Union of India & Anr. vs Tarsem Singh & Ors.

HELD: 1.1 The National Highways Act, 1956, as originally enacted, did not provide for acquisition of land.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, 1894 and the owners were given, in addition to market value, solatium as well as interest under the provisions of the Land Acquisition Act. [Para 6][63-B]

1.2 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 of National Highways Act, 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. One other important difference between the Amendment Act and the Land Acquisition Act is that determination of compensation is to be made by the competent authority under the Amendment Act which, if not accepted by either party, is then to be determined by an Arbitrator to be appointed by the Central Government. Such arbitrator’s Award is then subject to challenge under the Arbitration and Conciliation Act, 1996. Thus, 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. [Para 9][69-F-H; 70-A-C]

1.3 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. [Para 10][71-C-D]

Sunder v. Union of India (2001) 7 SCC 211 : [2001] 3 Suppl. SCR 176 – followed.

1.4 Solatium and interest were awarded to landowners for compulsory acquisition of their lands for the purpose of National Highways until the 1997 Amendment Act. After the Land Acquisition Act has been repealed, the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 has come into force. The First Schedule to the 2013 Act provides that solatium equivalent to 100% of the market value multiplied by various factors, depending on whether the land is situated in a rural or urban area, constitutes minimum compensation package to be given to those whose land is acquired. The Fourth Schedule to the 2013 Act, to be read along with Section 105, expressly includes under Item 7, the National Highways Act, 1956. In Item 9, this Schedule also includes The Requisitioning and Acquisition of Immovable Property Act, 1952. By a Notification dated 28 th August, 2015 issued under Section 105 read with Section 113 of the 2013 Act, it is provided that the 2013 Act compensation provisions will apply to acquisitions that take place under the National Highways Act. The result is that both before the 1997 Amendment Act and after the coming into force of the 2013 Act, solatium and interest is payable to landowners whose property is compulsorily acquired for purposes of National Highways. This is one other very important circumstance to be borne in mind when judging the constitutional validity of the 1997 Amendment Act for the interregnum period from 1997 to 2015. [Paras 11 and 12][71-E; 72-E-G]

2.1 In *Property Owners’ Association case it was held that the statement made in **Sanjeev Coke case , followed by several other judgments, that the “material resources of the community” would include privately owned resources, would be prima facie incorrect and hence the matter was referred to nine Judges of this Court, which reference is still pending. It is assumed for the purpose of the present case that Article 31-C, as originally enacted, continues to exist and that the “material resources of the community” would include private property as well. [Para 13][74-C-D]

**Sanjeev Coke Manufacturing Company v. Bharat Coking Coal Ltd. & Anr. [1983] 1 SCR 1000; *Property Owners’ Association v. State of Maharashtra (1996) 4 SCC 49 : [1996] 2 Suppl. SCR 230; Minerva Mills v. Union of India [1981] 1 SCR 206; Property Owners’ Association v. State of Maharashtra (2001) 4 SCC 455; State of Karnataka v. Shri Ranganatha Reddy (1977) 4 SCC 471 : [1978] 1 SCR 641 – referred to.

3.1 For availing protection under Article 31-C, it is not necessary that any declaration be made in that behalf. It is also important to remember that in order that a law be shielded by Article 31-C, the said law must have a direct and rational nexus with the principles contained in Article 39(b). [Para 16][75-E-F] State of Maharashtra v. Basantibai Mohanlal Khetan (1986) 2 SCC 516 : [1986] 1 SCR 707; Assam

Sillimanite Ltd. v. Union of India [1991] Supp 3 SCR

273 – relied on.

3.2 The Objects and Reasons which led to the 1997 amendment of the National Highways Act do not mention any object relating to distribution of the material resources of the community. The object of the Amendment Act has no relationship whatsoever to the Directive Principle contained in Article 39(b), inasmuch as its limited object is to expedite the process of land acquisition by avoiding inordinate delays therein. The object of the Amendment Act was not to acquire land for the purpose of national highways as, pre-amendment, the Land Acquisition Act provided for this. The object of the Amendment Act was fulfilled by providing a scheme different from that contained in the Land Acquisition Act, making it clear that the stage of offer of an amount by way of compensation is removed altogether; vesting takes place as soon as the Section 3D notification is issued; and most importantly, the tardy Court process is replaced by arbitration. Obviously, these objects have no direct and rational nexus with the Directive Principle contained in Article 39(b). [Para 18] [77-D-F]

3.3 Even on the assumption that Article 31-C is attracted to the facts of the present case, yet, it is not every provision of a statute, which has been enacted with the dominant object of giving effect to a directive principle, that it entitled to protection, but only those provisions of the statute which are basically and essentially necessary for giving effect to the Directive Principle are protected under the amended Article 31-C. [Para 18] [77-F-H]

Minerva Mills v. Union of India [1981] 1 SCR 206 – followed

Tinsukhia Electric Supply Co. Ltd. v. State of Assam (1989) 3 SCC 709 : [1989] 2 SCR 544; Maharashtra State Electricity Board v. Thana Electric Supply Co. (1989) 3 SCC 616 : [1989] 2 SCR 58 – referred to.

3.4 The test of Article 31-C’s protection being accorded only to those provisions which are basically and essentially necessary for giving effect to the objects of Article 39(b) is lifted from #Akadasi Padhan case. Even if the Amendment Act, 1997 be regarded as an Act to carry out the purposes of Article 39(b), the object of the Amendment Act is not served by removing solatium and interest from compensation to be awarded. It is obvious, therefore, that the grant of compensation without solatium and interest is not basically and essentially necessary to carry out the object of the Amendment Act, 1997, even if it is to be considered as an acquisition Act pure and simple, for the object of the said Amendment Act as it is to obviate delays in the acquisition process of acquiring land for National Highways. On application of this test as well, it is clear that the grant of compensation without solatium and interest, not being basically and essentially necessary to carry out the object of the Amendment Act, would not receive the protective umbrella of Article 31-C and, therefore, any infraction of Article 14 can be inquired into by the Court. [Para 18][78-E; 79-E-G] Dr K. R. Lakshmanan v. State of Tamil Nadu (1996) 2 SCC 226 : [1996] 1 SCR 395 – relied on.

State of Tamil Nadu v. L. Abu Kavur Bai (1984) 1 SCC 515; Maharashtra SEB v. Thana Electric Supply Co. (1989) 3 SCC 616 : [1989] 2 SCR 518; Tinsukhia Electric Supply Co. Ltd. v. State of Assam (1989) 3 SCC

709 : [1989] 2 SCR 544– distinguished.

#Akadasi Padhan v. State of Orissa [1963] Supp. (2) SCR 691 – referred to.

4.1 Ordinarily a classification based on public purpose is not permissible under Article 14 for the purpose of determining compensation. Also, it is immaterial whether it is one Acquisition Act or another Acquisition Act under which the land is acquired, as, if the existence of these two Acts would enable the State to give one owner different treatment from another who is similarly situated, Article 14 would be infracted. In the facts of the present cases, it is clear that from the point of view of the landowner it is immaterial that his land is acquired under the National Highways Act and not the Land Acquisition Act, as solatium cannot be denied on account of this fact alone. [Para 24][84-G-H; 85-A-B]

4.2 The object of the 1997 Amendment was to speed up the process of acquiring lands for National Highways. The awarding of solatium and interest has nothing to do with achieving this object, as it is nobody’s case that land acquisition for the purpose of national highways slows down as a result of award of solatium and interest. Thus, a classification made between different sets of landowners whose lands happen to be acquired for the purpose of National Highways and landowners whose lands are acquired for other public purposes has no rational relation to the object sought to be achieved by the Amendment Act, i.e. speedy acquisition of lands for the purpose of National Highways. On this ground alone, the Amendment Act falls foul of Article 14. [Para 22][84-B-D]

P. Vajravelu Mudaliar v. Special Deputy Collector for Land Acquisition [1965] 1 SCR 614 – followed

State of Kerala v. T. M. Peter (1980) 3 SCC 554 : [1980]

3 SCR 290 – relied on.

Prakash Amichand Shah v. State of Gujarat (1986) 1 SCC 581 : [1985] 3 Suppl. SCR 1025; Girnar Traders

(3) v. State of Maharashtra (2011) 3 SCC 1 : [2011] 3 SCR 1 – distinguished.

Union of India v. Hari Krishnan Khosla (1993) Supp 2 SCC 149 : [1992] 1 Suppl. SCR 620; Union of India v. Chajju Ram (2003) 5 SCC 568 : [2003] 3 SCR 647 – distinguished and required a re-look.

M/s Golden Iron and Steel Forging v. Union of India 2011 (4) RCR (Civil) 375 – approved.

Nagpur Improvement Trust v. Vithal Rao (1973) 1 SCC

500 : [1973] 3 SCR 39; Balammal v. State of Madras [1969] 1 SCR 90; H. V. Low and Company Private Ltd. v. State of West Bengal (2016) 12 SCC 699 – referred to.

5. Any reference to the second proviso of Article 31-A is wholly irrelevant to the question in the present case and cannot under any circumstance be used in order to distinguish a judgment which otherwise applies on all fours. 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, under second Proviso, 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. [Para 26][85-D-G]

6. Insofar as easementary rights under the Land Acquisition Act are concerned, Sections 3, 9 and 31 show that a person who is interested in an easement, affecting land, can claim compensation therefor under the aforesaid provisions of the Land Acquisition Act. Under both the Land Acquisition Act and the National Highways Act, such claims have to be proved in accordance with law, the difference being that under the Land Acquisition Act actuals are payable, whereas under the National Highways Act, a fixed amount of 10% of the amount determined by the competent authority is payable. It is, therefore, wholly incorrect to state that extra amounts are payable to the owner under the National Highways Act, which are not so payable under the Land Acquisition Act. Also, both Acts contemplate payment of compensation to persons whose easementary rights have been affected by the acquisition. In any event, this contention cannot possibly answer non-payment of solatium and interest under the National Highways Act. [Para 37][94-G; 96-B-D]

7. Even in acquisitions that take place under the National Highways Act and the Requisition and Acquisition of Immovable Properties Act, 1952, the Notification of 2015 under the new Acquisition Act of 2013 makes solatium and interest payable in cases covered by both Acts. In fact, with effect from 1 st January, 2015, an Amendment Ordinance No.9 of 2014 was promulgated amending the 2013 Act. It is only when this Ordinance lapsed that the notification dated 28 th August, 2015 was then made under Section 113 of the 2013 Act. It is thus clear that the Ordinance as well as the notification have applied the principle contained in Nagpur Improvement Trust case, as the Central Government has considered it necessary to extend the benefits available to landowners generally under the 2013 Act to similarly placed landowners whose lands are acquired under the 13 enactments specified in the Fourth Schedule, the National Highways Act being one of the aforesaid enactments. This being the case, it is clear that the Government has itself accepted that the principle of Nagpur Improvement Trust case would apply to acquisitions which take place under the National Highways Act, and that solatium and interest would be payable under the 2013 Act to persons whose lands are acquired for the purpose of National Highways as they are similarly placed to those landowners whose lands have been acquired for other public purposes under the 2013 Act. This being the case, it is clear that even the Government is of the view that it is not possible to discriminate between landowners covered by the 2013 Act and landowners covered by the National Highways Act, when it comes to compensation to be paid for lands acquired under either of the enactments. [Para 38][96-E-F; 97B; 99-C-E]

Sunita Mehra v. Union of India (2016) SCC OnLine 1128 – referred to.

8. The impugned judgments could have set aside on the ground that when the arbitral awards did not provide for solatium or interest, no Section 34 petition having been filed by the landowners, the impugned judgments ought not to have allowed solatium and/or interest. But 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 interfere with such orders is declined, given discretionary jurisdiction under Article 136 of the Constitution of India. Therefore, it is declared 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. [Para 41][101-FH; 102-A]