Court-approved mediation settlements substitute prior land-acquisition awards and decrees.

Karnataka Neeravari Nigam (KNNL), the beneficiary of the acquisition, challenged the First Appellate Court’s judgment and award in M.A. No. 366 of 2014, stating that it had not been impleaded in that appeal.

During the writ proceedings, the dispute was referred to mediation and the parties filed a settlement agreement providing, among other terms, a market value of ₹43,890 per acre for dry land and specified conditions concerning statutory benefits, interest, payment, and final settlement of claims.

The Land Acquisition Officer signed the agreement, but the Deputy Commissioner did not.

1. Whether the mediation agreement could be accepted and implemented despite the Deputy Commissioner’s failure to sign it.

2. Whether payments under the agreement should be made without deduction of tax at source.

3. Whether the agreement should govern the parties’ claims in substitution for the awards or decrees of the Reference Court and Appellate Court.

Section 89 of the Code of Civil Procedure, 1908, read with Order XXIII Rule 3 CPC, permits a court to record a lawful settlement and give effect to it; here, the Court directed that the mediation agreement would form part of its order and operate in substitution for the relevant award, judgment, or decree.

The Court also 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 because the dispute was principally between KNNL, as acquisition beneficiary, and the land claimant, the State had consented in principle, and the authorized Land Acquisition Officer had signed the agreement; in those circumstances, it dispensed with the Deputy Commissioner’s signature.

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

It then gave the settlement operative effect under Section 89 read with Order XXIII Rule 3 CPC, rather than deciding the original challenge to the appellate award on its merits.

Payments were directed to be made without TDS, and the concerned courts were directed to draw up a decree in accordance with the agreement within 60 days of receiving a certified copy of the order.