Kiran Raj

The Supreme Court of India adjudicated a matter concerning delayed compensation under the Karnataka Industrial Areas Development Act, 1966 (KIAD Act), in the context of the Bengaluru-Mysuru Infrastructure Corridor Project (BMICP). The appellants, owners of residential sites in Gottigere Village, Bengaluru, challenged the compensation awarded in 2019, contending that delays in the acquisition process necessitated recalculating compensation at current market rates.

The case arose from land acquisition proceedings initiated in 2003 for the BMICP, a major infrastructure project executed under a framework agreement between the Government of Karnataka and Nandi Infrastructure Corridor Enterprise Ltd. (NICE). Preliminary notifications for acquiring the appellants' properties were issued in 2003. However, the compensation Award was finalized by the Special Land Acquisition Officer (SLAO) only on April 22, 2019, nearly two decades later.

The appellants argued that the SLAO’s reliance on market values as of the 2003 notification date was unjust due to the prolonged delay. They sought to quash the 2019 Award and demanded compensation reflecting market values as of the Award’s issuance. Judicial precedents were cited to support their argument that courts could account for such delays when determining compensation.

The Karnataka High Court, however, ruled against the appellants, holding that the SLAO lacked the statutory authority to alter the date for determining market value. The High Court held that any deviation from the preliminary notification date could only be directed by constitutional courts exercising extraordinary powers under Articles 226 or 142 of the Constitution of India. Consequently, it set aside the 2019 Award and directed the SLAO to issue a fresh Award based on the market value prevailing at the time of the 2003 notification.

The appellants approached the Supreme Court, challenging the High Court’s decision on the grounds of delayed compensation and reliance on outdated market values. They argued that the lengthy delay in disbursing compensation violated their rights and necessitated judicial intervention.

The Supreme Court examined the matter in light of the Land Acquisition Act, 1894, and judicial precedents. The Court stated that compensation must be the market value as of the date of the preliminary notification, as stipulated under Section 11 of the 1894 Act. The judgment stated: “The market value of the acquired lands has to be taken as on the date of the preliminary notification as contemplated under Section 11 of the 1894 Act.”

The Court held that administrative authorities, such as SLAOs, could not unilaterally shift the date for determining market value. It noted: “The SLAOs clearly fell in error in placing reliance upon the decisions of this Court for the purpose of shifting the date from the date of the preliminary notification without appreciating that such shifting is not legally permissible.”

The Court further observed that the power to alter the date for compensation calculation in exceptional cases rests exclusively with the Supreme Court or High Courts, exercising their inherent constitutional powers. It observed: “The power to shift the date of the preliminary notification, even in exceptional circumstances, lies solely with the constitutional courts exercising their powers under Articles 226 or 142 of the Constitution.”

While upholding the High Court’s finding that the SLAO acted beyond its statutory authority, the Supreme Court acknowledged the appellants’ grievances arising from the prolonged delay in compensation disbursal. The Court observed that delays in land acquisition proceedings impose substantial hardships on landowners and directed authorities to ensure timely conclusion of such processes. It stated: “While the procedural framework mandates adherence to the date of the preliminary notification, authorities must recognize the implications of delay and act in a timely manner to prevent undue hardship to landowners.”

The Supreme Court set aside the High Court’s judgment, holding that the appellants’ claims regarding compensation adequacy and delays warranted reconsideration. It directed the SLAO to re-evaluate the compensation, in accordance to statutory provisions and addressing the appellants’ grievances during the reassessment. The judgment stated: “The cause of action with regard to the appellants’ prayer for determining compensation at a current market value still survives for consideration and must be adjudicated in accordance with law.”

The Supreme Court remanded the matter for further proceedings, directing the SLAO to issue a fresh Award based on its findings. The matter will proceed in accordance with the statutory framework and the Supreme Court's directives.

Case Title: Bernard Francis Joseph Vaz & Ors. v. Government of Karnataka & Ors.
Case Number: Civil Appeal No. 5490 of 2024 (arising from SLP (C) No. 10338 of 2023)
Bench: Justice B.R. Gavai and Justice K.V. Viswanathan

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