National Highways Authority Of India vs Tarsem Singh And Others

Surya Kant, CJI

The instant Review Petition has been filed by the National Highways Authority of India (NHAI) for recalling our order dated 04.02.2025, passed in Miscellaneous Application No. 1773/2021 (Tarsem Singh- II) ‘Union of India and another v. Tarsem Singh and others, 2025 SCC OnLine SC 235’. Vide that order, this Court had dismissed NHAI’s application seeking clarification whether the judgement dated 19.09.2019 passed by a Coordinate  Bench  of  this  Court  in Union  of  India  and  another  v. Tarsem Singh and others (Tarsem Singh-I) (2019) 9 SCC 304 would apply prospectively.

Notably, several Special Leave Petitions preferred by the NHAI/its Project Director are also tagged with the instant Review Petition, challenging  different  orders passed  by  the High  Courts of  Bombay  and Chhattisgarh.

The High Courts,  vide those orders, have,  inter alia, directed NHAI and its officers to pay (i) interest, (ii) solatium, (iii) and interest on the solatium, along with the statutory compensation, for acquisition of lands under the National Highways Act, 1956 (NH Act) in terms of Tarsem Singh-I and Tarsem Singh-II in a time-bound manner. NHAI’s grievance in these Special Leave Petitions appears to be that such directions ought not to have been issued in view of the pendency of the Review Petition against Tarsem Singh-II before this Court.

Be that as it may, since the survival of the claims raised in the adjoining  Special Leave Petitions hinges on  the outcome of this Review Petition, we shall first turn to adjudicate the latter on its merits.

A.  BACKGROUND

To that end, given that this Review Petition constitutes the third round of  litigation  on  the  limited  issue  of  various  landowners’  entitlement  to‘solatium’ and ‘interest’ as part of the compensation for land acquisition initiated  by  the  NHAI,  we  do  not  deem  it  appropriate  to  delve  into  the entire legislative and judicial history of the matter. Suffice it would be to notice certain salient events:

5.1. In 1997, a fresh, comprehensive land acquisition framework was introduced  into  the  NH  Act.  Included  in  this  Amendment  was  Section 3-J, stipulating that the Land Acquisition Act, 1894 (1894 Act) in toto would not apply to acquisitions under the NH Act. A necessary by- product of this amendment was that the provisions of the 1894 Act granting ‘solatium’ and ‘interest’ to land-losers would not apply to acquisitions initiated under the NH Act.

5.2. Section  3-J  held  the  field  until  the  purported  dissonance  between  the land acquisition compensatory schemes contemplated under the NH Act and  the  1894  Act  was  agitated  as  being ex-facie  illegal  and  ultra  vires the Constitution of India before various High Courts.

5.3. A learned Single Judge of the High Court of Karnataka in Lalita v. Union  of  India,  New  Delhi, 2002 SCC OnLine Kar 569 struck  down  Section  3-J  of  the  NH  Act, holding it to be unconstitutional for perpetuating an arbitrary distinction, in opposition to the strict contours of Article 14 of the Constitution of India. That ruling, however, was stayed by a Division Bench of the same High Court on 10.02.2003, while it was seized of the intra-court  appeal  preferred  by  the  Union  of  India.  The  stay  continued to operate till 15.10.2019, when the Writ Appeal was eventually dismissed by the High Court in terms of this Court’s judgement in Tarsem Singh-I, which is elaborated upon later.

5.4. As stated earlier, similar challenges were made before other High Courts as well, resulting in two noteworthy decisions:

(i) Judgement dated 28.03.2008 passed by a Division Bench of the High Court of Punjab and Haryana, titled  Golden Iron and Steel Forging v. Union of India; 2008 SCC OnLine P&H 498 and

(ii) Order  dated  04.03.2011  passed  by  a learned  Single  Judge  of  the High Court of Judicature at Madras, titled T. Chakrapani v. Union of India 2011 SCC OnLine Mad 2881.

5.5. These decisions assume significance for the reason that, rather than striking down Section 3-J of the NH Act in its entirety, the High Courts adopted a calibrated approach. While preserving the distinct acquisition framework under the NH Act, they held the statutory scheme to be unconstitutional to the limited extent that it denied land- losers the benefit of ‘solatium’ and ‘interest’. In effect, Sections 3-G and 3-J of the NH Act were read down to align with the compensatory principles  embodied  in  Section  23(1-A)  and  Section  23(2)  of  the  1894 Act. The result was that, notwithstanding the separate statutory regime, landowners under the NH Act were also held entitled to‘solatium’ and ‘interest’ on parity with acquisitions under the 1894 Act. These decisions, along with similar pronouncements by other High Courts, were subsequently carried in appeal before this Court.

5.6. While the aforesaid appeals were pending consideration, the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation  and  Resettlement  Act,  2013  (2013  Act) came  into  force with effect from 01.01.2014, replacing the 1894 Act. Thereafter, by way of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement (Amendment) Ordinance, 2014  (2014  Ordinance),  the  compensation  framework  under  the  2013 Act was extended to acquisitions under the NH Act, with effect from 01.01.2015. Although the said Ordinance subsequently lapsed, the Union  of  India,  in  exercise  of  its  powers  under  Section  113  read  with Section 105 of the 2013 Act, issued a notification dated 28.08.2015, thereby  continuing  the  applicability  of  the  compensation  provisions  of the 2013 Act to acquisitions under the NH Act.

5.7. The net effect of this entire rigamarole was that a distinct class of land- losers came  to be excluded from  the benefit  of  ‘solatium’  and  ‘interest’. To be specific, the acquisitions undertaken under the NH Act during the interregnum, namely, after the insertion of Section 3-J in 1997 and till the beneficial compensation regime of the 2013 Act was made applicable to the NH Act w.e.f. 01.01.2015, remained outside the fold of entitlement  to  ‘solatium’  and  ‘interest’.  This  resulted  in  an  anomalous situation, where similarly situated landowners, differing only in the timing or statutory route of acquisition, were subjected to materially unequal compensatory frameworks.

5.8. As a consequence of the statutory rights accorded through the 2014 Ordinance and the notification dated 28.08.2015, the appeal arising from T. Chakrapani (supra) was disposed of by this Court with the statement of the then Solicitor General of India being recorded that solatium in terms of the order of the Madras High Court would be granted in that case ‘Civil Appeal Nos. 129-159/2014’.

5.9. Similarly,  in  Sunita  Mehra  v.  Union  of  India, (2019) 17 SCC 672 a  two-Judge  Bench  of this Court, disposed of the NHAI’s appeals against other comparable judgements of the High Court of Punjab and Haryana, with the directions  that  the  benefit  of  ‘solatium’  and  ‘interest’  shall  be  available to land-losers in all such  cases where the proceedings for computation of compensation were pending as on 28.03.2008. In doing so, this Court  clarified  that  while  future  acquisitions  would  be  covered  by  the 2013 Act and its benefits, those cases which had been decided prior to the said date and, thus, stood concluded ought not to be reopened. Here, it may be noted for clarity that this cut-off date was derived from the date on which the judgement in Golden Iron and Steel (supra) was pronounced by the High Court of Punjab and Haryana.

5.10. Following  the  aforesaid  developments,  the  NHAI  chose  to  withdraw  its appeals  pending  before  this  Court  in  which  the  judgement  of  the  High Court  of  Punjab  and  Haryana  in Golden  Iron  and  Steel  (supra)  was under challenge ‘Civil Appeal No. 10695/2011’.

5.11. It is in this backdrop that a two-Judge Bench of this Court, including one of us (Surya Kant, J., as he then was), in Tarsem Singh-I held that the  benefit  of  ‘solatium’  and  ‘interest’  must  be  extended  to  landowners even  in  respect  of  acquisitions  made  during  the  period  between  1997, when Section 3-J was introduced into the NH Act, and 2015, when the compensation scheme of the 2013 Act was made applicable to the acquisitions under the NH Act. With this in mind, Section 3-J was declared unconstitutional to the extent that it denied solatium and interest, and landowners were held entitled to such benefits in terms of Section 23(1-A) and Section 23(2), along with interest under the proviso to Section 28 of the 1894 Act.

5.12. Aggrieved thereby, the NHAI moved Miscellaneous Application No. 1773/2021,  seeking a clarification that the directions  in Tarsem Singh-I  would  operate  only  prospectively.  That  prayer  was  declined  by this Court in Tarsem Singh-II, wherein it was held that the entitlement to ‘solatium’ and ‘interest’ inheres in the right to just compensation, and that the grant of such benefits does not amount to reopening of cases that have attained finality.

5.13. It must be mentioned that in those proceedings, this Court also rejected a specific argument of the NHAI apropos the financial burden that would  have  to  be  borne  by the  public  exchequer for payment  of  such solatium and interest to the landowners. The relevant para is reproduced below:

“23. In all fairness, the only defense that may perhaps seem appealing is the claim of a financial burden amounting  to Rupees 100 crores. However, this argument does not persuade us for several reasons: First, if this burden has been borne by the NHAI in the case of thousands of other landowners, it stands to reason that it should also be shared by the NHAI in this instance, in order to eliminate discrimination. Second, the financial burden of acquiring land cannot  be  justified  in  the  light  of  the  Constitutional  mandate  of Article 300A. Third, since most National Highways are being developed under the Public Private Partnership model, the financial burden will ultimately be passed on to the relevant Project Proponent. Fourth, even the Project Proponent would not have  to  bear  the  compensation  costs  out  of  pocket,  as  it  is  the commuters who will bear the actual brunt of this cost. 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. We are thus not inclined to entertain the plea for prospectivity on this limited tenet.”

[Emphasis supplied]

5.14. While dismissing the Miscellaneous Application, this Court also alluded to  the  decision  in  Sunita  Mehra  (supra)  and  underlined  that  it  stood appropriately addressed and clarified in Tarsem Singh-I.

B.  SCOPE OF THE REVIEW

The NHAI has filed the present Review Petition inter alia contending that the financial burden projected to this Court in the course of arguments in Tarsem Singh-II was based on a clerical error. It is submitted that the actual liability towards payment of solatium and interest  to  all  landowners  is  not  Rs.  100  crores,  as  is  recorded  in  the extract reproduced hereinabove, but is in fact amounting to approximately Rs. 29,000 crores. On this basis, it is urged that an error apparent on the face of the record has crept into the order, warranting reconsideration thereof.

At  the  outset,  it  must  be  clarified  that  while  the  corrected  estimate  of the monetary costs is taken on record, the same does not persuade us to revisit the merits of the earlier adjudication. This Court had unequivocally held that the fiscal implications of granting solatium and interest cannot override the substantive entitlement of land-losers. There is no gainsaying that the constitutional guarantee of just compensation cannot be rendered contingent upon the magnitude of the  financial  burden.  Consequently,  a  mere  escalation  in  the  projected liability, howsoever significant, does not constitute, per se, a valid ground for review or modification of the judgement.

There is, consequentially, no occasion for us to reconsider our decision in Tarsem Singh-II on the above-noted ground.

Regardless thereto and upon a careful consideration of the submissions advanced  on  behalf  of  the  NHAI,  it  appears  that  certain  aspects  of  the judgements rendered in Tarsem Singh-I and Tarsem Singh-II warrant limited clarification. The necessity for such clarification arises not from any error in principle, but to ensure a consistent and equitable understanding of  the  scope  and  effect of  those  decisions. The  instant proceedings, therefore, are confined strictly to that limited exercise.

C.  CLARIFICATION RE: DELAYED AND BARRED CLAIMS

The undisputed position of law, settled by successive judgements of the High Courts and this Court, is that the landowners who suffer acquisition of their land under the NH Act are entitled to interest, solatium, and interest on solatium as part of their compensation. In Tarsem Singh-I, this Court recognised “that the Government itself is of the view that solatium and interest should be granted even in cases that arise between 1997 and 2015.” It is also not in question that such benefits shall be payable in line with those granted in the 1894 Act or the 2013 Act, as the case may be.

However,  as  a matter  of  caution,  we  deem  it  appropriate  to  clarify  that each  claim  for  this  entitlement  cannot  be  treated  in  the  same  way.  We say so for the reason that, in many cases, the landowners have chosen to approach the different authorities, like the Competent Authority, the Arbitrators, or the Courts, for the grant of ‘solatium’ and ‘interest’decades  after  the  cases  regarding  the  quantum  of  the  land  acquisition compensation for their lands stood closed.

This Court is conscious of the legal necessity of giving quietus to decided matters. Once a judgement or an order passed by  a court in a particular case has attained finality and is not the subject matter of further challenge before a prescribed forum, a subsequent change in the  judicial  interpretation  would  not  entail  a reversal  of  such  decision inter-se the parties to that case. In fact, a three-Judge Bench of this Court, including both of us, in State (NCT of Delhi) v. K.L. Rathi Steels Ltd. (2024) 7 SCC 315 has observed that such overturning of the principle of law cannot  sustain  even  a formal  review  of  the  original  decision  once  the same  has  attained  finality.  As  such,  we  find  that  while,  as  a matter  of legal principle, the landowners may be entitled to solatium and interest, they  cannot  be  permitted  to  reopen  old,  stale  claims  which  have  been decided conclusively by a court of law.

However, where final remedy has not been exhausted and statutory appeals  or  applications  have  been  filed  after  inordinate  delay,  claiming the benefit of ‘interest’, ‘solatium’, or ‘interest on solatium’, a balance must be struck between the entitlement of the landowners and the equities operating against their delay. A similar balancing exercise is usually undertaken by this Court while considering cases for enhancement of land acquisition compensation in a belated appeal. The notable method used in such cases is the denial of ‘interest’ payable on the enhanced amount of compensation for the period of delay. A similar exercise must be undertaken for the land acquisition cases arising from the  NH  Act  in  the  matter  of  grant  of  ‘solatium’,  ‘interest’,  and  ‘interest on solatium’.

D.  CONCLUSION AND DIRECTIONS

Considering the facts and circumstances explained in the instant proceedings  along  with  the  various  submissions  placed  on  record  and with a view to balancing the equities regarding delay and the entitlements of the landowners, we issue the following directions:

(i) All landowners whose claims re: the quantum and/or components of compensation for their lands acquired under the NH Act were alive on or after 28.03.2008, i.e., they were pending before one of the prescribed fora, shall be entitled to seek addition of ‘interest’, ‘solatium’, and ‘interest on the solatium’ to their compensation claim;

(ii) In the cases where compensation claims are alive on the aforesaid date, but the landowner has claimed ‘interest’,‘solatium’, and ‘interest on solatium’ after 28.03.2008, no interest  on  both  components  shall  be  payable  for  the  period  of delay. Such landowner shall be entitled to ‘interest’ and ‘interest on solatium’ only from the date on which such claims were raised; and

(iii) If the claims of the landowners stood concluded prior to 28.03.2008, with no further appeal, Writ Petition, Special Leave Petition, etc., then such landowners are not entitled to seek reopening, review, or modification of the said decision for the purpose of claiming ‘solatium’ or ‘interest’.

The instant Review  Petition, along  with all pending  applications, stand disposed of accordingly.

Delay is condoned and leave is granted in the tagged Special Leave Petitions, and while setting aside the impugned judgements of the High Courts, the matters are remanded to the concerned High Courts with a request to recalculate the ‘interest’, ‘solatium’, and ‘interest on solatium’payable to the landowners. Such computation shall be strictly in accordance with the directions issued hereinabove. If the landowners are held to fall within the category of Paragraph 14(ii) then the payment has  to  be  made  accordingly.  Similarly,  in  the  cases  of  landowners  who are covered by Paragraph 14(iii), no such benefit shall be granted.

As a matter of abundant caution, however, it is clarified that these directions do  not entitle the NHAI or the Union  of India to seek refund or recovery of the solatium or interest already paid to the landowners.

Ordered accordingly.