Solatium & Interest As Per Land Acquisition Act Payable For Acquisitions Made Under National Highways Act: Kerala High Court Reiterates

The Kerala High Court recently rebuked the National Highway Authority of India for 'unnecessarily burdening the courts' with litigations even in the face of settled principles of law.

The Court made the above observation while reiterating that provisions of the Land Acquisition Act 1894 relating to solatium and interest contained in Sections 23(1-A) and (2) and interest payable in terms of Section 28 proviso will apply to acquisitions made under the National Highways Act 1956.

The Division Bench comprising Justice Amit Rawal and Justice C.S. Sudha, observed that in spite of the decision of the Apex Court in Union of India & Anr v. Tarsem Singh & Ors. (2019) which declared as unconstitutional Section 3J of the National Highways Act to the extent it excludes solatium and interest as per Land Acquisition Act to acquisitions done under the NH Act, the NHAI had been challenging the grant of the benefits under the 1894 Act.

"Fully knowing all these provisions and judgments, it has become a common practice that National Highways Authority of India, unnecessarily is burdening the courts with spate of litigations, putting the State Exchequer at peril causing delay in disbursement of interest and compensation thereon. Not only this, even when delayed payments are released, the element of interest increases exponentially, which also causes a big hole in the pocket of bona fide tax payers. If the National Highway takes appropriate advice, it would save the cost of litigation and would avoid the burden of payment of heavy interests. It could have a great impact in saving the economy of the country," the Bench observed. 

Factual Background

As per the factual matrix, various parcels of land in Neyyattinkara Taluk were acquired for the purpose of forming a by-pass in Thiruvananthapuram city. Declaration under Section 3D(1) of the National Highways Act was approved and compensation was awarded by the competent authority. However, the land owners were aggrieved by the amount that was determined, and sought a reference before the Arbitrator.

As per the Arbitration Award, the value of land was increased, and it was held that the appellant would be eligible to get 9% interest per annum on the total excess amount (50% increased land value + 10% user’s right) from the date of taking possession. The Arbitrator however did not grant the benefits under Sections 23(1-A) and (2), and the interest payable under Section 28 proviso of the erstwhile Land Acquisition Act, 1894.

On the objection by the NHAI to the above Award, the objecting Court set aside the Award. It is in this context that the present Appeal was filed.

Landowners argued that solatium and interest under the Land Acquisition Act, 1894 would also be applied to acquisition made under the National Highways Act. They cited a Government notification dated August 28, 2015 under the Right to Fair Compensation Act, 2013, which they said made solatium and interest payable in cases covered by both the National Highways and Land Acquisition Act with effect from January 1, 2015 through an ordinance.

On the other hand, it was argued on behalf of the respondents that in the present case, notification under Section 3A of National Highways Act was issued in March 2012, before the notification of 2015 that extended the benefits of solatium and interest to land owners, and hence the benefit would not be applicable. 

Findings of the Court

The Court observed that pursuant to the decision of the Apex Court in Tarsem Singh case, the provisions of the Land Acquisition Act relating to solatium and interest contained in Sections 23(1-A) and (2) and interest payable in terms of Section 28 proviso would apply to acquisitions made under the National Highways Act. It further noted that the said decision had relied upon the decision in Narain Das Jain v. Agra Nagar Mahapalika (1991), wherein it had been held that grant of interest on solatium is a matter of right for land-owners since it amounts to re-compensate for the loss of land of the owner. 

The Court stated that even in certain pending issues before the Supreme Court, the Government had itself conceded that the land owners would be entitled to solatium and interest as envisaged under the Land Acquisition Act. 

"Even after the judgment in Tarsem Singh (supra), National Highways Authority had been challenging grant of interest/solatium, without noticing the fact that the counsel representing them had conceded the applicability of the provisions of 1894 Act viz. grant of solatium interest and interest under Sections 23(1-A) & (2) and 2 and 28 of 1894 Act, brought into effect from 2015, fully knowing well that land owners have given the said benefit in respect of the acquisitions effected between 1997 and 2015," the Court observed. 

It noted that the NHAI had been challenging the grant of interest/solatium, without noticing the fact that the counsel representing them had conceded the applicability of the provisions of 1894 Act with respect to grant of solatium interest and interest.

The Court observed that in Sunita Mehra v. Union of India (2019), Government had also accepted the fact that in respect of acquisitions made under the National Highways Act, 1956, solatium and interest in terms similar to those contained in Sections 23(2) and 28 of the Land Acquisitions Act, 1894 will have to be paid. The said decision had added that in terms of future proceedings, the position would be covered by the provisions of Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013, which have been made applicable to acquisitions under National Highways Act, 1956. 

"For the reasons aforementioned, order of the objecting Court is not tenable and sustainable, it is set aside and Award of the Arbitrator is restored. We also clarify that the land owners would also be entitled to the statutory benefit under Sections 23(1-A) & (2) and 28 of the Land Acquisition Act, as per the dictum in Tarsem Singh (supra) as it would not amount to modification of the Award, for, these are the intrinsic benefits, which are to be granted as per the judgment in Shri Sarjuprasad's case of Bombay High Court," the Court observed, while adding that all the benefits granted by the Arbitrator as well as the statutory benefits granted by the Court would have to be released to land owners, within a period of two months.

The Registrar General of the Court was also directed to circulate the judgment to all Project Directors of National Highway pan India as well as the Managing Director/Chairman for perusal. 

The appellant was represented by Advocates K. Siju, S. Abhilash, Anjana Kannath, and T.S. Sreekutty. Standing Counsel for NHAI Mathews K. Philip, Senior Government Pleader T.K. Vipin Das, and Government Pleader Jimmy George appeared on behalf of the respondents. 

Case Title: Shiji v. The Project Director, National Highway Authority of India & Ors. 

Citation: 2023 LiveLaw (Ker) 275

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