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Pandora's Real Estate Box

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Depending on the side you take, when you stop to discuss the land acquisition controversy in Greater NOIDA at the eastern edge of the national capital region, you either come across as a callous social Darwinist or as a bleeding heart Fabian socialist. To add to the angst, you can agonise about what you think of the Supreme Court leaving thousands of flat owners in limbo. It doesn't help that this judgment — Devinder Kumar versus State of UP delivered 12 May, 2011 - has opened the floodgates to thousands of similar claims from other villages. When the wine flows more freely on a weekend as the evening progresses, party wags question the wisdom of the judiciary. As for me, I question the wisdom of those who think anything is fine just so long as urban elite participants of the new globalised India (i.e. people like us) can have whatever they want as cheaply as they can.

Let the facts speak for themselves. The reality of land acquisition laws in India is considerably uglier than anything I have ever said (see Land Acquisition Angst). For instance, Section 17(1) of the Land Acquisition Act 1894 allows the Government to take possession of any land within fifteen days of a notice of acquisition without hearing the owners and without making any announcement of any compensation! The chaos currently reining in GNOIDA is a direct result of the Government of UP deciding that the land was urgently required for the "planned industrial development of Greater NOIDA"without hearing the owners because (a) hearing delays would result in squatters may take over the land and (b) impatient entrepreneurs would go off to other states.

To take the case of one particular group of villages as an example, the Government notified its intention (under Section 4) on 10 June, 2009 and made its proposal three months later. Within a month after that, the Industrial Development Departmentasked the Law Department for its opinion. Two weekslater,theIndustrial Development Department decided not to wait for an opinion, put up a note and obtainedthe Chief Ministerapproval in early November.The whole process took five months total in a world where the Government can't take out a notice inviting tender in a year! Why didn't the Government ask its own legal department if it could use Section 17? The records show that the government was afraid owners would obtain stay orders!

That is not the worst of it. GNOIDA started proceedings to change the use of the land to "Builders Residential Schemes" in September 2009. Please note that in June, the land was notified for industrial purposes and by September the Government had already decided to hand it over to builders for residential purposes! The Government formally proposed the residential conversion scheme on October 30th 2009.The Committee constituted for that purpose considered it on November 1st, 2009, approved it the same day, and the Government notified it on November 9th. By December 30th, 2009, all procedures were complete and the land use had been changed.

Now, we need to remind ourselves of several legal principles here. It is true that flats have to be built for workers in an industrial zone too but it cannot be legal to take land for industrial use and then build no industries at all. In law, this is called "colourable exercise of jurisdiction": when power is exercised in bad faith, with improper motive, to wreck vengeance, and so forth. Second, a Government cannot say that it will not follow administrative procedure because it doesn't want its citizens to seek legal protection. Third, a Government cannot take away a citizen's rights to be heard against an acquisition because it is afraid of squatters. Can any Government decide not to follow a law because it is incapable of dealing with a law and order problem?

As it turned out, the original residential scheme did not get a good response because of the economic recession in 2009-10. GNOIDA now decided that the best way "to earn more profits" was to utilize the land "for multi storied housing complex, through abuilder's allotment scheme." So here is land you are taking from farmers on the cheap, without hearing them, without making a compensation award and then you are trying to make "more profit"? Surely, that is what in delightful Indianism would be called daylight robbery. The terms on which land was given to builders was scandalous. Plots no less than 60,000 square meters in size — one as large as 2 lakh square meter — was given over at a price of Rs 10,000 per square meter on a down payment of 5 per cent! Worse, the builders could subdivide the land and sublease the plots to third parties. If this is not unconscionable, what is?

At any rate, this is not how the Constitution of India works, at least not when people like you and I lose our lands. No man can be deprived of his property without authority of law. When a governmentcompulsory acquires a property fora public purpose, the owner has a right to persuadethe Government to drop the acquisition. The land may be unsuitable, it may cause him grave hardship, other land may be available…who knows what he may have to say. You have to let him show cause and have his say.

When the Supreme Court got into the specifics of the cases, the picture only looked grimmer. The record did not show that residential housing was urgently required in the area. The record showed that some land was released from acquisition because the owners had already built houses on them. A large chunk of land was not acquired because it was owned by a politician. In these circumstances, if you were the judge, what would you do?

Before you answer that question, let us politically contextualize the issue. At all relevant times, Ms Mayawati was Uttar Pradesh's chief minister who we know is a dynamic lady given to reminding us that she is the "daughter of a sweeper". She started out as a teacher, joined a non-political outfit floated by Kanshi Ram in 1984 and by April 2007, while filing her assembly election nomination papers, had declared her assets at 52 Crores. By the time she filed her income tax returns for 2008-09, her income had risen to 60 Crores even though she had no know sources of income. In explanation, she famously stated that her income flowed as gifts and contributions of ordinary party workers and well-wishers who showered their love and affection on her! By the end of the year 2009, she had joined Shah Rukh Khan and Sachin Tendulkar as amongst the top tax payers in their respective fields.

The entertainment did not end there. Since the Income Tax department didn't believe her and started an investigation, her income fell drastically immediately thereafter. In the following year, her income had dropped to a more modest one Crore. She now equally famously claimed that her income had fallen because as chief minister, she could not now accept love and affection gifts.

Meanwhile, her depleted revenue stream has not prevented her from building a grand Mughal style pink haveli in the Greater NOIDA area on a 40,000 square meter plot owned by a family trust. The grand parks on both sides of her house - one called Gautam Buddha Park and the other one called Ambedkar Park - are both maintained by GNIODA to a standard that you wouldn't believe any public authority was capable. The pictures are all over the internet.

If you had an ear to the ground in Delhi in 2009, you would have heard that builders funnelled large sums of money into political coffers to obtain quick allotments of land without complications. So now, as members of India's righteous and very enlightened elite in good standing, if you were confronted with these facts on a judge's chair, what would you do? On the one hand, you have farmers who have had the land wrenched out of their hands by a state government determined to enrich builders and act in utter disregard of its own laws. On the other hand, you have thousands of future flat owners waving their allotment letters in your face. Which side will you pick? Perhaps, like a trained judge, you will do what 99% of judges in this country do. You will close your eyes in contemplation and say, "a legal issue is placed before me and this is what I have to decide".That is what the Supreme Court of India did.

It is another matter that the court did decide to do something about the allotment holders and ordered that their money be returned. This is still a ball in play. All the farmers who are now clamouring to have theirland returned haven't the slightest intention of putting on their dhotis and yoking themselves to an ox to go ploughing in the fields. We know it's about the money. We know that the politicians made their killing. We know that the builders always have and are going to still make a killing. Surely the farmers of all people deserve to make a small killing. If in the bargain, the costs of these flats rise a bit, you know it's all completely academic because in ten years' time, these same flats will still be worth ten times what it costs to buy them.

The author is managing partner of the Gurgaon-based corporate law firm N South and author of the pioneering business book Winning Legal Wars He can be contacted at [email protected]


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