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Justice Seshasayee of Madras High Court has held that State and its instruments cannot shirk away from their statutory obligation to pay compensation on acquisition of land on the ground of acquiesce  and waiver.

Sections 3 A to 3 J were inserted to the National Highways Laws (Amendment) ordinance of 1997 into the National Highways Act, 1956.  Section 3-J (which has since been struck down) had the effect of excluding the additional compensation (commonly known as solatium) of 30% of the market value payable to the landowner. Section 3-J of the act corresponds to Section 23(c) of the Land Acquisition Act, 1894 which provides that a solatium of 30% of the market value be paid to the landowners. The inconsistency between similar sections in 2 legislations lead to violation of Articles 14 and 21 of the Constitution.

In 2015, the government passed the Right to Fair Compensation & Transparency in Acquisition, Rehabilitation and Resettlement Act, 2013, this legislation made solatium and interest payable for any acquisition made by NHAI.

In 2019, the Supreme Court in a case titled Tarsem Singh Vs Union of India (2019) 9 SCC 304 struck down Section 3-J of the National Highways Act as unconstitutional. This ensured that the land owners whose lands were acquired by NHAI must be treated on par with those whose lands were acquired under the Land Acquisition Act, 1894. The court held that

“52. There is no doubt that the learned Solicitor General, in the aforesaid two orders, has conceded the issue raised in these cases. This assumes importance in view of the plea of Shri Divan that the impugned judgments should be set aside on the ground that when the arbitral awards did not provide for solatium or interest, no Section 34 petition having been filed by the landowners on this score, the Division Bench judgments that are impugned before us ought not to have allowed solatium and/or interest. Ordinarily, we would have acceded to this plea, but given the fact that the Government itself is of the view that solatium and interest should be granted even in cases that arise between 1997 and 2015, in the interest of justice we decline to interfere with such orders, given our discretionary jurisdiction under Article 136 of the Constitution of India. We therefore declare that 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 will apply to acquisitions made under the National Highways Act. Consequently, the provision of Section 3-J is, to this extent, violative of Article 14 of the Constitution of India and, therefore, declared to be unconstitutional.”

The petitioners in this case are people whose lands were acquired by NHAI for developmental purposes. Unhappy with the compensation they received from NHAI, they approached the Competent Authority for Land Acquisitions (CALA), a body constituted under NHAI act. Furthermore being aggrieved by the order of CALA, they approached the statutory arbitrator who disposed their claims.

However the judgment of Tarsem Singh came to be passed and some petitioners gave representations seeking solatium and interest. Since they received no response from the authorities, the filed the writ petitions.  They contended that their right to claim solatium and interest cannot be disputed or denied on technical pleas. It was further contended that the petitioners became entitled to solatium after the awards of the CALA and statutory arbitrator ie. only after the judgment of Tasrem Singh. Once the judgment of Tasrem Singh was passed, the petitioners wasted no time in approaching the court.

The NHAI contended that since the petitioner were aggrieved by non-grant of solatium, they should have contended the same before the CALA and subsequently before the statutory arbitrator. Since they have not done so, they have waived it. NHAI further contended that the award of the arbitration not granting solatium should have been challenges under section 34 of the Arbitration and conciliation act, since they have an alternative statutory remedy the writ is not maintainable.

The judgment of the court:

The court held that the argument of NHAI on waiver and abandonment are primarily aimed at avoiding the petitioner’s claim to solatium and interest. It further held that once a section is struck down on account of being unconstitutional it is deemed to have never existed.

The NHAI further contended that the judgment of Tarsem Singh would operate prospectively and hence the petitioners are not entitled to solatium and interest. The court while referring to Uttaranchal Jal Sansthan Vs Laxmi Devi (2009) 7 SCC 205 held that a judicial decision unless expressly declared otherwise always operates retrospectively.

According to the judgment compensation is not a benevolence that a charitable State grants to the land owners but it is a statutory substitute, a monetary equivalent to enable the land owners to sustain the quality of life which they are entitled to under Article 21. The judgment further holds that solatium is a palliative to help the land losers to wade their lives through the difficulties that often accompanies a compulsory acquisition of a private property.

While answering to the contention of NHAI that the petitioners should have challenged the arbitration award by filing an application under section 34 of Arbitration act, the court held that when in Tarsem Singh case, it is concluded that the denial of solatium was on the basis of a provision that is ultra vires to the constitution, it would follow that the denial of solatium by CALA and the statutory arbitrator cannot be termed as a decision under the act. The court referred to the judgment of the supreme court in K.S.Venkataramana Vs State of Madras (AIR 1966 SC 1089) wherein it was held that mechanism prescribed under the act could only determine the disputes by applying the provisions “under the act.” If the authority acts on basis of a provision which is subsequently declared void, it is deemed to have acted outside its jurisdiction. Hence in conclusion the issue of payment of solatium and interest falls outside the jurisdiction of the authorities constituted under the NHAI Act to decide, their obligation to pay has arisen only after the judgment of the court in Tarsem Singh, hence no circumstances exists for invoking section 34 of the Arbitration act.

On the question of whether the petitioners have waived or abandoned their demand for solatium and interests, the court held that the NHAI is oblivious to the fact that payment of compensation is not the same as consideration that is to be paid between two private parties during conveyancing. The court held that the constitution mandates that the Stated and its instrumentalities should not act in a way that is perilous to the citizens right to life. The court while referring to various judgments of the supreme court held that where there is a statutory obligation to pay compensation which includes solatium and interests, the State or its instruments cannot avoid them on the grounds of acquiescence and waiver.

The court held that the quintessence of Tarsem Singh case is that the land owners cannot be treated deferentially under 2 different enactment as it violates Article 14. This being a correction and instruction to treat the land owners under the NHAI Act on par with the land owners under the Land acquisition Act. Therefore they should be paid solatium and interest as is being given to land owners under Land Acquisition act.

On the aspect of limitation having expired the court held that

“Limitation and laches have one thing in common and one difference: The commonality in them requires the existence of a right in the one who approaches the Court. To expatiate it, or to return to the rudimentary principles, there must be in existence ‘a right’, that there is a need to enforce that right (the cause of action) and then the requirement to enforce it within the time prescribed by law. If it is not done within the time so prescribed, the right will be there, but remedy would be barred. The distinction between limitation and laches is only in point of duration, except that, while limitation is dictated by law, laches is guided by court‘s discretion.”

The court further held that a land owner does not approach the State to acquire his land on the contrary, the State acquires the private property of the land owner against their will, hence it is required to meet a certain liability. The limitation and laches operate where there is a need for demanding something based on a certain right, however under the given circumstances hence the question of limitation does not arise in the given case.

NHAI contended that if the court permits the payment of solatium and interests to the petitioners, it would re-open all the earlier cases where it had denied them to land owners. This would amount to a liability of Rs.2000 crores to NHAI. The court while quoting Tarsem Singh case noted that central government itself was of the view that solatium and interest should be paid for all acquisitions from 1997 to 2005.

The court while allowing the writ petitions directed the CALA to pass consequential order determining differential compensation payable on the head of solatium and interest on the amount already determined as the market value of the property. The authorities were directed to complete this exercise within 12 weeks from the date of receipt of this order.

Sharath Chandra, Advocate, Madras High Court was appointed as the amicus curiae for the case, the court appreciated him for making the case intellectually engaging.