The Supreme Court annulled a decades-old acquisition of 59 acres in Bengaluru and ordered possession restored. The ruling reinforces that compensation cannot cure fraud, absent legal authority or lack of public purpose.Image used for representational purposes onlyNewdelhi,Oct 26, 2026 18:36 ISTThe Supreme Court has set aside land acquisition proceedings initiated more than three decades ago for about 59 acres in Bengaluru after finding fraud, serious procedural irregularities and the absence of a duly approved housing scheme, news agency Press Trust of India reported.A bench of Justices J B Pardiwala and K Vinod Chandran allowed the appeals, overturned a Karnataka High Court division bench ruling and restored an earlier order passed by a single judge.

It also directed that physical possession of the acquired land be returned to the original landowners, regardless of whether they had challenged the acquisition.The verdict came on an appeal filed by N Arasappa, who challenged the acquisition on grounds including lack of legal authority, absence of public purpose and fraud.Writing the judgment, Justice Chandran cited the Supreme Court of Pennsylvania to underline that no government authority has unlimited power and that its decisions are subject to judicial review. “The power of eminent domain, next to that of conscription of manpower for war, is the most awesome grant of power under the law of the land... what the Supreme Court of Pennsylvania observed applies equally in our shores too. Condemnation of privately owned land for public purpose can only be with authority of law and with just compensation being paid,” the verdict said.The court said the legal power to acquire land could be used only for a public purpose.

Payment of fair compensation was an accompanying right but could not, by itself, justify an acquisition. “However just the compensation be, if the authority of law is lacking or the public purpose is absent, there can be no eminent domain exercised. The appellants herein allege lack of authority in law; complete absence of public purpose and fraud having vitiated the instant acquisition,” the verdict said.Housing schemes sponsored by cooperative societies were recognised as a public purpose under the Land Acquisition Act, 1894, after the Land Acquisition (Amendment) Act, 1984, came into force on September 24, 1984.

However, a valid acquisition required a properly prepared housing scheme, including a layout plan or blueprint approved by the competent government authority.According to PTI, the dispute dates to September 1984, when the Peenya-based House Building Cooperative Society entered into a private agreement with M/s Bhagya Enterprises to act as a middleman for acquiring private land in Nelakadiranahalli village. State notifications were issued under the Land Acquisition Act between 1988 and 1989 to acquire about 59 acres.The Supreme Court found that the agreement with the third party, signed even before the relevant amendment came into force, exposed the fraudulent nature of the arrangement.

The agreement envisaged assistance in acquiring land under the Act for implementing a housing scheme.The court said the acquisition authorities proceeded without a properly formulated and approved housing scheme. The absence of a final layout plan and blueprint, along with inadequate scrutiny by the relevant committees and government authorities, invalidated the proceedings.The verdict also found serious deficiencies in the handling of compensation.

Government file notings showed that the society had not deposited the amounts required to meet the compensation awards for payment to landowners, PTI reported.The landowners challenged the acquisition in 2007, citing widespread irregularities. A single judge of the Karnataka High Court quashed the notifications, but a division bench later reversed that ruling, mainly on technical grounds relating to the delay in approaching the court and earlier rulings.The Supreme Court held that the division bench had erred by relying on grounds such as the principle that a matter already decided cannot be reopened and the delay in filing the case, without adequately examining the allegations of fraud and misuse of power.It said such procedural objections could not sustain the acquisition when defects, fraud and undue influence had been established, particularly in view of earlier Supreme Court decisions involving similar cooperative societies and comparable allegations.The court also held that the arrangement to pay commission to private entities to secure government notifications was illegal, against public policy and a misuse of state machinery.While restoring the single judge's order, the Supreme Court removed the direction to initiate contempt proceedings against government officers because of the time that had passed.

It increased the costs imposed by the single judge to Rs 50,000 for each petitioner, or for each group of legal representatives of an original petitioner who were appellants in the civil appeals.The bench directed landowners receiving their property back to refund any compensation received from the state government under the law, without interest. The ruling therefore nullified the acquisition, restored the single judge's order and required the land to be returned to its original owners.- Ends