On March 15, the Lok Sabha passed the Specific Relief (Amendment) Bill, 2018 amending the existing Specific Relief Act, 1963 with only a voice vote and without any debate owing to the ongoing logjam. If passed by the Rajya Sabha, this legislation will alter fundamental principles of property law in India by forbidding courts from granting injunctions in contracts involving infrastructure projects.
At the core of the property right is the right to exclude others from using or encroaching upon a person’s property without their express permission. The only legal remedy that allows the court to restrain such violation of a property right is a remedy called the “injunction”.
Dating back several hundred years, injunctions are perhaps the most important form of equitable relief in English law. While injunctive relief comes in various shapes and sizes, it is most often used in property cases to stop either private or public parties from encroaching upon a piece of property.
For example, if you have a piece of property and the government or a private player decides to encroach upon it for the purpose of building a highway or a factory, the only remedy at hand is to move the court for injunctive relief. Typically, the order for injunctive relief will seek to restrain any violation of property rights that exist in the name of the plaintiff.
While independent India has seen its share of debates on the fundamental right to property, which was eventually demolished by the 44th amendment, not even Morarji Desai proposed whittling down the property owner’s right to injunctive relief. Without the fundamental right to property, a citizen may not be able to avail of reasonable compensation. Without the bargaining chip of injunctive relief, the property owner cannot stop the government from kicking him out of his own property.
The proposed Section 20A which is at the core of this amending Bill is as follows:
“20A. (1) No injunction shall be granted by a court in a suit under this Act involving a contract relating to an infrastructure project specified in the Schedule, where granting injunction would cause impediment or delay in the progress or completion of such infrastructure project.”
The provision, thus, forbids courts from granting injunctions in any lawsuit involving a contract related to an infrastructure project if such an injunction would cause an impediment or delay in the progress of the project.
For example, if there is an infrastructure project – like building a metro line or a highway – involving a private firm and it decides to violate a citizen’s property right either by illegally occupying their land or by dumping construction material on their land, the property owner could have ordinarily moved court to seek an injunction restraining the construction company from violating his property rights. After this amendment is passed, the infrastructure company can simply encroach upon private property rights at will.
The ramifications of this amendment are massive since it will incentivise government and private players executing infrastructure projects to violate property rights with impunity rather than bother with the legal niceties of land acquisition under the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013. Why bother with notices and public meetings if you can simple squat on private property without the threat of an injunction?
At the core of the property right is the right to exclude others from using or encroaching upon a person’s property without their express permission. Credit: Reuters
Eventually, it is the property owner who will have to bargain and sue in court for compensation, and given the timeline for settling such cases, the property owner will eventually settle for less compensation. The threat of injunctive relief would have evened the scales by stopping the government and private players from violating property rights thereby forcing them to follow the procedure laid down in the 2013 land acquisition law.
It is no secret that the Modi government is not fond of the UPA-era land acquisition law and an earlier attempt to amend the law in 2015 to dilute the protections that it offered was dropped after significant protests. The rights under that law, however, mean little if parliament is going to whittle down the property right by depriving private property owners the right to injunctive relief in cases of infrastructure projects.
The background to these present amendments appear to lie in the recommendations of an Expert Committee report commissioned by the law ministry two years ago with a mandate to review the Specific Relief Act from the viewpoint of “enforceability of contract and other relief” in the context of the “contract based infrastructure developments, public-private partnerships and other public projects involving huge investments”.
It is, however, not possible to confirm whether the committee actually came up with the present recommendation because the final report of the committee is unavailable on the website of the ministry.
The law ministry also appears to have forgotten the Pre-Legislative Consultation Policy which it had announced in 2014. This policy requires the government to conduct consultations before a legislation is introduced in parliament. That has unfortunately not happened with most legislation introduced by the Modi sarkar.
Like most of its brethren, this Bill made its way directly to parliament without any consultations. This is worrisome because the amendments in question have far-reaching implications not only for property rights but also other crucial areas of commercial law. The opposition must gather its wits and vote in the Rajya Sabha to send this bill to a Select Committee for further examination.
Prashant Reddy T. is an assistant professor at the National Academy for Legal Studies and Research (NALSAR), Hyderabad and is co-author of Create, Copy, Disrupt: India’s Intellectual Property Dilemmas (OUP)