Section 24(2) Right to Fair Compensation Act | Beneficiary Financial Liability Entitles Participation in Compensation Proceedings : Karnataka HC Quashes Awards Without Notice

The Karnataka High Court has affirmed that a state-established project beneficiary, such as Krishna Bhagya Jala Nigam Ltd., is a person interested entitled to participate in land acquisition compensation proceedings under the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013. This ruling resolves a critical procedural ambiguity affecting hundreds of pending cases across the state.

Background & Facts

The Dispute

The dispute arises from land acquisition proceedings initiated by the State of Karnataka under the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 (the Act, 2013) for the Upper Krishna Project. The petitioner, Krishna Bhagya Jala Nigam Ltd. (KBJNL), is a public sector entity established by the State Government to manage irrigation projects, including the Almatti Dam. Although KBJNL was not named as the beneficiary in the original acquisition notifications, it was later entrusted with the completion of the project and all associated liabilities through Government Orders.

Key Facts

• Acquisition notifications for the Upper Krishna Project were issued between 2010 and 2015 across multiple villages in Vijayapura district.
• KBJNL was formally established by Government Order dated 01.04.2012, subsequent to the issuance of acquisition notifications.
• The State Government transferred all assets, liabilities, and responsibilities of the irrigation projects to KBJNL via GO No. RD 422 LAC 2013 dated 15.07.2013.
• Landowners filed reference petitions under Section 46 of the Act, 2013 before the Reference Court (III Additional District Judge and Land Acquisition Rehabilitation and Settlement Authority, Vijayapura).
• The Reference Court enhanced compensation amounts in 18 separate cases between 2018 and 2023, without impleading KBJNL as a party.
• KBJNL had deposited the enhanced compensation amounts awarded in all cases, as per its statutory obligation under the Act.
• KBJNL was not permitted to file objections, cross-examine witnesses, or adduce evidence in any of the 18 reference proceedings.

Procedural History

• 2010 - 2015: Acquisition notifications issued for land in Nagardinni, Madabhavi, Managuli, Shivanagi, Hittanalli, and other villages in Vijayapura district.
• 2012 - 2013: KBJNL established and entrusted with project completion and liability.
• 2018 - 2023: 18 reference petitions filed by landowners before the Reference Court.
• 24.07.2023: Impugned award in L.A.C. No. 361/2018 enhancing compensation without impleading KBJNL.
• 28.06.2023: Impugned award in L.A.C. No. 525/2019.
• 07.08.2023: Impugned award in L.A.C. No. 358/2018.
• 23.11.2022: Impugned award in L.A.C. No. 894/2020.
• 19.11.2022: Impugned award in L.A.C. No. 892/2020.
• 27.09.2022: Impugned award in L.A.C. No. 1852/2020.
• 09.12.2022: Impugned award in L.A.C. No. 746/2018.
• 09.02.2023: Impugned award in L.A.C. No. 1204/2020.
• 14.12.2022: Impugned award in L.A.C. No. 129/2019.
• 06.11.2021: Impugned award in L.A.C. No. 979/2018.
• 04.11.2022: Impugned award in L.A.C. No. 2612/2020.
• 28.10.2022: Impugned award in L.A.C. No. 972/2018.
• 20.01.2023: Impugned award in L.A.C. No. 895/2020.
• 19.10.2022: Impugned award in L.A.C. No. 516/2019.
• 15.11.2021: Single Judge of Karnataka HC in W.P. No. 200605/2019 held that beneficiary is entitled to challenge enhancement of compensation.
• 28.03.2025: Division Bench of Karnataka HC in W.A. No. 200188/2021 upheld the Single Judge’s order and laid down binding principles.
• 19.12.2025: Coordinate Bench in W.P. No. 201896/2025 issued a conflicting order with additional conditions.
• 22.04.2026: Present batch of 18 writ petitions decided by Justice S. Vishwajith Shetty.

The Parties' Positions

For the Petitioner (KBJNL)

• Argued that as the entity responsible for paying enhanced compensation and managing the project, it is a "person interested" under Section 3(j) of the Act, 2013.
• Contended that exclusion from proceedings violates principles of natural justice and Article 14 of the Constitution.
• Relied on Executive Engineer, KNNL v. State of Karnataka (Civil Appeal (D) No. 13231/2023, SC dated 12.03.2024) and W.A. No. 200188/2021.
• Stressed that uniformity in compensation awards across similarly situated lands is essential to prevent arbitrariness.

For the Respondents (Landowners)

• Argued that KBJNL is not the beneficiary named in the acquisition notifications and therefore lacks locus standi.
• Claimed that allowing KBJNL to intervene would delay proceedings and create procedural confusion.
• Asserted that KBJNL had not deposited 25% of the enhanced compensation as required under Section 64(2) of the Act.

Relief Sought

The petitioner sought:

• Quashing of all 18 impugned awards passed by the Reference Court between 2018 and 2023.
• Remand of all cases to the Reference Court with mandatory impleading of KBJNL as a respondent.
• Direction to afford KBJNL full opportunity to file objections, cross-examine witnesses, and adduce evidence.
• Uniform application of compensation standards across similarly placed lands.
• Deposit of 25% of enhanced compensation pending disposal.
• Costs against authorities who failed to disclose KBJNL’s interest.

The Legal Issue

The central question was whether a state-established project beneficiary, not named in the acquisition notification but legally responsible for paying enhanced compensation, is a "person interested" under Section 3(j) of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013, and thus entitled to be heard before enhancement of compensation is awarded.

Arguments Presented

For the Appellant/Petitioner

KBJNL relied on the Division Bench judgment in W.A. No. 200188/2021 and the Supreme Court’s direction in Executive Engineer, KNNL v. State of Karnataka (2024). It argued that the Act, 2013, contemplates participation by entities bearing financial liability, not merely those named in notifications. The petitioner emphasized that it had already paid the enhanced compensation in all cases, making it a real party in interest. It further contended that excluding it from proceedings leads to inconsistent awards and violates Article 14.

For the Respondent/State

The Advocate General endorsed the petitioner’s position, acknowledging that the Division Bench’s ruling in W.A. No. 200188/2021 was binding. However, the State noted that the Coordinate Bench’s order in W.P. No. 201896/2025 had introduced additional conditions, which were now under review. The State supported remand but urged adherence to the Division Bench’s framework to ensure uniformity.

The Court's Analysis

The Court examined the nature of KBJNL’s role under the Act, 2013, and the precedents set by its own Division Bench and the Supreme Court. It noted that while KBJNL was not named in the acquisition notifications, it was statutorily entrusted with the completion of the project and the payment of compensation. The Court held that the term "person interested" under Section 3(j) is not confined to the beneficiary named in the notification but extends to any entity with a legal and financial stake in the outcome.

"The petitioner company is not the beneficiary for whose benefit the acquisition notifications were issued. In fact, it is undisputed that the petitioner company was established by the State Government subsequent to the issuance of the acquisition notifications... It is also a fact that the petitioner company has satisfied the claim of the land owners by depositing the award amount/enhanced compensation."

The Court rejected the landowners’ argument that KBJNL was merely a payer and not a stakeholder. It emphasized that the Act, 2013, aims for fairness and uniformity, and allowing only landowners to contest enhancement while excluding the payer creates a one-sided proceeding. The Court cited the Supreme Court’s directive to adopt a holistic, project-wise approach to compensation awards.

The Court also addressed the conflict between its own Division Bench and Coordinate Bench judgments. It held that where a Division Bench has laid down binding principles, a Coordinate Bench cannot introduce materially different conditions without overruling the earlier decision. Since review petitions against the Coordinate Bench’s order were pending, the Court declined to rely on it and adhered strictly to the W.A. No. 200188/2021 precedent.

The Court further observed that the failure to implead KBJNL rendered the proceedings fundamentally flawed, violating the principles of audi alteram partem. It held that the Reference Court’s failure to afford KBJNL an opportunity to be heard was a jurisdictional error warranting quashing.

The Verdict

The writ petitions were allowed. The impugned judgments and awards dated between 2018 and 2023 in all 18 cases were quashed. The matters were remanded to the Reference Court with the following directions:

• KBJNL must be impleaded as a respondent in all 18 cases.
• KBJNL may file statements of objections, cross-examine landowners, and adduce evidence.
• The Reference Court must determine whether enhanced compensation has been paid by KBJNL or the Special Land Acquisition Officer.
• If payment is confirmed, all similar cases must be disposed of uniformly within six months.
• If payment is not confirmed, the Reference Court must decide on merits within one year.
• KBJNL shall deposit 25% of the enhanced compensation awarded in each case within two months of receiving this order.
• The deposit shall be held in an interest-bearing account by the Reference Court.
• The State shall pay costs of Rs. 25,000 to each landowner, recoverable from officials who failed to disclose KBJNL’s interest.
• Non-compliance with the 25% deposit condition shall trigger expedited proceedings by the Reference Court within one month.

What This Means For Similar Cases

Beneficiary Status Is Functional, Not Formal

• Practitioners must now assess whether an entity bears legal or financial liability under the Act, 2013, not merely whether it is named in the notification.
• Entities like irrigation boards, housing authorities, or public utilities entrusted with project completion are entitled to participate in compensation proceedings.
• Failure to implead such entities renders awards voidable under Article 14 and natural justice.

Uniformity in Compensation Is Mandatory

• Reference Courts must compare compensation awarded across similarly situated lands within the same project.
• Disparities without justification will be struck down as arbitrary.
• Project-wide compensation audits are now procedurally required.

Deposit of 25% Is a Condition Precedent to Challenge

• Any beneficiary seeking to challenge enhancement must deposit 25% of the awarded amount.
• Non-compliance bars the beneficiary from participating in remanded proceedings.
• The deposit requirement is not a penalty but a procedural safeguard against frivolous appeals.

Procedural Compliance Is Non-Negotiable

• Courts must record whether all parties with a stake have been impleaded.
• Authorities who omit beneficiaries from proceedings may be held liable for costs.
• This judgment establishes a new standard for procedural fairness in land acquisition litigation across India.