'Bureaucrats Deciding Land Compensation Prima Facie Unacceptable': Supreme Court Recommends Amendment To National Highways Act

The Supreme Court today urged the Union government to make suitable amendments to the National Highways Act so that land acquisition compensation disputes thereunder are decided by "judicially trained minds" and not government officers.

A bench of CJI Surya Kant, Justice Joymalya Bagchi and Justice V Mohana was hearing a batch of SLPs that arose from the Punjab and Haryana High Court's judgment, which declared Sections 3G and 3J of the National Highways Act, 1956, unconstitutional.

These provisions constitute the statutory framework for determining compensation through arbitration when landowners dispute the amount awarded. The concern of the Court is grounded in a disparity between landowners whose lands were acquired under the NH Act vis-s-vis those whose lands are acquired under other statutes. This is because the compensation disputes under the former are decided by government officers, while the latter's are decided in courts.

For instance, under the Land Acquisition Act, 1894 (Old Act) and the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 (new Act), compensation disputes are decided by judicial courts with the expertise and independence to fairly determine market value. They also have more liberal appellate remedies.

Earlier also, to address the issue of differential treatment to the landowners whose lands were acquired under the 1956 Act, the CJI bench had suggested the Union government to revisit the legislative scheme and consider bringing parity in the method of compensation determination, keeping in view Article 300A of the Constitution, which protects the right to property.

The Court had noted that under the National Highways Act, compensation disputes are decided by government officers like Collectors or Commissioners, not judicial authorities, who are often burdened with administrative duties and lack judicial training to decide complex valuation issues. The land acquisition matters are statutorily referred to arbitration as per the NH Act.

Today, Attorney General R Venkataramani informed the Court that the government is considering amendments to the NH Act and if the same are carried out, pending cases would be taken care of. "The government is seriously considering amendment to the Act. If there is an amendment, it will take care [of the pending cases]", said the Attorney General.

Solicitor General Tushar Mehta, for NHAI, apprised the Court that there are 12 statutes which prescribe statutory arbitration. He also submitted that NH Act incorporates the Arbitration Act by way of a legislative device. After an arbitrator appointed in terms of the statute arbitrates, Section 34 of the Arbitration Act takes over.

In response, Justice Bagchi said,

"Mr Solicitor, we would like to hear you on this. There are some laws which expressly exclude the Arbitration Act and provide for statutory arbitration. Some laws provide for appointment through the statute but incorporate the Arbitration Act, like the NH Act, and other appointments are under the Arbitration Act per se...even MSME Act, to the extent it does not run foul of the special law, provisions of the Arbitration Act will apply.

The issue which you need to address is if the Arbitration Act applies, without qualification through NHAI Act, will the special provision of NHAI Act providing for unilateral appointment be carved out as an exception to S.16 of the Act? That is, whether there is a collision between S.16 and the special law, and if there is, which will prevail?"

Adding to Justice Bagchi's observation, CJI Kant said that entrustment of compensation disputes arising out of the NH Act to bureaucrats is prima facie not acceptable.

"Every such Act (dealing with land acquisition) provides procedure as laid down in the Central Act will apply. So for all acquisitions, the determination of compensation, which is purely a judicial exercise, is done by judicially trained minds. This is the only Act where an exception is carved and bureaucrats have been entrusted with this. That is prima facie not acceptable to us. This is a very peculiar situation. This needs to be addressed immediately. Either by us, or by Parliament."

The order was dictated thus,

"We have impressed upon ld. Attorney General to take up the matter with the competent authority for suitable amendment in the National Highways Act. He assures that the matter will be taken up as early as possible. Meanwhile, in terms of our order dt. [...], the Arbitrators are directed to continue with the pending proceedings, subject to final outcome of the present proceedings."

Before parting, CJI Kant also referred to the issue of solatium and interest not being provided to landowners. He commented that "injustice" was done to farmers, which ultimately had to be rectified through judicial intervention.

"Mr Attorney, please do something in this matter. Normally, where there are National Highways...going by market forces, value of land abutting to such roads will be higher than other ordinary land. When you require ordinary land under the old Acquisition Act, or under the new Act of 2013, you pay compensation as per the criteria prescribed there. The first injustice to the farmers was done here, when you said no solatium, no interest. We had to judicially intervene [Ref: Tarsem Singh]. Land acquisitions under those Acts...collectors are normally civil servants. No issue. But their immediate next platform is a judicial platform. Reference Court. You lead evidence, you provide opportunity to judicial fora to determine based on evidence led. Here, that is completely missing", CJI noted.

In this context, one of the counsels claimed that solatium and interest were still not being provided and people were having to run from pillar to post to obtain the same despite the Court's orders in Tarsem Singh case.

Case Title: M/S RIAR BUILDERS PVT LTD & ANR. v. UNION OF INDIA & ORS. (with connected matters)