The National Highways Act, 1956 does two things, and only one of them is widely understood. Its first job is constitutional housekeeping: it declares which highways in India are national highways, vests them in the Union, and makes the Central Government responsible for their development and maintenance. Its second job, added four decades after enactment, is far more consequential for the people it touches: it contains a complete, self contained code for taking private land to build those highways, from the first notification of intention to the deposit of the amount payable. A landowner whose fields lie in the path of a new alignment will meet this Act, and almost nothing else, at every stage of the process.

The single most valuable fact about the Act is one that a reader of the Act alone will never find in it. Since the beginning of 2015, the compensation payable for land taken under this Act has not been governed by this Act. The procedure is the highways statute’s own, compressed and unforgiving of delay. The money, meaning the method of calculating the amount, the multiplier applied to rural land, the solatium added on top, and the rehabilitation and resettlement entitlements that accompany the taking, comes from the general land acquisition statute of 2013, imported into highway acquisitions by an executive order rather than by any amendment of either statute. The procedure is one statute and the price is another, and the bridge between them is an order that most published guidance on highway acquisition still omits.

That division structures everything that follows. This article sets out the Act as enacted in 1956 and the declaration machinery of Section 2, the vesting and responsibility provisions of Sections 4 to 6, the acquisition code inserted in 1997 as Sections 3A to 3J step by step, the determination of the amount under Section 3G and the deposit and payment machinery of Section 3H, the change of 2015 and the arithmetic it imported, the arbitration mechanism and the serious argument about its independence, the separate statute that created the National Highways Authority of India, the toll framework under Section 7 and the concession power in Section 8A, and the companion statute of 2002 that polices encroachment and access. It closes by stating the case for the acquisition code and the case against it at full strength, because the design choice at the heart of the Act, speed purchased with process, is a genuine choice and deserves to be argued rather than assumed.

The Act on the statute book

The National Highways Act is Act 48 of 1956. It received its place on the statute book in September 1956 and came into force on 15 April 1957, by notification S.R.O. 1180 dated 4 April 1957. Its long title is short and exact: an Act to provide for the declaration of certain highways to be national highways and for matters connected therewith. Nothing in the long title speaks of acquisition, of compensation or of tolls. The Act that a landowner meets in practice is therefore mostly not the Act that Parliament enacted in 1956. It is the 1956 shell filled in by later amendments, above all by the National Highways Laws (Amendment) Act, 1997, Act 16 of 1997, which took effect on 24 January 1997 and inserted the acquisition code, substituted the definitions section, and cut away parts of the original scheme that had outlived their purpose.

The constitutional footing is straightforward. Highways declared to be national highways fall within the Union’s legislative field under the Union List, and the declaration under this Act is the act that moves a road from the state field into the Union field. Before the Act, the great trunk roads of the country were maintained through a patchwork of arrangements in which the Centre funded and the provinces and then the states executed, without a clean statutory statement of ownership or responsibility. The Act supplied that statement. Section 4 vests every national highway in the Union. Section 5 makes the Central Government responsible for developing and maintaining all national highways in proper repair. Section 6 empowers the Central Government to give directions to any state government about carrying out the Act within that state. Ownership, responsibility and a direction power: the 1956 Act is, at its core, an allocation statute, settling which level of the federation a national road belongs to.

That allocation is what makes the rest of the machinery necessary. A government that owns a road and answers for its condition must be able to widen it, realign it, build bypasses around towns that the old alignment strangled, and acquire the land to do so. For the first forty years of the Act’s life, that acquisition was done under the general land acquisition law, the Land Acquisition Act, 1894, invoked project by project. The 1997 amendment ended that dependence for highways. It wrote a bespoke code into the Act itself, designed for the specific geometry of road building: a linear project, crossing many districts and sometimes several states, in which a single contested parcel can hold up a continuous carriageway and in which delay compounds along the whole alignment. Whether that design was a necessity or an overcorrection is the argument taken up later in this article. Its content is not in doubt, and it is set out in full below.

Section 2: how a highway becomes a national highway

Section 2 is the gateway provision, and it works in three movements. Section 2(1) declares each of the highways specified in the Schedule to the Act to be a national highway. The Schedule is part of the Act, so the founding list carries statutory force. Section 2(2) empowers the Central Government, by notification in the Official Gazette, to declare any other highway to be a national highway, and on publication of the notification the highway is deemed to be specified in the Schedule. Section 2(3) supplies the reverse power: the Central Government may, by a like notification, omit any highway from the Schedule, and on publication the highway ceases to be a national highway.

Three features of this machinery matter. The first is that the Schedule grows, and shrinks, by executive notification rather than by amendment of the Act. Parliament set the founding list and then handed the pen to the Central Government. A state highway becomes a national highway when the Gazette says so, and the deeming language of Section 2(2) means no further legislative step is needed to give the new entrant the full statutory character, including vesting in the Union under Section 4 and Central responsibility under Section 5. Denotification works the same way in reverse, and it is used: stretches handed back to states, or reclassified, leave the Schedule by the same instrument that brought them in.

The second feature is that declaration is a legal event with consequences far beyond a change of name on a map. On declaration, the highway vests in the Union. Maintenance responsibility shifts to the Central Government, subject to the delegation power examined below. The acquisition code becomes available for any widening or realignment of the declared road. The fee provisions of Section 7 become capable of applying to its sections and bridges. And the control machinery of the 2002 statute, which applies to highway land, attaches to it. A notification under Section 2(2) is therefore one of the most consequential single-page instruments in Indian infrastructure law, and it is issued as a matter of routine administration.

The third feature is historical. The Schedule as enacted listed the principal trunk routes of the young republic. It has been added to, notification by notification, across seven decades, and the numbering of the network was comprehensively reorganised in 2010, when the familiar route numbers were replaced by a grid based system. The legal point survives every renumbering: whatever the number painted on the milestone, a highway is a national highway in law because Section 2 says it is, either in the original Schedule or through a notification that deems it to be there. Arguments about whether a particular stretch is or is not a national highway are settled by the Gazette, not by the signboard, the map or the quality of the surface.

A detail from the 1997 amendment belongs here, because it shows the direction of travel of the whole statute. As enacted, Section 2 excluded from its declaration the parts of a highway situated within a municipal area, leaving town stretches in a different legal position from the open road. The 1997 amendment omitted those words with effect from 24 January 1997. The national highway in law is therefore the whole highway, running through municipal limits as it runs through fields, and the fragmentation of responsibility at the town boundary, which the original Act had accepted, was abolished by the same amendment that built the acquisition code. The pattern is characteristic: the 1997 legislature wanted one road, one owner, one procedure.

Vesting and responsibility: Sections 4 to 6

Section 4 provides that all national highways shall vest in the Union. The section then defines what counts as part of a highway for the purposes of the Act, and the definition is wider than the carriageway. Highways include all lands appurtenant to them, whether demarcated or not; all bridges, culverts, tunnels, causeways, carriageways and other structures constructed on or across them; and all fences, trees, posts and boundary, furlong and milestone markers on them or on land appurtenant to them. The vesting is therefore of a corridor and its furniture, not merely of a strip of tarmac. Land that is appurtenant to the highway vests even if it has never been demarcated, which matters when a dispute arises about a verge, a drain, a borrow pit or the strip between the carriageway and the boundary fence: the question is appurtenance, not survey marks.

The vesting of highways declared under Section 2 should not be confused with the vesting of land acquired under the 1997 code. Section 4 vests the highway as an institution: the road, as a going concern, belongs to the Union. Section 3D, examined below, vests particular parcels of private land in the Central Government when they are acquired for building or widening. The two vestings work together. Section 3D brings the new land in; Section 4 makes it part of a thing that is already, in law, Union property with a Union purpose. Infrastructure vesting in the Union by force of a declaration statute is a recurring Indian technique: the railway network rests on a comparable vesting and responsibility structure, worked through in the article on the Railways Act 1989 and passenger rights, where the same pattern of a Union owned corridor administered through a specialised machinery appears in a different sector.

Section 5 states the responsibility and then qualifies it. It is the responsibility of the Central Government to develop and maintain in proper repair all national highways. But the Central Government may, by notification in the Official Gazette, direct that any function in relation to the development or maintenance of any national highway shall, subject to conditions specified in the notification, also be exercisable by the government of the state within which the highway is situated, or by any officer or authority subordinate to the Central Government or to the state government. The verb matters. The state function is made “also exercisable”: the Central responsibility is not transferred away, it is shared downward on conditions. A state public works department that maintains a national highway stretch under a Section 5 notification does so as a delegate within a Union responsibility, funded and directed accordingly, and the delegation can be structured by conditions in the notification itself.

This dual structure explains a confusion that motorists and landowners both share. The national highway past a town may be patrolled, patched and swept by state personnel, its roadside works executed by a state division, and its land records maintained in the district, yet none of that makes it a state road. Ownership sits with the Union under Section 4, ultimate responsibility sits with the Centre under Section 5, and the state hand on the road is there because a notification put it there. When the National Highways Authority of India enters the picture, as it does for the greater part of the network by length of developed corridor, it does so by entrustment under its own Act, an arrangement examined in its own section below. The 1956 Act itself knows nothing of the Authority. Its world contains the Central Government, state governments, and officers and authorities subordinate to either.

Section 6 completes the federal picture with a direction power. The Central Government may give directions to the government of any state as to the carrying out in the state of any of the provisions of the Act, or of any rule, notification or order made under it. Read with the proviso structure of the Constitution’s own direction provisions, this is an ordinary but real instrument of Union supremacy within a Union subject: the state that exercises delegated functions under Section 5 can be directed in the manner of their exercise under Section 6. The remaining original provisions are machinery: Section 9 confers the rule making power on the Central Government, under which the National Highways Rules and, in time, the fee rules were made; Section 10 requires rules and notifications to be laid before Parliament. Section 8, which in the original Act dealt with agreements with state governments and municipalities, was omitted by the 1997 amendment, its subject matter absorbed into the general delegation and agreement powers that the amended Act provides.

Two further provisions inserted in 1995 belong to the Act’s operational layer. Section 8A, examined in detail with the toll framework below, empowers the Central Government to enter into agreements with any person for the development and maintenance of a national highway, and entitles that person to collect and retain fees: it is the statutory root of the concession model. Section 8B punishes mischief that renders a national highway impassable or less safe for travel, with imprisonment extending to five years, or fine, or both. Neither provision existed in 1956. Both arrived with the decade in which the state decided that national highways would be built at a pace and a standard that the budget alone had not delivered, and both were in force before the acquisition code that completed the transformation.

Why a separate acquisition code was written in 1997

For forty years, land for national highways was acquired under the Land Acquisition Act, 1894, the general statute that governed compulsory purchase for every public purpose from a school to a steel plant. That statute’s procedure was built around the individual block: a notification, an enquiry into objections by the Collector with a report to government, a declaration, an award after a further enquiry, and a reference to the civil court at the instance of any dissatisfied person, where the amount could be relitigated with evidence. It carried solatium for the compulsory character of the taking and interest for delay. It was also slow in ways that compound badly on a road. A highway is not a block. It is a line, sometimes hundreds of kilometres long, crossing the lands of thousands of owners in dozens of districts. Each parcel acquired under the 1894 Act carried its own procedural life, its own objection enquiry, its own award and its own potential court reference, and the works could not proceed on a stretch until the stretch was complete, because a road with a missing hundred metres is not a road.

The Statement of Objects and Reasons of the 1997 amendment, as later recounted by the Supreme Court, named the purposes plainly: creating an environment to promote private investment in national highways, speeding up construction, and removing bottlenecks in management, with the inordinate delay in acquisition of land identified as one of the recognised impediments. The amendment answered with a code that reverses most of the 1894 Act’s defaults. One notification of intention for the land required, published in the Gazette with its substance carried in two local newspapers. One window for objections, measured in days, heard by the acquiring machinery’s own officer, whose order is final. A declaration that itself vests the land in the Central Government, free from all encumbrances, before the amount is determined. Possession taken on deposit of the amount the acquiring side’s officer has fixed. Disagreement about the amount sent not to a court but to an arbitrator appointed by the Central Government, with the arbitration statute applying in a restricted way. And a closing section, Section 3J, stating in terms that nothing in the Land Acquisition Act, 1894 shall apply to an acquisition under this Act.

The design is coherent, and its coherence is the point that critics and defenders both have to confront. Every feature that a landowner experiences as a curtailment is load bearing for the feature the state experiences as speed. Vesting on declaration exists so that title questions cannot hold the alignment. The short objection window exists so that the survey line hardens into a programme. The arbitrator appointed by the Centre exists so that amount disputes run on an administrative timetable rather than a judicial one. Section 3J exists so that none of the 1894 Act’s slower machinery can be imported by an argument from analogy. A reader who wants to assess the code fairly has to assess it as a system, which is what the two cases argued later in this article attempt. A reader who wants to use it, as a landowner must, needs the sequence exactly, and the sequence is the next subject.

The acquisition code: the competent authority and Section 3A

The 1997 amendment rebuilt the front of the Act before it wrote the code. Section 3, substituted with effect from 24 January 1997, supplies the two definitions on which everything turns. A “competent authority” is any person or authority authorised by the Central Government, by notification in the Official Gazette, to perform the functions of the competent authority for such area as may be specified in the notification. “Land” includes benefits to arise out of land and things attached to the earth or permanently fastened to anything attached to the earth. The competent authority is the code’s central human institution. In practice the notification designates district level revenue officers, sub divisional officers, additional district magistrates or special land acquisition officers, area by area, and it is that officer who hears objections, determines the amount in the first instance, receives the deposit, pays it out, and refers apportionment disputes to the civil court. The acquiring government does not appear in the code as a litigant at these stages; it appears through this officer, a design choice whose consequences for the arbitration debate are taken up below.

Section 3A opens the sequence. Where the Central Government is satisfied that for a public purpose any land is required for the building, maintenance, management or operation of a national highway or part of it, it may, by notification in the Official Gazette, declare its intention to acquire the land. Every such notification must give a brief description of the land. The competent authority must then cause the substance of the notification to be published in two local newspapers, one of them in a vernacular language. Three points deserve emphasis. The purposes are closed and functional: building, maintenance, management or operation of a national highway. Land cannot be taken under this code for a purpose unconnected with the highway. The declaration of intention is exactly that, an intention: Section 3A takes nothing, vests nothing and entitles nobody to enter, except for the survey powers that Section 3B attaches to it. And the newspaper publication is not a courtesy. It is the mechanism by which owners who do not read the Gazette learn that their land is marked, and the objection clock runs from the publication of the Gazette notification, so the local publicity matters to the fairness of what follows even though the statutory period is tied to the Gazette date.

Section 3B arms the survey. On the issue of a Section 3A notification, any person authorised by the Central Government may enter the land to make inspections, surveys, measurements, valuations and enquiries, take levels, dig or bore into the sub soil, set out boundaries and the intended lines of work, mark levels, boundaries and lines by placing marks and cutting trenches, and do other acts laid down by rules. The authorised entrant may therefore cut a trench across a field and sink a bore into it at a stage when the owner has had no hearing and the land has not been acquired. The code treats investigation as preceding adjudication: the state first learns exactly what the alignment needs, in the ground, and objections are then heard against a proposal that has been physically marked out. Owners sometimes experience the survey party as the acquisition itself. In law it is the preliminary, and the owner’s procedural rights begin at the next section.

How long does a landowner have to object to a highway acquisition?

Twenty one days from the date of publication of the Section 3A notification in the Official Gazette. Section 3C requires the objection to be made in writing to the competent authority, setting out its grounds, and it entitles the objector to be heard in person or through a legal practitioner before the authority decides.

Section 3C is the code’s only hearing before title passes, and its terms should be read exactly. Any person interested in the land may, within twenty one days from the date of publication of the Section 3A notification, object to the use of the land for the purposes mentioned in that notification. The objection is to the use of the land for the highway purpose: it goes to whether this land should be taken for this road, not to how much should be paid for it, which is a question the code reserves for a later stage and a different standard. Every objection must be made to the competent authority in writing and must set out the grounds. The competent authority must give the objector an opportunity of being heard, in person or by a legal practitioner, and may, after hearing all objections and making any further enquiry it thinks necessary, by order either allow or disallow the objections. The order is declared final by Section 3C(3).

Finality there means what it says within the statute: there is no appeal inside the code against the disposal of objections. The twenty one day window is correspondingly severe. It runs from Gazette publication, not from service on the owner, not from the newspaper publicity that the competent authority arranges, and not from the owner’s actual knowledge. An owner who is away, who is served with nothing, whose land is held through a family arrangement in which the recorded holder is dead or absent, can lose the only statutory opportunity to contest the taking itself without ever having seen the notification. What survives the lapse of the window is the claim to the amount, which has its own later procedure, and the constitutional courts’ writ jurisdiction, which Section 3C cannot exclude and which owners invoke against notifications on grounds such as non application of mind, absence of the required satisfaction, or a proposal that is not for the stated purpose at all. Those challenges are exceptional and hard. The working rule for any owner is the statutory one: the objection is written, it is reasoned, it is filed inside twenty one days, and it addresses the use of the land, because amount arguments made at this stage are addressed to a question the authority is not deciding. This article explains the statute and is legal information; an owner facing a live notification needs advice on the specific survey numbers and dates, which no general account can supply.

The record an owner assembles at this stage decides much of what follows. The title documents, the Gazette copy and the newspaper publication, the written objection with its acknowledgement, the survey numbers and the alignment map, and any photographs of standing assets on the land, form the file on which the amount stage and any arbitration will run. Owners who keep that file complete, with scanned papers assembled in the order the competent authority will ask for them, and who can open the whole set as a single presentation when a hearing is called, are measurably harder to hurry. A reader assembling such a record can keep the working papers together and page through them with a presentation viewer for the assembled acquisition file, which is the unglamorous administrative habit that separates a documented claim from an asserted one.

Section 3D: the declaration that itself takes the land

Section 3D converts intention into acquisition. Where no objection under Section 3C has been made within the period, or where the competent authority has disallowed the objections, the competent authority submits a report to the Central Government, and on receipt of the report the Central Government declares, by notification in the Official Gazette, that the land should be acquired for the purposes mentioned in the Section 3A notification. Section 3D(2) then states the consequence in a single sentence: on the publication of the declaration, the land shall vest absolutely in the Central Government free from all encumbrances. A declaration must come within one year of the Section 3A notification: Section 3D(3) provides that where no declaration is published within one year from the date of publication of the Section 3A notification, the notification ceases to have any effect, with periods during which proceedings were stayed by a court excluded from the computation. Section 3D(4) bars the declaration from being called in question in any court or by any other authority, a bar that, like the finality in Section 3C, operates inside the statutory scheme and does not displace the writ jurisdiction of the constitutional courts.

Why does the declaration matter more than the possession date?

Because the declaration, not possession, is the legal taking. On its publication in the Official Gazette the land vests in the Central Government free from all encumbrances, before the amount is determined and before any possession notice. Possession under Section 3E only enforces on the ground a title that has already passed.

The vesting sentence is the hinge of the entire code, and its implications repay slow statement. Title passes on publication of a notification, not on payment, not on possession, not on the execution of any document by the owner. From that moment the former owner holds no land; what the former owner holds is a statutory claim to an amount, enforceable through the code’s own machinery. Every interest that burdened the land is extinguished as against the land: a mortgagee’s security is gone from the land, a tenant’s possession is possession of government land, a lessee’s term has nothing left to attach to. Those interests are not destroyed without remedy, but their remedy is relocated. The mortgagee, the tenant and every other person interested become claimants to the amount determined under Section 3G, in the shares that Section 3H’s apportionment machinery will recognise. The doctrine is familiar from the older acquisition law and the courts have applied its logic consistently: vesting free from encumbrances cleans the title for the public work and converts private rights in the land into private rights against the fund. The human asymmetry is equally plain. The state gets the land at the declaration. The owner gets a process.

The one year lapse rule in Section 3D(3) is the code’s single concession to the owner at this stage, and it is a real one. A notification of intention that the government does not carry through to declaration within a year dies, and with it the blight that an open notification casts on dealings with the land. The exclusion of court stayed periods prevents the lapse rule from punishing the government for delays it did not cause, and correspondingly prevents an objector from running out the clock by litigation. A fresh acquisition of the same land after lapse would require a fresh Section 3A notification and a fresh objection window. Owners and purchasers examining a title should therefore treat a Section 3A notification as a perishable cloud: check its date, check for a declaration, and check for stay orders, before treating the land as either condemned or clear.

Notification to payment: the sequence in one table

The artifact below compresses the code into the sequence a landowner actually lives through. The second table the subject calls for, showing which statute supplies the procedure and which supplies the compensation, is folded into the final column and into the section on the 2015 change that follows, because the division it records is the division this table already assumes: everything in the steps column is the highways Act, and everything about the measure of the money, since the beginning of 2015, is the 2013 Act.

Step	Provision	Period or trigger	What the landowner may do	What is lost by not doing it
Notification of intention to acquire	Section 3A	Gazette publication; substance in two local newspapers, one vernacular	Read the description of the land, identify survey numbers, begin assembling title documents	Nothing yet in law, but the objection clock is already running
Survey and marking on the ground	Section 3B	After the Section 3A notification	Permit entry, record the marked line, photograph assets and boundaries	Evidence of what stood on the land when the line was set out
Objection to the use of the land	Section 3C	Twenty one days from Gazette publication of the Section 3A notification	Object in writing with grounds; be heard in person or by a legal practitioner	The only statutory chance to contest the taking itself; the authority’s order is final
Declaration of acquisition	Section 3D	Within one year of the Section 3A notification, stayed periods excluded	Nothing further on the taking; prepare the claim for the amount	Title itself: the land vests in the Central Government free from all encumbrances on publication
Determination of the amount	Section 3G(1) to (4)	After public notice inviting claims, published in two local newspapers	Appear, state the nature of the interest, prove title and value	A determination made on the acquiring side’s material alone
Deposit and payment	Section 3H(1) to (4)	Deposit with the competent authority precedes possession	Receive payment; claim a share in apportionment; send disputes to the principal civil court through the authority	Possession follows deposit of the authority’s amount, not of an agreed amount
Possession	Section 3E	Notice to surrender within sixty days of service; enforcement through the Police Commissioner or the Collector	Surrender within the notice period; remove movables and salvage	Enforced surrender of the land
Reference to the arbitrator	Section 3G(5) and (6)	On application by either party dissatisfied with the amount	Apply for determination by the arbitrator appointed by the Central Government, under the arbitration statute	The competent authority’s amount stands as the payable sum
Interest on an arbitral increase	Section 3H(5) and (6)	Nine per cent a year on the excess, from possession to actual deposit	Claim the excess with interest once the arbitrator has spoken	The time value of the increase for the years of the reference

Possession and entry: Sections 3E and 3F

Possession is deliberately placed after deposit in the code’s order, and the order is one of the protections the landowner does hold. Section 3E(1) operates where land has vested under Section 3D and the amount determined by the competent authority under Section 3G has been deposited under Section 3H(1) with the competent authority by the Central Government. Only then may the competent authority, by notice in writing, direct the owner and any other person in possession to surrender or deliver possession to the competent authority or its authorised person within sixty days of service of the notice. Section 3E(2) supplies the enforcement: if a person refuses or fails to comply, the competent authority applies, in a metropolitan area to the Commissioner of Police and elsewhere to the Collector of the district, and the Commissioner or Collector shall enforce the surrender. Section 3F completes the picture from the other side: where land has vested, any person authorised by the Central Government may lawfully enter it and do the acts necessary for building, maintenance, management or operation of the highway or connected work.

The sequence of vesting, deposit, notice and possession deserves attention because popular accounts habitually scramble it. Title passes at the declaration, before the amount exists. The amount is then determined. The amount is deposited. Possession follows the deposit, on sixty days notice, with police or Collector enforcement behind it. The state therefore takes the land physically after paying into the code’s own custody the sum its officer has fixed, but before any independent mind has tested that sum, and before the owner has had any forum on quantum beyond the fixing officer himself. The arbitration that can test the amount runs after possession, against a road that may already be under construction on the land. Defenders of the code call this pay first, argue later, and point out that the deposit is real money available to the owner from the competent authority under Section 3H(2). Critics answer that the sequence reverses the ordinary intuition of a sale, in which price precedes delivery, and that it transfers the entire cost of delay in the amount dispute from the taker to the taken from. Both descriptions are accurate about the same mechanism, which is why the mechanism is the argument.

The amount under the highways Act itself: Sections 3G and 3H

Section 3G determines the amount, and its structure is a ladder. Section 3G(1): where land is acquired under the Act, there shall be paid an amount determined by an order of the competent authority. Section 3G(2) deals with partial interests: where a right of user or a right in the nature of an easement over land is acquired, the owner and any other person whose enjoyment is affected are paid an amount calculated at ten per cent of the amount determined under sub section (1) for that land. Before determining the amount, Section 3G(3) requires the competent authority to give public notice, published in two local newspapers, one in a vernacular language, inviting claims from all persons interested, and Section 3G(4) requires the notice to state the particulars of the land and to require interested persons to appear, in person, by agent or by legal practitioner, and state the nature of their respective interests. The amount is therefore not fixed in a file without a hearing: there is a claims stage, and an owner’s failure to use it is the commonest reason a first determination is made on inadequate material.

Section 3G(7) lists the matters the competent authority, and later the arbitrator, shall take into consideration. There are four: the market value of the land on the date of publication of the Section 3A notification; the damage sustained by the person interested at the time of taking possession by reason of the severing of the land from his other land; the damage sustained at the time of taking possession by reason of the acquisition injuriously affecting his other immovable property in any manner, or his earnings; and, where the acquisition compels the person interested to change his residence or place of business, the reasonable expenses incidental to the change. Two features of the list are regularly missed in summaries. There is no head for standing crops or trees in Section 3G(7): that head belongs to the older general statute, and under the highways code the value bound up in what stands on the land enters, where it enters, through the market value and, after the 2015 change, through the assets component of the imported First Schedule. And there is no solatium and no general interest provision in the 1997 code as enacted: the amount was the four heads, counted once. The absence of solatium, the addition that the general law made for the compulsory nature of the taking, was the code’s most litigated feature for eighteen years, and its history is told in the sections on the courts and on 2015 below.

Section 3H handles the money’s movement. The amount determined under Section 3G must be deposited by the Central Government, in the manner laid down by rules, with the competent authority before possession is taken. As soon as may be after the deposit, the competent authority pays the amount, on behalf of the Central Government, to the persons entitled. Where several persons claim to be interested, the competent authority determines who is entitled and to what share. If a dispute arises over apportionment, or over the person to whom any part is payable, the competent authority refers the dispute to the decision of the principal civil court of original jurisdiction where the land lies. Apportionment, therefore, is the one amount question the code does send to a court in the first instance: who gets the money is judicial, how much money there is, is not. Section 3H(5) provides the code’s interest: where the amount determined by the arbitrator exceeds the competent authority’s amount, the arbitrator may award interest at nine per cent a year on the excess from the date of taking possession under Section 3D until the date of actual deposit, and Section 3H(6) requires the excess, with any such interest, to be deposited in the same way and paid out under the same machinery.

Which officer runs a highway acquisition in the district?

The competent authority: the person or authority the Central Government notifies under Section 3 for the area. That officer hears the Section 3C objections, invites and hears claims, determines the amount under Section 3G, receives the deposit under Section 3H and pays it out, holding for those purposes the powers of a civil court under Section 3I.

Around these sections sit three smaller provisions that complete the code. Section 3I gives the competent authority, for the purposes of the Act, the powers of a civil court trying a suit under the Code of Civil Procedure in five matters: summoning and enforcing attendance and examining on oath, requiring discovery and production of documents, receiving evidence on affidavits, requisitioning public records, and issuing commissions for examining witnesses. The authority that hears objections and fixes amounts is thus equipped with coercive process, though it remains an executive officer and not a court. Section 3G(5) and (6), the arbitration provisions, are examined with the arbitration debate below. And Section 3J closes the code: nothing in the Land Acquisition Act, 1894 shall apply to an acquisition under this Act. One sentence, doing heavy work. It excluded the older statute’s objection enquiry before government, its award procedure, its court reference on quantum, its solatium and its interest, at a stroke, and it made the highways code exclusive on its own territory. For owners whose land was taken between 1997 and the changes of 2015 and 2019 described below, Section 3J was the sentence that decided what their land was worth in law, and the constitutional attack on it produced the code’s most important judgment.

The change of 2015: procedure from one statute, money from another

The general land acquisition statute was replaced in 2013. The Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013, Act 30 of 2013, which received assent on 26 September 2013 and came into force on 1 January 2014, rebuilt the law around social impact assessment, consent requirements for private and public private acquisitions, a compensation formula markedly more generous than the 1894 Act’s, and structured rehabilitation and resettlement entitlements. Its full scheme is worked through in the article on the LARR Act 2013 in this series. The question for highways was what, if anything, of that settlement would reach an acquisition that Section 3J’s successor logic had fenced off from the general law. The 2013 Act answered the question itself, in Section 105 and its Fourth Schedule.

Section 105(1) provides that the 2013 Act does not apply to acquisitions under the enactments listed in the Fourth Schedule. The Schedule lists thirteen enactments, the sectoral acquisition regimes that Parliament chose to leave standing: the National Highways Act, 1956 stands seventh among them. Highway acquisition was therefore expressly outside the 2013 Act’s procedure: no social impact assessment, no consent stage, no expert group appraisal, none of the machinery described in the guide to land acquisition law in India governs the taking of land for a national highway. Section 105(3), however, cut a channel through the wall. It required the Central Government, by notification, within one year of the commencement of the 2013 Act, to apply the provisions of that Act relating to the determination of compensation in accordance with its First Schedule, and to rehabilitation and resettlement in accordance with its Second and Third Schedules, to acquisitions under the Fourth Schedule enactments. The procedure would stay sectoral. The money would be equalised. That was the legislative design, and the deadline built into it, the end of 2014, is where the design met parliamentary reality.

Does the 2013 land acquisition Act govern highway acquisition?

Not its procedure. Highway acquisition runs entirely on Sections 3A to 3J of the highways Act. Since the beginning of 2015, the 2013 Act supplies the measure of compensation through its First Schedule, and rehabilitation and resettlement through its Second and Third Schedules, applied by executive order.

The route actually taken to the equalisation was indirect, and it matters, because indirectness is why the position is so widely misstated. The government did not simply issue the Section 105(3) notification. It promulgated an ordinance, Ordinance 9 of 2014, at the end of December 2014, amending Section 105 so that the compensation and rehabilitation provisions would apply to the Fourth Schedule enactments, with the application taking effect from 1 January 2015. The amending bill that would have made the change permanent passed one House and stalled in the other. The ordinance was re promulgated, and then allowed to lapse on 31 August 2015. In the interval, on 28 August 2015, the Central Government issued the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement (Removal of Difficulties) Order, 2015, S.O. 2368(E), under Section 113 of the 2013 Act, the power to make orders for removing difficulties. The Order, in force from 1 September 2015, declares that the provisions of the 2013 Act relating to the determination of compensation in accordance with the First Schedule, rehabilitation and resettlement in accordance with the Second Schedule and infrastructure amenities in accordance with the Third Schedule shall apply to all cases of land acquisition under the enactments specified in the Fourth Schedule. The settled position administered by the highways ministry, following the ordinance’s own application date, is that the imported benefits run with effect from 1 January 2015. Individual owners have litigated the transition, and awards concluded before the change have been treated according to the law of their own dates, but for acquisitions in the period the Order governs, the channel cut by Section 105(3) is open and the 2013 measure of money flows through it.

What flows through deserves precise statement, because this is the arithmetic a highway landowner is actually owed and the arithmetic that no reading of the highways Act will disclose. Under the First Schedule to the 2013 Act, compensation begins from market value, determined on the principles of Section 26 of that Act: the highest of the value specified under the stamp law for registration of sale deeds in the area, the average sale price for similar land in the nearest village or vicinity drawn from the higher half of sale deeds of the preceding three years, and, where it applies, the consented amount paid for acquisition for private companies or public private partnerships. That market value is multiplied by a factor: one for urban land, and for rural land a factor between one and two fixed by the appropriate government by reference to the distance of the project from the urban area. To the multiplied value is added the value of assets attached to the land or building, the trees, plants, structures and standing assets that the highways code’s own four heads had left without a clear home. On the sum is added solatium of one hundred per cent, under Section 30 of the 2013 Act as applied through the Schedule, the doubling addition for the compulsory character of the taking which Section 3G(7) had omitted. The Second Schedule supplies the rehabilitation and resettlement entitlements, the housing, annuity, employment, subsistence and transportation elements that attach to affected families, and the Third Schedule the infrastructure amenities to be provided in resettlement areas. The competent authority under the highways Act remains the decision maker, and the arbitrator under Section 3G(5) remains the forum for disputes about the amount, but the measure both must apply to acquisitions within the Order’s reach is this imported measure.

The practical consequences rearrange the advice an owner needs. An argument about the amount is no longer an argument confined to Section 3G(7)’s four heads for a post 2015 acquisition: it is an argument about stamp values and comparable sale deeds under Section 26 principles, about the multiplier notified for the district and the distance classification of the village, about the valuation of attached assets, and about whether the Second Schedule entitlements have been counted at all. Owners who argue only from the highways Act argue from the wrong book. Equally, the grievances the Order did not touch are procedural: the twenty one day objection window, the finality of the authority’s order on objections, vesting at declaration before the amount is known, and arbitration before an appointee of the paying government all survived 2015 intact. The largest substantive complaint, that highway land was paid for at a discount against identical land taken for another public purpose, was answered. The procedural complaints were not, which is why highway acquisition litigation after 2015 is dominated by process and by the arbitration, rather than by the multiplier.

Tarsem Singh and the years before the Order

The gap years, acquisitions between the 1997 code and the 2015 equalisation, generated the constitutional challenge that Section 3J invited. Owners taken under the highways Act received no solatium and none of the interest the general statute gave, while owners of neighbouring land taken for a different public purpose under the 1894 Act received both. High Courts divided and then converged: the Karnataka High Court in Lalita v. Union of India in 2002, the Punjab and Haryana High Court in Golden Iron and Steel Forgings in 2008, and the Madras High Court in T. Chakrapani v. Union of India each held Section 3J unconstitutional in its discriminatory operation. The Supreme Court settled the question in Union of India v. Tarsem Singh, (2019) 9 SCC 304. The Court held that the denial of solatium and interest to landowners under the highways Act, when the same benefits were available under the general acquisition law, rested on a classification that violated the guarantee of equality in Article 14, and it declared Section 3J unconstitutional to the extent of that denial. The 2015 Order had already equalised the future. Tarsem Singh equalised the past, by constitutional compulsion rather than executive grace, and it stands as the clearest statement in the case law that the speed of a sectoral code does not licence a discount on the price of the land it takes.

Tarsem Singh also locates the limit of what equality arguments achieved under this Act. The Court’s intervention was about the measure of compensation, the incidentals of solatium and interest that made two owners of like land whole in unlike measure. It did not disturb the code’s procedure: the notification sequence, the objection window, vesting on declaration and the arbitral forum all survived, and survive. Owners and their advisers should hold the distinction firmly, because it predicts where argument succeeds. Challenges to the amount’s measure, grounded in the imported 2013 standards or in Tarsem Singh for the earlier period, operate on receptive ground. Challenges to the taking itself, outside the narrow writ grounds, face Section 3C’s finality, Section 3D(4)’s bar and a judicial record of refusing to convert process objections into vetoes over linear infrastructure.

The arbitration and the independence problem

Section 3G(5) provides that if the amount determined by the competent authority is not acceptable to either of the parties, the amount shall, on an application by either of the parties, be determined by the arbitrator to be appointed by the Central Government. Section 3G(6) applies the Arbitration and Conciliation Act, 1996 to every arbitration under the Act, subject to the provisions of the highways Act. Either side may invoke the reference: the landowner who finds the amount too low, and the acquiring side, in practice the Authority or the ministry, which may find it too high. The arbitrator re determines the amount on the Section 3G(7) considerations, or, for acquisitions within the 2015 Order, on the imported First Schedule measure. The arbitrator so appointed is, in the ordinary run of notifications, a senior revenue officer of the district administration, frequently the District Collector or the Divisional Commissioner. An award can be challenged only on the narrow grounds of Section 34 of the arbitration statute, and the Supreme Court held in Project Director, National Highways Authority of India v. M. Hakeem, (2021) 9 SCC 1, that a court in Section 34 proceedings cannot modify the award: it may set the award aside, or leave it standing, but it cannot correct the figure, however demonstrable the error in computation, because modification is not among the powers the arbitration statute confers. Section 37 appeals narrow the field further. The result is a quantum dispute resolved, in sequence, by an officer of the acquiring government, an arbitrator appointed by the acquiring government and commonly drawn from the same administrative service, and a court forbidden to adjust the number even when persuaded it is wrong.

The independence objection writes itself, and it has been written, by courts as well as commentators. The arbitrator is appointed by one of the two parties to the dispute, the party that pays. The appointee is ordinarily a serving officer of the administration that carried out the acquisition, and in the common district pattern is the administrative superior of the competent authority whose determination is under challenge. The Punjab and Haryana High Court described the resulting remedy in terms that questioned its reality as a remedy at all, and commentary in the profession’s journals has treated Section 3G(5) as a standing illustration of institutional design defeating adjudicative purpose. The objection is sharpened by doctrine. In the contractual setting, the Supreme Court held in Perkins Eastman Architects DPC v. HSCC (India) Ltd. that a party interested in the outcome cannot unilaterally appoint a sole arbitrator, and a five judge Constitution Bench in Central Organisation for Railway Electrification v. ECI-SPIC-SMO-MCML (JV), decided on 8 November 2024, held that clauses in public contracts permitting one party to unilaterally curate the panel or appoint the tribunal offend the equality principle in Section 18 of the arbitration statute and Article 14 of the Constitution: public bodies may maintain broad based panels, but they cannot compel the counterparty to accept appointment from a unilaterally controlled process. The Bench directed that its ruling apply prospectively to three member tribunal appointments made after the judgment.

Whether that doctrine reaches Section 3G(5) is a distinct question, and honesty requires it to be stated as open. The Constitution Bench addressed arbitration clauses, creatures of contract, even where one contracting party was the state. Section 3G(5) arbitration is a creature of statute: the forum, the appointing authority and the governing measure are all fixed by Parliament, and the landowner never agreed to any of it. Arguments run in both directions. For extension: the equality and independence principles the Bench articulated are principles about adjudication by an interested party’s nominee, and a statutory scheme that makes the acquiring government the appointor of the only quantum forum presents the vice in a purer form than any clause. Against extension: statutory arbitration has always occupied a different footing from contractual arbitration in Indian law, courts have sustained legislative choices of forum and appointor across many sectoral statutes, and the remedy for a statute is a constitutional challenge to the provision itself, with the deference that fiscal and infrastructure legislation attracts, rather than the reading down of a clause. No authoritative ruling has yet applied the 2024 Constitution Bench position to appointments under Section 3G(5), and an owner who assumes the point is won will be disappointed. The point is available, it is serious, and it is undecided, which is the accurate description of a great deal of the law under this Act.

The case for the code, and the case against it

The strongest case for the acquisition code is the case from geometry. A road is a chain, and a chain is only as complete as its weakest link. Under a procedure in which every parcel carries an objection enquiry before a reporting officer, a government decision on the report, an award enquiry, and a court reference on quantum at the option of any single owner, the time to assemble a corridor is set not by the average parcel but by the most contested one, multiplied across districts. National highway building under the general statute had delivered exactly that experience, and the 1997 legislature was entitled to treat delay not as an administrative misfortune but as a public cost: freight moving on congested two lane alignments, accident rates on undivided roads, towns choked by through traffic, and the interest cost of stalled capital. On this view, each feature of the code answers a demonstrated failure. Vesting on declaration stops title litigation from freezing works. The short objection window forces the real dispute, whether the road should pass here at all, to be taken at the one moment it can be taken, before the line is built elsewhere in reliance on it. Determination by a notified local officer, with a claims hearing, is faster than a Collector’s award precisely because it is narrower. Arbitration, whatever its composition, at least keeps quantum disputes out of the civil courts’ decades. And the objection that the owner is paid the state’s figure first and argues later is answered by the deposit: the money is not a promise, it is held and payable, and since 2015 it is calculated on the most generous measure Indian acquisition law has ever enacted, with a hundred per cent solatium that the general statute’s critics once thought extravagant. A code that pays the 2013 price is not a code for cheap land. It is a code for fast land at a full price.

The strongest case against the code is the case from sequence. At every point where the process distributes power, it distributes it to the acquiring side. The objection window runs from a Gazette publication the owner may never see, to an officer of the acquiring administration, whose order the statute declares final, on the only question, should this land be taken, that the owner may care about more than money. Title passes on declaration, which means the state acquires the legal estate at the moment of its own choosing and before any amount exists; the owner’s property is converted by notification into a claim. The amount is first fixed by the acquiring side’s officer. The appeal on the amount lies to an arbitrator the acquiring side appoints, drawn in the ordinary pattern from the same administrative family as the officer appealed from, and the one court that later sees the award is forbidden, after M. Hakeem, from correcting its figures even when they are demonstrably wrong. Possession follows the deposit of the unreviewed figure. Interest on an arbitral increase runs at nine per cent, a rate fixed in 1997, while the owner waits years for the reference to conclude against a road already built on the land. Process rights are not decoration on a taking power. They are the mechanism by which the figure for a compelled sale is made trustworthy, and a mechanism in which one party notifies, hears, values, appoints the reviewer and enforces possession has to justify itself by more than the observation that it is quick. Tarsem Singh shows what the courts thought of the code’s original parsimony on price. The arbitration’s composition raises the same structural question about the code’s fairness on process, and Section 3J’s history suggests that provisions of this Act which treat highway owners worse than other owners, for no reason beyond the identity of the acquiring project, have not aged well in constitutional court.

The verdict this article defends is the one the record supports: the 2015 equalisation of price removed the code’s indefensible feature, and the case for the code’s speed has been made good by the network built under it, but the arbitration is the surviving defect, and it is a defect of design rather than of operation. No individual arbitrator needs to be biased for Section 3G(5) to fail the standard the Constitution Bench articulated in 2024 for public adjudication: that the parties stand equal before the process that appoints their judge. A statutory amendment that moved appointment to a neutral mechanism, whether the district judiciary, a panel maintained independently of the acquiring ministry, or agreement between the parties with a judicial default, would cost the programme little time, because references are a small fraction of acquisitions, and would remove the one feature of the code that cannot be defended in the terms the code’s own defenders use for everything else. Until that amendment comes, owners should litigate the amount with the seriousness the forum’s limits demand: the record made before the competent authority and the arbitrator is, after M. Hakeem, very nearly the whole game.

The National Highways Authority: a different statute entirely

No account of this Act is safe that merges it with the National Highways Authority of India Act, 1988, Act 68 of 1988. The Authority is not created by the 1956 Act, is not mentioned in it, and draws none of its powers from it. The 1988 Act constitutes the Authority as a body corporate, and Section 11 of that Act empowers the Central Government to vest in, or entrust to, the Authority any national highway or stretch, whereupon the Authority discharges the development, maintenance and management functions for what has been entrusted. Section 16 of the 1988 Act states the functions: to develop, maintain and manage the national highways and any other highways vested in or entrusted to it, and, within that generality, to survey and construct, to establish facilities and amenities for users, to regulate the plying of vehicles on its highways for their proper management, to provide consultancy and construction services in India and abroad, to advise the Central Government, to assist state governments by agreement, to engage or entrust its functions to other persons on prescribed terms, and to collect fees on behalf of the Central Government for services or benefits rendered under Section 7 of the 1956 Act. The Authority is therefore best understood as the Centre’s specialised delegate for entrusted stretches, operating under its own statute, while the 1956 Act remains the source of the highway’s legal character, of the acquisition code, and of the fee power the Authority collects under. When a landowner receives a notice in a highway acquisition, the acquiring statute is the 1956 Act even where the Authority is the project proponent on the ground, and the competent authority, the arbitrator and the deposit all trace to the 1956 Act’s sections. Arguments addressed to the wrong statute fail on that ground alone, and the confusion is common enough in practice to be worth the paragraph it takes to prevent it.

Fees, concessions and the toll question

Section 7 is the fee power. The Central Government may, by notification, levy fees at rates laid down by rules for services or benefits rendered in relation to the use of ferries, permanent bridges whose cost of construction exceeds twenty five lakh rupees and which were opened to traffic on or after 1 April 1976, temporary bridges and tunnels on national highways, and, by an extension inserted with retrospective effect from 1992, the use of sections of national highways. Fees so levied are collected in accordance with the rules, and fees leviable before the Act’s commencement continued unless altered. The rules that matter in practice are the National Highways Fee (Determination of Rates and Collection) Rules, 2008, which replaced the patchwork of earlier fee rules with a formula system: base rates per kilometre by category of vehicle for a standard stretch, revised each year by a mechanism that combines a fixed annual increase with a wholesale price index linked component, applied through fee notifications for each plaza and stretch. The user fee of the toll plaza is therefore not set by the collector, nor by the concessionaire, but by notification under a rule bound formula, and challenges to the amount of a fee are challenges to the notification and the rules, not to the man in the booth.

Section 8A, inserted by Act 26 of 1995 with effect from 16 June 1995, is the concession power, and it should not be confused with anything else in the Act. Notwithstanding anything contained in the Act, the Central Government may enter into an agreement with any person in relation to the development and maintenance of the whole or any part of a national highway. The person so engaged is entitled, notwithstanding Section 7, to collect and retain fees at the rate the Central Government specifies by notification, having regard to the expenditure involved in building, maintenance, management and operation of the highway or part, interest on the capital invested, reasonable return, the volume of traffic and the period of the agreement. The concessionaire also receives power to regulate and control traffic on the stretch in accordance with Chapter VIII of the Motor Vehicles Act, 1988. Every element of the build operate transfer and annuity landscape rests on this short section: the private party builds or upgrades, collects and keeps the fee for the agreement period at the notified rate, and the rate itself is struck by reference to cost, capital, return, traffic and time.

Why does a toll plaza keep charging after a road’s cost is recovered?

Because the charge follows the financing model, not cost recovery alone. On a concession stretch the fee runs for the period of the Section 8A agreement at the notified rate. On a publicly funded stretch the 2008 Fee Rules step the rate down to forty per cent once the capital cost is recovered, and the levy continues at that level.

Tolls are levied as user fees under Section 7 notifications, at rates computed under the National Highways Fee Rules, 2008 and collected plaza by plaza. On a concession stretch the collecting party keeps the fee for the period of the Section 8A agreement. On a public funded stretch the levy is tied to the recovery of the project’s capital cost, with the rate stepping down under the 2008 Rules once that cost stands recovered.

The duration question is the one motorists ask most and the one answered worst in popular writing, usually by the assertion that a toll that has recovered its cost must stop. The statute and the rules give a more exact answer, and it differs by model. On a privately developed stretch, the entitlement to collect is a creature of the agreement under Section 8A: it runs for the period of the agreement, at the notified rate, and cost recovery inside that period does not by itself terminate it, because the rate was struck in advance by reference to capital, interest, return, traffic and time. On a public funded stretch, where the state built the road with its own money and collects under Section 7, the 2008 Rules tie the levy to the capital cost of the project: the fee is levied to recover that cost, and after recovery the rate is reduced to forty per cent of the applicable rate and the levy continues at that reduced level for the maintenance and services of the stretch, rather than falling to zero. A toll plaza is therefore not a meter that switches off. It is a notified charge whose life and level follow the model under which the road was financed, and a motorist who wants the answer for a particular plaza must ask the anterior question: who built this stretch, and under which instrument is the fee collected.

Encroachment, access and the Act of 2002

A highway vested in the Union and widened at the 2013 Act’s prices creates a boundary problem that the 1956 Act barely addresses: the corridor attracts occupation. Shops extend onto the shoulder, dwellings rise on the verge, hoardings and access ramps appear where traffic must see and merge. The Control of National Highways (Land and Traffic) Act, 2002, Act 13 of 2003, in force from 27 January 2005 by notification S.O. 96(E), is the statute written for that problem, and it is the third member of the family this article has described. It establishes Highway Administrations, bodies of one or more officers of the Central or a state government notified for defined lengths of highway, and charges them with the control of land within the highway boundaries, the regulation of traffic, and the control of access. It provides for a Tribunal for the appeals the Act creates, a forum whose designation has been reworked by later tribunal reforms, first as the National Highways Tribunal the Act itself named and, from 2017, through the appellate tribunal structure the Finance Act of that year substituted.

The Act defines unauthorised occupation widely, covering the trespasser, the person living in or using premises on the highway, the rent free occupant and the licensee, and its enforcement chapter is built around Section 26. The sequence there is a deliberate contrast with summary demolition regimes, and it should be stated because the people it governs are frequently among the poorest occupants of any Indian roadside. The Highway Administration, on information of unauthorised occupation, causes a notice to issue to the person in occupation, specifying the highway land, the period within which the occupation must be removed, and the place and time for hearing any representation the person wishes to make, and warning that failure to comply renders the person liable to penalty and summary eviction. Service is by delivery or registered post, and where service in those modes cannot be made, advertisement in a local newspaper is deemed service. Only where the notice has been served, the period has run, and no reasonable cause has been shown at the hearing the notice offered, may the Administration cause the occupation to be removed, and it may then impose a penalty of five hundred rupees per square metre of the land unauthorisedly occupied, extendable up to the cost of the land where the flat rate would fall below it. The process the statute requires is therefore real: written notice, specified land, specified time, an offered hearing, a reasonable cause enquiry, and only then removal and penalty. Roadside eviction practice that skips the Section 26 steps is not an exercise of this Act, whatever it calls itself, and the contrast with the rehabilitation first approach examined in the article on slum rehabilitation law shows the choice Parliament made for highway land: notice and hearing, then removal, with rehabilitation entitlements under this statute conspicuously absent and the Second Schedule of the 2013 Act, which attaches to acquisition, not engaged by the clearance of an encroachment from land already vested.

Access is the Act’s other great subject, and the one that shapes the commercial geography of every highway. A means of access from adjoining land to a highway, a petrol pump forecourt, a dhaba entrance, a factory gate, may not be constructed or laid out except with the prior permission of the Highway Administration, granted on conditions that govern geometry, sight lines and drainage, and permissions may be refused, modified or withdrawn within the Act’s scheme, with the appellate route the Act provides. The private law of the adjoining owner yields here to the safety logic of the corridor: an uncontrolled access is a hazard engineered into the road, and the 2002 Act treats the highway boundary as a controlled frontier rather than an open edge. Read with the acquisition code, the family resemblance is plain. The 1956 Act takes the corridor into Union ownership and prices the taking by the 2013 measure. The 2002 Act then polices the corridor’s edge, so that the width bought at public expense is not surrendered back, metre by metre, to the occupation and access pressures that narrowed the old alignments in the first place.

The founding settlement: roads before and after 1956

The Act’s brevity in 1956 is explained by the world it entered. Roads in British India had been classified by committee and convention, with the great arterial routes maintained from central revenues through provincial public works departments under arrangements that mixed funding, execution and ownership without settling any of them. The Nagpur Plan of 1943, the road development plan adopted by the conference of chief engineers, had set targets for a national network and popularised the very idea of national highways as a distinct class of road with a distinct claim on central funds. Independence and the Constitution converted that administrative idea into a legislative field: the Union List gave Parliament the highways declared by Parliament by law to be national highways, and the declaration device in the Constitution’s text is the device Section 2 operates. Until Parliament exercised the power, the trunk routes ran on the inherited arrangements. The 1956 Act was the exercise.

That origin explains two features of the Act that puzzle readers who meet it only through the acquisition code. The first is the absence, in the original Act, of any implementing corporation or department of its own: an allocation statute does not need one, because it assumes the existing public works machinery will execute under the new ownership, which is what Section 5’s delegation power formalises. The second is the Act’s indifference to money. The 1956 text says nothing about tolls on sections of highway, nothing about concessions, nothing about an authority with commercial functions, because the national highway of 1956 was a budget funded public work, built and maintained from revenues, free at the point of use. The fee on bridges and ferries that Section 7 began with was a survival from an older world of ferry ghats and pontoon crossings, charges for specific services at specific points, not a price for the road. Everything in the Act that smells of commerce, Sections 7’s extension to whole sections in 1992, Section 8A’s concessions in 1995, the Authority in its separate 1988 statute and its operational expansion in the decade after, belongs to the second life of Indian highways, when the state decided that the network would be rebuilt to divided carriageway standards at a pace the budget had never sustained and that users and private capital would carry much of the cost. The acquisition code of 1997 belongs to that same second life. Read in this light, the Act is two statutes sharing one cover: a 1956 allocation of roads within a federation, and a 1990s delivery machine for rebuilding them. Most confusion about the Act is a failure to notice which of the two is speaking in a given section.

The constitutional allocation had one further consequence that still shapes disputes. Because a declared highway is a Union subject, the state’s own road laws, its building line and ribbon development controls, its municipal assessments, do not govern the highway corridor as such, and the friction between a Union corridor and the state and municipal jurisdictions it passes through is managed by the Act’s own devices: Section 5 delegation, Section 6 directions, and the 2002 Act’s administrations staffed by officers of either government. Where a landowner or a municipality resists a highway measure, the first question is therefore jurisdictional in this specific sense: is the land within the declared corridor, and if so, which instrument of the highways family governs the act complained of. The Gazette notification under Section 2, the entrustment notification under the 1988 Act, and the jurisdictional notification of the Highway Administration under the 2002 Act are the three documents that answer the question, and litigation in this field very often turns on which of them exists and what exactly it covers.

The determination in practice: how the amount is actually built

Between the text of Section 3G and the figure in an owner’s bank account lies an administrative practice that the article must describe if the code is to be usable. The determination begins with the competent authority’s claims notice under Section 3G(3) and (4), published in two local newspapers, requiring persons interested to appear and state the nature of their interests. The hearing that follows is the owner’s one structured opportunity to put title and value into the record. On title, the authority works from the revenue record, the record of rights, mutation entries, registered deeds and succession papers, and the owner’s task is to present a chain that ends in the claimant. Discrepancies between the revenue record and the deeds are the commonest cause of withheld or apportioned payments, and they are resolved, where they cannot be resolved by consent of the claimants, through Section 3H(4)’s reference to the principal civil court, not by the authority’s own preference. An owner who appears with the record complete is not merely being tidy: the authority’s determination of entitlement under Section 3H(3) is made on the material before it, and absent material is the owner’s loss at this stage even where a later forum could repair it.

On value, for acquisitions governed by the 2015 Order, the competent authority applies the imported measure, and the evidential contest has a known shape. The stamp duty value of the land, the rate at which the state registration department values land in the village or sector for fiscal purposes, supplies one candidate figure. Registered sale deeds of similar land in the vicinity supply another, and the 2013 Act’s method looks to the average of the higher half of such deeds across the three preceding years, which makes the selection and authentication of comparable deeds the decisive evidential act in most determinations. Owners argue potentiality: the land’s nearness to the existing road, to a town, to an interchange, its suitability for commercial use that the acquisition itself foreshadows. Acquiring authorities argue the recorded, agricultural character of the land and the fiscal rate. The multiplier for rural land then applies by the state’s notified table, and disputes about the distance classification of the village from the urban area are disputes about which multiplier in that table governs. The value of assets attached to the land, wells, borewells, trees, standing structures, boundary works, is separately assessed, commonly through departmental valuation of structures and horticulture or forest department rates for trees, and separately contestable. Solatium follows arithmetically once the base is set, which is why the real battle in every post 2015 highway determination is the base: market value and assets. A hundred per cent of a wrongly low base is a wrongly low award with an impressive percentage attached.

Two features of the first determination deserve the owner’s particular attention. The competent authority is an executive officer deciding under time pressure across hundreds of parcels, and the determination order is the foundation document of everything after: the arbitrator works from it, and the Section 34 court works from the award that works from it. Errors of survey number, of area, of the identity of interested persons, made at this stage, propagate. And the determination is made parcel by parcel and person by person, so that a family holding divided interests, the recorded holder, the cultivating son, the widowed mother with a maintenance interest, the mortgagee bank, must each ensure that the claim stage has captured the interest, because Section 3H pays the persons the record shows to be entitled, and the apportionment reference is the remedy of the person the record missed. The lesson the practice teaches, and which this article repeats deliberately, is that highway acquisition rewards the documented and punishes the informal at every stage from the objection window to the final payout.

Rehabilitation and resettlement on a line

The Second and Third Schedules of the 2013 Act, applied to highway acquisitions by the 2015 Order, import a set of entitlements that sit oddly, and importantly, on a linear project. Rehabilitation and resettlement under the general statute was designed around displacement: the family that loses its house or its livelihood to a project is owed a house or its monetary equivalent, a subsistence allowance for a period, a transportation allowance, a one time resettlement allowance, and, in the scheme’s fuller form, the offer of employment, or an annuity, or a one time payment in lieu, together with the infrastructure amenities of the Third Schedule in any resettlement area, roads, drainage, water, electricity, schools and the rest. On a highway, displacement has a particular profile. Most acquisitions take strips: the front of a field, the edge of a plot, a sliver that severs a holding without extinguishing the family’s life in the place. A minority take everything: the house that stands in the alignment, the shop whose forecourt becomes the carriageway, the small holding consumed entire. The imported entitlements matter most to that minority, and the classification questions, who counts as an affected family, whether a tenant or an agricultural labourer on the taken land qualifies alongside the title holder, are fought on the schedules’ definitions rather than on the highways Act, which contains none.

The honest structural observation is that the 2013 Act’s rehabilitation architecture presupposes an acquiring process with a social impact assessment that identifies affected families before the taking, and the highways code has no such stage. The import of the schedules by the 2015 Order brought the entitlements without the identification machinery, and in practice the entitlements are identified and delivered through the competent authority’s determination process and the district administration’s verification, a thinner net than the general statute weaves. Owners’ advocates therefore treat the Second Schedule as a checklist to be affirmatively claimed: the affected family must be got onto the record as such, with its composition and its livelihood loss documented, because entitlements that depend on classification are lost by silence in a system that classifies on paper. The series’ treatment of the general statute takes up the schedules in their home setting; the point here is their travelling character. Since 2015, a highway landowner’s full entitlement is a compound of the highways Act’s procedure, the 2013 Act’s price, and the 2013 Act’s rehabilitation promises, and the owner who knows only the first element will systematically underclaim the other two.

Challenging the taking: the narrow gates

A landowner who wishes to resist the acquisition itself, rather than its price, faces the code’s narrowest gates, and the article should map them without false comfort. Inside the statute there is exactly one gate, Section 3C’s objection, confined to the use of the land for the highway purpose, decided by the competent authority, and declared final. There is no statutory appeal against the Section 3D declaration, which Section 3D(4) shields from being called in question in any court or by any other authority. What remains is the writ jurisdiction of the High Courts under Article 226 and of the Supreme Court under Article 32, which no statute can bar, exercised on the grounds on which courts review executive action: that the acquiring authority never applied its mind to the Section 3A satisfaction, that the land is not required for the stated purposes at all and the notification is a colourable exercise, that the mandatory procedure, the Gazette notification, the newspaper publication, the hearing of a timely objection, was not followed, that the declaration came after the Section 3D(3) year had run without a stay to excuse it. These are real grounds and notifications have fallen on them, but they are grounds about the integrity of the process, not about the wisdom of the alignment, and courts do not re route highways. An objection that the road would be better placed a kilometre east is a Section 3C objection for the authority to weigh, and if the authority weighs and rejects it, a court will not weigh it again.

The standard advice follows. The taking is contested at the objection window or, exceptionally, by writ promptly moved on a process ground; it is not contested by refusing possession, which Section 3E answers with enforced surrender, nor by neglecting the amount procedure, which runs regardless and fixes sums by default on the acquiring side’s material. The amount, by contrast, is contestable at every stage the code provides, claims hearing, arbitration, Section 34 challenge, Section 37 appeal, and the realistic litigation life of a highway acquisition is lived on quantum. Owners should also note the lapse discipline running the other way: a Section 3A notification that never ripens into a declaration within the year is spent, and a purchaser or lender examining land under a stale notification should require the position to be cleared on the Gazette record, because the cloud the notification casts on title outlives, in the minds of buyers, the year the statute gives it.

The arbitration in practice

The reference under Section 3G(5) is commenced by application of either party to the arbitrator appointed by the Central Government for the district or division. In the ordinary pattern the appointee is the District Collector or the Commissioner of the division, notified as arbitrator for acquisitions in the area, and the reference is heard in the district headquarters on the papers of the competent authority supplemented by the parties’ evidence of value. The arbitrator’s task is a re determination of the amount on the governing measure, not an appeal on points of law, and the hearing is therefore an evidential contest about value: comparable sale deeds, stamp rates, asset valuations, the multiplier classification. An owner who treated the competent authority stage as a formality arrives at the reference with the record already set against the claim, which is the practical reason this article has insisted on the claims hearing’s importance.

The reference’s duration is its quiet scandal, and it connects to the interest provision. Section 3H(5) interest on an arbitral increase runs at nine per cent a year from the date of possession to the deposit of the excess, a rate set in 1997 in a different interest rate world. Where a reference takes years, and district references have taken years, the interest softens but does not remove the owner’s loss of the use of money that was the owner’s from the date the land was taken. The Authority, for its part, may also invoke the reference against amounts it considers excessive, and owners should understand that an application by the acquiring side places the competent authority’s figure in issue from both directions. Once the award is made, the challenge structure is the arbitration statute’s: a Section 34 application to set aside on the statute’s narrow grounds, patent illegality and public policy among them in their constrained senses, with the M. Hakeem bar on modification meaning that success annuls rather than corrects, and a Section 37 appeal that reviews the Section 34 court’s refusal or grant within still narrower bounds. The practical consequence, often missed by owners who budget for a court fight as the main event, is that the arbitration is the main event. It is the last forum that can set the figure on evidence, and it should be prepared for as a trial of value, with deeds proved, witnesses to transactions available, and the asset inventory documented, rather than as a representation to an officer in the hope of administrative sympathy.

After the award: deposit, records and the paper trail

The code’s last administrative acts are the deposit and payment machinery of Section 3H, already described, and the tidying of records that follows acquisition in practice. The amount determined is deposited by the Central Government with the competent authority in the manner laid down by rules, the National Highways (Manner of Depositing the Amount) Rules made under the Act govern the deposit’s mechanics, and payment to the persons entitled follows from the deposit. Where the arbitrator increases the amount, the excess and any interest awarded are deposited and paid through the same channel. On the land records side, the acquired land falls to be recorded for the Central Government in the revenue records on the strength of the vesting, and mutation following acquisition is an administrative act that owners and purchasers should verify rather than assume, since a revenue record that still shows the former owner invites confusion in later transactions involving the remnant plot. The remnant itself deserves a closing word. Severance damage under Section 3G(7) compensates the injury the taking does to the land left behind, the field cut off from its water source, the plot whose access the new carriageway has destroyed, and the claim is made at the determination stage on evidence of the before and after position. Owners who treat the acquisition as concerning only the strip taken undervalue the head under which the injury to the strip retained is paid for.

The concession models under Section 8A

Section 8A’s single power, to agree with any person for the development and maintenance of a highway and to let that person collect and retain the notified fee, has carried several distinct financial models, and the differences between them decide who bears the risks of traffic, construction and collection. In the toll concession, the concessionaire finances, builds and maintains the stretch and recovers from the user fee over the agreement period: the traffic risk is the concessionaire’s, the fee rate is the notified one, and the state’s exposure is the land, the clearances and the agreed support. In the annuity pattern, the concessionaire builds and maintains, but recovery comes not from the plaza but from periodic payments by the Authority over the concession period, the fee at the plaza, where charged, being collected for the Authority: the traffic risk moves to the state, and the concessionaire’s return is insulated from how many vehicles come. Engineering, procurement and construction contracts stand outside Section 8A’s fee logic altogether: the contractor builds for a price the government pays, and collection, if any, is the government’s own under Section 7. Later programme structures have blended these elements, part capital grant, part annuity, part toll, but the statutory anatomy does not change: either a person is engaged under Section 8A with a right to collect and retain fees for the agreement period, or the road is publicly funded and the fee, where levied, is the Centre’s under Section 7.

The landowner and the motorist meet this taxonomy at different points. The landowner’s acquisition is indifferent to the model: the code of Sections 3A to 3J runs the same whether the stretch will be a toll concession or a budget work, because the acquiring authority is the state in either case and the concessionaire takes the corridor from the state, not from the owners. The motorist’s fee, by contrast, is entirely a function of the model, of the Section 8A factors where a concession is in place, expenditure, interest on capital, reasonable return, traffic volume and the agreement period, and of the fee rules where it is not. The policy argument between the models, whether traffic risk should sit with private capital that prices it or with the state that can spread it, is an argument about the price of roads and the honesty of their accounting, and it is conducted in the language of Section 8A’s factors even by those who have never read the section. What the statute contributes to the argument is the discipline that the fee is never the concessionaire’s to invent: the rate is notified by the Central Government, and the concessionaire’s entitlement is to collect and retain at that rate, no more.

The competent authority as an institution

The code’s reliance on a single notified officer deserves a section of its own, because the competent authority is where the abstraction of the statute becomes a named person in a district office. The Central Government notifies, area by area, the officer who will perform the functions: in many states a special land acquisition officer appointed for highway work, in others the sub divisional officer or an additional district magistrate wearing the notified hat alongside revenue duties. The designation matters for a practical reason owners discover early: the competent authority for the area is the addressee of the objection, the convener of the claims hearing, the maker of the first determination, the custodian of the deposit and the payer of the amount, and correspondence addressed to the wrong office, to the Authority’s project office, to the district collector generally, to the ministry, is correspondence the code does not see. The Authority’s project implementation units execute the works and supply the land plan and the alignment records; the state revenue machinery supplies the officer; the Central Government notifies. Three hands, one file, and the owner’s business is with the notified hand.

The institution’s design carries the code’s central tension in miniature. A dedicated special land acquisition officer, handling highways alone, accumulates the practice of the code: the comparable deeds of the corridor, the multiplier tables, the asset valuation conventions, and delivers the consistency and pace the 1997 amendment wanted. The same officer is, structurally, the acquiring project’s own valuer, deciding objections to his project’s line and pricing his project’s land, with the executive’s interest in the programme’s timeline present in every listing of hundreds of claims. The statute’s answer to the tension is not to deny it but to surround the officer with forms: gazetted notifications, newspaper publicity, written and reasoned disposal of objections, public claims notices, civil court powers for evidence, a deposit before possession, a judicial forum for shares, and an arbitral forum for the sum. Whether the forms suffice is the argument of the earlier sections. What cannot be said is that the officer is informal or unaccountable in the manner of a purely departmental decision: the code has legalised the acquisition encounter at every step, and the owner’s remedies, narrow as they are, attach to the officer’s failures to observe the forms, which is why the paper trail this article keeps returning to is not pedantry but the substance of the owner’s protection.

The charging regime in detail

The fee a motorist pays at a plaza on a national highway is produced by a chain of instruments that the article can state completely. The power is Section 7 of the 1956 Act. The rates are produced by the National Highways Fee (Determination of Rates and Collection) Rules, 2008, which fix base rates per kilometre for categories of mechanical vehicles, a lower table for lighter vehicles and higher tables as axle load and destructive effect rise, and revise those rates annually by a published mechanism that combines a fixed yearly increase with an index linked adjustment, so that the rate in force at a plaza changes with the calendar and not with the collector’s discretion. The levy on a particular stretch is switched on by notification specifying the stretch, the plaza and the rates applicable, and collection is by the Authority, the state agency or the concessionaire according to the model. Two features of the regime soften the uniform table at its edges. Vehicles in categories the rules place outside the charging table, slow and two wheeled traffic among them, pass without a fee. And residents living in the vicinity of a plaza who use the stretch for personal, non commercial travel may take a monthly pass at a concessional rate prescribed by the rules, an arrangement that recognises the difference between the through traveller for whom the plaza is a price and the neighbour for whom it would otherwise be a daily tax on living beside a road.

The fee is, in legal character, a fee and not a tax: a charge for a service or benefit, the use of a built and maintained section of highway, which is why Section 7 speaks of services or benefits rendered and why the charge attaches to use. The distinction decides the arguments available against it. A fee must bear a broad relationship to the service it prices, and fee notifications have been examined by courts on that footing, on the state of the stretch, and on the rules’ own conditions, including the requirement that the section be complete and in service before the levy attaches to it. The motorist’s grievance that a stretch in visible disrepair is charged as though finished is therefore not merely a complaint for the press: it is the shape of a legal challenge to the notification under which the plaza operates, and such challenges have been brought, with the completeness and condition of the stretch at the centre of them. Equally, the fee cannot be resisted by refusing the service retrospectively or by appealing to the cost already recovered except through the rules’ own step down on public funded stretches described earlier. The charging regime, like the acquisition code, is a system of notified instruments, and it rewards the challenger who reads the notification for the stretch in question before framing the challenge.

Vesting and the people on the land

The vesting sentence of Section 3D(2), free from all encumbrances, distributes loss and remedy among the people who stand on acquired land in different legal relations to it, and the distribution is worth setting out person by person, because the brief landowner of the revenue record is rarely the only human being the acquisition touches. The mortgagee loses the land as security at the declaration and gains a claim against the amount: the debt does not vanish, it migrates, and the mortgagee’s protection is to appear at the claims stage, prove the encumbrance, and take the secured share of the fund, with the apportionment reference to the principal civil court deciding between the mortgagee and the mortgagor where they dispute the shares. The tenant, the lessee, the sharecropper recorded or unrecorded, holds an interest whose compensability depends on its legal character: a recognised tenancy or leasehold is an interest in the land that the determination must value, while mere occupation without right sounds, if at all, in the rehabilitation schedules’ treatment of affected families rather than in a share of the market value. The person in possession without any interest, the encroacher on land about to be acquired or already vested, stands outside the compensation scheme altogether and within the territory of the 2002 Act’s removal process.

The principle that organises these positions is the conversion effected by vesting. Before the declaration, the land carries a bundle of rights held by different persons against each other and against the world. At the declaration, the bundle is extinguished as a bundle and the land emerges in the Central Government’s hands unencumbered, while each right in the bundle is converted into a claim, ranked according to its nature, against the single fund the code creates. Litigation over vesting is therefore usually litigation about the conversion: whether a claimed interest existed in law at the date of vesting, whether it was asserted at the claims stage, and whether the fund was distributed to the right claimants in the right order. Courts applying the doctrine have treated the declaration as conclusive of the state’s title, as Section 3D(4) directs within the scheme, while leaving the converted claims to be fought over the money, which is the code working as designed. The human corollary is the one the rehabilitation schedules partially answer: the legal owner is made whole in money by the measure of 2015, the secured creditor is paid from the fund, the tenant is paid for the interest the tenancy law recognises, and the occupant with nothing the law recognises receives the process of the 2002 Act and whatever the resettlement entitlements, claimed and proved in time, will give. The distance between those positions is the distance between property as title and property as shelter, and no provision of the 1956 Act pretends to close it.

A worked passage through the code

The code is best understood as it is lived, in the order of its own events, and a single illustrative passage fixes the sequence in a way the section by section account cannot. Take a recorded owner of agricultural land through which a widening is to pass. The first legal event is invisible to the owner: the Central Government, satisfied that land is required for the building of the highway, publishes the Section 3A notification in the Gazette with a brief description of the land. The competent authority publishes the substance in two local newspapers, one in the vernacular. Survey parties then appear under Section 3B, setting out the line with marks and trenches across the field. From the Gazette date, the owner has twenty one days to object in writing to the use of the land, stating grounds, and to be heard by the competent authority in person or through a legal practitioner. The authority disallows the objection, as authorities in the ordinary run do where the alignment is settled, and reports to the Central Government. The declaration follows under Section 3D, within the year. On its publication the owner’s title ends. The field is the Central Government’s, free from encumbrances, and the owner’s position has changed in kind: from proprietor to claimant.

The second half of the passage is about the claim. The competent authority publishes the claims notice under Section 3G(3), and the owner appears, states the interest, files the deeds, the comparable sale deeds from the village, the valuation of the well and the trees, and the evidence of what the severance does to the plot left behind the line. The authority determines the amount on the imported 2013 measure: market value built from the stamp rate and the sale deeds, the rural multiplier for the village’s distance band, the assets added, solatium at one hundred per cent on the sum. The amount is deposited with the competent authority. Notice under Section 3E gives the owner sixty days to surrender possession, and possession passes, with the works behind it. The owner, dissatisfied with the market value the authority accepted, applies under Section 3G(5) to the arbitrator, the district’s notified officer, and the reference becomes a trial of the sale deeds. The arbitrator raises the figure; interest at nine per cent runs on the increase from the date of possession to the deposit of the excess. A challenge under Section 34 of the arbitration statute, if either side brings one, cannot adjust the number, only annul the award. At every step of this passage the owner had exactly the rights the code gives and no others, the deadlines were the code’s deadlines, and the two moments that decided the outcome were the twenty one days at the start and the quality of the evidence at the claims hearing, months before any court could have been approached.

Denotification, handback and the federal edges of the network

Section 2(3)’s power to omit a highway from the Schedule is exercised more often than its brevity suggests, and it creates the network’s federal edges. A stretch denotified ceases to be a national highway: vesting in the Union under Section 4 falls away with the status, responsibility under Section 5 ends, and the road reverts in law to the state field from which declaration had lifted it. Denotification is used when a new alignment or a bypass supersedes an old length, when a stretch is transferred for development under a state programme, and when the network’s planners reclassify a corridor. The legal interest of the device is its symmetry with notification: the same one page instrument that federalises a road defederalises it, and the land of the old corridor, acquired perhaps under the code for the old alignment, presents questions on handback that the Act answers only in part, since land vested in the Central Government for a highway that no longer exists as a highway remains Union land unless separately dealt with. Owners whose land was taken for a stretch later abandoned meet the hardest version of the acquisition bargain here: the code contains no revesting promise, no right of first refusal for the former owner written into Sections 3A to 3J, and the land’s fate after denotification is a matter of executive disposal policy rather than statutory entitlement.

The federal edges also appear where the network meets the city. The 1997 omission of the municipal limits exception from Section 2 made the national highway run legally unbroken through the town, but the town’s own laws, on hoardings, on buildings, on municipal taxation of the properties flanking the corridor, continue to press against the corridor’s edge, and the 2002 Act’s administrations and permission regime for access are the instruments through which the corridor’s interest is asserted inside the urban fabric. State public works departments executing Section 5 functions, municipal bodies controlling the flanks, the Authority operating entrusted stretches, and the Highway Administration policing the boundary: four authorities may lawfully act on the same kilometre of road, each under a different instrument, and the citizen’s practical difficulty is that the instruments do not announce themselves. The map this article has drawn, of which statute does what, is the equipment for that difficulty. The declaration notification settles whose road it is. The entrustment notification settles who runs it. The jurisdictional notification settles who polices its land. Everything else is commentary.

Interest across the regimes: the price of delay

Compensation law is, in large part, a law of timing, and the three regimes that meet in this article price delay in three different currencies. The general statute of 1894 paid interest on the award from the taking of possession until payment or deposit, at nine per cent for the first year and fifteen per cent thereafter, a rising rate designed to make the state’s delay progressively expensive and to hurry the money to the owner. The general statute of 2013 kept that pattern in its Section 80: interest on the excess or unpaid compensation at nine per cent for the first year from possession and fifteen per cent for the years after, again as a spur against administrative delay. The highways code of 1997, by contrast, contains one interest provision only, Section 3H(5), and it is confined to a single situation: where the arbitrator increases the amount, interest at nine per cent a year may be awarded on the excess, from the date of taking possession to the date of actual deposit of the increase. There is no fifteen per cent tier, no interest on the competent authority’s own amount for the period between possession and payment where that is delayed, and no rising rate to discipline the length of a reference.

The asymmetry is a faithful expression of the code’s design. Interest in the general statutes is a penalty on the taker for holding both the land and the money. In the highways code, possession follows deposit, so the paradigm case the general statutes contemplated, the state in possession with the price unpaid, is designed out of the sequence: the authority’s figure is in the competent authority’s hands before the owner is put out. What the design does not price is the second delay, the years of the arbitration, during which the owner is out of the land and out of the difference between the authority’s figure and the true measure, holding only the nine per cent promise of Section 3H(5) on the excess if the reference succeeds. Tarsem Singh’s equality reasoning touched the solatium and interest denial of the early code years, and the 2015 Order imported the generous measure of amount, but the imported First Schedule governs the computation of compensation, and the code’s own sparse interest provision continues to govern the price of time in a highway reference. An owner pricing the decision to invoke Section 3G(5) should do the arithmetic the code invites: the expected increase, the nine per cent on it for the years the reference is likely to run, and the costs of the evidential contest, against the certainty of the deposited figure in hand. The code’s defenders would say this is precisely the calculation a rational system wants owners to make, screening out speculative references. Its critics answer that a screen built from the owner’s poverty of time and the state’s wealth of it is not a neutral filter. Both are describing Section 3H(5) accurately.

Reading the three statutes together

The highways code only makes sense as a family of instruments, and the same is true of Indian infrastructure law generally, where each sector pairs an allocation statute with an acquisition route, a specialist authority and a charging regime: the field is mapped as a whole in the guide to infrastructure laws in India. Within the family, the division of labour is exact. The 1956 Act declares, vests, allocates responsibility, acquires, values and charges. The 1988 Act staffs the mission, supplying the Authority that plans, builds and operates entrusted stretches and collects the 1956 Act’s fees under its own Section 16. The 2002 Act guards the finished corridor against occupation and uncontrolled access. And the 2013 Act, from outside the family entirely, sets the price of the land the family takes and the rehabilitation owed to the families it displaces, entering through an order made under its own removal of difficulties power. A practitioner who reaches for the wrong member of the family, who argues the Authority’s functions from the 1956 Act or the acquisition sequence from the Authority’s charter, or who computes compensation from the highways Act for a post 2015 taking, has made the characteristic error of this field, and it is an error of shelving rather than of substance.

Behind the whole family stands Article 300A of the Constitution: no person shall be deprived of his property save by authority of law. The highways code is the authority of law for the deprivations it works, and the constitutional case law on Article 300A supplies the standards by which such a law is judged when it is challenged: that the taking be for a public purpose, that the law provide for compensation that is not illusory, that the procedure it lays down be followed in fact and not merely in form, and that the classification it draws between owners be a reasonable one. The history of this Act in the courts is the history of those standards being applied one at a time. Public purpose has never been seriously in issue for a highway. Procedure has been enforced through the writ gates described earlier. Compensation, in Tarsem Singh, was held to the standard of equality between owners. The appointor question pending against Section 3G(5) is, at bottom, an Article 300A and Article 14 question about whether a deprivation whose price is fixed by the depriver’s own appointee is a deprivation under a law that satisfies the Constitution’s minimum conditions. The code has survived every test so far put to it except the ones it has lost, and the ones it has lost, on solatium and on the price measure, were lost on the same principle: that the identity of the project for which land is taken is not a reason to pay the owner of that land less, or to hear the owner through fewer ears, than the owner of the next field taken for a different purpose on the same day.

Three errors in the published guidance deserve naming, because each misleads a landowner in a different direction. The first is the statement that highway acquisition carries lower compensation than acquisition under the general statute. That was true of the code as enacted in 1997 and it was the grievance Tarsem Singh partly answered for the earlier years, but for acquisitions governed by the 2015 Order it is the opposite of the truth: the measure is the 2013 Act’s own, multiplier, assets and hundred per cent solatium included. The second error is to describe vesting as occurring on possession. Vesting occurs on publication of the Section 3D declaration, and everything in the owner’s position, the race to object, the conversion of title into a money claim, the exposure of tenants and mortgagees, turns on getting that moment right. The third error is to treat the National Highways Authority as the creature of the 1956 Act or the acquisition as its act. The Authority is the 1988 Act’s body, and the acquisition is the 1956 Act’s code administered by the competent authority. A notice, a hearing or an award that misidentifies its own statutory source invites challenge on a ground that has nothing to do with the merits and everything to do with the discipline this area of law demands.

What remains open in the law of this Act can be listed with equal brevity. The application of the 2024 Constitution Bench doctrine on unilateral appointment to the statutory arbitrator under Section 3G(5) awaits an authoritative decision, and the provision’s survival in its present form is the largest live question in the code. The transitional edges of the 2015 Order, which acquisitions concluded at which dates take which measure, continue to be worked out case by case. And the reduced rate toll on public funded stretches after cost recovery, lawful under the 2008 Rules and resented in proportion to its lawfulness, remains a standing argument between the economics of maintenance and the motorist’s sense that a road paid for is a road owned. None of these questions is answered by the bare text of the 1956 Act, which is fitting. The Act that began in 1956 as a one page allocation of the nation’s roads between two levels of government has become, by accretion of an acquisition code, an authority, a control statute and an imported price, the operating system of the Indian highway. Reading it whole is the only way to read it accurately.

Frequently Asked Questions

Q: What does the National Highways Act provide?

The National Highways Act, 1956, Act 48 of 1956, provides the legal framework for national highways in India. Section 2 declares the highways in its Schedule to be national highways and empowers the Central Government to add or remove highways by notification. Section 4 vests all national highways in the Union, and Section 5 makes the Central Government responsible for their development and maintenance, with power to let state governments and subordinate authorities exercise those functions. Sections 3A to 3J, inserted in 1997, contain a complete code for acquiring land for a highway. Section 7 empowers the levy of fees for the use of sections, bridges, tunnels and ferries, and Section 8A empowers agreements with private parties for development and maintenance in return for fee collection.

Q: How is land acquired for a national highway?

Land is acquired under the self contained code in Sections 3A to 3J of the Act. The Central Government publishes a notification of intention under Section 3A, whose substance is carried in two local newspapers. Persons interested may object in writing within twenty one days under Section 3C and are heard by the competent authority, whose order is final. The Central Government then publishes a declaration under Section 3D within one year, and on publication the land vests in the Central Government free from all encumbrances. The competent authority determines the amount under Section 3G after a public notice inviting claims, deposits precede possession under Sections 3H and 3E, and a dissatisfied party may seek a re determination by an arbitrator under Section 3G(5).

Q: What compensation applies to highway acquisition?

Compensation for highway acquisition is determined by the competent authority under Section 3G, but the measure of the amount comes, since the beginning of 2015, from the land acquisition statute of 2013. The Removal of Difficulties Order, S.O. 2368(E) dated 28 August 2015, applied the 2013 Act’s provisions on the determination of compensation in accordance with its First Schedule, rehabilitation and resettlement in accordance with its Second Schedule and infrastructure amenities in accordance with its Third Schedule to acquisitions under the enactments in the Fourth Schedule, including this Act. The amount therefore carries the 2013 Act’s market value method, the multiplier for rural land, the value of assets attached to the land, and solatium of one hundred per cent, rather than the four heads of Section 3G(7) standing alone.

Q: How are disputes about the acquisition amount decided?

The competent authority decides the amount first, under Section 3G, after inviting claims and hearing the persons interested. If the amount is not acceptable to either party, Section 3G(5) provides that it shall be determined, on the application of either party, by an arbitrator appointed by the Central Government. The Arbitration and Conciliation Act, 1996 applies to the reference subject to the highways Act. The arbitrator’s award may be challenged only on the narrow grounds in Section 34 of the arbitration statute, with an appeal under Section 37, and the Supreme Court held in the M. Hakeem case that a court hearing such a challenge cannot modify the award: it may set the award aside or leave it standing, but it cannot substitute a corrected figure.

Q: Who owns and maintains a national highway?

A national highway is owned by the Union. Section 4 of the Act vests all national highways in the Union, including the lands appurtenant to them and the bridges, culverts, tunnels and other structures on them. Section 5 makes it the responsibility of the Central Government to develop and maintain all national highways in proper repair. That responsibility is exercised in several hands: the Central Government may by notification direct that development or maintenance functions be also exercisable by the state government or by subordinate officers and authorities, and for stretches entrusted to it, the National Highways Authority of India discharges the functions under its own Act of 1988. Maintenance by a state agency or by the Authority does not change ownership, which remains with the Union.

Q: How are tolls levied and for how long?

Tolls on national highways are user fees levied under Section 7 of the Act by notification, at rates computed under the National Highways Fee (Determination of Rates and Collection) Rules, 2008, which fix base rates per kilometre by vehicle category and revise them annually. Where a stretch is developed by a private party under an agreement under Section 8A, that party collects and retains the fee at the notified rate for the period of the agreement, the rate being set by reference to expenditure, interest on capital, reasonable return, traffic volume and the agreement period. Where a stretch is publicly funded, the levy is tied to the recovery of the project’s capital cost, and the 2008 Rules provide for the rate to step down to forty per cent once that cost stands recovered.

Q: What does the National Highways Authority do?

The National Highways Authority of India is constituted by the National Highways Authority of India Act, 1988, a statute separate from the National Highways Act, 1956. Under Section 11 of the 1988 Act the Central Government may vest in or entrust to the Authority any national highway or stretch. Section 16 charges the Authority with developing, maintaining and managing the highways vested in or entrusted to it, and empowers it to survey and construct, to provide facilities and amenities for users, to regulate the plying of vehicles on its highways, to provide consultancy and construction services, to engage other persons to discharge its functions, and to collect fees on behalf of the Central Government for services or benefits rendered under Section 7 of the 1956 Act.

Q: What happens to encroachment on highway land?

Encroachment on highway land is governed by the Control of National Highways (Land and Traffic) Act, 2002. The Highway Administration for the stretch causes a notice to issue under Section 26 to the person in unauthorised occupation, specifying the land, the period within which the occupation must be removed, and the place and time for hearing any representation. Service is by delivery, registered post or, failing those, advertisement in a local newspaper. If the occupation is not removed within the period and no reasonable cause is shown at the hearing, the Administration causes it to be removed and may impose a penalty of five hundred rupees per square metre of the land occupied, extendable up to the cost of the land where the flat rate would be lower.

Q: When does ownership of acquired land pass to the Central Government?

Ownership passes on the publication of the declaration under Section 3D in the Official Gazette. Section 3D(2) provides that on publication the land shall vest in the Central Government free from all encumbrances. The vesting does not wait for possession, which follows later under Section 3E after the amount determined has been deposited, and it does not wait for the determination of the amount under Section 3G, which also comes after the declaration in the code’s order. From the moment of publication the former owner holds not the land but a statutory claim to the amount payable, and every interest that burdened the land, a mortgage, a lease, a tenancy, is converted into a claim against that amount through the apportionment machinery of Section 3H.

Q: What happens if no declaration is made within one year of the Section 3A notification?

The notification lapses. Section 3D(3) provides that where no declaration has been published within one year from the date of publication of the Section 3A notification, the notification ceases to have any effect. In computing the year, periods during which action or proceedings on the notification were stayed by an order of a court are excluded, so litigation that freezes the process does not run down the clock. Once the notification has lapsed, the land is free of the acquisition proposal under that notification: the owner’s title is untouched, because nothing vested, and dealings in the land are no longer shadowed by the pending taking. If the government wishes to acquire the same land afterwards, it must begin again with a fresh Section 3A notification and a fresh objection period.

Q: Can the competent authority enter land for survey before acquisition?

Entry for survey is made not by the competent authority as such but by persons authorised by the Central Government under Section 3B, and it becomes lawful as soon as the Section 3A notification of intention has issued. The authorised persons may make inspections, surveys, measurements, valuations and enquiries, take levels, dig or bore into the sub soil, set out the boundaries and the intended lines of work, and mark levels, boundaries and lines by placing marks and cutting trenches, together with any other acts laid down by rules. This entry takes place before any objection has been heard and before the land is acquired: it is an investigative power, not a taking. Title, possession and ownership remain with the owner until the Section 3D declaration, and the survey party’s marks on the ground have no legal effect on the owner’s rights by themselves.

Q: How is the market value of highway land fixed under the 2013 Act’s First Schedule?

The First Schedule to the 2013 Act builds the amount in steps. Market value is first determined on the principles of Section 26 of that Act, taking the highest of the value specified under the stamp law for registration of sale deeds in the area, the average sale price of similar land in the nearest village or vicinity drawn from the higher half of sale deeds registered in the preceding three years, and any consented amount applicable to the acquisition. That value is then multiplied by the factor in the Schedule: one for urban land and between one and two for rural land, fixed by reference to the distance of the project from urban areas. The value of assets attached to the land or building is added, and solatium of one hundred per cent is added to the total under Section 30.

Q: What is solatium and is it payable on highway acquisition?

Solatium is the additional sum paid over and above market value in recognition of the compulsory character of the taking: the owner did not choose to sell, and the addition prices that compulsion. The 1997 acquisition code in the highways Act contained no solatium, which made highway owners worse off than owners taken under the general law, and the Supreme Court in Union of India v. Tarsem Singh, (2019) 9 SCC 304, held the denial of solatium and interest under Section 3J to be unconstitutional discrimination for the period before equalisation. For acquisitions governed by the 2015 Order, solatium is payable as part of the 2013 Act’s measure, at one hundred per cent of the market value as multiplied together with the value of assets attached to the land.

Q: What happens to the compensation when several persons claim the same land?

Section 3H governs the distribution of the amount once determined. The Central Government deposits the amount with the competent authority, who pays it to the persons entitled. Where several persons claim to be interested in the amount, Section 3H(3) requires the competent authority to determine the persons entitled and the amount payable to each of them. If a dispute arises about the apportionment of the amount, or about the person to whom any part of it is payable, Section 3H(4) obliges the competent authority to refer the dispute to the decision of the principal civil court of original jurisdiction within whose limits the land is situated. Apportionment is therefore the one money question under the code that a court decides in the first instance rather than on challenge.

Q: What interest is payable when the arbitrator raises the amount?

Section 3H(5) provides that where the amount determined by the arbitrator under Section 3G(5) exceeds the amount determined by the competent authority, the arbitrator may award interest at nine per cent a year on the excess amount, running from the date of taking possession under Section 3D until the date of the actual deposit of the excess. Section 3H(6) then requires the excess, together with any interest awarded, to be deposited by the Central Government with the competent authority in the manner laid down by rules, and to be paid out under the same machinery as the original amount. The interest attaches only to the arbitral increase: the code contains no general interest provision on the competent authority’s amount itself, which is deposited before possession is taken under Sections 3H(1) and 3E.

Q: Can an arbitrator’s award under the National Highways Act be challenged in court?

Yes, but on narrow grounds and with a limited remedy. Because Section 3G(6) applies the Arbitration and Conciliation Act, 1996 to arbitrations under the highways Act, the award may be challenged by an application under Section 34 of that Act on the grounds it lists, which concern the validity of the process and the award’s conformity with the statute and public policy rather than the correctness of the figure. An appeal lies under Section 37 against the Section 34 court’s order. The Supreme Court held in Project Director, National Highways Authority of India v. M. Hakeem, (2021) 9 SCC 1, that the Section 34 court has no power to modify the award: it cannot raise or lower the amount, and its choice is confined to setting the award aside or leaving it in force.

Q: What changes did the 1997 amendment make to the National Highways Act?

The National Highways Laws (Amendment) Act, 1997, Act 16 of 1997, effective from 24 January 1997, rebuilt the Act for the era of accelerated highway construction. It substituted Section 3 with the definitions of competent authority and land. It inserted Sections 3A to 3J, the self contained acquisition code covering the notification of intention, survey, hearing of objections, declaration and vesting, possession, determination of the amount, deposit and payment, the arbitrator appointed by the Central Government, and the bar in Section 3J on the application of the Land Acquisition Act, 1894. It omitted the words in Section 2 that had excluded parts of highways within municipal areas, so that a national highway runs legally unbroken through a town, and it omitted Section 8, which had dealt with agreements with state governments and municipalities.

Q: How does the Control of National Highways Act deal with access to a highway?

The Control of National Highways (Land and Traffic) Act, 2002 treats the highway boundary as a controlled frontier. A means of access from adjoining land to a highway, the entrance to a petrol pump, a commercial establishment or a private property, may not be constructed or laid out except with the prior permission of the Highway Administration for that stretch. Permission is granted on conditions directed to the safety and geometry of the junction, matters such as sight distance, drainage and the merging of traffic, and the Act empowers the Administration to refuse, condition or withdraw permissions within its scheme, with an appellate remedy to the Tribunal the Act provides for. Unauthorised access structures stand in the same position as other unauthorised works on highway land and are liable to removal through the Act’s enforcement procedure after notice and an opportunity to show cause.

Q: What is the difference between the National Highways Act and the NHAI Act?

They are different statutes doing different work, and confusing them is the commonest shelving error in this field. The National Highways Act, 1956 declares highways to be national highways, vests them in the Union, allocates responsibility for them, contains the code under which land is acquired for them, empowers the levy of fees under Section 7 and the making of development agreements under Section 8A. The National Highways Authority of India Act, 1988 constitutes the Authority as a body corporate and charges it, under Section 16, with developing, maintaining and managing the highways vested in or entrusted to it by the Central Government. Acquisition for a highway is always an exercise under the 1956 Act, administered by the competent authority, even where the Authority is the agency building the road on the ground.

Q: Does a tenant or mortgagee have any claim when highway land vests in the Union?

Yes, but the claim changes its object. On the publication of the Section 3D declaration the land vests in the Central Government free from all encumbrances, so a mortgage no longer burdens the land and a tenancy no longer binds the land itself. The rights are not extinguished without payment: they are converted into claims against the amount determined under Section 3G. A mortgagee may prove the encumbrance at the claims stage and take the secured share of the fund. A tenant or lessee with a legally recognised interest in the land is a person interested whose interest the determination must value. Where entitlement or shares are disputed, Section 3H(4) sends the question to the principal civil court. Occupation without any legal interest carries no share of the amount, though affected families may claim rehabilitation entitlements under the Second Schedule as applied from 2015.