Section 20M: Sharing with landowners the difference in price of a land when transferred for a higher consideration

1[20M. Sharing with landowners the difference in price of a land when transferred for a higher consideration. — Whenever any land acquired under this Act is transferred to any person for a consideration, eighty per cent. of the difference in the acquisition cost and the consideration received, which in no case shall be less than the acquisition cost, shall be shared amongst the persons from whom the lands were acquired or their heirs, in proportion to the value at which the lands were acquired, and for the purpose, a separate fund may be maintained which shall be administered by the competent authority in such manner as may be prescribed by the Central Government.]

1. Ins. by Act 11 of 2008, s. 3 (w.e.f. 31-1-2008)

Simplified Explanation

Section 20M of the Railways Act, 1989 addresses the situation when land acquired under the Act is later transferred for a higher price. It ensures that the original landowners or their heirs receive a share of the profits made from such transfers.

Key Provisions:

  1. Sharing of the Difference in Price:
    • When land acquired under the Act is later transferred for a higher price, 80% of the difference between the acquisition cost and the consideration received from the transfer must be shared among the original landowners or their heirs.
    • The share distributed must not be less than the original acquisition cost of the land.
  2. Proportional Distribution:
    • The amount to be shared is distributed among the original landowners (or their heirs) in proportion to the value at which the land was originally acquired.
    • This ensures a fair and equitable distribution based on the land’s original value.
  3. Creation of a Separate Fund:
    • To facilitate this process, a separate fund may be maintained for the purpose of sharing the difference.
    • The fund will be administered by the competent authority in accordance with the guidelines prescribed by the Central Government.

Implications:

  • Fair Compensation for Landowners: This provision ensures that landowners or their heirs benefit from any future increase in land value that results from a transfer. This helps in protecting their interests if the land is later sold for a higher price than it was acquired for.
  • Proportional Payment: By linking the share to the value at which the land was acquired, the provision ensures a fair and proportional compensation system for landowners, especially in cases where the value of the land has appreciated significantly after acquisition.
  • Government Oversight and Administration: The establishment of a separate fund and the involvement of the competent authority provide accountability and transparency in managing the shared proceeds, ensuring that landowners or their heirs receive their rightful share in a timely manner.

Conclusion:

Section 20M aims to address the financial disparity that might arise if acquired land is later sold at a higher price. It mandates a fair distribution of profits between the government and the original landowners, promoting fairness and ensuring that the landowners or their heirs are not left out of the benefits of any increased land value. The creation of a fund administered by the competent authority ensures that this process is handled in an organized and regulated manner.

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