SC Upholds Retrospective Application of 2019 Ruling on Solatium

In a landmark decision, the Hon’ble Supreme Court of India in the case of Union of India & Anr. v. Tarsem Singh & Ors., (2025 SCC OnLine SC 235), dated February 4, 2025, reaffirmed that the benefits of solatium and interest under the Land Acquisition Act, 1894, must be extended retrospectively to land acquisitions made under the National Highways Act, 1956, between 1997 and 2015. The Hon’ble Supreme Court dismissed the plea by the National Highways Authority of India (NHAI) seeking to restrict the retrospective application of the case of Union of India v. Tarsem Singh, (2019) 9 SCC 304 (“Tarsem Singh Case”), emphasising that such a clarification would undermine the constitutional principles of equality and fairness.

The Tarsem Singh Case arose from land acquisition disputes under the National Highways Act, 1956, where Section 3J of the Act, which was introduced via an amendment in 1997, excluded the applicability of the Land Acquisition Act, 1894, and thereby prevented landowners from receiving solatium and interest. However, after the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013, came into force, its provisions were applied to acquisitions carried out under the NHAI Act w.e.f. 2015. Section 3J was subsequently declared unconstitutional by the Tarsem Singh Case and other judgements, extending these benefits to affected landowners. In response, the NHAI filed a miscellaneous application before the Hon’ble Supreme Court of India, requesting clarification that the Tarsem Singh Case applies only prospectively, citing concerns over financial and administrative burdens.

The Hon’ble Court firmly rejected the request to limit the Tarsem Singh Case ruling to a prospective application. It observed that such a move would defeat the very purpose of the judgment, which was to address and rectify the inequality caused by Section 3J. A prospective application would result in a scenario where a landowner whose property was acquired on December 31, 2014, would be denied the statutory benefits, while another landowner whose property was acquired just a day later, on January 1, 2015, would receive full compensation. The Court held that allowing this outcome would perpetuate the same discriminatory practice that the Tarsem Singh Case aimed to eliminate.

Further, the Court dismissed the claim that retrospective application would have led to the reopening of concluded cases and imposed an economic burden on the government. It clarified that the judgment did not seek to reopen finalised proceedings or question the legality of acquisitions but merely ensured that compensation included solatium and interest where it was previously denied. The Court underscored that providing these compensatory benefits is an essential component of fair compensation under any expropriatory legislation, and restoring them did not violate the doctrine of immutability or undermine the finality of judgments.

The Apex Court further stressed that financial considerations cannot justify a denial of constitutionally mandated rights. It pointed out that the burden of compensation for land acquisition is part of the state’s responsibility and cannot be avoided on the pretext of economic hardship. It highlighted that since most national highway projects are executed under the public-private partnership (PPP) model, the financial burden would ultimately be absorbed by the project proponents or passed on to the public in a reasonable manner. Therefore, the argument that retrospective relief would result in an insurmountable financial burden was unsustainable.

Finally, the Hon’ble Court reiterated that when a provision is declared unconstitutional, the resulting inequality must be corrected comprehensively. Any attempt to limit the scope of relief by drawing artificial distinctions among affected individuals would amount to perpetuating the very discrimination that the judgment sought to remedy. The Court also emphasised that once the government had conceded the issue of extending solatium and interest in earlier proceedings, it could not now adopt an inconsistent stance to avoid its obligations.

In reaffirming the retrospective application of the Tarsem Singh Case, the Hon’ble Court ensured that the principle of constitutional equality prevails. The competent authority was directed to calculate and disburse solatium and interest for all land acquisitions between 1997 and 2015. The judgment serves as a powerful reminder that constitutional rights cannot be subordinated to administrative convenience or financial concerns, and it upholds the fundamental principle that compensation for expropriation must always be just, equitable, and fair.