Eminent domain is the right of a government to expropriate private property within its territory or jurisdiction, for what it deems is ‘public purpose. To understand eminent domain, we need to understand how the interpretations of property rights have changed over time. Property rights have been viewed as natural rights and also as rights as a result of birth of the so-vereign state. One such thinker, Hugo Grotius, introduced for the first time, the notion that these rights were alienable and transferable. It strengthened the idea of eminent domain as a mechanism to improve allocative efficiency in markets where high transaction cost may not result in mutually agreeable contract. However, eminent domain is a right attributed to the sovereign state, outside the property market. There are no naturally existing checks to the scope of power it can wield. We study the Indian scenario in this context, to understand how eminent domain is interpreted within Indian legal system and how it is a difficult concept to justify in terms of the social benefits it is supposed to facilitate. The most recent law that governs the issue in India is the Right to fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013. In the absence of land ownership records and formal land markets, the idea of ‘reallocation of property rights seems misplaced.