Karnataka: HC upholds judgment against NICE, calls infra project fit case for independent probe

Bengaluru: The Karnataka High Court on Wednesday dismissed appeals filed by Nandi Infrastructure Corridor Enterprises (NICE) and the Karnataka Industrial Areas Development Board (KIADB), upholding a single judge's July 4, 2025, judgment in a long-running dispute over the Bengaluru-Mysuru Infrastructure Corridor Project (BMICP).

A division bench of Justices DK Singh and TM Nadaf said the material placed before the court indicated that land acquired for a public infrastructure project had been commercially exploited in violation of the Framework Agreement (FWA), while thousands of landowners remained without compensation for decades.

The bench held that the present proceedings did not reopen the legality of the land acquisition, which the Supreme Court had already upheld. Instead, they arose from the authorities' prolonged failure to determine compensation and from allegations that the project had deviated from the public purpose for which land was acquired.


STATE IS AN ACCOMPLICE

“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. This is a fit case where an independent assessment and investigation be carried out by the special team of experts by conducting forensic audit of its accounts and for committing fraud and other criminal acts of commissions and omissions. However, we have doubt that such an exercise will ever be taken up as the State itself is accomplice in allowing the project proponents to earn huge profits illegally by diverting the lands against the FWA, capitalizing the assets, drying up the lakes, collecting huge toll in violation of the FWA and sitting over the huge land bank without payment of compensation etc.,” the division bench noted in strong words.

Relying on the Supreme Court's 2021 judgment in the BMICP case, the High Court said the Framework Agreement required the development of five self-sustained townships and that any deviation needed prior approval from the state government. It observed that land-use classifications under the master plan could not override the contractual obligations under the Framework Agreement.

The bench referred to documents, including annual reports, sale deeds and joint development agreements, and said they indicated that land acquired through compulsory acquisition had later become the subject of commercial transactions with private developers. It noted that NICE had generated revenue through land sales and joint development agreements alongside toll collections over several years.

The court also cited an Institute for Social and Economic Change (ISEC) report that questioned changes in land allocation under the project and referred to a state affidavit before the Supreme Court stating that 554 acres of excess land had been handed over to NICE.

The judges said the material prima facie suggested that the project had strayed from its original public purpose, and that acquired land had been used for commercial development.

The bench held that the landowners' challenge stemmed from a fresh cause of action arising from the failure to pass compensation awards over more than two decades.

The court said only 5 km of the proposed 111-km expressway had been completed over the past 25-26 years, while the project proponents had benefited from a land bank of more than 20,000 acres. It questioned why the state had not reviewed or cancelled the project and said the material warranted an independent forensic audit and investigation into the project's implementation.

The division bench dismissed the appeals filed by NICE and KIADB and affirmed the single judge's order. Pending interlocutory applications were also disposed of.