Tamil Nadu Land Acquisition: Can States Retrospectively Side-Step Central Laws?

For more than 100 years, land acquisition in India was governed by the Land Acquisition Act, 1894. Under this law, the Central government in India could acquire land for public purposes, such as to build infrastructure. There were State laws too, and these worked in tandem with the Central law and remained valid as long as they did not clash with the Central law.

Then in 2013, Parliament passed a new law: The Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 (‘LARR’). This new law introduced provisions for obtaining the consent of landowners, increasing the compensation they received and mandating social impact assessments, among other things.

Many celebrated this new approach to land acquisition, particularly landowners and those working in the field of resettlement policy. However, for State governments, this would make the process of land acquisition more cumbersome as the existing State laws did not adhere to some provisions of the new Central law.

Tamil Nadu was one of these States. It had three special land acquisition laws on its books:

Tamil Nadu Acquisition of Land for Harijan Welfare Schemes Act, 1978, Tamil Nadu Acquisition of Land for Industrial Purposes Act, 1997 and the Tamil Nadu Highways Act, 2001 (‘TN Acts’). These laws did not contain similar consent and assessment provisions, and became repugnant and void.

Madras HC Struck Down 2014 Amendment

In 2014, the Tamil Nadu legislature attempted to side-step these provisions by invoking a constitutional provision (Article 254) that allowed States to amend a central Act. The Tamil Nadu legislature passed an amendment to the LARR that said that the TN Acts would be exempt from the provisions of the LARR. This exemption would apply retrospectively from January 1st 2014.

In 2019, the Madras High Court struck down Tamil Nadu’s attempt to create an exemption for the TN Acts. They held that the Acts had been void due to repugnancy and therefore could not be revived through making an exception in the Central Act. The TN Acts had to be passed afresh.

Two weeks later, the Tamil Nadu legislature passed the Tamil Nadu Land Acquisition Laws (Revival of Operation, Amendment and Validation) Act, 2019 (‘2019 Act’). This time, they explicitly said that the TN Acts would be ‘revived’. They obtained the President’s assent, which allowed them to side-step the question of repugnancy.

Supreme Court Upholds 2019 Act

The Supreme Court dealt with three issues related to validity of the 2019 Act.

Retrospective Effect

The first was the fact that the 2019 Act revived the laws retrospectively. The 2019 Act said they were revived on September 26th, 2013, which was 6 years before the 2019 Act was passed. This coincided with the day the LARR had received Presidential assent. The Supreme Court affirmed the right of the legislature to retrospectively revive the laws. Relying on precedent of previous laws with retrospective effect, they held that this was permissible.

‘Referential’ Law

The second issue was that the 2019 Act only mentioned the name of each of the TN Acts and that they would stand revived. They did not pass the whole text of the TN Acts again. The Supreme Court clarified that legislation could be ‘referential’. So, by referring to the name of the TN Acts, it was clear what the substance of the law being passed was. The TN Acts would thus be revived.

Parliament and the Judiciary

The third issue was whether the Legislature could directly overrule the Madras HC judgment. The Court held that since the 2019 Act had explicitly revived the laws, they were complying with the Madras High Court judgment. Rather than simply overturning it, the legislature had removed the reason for the High Court’s judgment. The judgment had held that the TN Acts needed to be passed afresh and revived. The Legislature had revived them through the 2019 Acts. So, the 2019 Act was valid and complied with the judgment.

Affirming the Right to Pass Retrospective Laws

With this interpretation of the law, the Supreme Court has cleared the path for other States to pass similar retrospective laws. Many other states had also passed amendments for exemptions for certain projects. However, these were more limited than the TN Acts. The Supreme Court judgment has allowed the Tamil Nadu government to avoid cancelling acquisitions they have already done. Any other legal challenges in other States will follow this judgment, based on the specifics of each case.

Retrospective criminal laws are prohibited by the Constitution. However, Parliament has the power to enact other retrospective laws. This is commonly done for taxation provisions. The Supreme Court has mostly upheld such tax laws.

However, international law may pose a problem. For example, in 2012, Parliament passed a retrospective law which imposed a tax on deals between foreign companies for assets in India. The Permanent Court of Arbitration at the Hague, in two significant decisions, unanimously held this violated the standard of equitable and fair treatment under a free trade treaty. An Act has been passed in the Lok Sabha to nullify the retrospective effect of this law.

A Fundamental Rights Challenge?

There is another challenge pending against the three TN Acts. The petitioners argue that it is arbitrary and violates the right to equality. This is because whether a landowner would get the benefits of the LARR would depend only on the purpose of the acquisition. Now that the repugnancy hearing is over, hearings for the new challenge will begin soon.