July 27, 2026

Fair Compensation in Indian Land Acquisition: LARR, Railways and National Highways — A Practitioner’s Map

Fair Compensation in Indian Land Acquisition LARR, Railways and National Highways — A Practitioner’s Map

When the State takes a person’s land, the Constitution and statute promise something in return: fair compensation. Understanding land acquisition compensation — what it covers, who decides it, and how to challenge a low offer — matters for a farmer whose ancestral field lies in the path of an expressway, or a family whose plot is swallowed by a railway line. What is the land “worth”? Who decides? And if the offered sum is too low, where does the owner go to fight?

For most of a century those answers depended entirely on which statute did the taking. Land acquired for a highway, a railway, or a general public purpose each travelled a different road, with different — and often much smaller — compensation. That patchwork has now been largely levelled. Since the RFCTLARR (Removal of Difficulties) Order, 2015 (dated 28 August 2015, deemed effective 1 January 2015) and the Supreme Court’s decision in Union of India v. Tarsem Singh, (2019) 9 SCC 304, the substance of fair compensation — market value, multiplier, solatium and interest — is broadly unified across the general and the special Acts.

But unification of the money is not unification of the map. The forum and the procedure for actually extracting fair compensation still differ sharply depending on whether the land was taken under the RFCTLARR Act, 2013, the National Highways Act, 1956, or the Railways Act, 1989. This article is the practitioner’s map to that terrain. It frames the whole series; each numbered spoke below drills into one region in depth.

The land acquisition compensation architecture: what “fair compensation” is made of

Under the RFCTLARR Act, 2013, compensation is not a single figure but a stack. The foundation is market value, determined under section 26 by the higher of the guideline (jantri/ready-reckoner) value under section 26(1)(a) or the average of the top fifty per cent of comparable sale deeds under section 26(1)(b). That base is then multiplied under the First Schedule — a factor of 1 for urban land and up to 2 for rural land — to correct for the historic under-valuation of agricultural holdings. To the multiplied market value are added the value of assets, trees, structures and wells under section 29, a 100% solatium under section 30, and interest under section 80 (9% per annum, rising to 15% after one year), with a further 12% per annum additional amount under section 30(3) for the period from notification to award.

This architecture matters because owners routinely settle for the “market value” line alone and forfeit the solatium, multiplier and interest that can double or treble the sum. The full anatomy is unpacked in The Compensation Architecture of the LARR Act, 2013.

How market value is fought over

Everything above rests on the base figure, and the base is where the real litigation happens. The evidentiary contest is between the acquiring body — which leans on the low guideline/jantri value — and the owner, who must prove a higher value through genuine, proximate, comparable sale instances (Chimanlal Hargovinddas v. Special Land Acquisition Officer, Poona, (1988) 3 SCC 751).

The courts have laid down clear rules of engagement: guideline/jantri and ready-reckoner rates are creatures of stamp duty and cannot by themselves fix compensation (Jawajee Naganatham v. Revenue Divisional Officer, (1994) 4 SCC 595); the highest bona fide exemplar is ordinarily to be preferred over mechanical averaging (Mehrawal Khewaji Trust v. State of Punjab, (2012) 5 SCC 432); a single sale deed will not do to fix the average for dissimilar land (Project Director, NHAI v. Alfa Remidis Ltd., 2026 INSC 480); and a suitable deduction for development or largeness applies when a big tract is valued off small-plot sales (Lal Chand v. Union of India, (2009) 15 SCC 769). The tactics are set out in Determining Market Value: The Evidentiary Battleground.

The three forums for enhancement

If the awarded compensation is too low, the route to more depends entirely on the statute:

  • Under the RFCTLARR Act, 2013, the owner seeks a reference under section 64 to the Land Acquisition, Rehabilitation and Resettlement Authority (section 51), which determines the enhanced amount under section 69, with an appeal to the High Court under section 74.
  • Under the National Highways Act, 1956, there is no civil reference; the dissatisfied owner must go to arbitration under section 3G(5) before an arbitrator appointed by the Central Government, with the Arbitration and Conciliation Act, 1996 applying by force of section 3G(6).
  • Under the Railways Act, 1989, Chapter IVA (sections 20A–20W) supplies its own competent authority (section 20F) and arbitration mechanism.

The three tracks — and why the choice of track drives strategy, limitation and cost — are compared in Three Forums for Enhancement — s.64 Reference, NH Arbitration and the Railways Act.

The special problem: an NH arbitral award cannot be modified

The National Highways route carries a trap that surprises owners and counsel alike. Because section 3G compensation is fixed by an arbitrator, any challenge runs through section 34 of the Arbitration and Conciliation Act, 1996 — and under Project Director, NHAI v. M. Hakeem, (2021) 9 SCC 1, a court hearing a section 34 petition may set aside an award but cannot modify or enhance it. An owner who receives a miserly arbitral award cannot simply ask the court to raise the figure; at best the award is quashed and the matter begins again.

The section 34 window is also unforgiving: the three-months-plus-thirty-days limit is an outer wall that cannot be scaled (Union of India v. Popular Construction Co., (2001) 8 SCC 470), time running from receipt of the signed copy of the award (State of Maharashtra v. ARK Builders Pvt. Ltd., (2011) 4 SCC 616), and the grounds are confined to patent illegality that ignores vital evidence, not a re-appreciation of the merits (Ssangyong Engineering & Construction Co. Ltd. v. NHAI, (2019) 15 SCC 131). This narrow gateway is dissected in The Limits of Challenging a National Highways Arbitral Award under Section 34.

Harmonisation: the 2015 Order and Tarsem Singh

How did the special Acts come to pay LARR-grade compensation at all? Through two instruments. The RFCTLARR (Removal of Difficulties) Order, 2015 (issued under section 113(1) read with section 105(3)) extended the compensation, rehabilitation and infrastructure benefits of the First, Second and Third Schedules to the thirteen enactments in the Fourth Schedule — which include both the National Highways Act, 1956 and the Railways Act, 1989 — deemed effective 1 January 2015; the MoRTH guidelines of 28 December 2017 confirmed the First Schedule’s application to highways. Complementing the Order, Union of India v. Tarsem Singh, (2019) 9 SCC 304, struck down section 3J of the NH Act as violative of Article 14 insofar as it denied solatium and interest, importing those heads into NH acquisitions from the 1894-Act era. The harmonisation — and its temporal seams — is mapped in Harmonising Compensation across Special Acts: The 2015 Order and Tarsem Singh.

Section 24(2) lapse and the retrospective saga

A separate battleground is not how much but whether the acquisition survives at all. Section 24(2) of the 2013 Act deems certain old acquisitions to have lapsed where possession was not taken and compensation not paid. The scope of that reprieve was fought to a Constitution Bench in Indore Development Authority v. Manoharlal, (2020) 8 SCC 129, which read the “or” in section 24(2) as “nor” (conjunctive), held that mere non-payment does not cause a lapse where compensation was tendered, and overruled Pune Municipal Corporation v. Harakchand Misirimal Solanki, (2014) 3 SCC 183. The long arc of that dispute is traced in Section 24(2) Lapse and the Retrospective Saga.

The heads owners forget

Fair compensation is not only about the land physically taken. Where only part of a holding is acquired, the residue can lose value or utility — the classic heads of severance, injurious affection and diminution of profits, recognised in the parameters of section 28 of the 2013 Act (and historically in section 23(1) of the 1894 Act). An owner whose farm is bisected by a highway, leaving a landlocked or awkward remnant, is entitled to be compensated for the damage to what is left, not merely for the strip taken. These frequently-omitted heads are recovered in The Heads Owners Forget: Severance, Injurious Affection and Partial Taking.

Taxation: keeping what you win

Winning enhanced compensation is hollow if the taxman takes a slice. Section 96 of the 2013 Act exempts compensation received under the Act from income tax (and stamp duty), a protection whose interaction with the interest component and with acquisitions under the special Acts is often misunderstood. The tax treatment of compensation and interest is examined in Taxation of Land Acquisition Compensation and Interest.

In this series

  1. The Compensation Architecture of the LARR Act, 2013
  2. Determining Market Value: The Evidentiary Battleground
  3. Three Forums for Enhancement — s.64 Reference, NH Arbitration and the Railways Act
  4. The Limits of Challenging a National Highways Arbitral Award under Section 34
  5. Harmonising Compensation across Special Acts: The 2015 Order and Tarsem Singh
  6. Section 24(2) Lapse and the Retrospective Saga
  7. The Heads Owners Forget: Severance, Injurious Affection and Partial Taking
  8. Taxation of Land Acquisition Compensation and Interest

Key takeaways

  • Since the 2015 Removal of Difficulties Order and Tarsem Singh, the substance of fair compensation — market value, multiplier, solatium and interest — is broadly unified across the LARR Act, the National Highways Act and the Railways Act.
  • The forum and procedure are not unified: LARR uses a section 64 reference to the LARR Authority; the NH Act uses section 3G arbitration; the Railways Act uses its own Chapter IVA mechanism.
  • Compensation is a stack — base market value, First-Schedule multiplier, section 30 solatium (100%), section 80 interest, and section 30(3) additional amount — not a single “market value” figure.
  • Market value is won or lost on comparable sale deeds, not guideline/jantri rates; prefer the highest bona fide exemplar and resist single-deed and averaging shortcuts.
  • The gravest trap on the NH route is Hakeem: a section 34 court can set aside but cannot enhance a lowball arbitral award, and the limitation window is unforgiving.
  • Owners routinely forfeit money by ignoring solatium, interest, severance and injurious affection — and by overlooking the section 96 tax exemption.

Frequently asked questions

Is the compensation for a highway or railway acquisition really the same as under the LARR Act?

Broadly, yes, for the money. Land acquisition compensation under the National Highways Act and the Railways Act is now largely aligned with the LARR Act: the 2015 Removal of Difficulties Order extended the First, Second and Third Schedule benefits (compensation, R&R, infrastructure) to the Fourth-Schedule enactments including both statutes, and Tarsem Singh imported solatium and interest into NH acquisitions. But you claim it through a different forum and procedure under each statute.

My highway compensation is too low — can the court simply increase it?

Not directly. NH compensation is fixed by an arbitrator under section 3G, so any challenge is under section 34 of the Arbitration and Conciliation Act, 1996. Under M. Hakeem, (2021) 9 SCC 1, the court can set the award aside but cannot modify or enhance it, and the challenge must be filed within three months plus, at most, a further thirty days.

How is market value determined, and can they just use the jantri rate?

Market value under section 26 is the higher of the guideline value or the average of the top fifty per cent of comparable sale deeds, then multiplied under the First Schedule. Guideline/jantri and ready-reckoner rates are for stamp duty and cannot by themselves fix compensation (Jawajee Naganatham v. Revenue Divisional Officer); genuine comparable sales govern.

Only part of my land was taken — am I entitled to anything for the rest?

Potentially, yes. Section 28 of the 2013 Act recognises damage by severance, injurious affection and diminution of profits — that is, the loss in value or utility of the land you retain. These heads are frequently omitted from awards and must be affirmatively claimed.

Sources & authorities

By Aaditya Bhatt
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