In an unprecedented order, the High Court of Karnataka has ordered a probe by the Central Bureau of Investigation (CBI) into what it termed a “monumental fraud” in acquisition of around 50 acres of prime land near Hebbal flyover in favour of a “non-existent” private entity 25 years ago to establish a tourism project which has not seen the light of the day till now.

The court has set aside the entire acquisition process, which was upheld by the court in earlier rounds of litigations, by stating that the newly revealed “fraud” now in the process of acquisition has now vitiated all earlier judgments that have upheld the acquisition.

Meanwhile, the court imposed an exemplary cost of ₹10 lakh on M/s Lakeview Tourism Corporation (LTC), in whose favour the land was acquired by the Karnataka Industrial Areas Development Board (KIADB) during 2001-2004.

A Division Bench, comprising Justice D.K. Singh and Justice Tara Vitasta Ganju delivered the verdict on April 10 while allowing the appeals filed by land owners, Krishna Reddy and his legal heirs.

The Bench directed the CBI to register a criminal case for investigation of the offences bringing to book the persons of the government machinery as well as the private individuals who were involved in this “statutory and constitutional fraud”.

Background of case

The judgment reveals a startling chronology of irregularities that the Bench termed as “monumental fraud” on the statute. The project proposal and the application for land acquisition was submitted on June 23, 2000, by one P. Satish Pai on behalf of an entity that did not legally exist then but the application was drafted in a manner that gives an impression that the entity was in existence, the Bench pointed out.

The proposal of 2000 stated that “Unicare Tourist Centre”, to be set up at Hebbal and Hebbal Amanikere villages, would comprise a resort, a five-star hotel, an amusement park, water park, convention centre, modern shopping complex and service apartments with transit flat facilities, proposed by LTCL.

According to corporate records examined by the Bench, LTC was incorporated only on January 4, 2011 —more than a decade after the application was filed and seven years after the final acquisition notification was issued.

Collusion

“The acceptance of such an application which was totally incomplete and bereft of details was not only entertained, but the State High Level Committee (SHLC), in its second meeting held on June 28, 2000, considered the proposal,” the Bench observed.

It further noted that “high speed and alacrity” with which the government moved to exercise its eminent domain power to acquire land for a “non-existent” entity shows collusion of government authorities and officials with the private entity and its promoters.

The Bench further found that though the project report named leading businessmen, including Ramdas Pai and Dubai-based Syed Mohammed Salahuddin, as its promoters, they were nowhere associated with the entity that eventually got incorporated in 2011.

Even though investment of ₹250 crore and creation of 2,000 jobs was promised in the project proposal, the Bench, from the financial statements of LTC, noted that for the year 2022-23 the firm had a net worth of minus ₹8.6 lakh and zero operational income, and its Director’s report stated that the firm is “in the process of identifying viable business opportunities and start its principal business operations”.

“This was a fraud on statute to deprive the landowners of their valuable property for pittance on behest of a non-existent entity,” the Bench said, noticing that the government had fixed compensation at ₹15 lakh per acre.

‘Integrated township’

Strangely, the Bench, from the records found that the SHLC on March 7, 2023 permitted the LTC to develop an “integrated township” with development of commercial office spaces, IT park, R&D centre, malls, residential multi-storeyed apartment complex, hospitals, educational institutions, hotels, other service apartments, residential apartments, etc.