National Highways Act Land Acquisition: Statutory Interest Must Follow Sections 72 & 80 of the 2013 Act; Writ Jurisdiction Can Correct Statutory Arbitral Awards to Prevent Article 14 Discrimination
1. Introduction
In KULDEEP SINGH AND ANOTHER v. UNION OF INDIA AND OTHERS (Punjab & Haryana High Court, decided on 23.04.2026),
the petitioners (landowners) challenged the denial of statutory interest on enhanced compensation for land acquired for the
Delhi–Amritsar–Katra National Highway (NE-5) under the National Highways Act, 1956 (“1956 Act”).
The key dispute was narrow but significant: while the arbitrator enhanced market value and granted solatium and additional amount, he awarded
interest on enhanced compensation only at 9% from the date of filing the arbitration application, rather than applying the
more protective regime of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013
(“2013 Act”), which prescribes 9% for the first year and 15% thereafter from the relevant trigger (possession/withholding).
The respondents (including NHAI) resisted mainly on maintainability, arguing the petitioners should proceed under
Section 34 of the Arbitration & Conciliation Act, 1996.
Parties and Acquisition Framework
- Petitioners: Landowners in Village Tibber, Tehsil & District Gurdaspur.
- Respondents: Union of India/NHAI and acquisition authorities including CALA.
- Notifications: 07.07.2020 (Section 3-A, 1956 Act) and 09.02.2021 (Section 3-D, 1956 Act).
- CALA Award: 09.04.2021 (Section 3-G(1), 1956 Act) at Rs. 8,58,080/- per acre.
- Arbitral Award: 27.10.2025 (Section 3-G(5), 1956 Act) enhanced to Rs. 15,00,000/- per acre + 100% solatium + 12% additional amount.
2. Summary of the Judgment
The High Court held that the arbitrator committed a manifest error by not awarding interest on enhanced compensation as per
Section 72 of the 2013 Act. It further held that landowners are also entitled to interest on the compensation initially determined
by CALA as per Section 80 of the 2013 Act where payment/deposit was not made as required.
On maintainability, the Court refused to relegate petitioners to a Section 34 challenge because the Section 34 court cannot “modify” the award,
only set it aside—making that remedy ineffective for a dispute confined to correcting the statutory interest component.
The Court therefore modified the arbitral award to grant:
- Section 72 (2013 Act) interest: 9% for first year and 15% thereafter on enhanced amount from the date of possession.
- Section 80 (2013 Act) interest: on the amount originally determined by CALA (where unpaid/not deposited as per the statutory scheme).
3. Analysis
A. Precedents Cited (and Their Influence)
Cited to support the broader proposition that land acquisition under the 1956 Act cannot be used to deny landowners the statutory incidents of
“just compensation” available in general land acquisition law. This provided background to the petitioners’ non-discrimination argument
(Article 14) and reinforced the interpretive trajectory later crystallized in Supreme Court authority.
This was the controlling authority. The High Court treated Tarsem Singh as conclusively settling that:
- Landowners under the National Highways Act are “similarly situated” to landowners under the 2013 Act regarding compensation components.
- Denial of solatium and interest under the National Highways Act framework results in unconstitutional discrimination under Article 14.
- The Supreme Court declared that Land Acquisition Act benefits relating to solatium and interest apply, and held Section 3J unconstitutional “to this extent”.
The High Court extended the logic of Tarsem Singh to the 2013 Act’s interest regime, treating “interest” as an integral component of
compensation and thus essential to parity and non-discrimination.
The High Court used this decision as persuasive reinforcement for two linked propositions:
- Just compensation necessarily includes interest for delay; it is not merely market value + solatium.
- After the 2013 Act, restricting interest to Section 3H(5) of the 1956 Act produces discrimination and undermines the remedial purpose of modern acquisition law.
The judgment was influential in framing interest as restitutionary—compensating for the owner’s loss of use of land and money due to delayed payment.
4) Balwan Singh v. National Highways Authority of India (Lawfinder Doc Id #2425967)
The High Court relied on this Division Bench reasoning to justify applying Section 80 of the 2013 Act to National Highways acquisitions.
The critical analytical move was functional comparison:
- Section 3H(5) of the 1956 Act deals with interest in a limited manner (notably on excess amounts in certain contexts).
- The 1956 Act is silent/inadequate in ensuring interest where compensation is not paid/deposited before possession.
- Since interest is part of compensation, Section 105(3) of the 2013 Act forbids “exceptions or modifications” that reduce compensation.
5) Project Director, NHAI v. M. Hakeem (2021 AIR Supreme Court 3471)
This case was pivotal on maintainability and remedy. The High Court extracted the core holding: under Section 34, courts have no power to
modify an award; they may only set it aside (or remand in limited circumstances). Therefore, sending landowners to Section 34 for a
limited correction of interest would be inefficacious and delay justice.
Cited to restate that alternative remedy is a rule of prudence, not a bar; it does not oust Article 226 jurisdiction where justice so requires.
Used to ground the exception-based approach to alternative remedy. The Court implicitly located the case within those exceptions—especially where
statutory remedy is ineffective or does not provide substantial relief.
The High Court used this to justify avoiding procedural delay where similarly situated landowners have already received the benefit and parity is
demanded. Here, earlier arbitral awards for Village Tibber had granted 9%/15% interest, and NHAI had deposited/disbursed amounts in those cases.
9) M/ s Riar Builders Pvt Ltd & Anr. v. Union of India & Ors. (2026 LiveLaw (SC) 65)
Though not determinative of the interest issue, this Supreme Court observation was invoked to highlight systemic concerns: statutory arbitration under
the 1956 Act is decided by executive officers, with limited appellate correction due to the narrow Section 34/37 scope—creating structural disparity
compared to judicial references under the old and new land acquisition regimes. The High Court used this to support a more searching writ scrutiny
in appropriate cases of statutory arbitration.
B. Legal Reasoning
1) Section 105 of the 2013 Act and the 2015 Central Notification
The Court carefully parsed Section 105:
- Section 105(1) excludes automatic application of the 2013 Act to Fourth Schedule enactments (including National Highways acquisitions).
- Section 105(3) authorizes Central Government to extend beneficial compensation/R&R provisions with modifications that do not reduce compensation.
It noted the Gazette Notification/Removal of Difficulties Order dated 28.08.2015 applying Schedules I–III to Fourth Schedule enactments.
While interest is not within the schedules, the Court treated the interest issue as now governed by constitutional parity principles and Supreme Court law.
2) Interest as an Integral Part of “Just Compensation”
A central conceptual move in the judgment is that interest is not a discretionary add-on; it is a compensatory consequence of
being deprived of property and being denied timely payment. This matters because if interest is part of compensation, then:
- Any scheme that pays lesser interest to one class of landowners (National Highways) than another (2013 Act acquisitions) risks Article 14 violation.
- Section 105(3) forbids modifications that “reduce compensation,” supporting importation of beneficial interest provisions.
3) Correct Trigger and Rate for Interest on Enhanced Compensation (Section 72)
The arbitrator awarded interest at 9% from the date of filing the arbitration application. The High Court held this was wrong because:
- The statutory scheme invoked by the petitioners (and supported by parity jurisprudence) ties interest to possession and delayed payment.
- Earlier arbitral awards for the same village had granted 9%/15% on enhanced compensation, yet the arbitrator deviated without justification.
- The fact that NHAI had challenged the 15% component elsewhere could not justify denying the statutory benefit in the present award; challenge is a separate remedy.
4) Interest on the Amount Initially Determined by CALA (Section 80)
The Court accepted that, where compensation is not paid/deposited on or before possession, Section 80’s two-tier interest (9% then 15% after one year)
should apply, relying on the comparative-benefit analysis adopted in Balwan Singh v. National Highways Authority of India and the “interest as compensation”
thesis strengthened by Tarsem Singh.
5) Maintainability: Why Article 226 Was Invoked Despite Section 34
The Court’s maintainability holding is practically important:
- Under Project Director, NHAI v. M. Hakeem, Section 34 cannot modify an award, only set it aside.
- Here, petitioners accepted the enhancement; only the interest component was defective. Setting aside would be disruptive and dilatory.
- The dispute involved parity and discrimination, reinforced by prior local arbitral awards; writ intervention avoided “justice delayed.”
The Court also distinguished statutory arbitration under the 1956 Act from consensual arbitration, noting appointment by Central Government and potential
concerns about neutrality and institutional design—thereby justifying a somewhat broader supervisory approach in exceptional cases.
C. Impact
1) Substantive Impact: Standardization of Interest in National Highways Acquisitions
The judgment strengthens a clear operational rule for landowners under the 1956 Act:
interest must not be confined to the narrower National Highways framework where doing so reduces compensation or creates discrimination.
It reinforces that:
- Enhanced compensation should carry Section 72 interest (9% then 15%) from possession.
- Original compensation should carry Section 80 interest where unpaid/not deposited as required.
2) Procedural Impact: Writ Review as a Practical Corrective for Statutory Arbitration Errors
The judgment materially signals that, in narrow-correction situations (especially statutory benefits like interest) where Section 34 is structurally
ineffective due to the no-modification rule, High Courts may directly intervene under Article 226/227 to prevent arbitrary outcomes—particularly where
similarly situated landowners have already received the benefit.
3) Equality and Governance Impact
By anchoring the relief in Article 14 parity, the judgment pressures acquiring authorities to adopt uniform practices in deposits/disbursements and
discourages selective payment patterns (the Court criticized differential treatment where some landowners received 2013 Act interest and others did not).
4. Complex Concepts Simplified
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“Enhanced compensation”: the additional amount awarded after challenge (here, by statutory arbitration) over and above the CALA’s initial award.
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“Statutory interest” (Sections 72/80): interest mandated by statute as a right, typically to compensate for delayed payment after possession.
Section 80 expressly escalates from 9% to 15% after one year of non-payment/non-deposit.
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“Section 34 remedy is limited”: under M. Hakeem, a Section 34 court generally cannot rewrite or correct parts of an award; it can mostly only set it aside,
which can force re-arbitration and delays.
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“Article 14 discrimination”: the State cannot arbitrarily treat similarly situated landowners differently on compensation components (including interest),
merely because their land was acquired under a different acquisition statute.
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“Section 105(3) non-dilution principle”: when extending 2013 Act benefits to Fourth Schedule enactments, the Government cannot carve out changes that reduce compensation.
5. Conclusion
This decision is a strong reinforcement of the post-Tarsem Singh compensation architecture for National Highways acquisitions:
interest is a constitutionally significant component of compensation, and landowners cannot be denied the higher, protective interest regime of the 2013 Act
through technical reliance on narrower provisions of the 1956 Act.
Equally important is the Court’s remedial stance: where Section 34 review cannot provide an effective correction and the dispute is confined to statutory interest,
High Courts may deploy Article 226 to prevent delay, enforce parity, and cure manifest arbitral error—especially in statutory arbitration contexts under the 1956 Act.