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Jan  20- 2026

Supreme Court Flags Disparity in National Highways Act Acquisitions Compared to Other Land Acquisitions, Urges Centre to Examine

M/S RIAR BUILDERS PVT LTD & ANR. VERSUS UNION OF INDIA & ORS. (with connected matters)

Introduction

In a significant intervention touching upon property rights and equality in land acquisition, the Supreme Court of India has expressed serious concern over the structural inequities in the compensation mechanism under the National Highways Act, 1956.

The Court observed that landowners whose lands are acquired under the National Highways Act (NH Act) are placed at a clear disadvantage when compared to landowners governed by the Land Acquisition Act, 1894 or the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 (2013 Act).

While emphasizing the importance of expeditious highway development, the Court urged the Union Government to re-examine the legislative scheme to ensure fairness, parity, and compliance with Article 300A of the Constitution, which protects the right to property.

Core Issue Before the Court

The primary issue examined by the Court was whether the method of determining compensation under the National Highways Act, 1956 results in arbitrary and unequal treatment of landowners, particularly when compared with acquisitions under other land acquisition statutes.

The challenge arose from the constitutional validity of Sections 3G and 3J of the National Highways Act, 1956, which prescribe arbitration as the exclusive mechanism for adjudicating disputes relating to compensation.

Structural Flaws in the NH Act Compensation Mechanism

The Court highlighted several systemic shortcomings under the National Highways Act, 1956:

  1. Non-Judicial Determination of Compensation

Under the National Highways Act, 1956, disputes regarding compensation are decided by arbitrators appointed by the Central Government, typically District Collectors or Revenue Commissioners.

The Court noted that these officers:

  • Are primarily administrative authorities,
  • Are often overburdened with executive responsibilities, and
  • Lack judicial training necessary to determine complex valuation issues and statutory entitlements.

“These officers do not have the desired experience of a judicially trained mind to adjudicate complex issues like determination of market value of land.”

  1. Limited Scope of Judicial Review

Any challenge to the arbitral award under the National Highways Act, 1956 is restricted to Sections 34 and 37 of the Arbitration and Conciliation Act, 1996, where courts exercise extremely narrow supervisory jurisdiction.

In contrast:

  • Under the Land Acquisition Act, 1894 and the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013, compensation disputes are adjudicated by judicial courts,
  • Courts possess broader powers to reassess evidence, market value, and statutory benefits, and
  • Landowners enjoy liberal appellate remedies.
  1. Absence of Intelligible Differentia

The Court observed that landowners whose lands are acquired under the National Highways Act, 1956 form a separate and disadvantaged class, without any rational justification.

“This leads to grave heartburn among landowners whose lands are acquired under the National Highways Act, 1956.”

Such differential treatment, the Court indicated, prima facie violates the equality principle and undermines constitutional guarantees.

Court’s Observations on Legislative Intent vs. Fairness

The Bench acknowledged that the National Highways Act, 1956 is designed to ensure time-bound and expeditious acquisition for national infrastructure projects a legislative objective that is both legitimate and necessary.

However, the Court made it clear that speed of acquisition cannot come at the cost of fairness in compensation.

“This object can be kept intact while ensuring landowners are entitled to assessment of compensation in the same manner as under the Old Act or the New Act.”

Directions and Suggestions to the Union Government

The Bench comprising Justice Surya Kant, Justice Joymalya Bagchi, and Justice Vipul M Pancholi:

  • Urged the Union Government to revisit the legislative framework of the National Highways Act, 1956,
  • Suggested bringing parity in compensation determination with the Land Acquisition Act, 1894 and Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013,
  • Requested the Attorney General for India to examine the issue, and
  • Directed circulation of the order to the Solicitor General of India.

Background of the Case

The matter arose from a judgment of the Punjab and Haryana High Court, which had declared Sections 3G and 3J of the NH Act unconstitutional, thereby invalidating the arbitral mechanism for compensation disputes.

This created procedural uncertainty:

  • Several landowners had filed petitions under Section 34 of the Arbitration and Conciliation Act, 1996,
  • Following the High Court judgment, they withdrew their petitions believing the arbitral mechanism had ceased,
  • Subsequently, the Supreme Court stayed the High Court ruling, reviving arbitration,
  • This left landowners remediless due to limitation barriers.

Recognizing this exceptional situation, the Supreme Court exercised its inherent powers under Article 142 of the Constitution to restore the withdrawn petitions and prevent grave injustice.

Significance of the Judgment

This order is important for several reasons:

  • It exposes institutional inequality in land acquisition laws,
  • Reinforces that property rights under Article 300A of the Constitution must be meaningful, not illusory,
  • Signals possible future legislative reform of the National Highways Act, 1956, and
  • Provides immediate relief to affected landowners caught in procedural limbo

Final Thoughts

While the Supreme Court has stopped short of striking down the National Highways Act, 1956 provisions, its observations reflect deep constitutional unease with the existing compensation framework. The Court has sent a clear message that infrastructure development cannot justify discriminatory compensation regimes.

The ball now lies in the Union Government’s court to ensure that landowners under the National Highways Act, 1956 are not treated as second-class stakeholders, and that fair compensation, judicial scrutiny, and constitutional parity are upheld across all land acquisition statutes.