Limits on Solatium and Interest under the NH Act, 1956 Clarified

The Hon’ble Supreme Court in National Highways Authority of India v. Tarsem Singh & Ors. (Review Petition (Civil) No. 2528 of 2025), decided on March 25, 2026, clarified that while landowners are entitled to solatium, interest, and interest on solatium for acquisitions under the National Highways Act, 1956, such entitlement is subject to limitations relating to finality of proceedings and delay in asserting claims.

The matter arose in the context of a review petition filed by the National Highways Authority of India (NHAI) seeking recall of the Court’s earlier decision in Union of India v. Tarsem Singh, (2025 SCC OnLine SC 235) (hereinafter referred to as “Tarsem Singh-II”), wherein its plea for prospective application of Union of India v. Tarsem Singh, (2019 9 SCC 304) (hereinafter referred to as “Tarsem Singh-I”), which had extended the benefit of solatium and interest to acquisitions between 1997 and 2015, was rejected. NHAI contended that the financial burden arising from the judgment had been underestimated due to a clerical error and was substantially higher than recorded.

The Hon’ble Supreme Court rejected the contention that increased financial liability constituted a ground for review, holding that fiscal implications cannot override the constitutional guarantee of just compensation under Article 300A of the Constitution of India. It reiterated that the entitlement to solatium and interest forms an integral part of compensation and cannot be denied on the basis of financial burden.

However, the Hon’ble Supreme Court proceeded to clarify the scope of entitlement in order to ensure consistency and finality. It held that while landowners are entitled to solatium and interest in principle, such claims cannot be treated uniformly, particularly where proceedings have attained finality or are pursued after inordinate delay.

The Hon’ble Supreme Court held that claims which had attained finality prior to March 28, 2008, cannot be reopened for the purpose of seeking solatium or interest, emphasising the necessity of finality in litigation. It further held that in cases where claims were pending as on that date, landowners would be entitled to seek such benefits. However, where such claims were raised belatedly, interest on solatium and compensation would not be payable for the period of delay and would instead accrue only from the date of assertion of such claims.

Accordingly, the Hon’ble Supreme Court laid down a framework balancing entitlement and delay, holding that: (i) landowners with pending claims as on March 28, 2008 are entitled to solatium and interest; (ii) in cases of delayed assertion, interest would be restricted from the date of claim; and (iii) concluded matters cannot be reopened. The Hon’ble Supreme Court further clarified that amounts already paid towards solatium and interest shall not be recovered.

In view of the above, the review petition was disposed of with clarifications, and the matters arising from the tagged special leave petitions were remanded for recalculation of compensation in accordance with the principles laid down.