Karnataka HC finds developer sought to divert industrial land acquisition for housing, dismisses contempt plea for lack of wilful disobedience

The petitioner proposed a 300-acre “Integrated Entertainment Theme Park, Tourist cum Sports Hub” project, approved by the State High Level Clearance Committee (SHLCC), and sought land acquisition under the Karnataka Industrial Areas Development Act, 1966.

Although the petitioner was required to deposit 40% of the acquisition cost before the draft preliminary notification and the remaining 60% before the draft final notification, it deposited nothing.

It later sought to change the proposed activity to an integrated township and, in W.P. No. 8362/2022, obtained an order directing KIADB to consider its representations concerning the change of activity and a revised demand.

The Division Bench dismissed KIADB’s appeal, and in CCC No. 373/2023 directed compliance with the writ order within six weeks.

The petitioner then filed this contempt petition, alleging non-compliance.

1. Whether KIADB’s alleged failure to comply with the writ order dated 11 October 2022 and the compliance direction dated 13 December 2023 constituted wilful disobedience warranting contempt.

2. Whether the petitioner, having made no payment towards acquisition costs and having sought to change the project’s purpose, was entitled to the relief it sought through the contempt proceedings.

Article 215 of the Constitution and the Contempt of Courts Act, 1971 empower the High Court to address wilful disobedience of its orders.

The Court relied on Article 300-A principles that compulsory acquisition must be authorised by law, serve a genuine public purpose, and provide compensation; an acquisition ostensibly for public purpose but in substance for private gain may be judicially reviewed as a colourable exercise of power.

It also relied on authorities distinguishing public-purpose acquisition from acquisition for a company, and on the principle that the KIAD Act permits acquisition only for development of industrial areas or another purpose furthering the Act’s objects.

The Court treated change of purpose to private housing or commercial development, without a genuine public purpose, as potentially constituting a fraud on the statute.

The Court considered the petitioner’s failure to deposit any part of the acquisition cost, despite the stated 40% and 60% payment requirements, together with its request to change the project from a theme park and sports hub to a township and commercial development.

It concluded that the record did not support the petitioner’s asserted intention to undertake the originally approved project and that the proposed acquisition risked using eminent domain to benefit a private developer.

In those circumstances, the petitioner was not entitled to insist on allotment of the land; the Court found no wilful disobedience by KIADB.

It closed the contempt petition and discharged the contempt notice.