Karnataka HC Approves KNNL-Landowner Settlement At ₹50,820/Acre For Dry Land, With 3.5-Year Interest Waiver Conditional On Payment Within Four Months

Karnataka Neeravari Nigam (KNNL), the beneficiary of a land acquisition, challenged an appellate judgment and award on the ground that it had not been made a party before the First Appellate Court

The parties were referred to mediation and filed a settlement agreement fixing the market value of dry land at ₹50,820 per acre, providing for statutory benefits subject to specified exclusions and waivers of interest, and recording other terms of full and final settlement

The Deputy Commissioner had not signed the agreement, but the authorized Land Acquisition Officer had

The claimants also raised a concern about tax deducted at source (TDS) on the compensation

Section 89 of the Code of Civil Procedure, 1908, read with Order XXIII Rule 3, permits a mediated settlement to be recorded as a lawful compromise; where accepted, the settlement may be made the basis of a decree

The Court also relied on its earlier order dated 20 August 2025 in W.P. No. 102884/2025, 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 settlement because the dispute was principally between KNNL, as beneficiary, and the landholder, the State had consented to it in principle, and the authorized Land Acquisition Officer had signed it; accordingly, the Deputy Commissioner’s signature was dispensed with

Following its earlier TDS ruling, the Court directed that payments under the agreement be made without TDS

It then treated the agreement as a lawful settlement under Section 89 and Order XXIII Rule 3 CPC, in substitution for the prior award, judgment, or decree

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

The writ petition was disposed of in terms of the mediation agreement