Karnataka HC Approves KNNL-Landowners’ Settlement At Rs 44,352/Acre For Dry Land, Orders No TDS On Compensation

Karnataka Neeravari Nigam (KNNL), the beneficiary of the land acquisition, petitioned under Articles 226 and 227 challenging the First Appellate Court’s judgment and award dated 9 January 2015.

KNNL contended that it had not been impleaded before that court.

During the writ proceedings, the dispute was referred to mediation, and the parties filed a settlement agreement setting out the compensation and related terms.

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

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

It also applied its earlier order in W.P. No. 102884/2025, dated 20 August 2025, which held that compensation awarded for compulsory acquisition of land was not subject to tax deduction at source under the applicable provisions of the Income Tax Act.

The Court accepted the settlement after noting that the dispute was principally between KNNL, as beneficiary, and the land loser, and that the State had consented to it in principle.

Because the authorized Land Acquisition Officer had signed the agreement, the Court dispensed with the Deputy Commissioner’s signature.

Addressing the claimants’ concern about TDS, the Court applied its earlier ruling and directed that payments under the agreement be made without TDS.

It did not determine the merits of KNNL’s challenge to the appellate award; the settlement governed the disposition.

It directed that payments be made without deduction of tax at source.

It declared the agreement a lawful settlement under Section 89 CPC read with Order XXIII Rule 3 CPC, and directed the concerned courts to draw up a decree in its terms within 60 days of receiving a certified copy of the order.

The settlement was to operate in substitution for any award, judgment, or decree of the Reference Court or Appellate Court.