Challenging the Land Acquisition

The Land Acquisition Act 1960 has provided for the methods for challenging
acquisition proceedings. There is no right to appeal aginst the decision of the land
administrator. However, judicial review is allowed. Judicial review is nothing but a potent
and effective procedural device within the armoury of the High Court to supervise and
control the decision making process of public bodies or like to ensure that they act within the
spirit and powers of the statutes and if necessary to restrain the decision maker from acting in
excess and abuse of power. This process is also used to check and arrest exexutive excesses
and encroachment. The concept originates from the doctrine of separation of powers which
flows from english legal Jurisprudence.

Section 8(3) of the Act provides that the declaration issued under this provision shall
be conclusive evidence that the lands proposed to be acquired are needed for a particular
purpose as specified therein. The Act makes it a virtual impossibility to challenge any
acquisition except on the question of mala fides of the state authority in the exercie of its
powers in the acquisition proceedings. There is no provosion in the Act for an owner of land
to object to the intended acquisition. The avenues available for a land owner to challenge an
acquisition already made is to show that the state authority had abused its powers, or that the
purpose of acquisition does not come under any of those described in section 3 of the Act.

The principal ground on which an expropriation can be challenged is that the

acquiring authority has exceeded its powers, it has acted ultra vires. In the Federal Court
decision of Kulasingam & Anor1, held that it may be possible to treat a declaration under
section 8 as nullity if it be shown that the acquiring authority has misconstrued its statutory
powers or that the purpose stated therein does not come within section 3 or if bad faith can be
established.

1
[1982] 1MLJ 204
 Further Salleh Abbas in the Federal Court’s decision in Pemungut Hasil Tanah,
Daerah Barat Daya, Pulau Pinang v Ong Gaik Kee2 held that, we think that it is sufficient
to decide this appeal on the basis of a simpler question, whether or not in view of the long
delay resulting in an injustice to the land owner the acquisition was done in accordance with
the Act. Only in the circumstance that it is not done in acordance with the act can be said that
the acquisiotion is contrary to the requirement of clause (1) of Article 13 of the Federal
Constitution which requires that to be lawful every deprivation of property must be done in
accordance with law. Every exercise of statutoty power must not only be in conformity with
the express words of the Statute but above all must also comply with certain implied legal
requirements. The court has always viewed its exercise as an abuse and therefore treats it as
illegal where the exercise is done for an inadmissible purpose or on irrelevant grounds or
without regard to relevant considerations.

In Ahmad bin Samad3, Ariffin Zakaria opined that, it would appear that the
acquisiotion may be challenged on any of the following grounds,when the acquiring authority
has misconstrued the statutory powers, the purpose stated does not come within section 3,
where it can be shown that the acquiring authority has acted in bad faith and the acquiring
authority has acted contrary to the law.

The Court of Appeal, in Stamford Holdings Sdn Bhd v Kerajaaan Negeri Johor 4,
held that in land acquisition cases, if the acquisition proceedings had deprived a landowner of
his legitimate expectation of profit from the development of the said land, then it may be held
that the acquisition proceedings may be challenged on the ground of bad faith. The appelant
in the case of Stamford had applied to the government of Johor for development of his land.
The application had not been approved even adter four years of his land. The application had
not been approved even after four years had passed since his application. Subsequently, the
land was approved for development. However, the respondent wanted 70% equity in the
proposed development plans. The respondents also proposed that the land should be sold to
them for a certain sum. The appelant disagreed and the respondents began proceedings for the

2
[1983] 2 MLJ 35
3
[2003] 4 MLJ 705
4
[1998] 1 MLJ 607
compulsory acquisition of the said land. The applelant contended that the acquisition was
unconstitutional and outside the ambit of Section 3 of the act. The Court of Appeal held that
the acquisition proceedings were mala fide since the proceedings had rsulted in the appellant
being deprived of his legitimate expectation of profit from the land. The respondents were
unconscionable and unmeritorius in the conduct of the whole acquisition proceedings, and if
the facts alleged by the appelant were to be proven, the appelant had a good cause of action
against the respondents.

A recent Federal Court decision in the case of Semenyih Jaya Sdn Bhd vs Pentadbir
Tanah Daerah Hulu Langat5 examined and entrenched this constitutional safeguard of
adequate compensation. Section 40D of the Act effectively imposes on a High Court judge a
duty to rubber-stamp the decision / opinion of the two assessors on the amount of
compensation for the land acquired, thereby taking away the judicial power from the High
Court judge. Hence, the Federal Court declared Section 40D of the Act to be unconstitutional
and invalid as being ultra vires the Federal Constitution. The Federal Court struck down
Section 40D of the Act where such a declaration will only bind pending cases at first instance
or at the appellate stage. All proceedings involving compensation in land acquisition matters
which had taken place and been determined under Section 40D of the Act prior to the date of
this judgment of the Federal Court, April 20 2017 will remain status quo. The Federal Court
urged that a new Section 40D of the Act would have to be put in place by Parliament which
should make clear that essentially it is for the judge and the judge alone to decide on the
amount of compensation for the land acquired, and that the opinion of the assessors are not
binding on the judge.

The proviso to Section 49(1) of the Act seeks to bar all appeals from the High Court
to the Court of Appeal and to the Federal Court on the issue of compensation. The Federal
Court held that the proviso to Section 49(1) of the Act must be strictly interpreted in favour
of the land owners whose lands have been compulsorily acquired, so as to give meaning to
the constitutional protection of a person’s right to his property . Hence, the Federal Court
held that the proviso to Section 49(1) of the Act does not represent a complete bar on all
appeals to the Court of Appeal from the High Court on all questions of compensation,
instead, the bar to appeal in the proviso to Section 49(1) of the Act is limited to issues of fact

5
[2017] 3 MLJ 561
on ground of quantum of compensation. Therefore, an aggrieved party has the right to appeal
against the decision of the High Court on questions of law.

Section 40C of the Act provides that the opinion of the two assessors shall be given in
writing and recorded by the judge. The Federal Court held that compliance with Section 40C
of the Act is mandatory and non-compliance with Section 40C of the Act violates land
owners’ constitutional right to a fair and reasonable compensation arising from compulsory
acquisition. A decision of the High Court made in contravention of Section 40C of the Act is
invalid and ought to be set aside.

The Federal Court further held that the bar to appeal in the proviso to Section 49(1) of
the Act does not operate when there is non-compliance with Section 40C of the Act.The
Federal Court held that based on the principle of equivalence, compensation for loss of
business caused by the loss of the land acquired, is allowed under the Act. Hence, in
determining market value of the land acquired, the Land Administrator and the High Court
must give consideration to the profit value of the land at the time of acquisition.

Certainly, this landmark decision of our apex court is a momentous instance of

judicial activism which has breathed new life into our constitutional rights to property under
the Federal Constitution.