The Post-1997 Entitlement to 'Solatium' and 'Interest' Under the National Highways Act: A Landmark Clarification in Union Of India v. Tarsem Singh (2025 INSC 146)

The Supreme Court of India, in the landmark decision of Union Of India v. Tarsem Singh (2025 INSC 146), has firmly established that landowners whose lands were acquired under the National Highways Act, 1956 (“NHAI Act”) between 1997 and 2015 are entitled to the compensation benefits of solatium and interest. The litigation, which forms the subject matter of this judgment, had its genesis in the gradual realization that Section 3J of the NHAI Act — which excluded the application of the Land Acquisition Act, 1894 (“1894 Act”), and thus prevented the award of solatium and interest — was constitutionally flawed.

This matter reached the Supreme Court through a series of appeals and a Miscellaneous Application filed by the National Highways Authority of India (NHAI). These proceedings stemmed from attempts to clarify the reach of a prior Supreme Court verdict of 2019 (Union of India & Anr. v. Tarsem Singh & Ors., hereafter “Tarsem Singh (2019)”), which recognized the unconstitutionality of Section 3J. While the 2019 judgment set forth that solatium and interest applied to acquisitions under the NHAI Act, NHAI sought to argue that it should only be applied prospectively and not to previously concluded cases.

In this new judgment delivered on February 4, 2025, the Supreme Court rejects the request for a prospective application. It reaffirms that benefit of solatium and interest must be granted retrospectively to landowners whose properties were acquired between 1997 and 2015, thus harmonizing the legal landscape and upholding the principle of parity under Article 14 of the Constitution of India.

The consolidated judgment addresses several appeals and a Miscellaneous Application filed by the NHAI seeking clarification on whether the Supreme Court’s 2019 ruling in Tarsem Singh and others should be applied only from the date of that judgment (i.e., prospectively) or also for the period since 1997. The main points of the decision are:

• The Court unequivocally states that declaring Section 3J of the NHAI Act unconstitutional and reading solatium and interest into the NHAI Act must be applied to all acquisitions from 1997 to 2015, not just prospectively.
• The Court dismisses the argument that retrospective application reopens concluded matters, clarifying that awarding solatium and interest does not upset the overall compensation or the finality of land acquisition; it only grants a statutory benefit that was otherwise wrongly denied.
• The Court firmly rejects the NHAI’s contention that application of the ruling to older acquisitions would trigger fresh litigation or burden the public exchequer to the tune of hundreds of crores, holding that financial implications cannot justify denying constitutionally valid and equitable relief.
• The Court thus directs Competent Authorities to recalculate compensation with interest and solatium for all affected landowners whose property was acquired by NHAI between the enactment of the 1997 Amendment (which introduced Section 3J) and the coming into force of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation, and Resettlement Act, 2013 (the “2013 Act”).
• The Court clarifies that granting solatium and interest does not reopen or invalidate acquisitions themselves. Nor does it invite reconsideration of the merits or quantum of determined compensation for any other component besides these two statutory benefits.

A. Precedents Cited

The Supreme Court relies on various precedents where courts had earlier declared Section 3J unconstitutional and awarded solatium and interest despite the NHAI’s contrary contention:

B. Legal Reasoning

The Court’s approach is rooted in two fundamental principles:

• Article 14 (Equality Before Law): The Court highlights that owners whose land was acquired under the 1894 Act have always received solatium and interest, and post-2015 acquisitions under the 2013 Act also mandated these statutory benefits. Thus, excluding those whose land was acquired under the NHAI Act between 1997 and 2015 would create an unwarranted classification lacking any intelligible differentia.
• Doctrine of Unconstitutionality: Once a statutory provision is declared unconstitutional, any effect it had (in this case, the denial of solatium and interest) becomes untenable. A prospective ruling, the Court reasons, would preserve the very unconstitutional outcomes that Article 14 seeks to rectify.

Additionally, the Court clarifies that its judgment does not reopen fully concluded matters with regard to the initial compensation or the legality of the acquisition itself; it only requires the limited recalculation of statutory benefits that were unjustly denied. Hence, there is no violation of the “finality” principle or any undue veritable re-litigation.

C. Impact

The immediate effect of this ruling is to ensure parity and fairness in compensation for landowners whose properties were acquired for national highways infrastructure projects. It cements the concept that, under Article 300A of the Constitution, deprivation of property must be accompanied by fair and just compensation. The Court underscores that mere financial burden on the exchequer cannot negate the right to equitable compensation.

Moving forward, the following significant impacts can be anticipated:

• Consistency of Compensation: Now, no landowner will be arbitrarily excluded from receiving solatium and interest based on the date or legislative instrument under which the land was acquired.
• Reduction in Protracted Litigation: Since the judgment clarifies the retrospective scope, it preempts repetitive legal challenges in High Courts across India.
• Clear Judicial Precedent for Future Matters: Courts now have binding clarification that an unconstitutional statute does not produce partial or selective effects.
• Stricter Scrutiny of Expropriating Statutes: This ruling further cements the necessity for all expropriating statutes to meet the twin tests of fairness and non-discrimination.

Several technical concepts permeate this judgment. Below is a concise explanation:

• Solatium: A statutory component of compensation to landowners as an additional sum (a percentage of the compensation) recognizing emotional distress or intangible loss caused by compulsory acquisition of one’s property.
• Interest: Compensation for the delay in paying the amount owed to the affected landowner, calculated from the date of acquisition.
• Retrospective Application: When a judgment is applied backward in time, so that individuals whose cases originated before the judgment’s pronouncement can also benefit from or be bound by its outcome.
• Doctrine of Immutability: The principle that a judgment which has attained finality cannot be reopened or altered in a manner that undermines the settled rights of a party. Here, the Court clarified that merely awarding solatium and interest does not violate this doctrine, because it does not fundamentally alter the primary compensation already determined.
• Article 14 of the Indian Constitution: Guarantees equality before the law and protection from discriminatory treatment by any State legislation or executive action.

The Supreme Court’s ruling in Union Of India v. Tarsem Singh (2025 INSC 146) sets down a vital precedent guaranteeing an equitable remedy for landowners whose property was acquired by the NHAI under the now-defunct Section 3J. By expressly linking the decision’s scope to all acquisitions from 1997 to 2015, the Court preserves constitutional guarantees and ensures that statutory benefits are not denied simply on a technical or legislative anomaly.

Ultimately, this judgment upholds the core spirit of just and fair compensation in eminent domain proceedings. It fortifies the judicial recognition that no class of landowners can be unjustly disadvantaged due to legislative lacunae or transitional regimes. By endorsing a retrospective extension of solatium and interest, the Court has definitively removed any notion of prospective dilution, reinforcing the principle of parity and fair play under the law.

With this clarification, the path is now laid out for the payment of solatium and interest to all eligible landowners and for bringing to a close a long-contested question arising out of the interplay between the NHAI Act’s Section 3J and the incorporation of the Land Acquisition Acts’ beneficial provisions.