SC flags gaps in highway land compensation, asks Centre to revisit NH Act

Supreme Court flags unfair compensation regime under National Highways Act, says landowners are disadvantaged compared with other land acquisition laws

The Supreme Court has flagged systemic shortcomings in the mechanism for determining compensation for land acquired under the National Highways Act, 1956, observing that landowners covered by this law are placed at a clear disadvantage compared to those whose land is acquired under other acquisition statutes.

 

The court noted that, unlike acquisitions under the Land Acquisition Act, 1894, or the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013, disputes over compensation under the National Highways Act are not adjudicated by courts. Instead, they are statutorily referred to arbitration conducted by government officials such as district collectors or commissioners, who are notified as arbitrators by the Centre. 

According to the Bench, these officers are typically overburdened with administrative responsibilities and lack the judicial training required to adjudicate complex issues relating to land valuation and statutory benefits. The court further pointed out that awards passed under this framework can be challenged only within the narrow confines of Sections 34 and 37 of the Arbitration and Conciliation Act, 1996, resulting in a much more restricted scope of judicial scrutiny. 

By contrast, compensation disputes under the 1894 Act and the 2013 Act are decided by judicial courts, which possess the requisite independence and expertise to assess market value and allied entitlements, and are subject to broader appellate remedies. This differential treatment, the court observed, has no apparent rational basis and has led to deep dissatisfaction among landowners whose properties are acquired under the 1956 Act.

 

The Bench, comprising Chief Justice Surya Kant and Justices Joymalya Bagchi and Vipul M Pancholi, suggested that the Union government re-examine the legislative framework governing highway acquisitions. Emphasising Article 300A of the Constitution, which protects the right to property, the court said parity in the method of compensation determination could be achieved without compromising the objective of expeditious highway development.

 

While acknowledging that the National Highways Act is designed to facilitate time-bound infrastructure projects, the court remarked that this objective need not come at the cost of fairness to landowners. The court also observed that compensation could be assessed in a manner consistent with the principles applicable under the older and newer land acquisition laws, even when the acquisition is for infrastructure projects. The Bench requested the attorney general of India to examine the issue and directed that a copy of the order be forwarded to the solicitor general.

 

The observations were made while dealing with a batch of special leave petitions arising from a Punjab and Haryana High Court judgment that had struck down Sections 3G and 3J of the National Highways Act, which form the statutory basis for arbitration in compensation disputes. After those provisions were invalidated, the arbitral framework under the Act stood disrupted, creating uncertainty for pending cases.

 

In the present matter, 21 landowners had earlier approached the additional district judge under Section 34 of the Arbitration Act to challenge arbitral awards. Following the High Court ruling, they withdrew their petitions on the understanding that the arbitration regime itself had ceased to exist. However, the Supreme Court subsequently stayed the High Court judgment, temporarily reviving the arbitration mechanism, leaving the landowners without an effective remedy as fresh challenges would be barred by limitation.

 

In these circumstances, the landowners moved the Supreme Court seeking restoration of their withdrawn petitions. Exercising its inherent powers under Article 142 of the Constitution, the Bench allowed the restoration, while underscoring the uncertainty and inequity built into the 1956 Act when compared with the acquisition regimes under the 1894 and 2013 laws.

 

The court said this structural imbalance had placed landowners under the National Highways Act in a distinctly prejudicial position, warranting urgent legislative attention.