Land acquisition for a non-existent entity for private gain constitutes a fraud on the statute and is void.

In 2000, promoters of a non-existent entity, M/s Lakeview Tourism Corporation, applied to the State Government to establish a "Unicare Tourist Centre"

They requested the acquisition of 37 acres of land in Hebbal, claiming they had already negotiated for 33 acres privately

The State High Level Committee recommended the acquisition within five days of the application

Preliminary and final notifications under Sections 28(1) and 28(4) of the Karnataka Industrial Areas Development Act (KIAD Act) were issued in 2002 and 2004 respectively to acquire approximately 53 acres

However, the entity was not incorporated until January 2011, nearly 11 years after the application

In 2023, the State modified the project’s purpose from a tourism center to an "Integrated Township" including residential apartments and IT parks

Landowners challenged the acquisition, alleging it was a colorable exercise of power and a fraud on the statute intended to benefit private real estate developers at the expense of farmers.

A learned Single Judge previously dismissed the writ petitions, leading to these appeals

Whether the land acquisition for a non-existent entity under the KIAD Act was legal and consistent with the object of the Act?

Whether the acquisition of a large tract of land for a private entity constituted a fraud on the statute and a colorable exercise of power?

Whether the State can exercise the power of eminent domain to divest landowners of property for the private wealth creation of individuals?

The court primarily applied the Karnataka Industrial Areas Development Act, 1966, specifically Sections 28 and 29, which govern the procedure for land acquisition, and Section 13, which defines the Board's function as promoting orderly industrial growth

It relied on Article 300A of the Constitution of India, establishing that deprivation of property must be by "authority of law" and for a "public purpose"

The court invoked the Doctrine of Eminent Domain, holding that any law depriving a person of property for private interest is unlawful [citing K.T. Plantation Pvt. Ltd. v. State of Karnataka]

Furthermore, it applied the principle that "Fraud vitiates every solemn act," establishing that judicial or executive orders obtained through fraud are nullities [citing S.P. Chengalvaraya Naidu v. Jagannath and Meghmala v. Narasimha Reddy]

The Court found the acquisition process to be a "monumental fraud" perpetrated by State authorities in collusion with private individuals

It noted that the State acted with "alacrity" to approve an application from a non-existent entity, failing to verify the promoters' credentials or the entity's legal status

The Court observed that the subsequent 2023 change in land use—from a tourist resort to a residential and commercial township—proved the "public purpose" was a mere mask for private real estate gain

The financial records of the respondent-entity showed a negative net worth and zero income, contradicting the initial promise of a Rs. 2500 crore investment

Applying the Royal Orchid Hotels precedent, the Court reasoned that diversifying the land's use for private profit after using the State's power of eminent domain constitutes a fraud on power

It rejected the argument of finality of previous litigation, holding that discovered fraud overrides prior judgments

It held that the acquisition was a colorable exercise of power and a fraud on the statute

The Court directed the Central Bureau of Investigation (CBI) to register a criminal case and investigate the conspiracy between State officials and private individuals

Additionally, it imposed costs of Rs. 10 Lakhs on Respondent No. 4, to be paid to the Army Battle Casualties Welfare Fund