SC Revives Landowners’ Remedies and Calls for Parity in Compensation

The Hon’ble Supreme Court of India in the case of M/s Riar Builders Pvt. Ltd. & Anr. v. Union of India & Ors. [Special leave petition (civil), Diary No(s).26933/2025] dated January 13, 2026, exercising its powers under Article 142 of the Constitution of India, 1950, revived landowners’ compensation challenges filed under Section 34 of the Arbitration and Conciliation Act, 1996, and urged the Union Government to revisit the compensation adjudication framework under the National Highways Act, 1956, particularly Sections 3G and 3J, to bring parity with the judicial determination mechanisms available under general land acquisition statutes.

The matter arose from the acquisition of land under the National Highways Act, 1956. Aggrieved landowners invoked arbitration under Section 3G (5) of the Act and thereafter filed petitions under Section 34, challenging the compensation awarded. While these petitions were pending, the Hon’ble Punjab & Haryana High Court declared Sections 3G and 3J unconstitutional. Acting on this judgment, the landowners withdrew their Section 34 petitions. Shortly thereafter, the Supreme Court stayed the High Court ruling, reviving the statutory arbitral mechanism; however, limitation had already expired, rendering the landowners remediless.

Recognising that the applicants had been deprived of their remedies due to shifting judicial positions rather than any fault of their own, the Supreme Court invoked its extraordinary powers under Article 142 of the Constitution of India to do complete justice. It set aside the withdrawal orders passed by the Additional District Judge, Bhiwani, and restored all Section 34 petitions to the stage at which they were withdrawn, thereby ensuring adjudication on merits.

Beyond granting procedural relief, the Court undertook a substantive examination of the compensation regime under the National Highways Act. It noted that arbitration under Section 3G is conducted by executive officers, typically District Collectors or Commissioners, who are burdened with administrative duties and lack judicial training necessary to decide complex valuation issues. The Court further observed that the scope of judicial scrutiny under Sections 34 and 37 of the Arbitration and Conciliation Act, is narrowly circumscribed, leaving landowners with limited appellate remedies.

The Bench contrasted this with acquisitions under the Land Acquisition Act, 1894, and the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013, where compensation disputes are adjudicated by judicial courts at the first instance, followed by full appellate review. Such landowners also receive enhanced statutory benefits. The Court highlighted that this creates two distinct classes of expropriated landowners, despite both being deprived of property for public infrastructure purposes.

The Supreme Court observed that this differential treatment prima facie lacks intelligible differentia and raises constitutional concerns under Article 300-A of the Constitution of India. While acknowledging the legislative objective of expeditious highway development, the Court clarified that efficiency cannot override substantive fairness in compensation. It noted that parity in compensation adjudication could be achieved without compromising infrastructure timelines.

Accordingly, the Court urged the Union Government to revisit Sections 3G and 3J of the National Highways Act, 1956, and consider aligning the compensation determination mechanism with general land acquisition statutes so that landowners affected by highway projects are not placed at a systemic disadvantage. The Court directed that its observations be placed before the Attorney General for India and the Solicitor General of India for appropriate consideration.