A court-approved mediation settlement substitutes prior land-acquisition awards and governs compensation claims.

Karnataka Neeravari Nigam (KNNL), the beneficiary of a land acquisition, challenged an appellate judgment and award on the ground that it had not been impleaded before the First Appellate Court.

During the writ proceedings, the parties referred the matter to mediation and filed a settlement fixing compensation for the acquired dry land at ₹43,890 per acre, together with agreed terms on statutory benefits, interest, payment, and final settlement of claims.

The Deputy Commissioner had not signed the agreement, although the State had consented in principle and the authorized Land Acquisition Officer had signed it.

1. Whether the mediation agreement could be accepted and made binding despite the Deputy Commissioner’s not having signed it.

2. Whether payments made under the mediation agreement should be subject to tax deduction at source.

3. Whether the writ petition should be disposed of in terms of the mediation settlement, in place of the judgments or awards previously passed.

The Court treated the mediation agreement as a lawful settlement under Section 89 of the Code of Civil Procedure, 1908, read with Order XXIII Rule 3 CPC, and directed that it be incorporated into a decree.

On tax deduction at source, the Court relied on its earlier order dated 20 August 2025 in W.P. No. 102884 of 2025, which held that compensation for compulsory acquisition of land was not subject to TDS under the applicable provisions of the Income Tax Act.

The Court accepted the agreement because the dispute was principally between KNNL, as the acquisition beneficiary, and the land losers; the State had consented in principle, and the authorized Land Acquisition Officer had signed the agreement.

It therefore dispensed with the Deputy Commissioner’s signature.

Applying its earlier ruling on TDS, the Court directed that payments under the agreement be made without deduction at source.

It then treated the agreement as a settlement under Section 89 CPC read with Order XXIII Rule 3 CPC, substituting it for any award, judgment, or decree passed by the Reference Court or Appellate Court.

It directed that payments be made without TDS and that the concerned courts draw up a decree reflecting the settlement within 60 days of receiving a certified copy of the order.