Energy Dialogue with RSN
Solar & Wind Power Projects- Issues and Challenges in Land Acquisition & Legal Best Practices
Keywords: Land, Acquisition, Law, Solar, Renewable, Legal
Due to the recent push by the Government and vision of the Hon’ble Prime Minister for adding substantial capacity in Renewable Energy (especially Solar & Wind) many projects/investments are in pipeline in the field of Solar/Wind Power projects. A vital challenge in the installation of Solar or Wind Capacity is the Acquisition of land. As per the Indian Constitution, Land is a State Subject which means that every state follows its Land Laws, which eventually are to be followed by the business owners or people engaged in transactions related to the land of such states.

The first and foremost step, in the establishment of Solar/Wind Power Projects, is the Acquisition of land. India is an agrarian society still it is disinclined to use immeasurable patches of land, feasible for agriculture, for the purpose of establishment of Wind and Solar Parks. A pre-requisite in the process of Acquisition of Land, by the investor or developer, is the preparation of Land Due Diligence by an expert Law Firm. This process can be adopted for the avoidance of future complications; also it aids the Project funding from Financial Institutions. However, being a Law Firm deeply engaged in the subject matter, we often face a large number of Legal issues. The substantial challenges confronted by our team across India are as follows:

ISSUE 1: Property records being documented in Colloquial Language
ISSUE 2: Revenue Authorities holding documents to be Missing/Unavailable
ISSUE 3: Land Conversion from Agricultural to Non-Agricultural/Industrial
ISSUE 4: Forgery of Documents
ISSUE 5: Document Rectification (Rectification Deed)
ISSUE 6: Customary Practices for example- Oral Family Partition, Gift, etc.
ISSUE 7: Confidentiality and Conflict of Interest
ISSUE 8: Revenue Authorities- Poor Maintenance / Illegible Land Records
ISSUE 9: Pathways for Wind Turbine- Necessity of Legal Due Diligence
ISSUE 10: Solar Projects require contagious Land - Fragmented holdings & Difficulty in obtaining Contiguous Land
ISSUE 11: Classification of Land & Protected Tenants

Let us discuss all the flagged issues one by one with the Best practices followed by TILA in seriatim:-

ISSUE 1: Documentation of Property records in Vernacular language
Aim and Target must be Litigation Free Transaction and Acquisition of land. This to a great extent can be achieved if thirty-plus years of search are carried out. The State Revenue Records contains documents, as submitted by the owners, in languages unique to a particular region or state to which the owner belongs. Some of the examples are that documents of a Land situated in South India are in Malayalam, Telugu, Kannada, and Tamil, whereas the Lands situated in Eastern or North-Eastern States have documents in Bengali, Assamese language. Similarly, in North India, different languages are used such as Urdu, Punjabi, while in Western India Marathi and Gujarati are some of the famous languages used frequently. Portuguese, Hindi, French are a few other languages used in the revenue records. This pushes an advising Lawyer into a challenging situation, where verification of a third party is required or in case an opinion has to be rendered.

Best Practice followed by TILA: One of the best ways to move forward for bulk Acquisition is to engage a Local Translator & Secretary who is well-versed with the respective language. For a small Acquisition having few vernacular documents, a certified translation will suffice. Further, it is advisable that preferably the person engaged for Translation should be from a different place where land Acquisition is being carried out to avoid any conflict of interest and protect the confidentiality of the transaction.

ISSUE 2: Missing/Unavailable Property Documents with Revenue Authorities Many times while carrying out Legal search, it is observed that a vital document is missing or unavailable. This must be reported in the Legal Due Diligence Report clearly. Further corrective action must be suggested clearly. Best Practice followed by TILA: One of the ways to move forward is to file a Non- cognizable Police Report about the missing document. Secondly, a Newspaper advertisement/Public Notice can be published in two Newspapers (One Vernacular and one National language) giving time to the public to share any objects within 15 days of publications.

ISSUE 3: Conversion of Land from Agricultural to Industrial/Non-Agricultural The responsibility of land procurement is generally given to local land aggregators, who have a challenging task to coordinate land procurement and documentation. The land parcels are marked and a list is provided to the land aggregators as to which all lands are technically suitable and good for Acquisition. The next major step after the transfer of land in the name of an Investor/ developer is the Conversion of Land from Agricultural to Industrial/Non-Agricultural.

Keeping in view the fact that most of the land acquired for the Solar/Wind Project is Agriculture, the next step is to convert it from agriculture to Industrial/Non-Agricultural. This step changes the whole nature of land thereby adding value and increasing the price of the land, which is then sold to the companies establishing the energy park. Sometimes rise in price is ten times the earlier rate.

It is important to go through the Solar/Wind or Renewable Policy of the respective states to identify the incentives provided to the Solar/Wind Projects. Some of the states have exempted this requirement.

It will not be out of place to mention that in Andhra Pradesh, few villages started a campaign against the land aggregators feeling duped as the land was purchased from them at the rate of Three Lacs per Acre by the land aggregator, but was being sold at Seventy to Eighty Lacs per acre to the Investing companies. Though the technicalities of the transaction were explained to the people by the Government Officials & Land Aggregators and the protest ended, but still, a sense of betrayal persists in the hearts of the general population. This results in a general perception against the Investing Companies and deters the general public from dealing with them making land Acquisition a very difficult task.

Best Practice Advised by TILA: Post land Acquisition a strong CSR Initiative along with a Public Relations exercise will be very useful to build trust and goodwill for the investing organization. This will also reduce litigation and dispute resolution costs. CSR Initiate may include development works in villages where land Acquisition has taken place as mentioned in the Seventh Schedule of Company Act 2013.

ISSUE 4: Forgery of Documents
To meet the target of Land Acquisition and encourage landowners to part with land holdings the investor companies are willing to pay higher compensation/price for the land. Hence, sometimes, the local persons actively engaged in the preparation of forged documents helping them to sell the land to companies. This later leads to a string of litigations creating huge losses to the Companies. Local leaders and heads of various associations also persuade land aggregators into buying their lands, which is often in dispute, failing which they start agitations against the land aggregators and Investing companies hindering the whole process and causing losses.

Instances have come to light that Land aggregators in turn also used the forged documents to further sell it to the Investing companies to cut the losses incurred. Secondly, Due to the laxity and long delays associated with the procurement of documents from government offices, the verification of such forged documents becomes a very tiring process for any Lawyer.

Best Practice followed by TILA: However, this issue can be resolved if detailed due diligence is conducted by a Lawyer. Forgery can be detected at an early stage by making a family tree of thirty years. However the long time it takes, the search of documents for 30 years in the concerned office must be conducted without fail. By cross-checking, the revenue records will help in identifying incorrect documents used, if any. In case of any problem is found in documents a conference with the land aggregator and meeting with the Landowner will resolve the issues. The checks and balances will reduce the menace of forged documents being used in the Transaction.

ISSUE 5: Rectification of Documents (Rectification Deed)
Apart from the above practices, the custom of cashing in on clerical errors in sale deeds is a growing trend. At the time of registration, if any clerical mistake occurs and is found at a later stage, the vendors/ Original landowners are demanding an exorbitant amount to execute the rectification deed, sometimes double the amount of original sale consideration to appear for the rectification deed. Withholding facts in various situations and later using the same for cashing on the possibility of litigation is also a phenomenon.

For instance in one case, inadvertently, the name of the Land aggregator was not written in the sale deed, though the pan card number and address were mentioned properly and the revenue documents also stated the name of the Land aggregator clearly. When the original Landowner was approached for executing a rectification deed, he demanded twenty lakh rupees, which was double the amount of the consideration paid. Any litigation, in this case, will take around a year which will defeat the whole purpose of land Acquisition in the first place. In situations like this, challenging Legal questions arise. The issue is still unresolved, though the above omission in no way affects the title of the land aggregator or the subsequent buyer. Best Practice followed by TILA: To avoid such challenges, it is advisable to get the sale deed verified & settled by the Lawyer preparing a Land Due Diligence Report, before execution and registration of Conveyance or Sale Deed.

ISSUE 6: Traditional Practices like Oral Family Partition, Gift, etc.
India is a land of customs and traditions, which are provided for in the Laws incorporated, however, not all the customs and practices found a place in the books of Law. For instance, it is a common practice to enter into an Oral partition, Oral Gift, and even unregistered sale. These practices are accepted by the majority of the Indian population in rural areas, however, when the stage of land Acquisition comes into the picture, it is hard to rely on such narratives. Due diligence becomes a very tricky and balancing activity in situations like this.

Best Practice followed by TILA: It is challenging to move forward in absence of documents. However keeping in view the Limitation Act, we can safely infer that if 20 years of possession and cultivation is proved for Private Land that clearance can be given for Acquisition of the land. The Lawyer must make a title chain/family tree of 30 years which gives more authenticity to the documents for due diligence.

ISSUE 7: Confidentiality and Conflict of Interest
It is seen that generally a Local Lawyer is engaged in preparing a Legal Land Due Diligence Report, which may lead to a conflict of interest and a compromised report. In the case of a Lawyer from the same revenue district is preparing the Legal Due Diligence Report there are chances that his report may get compromised and will defeat the purpose of third-party Due Diligence. The confidentiality of the land being considered for Acquisition may also leak. This sometimes encourages Land speculation making the project more expensive, hence a huge portion of investment would be required for the land acquisition cost. Hence, it is advisable that the Lawyer preparing the Legal land Due Diligence must be from a different district and in no way connected through relatives or otherwise with the Land to be acquired in question.

Best Practice followed by TILA: It is a good practice that a Local Lawyer, who has landed in the same district or is well known in the district, must be avoided to render the Search Report. This will also ensure confidentiality of the Project and it will be a truly third-party Report.

ISSUE 8: Revenue Authorities- Poor Maintenance / Illegible Land Records
It has been noticed that records have not been maintained/kept safely. For efficacious Land Due Diligence, a Lawyer has to search documents for approximately Thirty years. Since they are too old documents, some of them become illegible or some are found in the torn condition.

While searching for a particular village in the state of Telangana, we came to know about a past accident in which the revenue office was burnt due to fire and consequently all the documents were burnt leaving behind ashes. Further due to flood also the documents get destroyed.

Best Practice followed by TILA: In such cases, it is advisable that a Letter from the Revenue Authority must be procured informing that due to fire or otherwise the records are not available. Thereafter, on the basis of available documents from the owner the Due Diligence Report can be prepared. As an abundant caution after seeking approval from the client, a Public Notice can be issued in two Newspapers giving 15 days to the general public to raise any objections, if any.

In this connection, it will also not be out of place that digitization of revenue records will go a long way in protecting the documents.

ISSUE 9: Pathways for Wind Turbine- Necessity of Legal Due Diligence
The commercials for Wind Power Projects are worked out on the basis of the locations. However, in one location in general two to five parcels of land may be involved. This requires that a separate Land Due Diligence Report must be prepared for each parcel of land along with Family Tree to bring in more clarity.

Further for connecting every wind Turbine location, a pathway is required. This pathway is also to be procured via Lease rights or easement rights for the duration of the Wind Project. Hence it is advisable to get a Due Diligence Report of all the parcels of land in the pathways also to protect the interest of the investor.

Best Practice followed by TILA: It is advised to know the clear title of all the parcels of land falling in the Pathways for the Wind Turbine.

ISSUE 10: Lands engaged in Solar Projects are required to be adjacent to one another- Landholdings are fragmented and it is difficult to obtain adjoining land
Due to the increase in population, the number of landowners have increased and it becomes difficult for the land aggregator to deal with such many people. Also, one farmer has many land parcels in separate sites, and sometimes the owner is ready to sell one land parcel but does not want to sell another (due to irrigated land and many reasons, etc.). Also the emotions of the landowners attached to the land and land being the only means of survivorship, it becomes very difficult to convince a farmer to sell his land. Due to these reasons, many of the farmers are not selling their land within a particular site; it becomes difficult to obtain contiguous land.

Best Practice advised by TILA: The Land aggregators have identified innovative solutions for particular challenges. In a few instances, alternative land parcels have been allotted to the landowners in the same village. Such innovative and out-of-the-box solutions have to be implemented for best results and to ensure the Project's viability.

ISSUE 11: Stratification of Land and Protected Tenants
Law prohibits the purchase of certain categories of land. We have to find out whether the land which the investor or Solar/Wind Developer are purchasing falls under any of the prohibited categories. Government lands, lands assigned to the landless poor by the government, and forest land are the few categories of land which can’t be purchased. Only tribal’s can purchase land in Scheduled Areas (Tribal areas).

Best Practice advised by TILA
The Laws applicable in the state should be perused and a summary must be attached with the Legal Land Due Diligence Report to identify such risks.

Conclusion & Way Forward
These are some of the challenges faced during the Acquisition of Land for Solar and Wind projects across India. However, most of them can be overcome by effective Legal & innovative intervention in the initial stage to avoid future disputes and Litigation Expenses. Above mentioned solutions will make land Acquisition for Solar projects easier which will help in large corporate investments in turn resulting in more economic growth of India & clean Energy for all.