The Land Acquisition Act, 1894, provided the legal framework under which the Government was supposed to acquire land and determine the compensation for those with legitimate interests. It explicitly targeted only those holding a legal interest in the land, such as owners or formally recognised tenants, for compensation, and remained silent on the rights of individuals who occupy land illegally. Under the Act, “Persons interested” were defined as those having legal rights or interests in the land, and Section 9 required the Collector to notify such persons to file claims for compensation. Thus, it is evident that legal recognition was a fundamental prerequisite for claiming compensation under the 1894 Act.
In 2013, the Land Acquisition Act, 1894 was substituted by the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation, and Resettlement Act or the LARR Act. It established a much more progressive approach for providing just compensation and rehabilitation for people having legal titles or recognised claims on lands being taken for public purposes. Though the LARR Act strengthens the protection of landowners’ rights and provides certain safeguards for tenants and other affected parties, it does not provide rights to individuals who occupy land without legal authority.
Consider this scenario: A lease is granted to Person X. Person X sub-divides the leased property and lets it on rent to several tenants. This subdivision goes against the lease agreement and hence is illegal. When the Government acquires the land under the Act, which rights do the tenants have against compensation? Technically, they are “illegal occupants” according to the law. Who would they appeal to – the lessor or the lessee (Person X), or the Government taking possession of the land?While civil or criminal remedies might exist against the lessor or lessee, the key legal question remains whether such tenants qualify as “persons interested” or “tenants” under the Act and are therefore eligible for compensation from the Government. This question regarding the compensation rights of individuals occupying land unlawfully but deserving of protection under principles of natural justice remains unanswered in both the 1894 and 2013 Acts. Do principles of fairness and equity necessitate a broader interpretation of eligibility for compensation in such cases? This blog aims to examine the judicial approach to this issue and analyze how courts have sought to extend the benefit of compensation to such occupants, despite these statutory limitations.
Who Qualifies as a Landowner?
Section 3(r) of the LARR Act defines “landowner” as follows:
“3(r) “landowner” includes any person.
(i) whose name is recorded as the owner of the land, building, or part thereof in the records of the concerned authority.
(ii) any person granted forest rights under the Scheduled Tribes and Other Traditional Forest Dwellers (Recognition of Forest Rights) Act, 2006, or under any other law in force.
(iii) any person entitled to be granted Patta rights under any state law, including for assigned lands; or
(iv) any person declared as such by an order of the court or authority.”
While interpreting this provision, the Kerala High Court, in Baby Joseph v. The Chief, recognised that the definition of “landowner” is meant to be inclusive, and not exhaustive. However, the Court clarified that only individuals with a semblance of a legal right over the land can qualify as “landowners” under the Act. Referring to Section 27 of the Act, the Court noted that compensation is to be paid exclusively to “landowners.” It held that individuals occupying land without any legal right cannot demand for the land to undergo the acquisition process and make provisions for compensation merely because they have been in occupation of the said land for several years. This situation is not contemplated under the Act. Additionally, the Court addressed the question of whether the petitioners were entitled to rehabilitation and resettlement benefits under the Second Schedule of the Act, which includes provisions for a separate plot or house. The Court ruled that such entitlements depend on the petitioners’ ability to establish their legal rights over the land in the pending civil suit. Until the petitioners prove their title to the land, it cannot be asserted that they are entitled to all the benefits under the Second Schedule. Thus, the Court’s position was clear: no legal right to the land means no compensation under the Act.
Can Encroachers be Recognised as Interested Persons?
It is well settled that fair compensation laws were enacted for the welfare of a vast section of people and to bring relief to all who deserve it. These enactments are not intended to handicap the rights of persons whose lands are acquired. Courts have, therefore, generally taken a liberal view of such matters. For instance, in the landmark judgements of the Hon’ble Supreme Court in Olga Tellis v. Bombay Municipal Corporation (1985) and K. Chandru v. State of Tamil Nadu (1985), it was held that slum dwellers are entitled to basic protections, such as alternate accommodations as part of their fundamental right to livelihood under Article 21 of the Constitution. The Court acknowledged that eviction from public spaces must be accompanied by measures to safeguard the rights to life and livelihood of these people.
Along these lines, the Madras High Court’s Full Bench in P.C. Thanikavelu v. Special Deputy Collector for Land Acquisition, Madras (1989) provided a broader interpretation of Section 5-A of the Land Acquisition Act, 1894. The Court held that even in the absence of explicit provisions requiring the observance of principles of natural justice, such principles must be adhered to whenever the rights of individuals are impacted. Thereby, if the officer conducting an enquiry is informed of a person’s interest in the land, such a person is a “person interested” in the land and is entitled to a notice of the enquiry. This holds true even if such person’s name is not found in the revenue records. It emphasised that the acquisition of an individual’s land, even with compensation, can affect their civil rights. To stay true to the principles of natural justice, the Court decreed that such persons must be given notice before their land is acquired and that their objections must be heard and considered.
However, the Madras High Court took a more stringent view in I. Jayamurugan v. The District Collector (2023). There, the petitioners, termed “encroachers,” were claiming a right to alternate accommodation or compensation for holding the land for thirty-five years. The Court held that those who have failed to establish any legal right, title, or interest in the land are not entitled to compensation or alternate accommodation under the Land Acquisition Act. The Telangana High Court also adopted a similar view in Sri Bachigalla Narsimha v. The State of Telangana (2022). Herein, the respondents had paid a certain amount as compensation and allotted plots to the petitioners, who were declared to be illegal occupants of the land. The Court held that the petitioners were not entitled to claim more than what had already been provided. Since they were neither legal owners nor assignees of the land, the compensation was based on their possession of the land, but the Court emphasised that they remained illegal occupants. The question of initiating formal land acquisition proceedings did not, therefore, arise. As such, these occupants, despite the prolonged nature of their occupancy, are left without legal recourse and are eventually compelled to vacate their lands.
Towards an Equitable Framework for All Stakeholders
To address the exclusion of these “illegal occupants” from compensation, rehabilitation and resettlement during land acquisition proceedings, a more equitable framework is necessary. The principle of equity must extend beyond legal ownership to recognise the socio-economic realities of long-term occupants. “Possessory rights” could be introduced in the Act as a valid basis for compensation or rehabilitation, inspired by the doctrine of adverse possession. By considering the length of time an individual has occupied the land and the dependency on the land for survival, such reforms can fill the gap between legal rigidity and social justice.
In the present system, rehabilitation, and resettlement (R&R) benefits are tied directly to ownership. It does not take into consideration that those who do not hold legal titles are equally dispossessed and vulnerable. Thus, the R&R provisions under the LARR Act must be extended to long-term occupants regardless of their legal status. The provision of alternative housing, livelihood opportunities, or skill development programs could significantly improve the inclusiveness of the whole process.
Moreover, Alternative Dispute Resolution (ADR) mechanisms, such as mediation, could prove to be transformational in land acquisition processes. These methods will enable illegal occupants, landowners, and authorities to negotiate solutions that take into account individual circumstances without compromising legal obligations. ADR can also prevent litigation by adopting a cooperative approach to land acquisition. Finally, developing a “Stakeholder Inclusivity Index” by research departments will serve as a systematic method for measuring the inclusiveness of acquisition policies. This index can evaluate equitable compensation, inclusion of marginalised groups, and socio-economic impacts as a benchmark for future reforms. Introducing these measures into the land acquisition laws will help India to create a more just and humane process that balances development imperatives with the rights and dignity of all stakeholders.
This blog is written by Mahi Agrawal, B.A. LL.B. (Hons.) Student at Hidayatullah National Law University, Raipur.