Supreme Court Rejects NHAI Plea To Prospectively Apply 2019 Judgment Allowing Solatium & Interest For National Highway Land Acquisitions

The Supreme Court today dismissed plea(s) filed by NHAI seeking a clarification that the Court's 2019 ruling in Union of India v. Tarsem Singh on grant of solatium and interest to landowners shall apply prospectively.

A bench of Justices Surya Kant and Ujjal Bhuyan rendered the decision, stating,

"Granting such clarification would nullify the very relief that Tarsem Singh intended to provide...The ultimate outcome of Tarsem Singh is related to granting solatium and interest to aggrieved landowners whose lands were acquired by NHAI between 1997 and 2015...It does not in any way direct the reopening of cases that have already attained finality. On the contrary, modifying or clarifying Tarsem Singh would land itself to violating the doctrine of immutability undermining the finality of the decision...what the applicant seeks to achieve indirectly is to evade responsibility and further delay resolution of a settled issue, where the directions given are unequivocal...What cannot be done directly cannot be done indirectly."

To recap, in Tarsem Singh, a bench of Justices Rohinton Nariman and Surya Kant declared Section 3J of the National Highways Act 1956, to the extent it excluded solatium and interest as per Land Acquisition Act 1894 to acquisitions done under the NH Act, to be unconstitutional. It was said that the provisions of the Land Acquisition Act relating to solatium and interest contained in Section 23(1A) and (2) and interest payable in terms of section 28 proviso will apply to acquisitions made under the National Highways Act.

Subsequent to this decision, NHAI moved the Court seeking clarification as to whether the 2019 ruling would apply prospectively, thereby precluding reopening of decisions where land acquisition proceedings had already completed and determination of compensation attained finality.

Insofar as NHAI proposed that the ruling must operate prospectively, the bench of Justices Kant and Bhuyan held that any such clarification would effectively nullify the very relief that the Tarsem Singh ruling intended to provide.

"The broader purpose behind Tarsem Singh was to resolve and put quietus upon the quagmire created by Section 3(j) of the National Highway Act, which led to unequal treatment of similarly situated individuals. The impact of Section 3(j) was short-lived owing to the applicability of the 2013 Act upon the National Highway Act from 1 January 2015. As a result, two classes of landowners emerged devoid of any intelligible differentia - those whose lands were acquired by the NHAI between 1997-2015 and those whose lands were acquired otherwise...Both equity and equality demand that no such discrimination be permitted, as allowing it would be unjust."

The bench further said that when a provision is declared unconstitutional, and continued disparity strikes at the core of Article 14, it must be rectified, particularly when such disparity affects a selected group.

Rejecting a contention that the ruling in Tarsem Singh would open Pandora's box, the bench said, "it merely allows for the grant of solatium and interest which are inherently embedded as compensatory benefits under the expropriating legislation". Another contention raised by NHAI regarding financial burden of about Rs.100 crores did not persuade the Court.

"If this burden has been borne by NHAI in the case of 1000s of other landowners, it stands no reason that it should also be shared by the NHAI in this instance in order to eliminate discrimination...the financial burden of acquiring land cannot be justified in the light of constitutional mandate of Article 300A...since most national highways are being developed under the public-private partnership model, the financial burden will ultimately pass on to the relevant project proponent...even the project proponent would not have to bear the compensation cost out of pocket. It is the commuters who would bear the actual brunt of this cost. The burden will be transferred to the middle or upper middle class segment of society, particularly those who can afford private vehicles and operate commercial ventures."

Disposing of the appeals, the Court directed the competent authority to compute the amount of solatium and interest in accordance with the directions in Tarsem Singh.

Case Title: UNION OF INDIA AND ANR. Versus TARSEM SINGH AND ORS., MA 1773/2021 in C.A. No. 7064/2019

Click here to read the judgment