Bennethora Project Claimants Agree To ₹1.23 Lakh/Acre For Dry Land; Karnataka HC Directs Compensation Paid Without TDS

The petitioner, the beneficiary of the land acquisition, challenged the judgment and award dated 19 April 2017 passed by the First Appellate Court in LAC No. 643 of 2016. It was undisputed that the petitioner had not been impleaded before that court.

During the writ proceedings, the parties participated in mediation and filed a Memorandum of Mediation Agreement, approved by the State Government, settling the claim at ₹1,22,982 per acre for dry land, subject to specified terms concerning statutory benefits, interest, payment and full and final settlement. The claimants also raised an apprehension about tax deducted at source (TDS) on the compensation.

The Court treated the mediated settlement 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 operate in substitution of any award, judgment or decree passed by the Reference Court or Appellate Court.

On TDS, 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 deduction of tax at source under the applicable provisions of the Income Tax Act.

The Court accepted the settlement after noting that it had been voluntarily reached through mediation and that the authorized Land Acquisition Officer had signed the agreement.

Rather than determine the merits of the challenge to the appellate award, the Court gave effect to the parties’ agreed terms under Section 89 and Order XXIII Rule 3 CPC, directing that the settlement replace the prior award or decree. Applying its earlier decision on TDS, the Court directed that settlement payments be made without deduction at source.

The Court directed that payments be made without TDS and that the concerned courts draw up a decree consistent with the agreement within 60 days of receiving a certified copy of the order.