Introduction
In a significant intervention highlighting systemic inequities in India’s land acquisition regime, the Supreme Court of India has expressed serious concern over the disparity in compensation mechanisms under the National Highways Act, 1956, as compared to land acquisitions carried out under the Land Acquisition Act, 1894 and the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013.
Observing that landowners whose properties are acquired for national highways are placed at a distinct disadvantage, the Court urged the Union Government to re-examine the legislative framework and bring parity in compensation determination, keeping in mind Article 300A of the Constitution, which protects the right to property.
Bench and Case Details
The observations were made by a three-judge Bench comprising Chief Justice of India Justice Surya Kant, Justice Joymalya Bagchi, and Justice Vipul M. Pancholi, while hearing a batch of Special Leave Petitions arising from a judgment of the Punjab and Haryana High Court.
- Cause Title: M/s Riar Builders Pvt. Ltd. & Anr. v. Union of India & Ors. (with connected matters)
- Citation: 2026 LiveLaw (SC) 65
Core Issue: Unequal Compensation Regimes
At the heart of the matter lies the statutory mechanism for determining compensation under the National Highways Act, 1956 (NH Act).
The Supreme Court noted that:
- Under the NH Act, disputes relating to compensation are referred to arbitration
- Arbitrators are typically District Collectors or Commissioners
- These officers are not judicial authorities and are often burdened with extensive administrative responsibilities
The Court remarked that such officers lack the judicial training and independence required to adjudicate complex issues like:
- Determination of market value
- Statutory solatium
- Additional compensation benefits
Judicial Concern Over Arbitration by Administrative Officers
In a pointed observation, the Bench stated:
“The Collectors or Commissioners of the Revenue Districts/Divisions are notified to act as arbitrators. These officers are generally pre-occupied with their multiple administrative responsibilities and they also do not have the desired experience of a judicially trained mind to adjudicate the complex issues like determination of market value of the land or other statutory benefits…”
The Court highlighted that this arbitration model severely limits the quality and fairness of adjudication for landowners affected by highway projects.
Limited Appellate Remedies Under NH Act
Another major flaw identified by the Court relates to appellate remedies.
Under the NH Act:
- Arbitral awards can only be challenged under Sections 34 and 37 of the Arbitration and Conciliation Act, 1996
- Judicial review under these provisions is extremely limited
- Courts cannot reassess compensation on merits
In contrast, landowners under the 1894 Act and the 2013 Act have access to:
- Judicial courts for determination of compensation
- Wider appellate remedies
- Reassessment of market value and statutory benefits
Violation of Equality and Article 300A
The Supreme Court observed that landowners under the NH Act and those under the 2013 Act are being treated as separate classes without intelligible differentia, raising constitutional concerns.
The Bench noted:
“This leads to grave heartburn among the land owners of the first category, namely, those whose lands are acquired under the 1956 Act.”
By placing NH Act landowners at a structural disadvantage, the framework potentially infringes:
- Article 14 (Equality before law)
- Article 300A (Right to property)
Court Urges Union Government to Revisit the Law
While acknowledging the legislative intent behind the NH Act—ensuring speedy and time-bound acquisition for national infrastructure—the Court emphasised that efficiency cannot come at the cost of fairness.
The Bench suggested that:
- The objective of expeditious highway development can coexist with fair compensation mechanisms
- Compensation assessment under the NH Act can be aligned with the methodology used under the 1894 and 2013 Acts
Accordingly, the Court:
- Requested the Attorney General for India to examine the issue
- Directed circulation of the order to the Solicitor General of India
Background: Punjab & Haryana High Court Judgment
The case arises from a judgment of the Punjab and Haryana High Court, which had:
- Declared Sections 3G and 3J of the NH Act, 1956 unconstitutional
- Invalidated the statutory arbitration framework for compensation disputes
These provisions governed:
- Determination of compensation
- Arbitration by government-appointed officers
Legal Limbo After Supreme Court Stay
Following the High Court’s judgment:
- The arbitral framework under the NH Act stood invalidated
- Several landowners withdrew their pending Section 34 petitions
However, when the Supreme Court stayed the High Court judgment, the arbitration mechanism was temporarily revived, leaving landowners:
- Without an effective remedy
- Barred by limitation from filing fresh challenges
Supreme Court Invokes Article 142
Recognising the procedural injustice, the Supreme Court invoked its inherent powers under Article 142 of the Constitution to:
- Restore the withdrawn Section 34 petitions
- Prevent irreversible prejudice to the affected landowners
The Bench used this opportunity to underscore the ambiguity and inequity embedded in the NH Act’s compensation framework.
Significance of the Ruling
This order is significant for several reasons:
1. Structural Critique of NH Act
The Court has openly questioned the institutional design of compensation determination under the NH Act.
2. Push for Legislative Reform
The observations may prompt the Union Government to amend the NH Act to ensure parity with the 2013 Act.
3. Strengthening Property Rights
The judgment reinforces Article 300A as a substantive constitutional guarantee, not a mere formality.
4. Impact on Infrastructure Projects
While not stalling highway development, the ruling demands a more humane and just approach towards landowners.
Conclusion
The Supreme Court’s intervention highlights a long-standing imbalance in India’s land acquisition laws, where landowners sacrificing property for national highways receive lesser procedural and substantive protection than others. By urging the Centre to revisit the compensation framework under the National Highways Act, the Court has taken a crucial step towards aligning developmental goals with constitutional justice.
As infrastructure expansion accelerates across the country, this judgment serves as a reminder that progress must not come at the cost of fairness, equality, and property rights.
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