Bengaluru-Mysuru Infrastructure Corridor might be biggest scam, farmers robbed of land: Karnataka HC

The Karnataka High Court on Wednesday said that the Bengaluru-Mysuru Infrastructure Corridor Project (BMICP), implemented by Nandi Infrastructure Corridor Enterprise (NICE), may be “one of the biggest scams” in the State [Nandi Infrastructure Corridor Enterprise Limited v. AMR Housing Development Corporation].

A Bench of Justices DK Singh and TM Nadaf made the observation while dismissing a batch of appeals filed by NICE and the Karnataka Industrial Areas Development Board (KIADB).

The appeals challenged a single-bench judgment quashing the acquisition of farmers' land due to non-determination of compensation over two decades ago.

"It appears that this BMICP may be one of the biggest scam in the State of Karnataka and it demonstrates how a State, which is the trustee of the natural resources on behalf of the citizens, can allow the private interest to flourish in utter violation of the constitutional mandate," the Court said.

It added there "is nothing nice about the NICE project" except that the farmers had been robbed of their land and livelihood of generations without payment of compensation as mandated under Article 300A of the Constitution of India.

"The NICE project has done nothing but to benefit its proponents in an astronomical way at the expense of the landowners and the public interest in general," the Court observed.

BMICP had been conceived as an integrated infrastructure project under an agreement executed between the Karnataka government and NICE in April 1997. It contemplated a 111-kilometre expressway, a 41-kilometre peripheral road, a 9.8-kilometre link road and five self-sustaining townships.

Around 20,193 acres were notified for acquisition under the Karnataka Industrial Areas Development Act, 1966 between 1998 and 2009. Final declarations were issued between 2003 and 2009. However, no awards determining compensation were passed in respect of the landowners even after 23 years.

A single judge last year quashed the acquisition proceedings only insofar as they concerned the petitioners’ lands. The Court found that no compensation awards had been passed despite delays extending beyond two decades and held that the proceedings could not remain pending indefinitely.

It clarified that the landowners were not reopening the validity of the BMICP or the acquisition notifications previously upheld by the Supreme Court. Their challenge arose from the authorities’ subsequent failure to determine compensation, which gave them a fresh cause of action.

Today, the Division Bench rejected the argument that once the lands vested in the State under Section 28 of the KIAD Act, the acquisition could not be set aside. It held that statutory vesting did not relieve the State of its obligation to determine and pay compensation within a reasonable period.

“Vesting answers the question of title. It does not answer the question whether the State can indefinitely postpone payment of compensation after depriving the citizens of their property,” the Court said.

The Bench acknowledged that the KIAD Act did not prescribe a specific period for passing an award. However, it said that the absence of a statutory time limit could not be treated as an unrestricted licence to postpone compensation indefinitely.

The continued failure to determine compensation prevented the landowners from alienating, developing, cultivating, mortgaging or otherwise dealing with their lands, the Court observed. It added that allowing such a situation to continue would reduce the constitutional right to property under Article 300A to a mere formality.

The Court also rejected NICE’s argument that earlier Supreme Court judgments upholding the BMICP and its underlying public purpose barred the present proceedings.

It held that the present cases arose from subsequent events, including the failure to pass awards and alleged deviations in implementing the project. These constituted fresh causes of action that were not considered in the earlier litigation, the Court said.

The Bench further examined material concerning the implementation of the project, including an Institute for Social and Economic Change report, sale deeds, joint development agreements and NICE’s financial statements. It noted that according to an affidavit filed by the State on July 28, NICE had constructed only 5 kilometres of the proposed 111-kilometre expressway in the past 25 to 26 years.

The Court also referred to a State affidavit filed before the Supreme Court stating that 554 acres of excess land had been handed over to NICE.

The Court also found that the land acquired for the project was even subjected to commercial arrangements with private developers.

NICE’s annual reports also disclosed income from the sale of developed land, advances received under joint development agreements and the capitalisation of completed road portions as company assets.

Considering these facts, the Court said that the land acquired for a public infrastructure project had become intertwined with substantial commercial transactions.

“In our view, it is a fraud on the statute and Constitution. The State authorities are accomplice in this fraud and gross breaches and violations of the FWA,” the Bench said.

The Court observed that this was a fit case for an independent assessment, investigation and forensic audit of NICE’s accounts. However, it stopped short of issuing such a direction, expressing doubts about whether the State would undertake the exercise.

Accordingly, the Court dismissed the appeals filed by NICE and KIADB and affirmed the single judge’s decision quashing the acquisition proceedings concerning the landowners before it.

Senior Advocates DLN Rao, Dhyan Chinnappa, Vikram Huilgol and Gopal Sankaranarayanan appeared for NICE.

Senior Advocate Ravivarma Kumar, Additional Advocate General SA Ahmed and Special Counsel Siddharth Babu Rao represented the State.

Advocate General K Shashi Kiran Shetty appeared for KIADB.

Senior Advocates KN Phanindra, S Ranga and HN Shashidhara represented the landowners.

[Read Judgment]