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2026 Supreme(Online)(Kar) 26922
THE HIGH COURT OF KARNATAKA
Anu Sivraman, Tara Vitasta Ganju, JJ
Kiran K. V. – Appellant
Versus
The Special Land Acquisition Officer-2 – Respondent
MFA No.3138/2024 | MFA No.2902/2024 | MFA No.3038/2024 | MFA No.3116/2024
For the Appellants/Petitioners: Radhanandan B.S.
For the Respondents: Chandrashekar P.V, Savithramma, N.N.Harish
The liability to pay interest on compensation for land acquisition subsists until the amount is paid to the owner or deposited in court; mere availability of funds with the acquiring authority is insufficient.
Headnote:
(A) Land Acquisition Act, 1894 - Sections 34 and 54(1) - Karnataka Industrial Areas Development Act, 1966 (KIAD Act) - Sections 29(2), 29(3), and 30 - Payment of interest on package compensation - Where a beneficiary had made the package compensation available to the acquiring authority but the authority failed to deposit the full amount in court, the land loser is entitled to interest on the unpaid balance. (Paras 17, 20, 25)
(B) Karnataka Industrial Areas Development Act, 1966 - Sections 29(2) - Payment of Compensation by Agreement - Where a title dispute prevents payment under Section 29(2), the acquiring authority is obliged to deposit the compensation amount in court. (Para 20)
(C) Interest - Rate and Period - In cases of delayed payment of compensation, interest at 9% per annum from the date of taking possession till the date of actual deposit of the total package compensation is payable. (Paras 18, 25)
Facts of the case:
The appellants were absolute owners of residential sites acquired for the benefit of the beneficiary authority. The beneficiary issued a Package Compensation of Rs.1,48,35,073/- per site on 27.07.2018, but due to a pending title dispute, the compensation could not be paid under Section 29(2) of the KIAD Act. A General Award was issued under Section 29(3) which the appellants challenged. The High Court in a writ petition substituted the General Award with the Package Compensation, directing the acquiring authority to deposit the balance amount within four weeks (on or before 09.01.2023). The acquiring authority failed to comply, and the entire package compensation was not paid or deposited until 15.03.2025.
Findings of Court:
The court held that the land losers were entitled to interest on the unpaid balance of the package compensation. The liability to pay interest subsists until the amount is paid to the owner or deposited in court. The failure of the acquiring authority to deposit the amount, despite the beneficiary having made the funds available, amounts to a serious illegality.
Issues: 1. Whether the land losers are entitled to interest on the package compensation when the acquiring authority failed to deposit the full amount within the time stipulated by the court. 2. What is the appropriate rate and period for such interest.
Ratio Decidendi: Where the beneficiary of an acquisition has made the package compensation available to the acquiring authority, and the authority fails to deposit the full amount in court, the land loser is entitled to interest at 9% per annum from the date of taking possession till the date of actual deposit.
Result : Appeals allowed in part. The appellants held entitled to interest at 9% per annum from the date of taking possession till the date of actual deposit of the total package compensation. Amounts already paid or deposited to be given credit for. Acquiring authority directed to pay within 2 months. No order as to costs.
| Table of Content |
|---|
| 1. owners entitled to package compensation for acquired sites (Para 1 , 3 , 4 , 5 , 6) |
| 2. appellants claim interest on unpaid compensation; respondent opposes (Para 7 , 8 , 9 , 10 , 11 , 12 , 13 , 14 , 15) |
| 3. court observes delay in deposit; interest liability subsists (Para 16 , 17 , 18 , 19 , 20 , 23 , 24) |
| 4. writ court directed deposit of package compensation within four weeks (Para 21 , 22) |
| 5. interest at 9% p.a. from possession date till payment (Para 25 , 26) |
CAV JUDGMENT
(PER: HON'BLE MRS. JUSTICE ANU SIVARAMAN)
MFA No.3138/2024, MFA No.2902/2024, MFA No.3038/2024 and MFA No.3116/2024 are filed against the Judgment and Award dated 27.01.2024 passed by the II Additional City Civil and Sessions Judge, at Bangalore (C.C.H.No.17) ('Reference Court' for short) praying to direct respondents No.1 and 3 to pay jointly and severally the interest amount due totally amounting to Rs.1,39,02,871/-.
2. We have heard Shri. Radhanandan B.S., learned counsel appearing for the appellants, Shri. P. V. Chandrashekar, learned counsel appearing for respondent No.1 - Karnataka Industrial Areas Development Board (‘KIADB’), Smt. Savithramma, learned Additional Government Advocate, appearing for respondent No.2 - State, Shri. N.N.Harish, learned counsel appearing for respondent No.3-Bangalore Metro Rail Corporation Limited (‘BMRCL’).
3. The appellants submit that they are the absolute owners of four residential house site properties bearing Sites No.19, 20, 25 and 26, each measuring East to West 40 ft. and North to South 30 ft., formed in Sy.No.87/2 of Kothanur Village, Uttarahalli Hobli, Bangalore South Taluk ('Scheduled Properties' for short), which were acquired for the benefit of BMRCL. The Preliminary Notification was issued on 08.10.2015, the Final Notification was issued on 22.02.2018 and possession was taken on 22.03.2018. On 27.07.2018, BMRCL issued a Package Compensation of Rs.1,48,35,073/- per site (inclusive of solatium and other statutory benefits) for payment under Section 29(2) of the Karnataka Industrial Areas Development Act, 1966 (‘KIAD Act’ for short).
4. However, on account of a pending title dispute concerning the Scheduled Properties, payment of compensation by agreement under Section 29(2) of the KIAD Act was not concluded. The KIADB on 30.11.2018 passed a General Award of Rs.48,93,678/- per site under Section 29(3) of the KIAD Act read with the relevant provisions of the Land Acquisition Act, 1894. The appellants challenged the said Award in W.P.No.57160/2018 before this Court, originally seeking compensation under the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 ('2013 Act' for short). By Memo dated 12.12.2022, the appellants sought substitution of the Package Compensation in place of the General Award. By Order dated 12.12.2022 passed in W.P.No.57160/2018, the General Award was substituted by the Package Compensation of Rs.1,48,35,073/-, while recording the appellants' submission that they would not claim "enhancement of the package compensation with interest (if any on such enhanced compensation amount)".
5. The KIADB had earlier deposited Rs.39,14,942/- on 12.09.2022 towards the General Award. The balance of Rs.1,09,20,131/- was directed to be deposited within four weeks (on or before 09.01.2023). However, the KIADB failed to comply. A further direction was issued by this Court vide order dated 05.07.2024 granting four weeks from the date of issuance of the Order, and the KIADB once again failed to comply.
6. In the meantime, by Final Award dated 27.01.2024 in LACs No.102/2022, 107/2022, 115/2022 and 125/2022, the Reference Court declared the appellants are the absolute owners of the Scheduled Properties and held them entitled to the Package Compensation. The Reference Court also noted the Special Land Acquisition Officer (SLAO)-KIADB's failure to deposit the differential amount within the time stipulated by this Court and directed payment of interest o
