It paid for the land in 2004 and never got it: Karnataka High Court orders a refund with interest from 2009

The State cleared an IT park, took forty per cent of the acquisition cost from the company, notified the land, then accepted the landowners’ objections and dropped it. Twenty-two years later the Division Bench has priced the delay.

In 2003 a software company applied to Karnataka Udyog Mitra to set up an Information Technology Park at Kadubeesanahalli, Varthur Hobli, in Bangalore East Taluk. The State Level Single Window Clearance Committee approved it in October 2003 and directed the Special Land Acquisition Officer to acquire 8.5 acres and hand it over.

On 23 September 2026, in writ appeals filed in 2013, a Bench of Justice D.K. Singh and Justice H. Shanthi Bhushan brought that file to an end — not by delivering the land, but by ordering the money back with interest running from December 2009.

What was paid, and what was notified

In December 2003 the Karnataka Industrial Areas Development Board asked the company to deposit Rs 38,06,500, being forty per cent of the tentative cost of the acquisition, so that the Special Land Acquisition Officer could put draft notifications to the Board for approval. The company paid in January 2004.

A preliminary notification under Section 28(1) read with Section 3(1) of the Karnataka Industrial Areas Development Act, 1966 followed in March 2004. A joint survey by the acquisition officer and the Assistant Director of Land Records reported in May 2004 that no development had been carried out on the notified lands. The Board then heard the landowners under Sections 28(2) and 28(3), and a final notification under Section 28(4) issued in September 2004.

Two rounds, and a change of mind

The landowners challenged the final notification in three writ petitions. The company filed its own, asking for delivery of the notified land. In November 2009 the single judge allowed the landowners’ petitions in part, set aside the final notification, and directed both sides to appear before the acquisition officer with their objections and claim statements.

Those objections were personal and specific. One landowner said his land had been allotted to him for his own project under a 2007 clearance. Another said the land carried her steel fabrication unit and was her sole source of livelihood. A third said it was his only means of maintaining his family and that he intended to set up an industry on it for his children.

In December 2009 the acquisition officer accepted those objections and dropped their lands from the acquisition. The order was published in the Official Gazette in July 2010.

The company challenged both in 2011. By the order now under appeal, passed in March 2013, the single judge disposed of those petitions by directing the respondents to provide alternative land, with liberty to the company to pursue damages against the State before an appropriate forum.

Why money instead of land

The single judge’s answer — find the company some other land — did not survive contact with what was actually available. The Chief Executive Officer of the Board stated categorically that no alternative land is presently available as a single plot of the extent required. A direction for allotment could not be issued into that vacuum.

Nor could the Court simply order the original lands delivered. A civil suit of 2004 had produced a finding on title, and a regular first appeal from it, filed in 2009, is still pending. With that dispute subsisting, the Bench held it could not issue a direction that would conclusively determine the parties’ rights to the lands, or compel the authorities to act contrary to the statutory framework.

What it would not do was leave the company without a remedy. The acquisition proceedings had been acted upon; the company had altered its position and incurred expenditure on the project on the strength of the representations and actions of the authorities. Weighing the manner in which the acquisition was dealt with, the irreversibility of what followed, the expenditure and prejudice suffered, the civil court’s finding and the pendency of the appeal from it, the Bench held that the ends of justice would be met by compensating the company in money in lieu of alternative land.

Eight per cent, from the date the land went

The direction that followed is short. The authorities are to refund the amount deposited by the company along with interest at eight per cent per annum from the date of the acquisition officer’s order — 28 December 2009 — until actual payment. The amount is to be paid within eight weeks of the judgment.

The choice of start date is the substance of the relief. Interest runs not from the 2004 deposit but from the day the acquisition was dropped, which is when the company’s money stopped being the price of land it might still receive and became money held for nothing.

The Bench added a protective rider. The payment is without prejudice to the rights and contentions of the parties in a regular first appeal of 2009 that remains pending, and is not to be construed as any adjudication by the Court on the final title to the lands.

The writ appeals were disposed of in those terms, and the pending interlocutory applications did not survive.