Karnataka HC Accepts Rs 43,890/Acre Dry-Land Settlement, With Claimant Waiving 3.5 Years’ Interest If KNNL Pays Within 4 Months

In brief

The question

Whether the parties’ mediated settlement could be accepted and given effect in the writ petition, notwithstanding the Deputy Commissioner’s failure to sign it.

The court held

The Court accepted the Mediation Agreement and disposed of the writ petition in its terms.

It also directed

It directed that the agreement form part of the order and operate as a lawful settlement in substitution for any award, judgment, or decree of the Reference Court or Appellate Court; the concerned courts were directed to draw up a decree accordingly within 60 days of receiving a certified copy.

It further directed that payments under the settlement be made without deduction of tax at source.

01Facts

Karnataka Neeravari Nigam (KNNL), the beneficiary of a land acquisition, challenged the First Appellate Court’s judgment and award dated 2 January 2015, contending that it had not been impleaded before that court.

p. 2

During the writ proceedings, the matter was referred to mediation. The parties reached a settlement providing, among other things, for compensation at ₹43,890 per acre for dry land, statutory benefits subject to specified exclusions of interest, and full and final settlement of the claim.

pp. 3–6

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

p. 7

02Issues

i.Whether the parties’ mediated settlement could be accepted and given effect in the writ petition, notwithstanding the Deputy Commissioner’s failure to sign it.

pp. 6–7

ii.Whether payments under the settlement should be made without deduction of tax at source.

p. 7

03Law Applied

The Court applied Section 89 of the Code of Civil Procedure, 1908, read with Order XXIII Rule 3 CPC, under which a lawful compromise may be recorded and embodied in a decree.

p. 8

It also relied on its earlier order dated 20 August 2025 in W.P. No. 102884/2025, which it described as holding that compensation for compulsory acquisition of land is not subject to deduction of tax at source under the applicable provisions of the Income Tax Act.

p. 8

Provisions in the judgment · 1 · Linked ones open on LawLens

Code of Civil Procedure, 1908 Section 89

04Reasoning

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

p. 7

On TDS, the Court applied its earlier ruling concerning compensation for compulsory land acquisition and directed that settlement payments be made without TDS.

p. 8