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Supreme Court rejects NHAI’s plea against higher compensation for landowners

ByAbraham Thomas
Feb 04, 2025 08:42 PM IST

The Supreme Court upheld that the landowners are entitled to solatium and interest, reinforcing the principle of fair compensation

The Supreme Court on Tuesday dismissed the National Highways Authority of India’s (NHAI) application seeking to limit compensation benefits for landowners whose properties were acquired between 1997 and 2015 for highway projects. The court upheld that these landowners are entitled to solatium and interest, reinforcing the principle of fair compensation.

The Supreme Court of India. (File Photo)
The Supreme Court of India. (File Photo)

Rejecting NHAI’s argument that the 2019 ruling in the Tarsem Singh case should apply only prospectively, a bench of justices Surya Kant and Ujjal Bhuyan emphasised that denying rightful compensation would violate Article 14 (right to equality).

“When a provision is declared unconstitutional, any continued disparity strikes at the core of Article 14 and must be rectified, particularly when such disparity affects only a select group,” the court held.

The dispute arose because a 1997 amendment to the National Highways Act excluded highway land acquisitions from the benefits of the Land Acquisition Act, 1894, which had previously provided solatium and interest. As a result, landowners were paid only a base compensation. This changed in 2015 with the implementation of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013, which reinstated these benefits.

NHAI contended that applying the Tarsem Singh judgment for the payment of solatium and interest retrospectively would impose an additional financial burden of 100 crore on the government. The court, however, dismissed this concern, stating: “The financial burden of acquiring land cannot be justified in the light of the Constitutional mandate of Article 300A.” Article 300A ensures that no person can be deprived of their property without legal authority.

Additionally, the court pointed out that NHAI had already made such payments to landowners before 1997 and after 2015.

It further noted that the financial impact would not fall on the government alone, as highway projects are largely developed under public-private partnerships (PPP).

“Since most national highways are being developed under the PPP model, the financial burden will ultimately be passed on to the relevant project proponent… ultimately, the burden is likely to be saddled onto the middle or upper-middle-class segment of society, particularly those who can afford private vehicles or operate commercial ventures,” the court said.

The bench also rejected NHAI’s concern that retrospective benefits would reopen settled cases, clarifying that the Tarsem Singh ruling applies only to lands acquired between 1997 and 2015. Delaying compensation further, the court warned, would only prolong disputes unnecessarily.

Directing NHAI to comply with the 2019 judgment, the court ordered the competent authority to calculate and disburse solatium and interest to eligible landowners.

It underscored the importance of fairness, stating: “The landowners have no discretion or choice regarding the date of land acquisition or the surrender of possession. Thus, both equity and equality demand that no such discrimination be permitted, as allowing it would be unjust.”

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