The Karnataka High Court on Wednesday described the Bengaluru-Mysuru Infrastructure Corridor Project (BMICP) as “one of the biggest scams” in Karnataka, while dismissing a batch of appeals filed by Nandi Infrastructure Corridor Enterprise (NICE) and the Karnataka Industrial Areas Development Board (KIADB).
A Division Bench of Justices DK Singh and TM Nadaf upheld a single-judge ruling that quashed the acquisition of certain farmers’ lands after authorities failed to determine compensation for more than two decades.
“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 Bench observed.
The court further remarked that there was “nothing nice about the NICE project”, saying farmers had been deprived of their land and generations-old livelihoods without receiving compensation guaranteed under Article 300A of the Constitution.
“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 Bench added.
What the BMICP project proposed
The BMICP was conceived under an agreement signed between the Karnataka government and NICE in April 1997. The project proposed:
• A 111-km expressway
• A 41-km peripheral road
• A 9.8-km link road
• Five self-sustaining townships
Between 1998 and 2009, around 20,193 acres were notified for acquisition under the Karnataka Industrial Areas Development Act, 1966, while final declarations were issued between 2003 and 2009.
However, compensation awards for several landowners were never passed, even after 23 years.
Why the landowners approached the court
A single judge of the High Court had last year quashed the acquisition proceedings only in respect of the petitioners’ lands, holding that authorities could not keep acquisition proceedings pending indefinitely without determining compensation.
The court had clarified that the petitioners were not challenging the validity of the BMICP or the acquisition notifications, which had already been upheld by the Supreme Court. Instead, their grievance arose from the authorities’ subsequent failure to determine compensation, giving them a fresh cause of action.
Division Bench rejects NICE and KIADB appeals
Rejecting the appeals, the Division Bench ruled that once land vests in the State under Section 28 of the KIAD Act, it does not free the government from 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.
Although the KIAD Act does not prescribe a fixed time limit for passing compensation awards, the Bench said this could not be interpreted as permission to delay compensation indefinitely.
The judges observed that because compensation had not been determined, landowners were prevented from selling, cultivating, developing, mortgaging or otherwise dealing with their land. Such prolonged inaction, the court said, would reduce the constitutional right to property under Article 300A to a mere formality.
Fresh cause of action despite Supreme Court rulings
The Bench also rejected NICE’s argument that earlier Supreme Court judgments upholding the BMICP and its public purpose barred the present proceedings.
It held that the current cases were based on subsequent developments, including the prolonged failure to pass compensation awards and alleged deviations in the project’s implementation. These issues constituted fresh causes of action that had not been examined in earlier litigation.
Court examines project implementation
While examining the implementation of the project, the Bench considered material including an Institute for Social and Economic Change report, sale deeds, joint development agreements and NICE’s financial statements.
The court noted that, according to an affidavit filed by the State on July 28, NICE had completed only 5 kilometres of the proposed 111-kilometre expressway over the past 25 to 26 years.
It 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 Bench further found that land acquired for the public infrastructure project had subsequently been used in commercial arrangements with private developers.
According to NICE’s annual reports, the company had disclosed income from the sale of developed land, advances received through joint development agreements and the capitalisation of completed road portions as company assets.
Court flags possible fraud, stops short of ordering probe
Based on these findings, the court said 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 observed.
The judges said the matter warranted an independent assessment, investigation and forensic audit of NICE’s accounts, but stopped short of directing such an exercise, expressing doubts over whether the State would undertake it.
Final verdict
The High Court dismissed the appeals filed by NICE and KIADB, affirming the single judge’s decision to quash the acquisition proceedings concerning the petitioners’ lands.
Senior Advocates DLN Rao, Dhyan Chinnappa, Vikram Huilgol and Gopal Sankaranarayanan appeared for NICE, while Senior Advocate Ravivarma Kumar, Additional Advocate General SA Ahmed and Special Counsel Siddharth Babu Rao represented the State.
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