Karnataka HC Records Landowners’ KNNL Compensation Settlement At ₹2.18 Lakh/Acre, With 2.5-Year Interest Waiver If Paid Within Four Months

The Executive Engineer of Karnataka Neeravari Nigam Limited (KNNL), the beneficiary of the land acquisition, challenged the First Appellate Court’s judgment and award in LACA No. 203 of 2016.

KNNL had not been made a party before that court.

During the writ proceedings, the parties reached a mediated settlement, approved by the State Government, fixing the market value at ₹2,18,715 per acre and setting out terms on statutory benefits, interest, payment, and final settlement of claims.

The claimants also raised 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 CPC, provides the basis for recording a lawful settlement and giving effect to it through a decree.

The Court also relied on its earlier order dated 20 August 2025 in W.P. No. 102884 of 2025, which it described as holding that compensation for compulsory acquisition of land was not subject to TDS under the applicable provisions of the Income Tax Act.

The Court applied these principles to the settlement voluntarily entered into by the parties and signed by the authorized Land Acquisition Officer.

The Court noted that KNNL’s non-joinder before the First Appellate Court was undisputed, but the parties had resolved the dispute through mediation and the authorized officer had signed the agreement.

Finding the agreement acceptable, the Court incorporated it into its order as a lawful settlement under Section 89 and Order XXIII Rule 3 CPC, directing that it replace the earlier award, judgment, or decree.

On TDS, the Court followed its earlier ruling and directed payment without deduction at source.

It directed that the settlement form part of the order, operate in substitution for any prior award, judgment, or decree, and be embodied in a decree by the concerned courts within 60 days of receiving a certified copy of the order.

Payments under the agreement were ordered to be made without TDS.