Supreme Court Flags National Highways Act Land Compensation Imbalance, Urges Review

On January 20, 2026, the Supreme Court raised serious concerns over how landowners are compensated under the National Highways Act, 1956. A bench led by Chief Justice of India Surya Kant observed that the compensation mechanism under the Act places affected landowners at a disadvantage when compared with other land acquisition regimes in India.

The Court noted that while older land acquisition laws allow disputes over compensation to be adjudicated by courts, claims under the National Highways Act land compensation framework are decided through arbitration conducted by government officials. This, the bench observed, leaves landowners with limited access to effective judicial remedies.

Emphasising constitutional principles and equity, the Court urged Parliament to reconsider the existing framework. The bench remarked that the right to property under Article 300A of the Constitution requires fairness and due process, and that highway development should not come at the cost of unjust treatment of landowners.

The Case That Prompted the Court’s Observations

The Supreme Court’s remarks arose during the hearing of a dispute concerning compensation awarded for land acquired for national highway projects. While the Court did not strike down any provision of the law, it took the opportunity to comment on the broader structural issues affecting National Highways Act land compensation.

The bench examined how compensation disputes are resolved under different acquisition laws and noted a clear disparity in procedural safeguards. This comparison formed the basis of the Court’s concern that landowners whose property is acquired under the National Highways Act are placed in a less favourable position.

The observations were framed as guidance rather than binding directions, but they carry significant weight given the Court’s emphasis on constitutional values.

How Compensation Works Under the National Highways Act

Under the National Highways Act, 1956, land can be acquired by the Central Government for the development and expansion of national highways. Compensation is initially determined by a competent authority appointed under the Act.

If a landowner disputes the amount of compensation, the Act provides for arbitration. However, unlike other land acquisition laws where disputes may be referred to civil courts, arbitration under the National Highways Act land compensation framework is typically conducted by a government-appointed official, often a senior bureaucrat.

The Supreme Court highlighted that this structure raises concerns about independence and fairness, particularly when the acquiring authority and the adjudicating authority are both part of the executive machinery.

Comparison With Other Land Acquisition Laws

The bench drew attention to how compensation disputes are handled under older and more general land acquisition laws. Under these regimes, landowners have the right to approach courts for adjudication if they are dissatisfied with the compensation awarded.

Judicial adjudication, the Court noted, provides greater procedural safeguards, transparency, and an opportunity for independent review. In contrast, arbitration by government officials under the National Highways Act land compensation framework offers limited scope for effective challenge.

This differential treatment, the Court suggested, results in an uneven playing field where similarly situated landowners are treated differently based solely on the statute under which their land is acquired.

Article 300A and the Right to Property

Central to the Supreme Court’s observations was Article 300A of the Constitution, which provides that no person shall be deprived of their property except by authority of law. While the right to property is no longer a fundamental right, the Court reiterated that it remains a constitutional right requiring fairness, reasonableness, and due process.

The bench observed that deprivation of property through acquisition must be accompanied by just compensation and a fair mechanism for resolving disputes. Any framework that limits access to independent adjudication risks falling short of constitutional expectations.

In the context of National Highways Act land compensation, the Court indicated that equity and constitutional morality demand a more balanced approach.

Arbitration by Government Officials Under Scrutiny

One of the Court’s key concerns was the nature of arbitration under the National Highways Act. Unlike neutral arbitral tribunals or courts, the arbitrator in such cases is a government official who may be linked, directly or indirectly, to the acquiring authority.

The bench noted that this arrangement can create a perception of bias, even if none exists in practice. For landowners, the absence of an independent forum may undermine confidence in the fairness of the process.

The Supreme Court did not rule on the validity of this mechanism but suggested that Parliament may need to reassess whether such a structure adequately protects the interests of affected landowners.

Limited Judicial Remedies and Their Impact

Another issue highlighted by the Court was the limited scope for judicial intervention in National Highways Act land compensation disputes. Since arbitration awards are not equivalent to court decrees, landowners often face procedural hurdles in seeking further review.

This stands in contrast to court-based adjudication, where appeals and revisions form part of a well-established judicial hierarchy. The Supreme Court observed that restricting landowners to arbitration by executive officials, with limited judicial oversight, may result in inequitable outcomes.

The bench’s remarks reflect a concern that access to justice is constrained under the current framework.

Development Versus Fairness

The Supreme Court was careful to acknowledge the importance of national highway development. Infrastructure expansion, the bench recognised, is essential for economic growth, connectivity, and public interest.

However, the Court emphasised that development objectives cannot override the requirement of fairness to individuals whose land is acquired. The bench observed that highway projects should not proceed at the cost of placing landowners at a structural disadvantage.

By urging a review of the National Highways Act land compensation regime, the Court sought to balance development needs with constitutional equity.

Recommendation for Parliamentary Review

Rather than issuing immediate directions, the Supreme Court recommended that Parliament revisit the compensation framework under the National Highways Act. This reflects judicial restraint and respect for legislative competence.

The bench suggested that lawmakers examine whether the existing arbitration mechanism and limited judicial remedies meet contemporary standards of fairness and constitutional compliance.

Such a review, the Court implied, would allow for a more comprehensive and democratically informed reassessment of how land acquisition for highways is conducted.

Broader Context of Land Acquisition Reform

Land acquisition has long been a sensitive issue in India, involving tensions between development, property rights, and social justice. Over the years, successive laws have attempted to address these concerns through improved compensation and procedural safeguards.

The Supreme Court’s observations on National Highways Act land compensation must be seen in this broader context. While other acquisition laws have evolved to incorporate judicial oversight and enhanced remedies, the National Highways Act has retained a distinct and more executive-driven model.

The Court’s remarks bring renewed attention to this divergence and its implications for affected landowners.

Why the Court’s Observations Matter

Although the Supreme Court did not invalidate any provision of the National Highways Act, its observations carry persuasive authority. Courts, policymakers, and administrators are likely to take note of the concerns raised about fairness and constitutional balance.

The emphasis on Article 300A and equitable treatment signals that land compensation frameworks will continue to be examined through the lens of constitutional values, even when the right involved is not fundamental.

For landowners affected by highway projects, the Court’s remarks provide recognition of long-standing grievances regarding compensation and remedies.

What the Judgment Does Not Decide

It is important to note that the Supreme Court did not grant specific relief to the landowners involved in the case by altering the compensation mechanism. The observations were made in the course of hearing a dispute and were advisory in nature.

The Court did not strike down arbitration provisions or mandate immediate changes to the National Highways Act land compensation framework. Any reform will depend on legislative action by Parliament.

This distinction underscores that the judgment is a call for reconsideration rather than an exercise of judicial lawmaking.

Potential Next Steps

Following the Supreme Court’s observations, the onus now lies on the legislature to examine the concerns raised. Parliament may choose to review the arbitration model, introduce greater judicial oversight, or align the National Highways Act with other land acquisition laws.

Whether such a review will be undertaken remains to be seen. However, the Court’s clear articulation of the issue has placed the matter firmly on the policy agenda.

The discussion around National Highways Act land compensation is likely to continue as infrastructure development expands across the country.

Conclusion

The Supreme Court’s January 20, 2026 observations mark a significant moment in the ongoing debate over land acquisition and compensation in India. By highlighting the disadvantages faced by landowners under the National Highways Act land compensation framework, the Court has drawn attention to structural inequities that merit reconsideration.

Grounded in Article 300A and principles of fairness, the bench’s remarks underline that development must be pursued without compromising constitutional values. The recommendation for parliamentary review reflects a balanced approach that respects both legislative authority and individual rights.

As India continues to invest heavily in highway infrastructure, the Court’s call serves as a reminder that progress and fairness must move together.