By Kitdor H. Blah
The Meghalaya State Investment Promotion & Facilitation Act, 2024 contains provisions that can be interpreted as draconian intent of a law. First of all, just for the clarity of the public, the words ‘investors’ and ‘investment’ might be misunderstood to mean persons investing in local businesses and local companies which are owned by the indigenous or local people of the state. The word ‘investors’ and ‘investment’ in the Act means business enterprises, including national and foreign companies, who will use the state’s resources and operate their businesses here.
Section 34 of the Principal Act reads, “Save as otherwise provided in this Act, the provisions of this Act shall have effect notwithstanding anything inconsistent therewith contained in any other State law for the time being in force or any custom or usage or any instrument having effect by virtue of any such law.” When the public became aware that there was a proposal to allow investors to acquire land for setting up their business units, by creating a land bank, there was fear that this would bypass the Meghalaya Transfer of Land (Regulation) Act, 1971. This fear was justified as section 34 would allow the Invest Meghalaya Authority to use this land bank to both lease and sell land to investors. The Amendment Bill, 2025 which was introduced in the ongoing Budget session seems to address this issue, by amending section 34 to read, “This Act shall not be in derogation of the Meghalaya Transfer of Land (Regulation) Act, 1971.” However, the ruling of the Supreme Court in “Samatha vs State of Andhra Pradesh, 1997,” says that the government is not a person as it is neither tribal or non tribal. Moreover, the Meghalaya Land Transfer Act defines Tribal as a person belonging to a Scheduled Tribe as specified for Meghalaya. Thus, a non Tribal means a person not belonging to a Scheduled Tribe as specified for Meghalaya. The state Government falls outside the purview of the Act since it does not fit the definition of tribal, or non-tribal or person, while the Act only prohibits transfer from non tribal to non tribal or tribal to non tribal.
Moreover, the Amendment Bill inserts new section 4(1) which says that the investment authority will promote investment and setting up of industrial or service sector undertakings in the state by creating land banks by direct purchase of land or by other means. Once land is purchased by the investment authority, it becomes government land and the provisions of the Meghalaya Land Transfer Act no longer apply to such land. Therefore, the Amendment Bill has heightened the possibility of dilution of tribal land holding. Section 34 of the Amendment Bill, read with section 4(1) of the Bill, can be interpreted as draconian intent of law.
Furthermore, the Investment Act cannot be compared with the schemes under the Meghalaya Industrial Development Corporation, or Meghalaya Tourism Development Corporation, since MIDC and MTDC do not offer such land bank schemes to outsiders of the state. The difference between the Investment Act and MIDC and MTDC is that the MIDC and MTDC exist to promote local businesses, while the Investment Act exists to promote foreign investment. The MIDC offers financial assistance to local entrepreneurs and that too, in the form of loans. That cannot be compared to facilitating foreign or outside enterprises to set up units in the state. Even if MTDC does invite investment from outsiders, it is through public private partnership. The question is not whether we need investment but what kind of investment, and who holds controlling interest in such enterprises. Is it the indigenous people, the public via the government or outside entities?
Section 8(2) (c) of the principal Act reads, “The orders and decisions of the Governing Council shall be binding upon all Government Departments, Authorities and Agencies and such Departments, Authorities and Agencies shall issue requisite clearances and permissions within the stipulated time limit: provided that the relevant provisions of the applicable Acts and Rules of the Government or Central Government for investment clearances and permissions are complied by the investor or applicant.” This section contains two provisions that can be mutually exclusive: one, that clearances shall be issued only if the investors comply with provisions of the existing laws and second, that the clearances must be issued by the relevant departments within the stipulated time. So, what happens if clearance is delayed because the relevant departments are not satisfied with the compliance? Section 26 of the principal Act reads, “The Government may, by notification, notify the clearances in respect of which, failure by the competent authority to grant clearance or pass final order within the period specified shall be treated as a deemed approval.”Deemed approval can only be interpreted in one way: that the investors will be treated as if they have been issued the requisite clearances, even if no such clearance has been issued or rejected by the concerned departments and authorities. What happens if such departments sit on the clearances for a period of time, and the clearances are then rejected after the investors have already acquired land and set up fixed assets? Or what happens if such departments sit on the clearances without rejecting or issuing clearances? This will create leverage for investors to bypass the relevant laws. Section 8(2)(c) of the principal Act, read with section 26 can be interpreted as draconian intent of law.
Section 31 of the principal Act reads, “The Government may, by notification, with approval of Governing Council, exempt any clearances from any of the provisions of the Act.” This section allows the investment authority to arbitrarily ease some clearances or restrict others.
Section 33 of the principal Act reads, “Where an offence under this Act is committed by a company or an industrial unit, the company or the industrial unit as well as every person in charge of and responsible to the company or the industrial unit for the conduct of its business at the time of commission of the offence, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly: Provided that nothing contained in this subsection shall render any such person liable to any punishment if he proves that the offence was committed without his knowledge or that he exercised all due diligence to prevent the commission of such offence.” This section allows investors to feign ignorance, while flouting the very rules framed under the Act.
Section 39 of the principal Act reads, “No suit or legal proceeding shall lie against the Chairman or other members of the Governing Council or High-Powered Committee or State Investment Committee or District Investment Committee or Nodal Agency or any employees of such committee in respect of anything which is done or intended to be done in good faith under this Act or any Rule made there under.” This section can be used to protect the investment authority from litigation by investors, other government departments and authorities, or the public, but it gives the investment authority over reaching power which can allow it to act arbitrarily, including in favour of or against any investor. Allotment of land, granting of deemed approval, easing or restricting clearances, can all be arbitrarily decided. Section 39 can be interpreted as draconian intent of law.
Lastly, section 8(2)(a) of the Amendment Bill says that incentives will be provided to the industries that provide employment to local people. The Meghalaya Investment and Industrial Promotion Policy, 2024 provides that in order to get incentives, the units must employ local people not less than 90% of non-managerial posts from the 1st, 2nd and 3rd years of commercial operation and not less than 25% of managerial positions for the 1st and 2nd year, and not less than 50% of managerial positions from the 3rd year. However, the Amendment Bill and the Policy interpret local people to mean individuals domicile to the state, and not the indigenous people of the state. Anyone can change their permanent residence and domicile state. Therefore, this Act can also increase influx over time. Such a lax can also be interpreted as draconian intent.
