Wednesday, April 15, 2015

Dhruva Gandhi, Sarangan Rajeshkumar & Shubham Jain - Modi’s land ordinance may be violative of the Indian Constitution

The vociferous debate around Modi government’s Land Acquisition Ordinance has largely been obsessed with the pros and cons of the clauses that remove the need for landowners’ consent and social impact assessments. Nowhere in this uproar regrettably has been considered the issue of constitutional values. Does the ordinance fall foul of the Indian Constitution? is a question that needs urgent attention. What follows is an attempt to answer just that.

Failing No. 1

Section 5 of the ordinance allows the government to exempt certain projects from the requirements of landowners’ consent, social impact assessment and the restrictions that apply to multi-crop irrigated lands.

The types of projects that get this special treatment are: roads, bridges, airports, ports, inland waterways, electricity generation, electricity transmission, power distribution, gas pipelines, oil pipelines, water supply pipelines, storm water drainage, telecommunication, telecommunication towers, education, hospitals, three-star or higher category hotels, special economic zones, tourism facilities, terminal markets, post-storage infrastructure, industrial corridors, mines, water conservation, agro-processing and national security – among others.

An obvious question to ask here is: what is left? (Wildlife sanctuaries, maybe?)

Now let us look at the constitutional infirmities of this clause. The jurisprudence on Article 14 of the Constitution, mandating equality before law, has traditionally been based on two tests. Only when both the tests are passed can a classification drawn under law be said to be constitutionally valid.

The first of the tests, called “intelligible differentia”, requires difference capable of being understood. (A good example of intelligible differentia is a rule which divides people with a fractured bone from people without one. The fracture in this case is intelligible and thus the basis of differentiation.) The second test, called “rational nexus”, requires that the differentia must have a nexus with the purpose sought to be achieved by the law.

Consider Section 5 of the ordinance against this backdrop. It seeks to make a division between projects entitled to exemptions and projects that are not. However, there seems to be no intelligible differentia in this division. What is the intelligible differentia between, say, a wildlife sanctuary and an inland waterway, or between a housing project for industrial workers and highways?

Even if one were to assume that an intelligible differentia is present, there seems to be no rational nexus to the objective of the law. The Statement of Objects and Reasons of the Land Acquisition Act, 2013, implies that the law’s objective is not merely to further industrialisation and urbanisation but rather their promotion in such a transparent and participative manner that it ensures overall socio-economic development. It is clear that the classification drawn by Section 5 has no nexus to this stated objective. For these reasons, Section 5 may be in breach of the Constitution.

Failing No. 2

Section 9 of the ordinance too may not pass the constitutional test. It does not conform to another aspect of the jurisprudence on Article 14 that relates to over-inclusiveness and under-inclusiveness. This states that Article 14 is violated if things that should have been excluded from a classification because of not being “similarly situated” are included and vice versa. (An example that explains this well is when a government wanting to curb unsafe driving prohibits all drivers above age 80 from driving. In this case, drivers aged above 80 who diligently follow traffic rules are not “similarly situated” as those in the same age group who do not follow the rules.)

Section 9 amends Section 101 of the 2013 Act, nullifying the provision that allowed the return of land lying unutilised for five years. The intent of that old provision was to promote optimum land utilisation by dis-incentivising its hoarding. Certainly, there were good reasons for its inclusion. A 2014 audit of special economic zones by the Comptroller and Auditor General had revealed that a large part of land acquired for SEZs was diverted to real estate projects or mortgaged.

Therefore, the difference between utilised land and unutilised land at the end of five years, as made in Section 101, could have been said to be a valid classification.

However, Section 9 of the ordinance seeks to change five years to “a period of five years or the period specified for the setting up of the project”, whichever is later. While it can be argued that such a change was necessary because projects get delayed for various reasons – including business negotiations, acquisition process, procurement of requisite clearances – these transactions cannot be effected without the certainty of land for the project. Therefore, land lying idle because of these reasons can at most be treated as underutilised and not unutilised. Unutilised land here would be a plot that lies vacant without any processes necessary for the project’s progress.

Unfortunately, Section 9 can be used to deny the return of land in both underutilised and unutilised cases. Whereas it may have sought to extend the benefit of commercial realities to underutilised land, it extends the same to unutilised land as well. Exploiting this, the transferees may now allow land to remain vacant or may use it for speculative purposes for more than five years.

We believe that Section 9 suffers from the problem of over-inclusiveness. It includes not only what is similarly situated with regard to purpose (underutilised land) but also what is not similarly situated (unutilised land). In other words, the classification confers benefits upon a wider range of individuals than those intended to be protected.

The ordinance, as is clear, has at least two provisions that may fall foul of the Constitution. Because of these failings, it may be challenged in court on constitutional grounds even before the government commences the acquisition of land for struck projects.