Landowners Under Highway Act Cannot Be Left Remediless: Supreme Court Restores Arbitral Challenges Withdrawn Due to Unconstitutional Ruling

“Complete justice requires restoring status quo ante to prevent irreparable prejudice” – In a remarkable exercise of its constitutional powers, the Supreme Court restored petitions under Section 34 of the Arbitration and Conciliation Act, 1996, which had been withdrawn by landowners after the Punjab & Haryana High Court had struck down Sections 3G and 3J of the National Highways Act, 1956 as unconstitutional. The Supreme Court bench, headed by the Chief Justice of India, and comprising Justice Joymalya Bagchi and Justice Vipul M. Pancholi, held that the withdrawal—made in reliance on a judgment that was later stayed—resulted in a remediless situation and required correction in exercise of powers under Article 142 of the Constitution.

“Withdrawal Based on Intervening Judgment Cannot Foreclose Rights When That Judgment Is Later Stayed”

The petitions had been filed by multiple landowners and developers whose lands were acquired under the National Highways Act, 1956. Dissatisfied with the compensation awarded by the Competent Authority, they had invoked arbitration under Section 3G(5) of the Act and, thereafter, challenged the arbitral awards under Section 34 before the Additional District Judge, Bhiwani.

However, in March 2025, the Punjab & Haryana High Court declared Sections 3G and 3J of the 1956 Act as unconstitutional, thereby invalidating the arbitral framework. Reacting to this, the petitioners withdrew their Section 34 petitions. Shortly thereafter, the Supreme Court stayed the High Court judgment on May 30, 2025, effectively reviving the statutory arbitral mechanism.

Now facing a limitation bar under Section 34(3) of the Arbitration Act, the petitioners moved the Supreme Court, seeking revival of their original petitions. Recognizing the gravity of injustice, the bench invoked Article 142 and observed:

“With a view to render complete justice to the parties, we deem it appropriate to invoke our powers under Article 142… All those petitions under Section 34 of the 1996 Act filed by the applicants, stand revived and shall be processed further from the stage of their withdrawal.”

“Arbitration by Revenue Officers Raises Serious Concerns of Judicial Incompetence in Compensation Matters”

Turning to the broader statutory framework, the Court took a critical view of the arbitration process under the National Highways Act, noting that arbitrations under Section 3G(5) are often conducted by Collectors or Commissioners—executive officers not trained in law and overburdened with administrative duties. The bench flagged:

“Such officers do not have the desired experience of a judicially trained mind to adjudicate complex issues like determination of market value of land or other statutory benefits.”

The Court further contrasted this with land acquisition under the Land Acquisition Act, 1894 or the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013, where disputes over compensation are decided judicially—by District Judges—with a full right of appeal and scope for reappreciation of evidence.

“Unequal Mechanism for Compensation Violates Article 300-A”: Supreme Court Calls for Legislative Reconsideration

In a pointed constitutional observation, the Court held that landowners whose properties are acquired under the National Highways Act form a disadvantaged class, arbitrarily deprived of fair and effective judicial remedies, especially when compared to landowners under the 2013 Act. The bench observed:

“The landowners, whose land is acquired under the 1956 Act… have been treated as separate classes, apparently without any intelligible differentia. This leads to grave heartburn…”

While acknowledging the legitimate objective of expeditious infrastructure development, the Court emphasized that fairness in compensation mechanisms must not be sacrificed. Noting that Article 300-A guarantees a right to property, the Court urged the Union of India to reconsider the statutory scheme, stating:

“We implore and suggest that the Union of India should revisit the legislative scheme and consider the desirability of bringing parity…”

“Judicial Restraint Observed—But Legislature Urged to Act”

Although the bench refrained from making any conclusive declaration on the constitutionality of the existing framework, it took the rare step of requesting the Attorney General of India to look into the matter. Copies of the order were directed to be forwarded to both the Attorney General and the Solicitor General.

The matters have now been posted for further hearing on April 21, 2026, with interim orders continuing in the meantime.

A Constitutional Course Correction to Prevent Injustice

By restoring the withdrawn petitions and questioning the structural fairness of compensation under the National Highways Act, this judgment bridges procedural rigidity with constitutional compassion. It is a rare but powerful invocation of Article 142, ensuring that technical missteps—taken in reliance on judicial orders—do not bar access to justice. The Court's nuanced observations may also serve as a catalyst for legislative reform, bringing equality in compensation to all landowners, regardless of the acquisition statute.

Date of Decision: 13 January 2026