Compensation parity in compulsory acquisition: exclusion of solatium and interest under the highways law violated Article 14.

Section 3J of the National Highways Act, 1956 was held unconstitutional to the extent it excluded solatium and interest otherwise payable on compulsory acquisition. The Court treated solatium as part of compensation for the compulsory taking of property and found no rational connection between the 1997 amendment's object of speeding acquisition and the denial of those benefits. It further held that landowners acquired under the National Highways Act could not be classified differently from those under the Land Acquisition Act merely because a different statute applied, as that distinction had no relevant bearing on compensation and offended Article 14. The later 2013 compensation regime reinforced this conclusion.

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Issues: Whether Section 3J of the National Highways Act, 1956 is unconstitutional to the extent it excludes solatium and interest otherwise payable under the Land Acquisition Act, 1894, and whether the exclusion violates Article 14 of the Constitution of India.

Analysis: Solatium was treated as part of compensation for compulsory acquisition, awarded because the owner is compelled to part with property without the freedom of negotiation that exists in a voluntary sale. The scheme introduced by the 1997 amendment to the National Highways Act was to accelerate acquisition and remove delay by substituting a vesting-and-arbitration mechanism, but the exclusion of solatium and interest had no rational connection with that object. The classification between landowners whose land is acquired under the National Highways Act and those whose land is acquired under the Land Acquisition Act was held to be based only on the statute of acquisition and not on any relevant difference affecting compensation, and thus offended Article 14. The cases dealing with requisition followed by acquisition were distinguished, because those statutes involved temporary possession followed by limited acquisition and a different compensation structure. The later legislative treatment under the 2013 compensation regime, made applicable to acquisitions under the National Highways Act, reinforced the conclusion that similarly placed owners could not be denied solatium and interest for the interregnum period.

Conclusion: Section 3J of the National Highways Act, 1956 is unconstitutional to the extent it excludes application of the Land Acquisition Act provisions relating to solatium and interest; those benefits apply to acquisitions under the National Highways Act.

Final Conclusion: The challenge to the exclusion of solatium and interest succeeded, while the remaining individual appeals were rejected on their own facts or for want of a sustainable challenge.

Ratio Decidendi: A compensation scheme for compulsory acquisition that denies solatium and interest solely because the acquisition is made under a different statute, without a rational connection to the object of that statute, violates Article 14.

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