The Bombay High Court has unequivocally held that the classification of acquired land as reserved forest cannot justify withholding compensation after vesting under the National Highways Act, 1956. This ruling reinforces the principle that once legal ownership transfers to the Central Government, the obligation to pay awarded compensation becomes absolute and non-negotiable.
Background & Facts
The Dispute
The petitioners in Writ Petition Nos. 8632, 8633 and 8634 of 2024 are landowners whose properties were acquired by the National Highways Authority of India (NHAI) for the construction of national highway stretches. The respondents, including the Competent Authority for Land Acquisition and the Sub-Divisional Officer, refused to disburse the final compensation awards on the ground that portions of the acquired land fell within reserved forests, requiring prior forest clearance under the Forest (Conservation) Act, 1980. The petitioners contend that this justification is legally untenable after the vesting of land under Sections 3A and 3D of the National Highways Act, 1956.
Key Facts
- In Writ Petition No. 8632 of 2024: Preliminary notification under Section 3A issued on 20.08.2018; Declaration under Section 3D issued on 26.10.2018; Final award passed on 22.02.2021 for Rs. 2,79,56,907
- In Writ Petition No. 8633 of 2024: Preliminary notification under Section 3A issued on 09.03.2018; Declaration under Section 3D issued on 18.08.2018; Final award passed on 24.12.2018
- In Writ Petition No. 8634 of 2024: Preliminary notification under Section 3A issued on 09.03.2018; Declaration under Section 3D issued on 09.10.2018; Final award passed on 30.04.2019
- All three awards determined compensation payable to petitioners as landowners
- NHAI and State authorities withheld payment citing pending forest diversion proposals
- Petitioners in Writ Petition Nos. 8632 and 8633 of 2024 continue to possess the subject lands despite vesting
Procedural History
- 20.08.2018: Section 3A notification issued for W.P. No. 8632 of 2024
- 26.10.2018: Section 3D declaration issued for W.P. No. 8632 of 2024
- 22.02.2021: Final award passed for W.P. No. 8632 of 2024
- 09.03.2018: Section 3A notification issued for W.P. Nos. 8633 and 8634 of 2024
- 18.08.2018: Section 3D declaration issued for W.P. No. 8633 of 2024
- 24.12.2018: Final award passed for W.P. No. 8633 of 2024
- 09.10.2018: Section 3D declaration issued for W.P. No. 8634 of 2024
- 30.04.2019: Final award passed for W.P. No. 8634 of 2024
- 2024: Writ petitions filed before Bombay High Court seeking disbursal of compensation with 9% interest
- 24.03.2026: Hearing before Division Bench; judgment delivered
Relief Sought
The petitioners sought a writ of mandamus directing NHAI and the Competent Authority to:
- Disburse the full compensation amounts as per the final awards
- Pay 9% per annum interest from the date of each award until actual payment
- Remove all impediments based on forest status of the land
The Parties' Positions
Petitioners: Argued that vesting under Section 3D extinguishes all rights of landowners and creates an absolute obligation to pay compensation. Relied on Project Director, Project Implementation Unit v. P.V. Krishnamoorthy (2021) 3 SCC 572 and prior Bombay HC orders in W.P. Nos. 5975/2022 and 7572/2023.
Respondents (NHAI and State): Contended that forest land cannot be used for highway construction without prior diversion clearance under the Forest (Conservation) Act, and that disbursal must be deferred until such clearance is obtained. Argued that realignment of highway routes due to forest restrictions created administrative and financial strain.
The Legal Issue
The central question was whether the classification of acquired land as reserved forest permits the withholding of compensation after the land has vested in the Central Government under Section 3D of the National Highways Act, 1956, and a final award has been passed.
Arguments Presented
For the Petitioner
The petitioners relied on the Supreme Court’s decision in Project Director, Project Implementation Unit v. P.V. Krishnamoorthy (2021) 3 SCC 572, which held that forest or environmental clearance is not a precondition for acquisition under the National Highways Act. The Court clarified that such clearances are required only at the stage of actual project execution, not at the stage of acquisition or vesting. The petitioners also cited two prior coordinate bench orders of the Bombay High Court dated 17.10.2023 and 28.11.2023, which had rejected identical arguments by NHAI and directed disbursal of compensation despite forest status. They emphasized that once vesting occurs, the landowner’s title is extinguished and the State’s obligation to pay compensation becomes absolute.
For the Respondent
The respondents argued that the proposed highway alignment traverses reserved forests, and construction without forest clearance would violate the Forest (Conservation) Act, 1980. They contended that disbursal of compensation should be suspended until the Forest Department approves diversion of forest land, as the land could not be utilized for its intended purpose. They further submitted that realignment of the highway route due to forest restrictions had led to additional acquisition proceedings and financial burden on the exchequer.
The Court's Analysis
The Court examined the statutory scheme under the National Highways Act, 1956, particularly Sections 3A, 3D and 3G, and found that the vesting of land under Section 3D is a decisive legal event that transfers absolute ownership to the Central Government. The Court observed that the Supreme Court in Project Director, Project Implementation Unit v. P.V. Krishnamoorthy had already settled that forest clearance is not a prerequisite for acquisition or vesting. The Court noted:
"The Central Government does not require prior environmental/forest clearance while expressing the intention to acquire land for the purpose of the said Act. Such clearance, if at all required, is when the executing agency takes up the project and before it commences the actual work."
The Court held that the respondents’ reliance on pending forest diversion proposals was legally irrelevant at the stage of compensation disbursal. The fact that the land was reserved forest did not negate the finality of the award or the extinguishment of the landowner’s rights. The Court distinguished between the legal act of acquisition and the subsequent administrative act of construction. The former triggers the obligation to pay; the latter is subject to environmental compliance. The Court further noted that the coordinate benches of the same High Court had consistently rejected the same argument, reinforcing the principle of consistency in judicial interpretation.
The Court also rejected the argument that financial strain or realignment justified delay. It emphasized that the statutory obligation to pay compensation is not contingent on the convenience or logistical challenges of the executing agency.
The Verdict
The writ petitions are allowed. The respondents are directed to disburse the full compensation amounts as claimed in prayer clause (a) of each petition within six weeks from today. The amounts are payable with interest at 9% per annum from the date of each respective award until actual payment. In Writ Petition Nos. 8632 and 8633 of 2024, the petitioners are directed to hand over possession of the subject lands to the respondents immediately upon receipt of compensation. Pending applications are disposed of.
What This Means For Similar Cases
Compensation Obligation Is Absolute Upon Vesting
- Practitioners must argue that once Section 3D declaration is issued, the State’s duty to pay compensation is non-discretionary and immediate
- Forest status, environmental clearances, or project realignments cannot be invoked to delay or deny payment
- Delay in disbursal after award is actionable under Article 226, with interest as a matter of right
Forest Clearance Is a Post-Vesting Concern
- The Forest (Conservation) Act applies only to the stage of construction or utilization, not acquisition
- Landowners cannot be held liable for delays caused by administrative failure to obtain forest diversion
- NHAI and State agencies must plan forest clearance timelines in parallel with acquisition, not as a precondition
Precedent Binding Across Coordinate Benches
- Coordinate bench rulings on identical legal issues are binding unless overruled by a larger bench
- Petitioners in pending land acquisition cases should cite Project Director, Project Implementation Unit and Bombay HC orders in W.P. Nos. 5975/2022 and 7572/2023
- Courts will not permit inconsistent interpretations within the same jurisdiction
