Compensation For ROW Under Telegraph Act, 1881: SC Ruling In Kalpataru Power Transmission Ltd. v. Vinod & Ors

Introduction

Under the Indian Telegraph Act of 1885 ("Telegraph Act") and the Electricity Act of 2003 ("Electricity Act"), transmission companies have the legal right to put up towers and lines on private land¹. They don't get to own the land, but the rules are so strict that landowners can't really use their property anymore. The heart of the problem is that there's no clear law that spells out how to compensate landowners. The Telegraph Act states that people should get full compensation for "damage," but it never explains what "damage" means, whereas on the other hand, the Electricity Act copies this language but doesn't fill in the blanks. So, in practice, landowners usually just get paid for lost crops or trees and nothing for all the other ways their land loses value. The Ministry of Power rolled out guidelines in 2015 and again in 2024, recognising that compensation should extend to both the Tower Base and Right of Way ("RoW"). The aim was to reduce the challenges such as uncertainties in cost estimation, project timelines and execution, particularly by focusing on the compensation process during the construction of transmission lines. By standardizing the compensation calculation method, the Guidelines aim to bring consistency across various projects and regions. Yet, the issue still stands as these guidelines are mere administration instructions and without legal enforcement, their implementation differs state to state.

With the aforementioned backdrop, the Supreme Court's decision in Kalpataru Power Transmission Ltd. v. Vinod & Ors. brought the issue out in the open as the Court examined how the interests of landowners and contractors clashed and exposed the inconsistencies in the application of law in such cases. The Court emphasised that there is a dire need for a structured framework for determining compensation.

Kalpataru Power Transmission Ltd. v. Vinod & Ors.: Judicial Recognition of Structural Deficiencies

Before, Kalpataru Judgement, the position with regards to determination of compensation has been affirmed in several cases such as Power Grid Corporation of India Ltd. v. Century Textiles & Industries Ltd² and Rajendra Prasad & Others v. District Magistrate, Bareilly & Another³, where the court held that disputes concerning adequacy of compensation under Section 10(d) of the Indian Telegraph Act 1885 must be resolved by the District Judge of the said jurisdiction where the affected property is situated.

The Supreme Court's decision in Kalpataru Power Transmission Ltd v Vinod & Ors⁴ is the latest acknowledgment of deficiencies in India's framework for compensating landowners affected by transmission lines. The dispute arose from erection of 400 KV towers across Haryana, where landowners sought enhanced compensation under Section 16(3) of the Indian Telegraph Act. The Additional District Judge at Sonepat awarded compensation based on eighty-five per cent of the collector's rate for tower footing, which both landowners and contractors challenged. The Punjab and Haryana High Court attempted to resolve these disputes through a common judgment applying a uniform formula of eighty-five per cent for the tower base and fifteen per cent for the Right of Way corridor.

The Supreme Court disapproved the proposal. It determined that the compensation could not be set by a uniform percentage over the whole transmission corridor which covers different districts and areas of different lands. The assessment must be based on the evidence and the merits of the case in question must be recognized by taking into account land location, its distance to services, and the proof of its value reduction. The Court stressed that compensation should be determined based on proof and not arbitrary percentages. The Court examined the Guidelines dated 15.10.2015⁵ by Ministry of Power, Govt. of India that had recommended the same percentages the High Court had adopted. It observed that the project notification was issued in 2010, and the claims were filed in 2012, years before the guidelines became effective. Besides, the guidelines themselves allowed states to choose whether to adopt them or not since land is a state issue. The Court inferred that such administrative orders cannot limit judicial evaluation of compensation, though they may set the floor for what is acceptable.

Further, the Court rightly pointed out that, "As is evident from the provisions of the 1885 Act, there is no amendment in Sections 10 and 16, ever since the same was enacted. It may be noted that when the 1885 Act was enacted, there was limited development and there may have been few cases requiring determination of compensation under the aforementioned Act. The value of the land was also in peanuts. However, with the rapid pace of development in the electrical and power sector, the volume of litigation has increased significantly, necessitating assessment of compensation under the 1885 Act."⁶

Another issue that was highlighted by the Hon'ble Court was the absence of appellate remedies under the Telegraph Act. Section 16(5) renders the award of the District Judge final, thus leaving the parties no choice but to approach the High Court's writ jurisdiction under Articles 226 and 227, where usually no factual findings are re-examined. This is in stark contrast to other acquisition laws, e.g., the Land Acquisition Act of 1894⁷, the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act of 2013⁸, the National Highways Act of 1956⁹, and the Petroleum and Minerals Pipelines Act of 1962¹⁰ all of which, either directly or indirectly, provide for appeals or arbitration with appellate review.

Further, the Court pointed out that in addition to no remedy of appeal being provided against the order passed by the District Judge, no timelines have been provided with regards to payment of compensation, the Act is silent on the time during which an application can be filed before the District Judge in case sufficiency of compensation is disputed and moreover, the rate at which interest is to be paid in case of delayed payment of compensation is also not provided.

The Court rightfully realized that such issues could not be solved by judicial interpretation and the lacunas must be solved with legislative reform and hence, referred the issue to the Ministry of Law and Justice and the Law Commission of India, in order to determine whether a statutory appeal should be made available against the orders under sections 16(3) and 16(4) of the Telegraph Act and analogous laws.

The Kalpataru Judgment therefore clarified that compensation must be evidence-driven and not formulaic, exposing the structural defect of finality under the Telegraph Act. Simultaneously, it recognises that courts cannot create or interpret the accurate method of compensation without a proper legislation. This judgment is both an affirmation of landowners' right to meaningful compensation and a call for legislative reforms.

Statutory Concerns and the Way Forward

The Kalpataru judgment highlights serious constitutional concerns. Article 300A of the Constitution provides that no person shall be deprived of his property except by the authority of law. Although it is no longer a fundamental right, it still requires that deprivation of property be affected by law that is fair, just and reasonable. Section 16(5) of the Telegraph Act does not meet this standard as it fails to provide safeguards to the landowners who are left with little meaningful enjoyment of their land due to restrictions imposed on them even though laying of transmission lines does not take away their ownership. Section 16(5) makes the District Judge's order final without providing the right to appeal. Further, there are no timelines for making claims, no statutory interest to compensate for delay, and no definition of what constitutes as compensable "damage".

Although Section 67 of the Electricity Act provides a detailed adjudicatory mechanism, including the right to appeal to the appropriate commission in disputes such as compensation to affected landowners, questions arise when a licensee is also vested with the powers of the Telegraph Authority under Section 164 of the Electricity Act. This creates uncertainty about the scope and interplay between the two provisions, as both remedies appear available. Such ambiguity can lead to forum shopping and inconsistent judicial outcomes.

Neither statute recognises consequential losses such as loss of profits, loss of rental income, restriction on enjoyment of land etc. The Works of Licensees Rules, 2006 ("2006 Rules") were meant to provide regulatory oversight but their overlap with the jurisdiction of Telegraph Act has further enhanced the procedural confusion.

Additionally, Section 16(3) of the Telegraph Act, which is framed as an appellate remedy for disputes regarding the sufficiency of compensation paid under Section 10(d) of the Telegraph Act, adds to the uncertainty because it is silent on who determines the quantum, the criteria for such determination, and the procedure when no compensation has been paid. Due to these lacunae, litigation has been on the rise, as stakeholders seek clarity through judicial intervention.

These issues can only be resolved by statutory reform that restores the intent of Article 300A. There is a dire need to enact a dedicated RoW compensation statute which harmonises the Telegraph Act and Electricity Act. The purpose of such reform should be to eliminate the current choice between Section 67 of the Electricity Act and Section 16 (4) and (5) of the Telegraph Act which arbitrarily determines whether landowners have appellate remedies or none at all. The law must provide for layered adjudication, beginning with initial assessment by the collector or appropriate office, subject to appeal to the District Judge and further appeal to the higher courts. This would replicate safeguards provided in other Acts as mentioned above and provide uniformity in application of landowners' rights. Further, the statute must define provide an expansive definition of "damage" which not only includes injury to crops and trees but also diminution of land value, loss of profit and disruption of future use.

The Hon'ble Supreme Court in Kalpataru Judgement reaffirmed that compensation must be based on evidence rather than arbitrary formulas, acknowledged that restrictions imposed by current framework for laying transmission lines amount to deprivation to enjoyment of land, and highlighted the absence of proper appellate remedies under the relevant statutes. The existing framework is divided between the Telegraph Act, Electricity Act, 2006 Rules and the non-binding guidelines and it has resulted in procedural confusion, forum shopping and denied the rights of the landowners. There is a need for legal reform as it is essential to balance the development of infrastructure and the constitutional rights of landowners.

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