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One of the most politically contentious issues in recent times has been the government’s right to acquire land for ‘public purpose’. Increasingly, farmers are refusing to part with their land without adequate compensation, the most recent example being the agitation in Uttar Pradesh over the acquisition of land for the Yamuna Express Highway. Presently, land acquisition in India is governed by the Land Acquisition Act, an archaic law passed more than a century ago in 1894. According to the Act, the government has the right to acquire private land without the consent of the land owners if the land is acquired for a “public purpose” project (such as development of towns and village sites, building of schools, hospitals and housing and state run corporations). The land owners get only the current price value of the land as compensation. The key provision that has triggered most of the discontent is the one that allows the government to acquire land for private companies if it is for a “public purpose” project. This has led to conflict over issues of compensation, rehabilitation of displaced people and the type of land that is being acquired. The UPA government introduced the Land Acquisition (Amendment) Bill in conjunction with the Rehabilitation and Resettlement Bill on December 6, 2007 in the Lok Sabha and referred them to the Standing Committee on Rural Development for scrutiny. The Committee submitted its report on October 21, 2008 but the Bills lapsed at the end of the 14th Lok Sabha. The government is planning to introduce revised versions of the Bills. The following paragraphs discuss the lapsed Bills to give some idea of the government’s perspective on the issue while analysing the lacunae in the Bills. The Land Acquisition (Amendment) Bill, 2007 redefined “public purpose” to allow land acquisition only for defence purposes, infrastructure projects, or any project useful to the general public where 70% of the land had already been purchased from willing sellers through the free market. It prohibited land acquisition for companies unless they had already purchased 70% of the required land. The Bill also made it mandatory for the government to conduct a social impact assessment if land acquisition resulted in displacement of 400 families in the plains or 200 families in the hills or tribal areas. The compensation was to be extended to tribals and individuals with tenancy rights under state laws. The compensation was based on many factors such as market rates, the intended use of the land, and the value of standing crop. A Land Acquisition Compensation Disputes Settlement Authority was to be established to adjudicate disputes. The Rehabilitation and Resettlement Bill, 2007 sought to provide for benefits and compensation to people displaced by land acquisition or any other involuntary displacements. The Bill created project-specific authorities to formulate, implement and monitor the rehabilitation process. It also outlined minimum benefits for displaced families such as land, house, monetary compensation, skill training and preference for jobs. A grievance redressal system was also provided for. Although the Bills were a step in the right direction, many issues still remained unresolved. Since the Land Acquisition Bill barred the civil courts from entertaining any disputes related to land acquisition, it was unclear whether there was a mechanism by which a person could challenge the qualification of a project as “public purpose”. Unlike the Special Economic Zone Act, 2005, the Bill did not specify the type of land that could be acquired (such as waste and barren lands). The Bill made special provision for land taken in the case of ‘urgency’. However, it did not define the term urgency, which could lead to confusion and misuse of the term. The biggest loop-hole in the Rehabilitation and Resettlement Bill was the use of non-binding language. Take for example Clause 25, which stated that “The Government may, by notification, declare any area…as a resettlement area.” Furthermore, Clause 36(1) stated that land for land “shall be allotted…if Government land is available.” The government could effectively get away with not providing many of the benefits listed in the Bill. Also, most of the safeguards and benefits were limited to families affected by large-scale displacements (400 or more families in the plains and 200 or more families in the hills and tribal areas). The benefits for affected families in case of smaller scale displacements were not clearly spelt out. Lastly, the Bill stated that compensation to displaced families should be borne by the requiring body (body which needs the land for its projects). Who would bear the expenditure of rehabilitation in case of natural disasters remained ambiguous. If India is to attain economic prosperity, the government needs to strike a balance between the need for development and protecting the rights of people whose land is being acquired. Kaushiki Sanyal The article was published in Sahara Time (Issue dated September 4, 2010, page 36)
The Specified Bank Notes (Cessation of Liabilities) Bill, 2017 is being discussed in Parliament today.[1] The Bill replaces an Ordinance promulgated on December 30, 2016 to remove the Reserve Bank of India’s (RBI) liability and central government’s guarantee to honour the old Rs 500 and Rs 1,000 notes which were demonetised on November 8, 2016 through a notification.[2] These notes were allowed to be deposited in banks by December 30, 2016. In light of this, we explain the provisions of the Bill and possible implications.
What does the Bill say?
Under the RBI Act, 1934, RBI is responsible for issuing currency notes, and is liable to repay the holder of a note upon demand. The Bill provides that, from December 31, 2016, RBI would no longer be liable to repay holders of old notes of Rs 500 and Rs 1,000, the value of these notes.[3] Further, the old notes will no longer be guaranteed by the central government.
Can a person keep old notes?
A person will be prohibited from holding, transferring or receiving the old notes from December 31, 2016 onwards. It exempts some people from this prohibition including: (i) a person holding up to 10 old notes (irrespective of denomination), and (ii) a person holding up to 25 notes for the purposes of study, research or numismatics (collection or study of coins or notes).
What happens if a person continues to hold old notes after December 30, 2016?
Any person holding the old notes, except in the circumstances mentioned above, will be punishable with a fine: (i) which may extend to Rs 10,000, or (ii) five times the value of notes possessed, whichever is higher.
Are there any issues with this provision?
There may be two issues.
No window to deposit old notes before imposing penalty: The notification of November 8th allowed old currency notes to be deposited till December 30, 2016 and specified that people unable to deposit them till this date would be given an opportunity later.2 However, the Ordinance which came into force on December 31, 2016 made it an offence to hold old currency notes from that day onwards and imposed a penalty. This overnight change did not provide a window for a person holding the notes on that day to exchange or deposit them. Therefore, not only did the holder lose the monetary value of the notes but he was also deemed to have committed an offence. This implies that a person who had the notes did not have an opportunity to avoid committing an offence and attracting a penalty.
Unclear purpose behind penalty on possessing old notes: The purpose and the objective behind imposing a penalty for the possession of old currency notes is unclear. One may draw a comparison between holding an invalid currency note, and an expired cheque since both these instruments are meant to complete transactions. Currently, a cheque becomes invalid three months after being issued. However, holding multiple expired cheques does not attract a penalty.
Is it still possible to deposit old notes?
The government has specified a grace period under the Bill to allow: (i) Indian residents who were outside India between November 9, 2016 to December 30, 2016 to deposit these notes till March 31, 2017, and (ii) non-residents who were outside India during this period to deposit notes till June 30, 2017. The government may exempt any other class of people by issuing a notification. In addition, RBI has permitted foreign tourists to exchange Rs 5,000 per week. No other person can exchange or deposit old notes after December 30, 2016.
Would this satisfy Constitutional norms?
While the notification issued on November 8 specified that after December 30, 2016, any person unable to exchange or deposit old notes would be allowed to do so at specified RBI offices, the Bill does not provide such a facility except in the circumstances discussed above.
On may question whether this violates Article 300A of the Constitution, which states that no person will be deprived of his property except by law. Though this Bill will be a “law”, one may want to think about whether its provisions meet the standards of due process and are not arbitrary. Given that earlier notifications had indicated that a facility for exchanging or depositing old notes would be provided after December 30, 2016, would the action of not providing such facility under the Bill qualify as an arbitrary action which violates due process? [4] A few examples will be useful in examining this question.
Case 1: A person unable to deposit notes due to poor health
A person may have been unable to deposit old currency notes owing to various reasons such as poor health, old age or disability till the deadline of December 30, 2016. The Bill does not provide any facility for such persons to deposit old notes, except if they were not in India during the period between November 8 and December 30, 2016.
Case 2: A person without a bank account
A person without a bank account may have held over Rs 4,500 in old currency notes. The notification (and future modifications) allowed a person to exchange up to Rs 4,500 over the counter once till November 24, 2016.[5] Such a person would have to incur a monetary loss if he possessed old notes above this value, given his inability to deposit them in a bank account.
Case 3: Indian citizens living abroad
There may be Indians working or studying abroad holding old currency notes. The government has notified the last date for depositing old notes for these non-resident Indians as June 30, 2017.[6] However, these people may not visit India between November 8, 2016 and June 30, 2017. In such a scenario, these people may have to incur a monetary loss.
Case 4: Foreign nationals entering India before demonetisation
Foreign tourists in the country may have held old currency notes before demonetisation on November 8, 2016. Such tourists can only exchange old currency notes of up to Rs 5,000 per week till January 31, 2017.[7] Given that such foreigners may not have bank accounts in India, they may also suffer a monetary loss for whatever amount could not be exchanged within the period they were in India. For example, a person who had Rs 10,000 and left India on November 13, 2016 would not have been able to get the value of notes they had, over Rs 5,000.
In addition, Indian currency notes are used legally in neighbouring countries such as Nepal and Bhutan. The Bill allows only Indian citizens to deposit old notes for an extended period under certain conditions. However, it does not make any provisions for foreigners to deposit or exchange old notes held by them. Such foreign nationals who are not Indian residents would not have bank accounts in India.
[1] The Specified Bank Notes (Cessation of Liabilities) Bill, 2017,http://www.prsindia.org/uploads/media/Specified%20Bank%20notes/specified%20bank%20notes%20bill%202017-compress.pdf.
[2] S. O. 3407 (E), Gazette of India, Ministry of Finance, November 8, 2016, http://finmin.nic.in/172521.pdf.
[3] The Specified Bank Notes (Cessation of Liabilities) Ordinance, 2016,http://www.prsindia.org/uploads/media/Ordinances/Specified%20Bank%20Notes%20%28Cessation%20of%20Liabilities%29%20Ordinance,%202016.pdf.
[4] Section 2 (ix) of the notification issued on November 8, 2016 (No. S. O. 3407 (E)) states that any person who is unable to exchange or deposit the specified bank notes in their bank accounts on or before the 30th December, 2016, shall be given an opportunity to do so at specified offices of the Reserve Bank or such other facility until a later date as may be specified by it.
[5] S. O. 3543 (E), Gazette of India, Ministry of Finance, November 24, 2016, http://finmin.nic.in/172740.pdf.
[6] S. O. 4251 (E), Gazette of India, Ministry of Finance, December 30, 2016,http://dea.gov.in/sites/default/files/24Notification%2030.12.2016.pdf.
[7] Exchange facility to foreign citizens, January 3, 2017, https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=10815&Mode=0.
