Supreme Court issues notice on NHAI's plea seeking review of ruling on retrospective solatium and interest payments

The Supreme Court has issued notice on the National Highway Authority of India's plea seeking review of its earlier judgment that held that solatium and interest granted to all landowners, whose properties were acquired by the Authority between 1997 and 2015, would apply retrospectively.

The February order had come in response to NHAI’s plea seeking clarification on whether the 2019 judgment (Union of India v. Tarsem Singh), which held that provisions of Land Acquisition Act, 1894 relating to solatium and interest will also apply to acquisitions made under the National Highways Act, 1956, will apply prospectively or retrospectively. With the February clarification, landowners who had not received beneficial solatium and interest when their properties were acquired by the authority between 1997 and 2015 due to an amendment, could also receive such compensation.

Seeking review of the February decision, NHAI told the court that if the judgment was applied retrospectively, it would necessitate reopening all acquisitions made by the NHAI between 1997 and 2015. Consequently, the government would be obligated to compensate every claimant whose land was acquired by the NHAI during this period, it said.

Permitting the decision to operate retrospectively would lead to an influx of mass litigation, requiring the reopening of closed cases, and this would have significant economic ramifications, placing an additional burden of approximately Rs 92.18 crore on the public exchequer for the payment of ‘interest’ and ‘solatium’ for the delayed period, the authority said.

Solatium is an additional payment made to landowners whose land is acquired by the government for public projects. It is paid in addition to the market value of the land.

The apex court had in February said that rendering the decision in the 2019 case as prospective would create a situation where a landowner whose land was acquired on December 31, 2014 would be denied the benefit of solatium and interest, whereas a landowner whose land was acquired the very next day, January 1, 2015, the date on which an ordinance was promulgated, would be entitled to these statutory benefits.

While the erstwhile Land Acquisition Act, 1894, facilitated the acquisition of land by the government for public purposes, in 2014, Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 came into force, and thereafter it was amended by an ordinance on January 1, 2015, to make its provisions applicable to numerous enactments, including the National Highways Act. After the lapse of the ordinance, a notification was issued which specified that the provisions of the 2013 Act would apply to acquisitions carried out under the National Highways Act.