The Supreme Court of India on Wednesday delivered a landmark observation on land acquisition, asserting that the constitutional guarantee of “just compensation” to citizens cannot be undermined or diluted based on the magnitude of the financial liability incurred by the state.
A bench comprising Chief Justice Surya Kant and Justice Ujjal Bhuyan made these remarks while disposing of a review petition filed by the National Highway Authority of India (NHAI). The authority had sought a reconsideration of the apex court’s February 4, 2025, verdict, which held that a 2019 decision granting solatium and interest to farmers under the NHAI Act would apply retrospectively.
The dispute centers on whether landowners whose property was acquired under the National Highways Act are entitled to the same benefits—specifically solatium and interest—as those whose land is acquired under the general Land Acquisition Act.
In 2019, the Supreme Court had struck down Section 3J of the NHAI Act, which excluded the applicability of the Land Acquisition Act of 1894. The court found this exclusion violated Article 14 (Right to Equality) of the Constitution. Consequently, the court ruled that landowners are entitled to a 9% interest rate (as per the Land Acquisition Act) rather than the 5% cap initially set under the NHAI Act.
The NHAI moved the court for a review, arguing that the financial implications of this retrospective application were staggering. While the initial estimate suggested a liability of approximately ₹100 crore, the NHAI informed the bench that the actual corrected figure is closer to ₹29,000 crore (with some estimates reaching ₹32,000 crore).
Rejecting the argument that high costs justify a reversal of the law, Chief Justice Surya Kant stated:
“The grant of solatium and interest cannot be made contingent upon the magnitude of the financial burden. The constitutional guarantee of just compensation cannot be diluted on that basis. Mere projection of financial liability does not constitute a valid ground for review.”
While upholding the right to compensation, the bench provided a significant clarification to prevent an endless cycle of litigation. The court noted that not all claims stand on the same footing and emphasized the need for “certainty in litigation.”
The bench clarified that while the law entitles landowners to these benefits, they cannot reopen “concluded claims” that have already attained finality through previous court orders or arbitral awards.
“The balance between the rights of landowners and the need for certainty in litigation must be maintained. Endless reopening of settled claims cannot be permitted,” the court observed.
The court reiterated observations made on February 23, noting that:
- Pre-March 2018 cases: Generally cannot be reopened if they have already been settled.
- Active Claims: Cases that were pending as of 2008 (the cut-off date) will continue to be eligible for parity.
- Interest vs. Solatium: For certain older applications filed recently seeking parity with 2008 cases, the court indicated that solatium might be granted, but interest may not be applicable in the same manner.
By dismissing the NHAI’s primary contention regarding the financial burden, the Supreme Court has reaffirmed that fundamental rights and the principle of equality under Article 14 take precedence over the exchequer’s budgetary constraints in land acquisition matters.
