The Supreme Court has quashed a 1988-89 land acquisition in Bengaluru made for the Karnataka Gruha Nirmana Sahakara Sangha (Peenya), a housing cooperative, holding that fraud overrides the pleas of delay and res judicata. It has ordered the land to be returned to the owners, even those who never challenged the acquisition.
The landowners from Nelakadiranahalli village, whose lands were notified under Section 4(1) on 22.11.1988 and Section 6 on 04.12.1989 for 59 acres 6 guntas, filed their writ petitions only in 2007. A Single Judge quashed the acquisition for fraud, but a Division Bench reversed this on delay and res judicata, relying on its earlier Karithimmaiah ruling that had upheld the same acquisition. Justices J.B. Pardiwala and K. Vinod Chandran set aside the Division Bench’s order. They held that Karithimmaiah was not binding because it did not consider the Society’s 1984 agreement with a middleman, Bhagya Enterprises, to get the land acquired through the government for a commission, which was signed before housing schemes by cooperatives became a “public purpose” under Section 3(f)(vi). The dismissal of the Special Leave Petition in that case did not have the force of Article 141, and a recent Supreme Court ruling, Bangalore City Cooperative Housing Society, had already rejected a similar presumption of approval. The court also found that no housing scheme with a layout plan was placed before the Government, that the committees dealt with the proposal in a “lackadaisical” manner, that the Society’s membership registers were missing, that its office-bearers told the G.V.K. Rao Committee that bribes had been paid to officials, and that the Society had paid the compensation privately instead of depositing it. A Section 16(2) notification is only a rebuttable presumption of possession, and there were no mahazars. Relying on S.P. Chengalvaraya Naidu and A.V. Papayya Sastry, the court said fraud vitiates everything and defeats finality. It restored the Single Judge’s order, enhanced costs to Rs 50,000 for each petitioner and deleted the direction for contempt action against officials owing to the passage of time. Following H.M.T. House Building (Syed Khader), possession must go back to the landowners, who must refund any government compensation without interest, and the Society has no claim. Any land not taken back will be auctioned to fund compensation for victims.
Citation: N. Arasappa v. State of Karnataka & Ors., Civil Appeal Nos. 13744-13747 of 2015 (with Civil Appeal Nos. 13749-13752, 13759-13762, 13754-13757 and 13753 of 2015), Supreme Court (Justices J.B. Pardiwala and K. Vinod Chandran), decided on 26.10.2026 | 2026 INSC 1151
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