Supreme Court Clarifies Which Land Acquisition Law Applies to Solatium and Interest in NH Act Cases

The Supreme Court has put to rest a recurring dispute over highway land acquisitions - whether landowners get solatium and interest calculated under the old Land Acquisition Act of 1894 or the newer 2013 compensation law. A bench of Justice J.B. Pardiwala and Justice K. Vinod Chandran held that the applicable law depends on when the compensation was determined by the Competent Authority - before or after January 1, 2015.Background of the Case

Background of the Case

The dispute arose from Manav Bhanot's appeal against the National Highway Authority of India. His land was taken up for a highway project years earlier, with the acquisition notification issued in June 2011 and the formal declaration published in January 2012. The Competent Authority under the National Highways Act finally fixed his compensation in July 2014, awarding over Rs 3.47 crore, of which Bhanot received a partial payment later that year. Unhappy with the amount, he took the matter to arbitration, and the resulting award was later challenged in court.

The core question was simple to state but tricky to resolve - should the solatium, interest, and interest-on-solatium components be worked out under the century-old 1894 Act, or the more landowner-friendly Right to Fair Compensation Act of 2013, which came into force nationally from January 2014 but wasn't extended to highway acquisitions until January 2015?

The bench traced the legislative history in detail, recalling how a 1997 amendment to the highway law had tried to shut out the 1894 Act entirely - a move earlier struck down by the Supreme Court as discriminatory in the case widely known as Tarsem Singh-I. That ruling had made clear that landowners couldn't be denied solatium and interest merely because of when their land was taken.

But the present bench clarified that this earlier ruling never said the 2013 Act itself should apply retrospectively to acquisitions finalised before 2015. The court explained that the entitlement would be determined by whether the award was passed before or after 01.01.2015 - the date from which the 2013 Act's compensation provisions were formally extended to highway acquisitions. Everything, the judges said, comes down to that cut-off.

The bench also examined a related government notification the appellant relied on, which spoke of "majority of land holdings" left unpaid as of December 2014. The court found this didn't help Bhanot, noting that compensation for a majority of the actual land parcels acquired had already been paid out in 2014 itself.

Since the Competent Authority had fixed Bhanot's compensation in July 2014 - before the 2013 Act's benefits kicked in for highway cases - the court held that solatium, interest, and interest on solatium must be computed under the 1894 Act.

The appeal was allowed only to this extent, and the matter was sent back to the Competent Authority to work out the final numbers and release payment accordingly.