National Highways Authority of Indiav.Tarsem Singh & Ors

Synopsis

This judgment addresses a review petition filed by the National Highways Authority of India (NHAI) against an earlier order (Tarsem Singh-II) which had declined to make the benefit of solatium and interest for land acquisitions under the National Highways Act, 1956 applicable only prospectively. NHAI sought review on the ground that the financial burden projected during the earlier arguments was based on a clerical error – the actual liability was ₹29,000 crores, not ₹100 crores. The Supreme Court dismissed the review, holding that the magnitude of financial burden cannot override the constitutional entitlement to just compensation. However, the Court, while reaffirming the substantive right to solatium and interest for the period between 1997 and 2015, issued clarifications to ensure that stale or delayed claims are not reopened. It directed that only claims that were “alive” (pending before any forum) on or after 28.03.2008 (the date of the landmark High Court judgment in Golden Iron and Steel Forging) are entitled to full solatium and interest; for claims raised after that date, no interest shall be payable for the period of delay; and claims that stood concluded before that date cannot be reopened. The Court also remanded several connected matters to the High Courts for recalculation in accordance with these directions.

2. Basic Information of the Judgment

Case Title: National Highways Authority of India vs. Tarsem Singh & Ors. (with connected matters)

Review Petition (Civil) No.: 2528 of 2025 in Miscellaneous Application No. 1773 of 2021 in Civil Appeal No. 7064 of 2019

Bench: Chief Justice Surya Kant and Justice Ujjal Bhuyan

Date of Decision: March 25, 2026

Citation: 2026 INSC 291

Nature: Review Petition against order dated 04.02.2025 (Tarsem Singh-II), along with several Special Leave Petitions arising from High Court judgments directing payment of solatium and interest.

3. Legal Framework

This judgment involves the interpretation of the National Highways Act, 1956 (NH Act), the Land Acquisition Act, 1894 (LA Act), the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 (2013 Act), and the principles governing finality of judgments and condonation of delay.

A. Key Statutory Provisions:

• National Highways Act, 1956:
  Section 3-J (inserted in 1997): Provided that the Land Acquisition Act, 1894 would not apply to acquisitions under the NH Act. This resulted in denial of solatium and interest to landowners under the NH Act.
  Section 3-G: Deals with determination of compensation under the NH Act.

• Land Acquisition Act, 1894:
  Section 23(2): Solatium (30% of market value) for compulsory acquisition.
  Section 28: Interest on compensation.
  Section 23(1-A): Additional amount (12% per annum) for the period from the date of notification to the date of award.

• Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013:
  Extended the compensation framework to NH Act acquisitions from 01.01.2015 (by notification dated 28.08.2015).

• Constitution of India:
  Article 14: Equality before law – the basis for striking down discriminatory provisions.
  Article 300A: Right to property – no person shall be deprived of property except by authority of law.

B. Related Precedents (Discussed in the Judgment):

• Lalita v. Union of India (Karnataka High Court): Struck down Section 3-J as unconstitutional, but stayed by Division Bench.

• Golden Iron and Steel Forging v. Union of India (2008, Punjab & Haryana High Court): Read down Section 3-J to grant solatium and interest; the cut‑off date 28.03.2008 is derived from this judgment.

• T. Chakrapani v. Union of India (2011, Madras High Court): Similarly read down Section 3-J.

• Sunita Mehra v. Union of India (2014): Supreme Court directed that solatium and interest be available to landowners whose proceedings were pending as on 28.03.2008.

• Union of India v. Tarsem Singh (2019) (Tarsem Singh-I): Declared Section 3-J unconstitutional to the extent it denied solatium and interest; held that landowners for the period 1997–2015 are entitled to solatium and interest under the 1894 Act.

• National Highways Authority of India v. Tarsem Singh (2025) (Tarsem Singh-II): Clarified that the benefit is not prospective only; rejected the plea of financial burden (then estimated at ₹100 crores).

• State (NCT of Delhi) v. K.L. Rathi Steels Ltd. (2024): A three‑Judge Bench held that a change in judicial interpretation cannot reopen a case that has attained finality between the parties.

4. Relevant Facts of the Case

1. Background of Acquisitions: For acquisitions under the NH Act between 1997 (when Section 3-J was inserted) and 2015 (when the 2013 Act’s compensation regime was extended to NH Act), landowners were denied solatium and interest, which were available under the LA Act.

2. High Court Decisions: Various High Courts read down Section 3-J to grant solatium and interest. The Punjab and Haryana High Court in Golden Iron and Steel Forging (28.03.2008) and the Madras High Court in T. Chakrapani (04.03.2011) were significant.

3. Supreme Court in Tarsem Singh-I (2019): The Court held that solatium and interest must be granted for the interregnum period, and declared Section 3-J unconstitutional to that extent.

4. Tarsem Singh-II (2025): NHAI sought a clarification that the benefit should apply prospectively. The Court rejected it, noting that the financial burden (estimated at ₹100 crores) was not a valid ground.

5. Review Petition: NHAI filed a review, claiming the financial burden was actually ₹29,000 crores due to a clerical error.

6. Connected SLPs: Several High Courts had directed payment of solatium and interest in terms of Tarsem Singh-I and Tarsem Singh-II; NHAI challenged those orders, and they were tagged with the review.

5. Issues Identified by the Supreme Court

1. Whether the review petition should be allowed on the ground of an apparent error in the earlier estimate of financial burden.

2. Whether the benefit of solatium and interest under Tarsem Singh-I and Tarsem Singh-II should be made applicable only prospectively.

3. What clarifications are necessary to balance the substantive entitlement of landowners with the need for finality of concluded proceedings and the equities of delay.

6. Ratio Decidendi (The Reasoning and Decision of the Court)

A. Dismissal of Review Petition

• The Court held that even if the financial burden was under‑estimated in the earlier order, that does not constitute an “error apparent on the face of the record” warranting review. The earlier order had already held that the constitutional guarantee of just compensation cannot be defeated by fiscal considerations. The magnitude of the burden, whether ₹100 crores or ₹29,000 crores, does not change the legal principle.

• The Court noted that the entitlement to solatium and interest is a substantive right rooted in Articles 14 and 300A; financial constraints cannot override that right.

B. Clarification on Delayed and Barred Claims

• The Court observed that while the substantive entitlement stands, not every claim can be treated uniformly. Claims that were “alive” (pending before a forum) on or after the date of the first authoritative High Court judgment (28.03.2008) can be adjudicated and granted the full benefit.

• However, claims that were already concluded (no further appeal, writ, or review pending) before that date cannot be reopened merely because of a subsequent change in law. This is consistent with the principle of finality of judgments and the decision in K.L. Rathi Steels.

• For claims raised after 28.03.2008 (i.e., where the landowner had not earlier claimed solatium and interest), the entitlement exists but interest on solatium and on the solatium itself shall not be payable for the period of delay. Interest will run only from the date the claim was actually raised.

C. Directions Issued

1. Landowners whose claims were alive on or after 28.03.2008 (i.e., pending before any competent authority, arbitrator, or court) are entitled to seek addition of solatium, interest, and interest on solatium.

2. In cases where the claim for these components was raised after 28.03.2008, no interest shall be payable for the period of delay. Interest and interest on solatium shall be payable only from the date the claim was raised.

3. Claims that stood concluded (i.e., no further proceedings pending) prior to 28.03.2008 cannot be reopened to claim solatium or interest.

4. These directions apply prospectively; payments already made are not to be recovered.

5. The connected Special Leave Petitions were remanded to the High Courts to recalculate the amounts in accordance with these clarifications.

7. New Legal Principles Established / Reiterated

1. Financial Burden Cannot Trump Constitutional Right: Even if the fiscal impact is enormous, it cannot be a ground to deny just compensation to landowners. Article 300A and Article 14 require that the State pay fair compensation; the quantum of public expenditure is irrelevant to the existence of the right.

2. Clarification on “Pending” Claims: For the purpose of granting solatium and interest under NH Act acquisitions for the 1997–2015 period, the operative date is 28.03.2008 (the date of the Golden Iron and Steel Forging judgment). Claims that were pending as on that date are entitled to full benefits; claims raised thereafter are subject to delay in claiming, and interest will be limited.

3. Finality of Judgments Not to be Disturbed: A subsequent change in judicial interpretation (like Tarsem Singh-I) does not allow a landowner to reopen a concluded acquisition compensation matter. The principle of res judicata and finality of judgments applies even in land acquisition cases.

4. Balance of Equity in Delayed Claims: While substantive rights are preserved, courts can, in the exercise of equity, deny interest for periods of unexplained delay. This approach ensures that genuine claimants are not penalised, but also that stale claims do not cause undue financial burden.

8. The Court’s Analysis and Examination of Concepts

• Review Jurisdiction – Limited Scope: The Court reiterated that review is not an appeal in disguise. An error in the estimate of a factual figure (financial burden) does not constitute an error apparent on the face of the record when the legal reasoning remains intact. The core holding – that financial constraints cannot defeat the right to just compensation – was independent of the exact figure.

• Cut‑off Date Rationale: The Court chose 28.03.2008 as the cut‑off because that was the date of the High Court judgment in Golden Iron and Steel Forging, which first authoritatively declared the entitlement to solatium and interest under the NH Act. Landowners whose claims were pending on or after that date could be said to have had their claims “alive” and could be granted the benefit without being accused of delay. Those who had already concluded their litigation before that date cannot now seek to reopen, as the law was settled later.

• Interest on Delay – Equitable Principle: The Court borrowed from the practice in belated appeals for enhancement of compensation: where a claim is made after a long delay, the court may grant the enhanced compensation but deny interest for the period of delay. Here, the same logic was applied: landowners who did not claim solatium and interest until after 28.03.2008 cannot be said to have been diligent, and thus they should not receive interest for the period before the claim was made.

• Applicability of K.L. Rathi Steels: The Court invoked the three‑Judge Bench decision to underline that even if a coordinate bench subsequently declares a provision unconstitutional, that declaration does not automatically entitle every landowner whose case has become final to have it reopened. Finality of litigation must be respected.

9. Critical Analysis of the Judgment

This judgment strikes a careful balance between substantive rights and procedural finality.

• Strength – Upholding Constitutional Guarantee: The dismissal of the review on the ground of financial burden is significant. It sends a message that the State cannot use fiscal constraints as a shield against its constitutional obligation to pay just compensation. The earlier order had already laid down the principle; this reaffirmation strengthens it.

• Practicality of the Cut‑off Date: By fixing 28.03.2008 as the reference date, the Court provides clarity to executing authorities and courts. It avoids the need for case‑by‑case examination of whether a claim was “pending” at the time of Tarsem Singh-I, which would have been chaotic. Landowners whose cases were pending on or after that date get the full benefit; those who never claimed or whose cases were already closed do not.

• Equitable Treatment of Delay: The direction that interest is not payable for the period of delay (if the claim was raised after 28.03.2008) ensures that landowners are not unjustly enriched by sleeping on their rights, while still granting the substantive solatium and interest from the date of claim.

• Clarity on Finality: The judgment makes it clear that concluded cases are not to be reopened. This respects the principle of res judicata and prevents endless litigation.

• Potential Critique – Cut‑off Date may be Perceived as Arbitrary: Some might argue that the choice of 28.03.2008 is arbitrary, as other High Courts had given similar judgments later. However, the Court was consistent with the earlier decision in Sunita Mehra which had also used that date, and it was the first authoritative pronouncement on the issue by a High Court.

• Impact on NHAI: The judgment substantially increases the financial liability of NHAI, but the Court made it clear that the constitutional right to compensation cannot be compromised. The clarification on delay, however, will reduce the interest component for those who claimed belatedly, providing some relief to the exchequer.

10. Final Outcome

The Supreme Court dismissed the Review Petition filed by NHAI. It declined to review the earlier order (Tarsem Singh-II) but issued clarifications on the scope of entitlement to solatium and interest:

• Claims pending on or after 28.03.2008 are entitled to full solatium, interest, and interest on solatium.

• If such claims were raised after 28.03.2008, no interest shall be payable for the period of delay; interest will run from the date of claim.

• Claims concluded before 28.03.2008 cannot be reopened.

The connected Special Leave Petitions were remanded to the High Courts for recalculation in accordance with these directions. The Court also directed that no recovery shall be made from landowners who have already been paid.

11.  (MCQs)

1. What was the primary ground on which the National Highways Authority of India sought review of the order in Tarsem Singh-II?
a) That the earlier order was contrary to the Constitution.
b) That the financial burden projected earlier was under‑estimated (actual being ₹29,000 crores).
c) That the landowners had committed fraud.
d) That the High Courts had no jurisdiction to grant solatium.

2. The Supreme Court held that the financial burden of paying solatium and interest:?
a) Can be a valid ground for denying compensation.
b) Can be a ground for prospective application only.
c) Cannot override the constitutional guarantee of just compensation.
d) Must be borne entirely by the landowners.

3. According to the judgment, which of the following categories of landowners is NOT entitled to solatium and interest?
a) Those whose claims were pending before a court on 28.03.2008.
b) Those whose claims were raised after 28.03.2008.
c) Those whose claims were finally concluded (no appeal pending) before 28.03.2008.
d) Those whose claims were raised after 28.03.2008 but before 31.12.2015.

4. For landowners who raised the claim for solatium and interest after 28.03.2008, what is the effect on interest?
a) They are not entitled to interest at all.
b) They are entitled to interest from the date of acquisition.
c) They are entitled to interest only from the date the claim was raised, not for the period of delay.
d) They are entitled to double interest.