Explainer: What you need to know about High Court’s ruling on highway land acquisition arbitration

The Punjab and Haryana High Court has struck down, among other things, the mandatory arbitration provisions under Sections 3G and 3J of the National Highways Act, 1956, declaring them unconstitutional. This ruling significantly impacts land acquisition cases, particularly those involving compensation disputes in national highway projects. Here’s what you need to know:

What were the provisions under challenge?

Sections 3G and 3J of the National Highways Act governed the compensation process for land acquired for highway construction. If landowners or the National Highways Authority of India (NHAI) disagreed with the compensation determined by the competent authority, the matter was referred to an arbitrator appointed by the Central Government. However, the arbitrator was often a government official, raising concerns over impartiality. The Act also excluded solatium or additional compensation and interest, which are available under other land acquisition laws.

What did the court rule?

The Division Bench of Justice Sureshwar Thakur and Justice Vikas Suri found these provisions unconstitutional, holding that they violated Article 14 of the Constitution, which guarantees equality before the law. The court noted that the arbitration mechanism was inherently unfair. Arbitration was meant to be consensual, yet landowners were forced into it without choice.

Landowners received lower compensation compared to those whose land was acquired under other laws, such as the Land Acquisition Act of 1894 and the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation, and Resettlement Act of 2013. Besides this, excluding solatium and additional interest created an arbitrary classification, depriving landowners of their rightful compensation.

How does this ruling affect landowners?

The court’s decision means that the landowners whose land was acquired under the National Highways Act will now be entitled to solatium at 30 per cent and interest at 9 per cent and 15 per cent as per the 1894 Act.  All pending arbitration cases under these Sections have been rendered ineffective. Fresh compensation awards will be issued based on fair compensation principles.

What is the legal basis for the ruling?

The court relied on a Supreme Court judgment affirming that landowners under the 1956 Act should receive the same benefits as those compensated under other land acquisition laws. It also stressed on the need for a uniform compensation standard, preventing discrimination against landowners affected by highway projects.

What happens next?

The Union of India and other authorities across the country will now ensure the grant of fair compensation to affected landowners with these provisions struck down. The ruling also sets a precedent for similar challenges in other States where landowners may seek to revisit compensation awarded under the 1956 Act.