Supreme Court Upholds Retrospective Application of Tarsem Singh (2019) Judgment: “Landowners Whose Lands Were Acquired Under the NHAI Act Between 1997-2015 Entitled to Solatium and Interest; Financial Burden Not a Justification to Deny Compensation”

Court’s Decision

The Supreme Court dismissed the Miscellaneous Application filed by the National Highways Authority of India (NHAI), affirming that the judgment in Union of India v. Tarsem Singh (2019) must be applied retrospectively. This means that all landowners whose lands were acquired under the National Highways Act, 1956 (NHAI Act) between 1997 and 2015 are entitled to ‘solatium’ and ‘interest’ on their compensation, even if their cases were previously settled.

The Court rejected NHAI’s argument that the judgment should apply only prospectively (from 2019 onward), stating that such a stance would create an arbitrary and unjust classification among landowners, violating Article 14 of the Constitution (Right to Equality). It further held that financial concerns could not be a justification for depriving landowners of their rightful compensation.

Facts of the Case

The case arose when the NHAI filed a Miscellaneous Application seeking clarification on the applicability of the Supreme Court’s 2019 judgment in Tarsem Singh. The 2019 judgment had held that landowners whose lands were acquired under the NHAI Act were entitled to the same benefits of ‘solatium’ and ‘interest’ as provided under the Land Acquisition Act, 1894.

Background of the Land Acquisition Issue

• Before 1997, landowners whose properties were acquired under the Land Acquisition Act, 1894 were entitled to:
  • Solatium (an additional compensation of 30% over the market value)
  • Interest on delayed payments
• In 1997, Section 3J of the NHAI Act was introduced, which excluded the applicability of the Land Acquisition Act, 1894. This meant that landowners whose lands were acquired under the NHAI Act were denied ‘solatium’ and ‘interest’, unlike other landowners.
• In 2013, the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 (2013 Act) was passed, which reinstated ‘solatium’ and ‘interest’ for landowners. This benefit was extended to acquisitions made from 2015 onwards, but landowners whose properties were acquired between 1997 and 2015 were left out.
• In 2019, the Supreme Court in Tarsem Singh held that Section 3J was unconstitutional and that landowners affected between 1997 and 2015 should also receive ‘solatium’ and ‘interest’. Following this ruling, various High Courts granted relief to affected landowners.
• NHAI challenged these High Court rulings, arguing that Tarsem Singh should apply only prospectively, meaning that landowners whose cases were already closed should not be able to claim additional compensation.
• This case concerns whether Tarsem Singh should apply only to future cases or also to past cases (retrospectively).

Issues Before the Supreme Court

1. Should the ruling in Tarsem Singh (2019) apply prospectively (only to future acquisitions) or retrospectively (also to past cases, including those between 1997-2015)?
2. Does denying ‘solatium’ and ‘interest’ to landowners affected between 1997-2015 violate Article 14 of the Constitution (Right to Equality)?
3. Does the financial burden argument raised by NHAI justify limiting the judgment’s applicability?

Arguments by the Petitioner (NHAI)

The NHAI and the Union of India, represented by the Solicitor General, made the following arguments:

1. Judgment Should Apply Only Prospectively
   • Tarsem Singh (2019) should not apply to cases that were already concluded before 2019.
   • Reopening settled cases would create legal instability and mass litigation.
2. Reopening Cases Would Cause a Financial Burden
   • Retrospective application would cost the government approximately ₹92.18 crores in additional compensation.
   • This would strain public funds and affect ongoing infrastructure projects.
3. Principle of Finality of Cases
   • Once a judgment attains finality, it cannot be altered.
   • Allowing retrospective benefits would violate the doctrine of immutability.
4. Doctrine of Delay and Laches
   • Since affected landowners did not challenge the non-payment of solatium for many years, they should not be allowed to claim compensation now.
   • The delay should disqualify their claims.

Arguments by the Respondents (Landowners)

The landowners, represented by their respective counsels, argued:

1. Denying Retrospective Benefits Violates Article 14 (Right to Equality)
   • Tarsem Singh was meant to correct discrimination between landowners affected by the NHAI Act and those covered by the Land Acquisition Act.
   • Landowners who lost their lands between 1997 and 2015 should not be treated differently from those whose lands were acquired before or after that period.
2. Government Already Admitted That Benefits Should Be Given
   • In previous court hearings, the government had agreed to grant solatium and interest.
   • The government cannot now change its stance and deny the relief.
3. No Mass Reopening of Cases Would Be Required
   • Granting ‘solatium’ and ‘interest’ does not mean re-litigating compensation amounts.
   • It only requires recalculating payments without disturbing the original acquisition.
4. Financial Burden Argument Is Weak
   • The burden should not be an excuse to deny constitutional rights.
   • Similar payments have already been made to landowners in other cases.

Court’s Analysis of the Law

The Supreme Court examined various legal principles:

1. Unconstitutionality of Section 3J
   • Section 3J was declared unconstitutional in Tarsem Singh because it created an unjust distinction between different categories of landowners.
2. Doctrine of Finality and Immutability
   • Granting ‘solatium’ and ‘interest’ does not reopen cases; it merely ensures fair compensation.
3. Doctrine of Equity and Fairness
   • If Tarsem Singh were to apply only prospectively, landowners whose lands were acquired on 31.12.2014 would be denied compensation, while those whose lands were acquired on 01.01.2015 would receive full benefits.
   • This would be illogical and unfair.
4. Financial Concerns Are Secondary to Constitutional Rights
   • The financial burden of ₹92.18 crores is not a valid reason to deny compensation.
   • Most of the cost will be borne by project developers rather than the government.

Conclusion of the Supreme Court

The Supreme Court rejected NHAI’s arguments and ruled that:

1. The judgment in Tarsem Singh (2019) applies retrospectively, covering landowners between 1997 and 2015.
2. The Competent Authority must calculate ‘solatium’ and ‘interest’ for affected landowners.
3. NHAI’s appeal on financial burden is dismissed, as public infrastructure cannot come at the cost of fundamental rights.
4. The appeal in SLP (C) Diary No. 52538/2023 is dismissed, since it concerned only additional market value, not the core issue of solatium.

Implications of the Judgment

• Landowners whose lands were acquired between 1997-2015 under the NHAI Act will now receive ‘solatium’ and ‘interest’.
• Government agencies cannot arbitrarily deny compensation based on financial concerns.
• This ruling reinforces that constitutional guarantees outweigh economic considerations.
• Other land acquisition cases may now cite this judgment to seek retrospective benefits.

This ruling ensures justice for landowners who were unfairly deprived of compensation for nearly two decades.

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