Karnataka HC Quashes KIADB Land Acquisition for IMTMA: No Award in 14 Years, Private Benefit Cannot Justify Eminent Domain

A Division Bench of the Karnataka High Court has quashed land acquisition proceedings initiated under the KIAD Act to expand a private exhibition centre, holding the exercise a fraud on statute and constitutionally void.

A Division Bench of the High Court of Karnataka, comprising Justice D K Singh and Justice T M Nadaf, on 3 June 2026 allowed writ appeals filed by landowners and quashed acquisition proceedings initiated by the Karnataka Industrial Areas Development Board (KIADB) to acquire approximately 17.38 acres of land in Madanayakanahalli village, Bengaluru, for the benefit of the Indian Machine Tools Manufacturers Association (IMTMA). The bench dismissed cross-appeals filed by KIADB and IMTMA. The court held that no compensation award had been passed for fourteen years after the final notification under Section 28(4) of the Karnataka Industrial Area Development Act, 1966 (KIAD Act), and that acquiring land for a profitable private entity through the power of eminent domain was a fraud on the statute and a violation of Article 300A of the Constitution of India.

The Acquisition and the Challenge Before the Writ Court

IMTMA, incorporated as a charitable company under Section 25 of the Companies Act, 1956, established the Bangalore International Exhibition Centre (BIEC) on land transferred by Nandi Infrastructure Corridor Enterprises (NICE) pursuant to a State Government order dated 18 September 2003. The original BIEC project was set up on 34 acres 11 guntas. Over subsequent years, IMTMA acquired additional land through private purchase and from NICE, bringing its total holding to 73 acres 14 guntas.

Seeking further expansion, IMTMA requested the State Government to acquire lands in Survey Nos. 18/316, 18/317, 68, 69, 70 and 71 of Madanayakanahalli village, measuring 23 acres 38 guntas in all, for construction of a multi-level car parking facility. The State accepted the request. A preliminary notification was issued under Section 28(1) of the KIAD Act on 19 August 2010. Landowners filed objections. After considering those objections, a final notification under Section 28(4) was issued on 2 May 2012, restricting the acquisition to 17.38 acres.

The affected landowners — including members of the Thimmaiah family from Srikantapura village, the Suresh Chandra Gupta family from Yelahanka, and M B Shanthappa and others — challenged the acquisition before the writ court. The learned Single Judge, by a common order dated 20 June 2013, upheld the acquisition only to the extent of 7 acres out of 17.38 acres, observing that acquisition could be sustained only for a genuine public purpose and at prevailing market value. The Single Judge noted that NICE had undertaken to provide 5 acres free of cost to IMTMA for multi-level parking, and that IMTMA had already entered into an agreement to purchase 7 acres privately from one Mr Mathukutty Vaidhyan. The Single Judge did not specify the survey numbers of the 7 acres whose acquisition was upheld.

All three sets of parties — the landowners, KIADB, and IMTMA — filed intra-court writ appeals, resulting in twelve appeals being heard together.

The Division Bench's Inquiry: Land Held, Finances, and the Waterbody Question

On 26 March 2026, the Division Bench passed a detailed interim order directing KIADB and IMTMA to place on record their clear stand on several specific questions: the total extent of land already in IMTMA's possession and ownership; whether IMTMA actually required the disputed land for its exhibition centre and related facilities; and whether IMTMA was willing to pay compensation at market rates prevailing today, given that no award had been passed and no compensation had been deposited or paid to the landowners despite the absence of any interim order restraining KIADB from doing so. The bench also directed the State Government to clarify whether the land in question fell within the prohibited distance of 75 metres from the bank of a waterbody.

In compliance, IMTMA filed an affidavit of its Secretary, Director General and CEO, confirming that IMTMA had acquired title to 73 acres 14 guntas of land. The bench also examined IMTMA's financial statements for the years 2019–20 to 2023–24, which showed that the company was making substantial profits and was capable of acquiring land through private negotiations.

Two Core Legal Issues

The bench framed two issues for determination. First, whether the land acquisition proceedings had become bad in law because no award had been passed and no compensation paid for fourteen years from the date of the final notification under Section 28(4) of the KIAD Act. Second, whether acquisition proceedings could lawfully be undertaken at the behest of a private entity that had the financial capacity to purchase land through private negotiations.

On the first issue, the bench noted that Section 29 of the KIAD Act imposes a statutory and constitutional obligation on the State Government to pay adequate compensation for acquired land. The entire machinery under Sections 28 and 29 — notification, objections, hearing, final notification, notice to surrender possession, and payment of compensation — must be completed in the manner prescribed. Non-compliance renders the acquisition invalid, illegal, and a fraud on the statute. The bench held that fourteen years had elapsed from the date of the final notification without any award being passed or any compensation being deposited, and that this alone rendered the proceedings unsustainable.

On the second issue, the bench examined the objects and reasons of the KIAD Act. The Act's purpose is the orderly establishment and development of industries in suitable areas in the State, and the Board's functions under Section 13 are to promote and assist the rapid and orderly establishment, growth and development of industries and to provide industrial infrastructure in industrial areas. The bench held that the Act does not contemplate acquiring land for an individual entity. Acquiring land for a profit-making entity for its expansion is not in line with the objects of the KIAD Act.

Fraud on Statute and Constitutional Violation

The bench held that using the power of eminent domain to divest landowners of their holdings for the benefit of a private entity capable of purchasing land on its own was “a statutory and constitutional fraud by the State Authorities.” The bench drew on the constitutional framework of Article 300A, which provides that no person shall be deprived of property except by authority of law, and held that the right to property is not merely a constitutional or statutory right but also a human right.

The bench relied on the Supreme Court's decision in K.T. Plantation Private Limited and Another v. State of Karnataka ([2011] 9 SCC 1), where a Constitution Bench held that the right to compensation is inbuilt in Article 300A, that just, fair and reasonable compensation is a requirement of Articles 14, 19(1)(g), 21, 26(b) and 30(1-A), and that any law depriving a person of private property for private interest is unlawful and undermines the rule of law. The bench extracted at length from that judgment, including the passage holding that Article 300A would be equally violated if the provisions of law authorising deprivation of property have not been complied with.

The bench also relied on Kolkata Municipal Corporation and Another v. Bimal Kumar Shah and Others ([2024] 10 SCC 533), where the Supreme Court enumerated seven sub-rights constituting the right to property under Article 300A: the right to notice, the right to be heard, the right to a reasoned decision, the duty to acquire only for public purpose, the right to fair compensation, the right to an efficient and expeditious process, and the right of conclusion. The bench held that non-compliance with these rights amounts to a violation of Article 300A without the authority of law.

On the public purpose requirement, the bench drew on Sooraram Pratap Reddy and Others v. District Collector, Ranga Reddy District and Others ([2008] 9 SCC 552), which held that where the power of eminent domain has been exercised mala fide or for collateral purposes, or the so-called purpose is no public purpose at all and fraud on statute is apparent, the writ court has jurisdiction to interfere. The bench also relied on Royal Orchid Hotels Limited and Another v. G. Jayaram Reddy and Others ([2011] 10 SCC 608), where the Supreme Court held that acquisition ostensibly for public use but diverted to private beneficiaries constitutes a fraud on the power of eminent domain.

The bench held that the State cannot exercise the power of eminent domain for a private entity unless there is a genuine public purpose and the cost of acquisition, including compensation, is borne by the State or from public funds. In the present case, IMTMA was a profitable private entity with the financial capacity to purchase land through private negotiations. The acquisition was, in substance, for private gain masked as public purpose. This was a colourable exercise of power and a fraud on the statute and the Constitution, in violation of Articles 14, 19 and 21.

Outcome

The Division Bench allowed the writ appeals filed by the landowners and dismissed the writ appeals filed by KIADB and IMTMA. The judgment and order of the learned Single Judge dated 20 June 2013 was set aside. Consequently, the writ petitions filed by the landowners were allowed and the acquisition notifications were quashed in their entirety. No order as to costs was made. All pending interlocutory applications in the batch were held to not survive and were disposed of accordingly.