In a setback to the Union government, the Supreme Court on Wednesday rejected a review petition filed by the National Highways Authority of India (NHAI), declining to limit its 2019 ruling on extra land compensation and leaving the agency with a ₹29,000-crore liability for unsettled cases.
A bench of Chief Justice of India Surya Kant and Justice Ujjal Bhuyan reaffirmed that landowners whose land was acquired for highway projects between 1997 and 2008 are entitled to extra compensation, known as solatium, and interest, even for past acquisitions.
The apex court maintained that financial implications of the judgment, estimated at around ₹29,000-crore by the NHAI—cannot be a ground to deny fair compensation to landowners.
“The grant of solatium and interest cannot be made contingent upon the magnitude of the financial burden. The Constitutional guarantee of just compensation cannot be diluted on that basis. Mere projection of financial liability does not constitute a valid ground for review,” the apex court said.
At the same time, the court placed a key limitation. It clarified that the cut-off date for claiming extra compensation (solatium and interest) is 28 March 2008, and this date is crucial for determining eligibility of landowners.
The Supreme Court also clarified that NHAI cannot seek any refund of compensation already paid. It stated that these directions do not entitle the government to recover solatium or interest already given to landowners.
By setting this date as the cut-off, the top court held that only landowners whose cases were still pending on or after 28 March 2008 can claim extra compensation such as solatium and interest. It made it clear that cases that had already been fully settled before this date cannot be reopened.
The top court chose this date because on 28 March 2008, the Punjab and Haryana High Court, in what is known as the Golden Iron and Steel case, held that denying solatium and interest to landowners under The National Highways Act was unfair and violated the principle of equality.
Before this judgment, there was uncertainty and landowners did not have a strong legal basis to demand these benefits. The 2008 ruling changed that by clearly recognising that people losing land to highway projects should be treated the same as those whose land was acquired under general laws.
The law was later corrected in 2015, when the provisions of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 were extended to highway projects. From 1 January 2015, land acquisitions under The National Highways Act began to include the benefits of solatium and interest.
What the case is about
The dispute goes back to a 1997 amendment to The National Highways Act, which introduced a faster land acquisition process for highway projects. While the change helped speed up infrastructure development, it also removed two important benefits—solatium and interest, which are normally given under general land acquisition laws.
Solatium is an additional amount paid to compensate landowners for the forced nature of acquisition, while interest covers delays in payment. Under the amended law, landowners were paid only the basic value of their land.
This created a disparity. A farmer whose land was taken for a highway received less compensation than someone whose land was acquired for another public purpose such as a railway or industrial project, even though the loss suffered was the same.
How the dispute reached the Supreme Court
The issue arose from land acquisitions in the early 2000s, including one involving Tarsem Singh in Punjab. Land was acquired in 2004 for highway widening, and compensation was fixed in 2006. Landowners challenged the amount and secured higher compensation through arbitration, but solatium and interest were not granted as the law did not provide for them.
They approached the Punjab and Haryana High Court, arguing that the difference in compensation was unfair. The High Court agreed and directed that solatium be paid, holding that similarly-placed landowners cannot be treated differently.
The Union government and NHAI challenged this before the Supreme Court, arguing that The National Highways Act was a separate law, and that adding such benefits would increase costs and defeat the purpose of faster land acquisition.
What the Supreme Court said in 2019
In its landmark 2019 Tarsem Singh ruling, the Supreme Court struck down the 1997 provision in The National Highways Act that excluded solatium and interest. It held that denying these benefits to one category of landowners was discriminatory and violated the principle of equality.
The top court noted that solatium is linked to the compulsory nature of acquisition and must be paid in all such cases, regardless of the law under which land is acquired.
Following the 2019 ruling, the NHAI sought to limit its impact by asking the court to apply it only to future cases. It argued that retrospective application would open up thousands of old cases and lead to a massive financial burden.
Earlier, in February 2025, the top court had rejected a plea seeking such clarification, prompting the Union government to file a review petition.
The judgment now ensures that many landowners whose land was acquired between 1997 and 2008 can now claim additional compensation and interest, provided their cases are still pending or not fully settled. At the same time, the judgment preserves the finality of cases that have already been settled.