For two decades, land acquired for national highways often followed a special, fast-track statutory procedure under the National Highways Act, 1956 (the “NH Act”). That procedure was intended to expedite strategic infrastructure. Yet it also produced a persistent grievance: landowners under the NH Act were denied statutory additions—especially solatium and interest—that similarly placed landowners received under the general land acquisition law.
The Supreme Court’s intervention began in earnest with its 2019 ruling in Tarsem Singh, but the real administrative and fiscal consequences have unfolded in the years since. A further layer has now been added: NHAI’s attempt to confine the 2019 benefit to the future (prospective application) was dismissed by a formal written order dated 4 February 2025, and NHAI’s review challenge to that outcome is still pending, with the court hearing it and making oral observations about finality and reopening of old cases.
This note explains the background, the legal interplay between regimes, the source of NHAI’s grievance, what is being sought in review, and what it means on the ground—particularly for Competent Authorities/SDMs in Punjab and Divisional Commissioners acting as statutory arbitrators.
1) The three legal regimes and how they intersect
A. The general regime (1894 Act)
Under the Land Acquisition Act, 1894, compulsory acquisition awards commonly carried statutory “add-ons”, notably:
- Solatium (a statutory extra amount recognising the compulsory nature of acquisition), and
- Interest (for delayed payment and/or on enhanced compensation, depending on the stage and forum).
The 1894 Act thus created a predictable compensation architecture: market value plus statutory additions.
B. The modern general regime (2013 Act)
The Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 replaced the 1894 Act for general acquisitions, substantially expanding procedural safeguards, participatory requirements, and compensation entitlements. Importantly, it also addressed the relationship between this 2013 framework and acquisitions undertaken under various “special” enactments, thereby shaping how its compensation principles interact with statutes such as the National Highways Act, 1956.
C. The special highways regime (NH Act, 1956)
The NH Act contains its own acquisition machinery (notifications, vesting, compensation determination by a competent authority, deposit/payment, and dispute resolution through statutory arbitration).
The flashpoint was Section 3J (inserted in 1997), which effectively excluded the application of the 1894 Act to NH Act acquisitions. In practice, this exclusion was invoked to deny solatium and interest to NH Act landowners even when comparable landowners under general acquisition law received those benefits.
The “interplay” in one sentence:
General land acquisition law built a compensation structure with statutory additions; the NH Act ran a special procedure; Section 3J created an exclusion that the Supreme Court later treated as constitutionally impermissible insofar as it produced unequal compensation outcomes.
2) The 2019 Supreme Court ruling: what the court held, and why
In 2019, the Supreme Court in Union of India v. Tarsem Singh held, in substance, that landowners whose land was acquired under the NH Act could not be denied solatium and interest merely because of Section 3J, because that denial created an unconstitutional inequality vis-à-vis other similarly placed landowners. The court’s reasoning pivoted on Article 14 (equality): a state instrumentality cannot create materially inferior compensation outcomes through an exclusion that has no constitutionally acceptable justification.
The consequence was clear in administration: NH Act awards and the downstream appellate/ arbitral outcomes had to recognise solatium and interest entitlements in line with the constitutional position declared by the court.
3) The real post-2019 controversy: prospective vs retrospective application
Once the court declares that a statutory exclusion is unconstitutional (or cannot operate in a discriminatory way), a practical question often arises:
Does the benefit apply only in future cases, or also to past acquisitions?
NHAI’s position has been that if Tarsem Singh is treated as operating retrospectively, it will:
- encourage reopening of old, settled awards,
- generate mass litigation, and
- impose an enormous and unbudgeted financial burden on the highway programme.
Landowners, on the other hand, argue that limiting the benefit only to future cases would freeze historic inequality into permanence and reward the state for having paid lesser compensation under an unconstitutional arrangement.
4) The February 2025 position: Was NHAI’s plea dismissed, or was it only a remark?
This needs to be stated with precision:
- Yes—there is a written Supreme Court order dated 4 February 2025 dismissing NHAI’s plea seeking prospective application (i.e., the court did not accept “prospective only” as a general solution).
- Separately, NHAI’s review petition challenging that outcome has been entertained to the extent that notice has been issued and the matter has been listed/ heard in open court. In that review hearing context, the court has been reported as making oral observations about finality, cut-offs, and whether pre-2018 disposed matters can be reopened particularly for interest.
So, the “dismissal” relates to the 4 February 2025 decision on the prospective-only plea. The later reporting about oral observations concerns the pending review proceedings, not a concluded final determination of the review.
5) Why NHAI is aggrieved: the administrative and fiscal logic
NHAI’s grievance is not simply doctrinal; it is operational. It says that retrospective application can mean:
- fresh claims for solatium/ interest on acquisitions where compensation was paid years ago,
- pressure on authorities to recompute payouts across large project corridors, and
- prolonged uncertainty over project costs, with cascading effects on contracting and financing.
In court, NHAI has projected a very large aggregate liability (reported around ₹32,000 crore) if retrospective benefits are allowed broadly and old matters are reopened, and has contrasted this with much smaller figures that were apparently contemplated earlier in the litigation narrative.
6) What review relief NHAI is effectively seeking
A review is not a full appeal; it is an exceptional jurisdiction. Still, the practical relief NHAI is aiming for (as reported) can be understood in these workable frames:
- Finality protection: Concluded/ disposed matters should not be reopened merely to add interest (and possibly not to add solatium) after a long delay.
- A cut-off framework: Benefits may be confined to claims that were “alive” or pending as of a certain date, rather than permitting late claims decades later.
- Differentiation between components: Even if solatium is extended in some older situations, interest may be curtailed to prevent runaway fiscal consequences—especially where the claimant slept over rights for years.
The oral remarks reported in the latest hearing are consistent with a judicial attempt to balance equality with finality, and to separate the treatment of pending claims from long-settled awards.
7) Practical implications for Punjab: Competent authorities/ SDMs and divisional commissioners as arbitrators
A. For competent authorities/ SDMs (NH Act compensation determination)
In Punjab, the officer designated as a competent authority under the NH Act is frequently the SDM/ additional deputy commissioner (as notified). The administrative implications are concrete:
- Reasoned computation becomes essential: Awards and recalculations must clearly show the base compensation and the statutory additions as applicable.
- Record discipline: Old acquisition records often have gaps; however, recomputation disputes are record-driven. Preserving and producing the complete chain—notification, award, deposit/ payment dates, objections, reference/arbitration history—is now crucial.
- Segregating “pending” vs “concluded”: Officers must be able to identify whether a matter is still “alive” (pending at some statutory stage) or is truly concluded, because the court’s current signals increasingly turn on finality.
B. For divisional commissioners (statutory arbitration under the NH Act)
Divisional commissioners acting as arbitrators sit at the junction of law and administration. The present situation calls for:
- Issue-framing: The arbitration order should explicitly frame whether the claim is timely, whether finality bars reopening, and whether the claim is for solatium alone or solatium plus interest.
- Consistency and transparency: Arbitral orders on compensation frequently set the tone for downstream litigation; clear reasoning reduces avoidable writ petitions.
- A calibrated approach to interest: Where long delays are attributable to the claimant’s own inaction, the adjudicatory instinct of balancing equities becomes more pronounced—particularly if the Supreme Court ultimately crystallises a cut-off approach.
C. For the bar and litigants
For counsel, the decisive factual questions increasingly are:
- Was the case pending at a relevant stage (and when)?
- Were rights pursued with diligence?
- What was the exact statutory route used (NH Act award → arbitration → writ/ appeal), and what is the status of limitation and finality?
Conclusion: Where the law stands today
The Supreme Court’s intervention in Tarsem Singh reflects a constitutional commitment: a special acquisition procedure cannot become a vehicle for unequal compensation. The 4 February 2025 order confirms that the court did not accept a simple “prospective only” escape route. Yet the live review proceedings show the apex court is also grappling with a second constitutional value: finality and legal certainty, especially where claims are revived very late.
For Punjab’s acquisition administration—competent authorities/ SDMs, deputy commissioners/ district collectors (as the overall custodians of district land administration), and divisional commissioners acting as statutory arbitrators—the best immediate response is not guesswork but governance: meticulous record-keeping, clear identification of matters that are pending versus those that are truly concluded, and well-reasoned speaking orders that address solatium and interest as distinct components, with separate findings on entitlement and computation. That administrative discipline will remain valuable—indeed, indispensable—regardless of how narrowly or broadly the Supreme Court ultimately calibrates the scope of retrospective relief in the pending review.
(Karan Bir Singh (KBS) Sidhu is a retired IAS officer and former special chief secretary, government of Punjab. He holds a Master’s degree in Economics from the University of Manchester, UK. He writes at the intersection of global trade negotiations, Trump-era tariff shocks, and contemporary geopolitics.)
