2019 (9) TMI 1480 - SC - Indian Laws

Non-grant of solatium and interest to lands acquired under the National Highways Act - Vires of Section 3J of the National Highways Act, 1956 - HELD THAT - National Highways Act, 1956, as originally enacted, did not provide for acquisition of land. Thus, till the National Highways Laws (Amendment) Act, 1997, all acquisitions for the purpose of National Highways were made under the Land Acquisition Act, and the owners were given, in addition to market value, solatium as well as interest under the provisions of that Act. Keeping in view the object of reducing delay and speedy implementation of highway projects, the amended National Highways Act does away with any award by way of an offer to the landowner. Post the notification under Section 3A, objections are to be heard by the competent authority, whose order is then made final. The moment the authority disallows the objections, a report is submitted to the Central Government, and on receipt of such report, the Central Government, by a declaration, states that the land should be acquired for the purpose mentioned in Section 3A. The important innovation made by the Amendment Act is that vesting is not postponed to after an award is made by the Competent Authority. Vesting takes place as soon as the Section 3D declaration is made - delays in references made to District Judges and appeals therefrom to the High Court and Supreme Court have been obviated. Section 3G(7) does not provide for grant of solatium, and Section 3H(5) awards interest at the rate of 9% on the excess amount determined by the arbitrator over what is determined by the competent authority without the period of one year contained in the proviso to Section 28 of the Land Acquisition Act, after which interest is only awardable at the rate of 15% per annum, if such payment is made beyond one year. Thus, the solatium that is paid to a landowner is on account of the fact that a landowner, who may not be willing to part with his land, has now to do so, and that too at a value fixed legislatively and not through negotiation, by which, arguably, such land owner would get the best price for the property to be sold. Once this is understood in its correct perspective, it is clear that solatium is part and parcel of compensation that is payable for compulsory acquisition of land. The Nagpur Improvement Trust case has to be read as a whole. Merely emphasising one example from the passages that have been extracted above (supra) will not make the ratio of the said judgment inapplicable. Besides, the second proviso to Article 31-A deals with persons whose lands are acquired when such person is cultivating the same personally. The reason for awarding compensation at a rate which is not less than market value is in order that a farmer, who is cultivating the land personally, gets other land of equivalent value, which he can then cultivate personally. As such farmer is at the centre of agrarian reform legislation, such legislation would be turned on its head if lands were to be acquired without adequately compensating him instead of from absentee landlords whose lands are then to be given to the landless and to such persons if they personally cultivate lands less than the ceiling area under State Agricultural Ceiling Acts. Given the fact that the Government itself is of the view that solatium and interest should be granted even in cases that arise between 1997 and 2015, in the interest of justice we decline to interfere with such orders, given our discretionary jurisdiction under Article 136 of the Constitution of India. We therefore declare that the provisions of the Land Acquisition Act relating to solatium and interest contained in Section 23(1A) and (2) and interest payable in terms of section 28 proviso will apply to acquisitions made under the National Highways Act. Consequently, the provision of Section 3J is, to this extent, violative of Article 14 of the Constitution of India and, therefore, declared to be unconstitutional - Appeal dismissed.

Issues Involved:
1. Non-grant of solatium and interest for land acquired under the National Highways Act.
2. Constitutionality of Section 3J of the National Highways Act.
3. Application of Article 14 of the Constitution of India.
4. Impact of Article 31-C and Article 39(b) on the Amendment Act of 1997.
5. Validity of the Amendment Act of 1997 under the National Highways Act.
6. Comparison with the Land Acquisition Act, 1894.
7. Jurisdiction and applicability of arbitral awards and Section 34 petitions.

Detailed Analysis:
Issue 1: Non-grant of Solatium and Interest
The Supreme Court addressed the Union of India's contention against the Punjab and Haryana High Court's decision that the non-grant of solatium and interest for lands acquired under the National Highways Act was bad in law. The High Court had struck down Section 3J of the National Highways Act as violative of Article 14 of the Constitution, as it discriminated against landowners whose lands were acquired for national highways compared to other public purposes under the Land Acquisition Act.

Issue 2: Constitutionality of Section 3J
The Court examined the constitutionality of Section 3J, which excluded the application of the Land Acquisition Act provisions to acquisitions under the National Highways Act. The Court noted that solatium and interest were integral parts of compensation for compulsory acquisition and that their exclusion under the National Highways Act was not justifiable. The Court declared Section 3J to be unconstitutional to the extent it denied solatium and interest, thereby violating Article 14.

Issue 3: Application of Article 14
The Court referred to the judgments in P. Vajravelu Mudaliar and Nagpur Improvement Trust, which held that different principles of compensation for compulsory acquisition based on the public purpose or the acquiring authority were discriminatory. The Court found that the classification between landowners whose lands were acquired for national highways and those for other public purposes had no rational relation to the object of the Amendment Act, which was to expedite land acquisition. Thus, the Amendment Act fell foul of Article 14.

Issue 4: Impact of Article 31-C and Article 39(b)
The Court discussed the applicability of Article 31-C, which protects laws giving effect to certain Directive Principles from being challenged under Article 14. The Court found that the Amendment Act of 1997 did not have a direct and rational nexus with the Directive Principle in Article 39(b), which deals with the distribution of material resources of the community. The Court held that the Amendment Act's object was to expedite land acquisition, not to distribute resources, and thus, Article 31-C did not apply.

Issue 5: Validity of the Amendment Act of 1997
The Court examined the Amendment Act's validity, noting that its objective was to reduce delays in land acquisition for national highways. The Court found that excluding solatium and interest did not further this objective and was not necessary for the Act's purpose. The Court held that the Amendment Act's provisions denying solatium and interest were not essential to achieving its objective and thus were unconstitutional.

Issue 6: Comparison with the Land Acquisition Act, 1894
The Court compared the National Highways Act with the Land Acquisition Act, noting that solatium and interest were provided under the latter for compulsory acquisitions. The Court found that the exclusion of these components under the National Highways Act was discriminatory and unjustifiable, reinforcing the need for uniform compensation principles across different acquisition statutes.

Issue 7: Jurisdiction and Applicability of Arbitral Awards and Section 34 Petitions
The Court addressed various grounds raised by the Union of India regarding arbitral awards and Section 34 petitions. The Court found that many of these grounds were either not argued at the appropriate stages or were factual matters without patent illegality. The Court dismissed the appeals on these grounds, reinforcing the arbitral awards' validity in granting compensation, including solatium and interest.

Conclusion:
The Supreme Court upheld the Punjab and Haryana High Court's decision, declaring Section 3J of the National Highways Act unconstitutional to the extent it denied solatium and interest. The Court emphasized the need for uniform compensation principles for compulsory land acquisitions, aligning with the Land Acquisition Act, 1894, and ensuring fairness and non-discrimination under Article 14 of the Constitution.

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