LEGAL ISSUE: Whether the denial of solatium and interest for land acquired under the National Highways Act, 1956, violates Article 14 of the Constitution of India.
CASE TYPE: Land Acquisition, Constitutional Law
Case Name: Union of India & Anr. vs. Tarsem Singh & Ors.
Judgment Date: 19 September 2019
Introduction
Date of the Judgment: 19 September 2019
Citation: (2019) INSC 972
Judges: R.F. Nariman, J., Surya Kant, J.
Can landowners be denied additional compensation and interest when their land is acquired for national highway projects? The Supreme Court of India recently addressed this crucial question, examining whether the National Highways Act, 1956, unfairly discriminates against landowners by denying them benefits available under the Land Acquisition Act, 1894. This judgment clarifies the rights of landowners and ensures fair compensation for compulsory land acquisition. The bench was composed of Justices R.F. Nariman and Surya Kant, with the majority opinion authored by Justice R.F. Nariman.
Case Background
The case originated from the acquisition of land for the four-laning of National Highway No. 1-A in Punjab. A notification was issued on 24th December 2004, under Section 3A of the National Highways Act, 1956, for acquiring land belonging to the respondents. On 11th July, 2005, the lands were declared to have vested in the State under Section 3D(2) of the Act. The competent authority awarded compensation at Rs. 4,219 per marla, or Rs. 6.75 lakhs per acre, on 5th October 2006. The landowners disputed this, leading to the appointment of an Arbitrator who determined compensation at Rs. 1.5 lakhs per marla. Importantly, the Arbitrator did not award solatium or interest, as the National Highways Act does not provide for these.
The Union of India’s application under Section 34 of the Arbitration Act was dismissed as time-barred. The High Court, in appeal, upheld the compensation rate of Rs. 1.5 lakhs per marla but removed the grant of severance and 18% interest. However, relying on a previous judgment, the High Court directed the National Highway Authority to pay solatium at 30%.
Timeline:
| Date | Event |
|---|---|
| 24 December 2004 | Notification issued under Section 3A of the National Highways Act, 1956, for land acquisition. |
| 11 July 2005 | Lands declared to have vested in the State under Section 3D(2) of the Act. |
| 5 October 2006 | Competent authority passed an Award calculating compensation at Rs.4,219/- per marla or Rs.6.75 lakhs per acre. |
| Arbitrator appointed, who determined compensation at Rs. 1.5 lakhs per marla. No solatium or interest awarded. | |
| Union of India’s Section 34 application under the Arbitration Act dismissed as time-barred. | |
| High Court upheld compensation rate, removed severance and 18% interest, and directed payment of 30% solatium. | |
| 19 September 2019 | Supreme Court judgment striking down Section 3J of the National Highways Act. |
Legal Framework
The core of the legal issue lies in the interpretation of the National Highways Act, 1956, specifically Sections 3A to 3J, which were introduced by the National Highways Laws (Amendment) Act, 1997. These sections outline the process for land acquisition for national highways, including the determination of compensation.
Section 3A of the National Highways Act, 1956, empowers the Central Government to declare its intention to acquire land for public purposes related to national highways. Section 3D(2) states that upon the publication of the declaration, the land vests absolutely in the Central Government. Section 3G provides for the determination of compensation by a competent authority, and if either party is not satisfied, the matter is referred to an arbitrator.
Section 3J of the National Highways Act, 1956, explicitly states that “Nothing in the Land Acquisition Act, 1894 shall apply to an acquisition under this Act.” This provision excludes the application of the Land Acquisition Act, 1894, which provides for solatium and interest, to acquisitions under the National Highways Act.
The Land Acquisition Act, 1894, on the other hand, provides for solatium and interest in addition to the market value of the land as compensation for compulsory acquisition.
The Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013, under Section 105, also includes the National Highways Act, 1956, in its Fourth Schedule. A notification dated 28th August, 2015, under Section 105, read with Section 113 of the 2013 Act, makes the compensation provisions of the 2013 Act applicable to acquisitions under the National Highways Act.
Arguments
Arguments by the Union of India and NHAI:
- The National Highways Act is a complete code that excludes the application of the Land Acquisition Act.
- Absent discrimination or manifest arbitrariness, the non-award of solatium and interest under the National Highways Act is not a violation of Article 14.
- It is not possible to choose between different acquisition acts. The National Highways Act alone applies when land is acquired for national highways.
- Since market value on the date of notification is given, there is no violation of fundamental rights. Solatium and interest are merely statutory rights.
- As only strips of land are acquired, landowners retain properties, obviating the need for solatium.
- The 1997 Amendment Act, enacting Sections 3A to 3J, is in furtherance of the Directive Principle in Article 39(b) and is shielded from attack under Article 14 by Article 31-C of the Constitution.
Arguments by the Respondents:
- The 1997 Amendment Act’s object (speedy implementation of highway projects) is not related to the Directive Principle in Article 39(b), and thus, does not receive protection under Article 31-C.
- Excluding solatium and interest under the National Highways Act is discriminatory, as it treats persons whose lands are acquired for national highways differently from those whose lands are acquired for other public purposes.
- Solatium is awarded due to the compulsory nature of acquisition, which is present in all types of acquisitions.
- Solatium and interest are integral parts of compensation for compulsory expropriation.
- Judgments upholding non-grant of solatium under other acts (like the Requisitioning and Acquisition of Immovable Property Act, 1952, and the Defence of India Act, 1971) are distinguishable, as those acts involved temporary requisition, not direct acquisition.
- The National Highway Authority, being “State” under Article 12, cannot pick and choose between persons similarly situated.
| Main Submission | Sub-Submissions (Union of India and NHAI) | Sub-Submissions (Respondents) |
|---|---|---|
| Applicability of Land Acquisition Act |
✓ National Highways Act is a complete code. ✓ Expressly excludes the application of Land Acquisition Act. |
✓ Exclusion of solatium and interest is discriminatory. ✓ Solatium is integral to compulsory acquisition. |
| Constitutional Validity |
✓ Non-award of solatium and interest does not violate Article 14. ✓ No fundamental right violated as market value is given. |
✓ Object of the Amendment Act is not related to Article 39(b). ✓ Does not receive protection under Article 31-C. |
| Justification for Differential Treatment |
✓ Landowners retain properties, obviating the need for solatium. ✓ Cannot choose between different Acquisition Acts. |
✓ Requisition Acts are different from Acquisition Acts. ✓ NHAI cannot discriminate between similarly situated persons. |
Issues Framed by the Supreme Court
The Supreme Court framed the following key issue for consideration:
- Whether the non-grant of solatium and interest to lands acquired under the National Highways Act, which is available if lands are acquired under the Land Acquisition Act, is bad in law, and consequently that Section 3J of the National Highways Act, 1956 be struck down as being violative of Article 14 of the Constitution of India to this extent.
Treatment of the Issue by the Court
The following table demonstrates as to how the Court decided the issues:
| Issue | Court’s Decision | Brief Reasoning |
|---|---|---|
| Whether the non-grant of solatium and interest under the National Highways Act violates Article 14. | Yes, Section 3J of the National Highways Act, 1956, is struck down as violative of Article 14. | The Court found that the denial of solatium and interest is discriminatory and has no rational relation to the object of the National Highways Act, which is speedy land acquisition. |
Authorities
The Supreme Court considered several cases and legal provisions to arrive at its decision.
Cases Relied Upon:
| Case Name | Court | How it was used | Ratio |
|---|---|---|---|
| Sunder vs Union of India (2001) 7 SCC 211 | Supreme Court of India | Explained the nature of solatium as part of compensation for compulsory acquisition. | Solatium is paid in consideration of the compulsory nature of acquisition. |
| P. Vajravelu Mudaliar vs Special Deputy Collector for Land Acquisition (1965) 1 SCR 614 | Supreme Court of India | Followed to establish that discrimination between landowners based on the purpose of acquisition is not permissible. | Different principles of compensation cannot be formulated for lands acquired based on the public purpose. |
| Nagpur Improvement Trust vs Vithal Rao (1973) 1 SCC 500 | Supreme Court of India | Followed to establish that classification based on public purpose is not permissible under Article 14. | It is immaterial whether land is acquired under one Acquisition Act or another; discrimination is not allowed. |
| M/s Golden Iron and Steel Forging vs. Union of India 2011 (4) RCR (Civil) 375 | Punjab and Haryana High Court | Approved to support the view that denial of solatium and interest violates Article 14. | The High Court correctly held that the non-grant of solatium and interest is discriminatory. |
| Banshilal Samariya vs Union of India 2005-06 Supp RLW 559 | Rajasthan High Court | Disapproved for incorrectly distinguishing the line of cases on solatium. | The High Court incorrectly followed cases under various state town planning Acts and the Requisitioning Act. |
| Union of India vs Hari Krishnan Khosla 1993 Supp (2) SCC 149 | Supreme Court of India | Distinguished as it pertained to the Requisitioning and Acquisition of Immovable Property Act, 1952, which involves a two-step process. | Cases of acquisition stand on a different footing than those where property is subject to prior requisition. |
| Union of India vs Chajju Ram (2003) 5 SCC 568 | Supreme Court of India | Distinguished for the same reasons as Hari Krishnan Khosla, and noted to be under reconsideration. | The Defence of India Act, 1971, is different as it involves temporary requisition. |
| Prakash Amichand Shah vs State of Gujarat (1986) 1 SCC 581 | Supreme Court of India | Distinguished as it pertained to the Bombay Town Planning Act, which involves a package deal. | The Bombay Town Planning Act is different from the Land Acquisition Act. |
| State of Kerala vs T. M. Peter (1980) 3 SCC 554 | Supreme Court of India | Cited for following Nagpur Improvement Trust and holding that discrimination in solatium is unconstitutional. | Denial of solatium based on the acquisition being for an improvement scheme is discriminatory. |
| Girnar Traders (3) vs State of Maharashtra (2011) 3 SCC 1 | Supreme Court of India | Distinguished as it dealt with whether Section 11-A of the Land Acquisition Act applied to acquisitions under the Maharashtra Regional Town Planning Act. | The judgment was not applicable as it was related to incorporation and not reference. |
| State of Tamil Nadu vs L. Abu Kavur Bai (1984) 1 SCC 515 | Supreme Court of India | Distinguished as it was related to nationalization measures. | Nationalization measures fall within Article 39(b) as a distributive process. |
| Maharashtra SEB vs Thana Electric Supply Co. (1989) 3 SCC 616 | Supreme Court of India | Distinguished as it was related to nationalization measures. | The protection of Article 31-C is accorded only to provisions that are necessary for Article 39(b). |
| Tinsukhia Electric Supply Co. Ltd. vs State of Assam (1989) 3 SCC 709 | Supreme Court of India | Distinguished as it was related to nationalization measures. | Nationalization enactments are entitled to the protection of Article 31-C. |
| Dr K. R. Lakshmanan vs State of Tamil Nadu (1996) 2 SCC 226 | Supreme Court of India | Cited as an example of a law denied protection under Article 31-C. | The Act had no nexus with Article 39(b) and (c) of the Constitution. |
| Assam Sillimanite Ltd. vs Union of India 1991 Supp 3 SCR 273 | Supreme Court of India | Cited to emphasize that a law must have a direct and rational nexus with the principles in Article 39(b) to be shielded by Article 31-C. | The law must have a direct and rational nexus with the principles contained in Article 39(b). |
| Minerva Mills Ltd. v. Union of India 1981 (1) SCR 206 | Supreme Court of India | Cited to emphasize that only the essential provisions of a statute are protected under Article 31-C. | Only those provisions basically and essentially necessary for giving effect to the directive principle are protected under Article 31-C. |
| Akadasi Padhan vs State of Orissa 1963 Supp. (2) SCR 691 | Supreme Court of India | Cited to emphasize that only the essential provisions of a law creating a State monopoly are protected under Article 19(6). | Only the provisions integrally and essentially connected with the creation of the monopoly are protected. |
| State of Maharashtra vs Basantibai Mohanlal Khetan (1986) 2 SCC 516 | Supreme Court of India | Cited to emphasize that it is not necessary that a declaration be made in order that a law avail of the protection of Article 31-C. | It is not necessary that any declaration be made in that behalf. |
| Property Owners’ Association v. State of Maharashtra (1996) 4 SCC 49, (2001) 4 SCC 455, (2013) 7 SCC 522 | Supreme Court of India | Cited for the ongoing debate on the scope of Article 31-C and the definition of “material resources of the community”. | The matter was referred to a nine-judge bench and is still pending. |
| Lalita vs Union of India AIR 2003 Karnataka 165 | Karnataka High Court | Approved for distinguishing Requisition Act cases and relying on Nagpur Improvement Trust. | The High Court correctly distinguished the Requisition Act cases. |
| T. Chakrapani vs Union of India | Madras High Court | Approved for distinguishing Requisition Act cases and relying on Nagpur Improvement Trust. | The High Court correctly distinguished the Requisition Act cases. |
Legal Provisions Relied Upon:
| Legal Provision | Statute | How it was used |
|---|---|---|
| Section 3A | National Highways Act, 1956 | Power to acquire land for national highways. |
| Section 3D(2) | National Highways Act, 1956 | Vesting of land in the Central Government. |
| Section 3G | National Highways Act, 1956 | Determination of compensation. |
| Section 3J | National Highways Act, 1956 | Exclusion of the Land Acquisition Act, 1894. |
| Section 105 | The Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 | Provisions of the Act not to apply in certain cases. |
| Article 14 | Constitution of India | Equality before law. |
| Article 31-C | Constitution of India | Saving of laws giving effect to certain directive principles. |
| Article 39(b) | Constitution of India | Directive principle related to the distribution of material resources. |
| Section 23(1A) and (2) | Land Acquisition Act, 1894 | Provisions for solatium. |
| Section 28 proviso | Land Acquisition Act, 1894 | Provisions for interest. |
| Section 3(b) | Land Acquisition Act, 1894 | Definition of “person interested”. |
| Section 9 | Land Acquisition Act, 1894 | Notice to persons interested. |
| Section 31(1) | Land Acquisition Act, 1894 | Payment of compensation. |
Judgment
How each submission made by the Parties was treated by the Court?
| Submission | Court’s Treatment |
|---|---|
| National Highways Act is a complete code excluding the Land Acquisition Act. | Accepted that the National Highways Act is a separate code but held that it cannot discriminate in the matter of compensation. |
| Non-award of solatium and interest does not violate Article 14. | Rejected. The Court held that denying solatium and interest is discriminatory and violates Article 14. |
| Article 31-C protects the 1997 Amendment Act. | Rejected. The Court held that the object of the 1997 Amendment Act is not related to the Directive Principle in Article 39(b). |
| Solatium and interest are not integral parts of compensation. | Rejected. The Court held that solatium is an integral part of compensation for compulsory acquisition. |
| Requisition Act judgments are applicable. | Rejected. The Court held that Requisition Acts are different from Acquisition Acts. |
| NHAI can pick and choose between persons similarly situated. | Rejected. The Court held that NHAI, being “State” under Article 12, cannot discriminate. |
How each authority was viewed by the Court?
✓ Sunder vs Union of India [(2001) 7 SCC 211]*: The Court relied on this case to define solatium as an integral part of compensation for compulsory acquisition.
✓ P. Vajravelu Mudaliar vs Special Deputy Collector for Land Acquisition [(1965) 1 SCR 614]*: The Court followed this case to highlight that discrimination between landowners based on the purpose of acquisition is not permissible.
✓ Nagpur Improvement Trust vs Vithal Rao [(1973) 1 SCC 500]*: The Court followed this case to emphasize that classification based on public purpose is not permissible under Article 14.
✓ M/s Golden Iron and Steel Forging vs. Union of India [2011 (4) RCR (Civil) 375]*: The Court approved this judgment of the Punjab and Haryana High Court, which rightly held that the non-grant of solatium and interest is discriminatory.
✓ Banshilal Samariya vs Union of India [2005-06 Supp RLW 559]*: The Court disapproved of this judgment of the Rajasthan High Court for incorrectly distinguishing the line of cases on solatium.
✓ Union of India vs Hari Krishnan Khosla [1993 Supp (2) SCC 149]*: The Court distinguished this case, as it pertained to the Requisitioning and Acquisition of Immovable Property Act, 1952, which involves a two-step process.
✓ Union of India vs Chajju Ram [(2003) 5 SCC 568]*: The Court distinguished this case for the same reasons as Hari Krishnan Khosla, and noted that it is under reconsideration.
✓ Prakash Amichand Shah vs State of Gujarat [(1986) 1 SCC 581]*: The Court distinguished this case as it pertained to the Bombay Town Planning Act, which involves a package deal.
✓ State of Kerala vs T. M. Peter [(1980) 3 SCC 554]*: The Court cited this case for following Nagpur Improvement Trust and holding that discrimination in solatium is unconstitutional.
✓ Girnar Traders (3) vs State of Maharashtra [(2011) 3 SCC 1]*: The Court distinguished this case as it dealt with whether Section 11-A of the Land Acquisition Act applied to acquisitions under the Maharashtra Regional Town Planning Act.
What weighed in the mind of the Court?
The Supreme Court’s decision was primarily driven by the principle of equality enshrined in Article 14 of the Constitution. The Court found that the denial of solatium and interest to landowners under the National Highways Act was discriminatory, as it treated them differently from landowners whose lands were acquired under the Land Acquisition Act for other public purposes. The Court emphasized that the compulsory nature of acquisition necessitates the payment of solatium, regardless of the specific statute under which the land is acquired. The Court also noted that the object of the 1997 Amendment Act was to expedite land acquisition, which does not justify the denial of solatium and interest.
The Court also considered the fact that the government itself has extended the benefits of the 2013 Act, including solatium and interest, to acquisitions under the National Highways Act, indicating that the government recognized the discriminatory nature of the 1997 amendment.
| Sentiment | Percentage |
|---|---|
| Discrimination under Article 14 | 40% |
| Compulsory nature of acquisition | 30% |
| Object of the 1997 Amendment Act | 20% |
| Government’s own recognition of discrimination | 10% |
Fact:Law
| Category | Percentage |
|---|---|
| Fact | 30% |
| Law | 70% |
Logical Reasoning:
Final Decision
The Supreme Court held that Section 3J of the National Highways Act, 1956, is violative of Article 14 of the Constitution to the extent that it denies solatium and interest to landowners whose lands are acquired under the said Act.
The Court directed that all landowners whose lands have been acquired under the National Highways Act, 1956, shall be entitled to solatium and interest as per the provisions of the Land Acquisition Act, 1894.
Implications of the Judgment
This judgment has significant implications for land acquisition in India, particularly for national highway projects. It ensures that landowners are treated equally and are not discriminated against based on the statute under which their land is acquired. The judgment establishes the principle that compulsory acquisition must be accompanied by the payment of solatium and interest, which are integral parts of fair compensation.
The striking down of Section 3J of the National Highways Act, 1956, to the extent it denies solatium and interest, has brought the National Highways Act in line with the Land Acquisition Act, 1894, and the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013. This ensures that landowners receive fair compensation for their land, regardless of the specific purpose for which it is acquired.
This decision has also clarified the scope of Article 31-C of the Constitution and its relation to Directive Principles, particularly Article 39(b), emphasizing that the protection under Article 31-C is available only for laws that have a direct and rational nexus with the principles contained in the directive principles.
Summary of the Judgment
The Supreme Court’s decision in Union of India & Anr. vs. Tarsem Singh & Ors. is a landmark judgment that upholds the rights of landowners in compulsory land acquisition cases. The Court struck down Section 3J of the National Highways Act, 1956, to the extent that it denied solatium and interest, holding it to be violative of Article 14 of the Constitution. The judgment ensures that all landowners, regardless of the statute under which their land is acquired, are entitled to fair compensation, including solatium and interest. This decision reinforces the principle of equality and fairness in land acquisition proceedings and has significant implications for future land acquisition cases in India.