Karnataka HC Approves KNNL Deal With Dry-Land Claimants: ₹41,580 Per Acre, With 3.5 Years’ Interest Waived If Paid Within Four Months

Karnataka Neeravari Nigam (KNNL), the beneficiary of the land acquisition, challenged the First Appellate Court’s judgment and award on the ground that it had not been impleaded in the appeal

During the writ proceedings, the parties participated in mediation and filed a settlement agreement fixing compensation for dry land at ₹41,580 per acre, subject to specified terms concerning statutory benefits, interest, payment, and final settlement of claims

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

The Court treated the 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 form part of the order and substitute any award, judgment, or decree passed by the Reference Court or Appellate Court

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

The Court accepted the settlement because the dispute was principally between KNNL, as the acquisition beneficiary, and the landowners; 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 and accepted the mediation report.

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

It then gave the settlement legal effect under Section 89 and Order XXIII Rule 3 CPC, requiring the concerned courts to draw up a decree in its terms.

The settlement was to operate in substitution for any relevant Reference Court or Appellate Court award, judgment, or decree, and the concerned courts were directed to draw up a decree within 60 days of receiving a certified copy of the order.