Karnataka HC Makes KNNL Land-Compensation Deal Binding: ₹40,656 Per Acre for Dry Land, With 3.5-Year Interest Waiver Only If Paid Within 4 Months

Karnataka Neeravari Nigam (KNNL), the beneficiary of a 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 entered mediation and filed a settlement agreement providing, among other terms, for compensation of ₹40,656 per acre for dry land, statutory benefits subject to specified exclusions, and payment within four months.

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

The claimants also raised concern about tax deduction at source (TDS) on the compensation.

The Court applied Section 89 of the Code of Civil Procedure, 1908, read with Order XXIII Rule 3 CPC, treating the recorded mediation agreement as a lawful settlement capable of forming the basis of a decree.

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

The Court further proceeded on the basis that the Deputy Commissioner’s signature was unnecessary in the circumstances, given the State’s in-principle consent and the authorized Land Acquisition Officer’s signature.

The Court accepted the parties’ voluntary settlement as resolving the dispute between KNNL, the beneficiary, and the land claimants.

Although the Deputy Commissioner had not signed, the Court considered the State’s in-principle consent and the Land Acquisition Officer’s signature sufficient to accept the mediation report.

On TDS, it followed its earlier ruling concerning compensation for compulsory land acquisition and directed that payments under the agreement be made without TDS deduction.

The settlement therefore displaced the need to determine the writ challenge on its original merits.

It directed that payments be made without deduction of TDS and that the agreement operate as a lawful settlement in substitution for any award, judgment, or decree of the Reference Court or Appellate Court.

The concerned courts were directed to draw up a decree consistent with the settlement within 60 days of receiving a certified copy of the order.