SUPREME COURT HIGHLIGHTS INEQUITIES IN LAND ACQUISITION UNDER THE NATIONAL HIGHWAYS ACT, CALLS FOR CENTRAL REVIEW:

The Supreme Court has expressed serious concern over structural deficiencies in the mechanism for determining compensation for land acquired under the National Highways Act, 1956, observing that landowners under this statute are placed at a significant disadvantage when compared to those whose lands are acquired under other acquisition laws. The Court noted that this disparity has resulted in unequal treatment of similarly placed landowners, giving rise to legitimate grievances and dissatisfaction.

The Court highlighted that, under the National Highways Act, disputes relating to compensation are resolved not by judicial courts but through a statutorily mandated arbitration process conducted by government officers such as District Collectors or Commissioners. These officers are typically burdened with extensive administrative responsibilities and do not possess the judicial training or independence necessary to adjudicate complex issues involving land valuation and statutory benefits. As a result, the determination of market value and compensation under the 1956 Act often lacks the procedural safeguards and expertise available in judicial adjudication.

Further compounding the problem, the Court observed that challenges to arbitral awards under the National Highways Act are restricted to the limited remedies provided under the Arbitration and Conciliation Act, 1996. Judicial scrutiny under Sections 34 and 37 of the 1996 Act is narrow in scope, thereby depriving landowners of a meaningful appellate remedy. In contrast, under the Land Acquisition Act, 1894, and the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013, compensation disputes are decided by civil courts that possess both judicial expertise and institutional independence. These statutes also provide broader appellate remedies, enabling a more comprehensive review of compensation determinations.

The Supreme Court noted that this differential treatment effectively creates two distinct classes of landowners without any intelligible basis for such classification. While the objective of the National Highways Act to facilitate time-bound and expeditious infrastructure development was acknowledged as laudable, the Court observed that this goal need not come at the cost of fairness in compensation. It held that the legislative intent of speedy acquisition could be preserved while still ensuring that landowners under the 1956 Act receive compensation assessed in a manner comparable to that under the 1894 and 2013 Acts. The Court emphasised that such parity would be consistent with Article 300A of the Constitution, which guarantees the right to property and mandates that deprivation of property must be accompanied by just compensation.

In light of these concerns, a bench comprising Chief Justice Surya Kant and Justices Joymalya Bagchi and Vipul M. Pancholi urged the Union Government to re-examine the legislative framework of the National Highways Act. The Court suggested that the Centre consider revisiting the compensation determination mechanism to eliminate disparities and ensure equitable treatment of landowners across different acquisition regimes. It also requested the Attorney General for India to examine the issue and directed that a copy of the order be circulated to the Solicitor General of India.

The observations arose in a batch of special leave petitions challenging a judgment of the Punjab and Haryana High Court, which had declared Sections 3G and 3J of the National Highways Act unconstitutional. These provisions form the statutory basis for arbitration-based compensation determination under the Act. Following the High Court’s decision, the arbitral framework was rendered invalid, leading several landowners to withdraw their pending challenges to arbitral awards. However, the Supreme Court subsequently stayed the High Court judgment, temporarily reviving the arbitration mechanism and placing the landowners in a remediless position due to limitation constraints. Invoking its extraordinary powers under Article 142 of the Constitution, the Supreme Court restored the withdrawn petitions and, in doing so, underscored the systemic ambiguity and inequity embedded in the 1956 Act’s compensation regime.