HP High Court Orders 7.5% Interest on Delayed NH Land Compensation
SHIMLA: The Himachal Pradesh High Court has directed the authorities to pay 7.5 per cent annual interest on land compensation withheld for 367 days for the Paonta Sahib–Ballupur National Highway project in Sirmaur district, ruling that the delay in depositing the award amount could not be justified.
Justice Sandeep Sharma, while allowing a petition filed by Deepak Bareja and another petitioner, directed the Union of India and other concerned authorities to calculate the interest on their compensation and deposit it with the competent authority within two weeks.
The court warned that failure to comply within the stipulated period would attract enhanced interest at 18 per cent per annum from the date of the order until actual payment, in addition to the interest already awarded.
The petitioners’ land in Bhuppur-II village of Paonta Sahib tehsil was acquired for widening and four-laning National Highway 72, connecting Paonta Sahib with Ballupur on the Dehradun route. The competent land acquisition authority had passed Award No. 3/2022 on February 14, 2022.
Under the award, the petitioners were entitled to a combined compensation of Rs 3.78 crore, with Rs 1.89 crore payable to each. However, the Central Government deposited Rs 43.27 crore, covering the acquired land under the relevant awards, with the competent authority on February 16, 2023 — 367 days after the award was passed.
The compensation was subsequently withheld following instructions from the authorities pending arbitration proceedings. The petitioners received their compensation during the pendency of the writ petition, but approached the High Court seeking interest for the period between February 14, 2022, and February 16, 2023.
The authorities opposed the demand, arguing that the compensation had been deposited and that arbitration proceedings had prevented its release. They also contended that the petitioners had delayed handing over possession of the land, affecting the highway construction and increasing project costs.
Rejecting this defence for the purpose of deciding the interest claim, the High Court observed that the land had vested absolutely in the Central Government under Section 3D of the National Highways Act, 1956. It held that the alleged delay in handing over possession could not be used to deny interest for the period in question.
The court also held that the authorities had no power to direct the competent land acquisition authority to withhold payment after the award had been passed. It noted that no stay order was in force during the relevant period when the compensation remained undeposited.
The court clarified that the dispute concerned interest for the 367-day period before the compensation was deposited, rather than the subsequent period covered by the arbitration proceedings.
The judgment was delivered on October 5, 2026, in CWP No. 2816 of 2024.
