Guarantee of just compensation cannot be diluted: Supreme Court

Stating that the constitutional guarantee of just compensation cannot be diluted, the Supreme Court on Wednesday said solatium and interest in a land acquisition matter cannot be contingent on the magnitude of the financial burden.

A bench of Chief Justice Surya Kant and Justice Ujjal Bhuyan made the observation while disposing of the National Highway Authority of India’s (NHAI) plea seeking review of the apex court’s February 4, 2025, verdict — that the 2019 decision of the top court allowing grant of compensation and interest to farmers whose land was acquired under the NHAI Act would apply retrospectively.

The bench said interest payable to the landowners will be according to the Land Acquisition Act, which is nine per cent, and not the NHAI Act, which has a five per cent cap.

The court said NHAI sought a review of the decision on the grounds that financial liability from solatium and interest to those whose land was acquired by NHAI was not Rs 100 crore as was claimed but around Rs 29,000 crore.

The top court, in its order today, said as far as this contention is concerned, the court made it clear at the outset that even if the corrected financial estimate is taken on record, it does not persuade it to revisit the merits of the earlier order.

“The grant of solatium and interest cannot be made contingent upon the magnitude of the financial burden. The constitutional guarantee of just compensation cannot be diluted on that basis. Mere projection of financial liability does not constitute a valid ground for review,” the CJI said while pronouncing the order.

The bench, however, said its earlier decisions on the issue require a limited clarification to ensure a consistent and equitable understanding of the scope and effect of the judgement.

The top court said it is undisputed that landowners whose lands were acquired under the National Highways Act are entitled to solatium and interest as part of just compensation.

It said that all claims of landowners do not stand on the same footing. In several cases, landowners have pursued different remedies and proceedings, including arbitration and court proceedings, for enhancing compensation or grant of benefits.

“We are of the view that while landowners may be entitled to solatium and interest as a matter of law, they cannot be permitted to reopen concluded claims which have attained finality. The balance between the rights of landowners and the need for certainty in litigation must be maintained. Endless reopening of settled claims cannot be permitted,” it said.

On February 23, the top court orally observed that pre-March 2018 land acquisition cases cannot be reopened for granting compensation with interest to the farmers whose land had been acquired under the NHAI Act.

In 2019, the apex court held that the decision to grant compensation with interest to farmers whose land was acquired under the NHAI Act would apply retrospectively. The NHAI contended that the 2019 judgement imposed a huge financial burden (approximately `32,000 crore) and should therefore apply prospectively. 

The top court previously rejected this contention, noting that denying such benefits violated Article 14 (right to equality) of the Constitution.

“The cut-off date appears to be of 2008, provided claims were alive then. Pre-2018 matters cannot be reopened. Those matters which were pending in 2008 continue. If someone in the early 2020s filed an application saying they are entitled to parity on the basis of 2008, we can say yes as the solatium but not interest, like in land acquisition matters,” the top court had observed.

The court said in its 2019 decision that Section 3J of the NHAI Act, by excluding the applicability of the Land Acquisition Act of 1894 and consequently denying solatium and interest for lands acquired under the NHAI Act, was violative of Article 14 of the Constitution.