Supreme Court Clarifies Retrospective Application of Solatium and Interest in Land Acquisition Cases: Union of India vs. Tarsem Singh (2025) INSC 146

Date of the Judgment: 04 February 2025
Citation: 2025 INSC 146
Judges: Surya Kant, J., Ujjal Bhuyan, J.

When land is acquired for public purposes, are landowners entitled to additional compensation even after the initial compensation has been determined and finalized? The Supreme Court of India addressed this critical question in a recent case concerning land acquisitions under the National Highways Act, 1956. The court clarified the applicability of its earlier judgment in Union of India v. Tarsem Singh, focusing on whether landowners whose lands were acquired between 1997 and 2015 are entitled to ‘solatium’ (additional compensation) and ‘interest’ on the compensation amount. This judgment, delivered by a bench comprising Justice Surya Kant and Justice Ujjal Bhuyan, addresses the claims of landowners for these additional benefits, ensuring parity and fairness in compensation.

Case Background

The case originates from a Miscellaneous Application filed by the National Highways Authority of India (NHAI) seeking clarification on the prospective or retrospective application of a previous judgment, Union of India & Anr. v. Tarsem Singh & Ors, dated 19.09.2019. This application was prompted by various High Court decisions that, relying on the 2019 judgment, either awarded ‘solatium’ and ‘interest’ to landowners or directed the Competent Authority to consider granting these benefits. The core issue revolves around land acquisitions made by NHAI between 1997 and 2015, during which Section 3J of the National Highways Act, 1956, was in effect, potentially denying landowners these additional compensations.

Timeline

Course of Proceedings

The initial proceedings involved challenges in various High Courts against the denial of ‘solatium’ and ‘interest’ to landowners whose lands were acquired under the NHAI Act between 1997 and 2015. These High Courts, relying on the principle of parity and the unconstitutionality of Section 3J of the NHAI Act, either awarded these benefits or directed the Competent Authority to reconsider the landowners’ claims. Appeals against these decisions led to the Supreme Court, where the central question was whether the judgment in Tarsem Singh should be applied prospectively or retrospectively.

Legal Framework

The legal framework relevant to this case includes:
✓ Land Acquisition Act, 1894: This Act provided the initial framework for land acquisition, including provisions for ‘solatium’ under Section 23(2) and ‘interest’ under Section 28.
✓ National Highways Act, 1956 (NHAI Act): This Act governs the acquisition of land for national highway projects.
✓ Section 3J of the NHAI Act: Inserted in 1997, this section initially excluded the application of the Land Acquisition Act, 1894, thereby denying ‘solatium’ and ‘interest’ to landowners. The section states: ‘nothing in the Land Acquisition Act, 1894 shall apply to an acquisition under this Act’.
✓ Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 (2013 Act): This Act came into force on 01.01.2014 and was later made applicable to acquisitions under the NHAI Act from 01.01.2015, thereby reinstating the benefits of ‘solatium’ and ‘interest’.
✓ Article 14 of the Constitution of India: Guarantees equality before the law and equal protection of the laws, which is central to the argument that denying ‘solatium’ and ‘interest’ to some landowners while granting it to others is discriminatory.
✓ Article 300A of the Constitution of India: Mandates that no person shall be deprived of their property save by authority of law, emphasizing the need for fair compensation in land acquisition.

Arguments

Arguments on behalf of the NHAI:

• Prospectivity of the Judgment:
  The NHAI argued that the judgment in Tarsem Singh should apply prospectively from 19.09.2019, to prevent the reopening of cases already finalized. They contended that retrospective application would contradict the principles established in Gurpreet Singh v. Union of India.
• Economic Ramifications:
  Applying the judgment retrospectively would necessitate reopening all acquisitions made between 1997 and 2015, imposing an additional burden of approximately Rupees 92.18 crores on the public exchequer for ‘interest’ and ‘solatium’.
• Doctrine of Immutability:
  Reopening finalized cases would contravene the doctrine of immutability, which protects the unalterable nature of judgments that have attained finality. Additionally, any claims raised now would be barred by delay and laches.

Arguments on behalf of the Landowners:

• Ensuring Parity:
  Declaring the judgment prospective would render the effort to ensure parity redundant, as the 2013 Act already mandates ‘solatium’ and ‘interest’. The purpose of Tarsem Singh was to address grievances of landowners denied these benefits due to Section 3J of the NHAI Act.
• Hostile Discrimination:
  Limiting the judgment’s application would result in hostile discrimination, as some landowners have already benefited from the declaration of Section 3J as unconstitutional, while others would be deprived of the same relief, undermining Article 14 of the Constitution.
• Attempt to Evade Liability:
  The application seeking clarification is a second attempt to evade impending liability. The Supreme Court has already addressed the precedent in Sunita Mehra, holding that the benefit of ‘solatium’ and ‘interest’ must be extended to all cases arising between 1997 and 2015.
• Review of Decision:
  The clarification sought would effectively amount to a review of the decision in Tarsem Singh, allowing the government to withdraw from its previously stated position of extending the benefit of ‘solatium’ and ‘interest’.

Issues Framed by the Supreme Court

1. Whether the judgment in Union of India v. Tarsem Singh is applicable prospectively or extends retrospectively.

Treatment of the Issue by the Court: “The following table demonstrates as to how the Court decided the issues”

Authorities

The Court considered the following authorities:

• Lalita v. Union of India, 2002 SCC Online Kar 569: The Karnataka High Court first struck down Section 3J of the NHAI Act as unconstitutional.
• Golden Iron and Steel v. Union of India: The Punjab and Haryana High Court followed suit, striking down Section 3J.
• T. Chakrapani v. Union of India, 2011 SCC Online Mad 2881: The Madras High Court also declared Section 3J unconstitutional.
• Gurpreet Singh v. Union of India, (2006) 8 SCC 457: Cited by the NHAI, this case discusses the principles of prospective application of judgments, which the Court distinguished in the context of ensuring parity and avoiding discrimination.
• Sunita Mehra v. Union of India, (2019) 17 SCC 672: This case was initially interpreted as prohibiting the grant of ‘solatium’ or ‘interest’ in concluded cases, but the Court clarified that the government had conceded to granting these benefits in cases between 1997 and 2015.
• National Highway Authority of India v. Resham Singh, 2023:PHHC:053158 -DB: Referred to in the context of the Punjab and Haryana High Court’s decision regarding ‘solatium’ and ‘interest’.

Authorities Considered by the Court

Judgment

How each submission made by the Parties was treated by the Court?

How each authority was viewed by the Court?

• Lalita v. Union of India, 2002 SCC Online Kar 569: Cited as the first instance of striking down Section 3J, reinforcing the view that the provision was unconstitutional.
• Golden Iron and Steel v. Union of India: Cited to further support the view that Section 3J was unconstitutional.
• T. Chakrapani v. Union of India, 2011 SCC Online Mad 2881: Cited to further support the view that Section 3J was unconstitutional.
• Gurpreet Singh v. Union of India, (2006) 8 SCC 457: Distinguished to emphasize that the principles of prospective application should not override the need to ensure parity and avoid discrimination.
• Sunita Mehra v. Union of India, (2019) 17 SCC 672: Clarified to highlight that the government had already conceded to granting benefits in cases between 1997 and 2015, making the current attempt to retract this stance untenable.
• National Highway Authority of India v. Resham Singh, 2023:PHHC:053158 -DB: Referred to in the context of the High Court’s decision regarding ‘solatium’ and ‘interest’.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the need to ensure equality and fairness in the application of the law. The Court emphasized that denying ‘solatium’ and ‘interest’ to landowners whose lands were acquired between 1997 and 2015, while granting these benefits to others, would create an unjust classification lacking intelligible differentia. The Court also considered the constitutional mandate of Article 300A, which requires fair compensation for land acquisition. Additionally, the Court took into account the government’s previous concession to grant these benefits, viewing the NHAI’s attempt to retract this stance as an effort to evade responsibility.

Fact:Law Ratio

Key Takeaways

• Retrospective Application: The judgment in Union of India v. Tarsem Singh applies retrospectively, benefiting landowners whose lands were acquired between 1997 and 2015.
• Parity in Compensation: Landowners are entitled to ‘solatium’ and ‘interest’ to ensure parity and avoid discrimination.
• No Reopening of Final Cases: The judgment does not direct the reopening of cases that have already attained finality, but it does allow for the grant of additional benefits.

Directions

The Supreme Court directed the Competent Authority to calculate the amount of ‘solatium’ and ‘interest’ in accordance with the directions issued in Tarsem Singh.

Development of Law

The ratio decidendi of the case is that Section 3J of the NHAI Act, by excluding the applicability of the 1894 Act and thereby denying ‘solatium’ and ‘interest’ for lands acquired under the NHAI Act, is violative of Article 14 of the Constitution. This judgment reinforces the principle that similarly situated individuals should be treated equally and that any disparity strikes at the core of Article 14 and must be rectified.

Conclusion

In conclusion, the Supreme Court dismissed the NHAI’s application, reaffirming that the judgment in Union of India v. Tarsem Singh applies retrospectively. This decision ensures that landowners whose lands were acquired between 1997 and 2015 are entitled to ‘solatium’ and ‘interest’, thereby promoting equality and fairness in compensation for land acquisition.