CORNERSTONE PROPERTY DEVELOPERS PRIVATE LIMITED vs DR. MAHESH M
- Court
- Karnataka High Court
- 1 -
HC-KAR
NC: 2026:KHC:57409-DB
CCC No. 329 of 2024
CNR: KAHC010168932024
®
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
TH
DATED THIS THE 13 DAY OF OCTOBER, 2026
PRESENT
THE HON'BLE MR. JUSTICE D K SINGH
AND
THE HON'BLE MR. JUSTICE H.SHANTHI BHUSHAN
CIVIL CONTEMPT PETITION NO. 329 OF 2024
BETWEEN:
1. CORNERSTONE PROPERTY
DEVELOPERS PRIVATE LIMITED
A COMPANY INCORPORATED
UNDER THE COMPANIES ACT, 2013
HAVING REGISTERED OFFICE AT
#583, 9TH MAIN, OFF CMH ROAD
INDIRANAGAR, 1ST STAGE
BANGALORE - 560 038
(REPRESENTED BY AUTHORIZED
REPRESENTATIVE MR. KIRAN POONACHA)
…COMPLAINANT
Digitally
signed by
VASANTHA
KUMARY B K
Location:
HIGH
COURT OF
KARNATAKA
(BY SRI VIKRAM HUILGOL, SENIOR COUNSEL FOR
SRI ABHINAY S AND SRI GURURAJ M, ADVOCATES)
AND:
1. DR. MAHESH M
CHIEF EXECUTIVE OFFICER
AND EXECUTIVE MEMBER
KARNATAKA INDUSTRIAL
AREAS DEVELOPMENT BOARD
#49, 4TH AND 5TH FLOORS
EAST WING, KHANIJA BHAVAN
RACE COURSE ROAD
BENGALURU - 560 001
- 2 -
HC-KAR
NC: 2026:KHC:57409-DB
CCC No. 329 of 2024
CNR: KAHC010168932024
2. SRI GOVINDA REDDY, IAS
CHIEF EXECUTIVE OFFICER AND
EXECUTIVE MEMBER
KARNATAKA INDUSTRIAL AREAS
DEVELOPMENT BOARD
NOS.2, 2/1 & 2/3
KALIDASA MARG
1ST MAIN ROAD
GANDHINAGAR
BENGALURU-560 009
(IMPLEADED V/O DATED 13.10.2026)
…ACCUSED
(BY SRI SHASHI KIRAN SHETTY, SENIOR COUNSEL FOR
SRI H L PRADEEP KUMAR, ADVOCATE)
THIS CCC IS FILED UNDER ARTICLE 215 OF THE
CONSTITUTION OF INDIA AND THE CONTEMPT OF COURTS
ACT, 1971, PRAYING TO INITIATE CONTEMPT PROCEEDINGS
AND PUNISH THE ACCUSED FOR FAILURE TO COMPLY WITH
THE DIRECTIONS IN THE JUDGMENT AND ORDER DATED
11.10.2022 PASSED BY THIS COURT IN W.P.NO.8362/2022
(ANNEXURE-B) IN TERMS OF THE TIMELINES SET OUT IN THE
JUDGMENT DATED 13.12.2023 IN CIVIL CONTEMPT PETITION
NO.373/2023 (ANNEXURE-A).
THIS PETITION, COMING ON FOR ORDERS, THIS DAY,
ORDER WAS MADE THEREIN AS UNDER:
- 3 -
HC-KAR
NC: 2026:KHC:57409-DB
CCC No. 329 of 2024
CNR: KAHC010168932024
CORAM: HON'BLE MR. JUSTICE D K SINGH
and
HON'BLE MR. JUSTICE H.SHANTHI BHUSHAN
ORAL ORDER
(PER: HON'BLE MR. JUSTICE D K SINGH)
1. The present contempt petition has been filed alleging
willful disobedience and defiance of the order dated 13.12.2023
passed in CCC No.373/2023 as also the judgment and order
dated 11.10.2022 passed in W.P.No.8362/2022.
2. The complainant/petitioner is a Real Estate Company
incorporated under the provisions of the Companies Act, 2013.
It is said to be engaged in the business of buildings,
apartments, industrial houses and developing real estate in and
around Bengaluru City.
3. The petitioner, in the name of establishing an "Integrated
Entertainment Theme Park, Tourist cum Sports Hub" in the
outskirts of Bengaluru i.e., in Haraluru and Muddenahalli
Villages of Devanahalli Taluk near Kempegowda International
Airport, filed an application before the State High Level
Clearance Committee (hereinafter referred to as 'the SHLCC')
under the provisions of the Karnataka Industrial (Facilitation)
- 4 -
HC-KAR
NC: 2026:KHC:57409-DB
CCC No. 329 of 2024
CNR: KAHC010168932024
Act, 2002. It appears that the SHLCC, in its 46th Meeting,
decided to approve the project and a Government Order dated
13.03.2017 came to be issued approving the establishment of
"Integrated Entertainment Theme Park, Tourist cum Sports
Hub". The proposed investment by the petitioner for the so-
called Theme Park and Tourist cum Sports Hub was Rs.1330/-
crores and the requirement of land was 300 acres, which was
to be acquired by the State Government under the provisions of
the Karnataka Industrial Areas Development Act, 1966
(hereinafter referred to as 'the KIAD Act'). The Government
Order dated 13.03.2017 stipulated the petitioner to obtain 70%
of the land required for its project through Consent Acquisition
and the whole project was to be completed within a period of
two years.
4. The case of the petitioner was that it obtained the
consent of 70% of the landowners towards acquisition of land
for its project. A preliminary notification under Section 28(1) of
the KIAD Act came to be issued in respect of 300 acres of land,
where the petitioner proposed to establish the said "Theme
Park and Tourist cum Sports Hub". Thereafter, a final
- 5 -
HC-KAR
NC: 2026:KHC:57409-DB
CCC No. 329 of 2024
CNR: KAHC010168932024
notification came to be issued under Section 28(4) of the KIAD
Act. Before the final notification could have been issued, the
petitioner was required to deposit the entire land acquisition
cost of Rs. 371,38,41,600/-.
5. The petitioner, being powerful and well-connected with
the people in power, got the demand of Rs. 371,38,41,600/-
revised to Rs. 278,53,81,200/-. The Principal Secretary,
Department of Industries and Commerce, Government of
Karnataka, vide Letter dated 19.09.2018, reduced the initial
demand of land acquisition cost from 100% to 40%. The
petitioner did not even make deposit of this 40% and could not
complete the project as promised within two years. The
petitioner, using its reach with the people in power, got
extension of further two years for completing the project and
this extension was given by the SHLCC on 29.06.2020.
6. The real intention of the petitioner got unmasked when
on 22.11.2021, it sought approval from the Government for
changing the activity on the notified land from "Theme Park
and Tourist cum Sports Hub" to "Integrated Township with
IT/ITES, Office Spaces, Industrial Warehouse, Residential Plots,
- 6 -
HC-KAR
NC: 2026:KHC:57409-DB
CCC No. 329 of 2024
CNR: KAHC010168932024
Villas and Apartments, Hotel, Service Apartment and Common
Facilities". This has been the trend in most of the projects
having been cleared by the Single Window Clearance
Committees. After acquisition of lands, the purpose gets
changed from industrial to housing etc., as has been sought to
be done in the present case.
7. The petitioner thereafter filed W.P.No.8362/2022 with the
following prayers:-
"a. Issue a writ in the nature of
mandamus directing the Respondent
No.1 to furnish a revised demand for
payment of 40% of the tentative
land cost in terms of the
representation dated 21.01.2022
(Annexure "H") ;
b. Issue a writ in the nature of
mandamus directing the
Respondents to consider the
representation dated 22.11.2021
(Annexure "G") and pass
appropriate orders."
8. The Karnataka Industrial Areas Development Board
(KIADB), in its statement of objections, clearly stated that
Single Window Clearance was given for establishment of
- 7 -
HC-KAR
NC: 2026:KHC:57409-DB
CCC No. 329 of 2024
CNR: KAHC010168932024
"Integrated Entertainment Theme Park, Tourist cum Sports
Hub" with the promise of investment of Rs. 1330/- crores and
employment opportunity to 5540 persons over 300 acres of
land of Haraluru and Muddenahalli Villages. Under the model
agreement and the policy of the KIADB, 100% land acquisition
cost was required to be paid before sending a draft of the final
notification. Initially, the demand was made for
Rs. 371,38,41,600/-, which was revised to Rs. 278,53,81,200/-
and a revised Demand Note dated 17.04.2018 was sent to the
petitioner. However, the petitioner did not pay any amount of
the cost of the acquisition. The petitioner was required to
make initial payment of 40% of the acquisition cost prior to
sending the draft of the preliminary notification, and the
remaining 60% prior to sending the draft of the final
notification. The petitioner did not even make the initial
payment of 40% towards the acquisition cost. It did not pay a
single penny. Further, the petitioner was not entitled for
changing the activity from "Integrated Entertainment Theme
Park, Tourist cum Sports Hub" to housing project. The
- 8 -
HC-KAR
NC: 2026:KHC:57409-DB
CCC No. 329 of 2024
CNR: KAHC010168932024
petitioner never had any intention to establish the project and
the real intent was to develop the housing project.
9. Interestingly, the writ Court, vide order dated
11.10.2022, directed the KIADB to consider the representation
of the petitioner for change of the activity from industrial to
housing and also to consider the representation for raising
revised demand of 40%. This order was challenged by the
KIADB in W.A.No.1483/2023. The Division Bench, vide order
dated 01.12.2023, dismissed the said appeal on the ground
that the petitioner was ready to deposit the initial amount of
40%. The Special Leave Petition filed by the KIADB, being SLP
(C) No.461/2024, also came to be dismissed in limine vide
order dated 12.01.2024 passed by the Supreme Court.
10. Within 12 days of the date of the order passed by the
Division Bench, CCC No.373/2023 came to be filed before the
same Bench and vide order dated 13.12.2023, the Division
Bench directed the contemnor-KIADB to comply with the order
dated 11.10.2022 passed by the learned Single Judge in
W.P.No.8362/2022 within six weeks.
- 9 -
HC-KAR
NC: 2026:KHC:57409-DB
CCC No. 329 of 2024
CNR: KAHC010168932024
11. The present contempt petition has been filed alleging
wilful disobedience and non-compliance of the judgment and
order dated 11.10.2022 passed by the Writ Court and the order
dated 13.12.2023 passed in CCC No.373/2023.
12. As seen from the facts mentioned above, the real
intention of the petitioner was not to invest Rs.1330/- crores in
the proposed "Integrated Entertainment Theme Park, Tourist
cum Sports Hub" and provide employment for 5540 people as
stated in the application submitted before the SHLCC, but the
real intention got exposed when the petitioner moved the
application on 22.11.2021 for change of the activity from
industrial to housing so as to develop the housing project.
13. The petitioner has not deposited 40% of the land
acquisition cost before the draft preliminary notification and the
remaining 60% cost before the draft final notification could be
published. The petitioner itself is in violation of the terms and
conditions of the orders passed by the SHLCC and the State
Government.
- 10 -
HC-KAR
NC: 2026:KHC:57409-DB
CCC No. 329 of 2024
CNR: KAHC010168932024
14. As we have stated, there has been a trend that the land
is acquired for industrial purpose and the purpose is later on
changed to housing etc., as has been done in the present case.
15. The question is, whether the State can exercise the
power of eminent domain to acquire the land/property for a
private entity to enrich and create wealth for such private
entity without an independently established public purpose and
without compliance with the safeguards applicable to
acquisition of lands.
16. Compulsory acquisition is an expropriatory power and its
use must satisfy a public purpose, lawful authority and a
statutory compensation framework. If the acquisition is merely
a device for private benefit or disguised public purpose, it
would be a colourable exercise of power as held in K.T.
PLANTATION (P) LTD. v. STATE OF KARNATAKA ([2011]
9 SCC 1) . The relevant paragraphs of the said decision read as
under:
" Public purpose
180. Deprivation of property within
the meaning of Article 300-A,
- 11 -
HC-KAR
NC: 2026:KHC:57409-DB
CCC No. 329 of 2024
CNR: KAHC010168932024
generally speaking, must take place
for public purpose or public interest.
The concept of eminent domain which
applies when a person is deprived of
his property postulates that the
purpose must be primarily public and
not primarily of private interest and
merely incidentally beneficial to the
public. Any law, which deprives a
person of his private property for
private interest, will be unlawful and
unfair and undermines the rule of law
and can be subjected to judicial
review. But the question as to
whether the purpose is primarily
public or private, has to be decided by
the legislature, which of course
should be made known .
181. The concept of public purpose
has been given fairly expansive
meaning which has to be justified
upon the purpose and object of the
statute and the policy of the
legislation. Public purpose is,
therefore, a condition precedent, for
invoking Article 300-A .
182. We have found that the
requirement of public purpose is
invariably the rule for depriving a
person of his property, violation of
which is amenable to judicial
review ..."
(emphasis supplied)
- 12 -
HC-KAR
NC: 2026:KHC:57409-DB
CCC No. 329 of 2024
CNR: KAHC010168932024
17. However, if the entire cost is borne by the private
company, the acquisition cannot be said to be for public
purpose merely by describing it as such. The acquisition must
correctly identify the legal character of the acquisition and
mandatory provisions must be followed as held in DEVINDER
SINGH v. STATE OF PUNJAB ([2008] 1 SCC 728) . The
Supreme Court, placing reliance on its decision in PRATIBHA
NEMA v. STATE OF M.P. ([2003] 10 SCC 626) , examined
the distinction between acquisition of land for a public purpose
under Part II of the Land Acquisition Act, 1894, and acquisition
for a company under Part VII thereof, particularly in the
context of Sections 6 and 41 of the said Act and held as
follows:
"22. Our attention has been drawn to a
recent decision of this Court in Pratibha
Nema v. State of M.P. [(2003) 10 SCC
626] Therein, for establishment of a
diamond park, 73.3 hectares of dry land
was to be acquired. The proposal
emanated from the General Manager of
the District Industries Centre. Sanction in
principle for acquisition was given by the
Government of Madhya Pradesh; even
Section 17 of the Act was taken recourse
to. The State contributed a token sum of
- 13 -
HC-KAR
NC: 2026:KHC:57409-DB
CCC No. 329 of 2024
CNR: KAHC010168932024
Rs 100 towards the cost of acquisition.
This Court clearly noticed that where the
acquisition is for a company, its cost is to
be borne entirely by the company itself,
provisions of Part VII would apply. But we
must hasten to add that the Bench did not
have any occasion to consider the question
as to whether the State is entitled to take
recourse to the provisions of both Part II
and Part VII of the Act simultaneously.
The Bench furthermore proceeded to
consider the requirements to hold that a
public purpose need not be ascertained
only from the point of view of applicability
of Part II but also the provisions of Part
VII, stating: (SCC p. 642, para 22)
“22. Thus the distinction between
public purpose acquisition and Part
VII acquisition has got blurred under
the impact of judicial interpretation
of relevant provisions. The main
and perhaps the decisive
distinction lies in the fact
whether the cost of acquisition
comes out of public funds wholly
or partly. Here again, even a token
or nominal contribution by the
Government was held to be
sufficient compliance with the
second proviso to Section 6 as held
in a catena of decisions. The net
result is that by contributing even a
trifling sum, the character and
pattern of acquisition could be
changed by the Government. In
- 14 -
HC-KAR
NC: 2026:KHC:57409-DB
CCC No. 329 of 2024
CNR: KAHC010168932024
ultimate analysis, what is considered
to be an acquisition for facilitating
the setting up of an industry in the
private sector could get imbued with
the character of public purpose
acquisition if only the Government
comes forward to sanction the
payment of a nominal sum towards
compensation. In the present state
of law, that seems to be the real
position.”
(emphasis supplied)
35. In Somawanti [AIR 1963 SC 151 :
(1963) 2 SCR 774] although this Court
while upholding that contribution of a sum
of Rs 100 as a part of the cost of
acquisition may subserve the requirement
of law, proceeded to opine: (AIR p. 169,
para 52)
“52. We would like to add that the
view taken in Senga Naicken case
[K. Senga Naicken v. Secy. of State,
AIR 1927 Mad 245 : ILR (1927) 50
Mad 308] has been followed by the
various High Courts in India. On the
basis of the correctness of that view
the State Governments have been
acquiring private properties all over
the country by contributing only
token amounts towards the cost of
acquisition. Titles to many such
properties would be unsettled if we
were now to take the view that
- 15 -
HC-KAR
NC: 2026:KHC:57409-DB
CCC No. 329 of 2024
CNR: KAHC010168932024
‘partly at public expense’ means
substantially at public expense.
Therefore, on the principle of stare
decisis the view taken in Senga
Naicken case [K. Senga Naicken v.
Secy. of State, AIR 1927 Mad 245 :
ILR (1927) 50 Mad 308] should not
be disturbed. We would, however,
guard ourselves against being
understood to say that a token
contribution by the State
towards the cost of acquisition
will be sufficient compliance
with the law in each and every
case. Whether such contribution
meets the requirements of the
law would depend upon the facts
of every case. Indeed the fact
that the State's contribution is
nominal may well indicate, in
particular circumstances, that
the action of the State was a
colourable exercise of power. In
our opinion ‘part’ does not
necessarily mean a substantial
part and that it will be open to
the Court in every case which
comes up before it to examine
whether the contribution made
by the State satisfies the
requirement of the law. In this
case we are satisfied that it satisfies
the requirement of law. What is next
to be considered is whether the
acquisition was only for a company
- 16 -
HC-KAR
NC: 2026:KHC:57409-DB
CCC No. 329 of 2024
CNR: KAHC010168932024
because the compensation was to
come almost entirely out of its
coffers and, therefore, it was in
reality for a private purpose as
opposed to public purpose. In other
words, the question is whether there
was on the part of the Government a
colourable exercise of power.
Elaborating the point it is said
that the establishment of a
factory for manufacturing
refrigeration equipment is
nothing but an ordinary
commercial venture and can by
no stretch of imagination fall
within the well-accepted
meaning of the expression
‘public purpose’, that even if it
were to fall within that
expression the factory is to be
established not by the
Government, nor by Government
participation but solely by
Respondent 6, a public limited
concern and that, therefore, the
concern could acquire land for
such a purpose only after
complying with the provisions of
Part VII and that the use of the
provisions of Section 6(1) is
merely a colourable device to
enable Respondent 6 to do
something, which, under terms
of Section 6(1), could not be
done.”
- 17 -
HC-KAR
NC: 2026:KHC:57409-DB
CCC No. 329 of 2024
CNR: KAHC010168932024
(emphasis supplied)
54. In Srinivasa Coop. House Building
Society Ltd. v. Madam Gurumurthy Sastry
[(1994) 4 SCC 675] , noticing Somawanti
[AIR 1963 SC 151 : (1963) 2 SCR 774]
wherein it was held that the
manufacturing of the articles was for the
benefit of the community and to save
substantive part of foreign exchange and
staff quarters to workmen, it was held:
(SCC p. 684, para 12)
“12. … On the other hand, in the
case of an acquisition for a
company, the compensation has to
be paid by the company. In such a
case there can be an agreement
under Section 41 for transfer of the
land acquired by the Government to
the company on payment of the cost
of acquisition, as also other matters.
The agreement contemplated by
Section 41 is to be entered into
between the company and the
appropriate Government only after
the latter is satisfied about the
purpose of the proposed acquisition,
and subject to the condition
precedent that the previous consent
of the appropriate Government has
been given to the acquisition.
Section 6 is in terms, made subject
to the provisions of Part VII of the
Act. The declaration for acquisition
for a company shall not be made
- 18 -
HC-KAR
NC: 2026:KHC:57409-DB
CCC No. 329 of 2024
CNR: KAHC010168932024
unless the compensation to be
awarded for the property is to be
paid by a company. In the case of
an acquisition for a company
simpliciter, the declaration cannot be
made without satisfying the
requirements of Part VII. But that
does not necessarily mean that
an acquisition for a company for
a public purpose cannot be made
otherwise than under the
provisions of Part VII, if the cost
or a portion of the cost of the
acquisition is to come out of
public funds. In other words, the
essential condition for
acquisition is for a public
purpose and that the cost of
acquisition should be borne,
wholly or in part, out of public
funds. Hence an acquisition for a
company may also be made for a
public purpose, within the
meaning of the Act, if a part or
the whole of the cost of
acquisition is met by public
funds. If, on the other hand, the
acquisition, for a company is to
be made at the cost entirely of
the company itself, such an
acquisition comes under the
provisions of Part VII .”"
(emphasis supplied)
- 19 -
HC-KAR
NC: 2026:KHC:57409-DB
CCC No. 329 of 2024
CNR: KAHC010168932024
18. Compulsory acquisition, in exercise of the power of
eminent domain, is not absolute but is subject to certain
conditions, including that the acquisition must be for a public
purpose and must be accompanied by payment of
compensation. The Supreme Court in KOLKATA MUNICIPAL
CORPN. v. BIMAL KUMAR SHAH ([2024] 10 SCC 533) held
that these twin conditions are implicit in Article 300-A of the
Constitution of India as sub-rights and constitute essential
requirements for compulsory acquisition. The relevant
paragraphs of the said decision read as under:
"29. The constitutional discourse on
compulsory acquisitions, has hitherto,
rooted itself within the “power of
eminent domain”. Even within that
articulation, the twin conditions of the
acquisition being for a public purpose
and subjecting the divestiture to the
payment of compensation in lieu of
acquisition were mandated [State of
Bihar v. Kameshwar Singh, (1952) 1
SCC 528] . Although not explicitly
contained in Article 300-A, these twin
requirements have been read in and
inferred as necessary conditions for
compulsory deprivation to afford
protection to the individuals who are
being divested of property [Hindustan
- 20 -
HC-KAR
NC: 2026:KHC:57409-DB
CCC No. 329 of 2024
CNR: KAHC010168932024
Petroleum Corpn. Ltd. v. Darius
Shapur Chenai, (2005) 7 SCC 627; K.T.
Plantation (P) Ltd. v. State of
Karnataka, (2011) 9 SCC 1 : (2011) 4
SCC (Civ) 414]. A post-colonial reading
of the Constitution cannot limit itself to
these components alone. The binary
reading of the constitutional right to
property must give way to more
meaningful renditions, where the larger
right to property is seen as comprising
intersecting sub-rights, each with a
distinct character but interconnected to
constitute the whole. These sub-rights
weave themselves into each other, and as
a consequence, State action or the
legislation that results in the deprivation of
private property must be measured
against this constitutional net as a whole,
and not just one or many of its strands.
30. What then are these sub-rights or
strands of this swadeshi constitutional
fabric constituting the right to property?
Seven such sub-rights can be identified,
albeit non-exhaustive. These are:
(i) The duty of the State to inform the
person that it intends to acquire his
property — the right to notice,
(ii) The duty of the State to hear
objections to the acquisition — the right to
be heard,
- 21 -
HC-KAR
NC: 2026:KHC:57409-DB
CCC No. 329 of 2024
CNR: KAHC010168932024
(iii) The duty of the State to inform the
person of its decision to acquire — the
right to a reasoned decision,
(vi) The duty of the State to
demonstrate that the acquisition is for
public purpose — the duty to acquire
only for public purpose ,
(v) The duty of the State to restitute and
rehabilitate — the right of restitution or
fair compensation,
(vi) The duty of the State to conduct the
process of acquisition efficiently and within
prescribed timelines of the proceedings —
the right to an efficient and expeditious
process, and
(vii) The final conclusion of the
proceedings leading to vesting — the right
of conclusion.
31. These seven rights are
foundational components of a law that
is tune with Article 300-A, and the
absence of one of these or some of
them would render the law
susceptible to challenge. The
judgment of this Court in K.T.
Plantation [K.T. Plantation (P) Ltd. v.
State of Karnataka, (2011) 9 SCC 1 :
(2011) 4 SCC (Civ) 414] declares that
the law envisaged under Article 300-A
must be in line with the overarching
principles of rule of law, and must be
- 22 -
HC-KAR
NC: 2026:KHC:57409-DB
CCC No. 329 of 2024
CNR: KAHC010168932024
just, fair, and reasonable . It is, of
course, precedentially sound to describe
some of these sub-rights as “procedural”,
a nomenclature that often tends to
undermine the inherent worth of these
safeguards. These seven sub-rights
may be procedures, but they do
constitute the real content of the right
to property under Article 300-A, non-
compliance of these will amount to
violation of the right, being without
the authority of law.
32. These sub-rights of procedure have
been synchronously incorporated in laws
concerning compulsory acquisition and are
also recognised by our constitutional
courts while reviewing administrative
actions for compulsory acquisition of
private property. The following will
demonstrate how these seven principles
have seamlessly become an integral part
of our Union and State statutes concerning
acquisition and also the constitutional and
administrative law culture that our courts
have evolved from time to time . "
(emphasis supplied)
On the aspect of acquisition of lands for 'public purpose',
the Supreme Court further held as follows:
- 23 -
HC-KAR
NC: 2026:KHC:57409-DB
CCC No. 329 of 2024
CNR: KAHC010168932024
"33.4. The Duty to acquire only for
public purpose
33.4.1. That the acquisition must be
for a public purpose is inherent and
an important fetter on the discretion
of the authorities to acquire. This
requirement, which conditions the purpose
of acquisition must stand to reason with
the larger constitutional goals of a welfare
State and distributive justice.
33.4.2. Sections 4 and 6 of the Land
Acquisition Act, 1894, Sections 3(1) and
7(1) of the Requisitioning and Acquisition
of Immovable Property Act, 1952, Sections
2(1), 11(1), 15(1)(b) and 19(1) of the
Right to Fair Compensation and
Transparency in Land Acquisition,
Rehabilitation and Resettlement Act, 2013
and Section 3-A(1) of the National
Highways Act, 1956 depict the statutory
incorporation of the public purpose
requirement of compulsory acquisition.
33.4.3. The decision of compulsory
acquisition of land is subject to
judicial review and the Court will
examine and determine whether the
acquisition is related to public
purpose. If the Court arrives at a
conclusion that that there is no public
purpose involved in the acquisition,
the entire process can be set aside.
This Court has time and again
reiterated the importance of the
- 24 -
HC-KAR
NC: 2026:KHC:57409-DB
CCC No. 329 of 2024
CNR: KAHC010168932024
underlying objective of acquisition of
land by the State to be for a public
purpose [In Somawanti v. State of
Punjab, 1962 SCC OnLine SC 23], this
Court held that the Constitution
permits acquisition of private land by
the State only for a public purpose.
The rationale of taking away private
land by the State for a public purpose
is that private interest must give way
to public interest as observed by the
Court in Daulat Singh Surana v.
Collector (LA), (2007) 1 SCC 641. In
Union of India v. Jaswant Rai
Kochhar, (1996) 3 SCC 491 and D.
Hanumanth SA v. State of Karnataka,
(2010) 10 SCC 656 : (2010) 4 SCC
(Civ) 308, this Court held acquisition
proceedings to be valid even if there
was a change in the public purpose,
so long as there is a public purpose
for which the land is acquired. The
importance of the communication of
public purpose as an ingredient of the
notification for acquisition was reiterated
by this Court in Munshi Singh v. Union of
India, (1973) 2 SCC 337 when acquisition
proceedings were set aside since the
public purpose was mentioned as “planned
development of the area” which was
observed to be wholly insufficient and
conveyed no idea as to the specific
purpose. Similarly, in M.P. Housing Board
v. Mohd. Shafi, (1992) 2 SCC 168,
wherein this Court quashed the acquisition
- 25 -
HC-KAR
NC: 2026:KHC:57409-DB
CCC No. 329 of 2024
CNR: KAHC010168932024
proceedings on the ground that the public
purpose was mentioned as “residential”
which was too vague]."
(emphasis supplied)
19. This Court, in SRI KRISHNAREDDY & OTHERS v.
STATE OF KARNATAKA & OTHERS (W.A.No.99/2013 AND
CONNECTED MATTERS, DECIDED ON 10.04.2026 ), while
examining the object and scope of the KIAD Act, elaborately
considered the requirement that compulsory acquisition must
be undertaken for a legitimate public purpose and not to serve
the interests of an individual or a non-existent entity. The
relevant paragraphs of the said decision are as under:
"32. The object of the KIAD Act is to
acquire the land for the purpose of setting
up the industrial areas and not for
acquiring the land for an individual/non-
existent entity. After setting up an
industrial area, the Government may allot
the land to an applicant for setting up the
industries in the industrial area. The
Government cannot acquire the land for
an individual entity that too, a non-
existent entity of its choice for creating the
wealth at the hands of its promoters at the
expense and cost of the landowners. The
object of the Act is public purpose in
creating industrial areas for
- 26 -
HC-KAR
NC: 2026:KHC:57409-DB
CCC No. 329 of 2024
CNR: KAHC010168932024
development of the industries and
industrialisation of the State and not
for the purpose of creating wealth and
income in the hands of individual
entities/persons. The Government
cannot acquire the land for an
individual person/entity of its choice
by exercising the power of eminent
domain.
33. The functions and powers of the
Board, as provided under Section 13 of the
KIAD Act, are to promote and assist in the
rapid and orderly establishment, growth
and development of industries and to
provide industrial infrastructural facilities
and amenities in industrial areas.
Therefore, the Government may acquire
the land to set up the industrial area and
the Board would then have to provide
industrial infrastructural facilities and
amenities for the rapid and orderly
establishment, growth and development of
industries in the said area. The Act does
not contemplate for acquiring the land
for making profit/ wealth by an
individual entity and such a purpose
cannot be said to be a public purpose.
Setting up an industrial area is a
public purpose and not putting the
land after exercising the power of
eminent domain in the hands of
unknown parties, real estate
developers and such other persons
would not be in the line of the objects
of the KIAD Act, and it is nothing but
- 27 -
HC-KAR
NC: 2026:KHC:57409-DB
CCC No. 329 of 2024
CNR: KAHC010168932024
a fraud on statute committed by the
authorities to divest the landowners
from their land holdings for a
pittance. This kind of exercise is a
statutory and constitutional fraud by
the State Authorities and a criminal
act.
35. Section 28 provides a complete
machinery in respect of the method and
manner in which the land can be acquired
by the State Government, non-compliance
of any of the provisions would render the
acquisition invalid, illegal and fraud on
statute. Sub-section (1) of Section 28
also specifically provides that the
State Government may acquire the
land for the purpose of development
by the Board or for any other purpose
in furtherance of the objects of the
Act. If the land is not acquired either
for the purpose of development by the
Board or for any other purpose in
furtherance of the objects of the Act,
such acquisition is nothing but a mala
fide and illegal exercise of power and
a fraud on statute and Constitution in
exercising the eminent domain by the
State.
46. The State can exercise the
eminent domain power for a private
entity, but only when there is a
genuine public purpose and cost of
acquisition (including compensation)
is borne by the State instrumentality
- 28 -
HC-KAR
NC: 2026:KHC:57409-DB
CCC No. 329 of 2024
CNR: KAHC010168932024
or the public fund so that the
transaction remains by the State for
public purpose.
47. The Supreme Court, in SOORARAM
PRATAP REDDY AND OTHERS vs
DISTRICT COLLECTOR, RANGA REDDY
DISTRICT AND OTHERS ([2008] 9 SCC
552), has held that if the power of
eminent domain has been exercised
mala fide or for collateral purposes or
the purported action is dehors the Act,
irrational or otherwise unreasonable
or the so-called purpose is "no public
purpose" at all and fraud on statute is
apparent, the writ Court would have
the jurisdiction to interfere with such
acquisition and exercise of the power
of eminent domain by the State .
Paragraphs 128 and 133, which are
relevant, are extracted hereunder:-
"128. Applying the aforesaid principles
to the case on hand, in our considered
opinion, it cannot be said that the
proceedings initiated by the State for
acquisition of land under the Land
Acquisition Act, 1894 are illegal,
unlawful, unwarranted, mala fide, fraud
on statute or have been taken in
colourable exercise of power.
133. The entire amount of
compensation is to be paid by State
agency (APIIC) which also works as
- 29 -
HC-KAR
NC: 2026:KHC:57409-DB
CCC No. 329 of 2024
CNR: KAHC010168932024
nodal agency for execution of the
project. It is primarily for the State
to decide whether there exists
public purpose or not. Undoubtedly,
the decision of the State is not
beyond judicial scrutiny. In
appropriate cases, where such
power is exercised mala fide or for
collateral purposes or the
purported action is dehors the Act,
irrational or otherwise
unreasonable or the so-called
purpose is “no public purpose” at
all and fraud on statute is apparent,
a writ court can undoubtedly
interfere. But except in such cases,
the declaration of the Government is
not subject to judicial review. In other
words, a writ court, while exercising
powers under Articles 32, 226 or 136 of
the Constitution, cannot substitute its
own judgment for the judgment of the
Government as to what constitutes
“public purpose”.
48. The acquisition of land or the
property of individuals in exercise of
the powers of eminent domain must
not be conveyable exercise or fraud
on statute or merely a device to
transfer land to private hands. When
an act is done by the State under the
colour of authority of law, it must be
for lawful purpose envisaged under
the statute. If the purpose namely,
- 30 -
HC-KAR
NC: 2026:KHC:57409-DB
CCC No. 329 of 2024
CNR: KAHC010168932024
public purpose as envisaged under a
statute under which the property is
acquired is not subserved, then the
exercise of the power of use of
eminent domain must be held to be
colourable exercise of power and
fraud on the statute.
49. In ROYAL ORCHID HOTELS
LIMITED AND ANOTHER VS G.
JAYARAM REDDY AND OTHERS
([2011] 10 SCC 608), the Court was
confronted with transfer of land
required for public purpose (Golf-
cum-Hotel Resort) to private
transferees and it was held that such
acquisition was fraud on the power
where the land acquired ostensibly for
public use got diverted to private
beneficiaries. It has been held that in
exercise of the power of eminent
domain, the State can compulsorily
acquire land of private persons, but
this proposition cannot be
overstressed to legitimize a patently
illegal and fraudulent exercise
undertaken for depriving the
landowners of their constitutional
right to property with a view to favour
private persons. Paragraphs 36 to 39 of
the said judgment are extracted
hereunder:-
"36. The next question which merits
examination is whether the High Court
- 31 -
HC-KAR
NC: 2026:KHC:57409-DB
CCC No. 329 of 2024
CNR: KAHC010168932024
was justified in directing restoration of
land to Respondent 1. In Behroze
Ramyar Batha v. Land Acquisition
Officer [Behroze Ramyar Batha v. Land
Acquisition Officer, (1992) 1 Kant LJ
589 : ILR 1991 Kant 3556] , the
Division Bench of the High Court
categorically held that the exercise
undertaken for the acquisition of land
was vitiated due to fraud. The Division
Bench was also of the view that the
acquisition cannot be valid in part and
invalid in other parts, but did not nullify
all the transfers on the premise that
other writ petitions and a writ appeal
involving challenge to the acquisition
proceedings were pending. In Annaiah
v. State of Karnataka [Annaiah v.
State of Karnataka, WPs (C) Nos.
19812-16 of 1990 order dated 18-
9-1991 (Kant)] the same Division
Bench specifically adverted to the
issue of diversification of purpose
and held that where the
landowners are deprived of their
land under the cover of public
purpose and there is diversification
of land for a private purpose, it
amounts to fraudulent exercise of
the power of eminent domain.
37. The pleadings and documents filed
by the parties in these cases clearly
show that the Corporation had made a
false projection to the State
- 32 -
HC-KAR
NC: 2026:KHC:57409-DB
CCC No. 329 of 2024
CNR: KAHC010168932024
Government that land was needed for
execution of tourism-related projects.
In the meeting of officers held on 13-1-
1987 i.e. after almost four years of the
issue of declaration under Section 6,
the Managing Director of the
Corporation candidly admitted that the
Corporation did not have the requisite
finances to pay for the acquisition of
land and that Dayananda Pai, who had
already entered into agreements with
some of the landowners for purchase of
land, was prepared to provide funds
subject to certain conditions including
transfer of 12 acres 34 guntas land to
him for house building project. After 8
months, the Corporation passed a
resolution for transfer of over 12 acres
land to Dayananda Pai. The Corporation
also transferred two other parcels of
land in favour of Bangalore
International Centre and M/s Universal
Resorts Limited. These transactions
reveal the true design of the officers of
the Corporation, who first succeeded in
persuading the State Government to
acquire a huge chunk of land for a
public purpose and then transferred a
major portion of the acquired land to a
private individual and corporate entities
by citing poor financial health of the
Corporation as the cause for doing so.
38. The courts have repeatedly held
that in exercise of its power of
- 33 -
HC-KAR
NC: 2026:KHC:57409-DB
CCC No. 329 of 2024
CNR: KAHC010168932024
eminent domain, the State can
compulsorily acquire land of the
private persons but this proposition
cannot be overstretched to
legitimise a patently illegal and
fraudulent exercise undertaken for
depriving the landowners of their
constitutional right to property
with a view to favour private
persons. It needs no emphasis that if
land is to be acquired for a company,
the State Government and the
company is bound to comply with the
mandate of the provisions contained in
Part VII of the Act. Therefore, the
Corporation did not have the
jurisdiction to transfer the land
acquired for a public purpose to the
companies and thereby allow them to
bypass the provisions of Part VII. The
diversification of the purpose for which
land was acquired under Section 4(1)
read with Section 6 clearly amounted to
a fraud on the power of eminent
domain. This is precisely what the High
Court has held in the judgment under
appeal and we do not find any valid
ground to interfere with the same more
so because in Annaiah v. State of
Karnataka [Annaiah v. State of
Karnataka, WPs (C) Nos. 19812-16 of
1990 order dated 18-9-1991 (Kant)]
the High Court had quashed the
notifications issued under Sections 4(1)
- 34 -
HC-KAR
NC: 2026:KHC:57409-DB
CCC No. 329 of 2024
CNR: KAHC010168932024
and 6 in their entirety and that
judgment has become final.
39. The judgment in Om Parkash v.
Union of India [(2010) 4 SCC 17 :
(2010) 2 SCC (Civ) 1] on which reliance
has been placed by Shri Naganand is
clearly distinguishable. What has been
held in that case is that quashing of the
acquisition proceedings would ensure to
the benefit of only those who had
approached the Court within reasonable
time and not to those who remained
silent. In this case, Respondent 1
independently questioned the
acquisition proceedings and transfer of
the acquired land to M/s Universal
Resorts Ltd. In other words, he
approached the High Court for
vindication of his right and succeeded
in convincing the Division Bench that
the action taken by the Corporation to
transfer his land to M/s Universal
Resorts Limited was wholly illegal,
arbitrary and unjustified."
59. The public purpose doctrine
survives constitutional amendments
and remains a test even after 44th
Amendment, while Article 300A
requires that in order to become
"authority of law" and in order to
become a cause for deprivation of
property, public purpose continues to
frame the legitimate scope of
- 35 -
HC-KAR
NC: 2026:KHC:57409-DB
CCC No. 329 of 2024
CNR: KAHC010168932024
acquisition and the manner of
compensating owners. If the
acquisition is challenged, it would be
the obligation of the State to prove
the public purpose and adhere to the
statutory procedures as prescribed
under the statute. In any acquisition
of the land or the property, public
purpose is a constitutional
precondition besides compensation.
60. In K.T. PLANTATION (supra), it has
been held that public purpose may be
scrutinized in the light of developmental
goals, economic sovereignty and broader
welfare considerations as was held in
SOORARAM PRATAP REDDY (supra). It
would be a colourable exercise of
power of eminent domain if the
project is framed for public purpose,
but it is, in substance, for private
gain. When the acquisition is not for
genuine public purpose, but it is
masked for private gain, this would be
a colourable exercise of the power
and fraud on the statute and
Constitution and against Articles 14,
19 and 21 of the Constitution of
India. "
(emphasis supplied)
20. The decisive question is whether the public purpose is the
real purpose of acquisition, the role of the State
- 36 -
HC-KAR
NC: 2026:KHC:57409-DB
CCC No. 329 of 2024
CNR: KAHC010168932024
instrumentality, the source of compensation, and whether the
project produces a genuine public purpose or is masked as a
public purpose for enriching a private entity and creating
wealth in the hands of a private person.
21. We are, therefore, of the view that once the petitioner
itself is of the opinion that the earlier purpose of establishing
the project is no longer feasible and has sought to change the
purpose of land acquisition, it is not entitled for allotment of
any land. Further, we are of the firm view that the real purpose
was not to invest Rs. 1330/- crores and generate employment
for 5540 people, but to divert the land acquired by the State or
its instrumentality by using the power of eminent domain for
the housing project and commercial spaces. The State, in
exercise of its power of eminent domain, cannot acquire a land
or property to create wealth in the hands of private individuals
for profit and gain.
22. The petitioner has not deposited a single penny till date
and wants 300 acres of land to be handed over to it. We are,
therefore, of the view that when the petitioner itself has failed
on all counts in making the initial deposit of 40% before
- 37 -
HC-KAR
NC: 2026:KHC:57409-DB
CCC No. 329 of 2024
CNR: KAHC010168932024
sending the draft preliminary notification and 60% before
sending the draft final notification, it is not entitled for
allotment of any land. There is no wilful disobedience by the
contemnor-KIADB, as alleged or otherwise.
23. Therefore, the present contempt petition is closed and the
contempt notice stands discharged.
Sd/-
(D K SINGH)
JUDGE
Sd/-
(H.SHANTHI BHUSHAN)
JUDGE
BKV
CT:SN
List No.: 2 Sl No.: 3