### State Power of Eminent Domain Cannot Be Exercised for Private Real Estate Interests Under Color of Industrial Development

The Appellants, owners of 36 guntas of land in Devarabisanahalli Village, challenged a Single Judge order that had quashed the State Government’s decision to denotify their lands.

Respondent No. 3 (RFPL), a company originally incorporated to manufacture gutka, applied to the State Level Single Window Agency (SLSWA) to set up an IT park despite having no experience in the sector.

On 18.09.2001, the SLSWA approved the acquisition of 12 acres for RFPL based on a largely blank application.

Subsequently, the KIADB allotted 29 acres—more than double the requested amount.

Following a 2004 report by the CEO of KIADB alleging "land mafia" involvement and lack of due diligence regarding the promoters, the State Government issued notifications on 18.03.2009 and 23.05.2009 to denotify the Appellants' 36 guntas.

The Single Judge set aside these denotifications without detailed discussion, leading to this intra-court appeal.

1. Whether the State may exercise its power of eminent domain to acquire private land for a private entity when the acquisition lacks a bona fide public purpose.

2. Whether the acquisition process in favour of Respondent No. 3 was vitiated by fraud, mala fides, and colourable exercise of power.

The Court applied the doctrine of "Eminent Domain," which empowers the State to compulsorily acquire private property provided it is for a "public purpose" and by "authority of law" under the constitutional framework.

It scrutinized the Karnataka Industrial Area Development Board (KIADB) Act and the KIADB Regulations, 1979, specifically Regulations 7, 9, and 10, which mandate transparency in land disposal, verification of an applicant's ability to start production, and notification of land availability to the public.

The court also relied on the principle that any State action must adhere to "constitutional morality" and must not be a "colourable exercise of power" for extraneous purposes.

The Court found the acquisition to be a "gross misuse of power".

It noted that RFPL, a gutka manufacturing firm with no IT expertise and minimal capital, was favored with valuable land through a "stage-managed" process.

The SLSWA approved a "blank application" that failed to disclose the promoters' backgrounds, which the Court held should have been "thrown in the dustbin".

The KIADB’s own internal audit (2004 report) admitted that the land was being diverted to "land mafias" for real estate development rather than industrial growth.

The Court reasoned that taking land from poor farmers to benefit private real estate developers does not constitute a "public purpose".

Furthermore, the "electricity" and "high speed" with which the State acted to bypass mandatory procedures under KIADB Regulations proved mala fides and a "colourable exercise of power".

The Court concluded that the State was within its rights to denotify the land to rectify the initial illegal acquisition.

Consequently, the Court set aside the Single Judge’s order dated 06.03.2013 and allowed the Writ Appeal, thereby upholding the government's decision to denotify the Appellants' lands.