Karnataka HC Approves KNNL-Landowner Deal: Rs 50,820/Acre For Dry Land, 3.5-Year Interest Waiver Only If Paid Within Four Months

Karnataka Neeravari Nigam (KNNL), the beneficiary of the land acquisition, challenged the judgment and award dated 28 December 2014 in M.A. No. 288 of 2014, on the ground that KNNL had not been impleaded before the First Appellate Court.

During the writ proceedings, the parties reached a mediated settlement fixing compensation for dry land at ₹50,820 per acre, subject to agreed terms concerning statutory benefits, interest, payment, and finality of claims.

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

The claimants also raised a concern about tax deduction 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 be recorded and incorporated into a decree.

On TDS, it 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 parties’ voluntary settlement, noting that the dispute was principally between KNNL, as beneficiary, and the landholder, and that the State had consented in principle. It therefore dispensed with the Deputy Commissioner’s signature; the authorized Land Acquisition Officer had signed the agreement.

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

It further gave the settlement legal effect under Section 89 and Order XXIII Rule 3 CPC, making it a substitute for any award, judgment, or decree passed by the Reference Court or Appellate Court.

The agreement was accepted as a lawful settlement, payments were directed to be made without TDS, and the concerned courts were directed to draw up a decree in its terms within 60 days of receiving a certified copy of the order.