Right to Fair Compensation in Land Acquisition


The Land Acquisition, Rehabilitation, and Resettlement Act of 2013 is a significant piece of legislation in India that addresses the process of acquiring land for public purposes while also ensuring the rehabilitation and resettlement of affected individuals and communities. Earlier, the Land Acquisition Act of 1894 was in effect which was repealed by the passing of this act. This act is commonly referred to as the LARR Act, of 2013. The act establishes a framework to strike a balance between development needs and safeguarding the rights and interests of landowners, farmers, and other affected parties. This century older legislation was widely criticized for several reasons, including inadequate compensation to landowners, disregard for the welfare of those displaced, and an absence of a proper mechanism for rehabilitation and resettlement of affected individuals. Over time, it became evident that the 1894 Act needed significant reform to better align with the principles of social justice, equitable development, and human rights.

In light of these shortcomings and the pressing need to address them, the Land Acquisition, Rehabilitation, and Resettlement Act of 2013 was enacted. The new act aimed to rectify the shortcomings of the earlier legislation and ensure a more just and humane process of land acquisition that took into account the concerns of affected communities.

About the Act

The act brought about significant changes in how land acquisition is carried out in India. This act introduced several key features and provisions to address the shortcomings of the earlier legislation and ensure a fair, just, and equitable process for all parties involved such as:

  • Compensation and Rehabilitation: A core focus of the LARR Act revolves around ensuring equitable compensation for landowners. The legislation mandates that landowners be compensated at market rates, with a substantial increment that considers both land value and potential income loss due to acquisition. Furthermore, the act places significant importance on the rehabilitation and resettlement of those whose livelihoods are impacted by land acquisition, especially vulnerable communities.
  • Requirement of Consent for Acquisition: The LARR Act introduced the principle of 'consent' within land acquisition procedures. For projects involving public-private partnerships or private initiatives, obtaining consent from a minimum of 80% of affected families is mandatory before land acquisition. This safeguard ensures that the concerns and preferences of local communities are acknowledged and factored into the decision-making process.
  • Social Impact Assessment (SIA): The act underscores the necessity of a Social Impact Assessment before land acquisition for any project. This assessment evaluates the potential effects on the impacted community, considering socioeconomic and environmental consequences. By conducting such assessments, the legislation promotes a comprehensive understanding of the project's implications.
  • Limitations on Multi-Cropping Land Acquisition: The LARR Act places restrictions on acquiring agricultural land utilized for multiple cropping or sustaining livelihoods. Such acquisition is only permissible under exceptional circumstances. This provision safeguards agricultural productivity and the well-being of farmers whose livelihoods are intertwined with the land.
  • Timeline for Compensation and Rehabilitation: The LARR Act introduces a structured timeline for compensatory payments and the completion of rehabilitation and resettlement measures. By setting specific timeframes, the legislation mitigates delays in providing relief to those impacted by land acquisition.
  • Review and Appeals: A framework is established within the act to allow affected parties to seek redress and appeal in instances of disputes concerning compensation or rehabilitation measures. This mechanism promotes transparency and accountability throughout the process.
  • Prevention of Speculative Land Acquisition: To discourage the misuse of land acquisition for speculative gains, the LARR Act enforces a prohibition on the sale or transfer of acquired land for five years. This safeguard ensures that the acquired land is utilized for its intended developmental purposes rather than personal profit.
  • Urgency Clause: In certain situations like defense, national security, emergencies arising from natural calamities, or other unforeseen exigencies, the acquisition of land occurs with certain exceptions. In such cases, the exhaustive process of Social Impact Analysis and the requirement of a Public Hearing are waived. Instead, the possession of the land is acquired after thirty days from the publication of the notice. This streamlined approach is applied only in exceptional circumstances and is subject to approval by the Parliament.

Various Cases for Land Acquisition

Acquisition of Forest Land – POSCO Movement

The acquisition of forest land has often been a subject of legal and environmental scrutiny, as it involves striking a delicate balance between development initiatives and conservation imperatives. The POSCO Resistance Movement stands as a notable example within this context, highlighting the legal intricacies and environmental concerns associated with the acquisition of forest land for industrial projects.

Background of the POSCO Resistance Movement

The POSCO Resistance Movement was an extensive protest that emerged in the Jagatsinghpur district of Odisha, India, against the proposed acquisition of forest land for a mega steel plant by POSCO, a multinational conglomerate. Initiated in 2005, this movement was primarily led by local communities, environmental activists, and indigenous groups who were vehemently opposed to the project due to its potential impacts on the environment, livelihoods, and rights of the affected people.

The Legal Landscape

At the heart of this resistance lay the contention between the acquisition of forest land for industrial purposes and the safeguards provided by legal instruments such as the Forest Rights Act (2006) and the Environmental Impact Assessment (EIA) process. These legislations prioritize the protection of indigenous rights, the conservation of biodiversity, and the sustainable use of forest resources.

Outcome of the Case

The POSCO Resistance Movement garnered significant attention and was marked by legal battles, protests, and public awareness campaigns. The project faced numerous legal hurdles, including challenges related to environmental clearances, forest rights, and violations of due process. While the resistance movement succeeded in delaying the project, it also underscored the complexities inherent in balancing development aspirations with ecological and societal considerations.

The case eventually witnessed a significant turn of events. In 2017, POSCO formally withdrew its project proposal, citing delays and uncertainties as contributing factors. This withdrawal marked a significant outcome for the movement, reflecting the potency of collective activism and legal challenges in influencing corporate decisions and ensuring adherence to legal safeguards.

In summation, the POSCO Resistance Movement serves as a compelling case study illustrating the intricacies of acquiring forest land for industrial projects, the role of legal provisions in safeguarding environmental and indigenous rights, and the power of public resistance in shaping outcomes. The case further emphasizes the ongoing need to harmonize developmental objectives with ecological sustainability and the rights of marginalized communities.

Acquisition of Private Players – Tata Singur Case

The acquisition of land by private entities has been a topic of significant legal and social importance, as seen in the Tata Singur case, which embodies the complex and legal aspects associated with the procuring of land for industrial projects.


The Tata Singur case originates from the controversy of the takeover of land in Singur, West Bengal by Tata Motors, to establish an automobile manufacturing facility. The project aims to promote social advancement and industrial growth in the area. However, it attracted strong opposition from local farmers and communities, who expressed worries about displacement, loss of livelihood, and violation of their land rights.

The case spotlighted the principles outlined in the Land Acquisition Act that governed land procurement during that period, and the implications for landowners' rights and interests. Additionally, the issue raised the need to strike a balance between industrial progress, and safeguarding land owners' rights considering the socioeconomic consequences of large-scale land acquisition.

The case went through an extended legal process that involved petitions legal disputes and public discussions. In 2011, the Supreme Court of India ruled in favor of returning a substantial portion of the acquired land to the original landowners, thereby acknowledging the grievances and concerns of the affected communities. The court's verdict emphasized the necessity of upholding landowners' rights and adhering to proper procedures in land acquisition, while also acknowledging the state's interest in industrial development. His ruling marked a pivotal moment in the conversation about land acquisition by private entities, highlighting the importance of fair compensation, rehabilitation, and informed consent of the affected parties. It also promoted the government to introduce more comprehensive legislation to address the deficiencies of the existing act.

The case offers a pertinent legal illustration of the complexities inherent in land acquisition by private organizations for industrial purposes. It showed the significance of harmonizing economic growth along with safeguarding landowner's rights and interests. This case acts as a reminder of the legal and ethical factors during a land acquisition practice, promoting a just and sustainable approach to development.

Advantages and Disadvantages


  1. Equitable Compensation and Rehabilitation: One of the primary merits of the LARR Act lies in its emphasis on providing fair and just compensation to landowners affected by acquisition.
  2. Inclusive Consultation and Consent: The act introduces the vital concept of 'consent' for certain types of projects, ensuring that affected families' interests are considered. 
  3. Protection of Marginalized Communities: The act safeguards the rights of marginalized and vulnerable groups by imposing restrictions on the acquisition of multi-cropping agricultural land and emphasizing the need to prioritize their welfare in the rehabilitation and resettlement process. This merit serves to mitigate socioeconomic disparities and ensure that development projects do not disproportionately affect these communities.
  4. Accountability and Review Mechanism: The LARR Act establishes an appeals and review mechanism, allowing affected parties to seek recourse in case of disputes or concerns regarding compensation, rehabilitation, or the overall acquisition process.
  5. Environmental Considerations: The act underscores the need for assessing and mitigating the environmental impacts of development projects, promoting sustainable development practices, and minimizing ecological damage.
  6. No Speculative Land Acquisition: The prohibition on the sale or transfer of acquired land for a stipulated period curbs speculative land acquisition, aligning with the act's overarching goal of responsible and purposeful land use.


  1. Complexity and Delay in Acquisition Process: One of the demerits of the LARR Act is its intricate procedural framework, which entails conducting Social Impact Assessments (SIAs), obtaining consent, and adhering to multiple legal and administrative requirements. This complexity can lead to delays in the acquisition process, hindering the timely execution of crucial development projects and potentially deterring investors.
  2. Subjectivity in Consent Determination: While consent provisions are intended to empower affected communities, the subjective nature of determining consent percentages can pose challenges. Calculating consent thresholds, particularly in larger projects, might be open to interpretation, potentially leading to disputes and prolonged negotiations.
  3. Ambiguity in Compensation Calculation: Despite emphasizing fair compensation, the act doesn't provide clear guidelines for calculating compensation, leaving room for differing interpretations. This ambiguity can lead to disparities in compensation amounts, impacting the equitable treatment of landowners.
  4. Potential for Manipulation: The stipulation that consent is required for certain types of projects could potentially be manipulated by vested interests.
  5. Inequity in Compensation for Tenant Farmers: The act primarily focuses on landowners, potentially overlooking tenant farmers who contribute significantly to agricultural productivity. In cases of land acquisition, tenant farmers might not receive fair compensation or adequate rehabilitation measures, leading to their economic displacement.
  6. Challenges in Implementation: Despite its laudable intent, the LARR Act has faced challenges in its implementation due to a lack of awareness, bureaucratic hurdles, and varying interpretations across states.

Key Takeaways

The Land Acquisition, Rehabilitation, and Resettlement Act (LARR), 2013, strives to harmonize development objectives with landowners' and affected parties' rights. However, certain demerits warrant attention. The act's intricate procedures, subjectivity in consent determination, and ambiguity in compensation calculation can lead to delays, disputes, and inequities. Potential manipulation of consent provisions, neglect of tenant farmers, administrative bottlenecks, impact on investment climate, and state reluctance further pose challenges. Suggestions include proactive area development, private player land banks, long-term benefits, and tailored procedures. Balancing development and rights remains complex, requiring continuous refinement of the act.

In conclusion, the LARR Act's merits and demerits underline the need for ongoing evaluation and enhancement in reconciling development goals with land acquisition considerations.