Kiran Raj

The Supreme Court three-judge Bench of the Chief Justice Surya Kant, Justice Joymalya Bagchi and Justice Vipul M. Pancholi set aside an order allowing 21 landowners to withdraw their challenges to compensation under the National Highways Act, 1956, and restored those petitions for continuation. The Court recorded deep-seated structural shortcomings in how compensation disputes under the Act are resolved, as they are statutorily sent to arbitration before Collectors or Commissioners—officials with heavy administrative responsibilities and without judicial training for valuation issues—with only limited scope for later court intervention. It found that this framework leaves 1956 Act landowners at a disadvantage compared with acquisitions under other laws, and asked the Union to revisit the scheme, directing the Registry to forward the order to the Attorney General and Solicitor General.

The proceedings arose from multiple special leave petitions concerning land acquisition under the National Highways Act, 1956. The dispute related to the determination of compensation awarded to landowners whose lands had been acquired for national highway projects. Dissatisfied with the compensation fixed by the competent authority, the affected landowners invoked the statutory remedy by filing petitions under Section 34 of the Arbitration and Conciliation Act, 1996 before the Additional District Judge, Bhiwani.

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While these petitions were pending at the final stage of arguments, the High Court of Punjab and Haryana delivered a judgment declaring Sections 3G and 3J of the National Highways Act, 1956 unconstitutional, which resulted in the statutory arbitral mechanism becoming inoperative. Acting on the basis of this judgment, the landowners sought permission to withdraw their Section 34 petitions, and the Additional District Judge permitted such withdrawal by an order dated 25 April 2025.

Subsequently, the Supreme Court stayed the operation of the High Court judgment, thereby reviving the arbitral framework under the 1956 Act. The landowners contended that filing fresh Section 34 petitions would be barred by limitation, rendering them without an effective remedy. Interlocutory applications were therefore filed seeking restoration of the withdrawn petitions.

The Court stated that “this Court on 30.05.2025 stayed the operation of the judgment of the High Court dated 20.03.2025,” and that “the arbitral framework envisaged under the 1956 Act again stood revived, though maybe temporarily.” It recorded the consequence that “if the applicants file a fresh petition, it will be barred by limitation under Section 34(3) of the 1996 Act,” and that “the applicants have been rendered remediless.”

On the compensation mechanism under the 1956 Act, the Court recorded that “the remedy provided to an expropriated land owner/interested party… is to invoke arbitration under Section 3G(5) read with provisions of the 1996 Act.” It observed that “Such an arbitration petition is adjudicated not by a judicial authority but by an officer notified by the Central Government,” and that “Invariably, the Collectors or Commissioners of the Revenue Districts/Divisions are notified to act as arbitrators.” The Court stated that “These officers are generally pre-occupied with their multiple administrative responsibilities and they also do not have the desired experience of a judicially trained mind to adjudicate the complex issues like determination of market value of the land or other statutory benefits.”

It further noted that “the further recourse left to an aggrieved expropriated land owner… is to file an appeal under Section 34… followed by a further appeal under Section 37… before the High Court,” and that “the restricted and limited scope of interfering with an arbitral award… has been well defined by this Court in a catena of judgments.” By contrast, it recorded that landowners under the 1894 law “were entitled to seek further enhancement through a reference… and such references were decided only by the Judicial Courts,” with a further appeal where “the High Court had the power to re-appreciate and re-appraise the evidence and then form an opinion re: market value.” It added that the 2013 law “has been further widened by the grant of additional statutory benefits and a higher rate of compensation.”

The Court stated that “the land owners, whose land is acquired under the 1956 Act… have been treated as separate classes, apparently without any intelligible differentia,” which “leads to grave heartburn.” While noting “the acquisition under this Act must take place in a time-bound and expeditious manner,” it recorded that “prima facie, it seems that this object can be kept intact while ensuring the land owners that they will be entitled to assessment of compensation… in the same manner” as under other acquisition laws. It then said, “we implore and suggest that the Union of India should revisit the legislative scheme and consider the desirability of bringing parity,” while adding, “we refrain from expressing any final opinion.”

The Court directed that “in such circumstances and with a view to render complete justice to the parties, we deem it appropriate to invoke our powers under Article 142 of the Constitution of India. The order dated 25.04.2025 passed by the Additional District Judge, Bhiwani, whereby the petitions filed under Section 34 of the Arbitration and Conciliation Act, 1996 were dismissed as withdrawn in light of the High Court judgment dated 20.03.2025, is set aside.”

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As a necessary consequence of setting aside the said order, the Court further directed that “all those petitions under Section 34 of the Arbitration and Conciliation Act, 1996, filed by the applicants, stand revived and shall be processed further from the stage of their withdrawal.” The Court clarified that the revival would restore the petitions to the same procedural position as they stood immediately prior to the withdrawal order dated 25.04.2025.

“The Interlocutory Applications are, thus, disposed of. The Registry is directed to send a copy of this order to the office of the learned Attorney General for India,” and “a copy of this order shall also be forwarded to the office of the learned Solicitor General of India. Post these matters for further consideration on 21.04.2026,” and “interim orders to continue.”

Advocates Representing the Parties

For the Petitioners: Ms. Tanu Priya Gupta, AOR; Ms. Khushi Sharma, Advocate; Mr. K.S. Kang, Advocate; Mr. Amrendra Kumar Mehta, AOR; Ms. Pallavi Daem, Advocate; Ms. Gunjan Kumari, Advocate; Mr. Karan Kapoor, Advocate; Mr. Gagneshwar Walia, Advocate; Mr. K.S. Minhas, Advocate; Mr. K.E. Minhas, Advocate; Mr. Manik Kapoor, Advocate; Ms. Srishti Singla, Advocate; Mr. Shrey Kapoor, AOR

For the Respondents: Mr. Rajive Bhalla, Senior Advocate; Mr. Yash, Advocate; Mr. Amitoj Bir Singh, Advocate; Mr. Divyansh Misra, Advocate; Ms. Gauri Bedi, Advocate; Mr. Deepak Samota, Advocate; Mr. Kamal Joshi, Advocate; Mr. Shubham Bhalla, AOR

Case Title: M/s Riar Builders Pvt. Ltd. & Anr. v. Union of India & Ors.
Case Number: Special Leave Petition (Civil) Diary No. 26933/2025 and connected matters
Bench: Chief Justice Surya Kant, Justice Joymalya Bagchi, Justice Vipul M. Pancholi