Himachal Pradesh high court directs payment of interest for 367 days delay in deposit of land acquisition compensation under national highways act, 1956

Himachal Pradesh High Court orders interest payment for a 367-day delay in land acquisition compensation under the National Highways Act, 1956.

Case Title: Deepak Bareja and Anr. v. Union of India and Ors.

Coram: Justice Sandeep Sharma

Citation: (2026) ibclaw.in 5955 HC | CWP No. 2816 of 2024 | Decided on 08.10.2026

The High Court of Himachal Pradesh has held that landowners are entitled to interest for the period during which the compensation determined under an award was not deposited by the Central Government, and that the competent authority could not have been instructed by respondent Nos. 1 and 2 to withhold disbursement after passing of the award.

The petitioners' land in Village Bhuppur-IInd, Tehsil Paonta Sahib, District Sirmour, was acquired for the widening and four laning of National Highway No. 72 Bye-pass Paonta Sahib to Ballupur. The competent authority under the National Highways Act, 1956 passed Award No. 3/2022 on 14.02.2022. The amount in terms of the award was deposited with the competent authority only on 16.02.2023, after 367 days of the award, and was not released thereafter on account of instructions of respondent Nos. 1 and 2 not to disburse it until arbitration proceedings against the award were concluded.

The petitioners sought a writ of mandamus for payment of compensation along with interest at 18 percent per annum. During the pendency of the petition, the amount payable to the petitioners under the award, Rs. 3,78,76,160, was disbursed by communication dated 24.07.2024. The dispute was thus confined to interest. It was admitted that the petitioners had already been paid interest from 26.03.2021 to 14.02.2022, and the claim was for interest from 14.02.2022 to 16.02.2023.

The respondents argued that the competent authority acted on the direction of respondent Nos. 1 and 2 and committed no illegality. Respondent Nos. 1 and 2 also submitted that the petitioners did not allow possession to be taken, which delayed construction, and reserved the right to recover interest and any loss from the petitioners.

The Court noted that the parties were ad idem that the arbitrator stayed the award after institution of arbitration proceedings in February 2023. It recorded that the application under Section 17 of the Arbitration and Conciliation Act was filed on 14.07.2023 and allowed on 23.07.2024. Since no stay was granted prior to 14.07.2023 and the amount was deposited on 16.02.2023, the Court held the petitioners entitled to interest for 367 days, even assuming they were not entitled to interest from 16.02.2023 until conclusion of the arbitration proceedings.

The Court held that after passing of the award by the competent authority itself, no authority vested in respondent Nos. 1 and 2 to instruct the competent authority not to disburse the amount to the claimants. It also noted that no stay order by any competent court was in operation during the period of delay.

Referring to Sections 3G and 3H of the Act, the Court noted that the amount determined under Section 3G is to be deposited by the Central Government with the competent authority before taking possession of the land, and that under Section 3H(2) the competent authority is to pay the amount to the persons entitled as soon as may be after the deposit. It further noted that Section 3H(3) and 3H(4) deal with claims by several persons and disputes on apportionment. In the present case, neither was there any dispute on apportionment nor did any person other than the petitioners raise a demand for release of the award amount, so there was no reason for the delay in deposit. The Central Government was under an obligation to deposit the amount after passing of the award.

The argument that construction was delayed because possession was not handed over was held to be no ground for denying interest. The Court noted that under Section 3D(2) of the Act, on publication of the declaration, the land vests absolutely in the Central Government free from all encumbrances, and held that the delay in handing over possession is of no consequence for the relief claimed in the petition.

Allowing the petition, the Court directed respondent Nos. 1 and 2 to calculate and pay interest at 7.5 percent per annum from 14.02.2022 to 16.02.2023 on the amount falling to the share of the petitioners under the award, and to deposit it with respondent No. 3, which shall release it to the petitioners on an application being made.

The amount is to be deposited within two weeks from the date of the order, failing which the petitioners shall be entitled to enhanced interest at 18 percent per annum from the date of the order till actual payment, in addition to the interest awarded for the period in question. No order as to costs was made.