reaches back beyond the three preceding years for older and lower transactions, has misapplied the section in a way that can be demonstrated arithmetically on the face of the record, which is the strongest possible ground for a reference.

Two cautions complete the picture of the first measure. The stamp value is not a fact of nature; it is an administrative figure, revised by the State’s registration authorities at intervals that in many districts lag years behind the prices at which land actually changes hands, and the proviso to Section 26 obliging the Collector, before initiating proceedings in an area, to take all necessary steps to revise and update the market value of land on the basis of the prevalent market rate is the statute’s own acknowledgment of that lag. A landowner confronted with a circle rate fixed in a different price era is entitled to press the revision duty as well as the deed evidence. The fourth Explanation, which permits the Collector to discount a price that in his opinion is not indicative of the actual prevailing market value, is the counterweight: it exists for the genuine outlier, the deed between relatives at a nominal figure or the single speculative transaction at an absurd one, but it is an opinion the Collector must form on the record, and a discount applied to the whole higher half of the deeds, rather than to an identified outlier, converts a fence against manipulation into a route around the section.

Why does the date of the preliminary notification fix the value of the land?

Because Section 26 says so in terms: the date for determination of market value is the date on which the notification under Section 11 was issued. Prices after that date, whether the announcement of the project has inflated them or the blight of the coming acquisition has depressed them, are excluded from the computation on both sides.

The section also provides for the case in which its own method fails. Where market value cannot be determined because transactions in the area are restricted by law, or because registered sale deeds for similar land are not available for the preceding three years, or because no value has been specified under the Stamp Act, the State Government must specify a floor price per unit area, derived from the prices of similar land in the immediate adjoining areas computed by the same method. The floor price is a fallback, not a fourth measure to be traded against the others, and an award that resorts to it must show why the three measures yielded nothing usable. One more discipline sits in the provisos: before initiating acquisition proceedings in an area, the Collector is to take all necessary steps to revise and update the market value of land on the basis of the prevalent market rate, a duty aimed at the stale circle rate, the single most common reason the first measure understates what land changes hands for. Where a requiring body offers its shares to landowners as part of the compensation, the shares may in no case exceed twenty five per cent of the value calculated, and no owner may be compelled to take them.

Step two: the multiplier, and why the State decides what your land is multiplied by

Section 26(2) directs that the market value so calculated be multiplied by the factor specified in the First Schedule, and the First Schedule is where the geography of compensation is written. For rural areas, the factor is between 1.00 and 2.00, based on the distance of the project from an urban area, as may be notified by the appropriate government. For urban areas, the factor is one. The Centre has notified the maximum factor of 2.00 for its own acquisitions. A State Government notifying for acquisitions within the State may set the factor at any point in the statutory band, and may grade it by distance, so that a parcel close to a town is multiplied by less than a parcel deep in the countryside, on the reasoning that proximity to urban land markets already lifts the rural parcel’s recorded value toward urban levels.

Three consequences follow, and a landowner should hold all three. First, there is no single national multiplier, and any account that states one is wrong: the factor is a notified figure, it varies by State and can vary by distance within a State, and the notification governing the acquisition is a public document the landowner is entitled to see and to test the award against. An award that applies a factor lower than the notified factor for that area is wrong in arithmetic, not merely ungenerous, and is exactly the kind of error the reference exists to correct. Second, the factor applies to the market value alone, before assets are added, which matters to the solatium computation below. Third, the political economy of the band is visible in the pattern of notifications: the compensation bill for an acquisition is borne by the requiring body and, for government projects, ultimately by the public budget of the same State that sets the factor, and States competing for investment have an incentive that pulls toward the lower end of the range. The brief for this statute’s design anticipated the pattern, and the record of notifications bears it out in tendency: the maximum factor of two is the exception claimed in debate, while factors at or near the lower end are the working reality in much of the country, which is why two parcels of identical market value on opposite sides of a State border can lawfully attract compensation differing by lakhs of rupees.

The distance grading inside the rural band carries its own practical lesson. A State notification may set the factor by slabs, the full two for land far from any urban area, descending toward one as the project approaches a town, on the theory that the recorded values of peri urban land already contain an urban premium which doubling would pay twice. The theory is coherent and the consequence is that the operative question for a rural landowner is not only what the factor is but which slab the parcel falls into, and that question is answered by the notification’s own distance measure, from the boundary of the notified urban area or the municipal limit, as the notification prescribes. Boundary cases are therefore real cases: a parcel a few hundred metres inside the higher slab is worth, on the calculator’s figures, lakhs more than its neighbour across an invisible line, and the measurement of the distance is a factual inquiry the award can be made to answer for. The factor is also fixed for the acquisition by the notification in force for the area, and a notification revised between the study and the award raises a question a reference can properly put, namely which notification the Collector was bound to apply to a proceeding already on foot.

Can the Collector value land below all three Section 26 measures?

No. The three measures are a floor constructed by comparison, and the highest of them governs. The only route below them is the floor price mechanism in Section 26(3), which is available solely where market value cannot be determined for the reasons the sub section states, and which is derived from prices of similar land in adjoining areas.

Step three: assets, damage, and the parameters of the award

Land is rarely all that is taken. Section 27 directs the Collector, having determined the market value, to calculate the total compensation by including all assets attached to the land, and Section 29 supplies the valuation method for them: the value of buildings and other immovable property is determined with the services of a competent engineer or other specialist as the Collector considers necessary; the value of trees and plants is determined with the services of experienced persons in agriculture, forestry, horticulture or sericulture; and the value of standing crops damaged in the process is assessed with experienced persons in agriculture. The practical consequence is that the asset inventory is evidence, and it is made early. A house, a well, a borewell, a pump house, a boundary wall, mango trees in bearing, a standing crop in the field: each enters the award only if it is identified and valued, and the family’s own record, photographs, receipts, and a prompt representation at the inquiry, is what puts an asset in front of the specialist whose valuation the Collector will adopt. Assets omitted from the award are a standard ground of reference, because unlike market value they do not depend on contested comparisons; a well either was valued or it was not.

Around the formula sit the parameters in Section 28, which the Collector must take into consideration in determining the award. They are the market value under Section 26 and the award amounts in accordance with the First and Second Schedules; the damage sustained by reason of the taking of standing crops and trees at the time possession is taken; the damage sustained by severing the acquired land from the person’s other land; the damage sustained by the acquisition injuriously affecting the person’s other property, movable or immovable, or his earnings; the reasonable expenses incidental to a compelled change of residence or place of business; the damage bona fide resulting from diminution of the profits of the land between the publication of the declaration under Section 19 and the taking of possession; and, seventhly, any other ground which may be in the interest of equity, justice and beneficial to the affected families. The seventh parameter is a genuine equity head, unusual in a compensation code, and it is the textual home for losses the first six do not capture. Severance and injurious affection deserve emphasis because they are the parameters landowners most often leave unclaimed: where a road or a canal cuts a holding in two and leaves a landlocked fragment, or takes the frontage of a shop and leaves the building standing without its trade, the loss is real, it is compensable under the third and fourth parameters, and it must be claimed and evidenced before the Collector, because an Authority on a reference can only work with the objection the applicant has stated.

A severance illustration shows what claiming the parameters involves. Take a holding of three acres farmed as one unit, through the middle of which a canal acquisition takes one acre in a strip. The two remaining acres are not two thirds of the former holding in any sense an income account would recognise: the fragment beyond the canal loses its access to the farmhouse and the road, its irrigation comes from a source the strip has severed, and its shape defeats the implements the family owns. The compensation for the acre taken is computed by the formula in the ordinary way. The loss in the value and utility of the two acres retained is the third parameter’s subject, damage by reason of severing the acquired land from the other land, and the fourth parameter reaches the same facts from the direction of injurious affection to the remaining property and earnings. Neither figure appears in an award by default, because neither can be computed from the registration record: both depend on evidence about access, water, shape and use that only the family can supply, in the form of the map of the holding before and after, the source of irrigation, the route to the road, and the income the unified holding produced. The family that files that material at the inquiry converts a grievance into a head of compensation; the family that saves it for the reference must still file it, later and against a concluded award, which is a worse posture in every respect except that the road exists.

Step four: solatium and the twelve per cent addition

Section 30 performs the two operations that transform the figure. Sub section (1) requires the Collector, having determined the total compensation to be paid, to impose a solatium amount equivalent to one hundred per cent of the compensation amount in order to arrive at the final award, and the Explanation declares that the solatium is in addition to the compensation payable. The First Schedule fixes the base precisely: the solatium is one hundred per cent of the market value multiplied by the factor, plus the value of assets attached to the land or building. Solatium is therefore not a percentage of the market value alone, and it is not a discretionary uplift; it is a doubling of the assembled compensation amount, paid, as the Act’s structure and the older law both put it, in consideration of the compulsory nature of the acquisition. The seller did not choose to sell. The solatium is the price of that absence of choice, and at one hundred per cent it is more than three times the thirty per cent the 1894 Act allowed for the same idea.

Sub section (3) adds the final component. In addition to the market value, the Collector shall in every case award an amount calculated at the rate of twelve per cent per annum on the market value, for the period commencing on and from the date of publication of the notification of the Social Impact Assessment study under Section 4(2) until the date of the Collector’s award or the date of taking possession of the land, whichever is earlier. Two features of this addition are persistently misstated. It is calculated on the market value determined under Section 26, before multiplication, and not on the multiplied figure or the final award. And its period runs from the assessment notification, which stands at the head of the process, so the period will ordinarily be longer than the period from the preliminary notification, and every month of administrative delay between the study and the award is priced at twelve per cent per annum on the market value and added to the bill of the acquiring body. Section 30(2) then requires the Collector to issue individual awards detailing the particulars of compensation payable and the details of payment in the manner the First Schedule specifies, which is the landowner’s audit trail: a lawful award shows its components, and an award that states only a lump sum has denied the landowner the means of checking it and is vulnerable for that reason among others.

The full sequence can be stated as the arithmetic it is. Determine the market value as the highest of the stamp value, the higher half deed average, and, where it applies, the consented amount. Multiply by the notified factor, two at most in rural areas and one in urban areas. Add the value of the assets attached. That sum is the compensation amount. Add solatium of one hundred per cent of that sum. That total is the final award in the First Schedule’s terms. Then add the twelve per cent per annum amount on the market value for the statutory period. What remains outside this computation, deliberately, is rehabilitation, which is awarded separately under Section 31 in the Second Schedule’s elements and is not a component of the compensation figure at all.

The compensation calculator

The table below is the computation worked on one hypothetical parcel, so that a reader holding a real award can substitute real figures in the same rows and see where the two diverge. The parcel is one acre. The stamp value for its class of land is eleven lakh rupees. The registered deeds for similar land in the vicinity over the preceding three years, averaged across the higher half, give twelve lakh rupees, so the market value under Section 26 is twelve lakh rupees. The assets attached, a house, a well and standing trees valued under Section 29, come to three lakh rupees. The period from the publication of the Social Impact Assessment notification to the date of the award is eighteen months. In the rural column the appropriate government has notified the maximum factor of two. In the urban column the same parcel, with the same market value and the same assets, is computed at the urban factor of one.

Step in the computation	Rural parcel, factor 2.00	Urban parcel, factor 1.00
Market value under Section 26, the highest of the stamp value of Rs 11,00,000 and the higher half deed average of Rs 12,00,000	Rs 12,00,000	Rs 12,00,000
Multiplication by the First Schedule factor	Rs 12,00,000 x 2.00 = Rs 24,00,000	Rs 12,00,000 x 1.00 = Rs 12,00,000
Value of assets attached to the land under Section 29	Rs 3,00,000	Rs 3,00,000
Compensation amount, being the multiplied value plus assets	Rs 27,00,000	Rs 15,00,000
Solatium at 100 per cent of the compensation amount under Section 30(1)	Rs 27,00,000	Rs 15,00,000
Final award under the First Schedule	Rs 54,00,000	Rs 30,00,000
Addition at 12 per cent per annum on the market value for 18 months under Section 30(3)	Rs 12,00,000 x 12 per cent x 1.5 years = Rs 2,16,000	Rs 12,00,000 x 12 per cent x 1.5 years = Rs 2,16,000
Total payable on the parcel	Rs 56,16,000	Rs 32,16,000

Read the table for what it teaches beyond the totals. The twelve per cent addition is identical in both columns, because it is computed on the market value before multiplication, and it is the only component that grows with delay. The entire rural and urban difference is produced by the factor, and within the rural column it is produced by the notification: had the State notified a factor of 1.50 for the area instead of 2.00, the multiplied value would have been eighteen lakh rupees, the compensation amount twenty one lakh, the solatium twenty one lakh, the final award forty two lakh, and the total, with the same twelve per cent addition, forty four lakh sixteen thousand rupees. One notified figure, set in a government order the landowner may never have seen, is worth twelve lakh rupees on this parcel between the two notifications. That is why the first document to demand after the award is not the award itself but the factor notification it applies, and why the popular statement that the Act pays four times the value of land is a ceiling reached only at the maximum factor on a market value that the registration record has not understated: four times a depressed base can be less than twice an honest one, which is why reference litigation under this Act concentrates on the determination of market value and on the factor, and not on the solatium, which admits of no argument at all.

A second worked illustration belongs to the remedy sections but is set down here because it is arithmetic. Suppose the Collector in the rural case takes the stamp value of eleven lakh rupees as the market value, overlooking the higher deed average. Every downstream figure is then built on the wrong base: the multiplied value falls by two lakh rupees, the solatium falls by the same two lakh, and the twelve per cent addition falls as well. A one lakh error in the first row is a four lakh error in the total at the maximum factor, before the addition is recomputed. The multiplication that makes the Act generous also multiplies its errors, and that, more than any doctrinal subtlety, is why the reference to the Authority is worth its strict timetable.

Consent: when it is required, whose it is, and how it is counted

The consent mechanism is the most misstated element of the Act, so its boundaries come first. The Act applies when the appropriate government acquires land for its own use, hold and control, including for public sector undertakings, and in that case no consent of any affected family is required at any proportion. The consent condition attaches, by the proviso to Section 2(2), to the two routes in which the government acquires for somebody else: where it acquires land for public private partnership projects in which ownership of the land continues to vest in the government, the prior consent of at least seventy per cent of the affected families must be obtained; and where it acquires land for private companies for a public purpose, the prior consent of at least eighty per cent of the affected families must be obtained. The consent is prior: it must exist before the acquisition proceeds, and the appropriate government must satisfy itself that it has been obtained, so a consent exercise conducted after the preliminary notification to ratify a decision already taken does not answer the provision.

The counting rule is narrower than the rhetoric around it. The percentage is calculated on the affected families as defined in sub clauses (i) and (v) of Section 3(c): families whose land or other immovable property is being acquired, and families who have been assigned land by the government under its schemes and whose assigned land is under acquisition. The livelihood losers of the wider definition, the tenants, sharecroppers and agricultural labourers who are owed rehabilitation in full, are not counted toward the consent percentage, because the proviso borrows only those two sub clauses for its electorate. The result is a counted consent of recorded interests. A project can lawfully reach its eighty per cent on the agreement of landholders while every landless family in the affected area objects, and the statute registers the outcome as consent obtained. The defence of the design is administrative: a percentage needs a countable electorate, and title and assignment records supply one, while livelihood dependence, being a matter of fact and degree, does not yield a register on which a percentage can be certified. The criticism is that the Act chose countability over its own theory of who is affected, and chose it in favour of the constituency the records already see. Both points are live in the literature on the Act, and both are honestly come by on the text.

The two figures themselves are a record of the statute’s negotiation, and knowing it steadies a landowner’s reading of what the figures mean. The bill as introduced in 2011 set the consent requirement at eighty per cent for acquisition for private companies and for partnership projects alike. The Standing Committee on Rural Development, which examined the bill, would have gone further in one direction and barred acquisition for companies and partnerships altogether, while industry representations pressed for the removal of any consent condition as a recipe for holdout. The seventy per cent figure for partnership projects, in which the land continues to vest in the government and the public character of the asset is preserved in form, emerged during the bill’s passage as the compromise between those positions, and it is the reason the two routes carry different thresholds: consent is priced, in the enacted design, according to how much of the public character of the acquisition survives the project’s structure. A partnership project is treated as needing less of a mandate from the affected families because the land never leaves public ownership; a private company’s project, in which the land and the asset both end in private hands, must carry four fifths of the families with it.

The process is prescribed rather than improvised. The second proviso to Section 2(2) requires the consent process to be carried out along with the Social Impact Assessment study, and the consent itself is to be obtained through the process prescribed by the appropriate government. Under the Social Impact Assessment and Consent Rules which the Centre notified in 2014, the consent of the Gram Sabha or the corresponding local body is sought in a public meeting convened for the purpose, the terms of the proposed acquisition, including the compensation and the rehabilitation package on offer, are explained to the affected families, and the consent of each family is recorded in writing in the prescribed form, with the proceeding documented so that the count can later be verified. The record is the remedy’s raw material. A consent figure short of the statutory percentage, a meeting not held or not competent, families recorded as consenting who were never asked, forms not executed: each is a defect that goes to the validity of the acquisition itself on the consent routes, because consent there is a condition of the power to acquire and not a courtesy within it. A family inside the dissenting minority should understand its position exactly: the veto the section creates is collective and numerical, not individual, so once the threshold is genuinely reached the dissenting family is acquired over its objection, and its remedies are the same remedies every other family holds, objection, computation, reference and appeal, rather than a personal right to hold the project.

One consent of a different kind stands outside the percentage altogether. Under Section 41, in the Scheduled Areas, acquisition is to be avoided as far as possible and is a demonstrable last resort where it happens, and the prior consent of the Gram Sabha or the Panchayat or the autonomous District Council at the appropriate level is required in all cases, including acquisition by the government for its own use. Section 41 consent is institutional and territorial where Section 2(2) consent is numerical and proprietary, a project in a Scheduled Area on the private route must satisfy both, and the two are not interchangeable: a defect in either is fatal on its own ground. The related route that avoids consent entirely should also be understood, because promoters understand it. Where a private company purchases land by negotiation above the limits the appropriate government prescribes, under Section 46, no acquisition under the Act occurs and no consent percentage applies, but the rehabilitation and resettlement provisions of the Act attach to the purchase, so the Schedule’s entitlements are owed even on a private bargain. Consent, in short, disciplines only the acquisitions the state performs for others, and the state is not a party to a purchase.

Before the award: objections, the census, and the inquiry

The landowner’s procedural rights begin before any figure exists. Under Section 15, any person interested in land notified in the preliminary notification under Section 11 may object to the acquisition, in writing to the Collector, within sixty days from the date of publication of the preliminary notification. The objections the section contemplates go to the acquisition itself: that the land is not needed for the stated purpose, that the area proposed exceeds what the purpose requires, that the impact study was defective. The Collector hears the objector, in person or through a representative, and reports to the appropriate government, whose decision on the objections is final within the process. Sixty days is short, it runs from publication and not from the day a family first hears of the notification in the village, and it is the first of several clocks in this Act that expire while a family is still deciding whether the notice is serious. The objection stage is also where the record starts: the study, the hearing and the government’s examination of the proposal under Section 8 all generate documents, and an acquisition later challenged is challenged on that file.

Running inside the same chapter is the rehabilitation census. Under Sections 16 to 18, the Administrator for Rehabilitation and Resettlement conducts a survey and census of the affected families, identifying the families losing land and the families losing livelihood, and prepares the draft Rehabilitation and Resettlement Scheme with the entitlements of each family, which is published and discussed in the Gram Sabhas and public hearings of the affected area before approval, and accompanies the declaration under Section 19. The census is the foundation of the Section 31 award, and its errors are the quiet catastrophe of the scheme, because the scheme can only pay the families the census found. Tenancy in much of rural India is oral, labour is seasonal, migration empties a village of its working adults for months at a time, and the record of rights may be a generation stale. A family omitted from the census is not merely underpaid; it is, within the proceeding, nonexistent, and the correction of the census at the draft scheme stage, when the draft is published and discussed, is far cheaper than the correction of an award afterwards.

What proof of loss should a landowner place before the Collector at the award inquiry?

The sale deeds for similar land in the vicinity that support the higher market value, the record of rights and any tenancy or sharecropping evidence, an inventory of the assets with photographs and receipts, and particulars of severance, injurious affection and shifting expenses, because the Collector’s award can only price what the inquiry has put in front of him.

After the declaration under Section 19, the Collector issues public notice under Section 21 calling on persons interested to state the nature of their respective interests in the land, the amount and particulars of their claims to compensation, and their objections, if any, to the measurements made. The inquiry that follows under Section 23 is the landowner’s one structured opportunity to put the computation right before it hardens into an award: claims are stated, evidence of value is produced, the asset inventory is pressed, the Section 28 parameters are invoked by name, severance and injurious affection and the expenses of change of residence or business are claimed with particulars rather than asserted in the air. What is not claimed at the inquiry can still be raised on a reference, because the reference application must state the grounds of objection and the applicant’s case there is confined to the interest of the persons affected by the objection, but a claim first constructed after the award arrives with its evidence unmade and its author explaining an omission. The discipline the Act rewards is documentary and early, and it rewards it because the Collector’s inquiry is a valuation proceeding in which the file is the argument.

The stages before the award run on clocks of their own, and a landowner who knows them can tell, from the dates on the file alone, whether the proceeding is alive or dead. The Social Impact Assessment study is to be completed within the period the 2014 Rules prescribe, six months from its commencement, and the appraisal and the government’s examination follow it. The preliminary notification under Section 11 then starts a twelve month clock of its own: if no declaration under Section 19 follows within twelve months of the preliminary notification, the notification falls away and the process must begin again, with any period during which the proceeding stood stayed by an order of a court excluded from the count. The objection window of sixty days under Section 15 runs inside that year. The declaration carries the summary of the rehabilitation scheme with it, so that the family’s entitlement position is public before the valuation stages begin. From the declaration, the twelve months of Section 25 run to the award. A proceeding can therefore lawfully occupy close to two years between the first notification and the award without any single clock being breached, and the landowner’s land is under the shadow of acquisition for the whole of it, which is one reason the twelve per cent addition runs from the assessment notification rather than from the award: Parliament priced the shadow as well as the taking. It is also why the dates of the study notification and the preliminary notification matter forensically, since an error of a month in either moves the addition, and an undetected expiry of either clock can end a proceeding that everyone in the district assumes to be alive.

The award, the twelve month clock, and the moment of payment

The Collector’s award is made under Section 30, and it is governed by Section 25: the award must be made within twelve months from the date of publication of the declaration under Section 19, and if no award is made within that period the entire proceedings for the acquisition lapse. The appropriate government may extend the twelve months where in its opinion circumstances exist justifying the extension, but the decision to extend must be recorded in writing and notified and uploaded on the website of the authority concerned, so an extension that exists only on an internal file does not answer the section. The lapse under Section 25 is a lapse of the proceeding, not of the project: the government may begin again with a fresh study and a fresh notification, but the landowner whose acquisition has lapsed holds the land free of the dead proceeding, and any possession taken under it must be undone. The clock disciplines the administration in the landowner’s favour in a second way, because the twelve per cent addition under Section 30(3) runs until the award or possession, so delay inside the twelve months is priced into the award itself.

Payment and possession are sequenced by Section 38. The Collector may take possession only after ensuring that the full compensation amount is tendered or paid within three months from the date of the award, and that the monetary part of the rehabilitation entitlements is paid within six months from the award, with the rehabilitation process in irrigation and hydel projects to be completed six months before submergence. On payment, possession follows and the land vests in the government free from all encumbrances. Section 77 then governs the tender itself: on making the award, the Collector shall tender payment of the compensation to the persons interested entitled to it, paying it by depositing the amount in their bank accounts, unless one of the contingencies in the section intervenes. Those contingencies are the working heart of the payment law. Where the person entitled does not consent to receive the compensation, or there is no person competent to alienate the land, or there is a dispute as to the title to receive the compensation or as to its apportionment, the Collector shall deposit the amount in the Authority to which a reference under Section 64 would be submitted. The money leaves the acquiring body’s hands and waits with the Authority, to be invested under Sections 78 and 79 and paid out to whoever is found entitled.

Two provisos to Section 77 decide cases out of all proportion to their length, and every landowner offered money under this Act should know both before touching it. A person admitted to be interested may receive the payment under protest as to the sufficiency of the amount, and receipt under recorded protest preserves the right to require a reference. A person who has received the amount otherwise than under protest is not entitled to make an application under Section 64 at all. The endorsement on the receipt is therefore the most consequential signature in the entire proceeding. The family that takes the money because the family needs the money, signing a clean receipt in the Collector’s office, has by that signature surrendered its one statutory route to a higher figure, and no later discovery that the factor was wrong or the deeds were misread will reopen it. The family that takes the same money under a written protest as to sufficiency keeps the reference alive and loses nothing by the taking. Nothing in the section penalises the protest; the protest is the design, the mechanism by which the Act lets compensation flow to people who cannot wait years for a forum while preserving their claim to its correction.

Does taking possession of the land end the landowner’s claim to more compensation?

No. Vesting and quantum are separate questions under the Act. Possession under Section 38 ends the landowner’s title, but the claim to a corrected figure survives in the reference under Section 64, provided the compensation was received under protest or not received at all, and provided the reference is sought inside its own timetable.

Refusal deserves its own paragraph because it is the trap the brief for this article flags and the Constitution Bench has addressed. A landowner who refuses the compensation does not stop the acquisition, does not prevent vesting, and does not improve the eventual figure by one rupee through the refusal itself. Under Section 77 the refused amount is deposited with the Authority, possession follows, and the landowner’s position is exactly the position of a person who accepted under protest, except that the landowner has no use of the money in the meantime. Refusal preserves the reference, as protest does, but it purchases that preservation at the price of the family’s liquidity, and it is almost never the better instrument. The belief that refusal keeps the land, or keeps the claim stronger, is the single most expensive misunderstanding in the operation of this Act, and it is addressed again in the lapse discussion below, because the same misunderstanding, applied to old acquisitions, was the foundation of thousands of lapse claims that failed in 2020.

Reading the award: the audit a landowner performs

An award under this Act is a document that can be audited, and the audit has an order, which is the order in which an Authority will later perform it. The first page to test is the market value. Identify which of the three Section 26 measures the Collector adopted, and demand the basis: the stamp value relied on and its date, the set of sale deeds from which the average was struck, the three year window from which they were drawn, and whether the average was taken across the higher half of the deeds or across all of them. An award that does not disclose the deed set has not shown its working, and a reference can be framed on that failure alone, because the Authority’s first statutory question under Section 69 is whether the Collector followed the parameters of Sections 26 to 30. The second page is the factor: the notification relied on, the slab into which the parcel was placed, and the distance measurement by which it was placed there. The third is the assets: the inventory the Collector’s specialists valued, item by item against the family’s own inventory, because an omitted well or an unvalued orchard is a sum of money with a name, not a rounding difference. The fourth is the parameters: whether the award addresses severance, injurious affection, the expenses of change of residence or business and the diminution of profits between declaration and possession, or whether those heads were claimed and silently dropped. The fifth is the solatium, a pure arithmetic check on the correct base, the multiplied value plus assets. The sixth is the addition: the start date used for the twelve per cent computation, which for the Collector’s award is the publication of the Social Impact Assessment notification, the end date, and the figure on which the rate was applied, which must be the market value before multiplication. The seventh is the second award: whether a Rehabilitation and Resettlement Award under Section 31 exists for the family at all, whether the family count in it matches the census as corrected, and whether the family’s choice among employment, the one time payment and the annuity was recorded and honoured.

Section 30(2) supports the audit by requiring individual awards detailing the particulars of compensation payable and the details of payment in the manner the First Schedule specifies: the award is required to be a computation, not a conclusion. A landowner is entitled to the award and to the documents it rests on, and the interval between the award and the expiry of the six weeks for a reference is best spent obtaining the complete set, the factor notification, the deed set, the census extract and the scheme, rather than in composing the objection, because the objection must state its grounds and the grounds are in those papers. Where the audit discloses an error of the mechanical kind, the wrong factor, the full set of deeds averaged, the addition computed on the multiplied figure, the point should be put to the Collector in writing at once and in any event pleaded in the reference, since errors of that kind do not need the Authority to take a view about value: they need it to take a view about arithmetic, which is the easiest view a tribunal can be asked to take.

The second award: rehabilitation as an entitlement, not a favour

Section 31 requires the Collector to pass a Rehabilitation and Resettlement Award for each affected family in terms of the Second Schedule, in addition to the compensation award, and its elements, verified against the Schedule, are the practical content of the Act for the families who own least. A displaced family that has lost its house, or has no house, is owed a constructed house, in rural areas to the specifications the Schedule adopts and in urban areas of not less than fifty square metres in plinth area, with a one time financial assistance in lieu for a family that prefers it, of not less than one lakh fifty thousand rupees in urban areas and the equivalent cost in rural areas. In irrigation projects, land for land operates as far as possible: each affected family owning agricultural land that is acquired or lost, or reduced by the acquisition to the status of a marginal farmer or landless, is allotted a minimum of one acre in the command area of the project, with Scheduled Caste and Scheduled Tribe families provided land equivalent to the land acquired or two and a half acres, whichever is lower. Where land is acquired for urbanisation, twenty per cent of the developed land is reserved and offered to the land owning affected families in proportion to the area acquired, at the cost of acquisition and development, against a deduction from the compensation package for a family that takes the offer.

At the centre of the Schedule sits a three way choice the government must ensure for every affected family: employment for at least one member of the family, after suitable training and skill development, at not less than the minimum wage, where jobs are created through the project; or a one time payment of five lakh rupees per affected family; or annuity policies paying not less than two thousand rupees per month per family for twenty years, with appropriate indexation to the Consumer Price Index for Agricultural Labourers. Around the choice sit the allowances: a subsistence grant of three thousand rupees per month for one year from the date of award for each displaced family, with an additional fifty thousand rupees for Scheduled Caste and Scheduled Tribe families displaced from the Scheduled Areas; a one time transportation cost of fifty thousand rupees for shifting the family, its building materials, its belongings and its cattle; a one time resettlement allowance of fifty thousand rupees; one time assistance of not less than twenty five thousand rupees for a cattle shed or a petty shop, and of not less than twenty five thousand rupees for artisans, small traders and the self employed displaced from the affected area; fishing rights in the reservoirs of irrigation and hydel projects; and the stamp duty and registration fee on the land or house allotted borne by the requiring body, with the allotted land or house free of encumbrances and capable of being in the joint names of wife and husband. The Third Schedule then specifies the infrastructural amenities, twenty five in number, that the resettlement area itself must carry.

For the landowner operating the machinery, three features of this award matter. It is a separate award, and an acquisition file that contains a Section 30 award and no Section 31 award is incomplete on its face. Its unit is the affected family as defined, including the adult-as-separate-family rule, so the count of families in the census is the count of packages, and an adult son or widowed mother recorded as a mere member of another’s family has lost a package by a stroke of the census pen. And its disputes travel the same road as compensation disputes: Section 64 carries objections to the rights of Rehabilitation and Resettlement under Chapters V and VI to the Authority expressly, so the family denied its annuity choice or its house is not remitted to a welfare grievance but holds a statutory reference like any objector to the amount.

If a family’s name is missing from the census of affected families, what can be done?

Raise it at the draft scheme stage, when the draft Rehabilitation and Resettlement Scheme is published and discussed in the Gram Sabha or public hearing, placing the family’s residence and livelihood evidence before the Administrator and the Collector, because the census is the foundation of the Section 31 award, and correction is far easier before the award than after it.

The reference to the Authority: Section 64 and its clocks

Chapter VIII establishes the Land Acquisition, Rehabilitation and Resettlement Authority under Section 51, presided over by a Presiding Officer of the rank the Act prescribes from the district judiciary, and Section 64 is the door into it. Any person interested who has not accepted the award may, by written application to the Collector, require the matter to be referred by the Collector for the determination of the Authority, whether the objection is to the measurement of the land, the amount of the compensation, the person to whom it is payable, the rights of Rehabilitation and Resettlement under Chapters V and VI, or the apportionment of the compensation among the persons interested. The five grounds are worth memorising as a set, because they define what the Authority is for: not a general appeal against acquisition, which lies elsewhere and on other grounds, but the tribunal of quantum, title to receive, division, and entitlement. A challenge to the public purpose or to the validity of the acquisition itself is not a Section 64 matter, and Section 63 bars the civil courts from entertaining the disputes the Act assigns to the Collector and the Authority, saving the writ jurisdiction of the High Court under Articles 226 and 227 and of the Supreme Court.

The application must state the grounds on which objection to the award is taken, and its timetable is the strictest in the Act. If the person making the application was present or represented before the Collector when the award was made, the application must be made within six weeks from the date of the Collector’s award. In other cases, it must be made within six weeks of receipt of the notice from the Collector under Section 21, or within six months from the date of the Collector’s award, whichever period first expires. Six weeks is forty two days, and it runs against people who may first need to learn that the award exists, obtain a copy, find the factor notification, and recompute the figure. Parliament softened the edge in one place only: a further proviso permits the Collector to entertain an application after the period has expired, within a further period of one year, if satisfied that there was sufficient cause for not filing it in time. The condonation is discretionary, it belongs to the Collector rather than to the Authority, it is capped at the further year, and a landowner who has drifted past six weeks on the strength of it has exchanged a right for a request. The safe course treats six weeks as the deadline and the proviso as what it is, a rescue provision for the case that can explain itself.

The Collector’s own duty on receiving the application is timed as tightly. The Collector shall, within thirty days from the date of receipt of the application, make the reference to the Authority. Where the Collector fails to make the reference within that period, the applicant may apply to the Authority requesting it to direct the Collector to make the reference within a further thirty days. The reference, once made, is worked through a short procedural code: the Collector files a statement of the particulars the section prescribes, the Authority gives notice to the applicant, to all persons interested in the objection except those who consented without protest to receive the compensation awarded, and to the Collector where the objection concerns area or amount, the proceedings are held in public, and their scope is restricted to a consideration of the interest of the persons affected by the objection. The Authority exercises the powers of a civil court for summoning witnesses, compelling the production of documents and receiving evidence, and its award is in writing, signed, and deemed a decree of a civil court for the purposes of execution. The design intent is a specialised forum deciding quantum on evidence within the district’s reach, in place of the reference courts of the old law in which enhancement proceedings outlived the projects they priced.

What the Authority can do: Section 69

Section 69, the determination of award by the Authority, is the provision that gives the reference its teeth, and it repays exact reading. In determining the amount of compensation to be awarded for land acquired, including the Rehabilitation and Resettlement entitlements, the Authority shall take into consideration whether the Collector has followed the parameters set out under Sections 26 to 30 and the provisions under Chapter V of the Act. The Authority’s inquiry is therefore an audit of the computation against the statute: was the highest of the three measures taken, was the notified factor applied, were the assets valued, were the Section 28 parameters considered, was the rehabilitation award made at all. On a reference the Authority determines the amount afresh on that audit, and its award can exceed the Collector’s by whatever the correct computation yields.

The section then imposes two additions of its own, in every case. Under Section 69(2), in addition to the market value of the land, the Authority shall in every case award an amount calculated at the rate of twelve per cent per annum on the market value, for the period commencing on and from the date of publication of the preliminary notification under Section 11 until the date of the Collector’s award or the date of taking possession of the land, whichever is earlier, and the Explanation excludes from that computation any period during which the acquisition proceedings were held up on account of a stay or injunction of a court. The careful reader will notice that the Authority’s twelve per cent runs from the Section 11 notification, where the Collector’s under Section 30(3) runs from the earlier Social Impact Assessment notification: the two additions are cousins, not twins, and an Authority award that recalculates the addition uses the starting point its own section prescribes. Under Section 69(3), the Authority shall in every case award a solatium of one hundred per cent over the total compensation amount, replicating at the appellate level the doubling the Collector was bound to perform. The practical meaning of Section 69 is that a landowner who reaches the Authority with a miscomputed award does not merely get the error identified; the Authority rebuilds the award on the statutory parameters and adds both statutory additions to the rebuilt figure, so the enhancement on a successful reference compounds in the same way the original error compounded.

Two institutional facts qualify everything said about the Authority, and a landowner is better off knowing both. The Authority exists, in any district, only when the appropriate government has established it by notification under Section 51 and the Presiding Officer’s post is filled; in States where constitution lagged, references accumulated against a forum that existed in the statute book and not yet in the district, and the remedy for a stalled reference in such a State runs through the High Court’s writ jurisdiction rather than through the Act’s own machinery. And the Authority’s proceedings, though conducted with the powers of a civil court, are confined by Section 67 to the interest of the persons affected by the objection actually raised: the Authority is not conducting a general review of the acquisition, and grounds never stated in the application, however meritorious, are outside the enquiry. The discipline of the application, grounds stated with particulars, evidence organised by head of claim, is therefore not a pleading nicety but the boundary of the forum’s power.

One further provision in the chapter distributes the benefit of a successful reference beyond its applicant. Under Section 73, where the Authority allows an applicant an amount of compensation in excess of the amount awarded by the Collector, the persons interested in all the other land covered by the same preliminary notification under Section 11, who are also aggrieved by the Collector’s award, may, notwithstanding that they made no application to the Collector under Section 64, apply in writing to the Collector within three months from the date of the Authority’s award, the day of pronouncement and the time taken to obtain a copy being excluded from the count, and require that the amount payable to them be re-determined on the basis of the amount awarded by the Authority. The Collector then inquires, after notice and a hearing, and makes an award of re-determined compensation, and a person who does not accept that award may in turn require a reference. Section 73 is the Act’s answer to the collective action problem of the village: one family’s reference, fought on one family’s resources, raises the computation for every family under the same notification that applies within the three months, and a landowner who missed the six weeks of Section 64 should watch a neighbour’s reference the way a litigant watches a test case, because its result is, for three months, an asset of the whole notified area.

The custody of money that cannot be paid completes the payment picture, because a deposit is not a dead end. Where compensation is deposited with the Authority because the land belonged to a person who had no power to alienate it, Section 78 directs the Authority to order the money invested in the purchase of other lands to be held under the like title and conditions of ownership, or, where such a purchase cannot be effected at once, in Government or other approved securities, with the interest or proceeds paid to the persons who would for the time being have been entitled to possession of the land, the money remaining invested until it is applied in such a purchase or paid out to persons becoming entitled to it; and the costs of the investment and of the orders for payment are borne by the Collector, except those occasioned by litigation between adverse claimants. Section 79 covers deposits made for other causes, such as refusal or a dispute between competent claimants: the Authority may, on the application of any party interested or claiming an interest, order the money invested in Government or other approved securities and paid in the manner that will give the parties the same benefit from it as they might have had from the land, or as near to it as may be. The deposit, in other words, is a trust like custody inside the statute, and a family whose money rests with the Authority holds an asset that earns and can be followed, provided the family knows the deposit exists, which returns the argument to the file: the deposit receipt and the Authority’s investment orders belong in the same bundle as the award.

The appeal to the High Court: Section 74

The Authority is not the end of the road. Under Section 74, the Requiring Body or any person aggrieved by the award passed by the Authority under Section 69 may file an appeal to the High Court within sixty days from the date of the award. The appellant class deserves notice: it includes the requiring body, so an enhancement won before the Authority can be carried upward by the body that must pay it, and the landowner who has won below should expect the figure to be defended above rather than treating the Authority’s award as money in hand. The High Court may, if satisfied that the appellant was prevented by sufficient cause from filing the appeal within the sixty days, allow it to be filed within a further period not exceeding sixty days, so the outer limit of a condonable appeal is one hundred and twenty days from the award, and delay beyond that is not curable under the section. Every appeal is to be heard as expeditiously as possible, with an endeavour to dispose of it within six months from the date it is presented, a direction that states the statute’s intention about pace even where dockets defeat it. The High Court for this purpose is the High Court within whose jurisdiction the land acquired is situated. There is no second statutory appeal from the High Court’s decision under the Act; what remains is the constitutional jurisdiction, which Section 63 expressly does not touch, and the discipline of every stage of this ladder is that each forum’s clock is shorter than the litigant’s habits, so that the acquisition file rewards the party whose papers were ready before the period began to run.

The appeal’s character should be understood before it is filed, because it is not a third computation conducted from nothing. The High Court examines the Authority’s award: whether the Authority applied the parameters of Sections 26 to 30 correctly, whether its market value rests on the evidence the section permits, whether the additions were computed on the right figures and for the right periods, and whether the rehabilitation entitlements were addressed at all. Errors of the mechanical kind travel upward as well as they travelled to the Authority, and an appeal framed on a demonstrable misapplication, the full deed set averaged, the factor notification misread, the addition applied to the multiplied figure, asks the court to correct arithmetic on a closed record. An appeal that merely prefers a different valuation of the same evidence asks for more, and should be framed with the comparable instances and the record errors that justify it. The landowner who has won an enhancement below should also plan for the defence of it: the requiring body appeals enhancements as a matter of institutional habit, the sixty days runs for it as for everyone, and the enhancement is not securely the family’s money until that window, and any appeal filed within it, has closed. The file discipline asserted throughout this article is what serves at this stage, because the appeal is fought on the record the earlier stages made, and a ground that was never put to the Collector or the Authority arrives in the High Court with an explanation owing.

Interest: the price the Act sets on paying late

Section 80 is short and entirely practical. When the amount of compensation is not paid or deposited on or before the taking of possession of the land, the Collector shall pay the amount awarded with interest on it at the rate of nine per cent per annum from the time of taking possession until it is paid or deposited. If the compensation, or any part of it, is not paid or deposited within one year from the date on which possession is taken, interest at the rate of fifteen per cent per annum is payable from the expiry of that year on the amount that remains unpaid or undeposited. The illustration on the calculator’s rural total makes the cost concrete: on an award of fifty six lakh sixteen thousand rupees taken into possession and left wholly unpaid for two years, the first year runs at nine per cent, which is five lakh five thousand four hundred and forty rupees, and the second year runs at fifteen per cent, which is eight lakh forty two thousand four hundred rupees, so the interest alone comes to thirteen lakh forty seven thousand eight hundred and forty rupees, a sum larger than the original market value of the parcel. Interest under Section 80 is not the twelve per cent addition under Section 30(3), and the two are persistently confused. The addition is a component of the award, compensating for the period the process consumed between the assessment notification and the award, and it is earned whether or not payment is prompt. Interest is a sanction for a different interval, between possession and payment, and it is earned only where the state has taken the land before paying for it, which Section 38’s sequencing is designed to prevent and Section 80 prices when prevention fails. A landowner dispossessed without payment should plead both figures separately and for their separate periods, because an award or a settlement that merges them will almost always price one of them wrong.

The lapse provision: Section 24 and the awards of the old Act

Everything so far has concerned acquisitions under the 2013 Act itself. Section 24 governs the acquisitions that were already alive when it commenced, and it is the provision the One Test for this article calls the one that has generated more litigation than any other in the statute. Its structure is threefold. Where proceedings under the Land Acquisition Act, 1894 had been initiated but no award under Section 11 of that Act had been made by the commencement of the 2013 Act, there is no lapse, but all the provisions of the 2013 Act relating to the determination of compensation apply, so the price is computed under the new code. Where an award under the old Act had been made, the proceedings continue under the 1894 Act as if it had not been repealed. Section 24(2) then carves the exception that filled the courts: where an award under the old Act was made five years or more before the commencement of the 2013 Act, but the physical possession of the land has not been taken or the compensation has not been paid, the proceedings shall be deemed to have lapsed, and the appropriate government, if it so chooses, shall initiate the proceedings afresh under the 2013 Act. The awards to which this applies are awards of the old regime, whose own machinery is treated in the account of the Land Acquisition Act 1894, and the lapse, where it operates, does not transfer anything to the landowner by itself: it kills the old proceeding, and the land is the owner’s again unless and until a fresh acquisition under the new Act takes it at the new Act’s prices.

The first limb deserves a worked statement, because it is the commonest transition case and the least dramatic. Where the old proceeding had begun, with a notification under Section 4 of the 1894 Act and objections and even a declaration behind it, but the Collector had made no award by 1 January 2014, the proceeding does not lapse and does not restart: it continues, and the compensation is determined under the 2013 Act. The practical transformation is total on the money side. The family that would have received the old Act’s market value with thirty per cent solatium receives instead the Section 26 market value, the First Schedule factor, assets, solatium at one hundred per cent and the twelve per cent addition, together with the rehabilitation entitlements the old proceeding never contemplated. Many acquisitions that governments had kept in suspended animation for years, because completing them was cheap, became expensive at the moment of commencement for exactly this reason, and the rush of awards made under the old Act in the months before commencement, and the litigation over whether particular awards were in fact made before the line, are part of the section’s history. For the landowner the forensic question is anterior to everything else in an old case: was there an award under Section 11 of the 1894 Act before 1 January 2014, proved by the award itself and not by assertion, because the answer selects the entire legal regime that follows.

A proviso then softens the boundary in a way that decided the money in a large class of cases. Where an award has been made and compensation in respect of a majority of land holdings has not been deposited in the account of the beneficiaries, all the beneficiaries specified in the notification for acquisition under Section 4 of the 1894 Act are entitled to compensation in accordance with the provisions of the 2013 Act. The proviso does not lapse the proceeding and does not return the land; it reprices it. Between the first limb of Section 24(1), which applies the new compensation code to every old proceeding that had reached no award, and the proviso, which applies it where the majority of holdings went unpaid, the financial reach of the 2013 Act into old proceedings proved far wider than its procedural reach, and a landowner holding an old award should therefore ask two separate questions in sequence: first whether the proceeding has lapsed under the test stated below, and, if it has not, whether the proviso nevertheless entitles the family to be paid at 2013 rates.

Pune Municipal Corporation: the landowner’s reading, 2014

The provision was first construed by a three judge bench of the Supreme Court in Pune Municipal Corporation v Harakchand Misrimal Solanki, decided in January 2014, within weeks of the Act’s commencement. The question was what counted as payment. Under the 1894 Act, where a landowner did not consent to receive compensation, or title was disputed, the Collector was required to deposit the amount in the reference court; in the case before the Court, and in thousands like it, the money had instead been deposited in the government treasury. The bench, comprising R. M. Lodha, Madan B. Lokur and Kurian Joseph JJ, held that deposit in the government treasury is not payment for the purposes of Section 24(2): the statute’s word is paid, the old Act’s scheme required deposit in court where payment to the person could not be made, and a treasury deposit, which the beneficiary had no right to draw upon, did not discharge the obligation. Where the award was five years old or more and the compensation had merely rested in the treasury, the payment limb failed, and on the disjunctive text of the section the proceeding lapsed. The decision was followed across the country and applied by later benches, among them the bench in Sree Balaji Nagar Residential Association v State of Tamil Nadu in 2015, and commentators treated the position as settled: by the count made by Namita Wahi of the Centre for Policy Research, the 2014 judgment was followed in close to two hundred and fifty decisions of the Supreme Court and about a thousand decisions of the High Courts in the four years that followed. For landowners whose families had been awarded compensation a generation earlier and never paid it in the statutory sense, Section 24(2) as read in 2014 was the most valuable provision in Indian land law: it offered the return of the land, or a fresh acquisition at the new Act’s multiplied prices, for an acquisition the state had itself left unfinished.

Indore Development Authority v Shailendra: the coordinate bench breaks ranks, 2018

In February 2018 the position was thrown open by a bench of the same strength. In Indore Development Authority v Shailendra, decided on 8 February 2018, a three judge bench comprising Arun Mishra, A. K. Goel and Mohan M. Shantanagoudar JJ considered Section 24 and held, by a majority of Mishra and Goel JJ, that Pune Municipal Corporation had been decided per incuriam, that is, without considering relevant provisions of the old Act and therefore without binding authority. The majority reasoned that the old Act’s Section 31 did not oblige the Collector in every case of refusal to deposit the amount in court, that a landowner who refused a proper tender could not convert his own refusal into a lapse, and that deposit in the treasury satisfied the state’s obligation where the landowner would not take the money. Shantanagoudar J dissented on the point of method that would dominate everything that followed: a bench of three judges, he held, cannot overrule or discard the decision of a coordinate bench of three judges; if it doubts that decision, its course is to refer the question to a larger bench, and on the merits he regarded the view in Pune Municipal Corporation as the correct one. The institutional objection was taken up within days. Another three judge bench, comprising Madan B. Lokur, Kurian Joseph and Deepak Gupta JJ, two of whom had sat on the Pune Municipal Corporation bench, recorded its disapproval of a coordinate bench discarding a precedent by the per incuriam route and stayed the operation of the 2018 ruling, and the conflict was placed before the Chief Justice of India, Dipak Misra CJ, who constituted a Constitution Bench of five judges to settle the construction of the section.

The recusal episode belongs in this narrative as a documented fact, stated without adornment. The Constitution Bench was presided over by Arun Mishra J, who had authored the majority judgment of 2018 whose correctness the reference required the bench to examine. Applications were moved seeking his recusal, on the ground that a judge who had decided the very questions, in a judgment under examination, might reasonably be seen as predisposed on them. By a written order dated 23 October 2019, Mishra J declined to recuse, holding that a view expressed in an earlier judgment is a legal predisposition and not bias, that a judgment is not the personal cause of the judge who delivered it, and that to recuse on such a ground would be a dereliction of duty and would license litigants to choose their benches; he wrote that posterity would not forgive him for setting a bad precedent by recusing. The other four judges of the bench recorded a concurring order deferring to the judge whose recusal was sought, on the principle that such an application is decided by that judge. The episode drew substantial commentary, including the argument by the constitutional scholar Gautam Bhatia that the controversy exposed the structural problem of bench allocation being concentrated in the Chief Justice’s roster power, and the argument by Suhrith Parthasarathy that the 2014 decision had been right on the text and that the 2018 departure had breached the discipline of precedent. The bench then heard the reference on the merits.

Manoharlal: the Constitution Bench settles the test, 2020

The Constitution Bench delivered judgment on 6 March 2020 in Indore Development Authority v Manoharlal, reported at (2020) 8 SCC 129. The bench comprised Arun Mishra, Indira Banerjee, Vineet Saran, M. R. Shah and S. Ravindra Bhat JJ, and the judgment was delivered by Mishra J. Its holdings on Section 24(2) can be stated as a test with four working parts. First, the two limbs of the provision operate conjunctively: the word or in the phrase physical possession of the land has not been taken or the compensation has not been paid is to be read as nor or and, so proceedings lapse only where the authority has failed on both limbs, neither taking physical possession nor paying the compensation, over the qualifying period. If either possession was taken or compensation was paid, there is no lapse. Second, payment is discharged by tender: where the amount was tendered to the landowner, the obligation is satisfied, and a landowner who refuses to accept compensation cannot manufacture a lapse out of his own refusal. Third, deposit of the compensation in the government treasury does not by itself cause a lapse, the Court holding that the mode of deposit, in the treasury rather than in court, does not invalidate the acquisition or leave the payment limb unperformed in the sense the 2014 decision had required. Fourth, the period during which an interim order of a court operated, staying the proceedings or the taking of possession, is excluded from the computation of the five years. The Court further held that Section 24 does not revive stale or concluded proceedings or give a fresh cause of action to question their legality, and it dealt with the proviso as a distinct route to enhanced compensation rather than to lapse. In terms of precedent, the decision in Pune Municipal Corporation was overruled, the decisions following it, including Sree Balaji Nagar, were held not to state good law, and the 2018 decision in Indore Development Authority v Shailendra, which had not considered the proviso or the or question in the manner the reference required, was held not to prevail.

The practical test for an old acquisition is therefore severe, and a landowner should apply it without sentiment. Ask whether the award under the 1894 Act was made on or before the qualifying date, five years or more before 1 January 2014. Ask whether physical possession was taken; if the record shows possession taken, by panchnama or mutation or the construction of the work, the inquiry ends. Ask whether the compensation was paid or tendered; if it was paid to the beneficiaries, or tendered and refused, or deposited, the inquiry ends the other way. Only where the state, over five years and more after its own award, neither took the land nor paid or tendered the money, with any period of judicial stay excluded from the count, do the proceedings stand lapsed and the fresh acquisition follow. Cases satisfying that conjunction exist, because there were acquisitions the administration genuinely abandoned on paper while leaving the notification alive, but they are the residue of the doctrine and not its mass, and the thousands of claims built on treasury deposits and refused tenders failed on the 2020 test.

Three applications fix the test in the mind better than its statement does. In the first, the award was made in 2007, the acquiring body entered the land in 2009, built the project road across it, and the compensation of a group of owners was deposited in the treasury when they could not be traced. There is no lapse: possession was taken, and the conjunctive test fails at its first limb, whatever the position about the treasury deposit, and the owners’ claim is a money claim for the deposited amount with such interest as the old Act gives. In the second, the award was made in 2006, the notification was published and then nothing happened at all: no possession was taken, no compensation was paid, tendered or deposited, the family continued to cultivate the land and to pay its revenue, and no court order ever stayed the proceeding. There the conjunction is satisfied, the five years ran out long before 1 January 2014, the proceeding stands lapsed, and if the government wants the land for the project it must acquire it afresh under the 2013 Act, at the 2013 Act’s prices and through its full process. In the third, the award was made in 2008, possession was not taken and compensation was not paid, but the proceeding was under a stay of the High Court from 2009 to 2013 in litigation the landowners themselves had brought. The stay years are excluded from the computation, the qualifying five years had not run by the commencement date on the corrected count, and the proceeding survives, to be completed under the old Act with the compensation question then governed by the proviso analysis rather than by lapse. The three outcomes also teach the forensic order: dates first, possession second, payment third, stays throughout, because a claim pleaded in any other order wastes its strength on a limb the record may not support.

The proviso’s working can likewise be shown on figures. Take an acquisition under the old Act in which the award of 2007 valued the land and paid thirty per cent solatium in the old manner to some holdings, while the compensation for the majority of holdings in the notified area was never deposited in the accounts of the beneficiaries at all. Lapse fails, because possession was taken and works were executed. The proviso nevertheless entitles every beneficiary specified in the Section 4 notification to compensation computed under the 2013 Act: the market value redetermined by the Section 26 method, the First Schedule factor applied, assets added, solatium at one hundred per cent instead of thirty, and the twelve per cent addition. On a holding whose old award stood at thirteen lakh rupees on a market value of ten lakh, a redetermination at the same market value with the maximum rural factor produces the calculator’s order of figure, several times the old award, and the difference between the two outcomes is attributable entirely to the proviso’s single sentence. That is why, in the mass of old acquisition litigation that survived the 2020 judgment, the contest moved from lapse to the proviso’s trigger: whether the majority of holdings stood undeposited is a question answerable from the acquiring body’s own deposit records, and it reprices the acquisition without disturbing a single brick of what was built on the land.

What interpretation did that the ordinance could not

The comparison between the two routes to the same destination is the analytical point of this article, and it is capable of exact statement. The ordinance promulgated in December 2014, and re-promulgated while its replacement bill was before Parliament, sought among its changes to narrow the field of Section 24, by amendments that would have confined the lapse doctrine and excluded categories of acquisition from the provision’s reach; the bill failed in Parliament, the ordinance was allowed to lapse in August 2015, and the legislative attempt to narrow the provision died with it, an episode treated in full in the account of the land acquisition ordinance battle. Five years later, the Constitution Bench read the provision’s two limbs conjunctively and achieved substantially the narrowing the ordinance had sought: a lapse doctrine that had operated wherever payment failed, in the statutory sense, operates only where the state failed at everything. The policy that lost a legislative vote arrived through construction. That is not an accusation; courts construe, and a construction honestly arrived at is law however it aligns with a failed bill. But a reader of this series should register what the sequence demonstrates about the content of a right: the right to have an old acquisition lapse was created by an enactment in 2013, defeated as a legislative amendment in 2015, and redefined by an interpretation in 2020, and at no point in that sequence did the text of Section 24(2) change by a single word.

The Constitution Bench’s reading has a pragmatic justification which the judgment itself states and which deserves to be put at full strength. On the 2014 reading, acquisitions decades old, on which roads had been built, housing schemes occupied by third parties who had bought in good faith, and public works long in use, could be undone because money had rested in a treasury rather than in a court, a defect of the state’s internal accounting that the landowner had not caused but that the third party on the land had no means of knowing or curing. The Court reasoned that a provision should not be read to divest completed public projects and settled titles for a default in the mode of deposit, and that the landowner’s real grievance, non payment, is answered by the money with interest rather than by the unwinding of the acquisition. The objection is equally serious and should be put at its full strength too. Section 24(2) was enacted deliberately, as the transitional justice of the 2013 settlement, to relieve the class of landowners whose land had been taken on paper generations earlier while the state neither possessed it nor paid for it, and the word Parliament used was or, in its ordinary disjunctive sense; a construction that requires both failures before the provision bites makes it very difficult to invoke, and confines the relief largely to cases of total administrative abandonment, which are the cases least likely to be litigated because the state has, in them, taken nothing it wants to keep. Suhrith Parthasarathy made the textual objection in commentary at the time the conflict opened, arguing that the 2014 bench had read the section as it was written. Between the two positions sits a genuine question about the judicial role, whether a court may prefer the consequences it can foresee to the conjunction it was given, and the 2020 judgment answers that question in favour of consequences, in terms. A landowner does not need to resolve the jurisprudence. A landowner needs to know which test the courts will apply, and since 6 March 2020 the conjunctive test is the law, stated by a Constitution Bench, and lapse claims are to be prepared, or abandoned, on that footing.

One executive postscript belongs to the transition story because landowners under the special statutes meet it constantly. When the ordinance was allowed to lapse in August 2015, the Central Government used the power in Section 113 to remove difficulties, issuing the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement (Removal of Difficulties) Order, 2015, by notification S.O. 2368(E) dated 28 August 2015 and effective from 1 September 2015. The Order applied the compensation provisions of the First Schedule and the rehabilitation provisions of the Second and Third Schedules to acquisitions under the thirteen enactments listed in the Fourth Schedule, the railways, highways, electricity and other sectoral statutes that Section 105 had kept outside the Act. What the Order did not extend was the procedure: the consent thresholds and the Social Impact Assessment do not travel with the money schedules, so a highway acquisition after September 2015 pays compensation computed on the 2013 formula and owes the 2013 rehabilitation package while following the highways statute’s own procedure for taking the land. For a landowner the consequence is concrete and should be checked in every sectoral acquisition: the price and the package are the 2013 Act’s, by force of the Order, even though the notice, the objection hearing and the forum are the special statute’s, and an award under a special statute that prices the land on that statute’s older and meaner basis is wrong in law since the Order took effect.

The two statutes’ full price and remedy structures are set side by side in the comparison of the 1894 and 2013 acquisition laws, and the practitioner point to carry from this section is the narrower one. The lapse doctrine survives, but as a doctrine about abandoned acquisitions, not about unpaid ones. Unpaid compensation under an old award is principally a money claim, pursued through the proviso’s repricing where the majority of holdings went undeposited, through interest under the old Act where it applies, and through the enforcement of the award, rather than through the return of land that has a road on it.

The mistakes that lose cases, and the file that wins them

The errors that defeat landowners under this Act are recurrent enough to list as a set, in prose because each is a small story. The first is signing a clean receipt: compensation accepted otherwise than under protest closes the Section 64 door, and the protest costs nothing but the words on the record. The second is assuming that refusal protects the land: refusal deposits the money with the Authority, possession follows, vesting completes, and the family has traded liquidity for nothing. The third is missing the clocks: sixty days for the objection under Section 15, six weeks for the reference where the applicant was present at the award, sixty days for the appeal, three months to claim the benefit of a neighbour’s enhancement under Section 73, each running while the family deliberates. The fourth is fighting the wrong recipient: a tenant or labourer family omitted from the census who spends its energy on the compensation formula, in which it has no share, instead of on the census and the Section 31 award, in which its whole entitlement sits. The fifth is neglecting the factor notification: challenges aimed at the solatium, which is fixed at one hundred per cent and admits no argument, while the notified factor, the one figure in the award that varies by order of the State, goes unexamined. The sixth is pleading a lapse on the 2014 authorities: Pune Municipal Corporation is overruled, and a lapse claim that does not plead the conjunctive test, possession and payment both failing with the stay periods excluded, pleads a law that no longer exists.

Against these errors stands one positive discipline, which is the maintenance of the file. A lapse claim, a reference and an appeal all turn on the same handful of documents: the Social Impact Assessment notification and the preliminary notification with their dates, the objection and the record of its hearing, the declaration, the notices under Section 21, the award with its computation, the date possession was taken and the record of how it was taken, the tender of payment or its deposit and the terms of any receipt signed. The dates in that file decide the twelve per cent period, the twelve month clock, the six weeks and the five years, and the party who holds the file holds the chronology. Keeping that bundle as a single, dated, encrypted case file, of the kind a private encrypted file on VaultBook is built to hold, is the difference between a claim that can be computed and checked in an afternoon and a claim reconstructed from memory in the sixth week. Where a family cannot carry the proceeding alone, the legal services institutions exist for exactly this gap, and the framework of the Legal Services Authorities Act explains the free legal aid machinery through which representation before the Authority and the High Court can be sought. The general position set out in this article is legal information about how the machinery works and is not advice on an individual acquisition, and because limitation periods and forum rules under this Act are unforgiving, a landowner facing a live deadline should take advice on the facts of the case before the clock runs out.

Verdict: a formula that can be checked, and a door that was narrowed

The rights and remedies this Act gives a landowner are, by the standards of Indian welfare legislation, unusually operable. The compensation is a formula with published inputs, each of which can be demanded, checked and, if wrong, carried to a specialist Authority on a reference that the Collector must make and the Authority must decide by rebuilding the award on the statutory parameters, with an appeal to the High Court behind it. The consent, where it applies, is a counted condition of the power to acquire. The rehabilitation is a separate award with its own entitlements and its own reference. The weaknesses of the scheme are equally identifiable: the electorate for consent excludes the livelihood losers the Act elsewhere champions; the clocks are short and run against the least resourced party in the proceeding; the Authorities exist only where States constitute and staff them; and the one provision that promised retrospective justice against the old regime was read down to a doctrine of abandonment by the time its meaning was finally settled. None of that makes the machinery decorative. It makes it machinery: indifferent to those who do not operate it, and effective, within its limits, for those who compute the figure, record the protest, and file inside the six weeks.

Frequently Asked Questions

Q: How is compensation calculated under LARR?

Compensation is built as an arithmetic sequence in Sections 26 to 30 and the First Schedule. The Collector first determines the market value of the land as the highest of the stamp value for the area, the average sale price of similar land in the vicinity taken from the higher half of registered deeds over the preceding three years, and, for acquisition for private companies or partnership projects, the consented amount. That market value is multiplied by the First Schedule factor, between 1.00 and 2.00 in rural areas as notified and one in urban areas. The value of assets attached to the land is added. Solatium of one hundred per cent is then imposed on the resulting compensation amount, and an addition of twelve per cent per annum on the market value is made for the period from the Social Impact Assessment notification to the award or the taking of possession, whichever is earlier. Rehabilitation under the Second Schedule is awarded separately and is not part of this figure.

Q: What is the multiplier and who decides it?

The multiplier, called the factor in the First Schedule, is the figure by which the market value determined under Section 26 is multiplied before assets and solatium are added. In urban areas the factor is fixed at one by the Schedule itself. In rural areas the factor lies between 1.00 and 2.00, based on the distance of the project from an urban area, and the figure within that band is decided by the appropriate government, which notifies it for the acquisitions it governs. The Centre has notified the maximum of 2.00 for its own acquisitions. State Governments notify for their States, and the notifications are public orders that an award must follow exactly. Because the requiring body bears the cost of acquisition, the government that sets the factor is also exposed to the bill it produces, and notifications across the country have tended toward the lower end of the band, which is why there is no single national multiplier and why the notification governing a particular acquisition is the first document to check against the award.

Q: What is solatium and how much is payable?

Solatium is the amount the Act adds to compensation in consideration of the compulsory nature of the acquisition: the price the statute puts on the fact that the seller never chose to sell. Under Section 30(1) the Collector must impose a solatium equivalent to one hundred per cent of the compensation amount in order to arrive at the final award. The First Schedule fixes the base precisely: solatium is one hundred per cent of the market value multiplied by the factor, plus the value of the assets attached to the land or building. It is therefore a doubling of the assembled compensation amount, payable in every case, at the same rate in rural and urban areas, and without discretion on either side. It replaced the thirty per cent solatium of the 1894 Act. Under Section 69(3) the Authority, on a reference, is likewise required to award a solatium of one hundred per cent over the total compensation amount it determines.

Q: How is the consent of landowners obtained and recorded?

Consent is required only where the government acquires land for a public private partnership project, at seventy per cent of the affected families, or for a private company, at eighty per cent, under the proviso to Section 2(2), and the count is taken on the families whose land or immovable property is acquired and families holding government assigned land. The process of obtaining consent is carried out along with the Social Impact Assessment study, through the procedure prescribed by the appropriate government. Under the Social Impact Assessment and Consent Rules notified by the Centre in 2014, the consent of the Gram Sabha or the corresponding local body is sought at a public meeting convened for the purpose, the terms of the acquisition, including the compensation and the rehabilitation package, are explained to the affected families, and each family’s consent is recorded in writing in the prescribed form, with the proceeding documented so the count can later be verified. The appropriate government must satisfy itself that the required consent has actually been obtained before the acquisition proceeds.

Q: What can a landowner do if they disagree with the award?

The route depends on what the disagreement is about, and the first step is protective: compensation should be received, if it is received at all, under a written protest as to sufficiency, because Section 77 bars a person who has received the amount otherwise than under protest from seeking a reference. A landowner who has not accepted the award may then apply in writing to the Collector under Section 64 to have the matter referred to the Land Acquisition, Rehabilitation and Resettlement Authority, on grounds of measurement, the amount of compensation, the person to whom it is payable, rehabilitation and resettlement rights, or apportionment. The application must be made within six weeks of the award where the applicant was present or represented when it was made, with a limited power in the Collector to condone delay within a further year for sufficient cause. The Authority determines the amount afresh under Section 69, and an appeal lies to the High Court under Section 74 within sixty days of the Authority’s award.

Q: When do land acquisition proceedings lapse?

The 2013 Act contains two lapse rules for two different situations. For proceedings under the Act itself, Section 25 provides that if the Collector does not make the award within twelve months of the declaration under Section 19, the entire proceedings lapse, subject to a recorded and notified extension by the appropriate government. For proceedings begun under the repealed 1894 Act, Section 24(2) provides that where an award was made five years or more before the 2013 Act commenced on 1 January 2014, the proceedings are deemed to have lapsed where the state failed both to take physical possession of the land and to pay the compensation, the two limbs being read conjunctively after the Constitution Bench decision of 2020, with any period during which a court’s interim order operated excluded from the five year count. Where lapse operates, the land is free of the old proceeding and the government must acquire afresh under the 2013 Act if it still wants the land.

Q: What did the Supreme Court decide about lapsed acquisitions?

The question reached the Court three times. In Pune Municipal Corporation v Harakchand Misrimal Solanki in 2014, a three judge bench held that depositing compensation in the government treasury was not payment under Section 24(2), so old acquisitions lapsed where the money had merely rested in the treasury. In February 2018, a three judge bench in Indore Development Authority v Shailendra held that decision per incuriam by a majority, with one judge dissenting on the ground that a bench cannot overrule a bench of equal strength; another bench stayed that ruling and the conflict went to a Constitution Bench. On 6 March 2020, in Indore Development Authority v Manoharlal, the five judge bench held that the two limbs of Section 24(2) operate conjunctively, so proceedings lapse only where the authority neither took physical possession nor paid the compensation; that tendering the amount discharges the payment obligation and refusal by the landowner creates no lapse; and that deposit in the treasury does not by itself cause a lapse. Pune Municipal Corporation was overruled.

Q: Can a landowner refuse compensation and keep the land?

No. Refusal does not prevent the acquisition, does not stop possession or vesting, and does not preserve the land. Under Section 38 the Collector takes possession once compensation has been tendered or paid within the statutory period, and under Section 77, where the person entitled does not consent to receive the compensation, the Collector deposits the amount with the Land Acquisition, Rehabilitation and Resettlement Authority, which holds and invests it for the person ultimately found entitled. The landowner’s remedies are unaffected by the refusal in one respect only: like a receipt under protest, a refusal leaves the Section 64 reference open, because the award has not been accepted. But the family that refuses has no use of the money while the reference is fought, whereas the family that accepts under a recorded protest has both the money and the same reference. The Constitution Bench in Indore Development Authority v Manoharlal also held, in the old Act context, that a landowner’s refusal of a tendered amount cannot be turned into a lapse of the acquisition.

Q: How is the market value of land determined under Section 26 of the LARR Act?

Section 26 requires the Collector to adopt the highest of three measures: the market value, if any, specified in the Indian Stamp Act, 1899 for registration of sale deeds in the area; the average sale price for similar land in the nearest village or vicinity area; and, where land is acquired for private companies or partnership projects, the consented amount of compensation agreed in the consent process. The average sale price is computed from sale deeds or agreements to sell registered during the three years immediately preceding the year of the proposed acquisition, taking into account only the half of those deeds in which the highest prices were mentioned. The date of determination is the date of the preliminary notification under Section 11. Prices paid as compensation for earlier acquisitions in the district are excluded, and a price the Collector considers not indicative of actual prevailing market value may be discounted. Where none of the measures can be applied, the State Government specifies a floor price derived from similar land in adjoining areas.

Q: What is the time limit for seeking a reference to the Authority under Section 64?

The application to the Collector must be made within six weeks from the date of the Collector’s award if the person making it was present or represented before the Collector when the award was made. In other cases, it must be made within six weeks of receipt of the notice from the Collector under Section 21, or within six months from the date of the Collector’s award, whichever period expires first. The application must state the grounds of objection. A further proviso gives the Collector a limited rescue power: an application filed after the period may be entertained within a further period of one year if the Collector is satisfied there was sufficient cause for not filing it in time. The condonation is discretionary and capped, so the six weeks should be treated as the operative deadline. Once the application is filed, the Collector must make the reference to the Authority within thirty days.

Q: What can the Authority change when a matter reaches it under Section 69?

On a reference, the Authority determines the amount of compensation afresh rather than merely reviewing the Collector for error. Section 69(1) directs it to take into consideration whether the Collector followed the parameters set out in Sections 26 to 30 and the provisions of Chapter V, which covers rehabilitation and resettlement, so its audit extends from the choice of market value measure and the factor applied, through the valuation of assets and the parameters of Section 28, to the entitlements themselves. Where the Collector’s computation failed the statute, the Authority substitutes its own figure, which may exceed the award by the full amount of the correct computation. Section 69 then adds, in every case, an amount at twelve per cent per annum on the market value for the period from the publication of the preliminary notification under Section 11 to the Collector’s award or the taking of possession, whichever is earlier, excluding any period the proceedings were held up by a court stay or injunction, and a solatium of one hundred per cent over the total compensation amount.

Q: How much time does the Collector have to make the award, and what happens if the award is late?

Section 25 requires the Collector to make the award within twelve months from the date of publication of the declaration under Section 19. If no award is made within that period, the entire proceedings for the acquisition of the land lapse, and the government must start again with a fresh study and notification if it still wants the land. The appropriate government has a power to extend the twelve months where in its opinion circumstances exist justifying the extension, but the decision to extend must be recorded in writing and must be notified and uploaded on the website of the authority concerned, so an unrecorded internal extension does not keep the proceeding alive. Delay within the period is also priced: the twelve per cent per annum addition under Section 30(3) runs until the date of the award or the taking of possession, so every month the administration consumes between the assessment notification and the award increases the amount the acquiring body must pay on the market value.

Q: What interest is payable if compensation is not paid when possession is taken?

Section 80 governs the case. Where the amount of compensation is not paid or deposited on or before the taking of possession of the land, the Collector must pay the amount awarded with interest at nine per cent per annum from the time possession is taken until the amount is paid or deposited. If the compensation, or any part of it, remains unpaid or undeposited for one year from the date possession is taken, interest at fifteen per cent per annum becomes payable from the expiry of that year on the amount still outstanding. The interest runs on the amount awarded, and it is a separate entitlement from the twelve per cent addition under Section 30(3): the addition is a component of the award compensating for the period consumed by the process up to the award, while Section 80 interest prices the distinct interval in which the state holds the land and the landowner does not hold the money.

Q: What does receiving compensation under protest mean, and why does it matter?

On making an award, the Collector tenders payment to the persons entitled, ordinarily by depositing the amount in their bank accounts. Section 77 provides that a person admitted to be interested may receive the payment under protest as to the sufficiency of the amount, and the record of that protest preserves the right to require a reference to the Authority under Section 64. The same section provides that no person who has received the amount otherwise than under protest is entitled to make a Section 64 application. The endorsement therefore decides the future of the claim at the moment the money is taken: a receipt recorded as under protest keeps the quantum dispute alive at no cost to the family’s use of the money, while an unqualified receipt closes the statutory route to a higher figure even if the award is later shown to have applied the wrong market value or the wrong factor. The protest should be in writing, should state that it is as to the sufficiency of the amount, and a copy should be kept with the acquisition file.

Q: Can a landowner who filed no reference still gain when the Authority enhances a neighbour’s compensation?

Yes, through the re-determination route in Section 73. Where the Authority, on a reference, allows an applicant compensation in excess of the amount the Collector awarded, the persons interested in all the other land covered by the same preliminary notification under Section 11, who are also aggrieved by the Collector’s award, may apply in writing to the Collector within three months from the date of the Authority’s award and require that the compensation payable to them be re-determined on the basis of the amount awarded by the Authority. In computing the three months, the day the award was pronounced and the time requisite for obtaining a copy of it are excluded. The Collector then holds an inquiry, after notice to all persons interested and a reasonable opportunity of being heard, and makes an award of the re-determined amount. A person who does not accept that re-determined award may in turn require a reference to the Authority under Section 73(3).

Q: How much time is there to appeal to the High Court against an award of the Authority?

Section 74 gives sixty days from the date of the Authority’s award. The appeal may be filed by the Requiring Body or by any person aggrieved by the award passed under Section 69, so a landowner who has won an enhancement must expect the possibility of the requiring body appealing as well. The High Court may, if it is satisfied that the appellant was prevented by sufficient cause from filing within the sixty days, allow the appeal to be filed within a further period not exceeding sixty days, which makes one hundred and twenty days the outer limit the section permits. The appeal goes to the High Court within whose jurisdiction the land is situated. Section 74 also directs that every appeal be heard as expeditiously as possible and that an endeavour be made to dispose of it within six months from the date on which it is presented. There is no further statutory appeal under the Act from the High Court’s decision.

Q: What happens when co-owners dispute how the compensation should be divided?

Apportionment is a distinct head of dispute with its own route. When the amount of compensation has been settled, if a dispute arises as to the apportionment of the compensation or any part of it, or as to the persons to whom it is payable, Section 76 empowers the Collector to refer the dispute to the Authority. Independently, apportionment is one of the express grounds on which a person interested may require a reference under Section 64, so the division of the money can be litigated before the Authority whether the Collector refers it or an interested person does. Where the persons interested agree on the apportionment, Section 75 requires the particulars to be specified in the award, and the award is then conclusive evidence of the correctness of the apportionment as between them. Pending the dispute, the money does not wait in the acquiring body’s hands: where title to receive compensation or its apportionment is disputed, Section 77 requires the Collector to deposit the amount with the Authority, which invests it under Sections 78 and 79 until entitlement is determined.

Q: How is the consent percentage counted, and whose consent counts toward it?

The percentage is counted on a defined electorate, not on every person the acquisition affects. The proviso to Section 2(2) borrows sub clauses (i) and (v) of the definition of affected family in Section 3(c): families whose land or other immovable property is being acquired, and families who have been assigned land by the State or Central Government under a scheme and whose assigned land is under acquisition. Eighty per cent of those families must consent where acquisition is for a private company, and seventy per cent where it is for a public private partnership project in which ownership continues to vest in the government. Families whose livelihood is affected but who hold neither land nor assigned land, including tenants, sharecroppers and agricultural labourers, are owed rehabilitation in full but are not counted toward the percentage. The consent of the family is recorded in writing through the prescribed process, which runs along with the Social Impact Assessment study, and the appropriate government must ascertain that the threshold has genuinely been reached before proceeding.

Q: What is the proviso to Section 24(2), and who does it benefit?

The proviso operates where the main lapse rule does not give the land back. It provides that where an award under the 1894 Act has been made and compensation in respect of a majority of land holdings has not been deposited in the account of the beneficiaries, then all beneficiaries specified in the notification for acquisition under Section 4 of the 1894 Act are entitled to compensation in accordance with the provisions of the 2013 Act. Its beneficiaries are therefore the landowners under old awards in acquisitions where most holdings were never actually paid into the beneficiaries’ accounts: they do not recover the land, and the acquisition stands, but their compensation is recomputed at the 2013 Act’s rates, with its multiplier, its hundred per cent solatium and its additions, instead of the 1894 Act’s market value plus thirty per cent. Because the trigger is the position across the majority of holdings in the notified area rather than the position of any single family, the proviso can benefit a landowner whose own amount was handled regularly, once the majority condition is shown.

Q: What can an applicant do if the Collector does not make the reference after the application is filed?

The Act times the Collector as well as the applicant. The first proviso to Section 64(1) requires the Collector, within thirty days from the date of receipt of the application, to make the reference to the appropriate Authority. If the Collector fails to make the reference within that period, the second proviso entitles the applicant to apply directly to the Authority, requesting it to direct the Collector to make the reference to it within a period of thirty days. The applicant is therefore not dependent on the Collector’s cooperation to reach the forum: the file can be moved by the Authority’s own direction. In the reference proceedings the Collector files a statement of the prescribed particulars, the Authority issues notice to the applicant, to the persons interested in the objection other than those who consented without protest to receive the compensation, and to the Collector where the objection concerns the area of the land or the amount, and the scope of the enquiry is restricted to the interest of the persons affected by the objection.