Bombay HC Overrules NHAI Objections, Mandates Statutory Land Compensation Under Tarsem Singh Verdict

In a significant relief for landowners, the Bombay High Court has directed the National Highway Authority of India (NHAI) to provide statutory benefits—specifically solatium and interest—to a slew of petitioners whose land was acquired for highway projects. The bench, comprising Justice M.S. Sonak and Justice Jitendra Jain, unequivocally rejected the NHAI’s attempt to evade these payments by citing alternative legal remedies.

The Conflict: A Procedural Impasse

The dispute centered on the entitlement of landowners to compensation enhancements as clarified by the Supreme Court in the landmark case Union of India vs. Tarsem Singh . Despite the fact that the NHAI acknowledged these entitlements, it had previously sought to dismiss the petitioners' writ petitions by claiming they should have pursued an appeal under Section 37 of the Arbitration and Conciliation Act, 1996.

The background of the case reveals a circular legal trap: while the petitioners had successfully argued for enhanced solatium and interest before a Principal District Judge (PDJ) in proceedings under Section 34, the court found itself procedurally disabled to grant these specific monetary reliefs due to a previous High Court ruling in Rishabhkumar vs. Secretary to Government of India . That ruling suggested that courts under the Arbitration Act lacked the power to modify awards to include these statutory components.

Why the High Court Intervened

The NHAI’s counsel argued that the High Court should decline entertaining these writ petitions, suggesting the petitioners lacked standing because they bypassed the Section 37 appeal process. The Bombay High Court found this argument “unfortunate and unfair.”

Justice M.S. Sonak, writing for the bench, noted that the rule of exhaustion of alternative remedies is not a bar when the remedy is not effective. Since the Appellate Court would also have been bound by the Rishabhkumar precedent, relegating the landowners to a Section 37 appeal would have been a "futile" exercise that would only further delay justice.

"There is no point in relegating the Petitioners to the remedy under Section 37 of the Arbitration Act, when the relief they claim cannot be granted under such proceedings," the court observed.

Key Observations

The judgment is a firm reminder that statutory entitlements should not be sidelined by procedural technicalities. Among the court’s most notable observations were:

• On the efficacy of remedies: "The rule of exhaustion of alternate remedies is a self-imposed restriction... Before applying this Rule, the court must see whether the alternate remedy is indeed efficacious."
• On the duty to the Supreme Court: "Article 141 of the Constitution provides that the law declared by the Supreme Court shall be binding on all Courts within the territory of India."
• On NHAI’s inconsistency: "The NHAI cannot take diversion stances. Ultimately, these are statutory benefits. The entitlement is never seriously disputed."

Final Decision: A Mandate for Payment

The bench made absolute the Rule in all connected petitions, issuing a clear directive to the NHAI. The Authority must pay the statutory benefits of solatium and interest in accordance with the Tarsem Singh verdict within four months. By ordering this, the Court has effectively bridged the gap created by previous procedural hurdles, ensuring that land acquisition compensation aligns with the fair market standards set by the Supreme Court.

This decision serves as a vital precedent for future land acquisition disputes, affirming that when compensation is purely a matter of law based on established Supreme Court dictates, constitutional courts will exercise their jurisdiction to prevent the denial of rightful dues.