State Cannot Hijack Compensation for National Highways – Only Centre Can Decide Multiplier: Bombay High Court Quashes Maharashtra’s Attempt to Dilute Landowners’ Rights

"Compensation for National Highways Is Solely Within the Central Government’s Domain Under Entry 23, List I of the Constitution", In a significant ruling with far-reaching implications for land acquisition in infrastructure projects, the Bombay High Court held that “only the Central Government is empowered to prescribe the multiplier factor for compensation in land acquisitions under the National Highways Act” and that any contrary resolutions or notifications issued by State Governments are “unconstitutional and without jurisdiction.”

Justice Manish Pitale and Justice Shreeram V. Shirsat firmly declared that “the Maharashtra Government cannot override or undercut the binding Central Government notification of 2016 which prescribed a multiplier of 2.00 for compensation in rural areas.”

“Jurisdiction to Determine Compensation Multiplier Lies Exclusively with the Union, Not the State”: Court Declares State GRs as Ultra Vires

The judgment arose from a challenge to a land acquisition award dated 13.01.2023, in which the Deputy Collector (Land Acquisition), National Highways Project, had adopted a multiplier of 1.00, relying on State Government Resolutions dated 05.10.2021, 06.10.2021 and 14.01.2022, despite a binding Central notification dated 09.02.2016 prescribing a multiplier of 2.00 for acquisitions under the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013.

The Court ruled that “Section 3(e)(v) of the 2013 Act clearly identifies the Central Government as the ‘appropriate Government’ for acquisition of land for purposes of the Union, including national highways” and that therefore, the State Government could not issue GRs or notifications reducing the multiplier applicable to such acquisitions.

“The State Government Has No Power to Fix Multiplier for National Highways – It Cannot Trench Upon the Centre’s Legislative Domain”

Analyzing the statutory and constitutional framework, the Court observed:

“A conjoint reading of Section 3(e)(v) of the 2013 Act and Entry 23 of List I of the Seventh Schedule to the Constitution shows that for national highway projects, the exclusive power and jurisdiction to determine compensation norms, including the multiplier factor, vests in the Central Government.”

The Court held the State’s attempt to prescribe a multiplier of 1.00 as “not only unauthorised but unconstitutional”, declaring:

“Respondent No.3-State Government could not have issued notification dated 05.10.2021 and GRs dated 06.10.2021 and 14.01.2022 for specifying the multiplier factor of 1.00 as regards acquisition of lands pertaining to national highways.”

The Court further emphasized that “Section 3-A of the National Highways Act confers the power of land acquisition for national highways solely upon the Central Government”, and hence, any resolutions issued by the State Government encroaching upon that domain are legally void.

“Award Applying Multiplier of 1.00 is Vitiated – Fresh Award Must Apply Multiplier of 2.00 as per Central Notification”

Having found the State Government’s resolutions ultra vires, the Court also quashed the impugned award dated 13.01.2023, which had calculated compensation using the illegal 1.00 multiplier.

The Bench directed:

“Respondent No.4-competent authority shall now issue a fresh award by applying the multiplier factor of 2.00, as per the notification dated 09.02.2016 issued by respondent No.1-Central Government. The said exercise shall be completed within six weeks.”

Notably, the Court rejected the State’s plea that the higher multiplier would cause undue financial burden, remarking:

“Even otherwise, payment of compensation is the responsibility and liability of respondent No.5-NHAI, which is an agency and instrumentality of respondent No.1-Central Government. It cannot lie in the mouth of the State Government to raise such contentions.”

"Statutory Arbitrator Under Section 3-G(5) Has No Jurisdiction to Decide Constitutional Validity of State Notifications"

Addressing the argument that the petitioners had an alternative remedy under Section 3-G(5) of the National Highways Act (arbitration), the Court found it wholly inapplicable. It held:

“The statutory arbitrator, being a State functionary, would not have the jurisdiction to decide whether the Central notification prevails over the State GRs. Therefore, the present writ petition is maintainable despite the availability of alternative remedy.”

The Court concluded by reserving liberty to the petitioners to challenge the fresh award on any other grounds, including the quantum of compensation, under Section 3-G(5) once the new award is issued.

"When It Comes to National Highways, the Centre’s Word Is Final" – A Judgment with Far-Reaching Impact on Federal Land Acquisition Disputes

This ruling is not only a vindication of the landowners’ rights but also a firm reaffirmation of the constitutional demarcation of legislative powers between the Union and the States.

By holding that “only the Central Government can decide compensation norms for national highway projects”, the Bombay High Court has sent a strong message against federal overreach and administrative confusion.

The judgment is also likely to impact similar disputes where State Governments have attempted to dilute or reinterpret compensation entitlements for Central projects through executive instruments.

“The notification and GRs issued by the State Government trench upon the power of the Central Government and hence, to that extent, they deserve to be quashed.”

Date of Decision: 02 February 2026