Supreme Court holds Tarsem Singh judgment is not prospective; directs payment of solatium and interest to NHAI-era landowners

A bench of Justices Surya Kant and Ujjal Bhuyan heard a Miscellaneous Application filed by the National Highways Authority of India (NHAI) through its Project Director seeking clarification whether the Court’s judgment dated 19.09.2019 in Union of India v. Tarsem Singh applied only prospectively and therefore precluded reopening of acquisitions already concluded and determinations of compensation that had attained finality. The application was tagged to several appeals arising from High Court orders that had directed grant or reconsideration of ‘solatium’ and ‘interest’ to landowners whose land was acquired by NHAI between 1997 and 2015.

The Court dismissed the NHAI’s plea for a prospective-only clarification and reaffirmed the ratio in Tarsem Singh that Section 3J of the National Highways Authority of India Act, 1956 was unconstitutional to the extent it excluded the benefits of ‘solatium’ and ‘interest’ available under the Land Acquisition Act, 1894. The bench observed that confining the Tarsem Singh decision to prospective operation would perpetuate unjust classification among similarly situated landowners and would “restore the state of affairs to the same position as it was before the decision was rendered.” The Court directed the Competent Authority to calculate and award solatium and interest in accordance with the directions in Tarsem Singh and dismissed related appeals that only challenged the refusal to award Additional Market Value where solatium and interest had already been granted. The Court, in its reasoning, observed: "That being so, the decision in Tarsem Singh (supra) also cannot be assailed on the grounds that it opens a Pandora’s Box or contravenes the doctrine of immutability, as it merely allows for the grant of ‘solatium’ or ‘interest’, which are inherently embedded as compensatory benefits under an expropriating legislation. This exercise cannot be equated to reopening of cases or revisiting the decisions that have already attained finality. Similarly, the restoration of these twin benefits does not invite reconsideration of the merits of a decided case, re-evaluation of the compensation amount, or potentially declaring the acquisition process itself to be unlawful. Instead, the ultimate outcome of Tarsem Singh (supra) is limited to granting ‘solatium’ and ‘interest’ to aggrieved landowners whose lands were acquired by NHAI between 1997 and 2015. It does not, in any manner, direct the reopening of cases that have already attained finality."

Background The dispute arose from amendments made to the NHAI Act in 1997 by insertion of Section 3J which declared that “nothing in the Land Acquisition Act, 1894 shall apply to an acquisition under this Act,” effectively excluding statutory benefits of solatium and interest. Several High Courts struck down Section 3J as discriminatory; the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 came into force in 2014 and was made applicable to NHAI in 2015, further complicating the field. In Tarsem Singh (2019) this Court held that exclusion of solatium and interest violated Article 14 and restored entitlement to those benefits for acquisitions effected under the NHAI Act between 1997 and 2015. That decision prompted numerous writ petitions and High Court orders directing grant or reconsideration of solatium and interest to affected landowners.

Before the Supreme Court NHAI, through the Solicitor General, contended that Tarsem Singh should operate prospectively from 19.09.2019 to avoid reopening finalised matters, to prevent “mass litigation” and to respect the doctrine of immutability; it also relied on financial burden and earlier precedents on prospectivity. Landowners countered that a prospective rule would perpetuate arbitrary classification and that Tarsem Singh remedied exclusionary treatment which had been accepted earlier by the Union in other proceedings. The Court examined legislative history, prior High Court rulings, the 2013 Act’s applicability, and the Solicitor General’s earlier concessions in related proceedings. The bench rejected the contention that allowing solatium and interest would amount to reopening final awards, stressing that the relief was limited to restoration of statutory compensatory benefits and would not revisit merits of awards. The Court noted that “Quando aliquid prohibetur ex directo, prohibetur et per obliquum” to discourage indirect evasion of obligations. It dismissed the Miscellaneous Application, granted leave in connected matters, and directed the Competent Authority to calculate solatium and interest per Tarsem Singh; the challenge to denial of Additional Market Value was dismissed where solatium and interest had been awarded. Pending applications stood disposed.

Case Details: Case No.: Miscellaneous Application No. 1773/2021 in Civil Appeal No. 7064/2019; Citation: 2025 INSC 146 Case Title: Union of India and another v. Tarsem Singh and others; In the matter of Project Director, National Highways Authority of India (Applicant) Appearances: For the Petitioner(s): Mr. Tushar Mehta, Solicitor General of India (for NHAI/Union) For the Respondent(s): Counsel for landowners (names not specified in the order)