The Supreme Court of India has provided crucial clarifications regarding the payment of solatium and interest to landowners whose properties were acquired under the National Highways Act, 1956 (NH Act) between 1997 and 2015. While refusing to recall its earlier decision in Tarsem Singh-II, the Court established a clear framework to distinguish between active, delayed, and stale claims to balance the rights of landowners with the necessity of legal finality.
The judgment, delivered by a Bench comprising Chief Justice Surya Kant and Justice Ujjal Bhuyan on March 25, 2026, held that while fiscal implications cannot override the constitutional guarantee of just compensation, landowners cannot be permitted to reopen “old, stale claims” that attained finality decades ago.
Background of the Legal Dispute
The controversy dates back to 1997, when Section 3-J was inserted into the NH Act, stipulating that the Land Acquisition Act, 1894 (1894 Act) would not apply to acquisitions under the NH Act. This effectively denied landowners ‘solatium’ and ‘interest’—benefits available to those whose lands were acquired under the 1894 Act.
This statutory distinction was challenged across various High Courts as being discriminatory and violative of Article 14 of the Constitution. Notable decisions included the Karnataka High Court’s ruling in Lalita v. Union of India (2002) and the Punjab and Haryana High Court’s judgment in Golden Iron and Steel Forging v. Union of India (2008). These courts held that denying such benefits was unconstitutional.
In Tarsem Singh-I (2019), a Coordinate Bench of the Supreme Court formally struck down Section 3-J to the extent that it denied solatium and interest. Subsequently, in Tarsem Singh-II (2025), the Court dismissed an application by the National Highways Authority of India (NHAI) seeking to make the 2019 judgment prospective. The NHAI then filed the present Review Petition.
Arguments: The ₹29,000 Crore Financial Burden
The NHAI sought a review primarily on the grounds of a “clerical error” regarding the projected financial impact. In the previous proceedings, the liability was recorded as ₹100 crores. However, the NHAI submitted that the actual liability for solatium and interest across all landowners amounted to approximately ₹29,000 crores.
The NHAI argued that such a massive escalation in liability constituted an “error apparent on the face of record,” warranting a reconsideration of the order refusing prospectivity.
The Court’s Analysis
The Bench rejected the NHAI’s plea to revisit the merits based on the revised financial estimates. The Court observed:
“The corrected estimate of the monetary costs… does not persuade us to revisit the merits of the earlier adjudication. This Court had unequivocally held that the fiscal implications of granting solatium and interest cannot override the substantive entitlement of land-losers.”
The Court further emphasized that the “constitutional guarantee of just compensation cannot be rendered contingent upon the magnitude of the financial burden.”
However, the Bench acknowledged the need to clarify the scope of these decisions to prevent the reopening of concluded cases. Referencing State (NCT of Delhi) v. K.L. Rathi Steels Ltd., the Court noted that a subsequent change in judicial interpretation does not entail a reversal of decisions that have already attained finality.
The Decision: Three Categories of Claims
To balance equities, the Supreme Court issued the following directions for calculating interest, solatium, and interest on solatium:
- Pending Claims: Landowners whose compensation claims (regarding quantum or components) were alive or pending before any forum (Competent Authority, Arbitrator, or Court) on or after March 28, 2008, are entitled to seek the addition of solatium and interest.
- Delayed Claims: In cases where claims were alive on the cut-off date but the landowner raised the demand for solatium and interest after an inordinate delay, no interest shall be payable for the period of delay. Such landowners will receive interest only from the date the specific claim was raised.
- Concluded/Stale Claims: If the compensation proceedings attained finality prior to March 28, 2008, and no further appeals or petitions were pending, the landowners are not entitled to reopen or review those decisions to claim these benefits.
The Court clarified that the cut-off date of March 28, 2008, was derived from the date the Punjab and Haryana High Court first addressed this issue in Golden Iron and Steel.
Conclusion
While disposing of the Review Petition and tagged Special Leave Petitions, the Court remanded several matters back to the respective High Courts to recalculate payments based on these three categories. As a “matter of abundant caution,” the Court clarified that these directions do not allow the NHAI or the Union of India to seek refunds or recoveries of solatium or interest already paid to landowners.
CASE DETAILS
Case Title: National Highways Authority of India v. Tarsem Singh and others
Case Number: Review Petition (Civil) No. 2528 / 2025 in M.A. No. 1773 / 2021 in C.A. No. 7064 / 2019
Bench: Chief Justice Surya Kant and Justice Ujjal Bhuyan
Date of Judgment: March 25, 2026
