In today’s Finshots, we tell you about India’s land acquisition laws and how the West Bengal Industrial Development Corp. Ltd might finally be forced to cough up ₹766 crores to Tata Motors.
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The Story
In January 2008, Tata stunned everyone at the Delhi Motor Show. They’d just unveiled the world’s cheapest car — the Tata Nano which would be priced at just ₹1 lakh! It was the first look and everyone wanted to see it. Global media stormed the launch. And they even destroyed the stage in the frenzy.
Yup, the hype was insane. And Tata predicted they’d soon start churning out 10 lakh Nanos a year. It would be a car revolution.
But where would Tata produce these Nanos?
Well, a couple of years before this event, states had fallen over each other in a bid to woo Tata. Everyone wanted the factory that would roll out the revolutionary car to be built in their region. They could envision the number of jobs and economic progress it could achieve. Finally, West Bengal’s efforts bore fruit. And Tata decided to set up shop in a place called Singur. The government handed over the needed land. The factory was taking shape. The promise was that the first cars would roll out of the factory by October 2008.
It was touted to be a game-changer for the region. It would help deal with the unemployment issue.
But protests began in full swing. One of the signs said: “Atta not Tata”.
What was going on, you ask?
Well, the crux of the problem seemed to be that the West Bengal government had forcibly taken 1,000 acres of land from the farmers in the area. Yup, the government hadn’t owned the land in the first place. And if you’re wondering about the sign, Atta referred to wheat flour. It was a sign of the farmers saying they wouldn’t give up fertile farmland for a factory. The Opposition (the political party that wasn’t in power) created a ruckus too.
Finally, Tata had to abandon a factory that was nearly 85% done. They’d sunk crores of money into it and it was a doomed enterprise. So they packed up and moved to Sanand in Gujarat instead. West Bengal had lost.
But here’s the thing.
The entire fiasco was probably the result of the State’s own doing. Because at the end of the day, it came down to one simple thing - How on earth did the state acquire this land in the first place. You see, India’s Land Acquisition Law back then was a 19th-century relic*. It was pretty outdated. But, there were a few provisions in the law that had to be satisfied in cases where the state acquired land from the people.
The 3 basic principles were:
- Is the forcible acquisition of land by the government for a ‘public purpose’?
- Is ‘compensation’ being paid to those affected?
- Is ‘due procedure’ being followed during acquisition?
Now here’s the first problem. This definition of ‘public purpose’ was quite vague. The government could simply claim that land is going to be used for the greater good of the larger community. And then they’d simply go ahead. Now you could argue this is fine for instances when land is acquired for say building roads. But, what about when the government acquires land to hand over to a private company whose sole objective is to make profits? Well, the government could still argue that it is “likely to prove useful to the public”. That it would create jobs and help in development. And that was that.
Sure, they’d pay compensation. But everyone would squabble over that too. What seemed fair to one wouldn’t be fair to another. For instance, one report says that in Singur, farmers were paid a premium to the market rate. But when the Nano factory began to take shape, the market rate shot up by 3 times. The farmers felt cheated. They felt that no one in the government was listening to their problems. So the matter went to court. People wanted justice.
And in 2016, two judges of the Supreme Court weighed in on the matter.
Now there might have been a problem here. Because the judges disagreed with each other on whether this particular land acquisition was actually for ‘public purpose’. One said it was done solely in the interest of Tata. The other believed that the public still had some benefit.
But luckily (for the farmers), they did agree on one thing. They said that the government didn’t follow the third principle — they ignored ‘due process’. See, the ones who give up the land are entitled to a hearing where they can put forward arguments about why their land should not be acquired. They should even be allowed to discuss the fairness of the compensation. But here, apart from an inquiry, the government did nothing else. And this inquiry itself was a “farce and an eyewash”. The government had already made up its mind and didn’t care about the farmers.
So yeah, that was enough for the Supreme Court. The judges ordered that the land was to be given back to the rightful owners. And even said that since the farmers had lost access to their land for 10 long years, they didn’t have to return the compensation they’d received either. They could keep the monies.
With that, Tata not only lost the factory that it had so painstakingly built. But, it also lost the land it had eventually taken over. Tata trusted the government to do its job right when it came to land acquisition. And let’s just say the government failed.
What do you think would’ve happened next?
Tata wanted compensation for its troubles. So it challenged the state.
And finally, on 30th October, an arbitration tribunal ruled, “The West Bengal Industrial Development Corp. Ltd will have to cough up a sum of ₹766 crores to compensate for the capital investments made by Tata in Singur. Plus they’d pay interest from 1st September 2016 till the date the final payment is made.”
So does that mean this is the end of the unhappy chapter in Singur for Tata?
Well, maybe not. The government will probably contest it. And that means more rounds in courts. 17 years later and Tata still can’t seem to break up with Singur.
Until then…
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*Maybe the Singur fiasco was the catalyst, but, the Land Acquisition Act finally got a proper makeover in 2013. The rules were tightened further with rules about acquisition value and getting the approval of 80% of affected parties beforehand.
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