A very consequential Supreme Court ruling: When govt values land unjustly, landowners cannot seek full remedy in lower courts

Synopsis: Road construction is important. But so are the right of landowners who lose the land as part of the Government’s land acquisition.


Government has the power to compulsorily acquire a person’s property for the construction of a government project. For that, they have to compensate the person fairly.  Fair compensation is the constitutional right of the person.

But, in the recent Project Director, NHAI vs M Hakeem case, the SC ruled that the government can acquire land for highways without a fair mechanism for compensation.

Why the government arbitration is considered one-sided?

National Highways Act, 1956 (amended 1997): Under it, government servants fix the compensation while acquiring the land. If the landowner is dissatisfied with the compensation, he can seek reconsideration. But that reconsideration is also done by another government servant, who will act as an arbitrator. But that arbitrator is not appointed with the consent of the landowner.

This is a remedy in section 34 of the Arbitration Act. But this provides only limited appeal in a court of law. Thus, this process seems to go against the concept of natural justice.

What can courts do?

Under Section 34 of the Arbitration Act, the courts cannot modify the award or increase the compensation itself. It can either set aside the award or leave it to be re-decided by the arbitrator. While the landowner had limited rights, SC  refused to concede to lower courts (below it) the right to enhance NHA awards.

What is the High Court stand?

The high court had taken a different view of the problem. The HC found the arbitrator to be biased towards the government. So, the HC called for a liberal interpretation of section 34 and enhanced the compensation itself.

What is the Supreme Court stand?

SC has denied lower courts the right to modify and enhance NHA awards. So, the landowners can only challenge the NHA in a writ petition in HCs or SC under the Constitution. Though SC pointed that the system is designed to favour the government, but left it to the parliament to legislate on the matter.

However, this amounts to grave injustice as it left the matter to parliament and also disapproved the HC decision to enhance the award.

What does this imply?

The whole scenario is in a worrying state for the landowners. They are limited by the law, not favoured by SC and lower courts have also been curtailed by SC.

Source: This post is based on the article “A very consequential Supreme Court ruling: When govt values land unjustly, landowners cannot seek full remedy in lower courts” published in the Times of India on 11th September 2021.

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