Supreme Court Grants Solatium and Interest for Highway Land Acquisition but Applies 1894 Act Rates; Holds Pre-2015 Compensation Awards Excluded From 2013 Act Benefits
Supreme Court Clarifies Highway Acquisition Compensation: Awards Before January 2015 Get Solatium and Interest Under 1894 Act, Not 2013 Act
Facts
The dispute in Manav Bhanot v. National Highway Authority of India concerned the rate at which solatium, interest and interest on solatium were payable for land compulsorily acquired under the National Highways Act, 1956—whether the benefits had to be calculated under the Land Acquisition Act, 1894 or the more beneficial Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 (“2013 Act”).
The acquisition proceedings commenced with a Section 3A notification published in the Official Gazette on 7 June 2011, followed by newspaper publication on 1 July 2011. After objections were considered, the declaration under Section 3D(1) was published on 20 January 2012.
The Competent Authority determined compensation before the crucial 1 January 2015 cut-off. The appellant received ₹49,17,000 due to him on 13 October 2014 but disputed the quantum, leading to arbitration and subsequent proceedings under Sections 34 and 37 of the Arbitration and Conciliation Act, 1996.
The central controversy before the Supreme Court was therefore not whether the appellant was entitled to solatium and interest—the NHAI substantially accepted that entitlement—but which statutory regime governed the computation.
Issues
The principal issues before the Supreme Court were:
- Whether solatium, interest and interest on solatium for acquisition under the National Highways Act should be calculated under the 1894 Act or the 2013 Act.
- Whether the relevant cut-off for determining the applicable statute is the date of the Competent Authority’s initial determination under Section 3G(1) of the National Highways Act or the date of the subsequent Arbitrator’s award.
- Whether Tarsem Singh-I and Tarsem Singh-II entitled landowners whose acquisition preceded 1 January 2015 to the higher compensation benefits under the 2013 Act.
- Whether a later arbitral determination could bring an acquisition, whose initial compensation had already been fixed before 1 January 2015, within the 2013 Act.
Appellant’s Arguments
The appellant relied principally upon Union of India v. Tarsem Singh (“Tarsem Singh-II”).
He argued that the Supreme Court had expressly rejected any distinction between a landowner whose land was acquired on 31 December 2014 and one whose land was acquired on 1 January 2015, because such a distinction would result in discriminatory treatment.
On that basis, the appellant contended that he should receive the full benefits available under the 2013 Act.
Alternatively, the appellant argued that even if the NHAI’s interpretation of the cut-off was accepted, the Arbitrator’s award was passed after 1 January 2015. Therefore, according to him, the 2013 Act should govern computation of the statutory benefits.
Respondent’s Arguments
NHAI accepted that landowners whose property was acquired under the National Highways Act could claim solatium, interest on compensation and interest on solatium.
Its objection concerned the applicable rates.
NHAI argued that the 2013 Act became applicable to National Highways Act acquisitions only from 1 January 2015. Since the Competent Authority had determined compensation before that date, the benefits had to be computed according to the 1894 Act, notwithstanding the subsequent arbitral proceedings.
NHAI relied particularly upon National Highways Authority of India v. Tarsem Singh (“Tarsem Singh-III”).
Analysis of the Law
1. Effect of Section 3J of the National Highways Act
The 1997 amendment to the National Highways Act inserted Sections 3A to 3J. Section 3J purported to exclude application of the Land Acquisition Act, 1894 to highway acquisitions.
In Tarsem Singh-I, however, the Supreme Court declared Section 3J unconstitutional as violative of Article 14.
The effect was that highway landowners could not be completely deprived of solatium and interest merely because their lands were acquired under the National Highways Act.
2. 2013 Act did not automatically govern all earlier acquisitions
The Supreme Court carefully distinguished between:
- the right to receive solatium and interest, and
- the statutory rate at which those benefits must be computed.
Tarsem Singh-II established that pre-2015 highway acquisitions could not simply be denied solatium and interest. But it did not hold that all such benefits must retrospectively be calculated according to the 2013 Act.
The Court therefore held that the entitlement to solatium and interest for pre-2015 acquisitions was unquestionable, but the applicable statute depended upon when the relevant award was made.
3. Why 1 January 2015 became decisive for highway acquisitions
Although the 2013 Act came into force on 1 January 2014, Section 105 initially excluded enactments contained in the Fourth Schedule, which included the National Highways Act.
The compensation provisions of the 2013 Act were extended to those enactments with effect from 1 January 2015.
Consequently, if compensation under the National Highways Act had been determined by the Competent Authority before 1 January 2015, solatium and interest remained calculable under the 1894 Act. If no such determination had been made before the cut-off, the 2013 Act would apply.
4. Competent Authority’s determination is the relevant “award”
The Court rejected the appellant’s argument that the later Arbitrator’s award should determine which statute applies.
Under Section 3G(1) of the National Highways Act, the Competent Authority initially determines compensation. If either party disputes that amount, Section 3G(5) permits determination by an Arbitrator.
The Supreme Court held that the Competent Authority’s determination is analogous to the Collector’s award under Section 11 of the 1894 Act, whereas the Arbitrator’s determination is analogous to a Civil Court’s determination upon a Section 18 reference.
Therefore, it is the date of the Competent Authority’s determination, rather than the later arbitral award, that decides which compensation regime applies.
Precedent Analysis
Union of India v. Tarsem Singh — Tarsem Singh-I
Tarsem Singh-I declared Section 3J of the National Highways Act unconstitutional because excluding highway landowners from solatium and interest created impermissible discrimination.
The judgment established that landowners whose properties were acquired for national highways could not be deprived of those statutory benefits.
Union of India v. Tarsem Singh — Tarsem Singh-II
In Tarsem Singh-II, the Court refused to make Tarsem Singh-I merely prospective.
The judgment observed that denying benefits to a person whose land was acquired on 31 December 2014 while granting them to someone whose land was acquired on 1 January 2015 would result in hostile discrimination.
However, the present Court clarified that this reasoning established entitlement to solatium and interest, not retrospective computation of those benefits at the rates prescribed by the 2013 Act.
NHAI v. Tarsem Singh — Tarsem Singh-III
The NHAI relied upon Tarsem Singh-III. The Supreme Court observed that the case concerned proceedings that had already attained finality and therefore did not conclusively answer the present issue concerning which statute governs the computation. The Court described the present issue as res integra.
Indore Development Authority v. Manoharlal
The Court also examined the Constitution Bench ruling in Indore Development Authority concerning Section 24(1)(a) of the 2013 Act.
That decision held that where no award had been made as on the commencement of the 2013 Act, compensation had to be determined under the new Act. Conversely, where the award had already been made before the relevant cut-off, the earlier statutory regime continued to govern compensation.
The Supreme Court used this principle by analogy in determining the appropriate cut-off under the National Highways Act.
Court’s Reasoning
The Supreme Court drew a clear distinction between entitlement and quantification.
A landowner whose property was acquired under the National Highways Act before 1 January 2015 is not deprived of solatium, interest and interest on solatium. However, that does not automatically mean those benefits must be calculated at the more beneficial rates under the 2013 Act.
The decisive question is when the Competent Authority determined compensation under Section 3G(1).
The Court held that:
If the Competent Authority determined compensation before 1 January 2015, solatium, interest and interest on solatium are calculated under the 1894 Act.
If compensation had not been determined before 1 January 2015, the 2013 Act applies.
In the present case, the Competent Authority’s determination preceded the cut-off. Consequently, although the appellant was entitled to solatium, interest and interest on solatium, those amounts had to be calculated according to the Land Acquisition Act, 1894, not the 2013 Act.
The subsequent arbitral award did not change the applicable statutory regime because arbitration under Section 3G(5) was analogous to a reference challenging an already-made compensation award rather than the initial award itself.
Conclusion
The Supreme Court partly allowed the appeal.
It held that the appellant was entitled to:
- solatium;
- interest on compensation; and
- interest on solatium,
but all three benefits had to be calculated under the Land Acquisition Act, 1894, because the Competent Authority had determined compensation before the 2013 Act became applicable to National Highways Act acquisitions from 1 January 2015.
The matter was remanded to the Competent Authority for computation and disbursal of those benefits to the appellant.
Case Details
Case: Manav Bhanot v. National Highway Authority of India
Court: Supreme Court of India
Case Number: Civil Appeal arising out of SLP (C) No. 27541 of 2024; 2026 INSC 973
Judge: Justice J.B. Pardiwala and Justice K. Vinod Chandran
Date: 8 September 2026
Result: Appeal partly allowed; solatium, interest and interest on solatium granted under the 1894 Act; matter remanded to the Competent Authority for computation and disbursal
