SC reaffirms principles of ‘solatium’ & ‘interest’ laid down in Tarsem Singh, (2019); says clarification on prospective application will nullify its relief

Supreme Court: While considering the instant appeal seeking clarification regarding Union of India v. Tarsem Singh, (2019) 9 SCC 304, to the extent that the judgment is to be applied prospectively, thereby precluding the reopening of cases where land acquisition proceedings have already been completed and the determination of compensation had also attained finality; the Division Bench of Surya Kant* and Ujjal Bhuyan, JJ., reaffirmed the principles of Tarsem Singh (supra) regarding the beneficial nature of granting ‘solatium’ and ‘interest’ while emphasising the need to avoid creating unjust classifications lacking intelligible differentia.

Vis-a-vis clarification on prospective application of Tarsem Singh (supra), the Court opined that granting such a clarification would effectively nullify the very relief that Tarsem Singh (supra) intended to provide, as the prospective operation of it would restore the state of affairs to the same position as it was before the decision was rendered.

The Court stated that modifying or clarifying the judgment in Tarsem Singh (supra) would lend itself to violating the doctrine of immutability, undermining the finality of the decision. The Court pointed out that what the Applicant seeks to achieve, indirectly, is to evade responsibility and further delay the resolution of a settled issue where the directions given are unequivocal—Quando aliquid prohibetur ex directo, prohibetur et per obliquum i.e. ‘what cannot be done directly should also not be done indirectly’.

Background:

Miscellaneous Application has been tagged with several appeals filed by the National Highway Authority of India (NHAI) challenging the decisions of various High Courts at the instance of private parties, wherein relief has been granted relying on Tarsem Singh (supra). The High Courts vide these decisions have either (i) awarded ‘solatium’ and ‘interest’ to the expropriated landowners; or (ii) directed the Competent Authority (Land Acquisition, National Highways) to consider and decide representations made by the landowners for the grant of ‘solatium’ and ‘interest’ in light of Tarsem Singh (supra).

Therefore, after clarification of legal position regarding grant of ‘solatium’ and ‘interest’ vis-à-vis the NHAI Act via Tarsem Singh (supra), it triggered a chain reaction of writ petitions being filed across various High Courts by aggrieved landowners whose lands had been acquired by the NHAI in the period between 1997 and 2015 and who had not been granted the benefit of ‘solatium’ or ‘interest’, seeking parity with those who were found entitled to these statutory benefits prior to 1997 and post-2015.

Court’s Assessment:

Taking note of the legislative background of Section 3-J of the National Highways Authority of India Act and Land Acquisition Act, 1894, Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013; the Court noted that erstwhile 1894 Act facilitated the acquisition of land by the Government for public purposes, outlining a process that included the identification of land, issuance of a notification announcing the intent to acquire, followed by inquiries and hearings to determine the compensation payable to landowners. Additionally, the 1894 Act provided for the grant of ‘solatium’ and ‘interest’ under Sections 23 and 28. For a considerable period, the NHAI Act operated alongside the 1894 Act, with its provisions being pari materia to those of the latter.

Section 3-J of the NHAI Act has been fraught with controversy from its very inception. Section 3-J, along with several other provisions, were inserted into the NHAI Act vide the National Highways Laws (Amendment) Act, 1997, with the objective of ‘creating an environment to promote private investment in National Highways, to speed up construction of highways and to remove bottlenecks in their proper management’. In this regard, one of the impediments to the speedy implementation of highway projects was recognised to be the inordinate delay in the acquisition of land. Accordingly, the NHAI Act was amended, with a number of measures undertaken to accelerate the procedure of acquisition, whereby a determination of compensation would be made by the Competent Authority, and if not accepted by either party, it would then be determined by an arbitrator appointed by the Central Government. In addition, this newly introduced process did not envisage either ‘solatium’ or ‘interest’ and rather declared through Section 3-J that ‘nothing in the Land Acquisition Act, 1894 shall apply to an acquisition under this Act.

However, upon its incorporation and coming into force, several High Courts began to strike down Section 3-J of the NHAI as unconstitutional in the light of its effect of treating similarly situated individuals differently. Meanwhile, Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 came into being and a subsequent amendment made its provisions applicable to numerous enactments, including the NHAI Act including acquisitions carried out under the NHAI Act.

The Court pointed out that Tarsem Singh (supra) had held that Section 3-J of the NHAI Act, by excluding the applicability of the 1894 Act and thereby denying ‘solatium’ and ‘interest’ for lands acquired under the NHAI Act, is violative of Article 14 of the Constitution.

The broader purpose behind Tarsem Singh (supra) was to resolve and put quietus upon the quagmire created by Section 3J of the NHAI Act, which led to the unequal treatment of similarly situated individuals. When a provision is declared unconstitutional, any continued disparity strikes at the core of Article 14 and must be rectified, particularly when such disparity affects only a select group.

Even if it is assumed that the decision in Tarsem Singh (supra) suffers from the vice of vagueness, the absence of a judicial directive or an explicit legislative mandate should not result in the creation of an artificial classification among a homogeneous group by the same State exercising powers under the same Statute. “In this specific instance, the landowners have no discretion or choice regarding the date of land acquisition or the surrender of possession. Thus, both equity and equality demand that no such discrimination be permitted, as allowing it would be unjust”.

The Court stated that the decision in Tarsem Singh (supra) also cannot be assailed on the grounds that it opens a Pandora’s Box or contravenes the doctrine of immutability, as it merely allows for the grant of ‘solatium’ or ‘interest’, which are inherently embedded as compensatory benefits under an expropriating legislation. This exercise cannot be equated to reopening of cases or revisiting the decisions that have already attained finality. Similarly, the restoration of these twin benefits does not invite reconsideration of the merits of a decided case, re-evaluation of the compensation amount, or potentially declaring the acquisition process itself to be unlawful. Instead, the ultimate outcome of Tarsem Singh (supra) is limited to granting ‘solatium’ and ‘interest’ to aggrieved landowners whose lands were acquired by NHAI between 1997 and 2015. It does not, in any manner, direct the reopening of cases that have already attained finality.

Therefore, reaffirming Tarsem Singh (supra), the Court directed the competent authority calculate the amount of ‘solatium’ and ‘interest’ in accordance with the directions issued in Tarsem Singh (supra).