Land Acquisition Compensation Must Include Interest Under 2013 Act, Not Just NH Act 1956: Karnataka High Court - 2025-09-24

Karnataka High Court Upholds Higher Interest for Landowners, Rules 2013 Act Prevails Over NH Act

DHARWAD: In a significant ruling that reinforces the rights of landowners, the Karnataka High Court has held that compensation for land acquired under the National Highways Act, 1956, must include interest as calculated under the more beneficial Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013. The court dismissed a batch of 15 petitions filed by the National Highways Authority of India (NHAI), affirming that a uniform, non-discriminatory approach must be taken for all land acquisitions.

The judgment, delivered by Justice Suraj Govindaraj, resolves a contentious dispute between the NHAI and several landowners whose properties were acquired for the development of National Highway 63. The court upheld the orders of the Principal District and Sessions Judge, Dharwad, which had directed the NHAI to pay interest at 9% per annum until the date of possession and 15% thereafter, as stipulated by the 2013 Act.

Case Background

The case stems from arbitral awards that had enhanced the compensation payable to landowners. When the landowners initiated execution proceedings to recover the awarded amounts, the Executing Court in Dharwad calculated the interest based on the 2013 Act. The NHAI, having failed to pay the differential amount, faced attachment warrants, prompting it to challenge these orders in the High Court.

Arguments in Court

NHAI's Position: Sri B.P. Mathapati, counsel for the NHAI, argued that a special provision, Section 3H(5) of the National Highways Act, 1956, specifically mandates interest at a flat rate of 9% per annum. He contended that this special law should prevail and that the Executing Court had overstepped its jurisdiction by applying the provisions of the 2013 Act. The NHAI further claimed that since the 2015 notification only made Schedules I, II, and III of the 2013 Act applicable to highway acquisitions, and these schedules do not mention interest, the 9% rate under the NH Act was the correct "applicable rate."

Landowners' Counter-Arguments: Representing the landowners, advocates Sri C.S. Shettar and Sri S.M. Kalwad relied on the landmark Supreme Court decision in Union of India and Another Vs. Tarsem Singh and Others . They argued that the apex court has already settled the issue, establishing that landowners whose lands are acquired under the NH Act cannot be discriminated against. They asserted that principles of fairness and non-discrimination, enshrined in Article 14 of the Constitution, mandate that landowners receive the same benefits—including solatium and interest—as those whose lands are acquired under the 2013 Act.

Court's Pivotal Reasoning

Justice Govindaraj systematically addressed the legal questions, arriving at a clear conclusion favouring the landowners. The court strongly endorsed the principle that just compensation is a constitutional right and cannot be diluted through technical interpretations.

"A citizen of the country cannot be differentiated or discriminated against on account of the enactment under which the land has been acquired... if there are different sets of citizens losing land under different enactments, then one citizen cannot receive a higher amount than another, which would also amount to discrimination in terms of Article 14 of the Constitution of India."

The court explicitly rejected NHAI's argument that Section 3H(5) of the NH Act should apply post the enactment of the 2013 Act. Citing the Supreme Court's precedent in Tarsem Singh , the judgment clarified that the 2013 Act's provisions on solatium and interest are fully applicable to NH Act acquisitions to ensure parity.

The court further noted that the purpose of the 2013 Act was to create a fair, transparent, and uniform system for land acquisition. It held that compensation is a comprehensive term that includes not just the market value of the land but also solatium and interest for delayed payment.

"The just compensation would not only include the compensation which has been determined, but also solatium and interest payable thereof on the delay in making payment of compensation... The land loser having lost the benefit of usage of the land being required to be paid the compensation at the earliest, the delay in payment of compensation also causes injury and damage to the land loser, which is required to be compensated by payment of interest."

Additionally, the court took a stern view of the NHAI and the Special Land Acquisition Officer being represented by the same counsel, observing that the Land Acquisition Officer is supposed to be an independent authority and not a "spokesman for the beneficiary of acquisition."

Final Decision and Implications

The High Court found no infirmity in the orders passed by the Executing Court and dismissed all petitions filed by the NHAI. The ruling solidifies the legal position that landowners are entitled to interest at 9% until possession and 15% thereafter on their compensation, in line with the 2013 Land Acquisition Act.

The NHAI has been directed to pay the differential interest of 6% to the landowners. Upon such payment, the Executing Court may recall the attachment warrants. This judgment serves as a crucial precedent, ensuring that land losers are not deprived of just and fair compensation due to ambiguities or conflicting provisions in different statutes.