Land Use and Property RightsLegal and TaxesReal estate

Law of Eminent Domain: A Critical Analysis of Compulsory Acquisition of Private Property in The Context of Development of Housing Societies

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Introduction

Compulsory Acquisition is defined as the prerogative of the government to legitimately acquire private land for the benefit of the public. This type of acquisition is termed ‘eminent domain’ in countries like Pakistan and the USA; ‘compulsory purchase’ in the United Kingdom, Ireland, and New Zealand; ‘expropriation’ in Canada and South Africa; and ‘resumption’ in Australia. Even though the concept is much older, the idea of eminent domain was formally coined by the prominent Dutch jurist, Hugo Grotius, in his book De Jure Belli ac Pacis (1625), as the Latin phrase ‘dominium eminens’ (Gortius, 1625). The doctrine of eminent domain has evolved over time through various jurisdictions across the world. In Pakistan, ‘The Land Acquisition Act, 1894’ is the primary law that regulates eminent domain, a relic of colonial rule, while most of the interpretation is reliant upon case law developed over time.

Even though, the utilization of this right in furtherance of the public interest and welfare has its own sets of benefits; however, the loopholes present in the law have been exploited to the detriment of common public and private landowners at large.

This research article by the Iqbal Institute of Policy Studies will discuss the law of eminent domain, the exploitation of this law for the development of housing societies, and the consequences of the changes in the law of eminent domain in Pakistan.

Evolution of The Law of Eminent Domain

The law of eminent domain has evolved over time across the world. In the USA, the debate on eminent domain started with the landmark judgment, ‘Kohl v United States’, where the court set the criteria of ‘just compensation’ for the acquisition of land by the Federal Government. Subsequently, the ‘Takings Clause’ was included in the Constitution of the United States through the Fifth Amendment, which imposed two requirements on the government to be able to exercise the right of eminent domain: ‘just compensation’ and ‘public use’(Kohl v United States, 1875).  

In Pakistan, the law of eminent domain has colonial origins, and so is the history of exploitation which can be traced back to the ‘Bengal Regulation I of 1824’. The principal objective of this law was to enable the officers of the East India Company to acquire private property for infrastructure development, with fair compensation. This law changed over time in the years 1850, 1863, 1870 and finally in the year 1894 by Act I of 1894, which was adopted by Pakistan as the present ‘Land Acquisition Act, 1894’ after independence (Tarar, 2019). This act allows the state to exercise its inherent power of acquisition of property through state functionaries e.g., CDA.  

Rights related to property are protected by the fundamental rights of property in the constitution of Pakistan. The essence of fundamental rights is rooted in the idea that the state cannot usurp these rights unless at the time of imposition of emergency, as they are accrued by the state of nature. However, under the umbrella of eminent domain, the state can acquire private property for a public purpose, regardless of the unwillingness of the landowner to give away that property, which puts the landowners at an unfair disadvantage. Moreover, the term public purpose is not defined in the law, and is interpreted through case law, which has broadened the understanding of public purpose from building schools to housing societies; the latter may be a necessity but not a ‘public good’ unless the purpose is to build affordable housing schemes. Similarly, the term ‘fair compensation’ is not explicitly defined, rather determined by a ‘competent forum’ ascribed in the Land Acquisition Act, which makes exploitation inevitable.

Impacts on Development of Housing Societies

The power of compulsory acquisition is susceptible to abuse as it gives rise to unparalleled doorways for corruption and exploitation of power. It creates an imbalanced dynamic between the state functionary(s) and the private landowners, who are at an unfair disadvantage by not having the power to say no. Moreover, unfair procedures and inadequate compensation for the land defies the basic principles of equity and justice. The lacunas in the law are overtly exploited in clear defiance of the rule of law for the development of various housing societies for the rich. It must be noted that eminent domain is only applicable for ‘public purpose’ and its scope cannot be extended to acquire lands from the poor and sell them to the rich for high-end housing societies. For example, during the development of Islamabad in the 1960s, CDA acquired lands from people of neighbouring villages for purposes of urban planning in Islamabad. The landowners were allotted plots in different areas of Islamabad as compensation for their land. However, as evident through the case of ‘Noman Ahmed v Capital Development Authority’, a number of petitioners moved the writ jurisdiction of the Islamabad High Court to demand justice, as they had not been allotted the promised plots decades after the acquisition of their lands. The court, in its order dated 14th June 2021, ruled that this was a grave violation of the fundamental rights of the people and an evident breach of the fiduciary duty of state functionaries. The court directed the Federal Government to form a proper policy for land acquisition. (Noman Ahmed v Capital Development Authority, 2021)

Effects of Change in the Law of Eminent Domain

Recently, the Government of Pakistan has decided to formulate a policy to halt CDA from acquiring land under the Land Acquisition Act, 1984. Multiple instances were reported where CDA acquired land from poor landowners and granted them to influential people. Even though, the current wave of rampant urbanization has generated immense economic opportunities for the real estate sector and allied industries. However, land acquisition for purposes of housing societies is an exploitation of the loopholes in the law of eminent domain, as it does not justify ‘public purpose’, since the high-end housing schemes do not fall within the bracket of a public good. The Government of Pakistan has taken a rather brave step by stopping CDA from acquiring any further lands under this act and promising fair compensation for past acquisitions as well. The government has also decided to consolidate the local government laws of Islamabad, by giving power to the Municipal Corporation, while CDA will play the role of a regulator. This new legal framework, if implemented, will centralize the flow of power and streamline the procedural aspects of the law; while receding the extra-legal territory for state functionaries to extract undue advantages from the lacunas of the law. This is an ambitious step towards transparency in the real estate sector of Pakistan, a step towards restoring faith in the rule of law and capitalizing on the immense economic opportunities the real estate sector has generated. 

Conclusion

The law of eminent domain needs an upheaval in the rapidly urbanizing world. The acquisition of land without providing fair compensation and meeting the criteria of public purpose is a grave violation of principles of justice and equity. Moreover, the looming threat of dispossession on the landowners creates an environment of distrust between the government and the people. Furthermore, the law of eminent domain has gone through immense changes across the world. Most of the codified constitutions in the world stipulate the condition of ‘fair compensation’ and ‘public purpose’ to exercise the state’s power of eminent domain. In Pakistan, the colonial-era land acquisition act provides multiple loopholes for exploitation, which have resulted in the evident misuse of this law for the development of high-end housing societies. Needless to say, by stopping CDA from acquiring land in Islamabad, the Government of Pakistan has taken a step towards eradicating corruption by creating transparent practices in the real estate sector of Pakistan.

Bibliography

Grotius, H. (1925). De jure belli ac pacis libri tres. Oxford: Clarendon Press.Retrieved from https://gallica.bnf.fr/ark:/12148/btv1b8606957

Kohl v. United States, 91 U.S. 367 (1875). Retrieved 5 November 2021, from https://supreme.justia.com/cases/federal/u

Noman Ahmed v Capital Development Authority, W.P. No.244 of 2018. (2021). Retrieved from http://mis.ihc.gov.pk/attachments/judgements/84476/1/w.p._no._244-2018._final._637598862108727049.pdf

Tarar, I.A, Land Acquisition: an appraisal perspective of parliamentary inroads and judicial paradigms in Pakistan. (2019). Retrieved from http://pu.edu.pk/images/journal/studies/PDF-FILES/1_v20_2_19.pdf

The Land Acquisition, Act, 1894. (2021). Retrieved from http://punjablaws.gov.pk/laws/12.html

Research Questions

How has the law of eminent domain evolved over time? 

What is the impact of this law on housing societies? 

What effect will change on law of eminent domain have? 

Key Takeaways

The power of compulsory acquisition or eminent domain is susceptible to abuse as it creates a prejudiced dynamic between the state functionary(s) and the private landowners, who are at an unfair disadvantage by not having the power to say no.  

To exercise the power of eminent domain, the government must fulfil the criteria of ‘public purpose’ and ‘just compensation’.

The Government of Pakistan has stopped CDA, a public functionary, to exercise the powers of eminent domain in Islamabad for acquisition of private property.

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