Holding

The Supreme Court held that the earlier High Court judgment in Somashekar Reddy is binding res judicata, the FWA was not vitiated by fraud, the land acquisition was for a public purpose, and the High Court’s direction to implement the project was within its writ jurisdiction.

Summary

The State of Karnataka entered into a Memorandum of Understanding and a Framework Agreement (FWA) with a private consortium to develop the Bangalore‑Mysore Infrastructure Corridor, requiring acquisition of about 20,193 acres of land. Several public‑interest writ petitions challenged the FWA on grounds of fraud, misrepresentation and excess land acquisition, but the Karnataka High Court dismissed them, invoking res judicata based on an earlier decision in H.T. Somashekar Reddy v. Government of Karnataka. The appellants argued that the earlier judgment should not bar fresh challenges, especially after alleged fraud was discovered, and contended that the land acquisition violated Article 300A and the Karnataka Industrial Areas Development Act. The Supreme Court held that the earlier High Court judgment was a binding decision in rem, that the allegations of fraud were unfounded, and that the land was acquired for a genuine public purpose, so the issues were barred by res judicata. Consequently, the Court dismissed all appeals, upheld the High Court’s order to implement the project, and imposed costs on the State and its counsel.

Issues considered

The validity of the Framework Agreement and whether it was vitiated by fraud or misrepresentation.
Whether the acquisition of land beyond what was required for the expressway constituted a violation of Article 300A and the Karnataka Industrial Areas Development Act.
Whether the doctrine of res judicata applies to the present public‑interest litigations in view of the earlier Somashekar Reddy decision.
Whether the High Court had jurisdiction to direct specific performance of the contractual FWA.
Whether the notices issued under Section 28(1) of the KIAD Act were served and were sufficiently specific.

Legislation cited

Code of Civil Procedure, 1908s. Explanation III, s. Explanation IV, s. Explanation VI, s. Section 11
Code of Criminal Procedure, 1973s. Section 195, s. Section 340
Constitution of Indias. Article 300A
Karnataka Industrial Areas Development Act, 1966s. Section 2(7-a), s. Section 28(1)

Subjects

public interest litigationres judicataland acquisitionfraudmisrepresentationArticle 300AKarnataka Industrial Areas Development Actinfrastructure corridoreminent domaincontractual obligationsstate policy

Judgment

A STATE OF KARNATAKA AND ANR. •
v.
ALL INDIA MANUFACTURERS ORGANIZATION AND ORS.

APRIL 20, 2006
B [RUMA PAL, B.N. SRIKRISHNA AND DALVEERBHANDARI,JJ.]

Constitution of India-Article 300A-Code of Civil Procedure, 1908-
Seclion 11-Karanataka Industrial Areas Development Act, 1966---Sections
C 2(7-a) and 28(/)-Memorandum of Understanding entered into by State
wi1h a Private Consortium for an Infrastructure Corridor Project-Nodal
Company set up by the Consortium to implement the Project-Framework
Agreement entered into under which !he Stale has to make available agreed
acres of land lo the nodal company for the Project-State made requisite
amendments in State laws for acquiring private land-Public /meres!
D litigation Petition filed before High Court contending that the Agreement
was viliated by rnala tides and opposed 10 public policyr--High Court dismissed
the Writ Petirion--Notifications issued by the State for acquisition of land--
landowners filed Writ Petitions before High Court challenging the
notifications contending rhat excess land are acquired than required for the
E Project--Single Judge partly allowed the Writ Petitions but the judgment was
ser aside in Writ Appeals---Allegations came to be made against the nodal
company for committing fraud by diverting the acquired land to its real
estate business--State stalled the land acquisition proceedings and set up
an Enquiry Commirtee to look into the allegations-Public Interest litigations
peritions filed before High Court on the ground !hat !he Agreement was
F viliated by fraud and/or misrepresentation and that excess land are acquired
for the Project-High Court dismissed the Writ Petitions on the ground of res
judicata and on facts--Correcrness of-Held, Writ petitions were barred by
res judicata---On jilcls, the plea of lhe Stare offraud and misrepresentation
cvmmiued by the nodal company was lacking any bona tides-Land was
G bemg acquired for a public purpose and hence there is no contravention of
Article 300A and the Act.

State conceived Bangalore-Mysore Infrastructure Corridor Project with
twin objectives-firstly, to provide for an express highway linking Bangalore
with Mysore and secondly for developing infrastructure along the corridor
H 86
STATE OF KARNA I AKA v. ALL!NDIA MANUFACTURERS ORGN 87

)1 and in and around Bangalore city. The State entered into a Memorandum of A
Understanding (MOU) with a Private Consortium of three members to take
up the project on a Build-Own-Operate-Transfer (BOOT) basis. The State
agreed to extend full support for the development of the Project provided
commercial viability, competitiveness and feasibility of the project was
established to the satisfaction of the State. A High Level Committee was formed B
by the State to implement the Project. The Consortium presented a Project
Report to the Committee, which submitted its report to the State. The State
accepted the Committee report and the Project Report of the Consortium and
issued a Government Order.

The members of the Consortium entered into a 'Consent and C
Acknowledge Agreement' (CAA) and assigned their respective rights with
regard to the Project to a nodal company, which was formed to implement the
Project. The nodal company and the State entered into a Framework
Agreement (FWA) under which the State has to make available approximately
20, 193 acres of land to the Project. The State made amendments in the
Karnataka Industrial Areas Development Act, 1966 and the Board under the D
Act entered into an agreement with the nodal company for acquisition of
i
' private land.

A Writ Petition was filed before High Court as a Public Interest
Litigation against the State and the nodal company for quashing the FWA on
the ground that it was vitiated by malafides and was opposed to public policy. E
The High Court, after considering all the materials on record, dismissed the
Writ Petition. The High Court held that the required land was necessary not
only for the construction of an expressway but also for other connected
developmental activities [H. T. Somashelwr Reddy v. Government ofKarnatalw
and Anr., (1999) I KLD 500 (DB)). p
The State issued Notifications for acquisition of land required for the
Project. Many landowners filed Writ Petitions against the State and the nodal
company before the High Court challenging the notifications on the ground
that excess land were being acquired than required for the Project. Single
Judge of the High Court partially allowed the petitions by holding that the G
acquisition of 60% of the land for the formation of roads and infrastructure
development was valid and that the remaining 40% of the land meant for
development of townships and convention centres were invalid. The
landworkers, the State, the Board and the nodal company filed Writ Appeals.
When the writ appeals came up for hearing before the High Court, the State H
88 SUPREME COURT REPORTS (2006] SUPP. I S.C.R.

A and the Board withdrew their writ appeals, reversed their stance before the
High Court and contended that excess lands were being acquired than required
for the Project. The High Court allowed the Writ appeal of the nodal company
and dismissed the writ appeals by the landlord.

Serious allegations were made against the nodal company for diverting
B the land acquired for its real estate business. The State stalled the land
acquisition activity and set up an Expert Committee to look into the allegations.
Writ Petitions by way of Public Interest Litigations were filed before High
Court for restraining the State from continuing with the Project on the
ground that the FW A was vitiated by fraud and/or misrepresentation. Certain
C Writ Petitions were also filed seeking a mandamus against the State to
implement the Project. The High Court, by a common judgment, dismissed
the Writ Petitions of the petitioners opposing the Project on the ground of
res judicata and directed the State and all its instrumentalities to execute the
Project and implement the FWA in letter and spirit.

D In appeal to this Court, the State contended that the dispute between the
State and the nodal company is not barred by the principle of res judicata,
constructive res judicata or estoppel arising from the judgment in Somashekar
Reddy; that the principle of res judicata cannot be inflexibly applied to Public
Interest Litigations especially when a re-examination of decided issues might
be in public interest; that fraud and misrepresentation had vitiated the entire
E transaction and hence there would no res judicata since the fraud was
discovered subsequent to the judgment in Somashekar Reddy; that the report
of the Expert Committee, which reviewed the Project, clearly demonstrated
that there was excess land, which in terms showed that the FWA was not a
bona fide agreement and therefore was against public interest; and that the
F directions by the High Court to execute the Project and implement the FW A
was wholly beyond the writ jurisdiction as it would amount to granting a decree
for specific performance in writ jurisdiction. The State Industrial Development
Board coptended that Article 300A of the Constitution of India and the
Karnataka Industrial Development Act, 1966 would be violated ifthe excess
land is acquired than required for the Project.
G
The land owners, in their appeals, contended that no notice was served
on them by the Stat;! under section 28(1) of the Act; that the notice of
acquisition was vague which prejudiced them from making any effective
objection to the land acquisition; and that the acquisition of the lands far away
ll from the actual alignment of the road and periphery would not amount to a
STA TE OF KARNA TAKA v. ALLINDIA MANUFACTURERS ORGN. 89
Cj public purpose and would be covered by the provisions of the Act.. A
Dismissing the appeals, the Court

HELD: 1.1. The flip-flop on the part of the State occurred only l)eca.use
of.politicians, that the malafides, if any, appears to be on the par( oftheState
Government. From the facts on record, the plea was lacking any bona fides °B
and that there was neither fraud nor misrepresentation on t~e part of the
nodal company or any member of the Consortium. The plea of fraud and
misrepresentation was clearly an afterthought and it was conveniently raised
b.y the State Government through the writ petitioners, who were rightly
described by the High Court as the State Government's 'mouth piece'. The
contention of the State and the Writ Petitioners that the FWA was vitiated as
c
a result of fraud and/or misrepresentation was to get over the bar of res
judicata arising from the judgment in Somashekar Reddy.
!102-F; 103-D, F, H; 104-AI

1.2. When some interested parties raised the i.ssue in public interest D
that the FW A was a fraud and was nothing but a charade for a lucrative real
estate business on the part of the nodal company, the State defended the Project
against all the allegations. The State woke up after seven long years and even
more strangely after a change in the State's political leadership to the fact
that there was fraud/misrepresentation by the nodal company or anyone else.
The constitution and functioning of the Expert Committee, which was formed E
to go into the allegations of excess land acquired for the implementation of
the Project, illustrates the ma/a jides with which the State Government has
approached the Project. The utter irresponsibility with which the theory of
fraud/misrepresentation was put forward is thoroughly exposed by the High
Court. (104-C, F, G; 105-BI F
H. T. Somashekar Reddy v. Government ofKarnataka and Anr., (1999) 1
KLD 500 (DB) affirmed.

2.1. In a Public Interest Litigation, the petitioner is not agitating his
individual rights but represents the public at large. As long as the litigation G
is bona fide, a judgment in a previous Public Interest Litigation would be a
judgment in rem. It binds the public at large and bars any member of the public
from coming forward before the Court and raising any connected issue or an
issue which had been raised/should have been raised on an earlier occasion
.::_• by way of a Public Interest Litigation. The petitioner in Somashekar Reddy
H
90 SUPREME COURT REPORTS [2006] SllPP. 1 S.C.R.

A case was acting bona fide, Thus, in principle, the Somashekar Reddy case,
as a Public Interest Litigation, could bar the present litigation. (106-C, DI

2.2. The prayers in the present writ petitions and in Somashekar Reddy 's
petition are substantially the same. The cause of action in both the writ
petitions is the FWA which includes the provisions for acquiring vast acres
B of land for the Project. In both the writ petitions, the averments was that excess
land than required for the implementation of the Project was being acquired
by the State Government at the behest of the nodal company and that the Project
was nothing but a camouflage to carry out a real estate business by the nodal
company. The issue of excess land was specifically raised in the Writ Petition
C by Somashekar Reddy and was also forcefully denied by the State. In fact, in
the decision in Somashekar Reddy case the High Court accorded its
imprimatur to the land requirements under the FWA. In these circumstances,
Explanation Ill to Section 11 CPC squarely applies. It is clear that the issue
of excess land under the FWA was directly and substantially in issue in
Somashekar Reddy case and hence, the findings recorded therein, having
D reached finality, cannot be reopened in this case. ( 108-F, G; 110-E, F, GI

2.3. Explanation IV to Section 11 CPC squarely applies since in
Somashekar Reddy case, all possible challenges to the validity of the FW A
I.ad been exhausted, including the issue of excess land. Merely by the claim
E of the writ petitioners in the present writ petitions that excess land was not
identified at the stage of the litigation in Somashekar Reddy case and that
the Project should be reviewed, the issue does not cease to be res judicata or
covered by principle analogous thereto. If the issues that had been raised/
ought to have been raised in Somashekar Reddy case are re-examined, it would
simply be an abuse of the process of the court. Hence, the cause of action, the
F issues raised, the prayers made, the relief sought in Somashekar Reddy case
and the findings in it and the claims and arguments in the present petitions
were substantially the same. Therefore, the judgment in Somashekar Reddy
case operate as res judicata for the questions raised in the present petitions.
(111-C, D, E(

G Forward Construction Co. and Ors. v. Prabhat Manda/ and Ors., (1986(
I SCC 100; State of UP. v. Nawab Hussain, (1977( 2 SCC 806 and Direct
Recruit, Class fl Engineering Officers' Association v. State of Maharashtra,
(1990( 2 sec 715, referred to.

H Kalipada Dev. Dwijapada Das, AIR (1930) PC 22, referred to.
••
STATE OF KARNA TAKA v. ALLINDIA MANUFACTURERS ORGN. 91

... Henderson v. Henderson, (1843-60) All ER Rep. 378 and Greenhalgh v.
Mallard, (1947) 2 ALL 255, referred to.
A

P. Ramanatha Aiyer, Advanced Law Lexicon Vol. 3rd Edn. 200; and
Mui/a, Code of Civil Procedure Vol. I 15th Edn. 1995, referred to.

3. The land was not being acquired for a purpose other than a public B
purpose. There is no contravention of Article 300A of the Constitution of India.
The State and its instrumentalities including the Board were enjoined by the
terms and conditions of the FWA, to make best efforts to acquire the land
required for the Project. Considering the facts as a whole, since the Project
had been implemented and the nodal company had invested a large amount of
money and work had been carried out for more than seven years, the State c
Government could not be permitted to change its stand and to contend that
the land allotted for the Project was in excess of what was required.
[114-A-DJ
4. The High Court merely directed that the Project and the FW A, as
conceived originally and upheld by the High Court in Somashekar Reddy D
should be implemented in letter and spirit. In other words, the High Court
said that there is no scope for raising frivolous and ma/a fide objections for
ulterior purposes. This, the High Court was fully entitled to do. When the
State's acts of omission or commission are tainted with extreme arbitrariness
and with ma/afldes, it is certainly subject to interference by the Constitutional
Courts in this country. No exception could be taken to relief granted in the
E
judgment of the High Court. All that the High Court has done is to reaffirm
and require the State Government and its instrumentalities, as "State" under
the Constitution, to act without arbitrariness and ma/a fides, especially in
the matter of land acquisition. In future also, while the State Government and
its instrumentalities are entitled to exercise their contractual rights under F
the FWA, they must do so fairly, reasonably and without malafldes; in the
event that they do not do so, the Court will be entitled to interfere with the
same. [115-8-D; 116-E; 117-C, D[
Gujarat State Financial Corporation v. Mis. Lotus Hotels Pvt. Ltd.,
[1983) 3 SCC 379; Kumari Shrilekha Vidhurthi and Ors. v. State of U.P. and G
Ors., [1991) t SCC 212; Mis Dwarkadas Marfatia and Sons v. Board of
Trustees of the Port ofBombay, AIR (1989) SC 1642 and Biman Krishna Bose
v. United India Insurance Co. Ltd., and Anr., [2001[ 6 SCC 477, referred to.
5. The Project is a mega project which is in the larger public interest
:_ of the State of Karnataka and merely because there was a change in the
- H
92 SUPREME COURT REPORTS 12006] SUPP. I S.C.R.

A Government, there was no necessity for reviewing all decisions taken by the C'll.
previous Government, which is what appears to have happened. Such an action
cannot be taken every time there is a change ofGovernment. [118-Cf

State of U.P. and Anr. v. Johri Mal. 120041 4 SCC 714 and State of
Haryana v. State of Punjab and Anr., 120021 2 SCC 507, relied on.
B 6.1. The argument that no notice was served on the landowners under
Section Z8(1) of the Act is factually incorrect. The notification states that
the lands were being acquired for the purpose of"industrial development"
i.e. establishing and developing industrial areas by the State Board. The
purpose indicated in the notifications is sufficiently precise and is not affected
c by the vice of vagueness as alleged. No prejudice is caused to them as a result
of the wordings of the notification of acquisition. On facts, there is no
substances in the contention of the appellants that the notification was vague
and hence the State did not comply with the principle of natural justice.
(120-C, H; 121-A-EI

D Ajlatoon v. Lt. Uovernur of Delhi. 119751 4 SCC 285, referred to.

6.2. The various changes brought about to the Act also reflect the
intention of the State to provide for land acquisition for the Project. The
expressions "Industrial area" and "Industrial Infrastructural facilities" as
defined under the Act definitely include within their ambit, establishment of
E facilities that contribute to the development of industries. Further, Section
2(7-a) was added to be Act to define "Industrial Infrastructural facilities" in
a manner broad enough to take into its sweep the land acquisition for the
Project. The Project was an integrated project intended for public purpose
and irrespective of where the land was situated so long as it arose from the
terms of the FWA, there was no question of characterising it as unconnected
F with a public purpose. The acquisition of the entire land for the Project was
carried out in consonance with the provisions of the Act for a public project
of great importance for the development of the State. A Project of this
magnitude and urgency cannot be held up by individuals raising frivolous and
untenable objections thereto. The powers under the Act represent the powers
G of eminent domain vested in the State, which may need to be exerci~ed even to
the detriment of individuals' property rights so long as it achieves a larger
public purpose.1122-C, D, E; 123-C, D, E(

CIVIL APPELLATE JURISDICTION : Civil Appeal Nos. 3492-3494 of
-
H
2005.

From Final Judgment/Order dated 3.5.2005 of the High Court of Kamataka •
STATE; OF KARNATAKA i:. ALL INDIA MANUFACTURERS ORGN. [SRIKRISHNA, J ] 93

~ in W.P. Nos. 45334, 45386, 48981/2004.
WITH
· CA Nos: 349712005, 3S42c3844/2005, 3848-388412005, 3889-412712005, 4128-
4366/2005, 4575.:4576/2005, 5399~5401/2005, 5402/2005, 5746~5747/2005; 5759/
2005, 5797,5799/2005, 6098/2005, 6099/2005, 7024-7025/2005, 7626-7028/2005,
1029-703512oos; 7036-7038/2005, 7039-704012005, 5092"509312005, 759112oos, B
759212005, 73/2006, 74-76/2006; 61/2006, 2141/2006.

B. Parthasarthy, AG, A. Sharan, ASG (NP), Anil B. Divan, Bhaskar
Gupta, M. Rama Jois, Mahabir Singh,.K.K. Venugopal, S.S. Naganand; L.
Nageshwar Rao (NP), Dushyant Dave, Rakesh Dwivedi, Mtikul Rohtagi, Ashok
H. Desai, Narasimhan Murthy, Jaideep Gupta, M. L. Verma, Anil K. Mishra, C
A. Rohan Singh, Sanjay R. Hegde, Vivek Reddy, Balaji Srinivasan, S.R. Sharma, -
V. Sudeer, MBRS Raju; S. Srinivasan, Nikhil Jain, Ms. Madhusmita Bora,
. C.S.H. Saeed, Ms. Kiran Suri, Ankur Talwar, Shankar Divate, Mayur R. Shah,
Rajesh Mahale, Raghavendra S. Srivastava, Naresh Kaushik, Ms. Shilpa
Chohan;D.K. Sharma, Ms. Lalita Kaushik, K.K. Venujgopal, Srinivasagowda, D
Gaurav Kajriwal, Ms. Vandana Jalan, P. Ramashesh, S.N. Bhat, D.P. Chaturvedi,
NPS Panwar, KT Anantharaman Harris Beeran, Nikhil Goel, Tarak Damani,
Vasudevan Raghavan; Gaurav, Vijay Kumar, KT Anantharaman, R. Vasudevan,
N. Suresh, Ms. Richa Kapoor, Rahul Narain, Ms. Meenakshi Arora, Vikas
Sharma, Ms. Anil Katiyar, P. Parmeswaran, V.K. Verma, Prashant Kumar, Ms.
Triveni Potekar, Kuldip Singh, B.P.S. Patil, V.N. Raghupathy, B.S. Prasad, E
Rutwik Panda, Ms. Bimola Devi, CS Ashi"i, Ms. Sapna Malik, GV Chandrashekar,
Ms. Anjana Chandhrashekhar, SK. Kulkarni, M. Gireesh Kumar, Radha Shyam
Jena, Ms. Anjali K. Verma, Niraj Gupta, Ms. Meera Mathur, Lalit Kumar,
Kh Nobin Singh and Senthil Jagadeesam for the appearing parties.

The Judgment of the Court was delivered by F

SRIKRISHNA, J. Leave granted in Special Leave Petition (C} Nos.
1562-63/06.

Since this matter consists of two sets of distinct but related appeals, G
for the sake of convenience, they may be considered under the two heads
of: (i) the Main Matters and (ii) the Land Acquisition Matters .

. The Main Matters

(Civil Appeal Nos. 3492~3494/2005, 3497/2005, 3842-3844/2005)
H
94 SUPREME COURT REPORTS [2006] SUPP. I S.C.R.

A The BackKround

These appeals are directed against a common judgment of the High
Court of Karnataka (dated 3.5.2005) by which three Public Interest Litigations
being Writ Petition Nos. 45334i04 (All India Mamifacturers OrKw1isation v.
State of Karnataka and Ors.,), 45386/04 (J.C. Madhuswamy and Ors. v. State
B of Karnataka and Ors.,) and 48981 /04 (Dakshinamurthy and Anr. v. State of
Karnataka and Ors.. ) were disposed of resulting in dismissal of Mr. J.C.
Madhuswamy's writ petition and a direction to the State of Karnataka to
continue to implement a certain project known as the "Bangalore-Mysore
Infrastructure Corridor Project" (hereinafter "the Project").
c A brief statement regarding the Project: Bangalore is the capital of the
State of Kamataka and a rapidly developing city, which is projected to be the
IT boom town in the country. As a result of the pressures of urbanisation and
industrialisation, the infrastructure in and around Bangalore was found to be
inadequate. The traffic situation in Bangalore and on the roads leading into
D and out of the city was found to be chaotic and hardly conducive to the
important role that the city is expected to play in the near future. The
Government of Karnataka, realising the importance of rapidly developing the
city of Bangalore, and also for developing its transport and communication
systems, conceived of the Project. The Project had twin objectives: firstly, to
E provide for an express highway linking Bangalore with Mysore, the former
capital of the erstwhile State of Mysore, which is now coming up as an
industrial town, and for developing infrastructure along the corridor and in
and around Bangalore city. The Project is a massive undertaking, which
requires design, construction, maintenance and operation of an Express
Highway between Bangalore and Mysore. Equally, the Project is to also
F develop infrastructure around the periphery of Bangalore and all along the
Bangalore-Mysore Express Highway, which is about hundred years old and
has become incapable of handling the heavy volume of vehicular traffic.

On 28. 9.1988, the State of Kamataka invited tenders for implementation
of such an Express Highway. There was no satisfactory response to the
G tenders called for. There was only one tenderer and the tenderer insisted on
certain conditions which were not acceptable to the Government of Kamataka.
Thus, the bid of the tenderer was not accepted. A survey was conducted by
the Asian Development Bank and its report pointed out that the projected
population of Bangalore city would be about 8.2 million by the year 2011 and,
H therefore, there was an urgent ne.ed for improvement of the Bangalore-Mysore
STATE OF KARNATAKA v. ALL INDIA MANUFACTURERS ORGN. [SRIKRISHNA, J.] 95

.... Corridor. It was also suggested that the State Government bear 20% of the A
project cost, along with the cost of land acquisition, if such a project was to
be implemented. The State Government did not have sufficient means and had
to look for other alternative ways for implementing this project. The State
Government then decided to take up the project on a Build-Own-Operate-
Transfer (hereinafter "BOOT") basis with any consortium. The consortium
was to carry out the development of the project from its own resources and
B
recoup its investment by collection of tolls along the Express Highway.

On 20.2.1995, a Memorandum of Understanding (hereinafter "MOU")
was entered into between the State Government and the Consortium of Vanasse
Hangen Brustlin Inc. USA (hereinafter "VHB"), Kalyani Group of Companies
(hereinafter "Kalyani") and SAB Engineering and Construction Inc. USA
c
(hereinafter "SAB"). The Governor of the State of Massachusetts, U.S.A., Mr.
William Weld, and Mr. H.D. Deve Gowda, the then Chief Minister of the State
of Karnataka were present and appended their signatures thereto. It was
agreed that the State Government would extend support for the development
of the Bangalore-Mysore Expressway, provided commercial viability, D
competitiveness and feasibility of the project was established to the satisfaction
of the State Government. The Consortium submitted a Project Report for
review by the State Government.

.... On 5.6.1995, a "High Level Committee" (hereinafter "the HLC") was
formed under the Chairmanship of the Minister for Public Works. The HLC E
consisted of the Principal Secretary, Commerce and Industries Department;
Principal Secretary, Housing and Urban Development; Secretary, Public Works
Department; Chief Engineer C and B (South Zone, Bangalore). The Chairman
and Managing Director, Karnataka State Industrial Investment Development
Corporation, were official members and the Chairman, Technical Advisory F
Committee (lrrigation)/one K.C. Reddy/was a non-official member. The HLC
met from time to time and reviewed the progress made in the implementation
of the Project. On 26.8.1995, the Consortium presented the details of the
Project to the HLC. After detailed consideration of the Project, on 12.10.1995
the HLC submitted its report to the Government. The Project was considered
in detail by the State Cabinet Sub-Committee, which recommended that the G
matter be placed before the Cabinet for consideration. The report of the HLC
and the Project Report made by the Consortium was accepted by the Cabinet,

.... subject to the mod_ification that instead of seven townships as proposed in
the Project Report, only five townships were to be developed .
H
96 SUPREME COURT REPORTS (2006] SUPP. I S.C.R.

A A Government Order (No. PWD 32 CSR 95, Bangalore, dated 20.11.1995)
ensued, which in terms pointed out that the implementation of the Project was
to be done by a private consortium. The Preamble to the Government Order
recited that the Project work was to be completed by the Consortium with
their own resources and that the Consortium would keep the Project going
B for thirty years, so as to get a return of the expenditure, profit, etc. through
collection of tolls. It is important to note that the land acquisition expenditure
was also to be borne by the Consortium. To make the Project economically
viable, the Consortium had proposed development of seven townships, which
as already stated, was reduced to five by the Cabinet. It is also important to
note that the Government Order specifically permitted the development of five
C townships along with the construction of the Express Highway. As already
stated, the Consortium was to recoup its expenditure and obtain profits
through-tolls the first system of its kind in Karnataka. Consequently, it was
felt that the modification of the existing laws might become necessary. The
necessary legal changes were to be examined by the concerned administrative
D departments, who would take " .... necessary action and also extend co-operation
for implementation of the Project."'

The three members of the Consortium-- VHB, Kalyani and SAB--entered
into a "Consent and Acknowledgement Agreement" (hereinafter "the CAA")
dated 9.9.1996, specially assigning their respective rights under the Government
E Order (dated 20.11.1995) and the MOU with regard to the Project, in favour •
ofNandi Infrastructure Corridor Enterprises Ltd. (hereinafter "Nandi"). Nandi
had been registered on 16.1.1996 as a company under the Companies Act,
I956, to serve as a corporate vehicle for the development and implementation
of the Project. On 21.12.1996, the CAA was forwarded to the State Government
for necessary action. The State Government was advised by its Law Department
F (through Opinion No. 182 OPN 11/97 dated 3/4.3.1997) that since the Government
was finalising a separate agreement with Nandi, there was no need to
specifically consent to the CAA. Consequently, the State Government took
no further action except noting it.

In February 1997, Nandi submitted a draft of the Framework Agreement
G (hereinafter "the FW A") to be executed between it and the State Government.
This draft FWA was considered by the Core Committee, which had been set
up to negotiate the terms with Nandi. It was also referred to the Cabinet Sub-
committee, which suggested certain modifications to the FWA. After due
incorporation of such modifications, the Government of Karnataka approved
H the FWA on I7.3.1997 and the same was signed between Nandi and the State
ST ATE OFKARNATAKA v. ALL INDIA MANUFACTURERS ORGN. [SR!KR!SHNA, J.] 97

... Government on 3.4.1997. · A
Under Clause 4.1.1 of the .FW A, .the State Gover.nment set. up an
"Empowered.Committee" headed by the Chief Secretary of the State to oversee
the Project and its ·implementation keeping in mind the importance of timely
completion. The Empowered ·Committee included technical experts and held .
about ten meetings from time to time, the last one being on 24.7.2004. The B
main task ()f the E~powered Committee was to remove ad.ministrative
bottlenecks and to ensure the smooth .exec~tion of the Project. The Empowered
Committee was the State's a'gent of coordination and carried out the State
Government's obligations under the FWA.
. l ,·

One of the key obligations of the State Government under the· FWA was
c
to make available approximately 20, 193 acres of land. As set out in Schedule
I to the FWA, 6,956 acr'es wa~ Gove~nrrient fand and the remaining 13,237
acres ~as. private land, which .w11s to be acquired by the State Gove~nment.
There was also an. undertaking by the State Government. under the. l'.W A to
carry out appropriate amendments to its laws, rules and regulations so that D ·
the massive Project could be implemented fully and within a tiine·bound
schedule. Accordingly, the provisions of the Kamataka Industrial Areas
Development Act, 1966 ("the KIAD. Act") were amended ·by Aci No. I I of
1997 'so that the land required fo~ th~ Project could be acqui~ed expeditiously.
The Karnataka Industrial Areas Development Board ("KIAD Board") set up . E .
under the KIAD Ad, entered into an agreement with Nandi on 14.10.199'8 for
. , . : .I ·' ;/

acquisition of private land. Notifications were issued from time to time for'
acquiring lands for the Project. · . . ''
' • ,, ' ! . ' .

The Lltigatio~ in Sdmashekar. Reddy
.,, ,. ' ,
p.
While all these frenetic activities were going on for the successful and
timely implementation of the .Project, the FWA was challenged in a Public
Interest Writ Petition No. 29221/97 in November 1997 (reported as HT. ··
Somashekar Reddy v. Government of Karnataka and Anr. 1) by one H.T.
Somashekar Reddy, a retired Chief Engineer. The State Government and Nandi
were the two respondents thereto. The FWA was challenged on all con~eivable G
grounds and the writ petition was vigorously opposed by the State Government .
and also by Nandi. Both the Siate Government and Nandi contended that the'·
FWA was valid and that it had been entered into in larger public interest. It __

' ~ I. (1999) I KLD 500 (DB).
-
98 SUPREME COURT REPORTS [2006) SUPP. I S.C.R.

A was also successfully pleaded on the part of the State Government that it had
agreed to provide the "minimum extent of land'" for the Project, which was
20, 193 acres of land and that no excess land was being acquired.

The Division Bench of the Karnataka High Court hearing the said writ
petition formulated for its consideration, the following questions:'
B
"(a) Whether the Government has acted arbitrarily in entering into the
agreement with Respondent No. 2?

(b) Whether agreement is illegal as being opposed to public policy?

(c) Whether the agreement contravenes any Constitutional provisions
c or other existing enactments?

(d) Whether the agreement is vitiated by ma/a fides?

(e) Whether the rights of any individual or groups of individuals is
being illegally affected by the execution of the agreement?
·D
(t) Scope and extent of judicial review in matters of State Policy."

For the purpose of the present litigation, it is important to note that one
of the main grounds of challenge to the FWA in Somashekar Reddy (supra)
was that land was being acquired far in excess of what was required for the
E Project. In fact, it was specifically stated in the Writ Petition that Article 7 of
the FWA (that provides for construction of townships) was the ·'most
damaging provision detrimental to the owners of land". Further, it was stated
in the Writ Petition that the land requirement in Schedule I of the FW A was
"highly exaggerated" and would illegally create "huge profits" for Nandi. It
F was prayed that the FW A be quashed and further, since the FW A was
purportedly the result of "offences of breach of trust", for institution of a
Central Bureau of Investigation (hereinafter "CBI") enquiry into the whole
project.

Each of the questions was answered in favour of the respondents i.e.
G State of Kamataka and Nandi. It was held that the FWA was not arbitrarily
entered into by the Siate Government; that it was not opposed to public
policy; that it was not unconstitutional or illegal; that it was not vitiated by
ma/a fides; that no rights of any individual or individuals had been illegally
2. Ibid. at p. 529 (paragraph 52), per Ashok Bhan, J.

H 3. !hid. at p. 518 (paragraph 30), per Ashok Bhan, J.
STATEOFKARNATAKA v. ALLINDIAMANUFACTURERS ORGN. [SRIKRISHNA,J.] 99

... affected by the execution of the agreement. Finally, the court found that it A
could not exercise its power of judicial review to interfere with the FWA
which.was in reality a policy choice of the Government.

Further, as' we shall discuss subsequently, the argument of excess land
being acquired, was not acceded to by the High Court which found that the
Project envisaged, in addition to the construction of an expressway between l3
Bangalore and Mysore, other connected developmental activities, such as:

"(i) Development of area between Bangalore-Mysore.

(ii) Divergence of traffic from Mysore-Chennai;. Chennai-Bombay.

~iii) Construction of elected road from Sirsi Circle upto 9.4 Kms.
c
(iv) C-0nstruction of 2 truck terminals.

(v) Development 9f five identified local areas into townships with all
·infrastructure for habitation and economic activities.
D
{vi) Utilisation of sewage water being put to no productive use by
BWSSB.

'(vii) Development of tourism to augment the State's revenues."'

Thus, through an exhaustive consideration of all the background material
E
and documents presented to it, the High Court dismissed the writ petition by
holding against.the petitioner on all the contentions urged. The judgment in
Somashekar Reddy (supra) was challenged before this Court (in SLP (Civil) ....
CC 1423/99), but was dismissed in limine on 26.3.1999. The judgment in
Somas~ekar ~edd)J (supra) t.hus reached finality.
F
The Present Litigation

.Although
...
.the writ petition
'
in Somashekar Reddy (supra) was dismissed
.
by t.he High .Court by its judgment dateµ 21.9.1998, .it is of relevance to
notice that between November 1997, when this writ petition was filed, and
' • . l . ' . .

when Jh!! petition was dismissed, the work of implementing the Project was G
going
I.
on
'
in
,
view
•. , .
of. the stand of the·' State. Government and Nandi. Accordingly,
•, i

a . nw;nber
. ;
of notifications
.. were . issued for. acquisition of the land required
'

unfier the F.WA .. Many landowners challenged the acquisition of thefr lands

,.,. 4. Ibid. at p. 517 (paragraph 29), per Ash~k Bhan J.
H
100 SUPREME COURT REPORTS [2006] SUPP. I S.C.R.

A before the High Court. Although the issue of the landowners will be dealt
with in the second part of our judgment, it will be useful to note that the
Government supported the stand of Nandi before the Single Judge, who
partially allowed the land owners' petitions. It was during the writ appeal
stage that the Government reversed its stance and opposed Nandi.

B Even while the said writ appeals filed in the land acquisition matters
were pending before the High Court, a second round of writ petitions
challenging the Project itself was filed before the High Court. Despite the
High Court's go-ahead for the Project in 1997, and after seven years of
implementation, suddenly in the year 2004, these petitions were filed against
C it in so-called "public interest" by two Members of the Legislative Assembly
(hereinafter "MLAs") and a "social worker" (i.e. Mr. J.C. Madhuswamy and
others). This petition prayed for a CBI enquiry and to restrain the State
Government from continuing with the Project or acquiring any further land
thereunder. Perhaps inspired by Mr. J.C. Madhuswamy and others, and also
in the so-called "public interest", All India Manufacturer's Organisation, as
D well as two ex-Mayors of Mysore (Mr. Dakshinamurthy and another), moved
the High Court for a direction to the State Government to implement the
Project according to the FWA.

The High Court in the impugned judgment (vide Paragraph 18) raised
E the following two quesrions for consideration in the three writ petitions:

"(I) Whether the FWA entered into between the Government of
Karnataka and Nandi was a result of any fraud or misrepresentation
as alleged by J.C. Madhuswamy and others and the State Government?

(2) Wherher any excess land than what is required for the Project had
F been acquired by the State Government and whether it is open to it
to raise such a plea?"

The Division Bench disposed of all the writ petitions by a common
judgment by which it dismissed Writ Petition No. 45386/04 filed by Mr. lC.
Madhuswamy and others with costs. Writ Petition Nos. 45334/04 and 4898 !/
G 04 were allowed by the Division Bench directing the State of Karnataka and
all its instrumentalities, including the KIAD Board, to execute the Project as
conceived originally and to implement the FWA in "letter and spirit". The
High Court also directed the prosecution of K.K. Misra, Chief Secretary of
the Government of Karnataka and M. Shivalingaswamy, Under Secretary,
H Department of Industries and Commerce, as envisaged by Section 340 of the
f
STATE OF KARNATAKA v. ALLINDIA MANUFACTURERSORGN. [SRIKRISHNA,J.] JQJ

Code of Criminal Procedure, 1973, for certain offences which came to its A
notice as a result of the affidavits filed by them. K.K. Misra and M.
Shivalingaswamy have filed separate appeals with regard to the direction of
their prosecution with which we are not concerned at present.

The Contentions of the Appellants

The main arguments in the present Civil Appeal Nos. 3492-3494 of B
2005 were addressed on behalf of the State of Karnataka by Mr. Anil B.
Divan, learned Senior Counsel, whose main contentions are as under:

I. That the dispute between the State of Karnataka and Nandi is not
barred by the principle of res judicata, constructive res judicata
or estoppel arising from the judgment and proceedings in
c
Somashekar Reddy (supra).

2. That the principle of res judicata cannot be inflexibly applied to
Public Interest Litigations, especially when a re-examination of
decided issues might be in public interest.
D
3. To the bar of res judicata, it would be a successful answer that
fraud and misrepresentation had vitiated the entire transaction.
Hence, there would be no question of res judicata since the
fraud was discovered subsequent to the judgment in Somashekar
Reddy (supra).
E
4. That the High Court erred in brushing aside the report of the
Expert Committee headed by K.C. Reddy, which clearly
demonstrated that there was excess land, which in terms showed
that the FWA was not a bona fide agreement and, therefore, was
against public interest.
F
5. The High Court could not have granted the final relief in the
impugned judgment. The High Court's order amounted to a
mandamus to specifically perform the FWA, which is an
extremely complex contract, and hence the order is incorrect.

We will examine the third contention first-namely of fraud, G
misrepresentation and ma/a .fides vitiating the entire project.

Fraud and MisrepresentatirJn

• ~ The main ground on which the matter was argued by the learned counsel
for the State of Karnataka before the Division Bench of the High Court was H
102 SUPREME COURT REPORTS (2006] SUPP. I S.C.R.

A that there was fraud and misrepresentation on the part of Nandi, which vitiated
the entire transaction. It was contended before the High Court by the State
Government that this fraud came to be noticed subsequent to the judgment
in Somashekar Reddy (supra). It is pertinent to note that this point was put
on record through the affidavits of K.K. Misra, Chief Secretary of the
Government of Karnataka, M. Shivalingaswamy, Under Secretary, Department
B of Industries and Commerce, which suggested that public interest was being
affected as a result of the execution of the FW A. It appears that the main
contention of the writ petitioners Mr. J.C. Madhuswamy and others before
the High Court was that the FW A was vitiated as a result of fraud and/or
misrepresentation. Presumably, this contention was urged in order to get over
C the bar of res judicata arising from the judgment in Somushekar Reddy
(supra). When the matter was argued before us, although Mr. Divan addressed
some arguments on fraud, he quickly abandoned them and expressly gave it
up. Considering that this was the main thrust of the State's argument before
the High Court and has been expressly given up before us, we could have
dismissed the appeals on this narrow point alone. Nonetheless, since Mr.
D Divan argued the question of res judicata with some persistence, we will deal
with it subsequently.

On the merits of the argument of fraud/misrepresentation, the High
Court has gone into it at great length and has demonstrated the hollowness
E of this contention. We are in complete agreement with the views expressed
therein on this issue but we wish to highlight the following aspects to illustrate
how the argument of mu/a fides is actually the boot on the other foot.

The High Court has come to the categorical conclusion that the flip-
flop on the part of the State Government occurred only because of politicians,
F tliat the mala fides, if any, appears to be on the part of the State Government
for political reasons. The High Court has pointed out that the FW A did not
materialise out of the blue. The FW A was negotiated over several months; it
came to be drafted by considering several points that the Cabinet Sub-
committee had raised. As we have already highlighted, it was only thereafter,
when detailed deliberations had taken place at the highest levels of the State
G Government that the MOU was signed and the Project Report accepted. A
Government Order (dated 20.11.1995) was issued requiring the Public Works
Department to enter into a Memorandum of Understanding with the
Consortium of three companies, VHB, SAB and Kalyani. On 9.9.1996, through
the CAA, the three members of the Consortium agreed to " ..... unconditionally
f' '
H and irrevocably transfer and assign, jointly and severally ..... " to Nandi " .... all
STATE OF KARNA TAKA v. ALLINDIA MANUFACTURERS ORGN. [SRIKRISHNA, !] 103

rights, interest and title granted to them ... with respect to the Infrastructure A
Corridor by GOK under the Government Order and the Memorandum of
Understanding''. The CAA came to be signed by the three members of the
Consortium .on the one hand and Nandi on the other; the Governor of
Karnataka, on behalf of the Government of Karnataka, was shown as the
"Consenting Party''. A copy of this agreement was forwarded to the State B
Government along with a forwarding letter dated 21.12.1996 requesting that
the Government approve of the same and advise of its approval so that the
original agreement could be given to the State Government for its consent.
This letter was forwarded by the Public Works Department to the Law
Department through a letter dated 22.1.1997 (No. PWD 155 CRM 96) seeking
an opinion on the issue. The State Government was advised by its Law C
Department (through Opinion No. 182 OPN 11/97 dated 3/4.3.1997) that
since the Government was finalising a separate agreement with Nandi, there
was. no need to specifically consent to the CAA. Thus, it would appear that
the State Government had specifically been made aware of the CAA and the
fact that the members of the Consortium had transferred their rights to Nandi.
The argument made before the High Court that the Government was unaware D
of the CAA, was defrauded to execute the FWA is, therefore, utterly dishonest.
We concur with the decision of the High Court on this issue that the plea was
lacking any bona fides and that there was neither fraud nor misrepresentation
on the part of Nandi or any member of the Consortium.
E
Subsequently, as we have already discussed, Nandi as the assignee of
the Consortium, submitted a draft of the FWA to the State Government
which was considered by the Core Committee that had been set up to negotiate
the terms with Nandi. The Core Committee referred the draft FWA to the
Cabinet. Sub-Committee which suggested various modifications to it, which
were incorporated in the FWA. Finally, the FWA was approved by the State F
Government and came to be signed on 3.4.1997. Thus, it appears that the
plea of fraud and misrepresentation was clearly an afterthought and it was
conveniently raised by the State Government through the petitioners in Writ
Petition No. 45386/04, who were rightly described by the High Court as the
State Government's "mouth piece" (vide Paragraph 22).
G
The High Court has also totally disbelieved the affidavits of the Chief
Secretary, K.K. Misra, and the Under Secretary, M. Shivalingaswamy on this
issue. We have refrained from commenting on the merits of their affidavits
since their appeals against prosecution for perjury are pending separately. We
may, h·owever, point out that both the affidavits of the two senior bureaucrats H
104 SUPREME COURT REPORTS [2006] SUPP. I S.C.R.

A are on the issue that certain facts which had been suppressed from the
Government had come to light after the judgment in Somashekar Reddy
(supra) and that these indicated fraud and misrepresentation on the part of
Nandi. Indeed, this was the central argument put forward for impugning the
FWA.

B The FWA was executed on 3.4.1997 and implemented by the parties
for at least seven years. Several obligations under the FWA were carried out
by the State Government and its instrumentalities and also by Nandi, which
had invested a large amount of money in the Project. These included monies
for payment of compensation to landowners whose lands were being acquired
C for the Project. Soon after the FWA was entered into, some interested parties
had raised the issue in "public interest" that the FW A was a fraud and was
nothing but a charade for a lucrative real estate business on the part ofNandi.
The Government through the then Minister for Public Works vigilantly
defended the Project against all these allegations both inside and outside the
Legislature.
D
It would appear that the change of mind on the part of the State
Government came about-<:o-incidentally or otherwise-with a change of
Government in Karnataka in 2004. In the year 2004, while the State
Government's writ appeal was still pending before the Division Bench, a
statement was made by Mr. H.D. Deve Gowda, former Prime Minister, making
E serious allegations with regard to the Project stating that it was nothing but
a charade by which Nandi had converted it into a real estate business. It was
at this stage that a note (No. PWD/E/375/2004 dated 6.7.2004) was written
by the new Minister, Public Works Department, Mr. H.D. Revanna, who is
none other than the son of Mr. Deve Gowda, to the Principal Secretary,
F Public Works Department. The note in terms states that land acquisition by
the State Government for the Project was to cease till the allegation that
Nandi was carrying out a real estate business was enquired into. With this,
the State Government suddenly halted/slowed all ongoing activities for smooth
implementation of the Project. Indeed, it is strange that the State Government
woke up after seven long years, and even more strangely after a change in
G the State's political leadership, to the fact that there was fraud/
misrepresentation by Nandi or anyone else.

Pursuant to this, the Minister of the Public Works Department set up
the "Expert Committee" (headed by K.C. Reddy) to go into the allegations
H of excess land acquired by the Government for implementation of the Project.
STATE OF KARNATAKA v. ALLINDIA MANUFACTURERS ORGN. [SRIKRISHNA, J.l ) 05

After accepting the Interim Report of the Expert Committee, the Government A
withdrew its appeal filed before the High Court and the reasons for the same
are mentioned in a Government Order (PWD 155 CRM 95 BMICP Expert
Committee/2004, Bangalore dated 7.1.2005). As we shall see later in the
judgment, the constitution and functioning of this Committee also illustrates
the ma/a fides with which the State Government has approached the Project.
Thus, the utter irresponsibility with which the theory of fraud/misrepresentation B
was put forward is thoroughly exposed by the High Court in its impugned
judgment.

Res Judicata

Res judicata is a doctrine based on the larger public interest and is
c
founded on two grounds: one being the maxim nemo debet bis vexari pro una
et eadem causa ("No one ought to be twice vexed for one and the same
cause" 5) and second, public policy that there ought to be an end to the same
litigation. 6 It is well settled that Section 11 of the Civil Procedure Code, 1908
(hereinafter "the CPC") is not the foundation of the principle of res judicata, D
but merely statutory recognition thereof and hence, the Section is not to be
considered exhaustive of the general principle of law. 7 The main purpose of
the doctrine is that once a matter has been determined in a former proceeding,
it should not be open to parties to re-agitate the matter again and again.
Section 11 of the CPC recognises this principle and forbids a court from E
trying any suit or issue, which is res judicata, recognising both 'cause of
action estoppel' and 'issue estoppel'. There are two issues that we need to
consider, one, whether the doctrine of res judicata, as a matter of principle,
can be applied to Public Interest Litigations and second, whether the issues
and findings in Somashekar Reddy (supra) constitute res judicata for the
present litigation. F
Explanation VI to Section 11 states:

"Explanation VI. - Where persons litigate bona fide in respect of a
public right or of a private right claimed in common for themselves
and others, all persons interested in such right shall, for the purposes G
of this section, be deemed to claim under the persons so litigating."·

5. P. Ramanatha Aiyer, Advanced law lexicon (Vol. 3, 3rd edn., 2005) at p. 3170.

6. Mulla, Code of Civil Procedure (Vol. l, 15th edn., 1995) at p. 94.

7. See, Kalipada Dev. Dwijapada Das, AIR (1930) PC 22 at p. 23. H
106 SUPREME COURT REPORTS [2006] SUPP. I S.C.R.

A Explanation VI came up for consideration before this Court in Forward
Construction Co. and Ors. v. Prahhat 1'vfandal and Urs.,' (hereinafter "Forward
Construction Co."). This Court held that in view of Explanation VI, it could
not be disputed that Section 11 applies to Public Interest Litigation, as long
as it is shown that the previous litigation was in public interest and not by
way of private grievance. 9 Further, the previous litigation has to be a bona
B fide litigation in respect of a right which is common and is agitated in common
with others. '0

As a matter of fact, in a Public Interest Litigation, the petitioner is not
agitating his individual rights but represents the public at large. As long as
C the litigation is bona fide, a judgment in a previous Public Interest Litigation
would be a judgment in rem. It binds the public at large and bars any member
of the public from coming forward before the court and raising any connected
issue or an issue, which had been raised/should have been raised on an earlier
occasion by way of a Public Interest Litigation. It cannot be doubted that the
petitioner in Somashekar Reddy (supra) was acting bona fide. Further, we
D may note that, as a retired Chief Engineer, Somashekar Reddy had the special
technical expertise to impugn the Project on the grounds that he did and so,
he cannot be dismissed as a busybody. Thus, we are satisfied in principle that
Somashekar Reddy (supra), as a Public Interest Litigation, could bar the
present litigation.
E We will presently consider whether the issues and findings in
Somashekar Reddy (supra) actually constitute res judicata for the present
litigation. Section 11 of the CPC undoubtedly provides that only those matters
that were "directly and substantially in issue" in the previous proceeding will
constitute res judicata in the subsequent proceeding. Explanation III to Section
F 11 provides that for an issue to be res judicata it should have been raised by
one party and expressly denied by the other:

"Explanation 111.-The matter above referred to must in the former
suit have been alleged by one party and either denied or admitted,
expressly or impliedly, by the other."
G
Further, Explanation IV to Section I I, states:

8. [1986) l sec loo.

9. Ibid. at pp. 112-113 (paragraph 21).

H 10. Id.
STATE OF KARNATAKA v. ALL INDIA MANUFACTURERS ORGN. [SRIKRISHNA, J.] 107
"Explanation IV.-Any matter which might and ought to have been A
made ground defence or attack in such former suit shall be deemed
.to have been a matter directly and substantially in issue in such suit."

The spirit behind Explanation IV is brought out in the pithy words of
Wigram, V.C~ in Henderson v. Henderso~" as follows:
B
"The plea of res judicata applies, except in special case (sic), not
only to points upon which the court was actually required by the

- parties to form an opinion and pronounce a judgment, but to every
point which properly belonged to the subject of litigation and which
the parties, exercising reasonable diligence; might have brought
forward at the time. " 12
C

In Greenhalgh v. Mal/ard1 3 (hereinafter "Greenhalgh"), Somervell LJ.
observed thus:

"I think that on the authorities to which I will refer it would be
accurate to say that res judicata for this purpose is not confined to the D
issues which the Court is actually asked to decide, but that it covers
issues or facts which are so clearly part of the subject matter of the
litigation and so clearly could have been raised that it would be an
abuse of the process of the Court to allow a new proceeding to be
started in respect of them. 14" E
The judgment in Greenhalgh (supra) was approvingly referred to by
this Court in State of U.P. v. Nawab Hussain 15• Combining all these principles,
a Constitution Bench of this Court in Direct Recruit, Class II Engineering
Officers' Association v. State of Maharashtra 16 expounded on the principle
laid down in Forward Construction Co. (supra) by holding that: F
" ... an adjudication is conclusive and final not only as to the actual
matter determined but as to every other matter which the parties

11. [1843-60] All ER Rep. 378.

12. Ibid, at pp. 381-382.
G
13. [1947]2 All ER 255.

14. Ibid. at p. 257 (emphasis supplied).

» 15. (1977] 2 sec 806 at p. 809 (paragraph 4.)

16. [1990J 2 sec 715.
H
108 SUPREME COURT REPORTS [2006] SUPP. I S.C.R.
,.
A might and ought to have litigated and have had (sic) decided as
incidental to or essentially connected with (sic) subject matter of the
litigation and every matter corning into the legitimate purview of the
original action both in respect of the matters of claim and defence.
Thus, the principle of constructive res judicata underlying Explanation
IV of Section 11 of the Code of Civil Procedure was applied to writ
B case. We, accordingly hold that the writ case is fit to be dismissed on
the ground of res judicata." 11

With these legal principles in mind, the question, therefore, arises as to
what exactly was sought in Somashekar Reddy (supra), how it was decided
C by the High Court in the first round of litigation, and what has been sought
in the present litigation arising at the instance of Mr. J.C. Madhuswarny and
others. Jn order to show that the issue of excess land was "directly and
substantially in issue" in Somashekar Reddy (supra) we will first examine the
prayers of the parties, the cause of action, the averments of parties and the
finding of the High Court in Somashekar Reddy (supra).
D
First, learned counsel for the Respondents has pointedly drawn our
attention to the identity of the prayers made in the previous Public Interest
Litigation by Sornashekar Reddy as compared to the prayers made in the
present case of Mr. Madhuswarny and others. The prayers in Sornashekar
E Reddy's petition were: (a) for quashing the FWA and (b) for directing an
inquiry by the CBI in the matter and to prosecute the offenders. In Mr.
Madhuswarny's petition, the prayers were: (a) to direct the CBI to conduct
inquiries to various acts as enumerated by items I to 16 (specifically the
issue of excess land) and (b) for quashing the various agreements, and acts
done in pursuance of the Project and consequently, to denotify the land of all
F farmers situated away from the peripheral road and link road. We are therefore,
satisfied that the prayers made in Somashekar Reddy (supra) and in Mr.
Madhuswarny's writ petitions are substantially the same.

Second, the cause of action in both Somashekar Reddy (supra) and the
G present cases is the FWA, which includes the provisions for acquiring 20, 193
acres of land for the Project (comprising 13,237 acres of private land and
6,956 acres of Government land). Indeed, it was stated in Somashekar Reddy's
Writ Petition that the land requirement in Schedule I of the FWA was "highly
exaggerated" and would illegally create "huge profits" for Nandi. Sornashekar
Reddy thus prayed that the FWA be quashed-this prayer was, however,
H l 7. Ibid. at p. 741(paragraph35). per LM Sharma. J.
STATE OF KARNA TAKA v. ALLIND!A MANUFACTURERS ORGN. [SRIKRISHNA, J.) 109

•• specifically rejected. The very same FWA that was upheld earlier has now A
been impugned in the present case.

Third, in both Somashekar Reddy and Mr. Madhuswamy's petitions,
the avennent was that excess land than required for the implementation of the
Project was being acquired by the State Government at the behest of Nandi
and that the Project was nothing but a camouflage to carry out a real estate B
business by Nandi. The High Court records the following contention of
Somashekar Reddy's counsel:

"The next s~bmission of the Counsel for the petitioner is that
Government of Karnataka though ostensible (sic-ostensibly) purported
to fonn an Express Highway has in reality allowed the 2nd respondent C
to develop the townships as a developer by conferrin3 a huge largess
(sic-largesse) by way of giving 20,000 acres of land .. According to
petitioner, the land required for the construction offour lane Highway
is only 2 775 acres, whereas the remaining land would be utilized for
the purpose ofdevelopment of the towns thereby permitting respondent D
No. 2 to develop townships as a developer and on huge profits. " 18

The avennent of Somashekar Reddy regarding excess land came to be
considered by the High Court which records some of the opposing contentions ·. •
of the Respondent-State, in the following terms:
E
"As a mega project like the Expressway involves considerable extent
of land, answering respondent (the State) has agreed to provide the
minimum extent of land required for the project partly out of the land
owned by the State and by acquiring the balance. Second respondent
will not only construct the proposed Expressway but also link roads,
peripheral road, interchanges, Service Roads, toll plazas and F
Maintenance area etc., in addition to the townships. " 19

"It is stated that the project by its very nature requires considerable
extent of land and that is why the respondent has agreed to provide
the land to the extent available with it and acquire the balance and
make available the same to the replying respondent. There are mutual G
.. obligations on both the parties under the impugned agreement and
Respondent-No. I is only facilitating the acquisition of land for which

18. (1999) I KLD 500 (DB) at p. 528 (paragraphs 47), per Ashok Bhan, J (emphasis suppiied) .
...
19. Ibid. at p. 512 (paragraph 15) (emphasis supplied). H
110 SUPREME COURT REPORTS [2006] SUPP. I S.C.R.

A thl! replying respondent has to pay at the existing market rates." 20

Crucially, two very striking findings have been made by the High Court
in Somm.'1ekar Reddy (supra) as follows:

"'So uut of20,/'J3 acres, land required for the Expressway would be
B 6'J'Jl.J acres leaving 13,liOO acres fur development of townships.
Govanmwt of Karnataka in its written statement has said that it has
agreed ta provide minimum extent of land for the project partly out
of the land owned by the Government and by acquiring the balance.
Pcnnission has been given to develop the five township instead of 7,
proposed by respondent No. 2 to make the Project viable. " 21
c
.. The submission that the contract was entered in a clandestine manner
also cannot be accepted .... Respondents in their statement of objections
have admitted that this point was raised on the floor of the House and
the respondent made detailed presentation on this subject in the
House ... Every minute dt:tail was explained including the scientific
D method adopted hy the re.1pundent for identification uf the land for
th..: Project.""

All of these unequivocally snow that the issue of excess land (and
connected issues) was specifically raised by the petitioner in Somashekar
E Reddy (supra) and was also forcefully denied by the State. In fact, the decision
in Somashekar Reddy (supra), went further with the High Court according its
imprimatur to the land requirements under the FW A amounting to 20, 193
acres, which in no small measure, resulted from the State's successful defence
that it had provided the "'bare minimum of land" for the Project calculated by
a "scientific method".· The judgment also contains copious references to the
F issue of land (including the acreag..:). the types of land to be acquired, the
land requirement for different aspects of the Project, the scientific techniques
involved in identifying the land and road alignment etc. In these circumstances,
it cannot be doubted that Explanation III to Section 11 squarely applies. It is
clear that the issue of excess land under the FW A was "directly and
G substantially in issue" in Somashekar Reddy (supra) and hence, the findings
recorded therein having reached finality, cannot be reopened in this case.

20. Ibid. at p. 516 (paragraph 25).

21. Ibid. at p. 529 (paragraph 52) {empha;is supplied).

H 22. Ibid. at pp. 527-528 (paragraph 46) (emphasis supplied).
STATEOFKARNATAKA v. ALLINDIAMANUFACTURERSORGN. [SRIKRISHNA, J.l 111

.• The principle and philosophy behind Explanation IV, namely to prevent A
"the abuse of the process of the court" (as stated in Greenhalgh (supra))
through re-agitation of settled issues, provides yet another ground to rejeCt
the appellants' contentions. For instance, the High Court specificaliy records
(vide Paragraph 29) of the impugned judgment that:

"!tis common case of the parties that the validity ofFWA had earlier B
been challenged in Somashekar Reddy 's case (supra) on all conceivable
grounds including the one that land in excess of what is required for

- the Project had been acquired by the State Government".

In the face of such a finding by .the High Court, Explanation IV to
Section 11 squarely applies as, admittedly, the litigation in Somashekar Reddy
(supra) exhausted all possible challenges to the validity of the FWA, including
C

the issue of excess land. Merely because the present petitioners draw semantic
distinctions and claim that the excess land not having been identified at the
stage of the litigation in Somashekar Reddy (supra), the Project should be
reviewed, the issue does not cease to be res judicata or covered by principles D
analogous thereto. If we were to re-examine the issues that had been raised/
ought to have been raised in Somashekar Reddy (supra) it would simply be
an abuse of the process of the court, which we cannot allow.

As. we :.~ave pointed out, the cause of action, the issues raised, the
prayers made, the relief sought in Somashekar Reddy 's. petition and the findings E
in .Somashekar Reddy (supra), and the claims and arguments in t]1e present
petitions w~re substantially the same. Therefore, it is not.possible to _accept
the. contention of the appellants before us. that the judgment i.n $omashekar
Reddy (supra) does not operate as res judicata for the questionsrnised in t.he
present petitions.
F
Excess Land and the Expert Committee·

There was considerable time .taken by the. learned c.ounseI for the
appellants in trying to persuade us that excess land had actually been delivered
to Nandi under the FWA, A subsidiary arnument was that event.hough the G
actual area of land delivered might not_ have been in excess, since land in
prilile areas had. imprnperly been acquired for. Nandi's. benefit, the iss.ue
needed to qe re-examined. In our view, this argument too is not open to be
agitated at this point. As we have already .pointed out, th~ writ p~ti!icm .in
Somashekar Reddy (supra) was the culmination of all such allegations which
had been successfully refuted even on the floor of the Legislature. Finally, II
112 SUPREME COURT REPORTS [2006] SUPP. I S.C.R.

A having failed on the floor of the Legislature, a Public Interest Litigation was ,
filed on the ground that there was something wrong with the FW A and that
it was virtually a sell-out to Nandi. The Division Bench of the High Court
considered every argument very carefully and recorded findings on all the
issues against Mr. J.C. Madhuswamy and others. In our view, permitting the
argument on excess land to be heard again to scuttle a project of this magnitude
B for public benefit would encourage dishonest politically motivated litigation
and permit the judicial process to be abused for political ends. The High
Court, therefore, has refused to answer the first part of the second question

c
framed for consideration on the ground that it was already answered in
Somashekar Reddy (supra) and as it was res judicata, it could not be re-
agitated. Further, that since this argument involved details of contractual
disputes, the High Court would not examine it in its writ jurisdiction. We are
-
not satisfied that the High Court was wrong in so holding.

The High Court's finding on this issue only gains strength if we were
to examine the factual matrix in which the State took its stand that excess
D land had been acquired for the Project. As we have previously stated, pursuant
to the objections raised to the Project by the new Minister for Public Works,
an "Expert Committee" was setup in 2004 to review the Project. The Expert
Committee was conveniently headed by K.C. Reddy, who was the Advisor
to the Public Works Minister. This K.C. Reddy was the same gentleman, who
as a member of the previous HLC, had scrutinised the Project threadbare and
E
had given it the green signal. Surprisingly however, at this stage, he appeared
to be all willing to find faults and flaws in the Project and the FWA, despite
the fact that there was an Empowered Committee that was required to monitor
the implementation of the Project. The High Court rightly pointed out that
the Expert Cemmittee was constituted virtually in supersession of Clause
F 4.1.1 of the FWA.

The Expert Committee suddenly woke up to the alleged fact that excess
land was being acquired. Like the State Government, the Expert Committee
also made flip-flops and came out with a report saying that there was
acquisition of excess land. Crucially, it left the actual identification of the
G excess lands to the KIAD Board. Surprisingly, the State Cabinet in its meeting
dated 26.10.2004 accepted the report but reaffirmed its support to the Project
and expressed some reservations on the acquisition of more lands than what
was necessary for the Project. In this regard, the High Court critically
comments (vide Paragraph 26) that:
H ·--
STATE OF KARNA TAKA v. ALLINDIA MANUFACTURERS ORGN. [SRIKRJSHNA,J.] 11 J

"By constituting this Committee the State Government has ensured A
~
that the Project gets stalled. It is interesting to note that Sri K.C.
Reddy who is the Chairman of the Expert Committee was also a
Member of the HLC which had approved the Project and was
associated with it till the signing of the FWA which provides for
20,193 acres of land to be made available. Sri K.C. Reddy did not
record his dissent in those proceedings and at no stage did he ever B
point out that the land that was sought to be provided for the Project
was in excess of what was required but now as the Chairman of the
Expert Committee he has, without identifying the excess lands which
he ha~ left for the Board to identify, opined that excess land has been
acquired for the Project. We cannot appreciate such a conduct." c
We too cannot appreciate the conduct on the part of K.C. Reddy or the
State Government. The inference drawn by the High Court is that the plea of
fraud and misrepresentation sought to be raised was not only an afterthought
but also false to the know ledge of the State Government. The High Court,
therefore, observed (vide Paragraph 27): "It is unfortunate that the petitioners D
and the State Government have chosen to raise this bogie (sic-bogey) to
defeat the public project subserving public interest."

Interestingly, neither the interim report nor the final report of the Expert
Committee identified the excess land but in fact, left it for the KIAD Board.
The counsel for the KIAD Board handed over a set of documents, which E
purportedly identified the specific excess lands. It was the grievance of the
KIAD Board that they had not been given the opportunity for placing these
documents before the High Court. Since the date of documents showed that
they were drawn subsequent to the date on which the High Court had delivered
its judgment, the learned Senior Counsel for KIAD Board Mr. K.K. Venugopal F
candidly admitted that this exercise was carried out after the impugned
judgment had been delivered. It is a moot point whether the person, who
swore this affidavit on behalf of the KIAD Board stating that no opportunity
had been given to the KlAD Board to place these documents on the record
of the High Court, needs to be considered for prosecution under Section 340
read with Section 195 of the Code of Criminal Procedure, 1973. We strongly G
deprecate such misleading or false affidavits on the part of the KIAD Board.
-,

According to Mr. Venugopal, Article 300A of the Constitution, as well
as the KIAD Act, would be violated if the KIAD Board were to directly
acquire or acquiesce in the acquisition of land in excess of what is required
.... H
114 SUPREME COURT REPORTS [2006) SUPP. I S.C.R.

A for the Project. In our view, this is nothing but a repetition of the arguments
made by the State of Karnataka. As we have elaborately discussed, that the
land was not in excess has been hdd by the Division Bench of the High
Court on two occasions and we agree with it. Thus, there was no question of
the land being acquired for a purpose other than a public purpose or there
B being any contravention of Article 300A. In fact, we are somewhat surprised
that this type of argument must come from the KIAD Board, which was
intimately inv·olved, from the very beginning, with the process of acquiring
land. Further, the State and its instrumentalities (including the KIAD Board)
were enjoined by Clause 5.1.1.1 of the FWA, to make "best efforts" to
acquire the land required for the Project. Indeed, till the State itself changed
C its stand with regard to the Project, nothing was heard from the KIAD Board
about lands being acquired in excess of the public purpose. Further, as an
instrumentality of the State, the KlAD Board cannot have a case to plead
different from that of the State of Karnataka. Thus, we are unable to
countenance the arguments of Mr. Venugopal on behalf of the KIAD Board.

D Considering the facts as a whole, the High Court came to the conclusion
that since the Project had been implemented and Nandi had invested a large
amount of money and work had been carried out for more than seven years,
the State Government could not be permitted to change its stand and to
contend that the land allotted for the Project was in excess of what was
E required. Having perused the impugned judgment of the High Court, we are
satisfied that there is no need for us to interfere therewith. Thus, there is no
merit in this contention, which must consequently fail.

The Relief Granted by the High Court

F One final argument was made by Mr. Divan as regards the relief granted
by the High Court. To appreciate the argument, it is necessary to look at the
relief granted in terms of Paragraph 42.2, which is as follows:

'"Writ petitions nos. 45334 and 48981 of 2004 are allowed directing
the State of Kamataka and all its Instrumentalities including the Board
G to forthwith execute the Project as conceived originally and upheld
by this court in Somashekar Reddy 's case (supra) and implement
FW A in letter and spirit. Consequently, Government Orders dated
4.11.2004 and 17.12.2004 constituting the Review Committee and
Expert Committee are quashed. The report submitted by these
committees in pursuance to these orders and all subsequent actions
H ...
STATEOF KARNATAKA v. ALL INDIA MANUFACTIJRERS ORGN. [SRIKRISHNA, J.] 115

· taken incidental thereto are also quashed. Nandi is also directed to A
irriplemerit the Project as expeditiously as possible. Parties will bear
their own costs in these two cases."

Mr. Divan strongly urged that the relief granted was wholly beyond the
jurisdiction of the High Court under Article 226 of the Constitution, as it
would· amount to granting a decree for specific performance in writ jurisdiction. B
A reading of the relief granted by the High Court does not persuade us that
it is so. The High Court merely directed that the Project and the FWA, as
conceived originally and upheld by the. High Court in Somashekar Reddy
.(supra); shou14 be implemented "in Jetter and spirit". In other words, the
. High Court said that there is no scope for raising frivolous and ma/a fide C
• objections for ulterior purposes. This, the High Court was fully entitled to do.
it is trite law that when one of the contracting parties is "State" within the
meaning of Article 12 of the Constitution, it does not cease to enjoy the
character of 1cState" and, therefore, it is subjected to all the obligations that
..State" has under the Constitution. When the State's acts of omission or
· commission aretainted with extreme arbitrariness and with mala fides, it is D
·certainly ·subject to interference by the Constitutional Courts in this country.
We ·may refer-to Gujarat State Financial Corporation v. Mis Lotus Hotels
Pvt: Ltd., 21 in :Which· a statutory corporation (the Gujarat State Financial
Corporation) arbitrarily refused to gtarit the sanction of loans to entrepreneurs
who had already acted on the basis of the sanction and had incurred expenditure E
~d liabilities. The argument that the transaction was purely a contractual
. arra~ge111ent"between the parties an.d, therefore, not amenable to writ
. Jur,isdiction,.was ·categoficaUy rejected by the following observations:

· "Now if appellant entered into a solemn contract in discharge and
performance of its statutory duty and the respondent acted upon it, F
the statutory Corporation cannot be allowed to act arbitrarily so as to
cause harm and injury, flowing from its unreasonable conduct, to the
respondent. In such a situation, the court is not powerless from holding
the appellant to its promise and it can be enforced by a writ of
mandamus directing it to perform its statutory duty. A petition under
Article 226 of the Constitution would certainly lie to direct G
performance of a statutory duty by 'other authority' as envisaged by
Article 12."24

23. !198313 sec 379.

24. Ibid. at p. 387 (paragraph 13), per DA Desai, J. H
116 SUPREME COURT REPORTS [2006] SUPP. I S.C.R.

A Kumari Shri/ekha Vidyarthi and Ors. v. State of U.P. and Ors., 2' is
another authority for tl:e proposition that the State Government has to act
reasonably and without arbitrariness even with regard to the exercise of its
contractual rights.2•. tn Mis Dwarkadas Marfatia and Sons v. Board of Trustees
of the Port of Bombay2 7 the situation was one in which a lease between the
B Bombay Port Trust and certain parties was terminated in exercise of contractual
rights and the lease rent was abnormally increased. It was held that there was
always an obligation on the part of public authorities in their acts of omission
and commission to be reasonable. In Biman Krishna Bose v. United India
Insurance Co. Ltd. and Anr.,2B the question was whether an insurance company
could arbitrarily and unreasonably refuse the renewal of a policy. Considering
C that the insurance company, as a result of State-monopoly in the insurance
sector, had become "State" under Article 12 of the Constitution, this Court
held that:

" .. .it (the insurance company) requires (sic) to satisfy the requirement
of reasonableness and fairness while dealing with the customers. Even
D in an area of contractual relations, the State and its instrumentalities
an: t:njoined with the obligations to act with fairness and in doing so,
can take into consideration only the relevant materials. They must not
take any irrelevant and extraneous consideration while arriving at a
decision. Arbitrariness should not appear in their actions or
decisions. " 29
E
Thus, it appears that no exception could be taken to relief granted in
the judgment of the High Court impugned before us. All that the High Court
has done is to reaffirm and require the State Government and its
instrumentalities, as ·•state" under the Constitution, to act without arbitrariness
F and ma/a fides, especially in the matter of land acquisition. It is pertinent to
note that the State had agreed (vide Clause 5.1.1.1 of the FWA) in respect of
the ;ands required under the FW A, that:

"GOK shall use its best efforts and cause its Governmental

G 25. (1991J 1 sec 212.

26. Ibid. at pp. 235-243.

27. AIR ( 1989) SC 1642.

28. 1200116 sec 477.

H 29. Ibid. at p. 481 (paragraph 3), per VN Khare, J.
STATE OF KARNATAKA v. ALLINDIA MANUFACTURERS ORGN. [SRIKRJSHNA,J.] J J7

Instrumentalities to use their best efforts, to exercise its and their A
legal right of eminent domain (or other right of similar nature) under
the Laws of India to acquire the Acquired Land. Prior to acquiring
any Acquired Land, GOK will obtain from the company written
confirmation of its willingness to purchase such Acquired Land from
GOK at the purchase price (whether in the form of cash or comparable
land) required under the Laws of India (the "Acquired Land B
Compensation"). GOK shall offer to the ex-propriated owners of the
land the Rehabilitation package specifically worked out for this
Infrastructure Corridor Project with mutual consultation of the
consortium and the Revenue Authorities in accordance with the
applicable rules". c
In these circumstances, we find no reason to interfere with the said
directions of the High Court. In the future also, we make it clear that while
the State Government and its instrumentalities are entitled to exercise their
contractual rights under the FWA, they must do so fairly, reasonably and
without mala jides; in the event that they do not do so, the Court will be D
entitled to interfere with the same.

The High Court also found, justifiably in our view, that the writ
petitioners had been sponsored by the State Government to put forward its
changed stand in the garb of a Public Interest Litigation. In the opinion of the
High Court (vide Paragraph 29): E
"The court cannot allow its process to be abused by politicians and
others to delay the implementation of a public project which is in
larger public interest nor can the court allow anyone to gain a political
objective. These legislators who have not been successful in achieving
their objective on the floor of the Assembly have now chosen this F
forum to achieve their political objective which cannot be allowed."

Although this should have really put an end to the writ petitions filed
by Mr. Madhuswamy and others, the High Court had to consider the petitions
filed by Mr. Dakshinamurthy and the All India Manufacturer's Organisation,
who were also before the court by way of Public Interest Litigation and
G
sought a Mandamus of the continuation of the Project. A grievance was made
before the High Court that these were persons put up by Nandi and that they
were virtually projecting the viewpoint of Nandi. The High Court having
taken note of the same has said that despite this, larger public interest required
the implementation of the Project. We see no reason to differ with the High H
118 SUPREME COURT REPORTS [2006] SUPP. I S.C.R.

A Court on this point.
Writ Petition No. 45386/04 (Mr. J.C. Madhuswamy and others) was
rightly dismissed as raising the very same issues which had been concluded·
by the decision in Somashekar Reddy (supra). Writ Petition Nos. 45334/04
and 48981 /04 were rightly allowed and the order to implement the Project in
B its letter and spirit had been made in exercise of the writ jurisdiction of the
High Court. We refrain from dealing with the third relief granted, namely
directing the prosecution of K.K. Misra and M. Shivalingaswamy, as their
appeals shall be independently dealt with by this Court.

Taking an overall view of the matter, it appears that there could hardly
C be a dispute that the Project is a mega project which is in the larger public
interest of the State of Karnataka and merely because there was a change in
the Government, there was no necessity for reviewing all decisions taken by
the previous Government, which is what appears to have happened. That
such an action cannot be taken every time there is a change of Government
D has been clearly laid down in State of U.P. and Anr. v. Johri MaP 0 and in
State of Haryana v. State of Punjab and Anr.. 11 where this court observed
thus:

" .. .in the matter of governance of a State or in the matter of execution
of a decision taken by a previous Government, on the basis of a
E consensus arrived at, which does not involve any political philosophy,
the succeeding Government must be held duty-bound to continue and
carry on the unfinished job rather than putting a stop to the same."32

The land Acquisition Matters

F (Civil Appeal Nos. 3848-3884/2005, 3889-4127/2005, 4128-4366/2005,
4575-4576/2005, 5399-5401/2005, 5402/2005, 5746-5747/2005, 5759/2005,
5797-5799/2005, 6098/2005, 6099/2005, 5092-5093/2005, 7024-7040/2005,
7591/2005, 7592/2005, 61/2006, 73/2006, 74-76/2006, SLP 1562-63/2006).

G The Background
In all these appeals, another attempt by a side wind, was made to
30. r2004J 4 sec 714.

31. r20021 2 sec 507.

H 32. Ibid. at p. 538 (paragraph 16), per GB Pattanaik, J.

'
. STATEOF KARNA TAKA v. ALLINDIA MANUFACTIJRERS ORGN. [SRIKRISHNA, J.] 1.19

scuttle the Project. The attempt, this time, was primarily on the .part of the A
landowners, whose lands were acquired for implementation of the Project
and who challenged the same before the High Court of Karnataka. A learned
Single Judge of the Karnataka High Court, through judgment dated 18.12.2003,
disposed of these petitions. The learned Judge took the view that acquisition
of 60% of the land by the State Government, insofar as it related to the
formation of roads and infrastructure development was valid, while the B
acquisition of the re·maining 40% meant for the development of townships
and convention centres was invalid and to that extent the acquisition was
quashed. The landowners, the State Government, the KIAD Board and also
Nandi were aggrieved by the judgment of the learned Single Judge and filed
separate writ appeals challenging the judgment. The stand of the State C
Government in its writ appeal was that the learned Single Judge was wrong
in quashing 40% of the acquisition of land. This was also the stand of the
KIAD Board. Nandi also challenged the said part of the order. Thus, it would
appear that the State Government, KIAD Board and Nandi were ad idem in
their writ appeals that the learned Single Judge had erred in interfering and
quashing 40% of the land as not being in public interest. D
Sometime in August 2004, when the writ appeals came up for hearing
before the Division Bench of the High Court, the State Government and the
KIAD Board withdrew their appeals, because by then, as we have already
discussed, the State Government appeared to have second thoughts about the E
Project and felt that the land acquisitions were far in excess ofthe Project's
requirements. Even though they were also respondents under the writ appeal
filed by Nandi, they did not contest the clairn and addressed no arguments
before the Division Bench of the High Court. Those appeals were disposed
of by an order dated 28.2.2005. The appeals filed by Nandi and the Indian
Machine Tools Manufacturers Association (hereinafter "the IMTMA") were F
allowed, whereas those filed by the landowners were dismissed, and the
order of the learned Single Judge was set aside and the entire acquisition was
upheld.

Various connected appeals against the order of the learned Single Judge
came to be disposed of by orders of the High Court dated 29.6.2005 and G
18.11.2005; in terms of the detailed judgment and order of a Division Bench
of the High Court dated 28.2.2005 (hereinafter in the Land Acquisition Matters
"the impugned judgment").

H
120 SUPREME COURT REPORTS [2006] SUPP. I S.C.R.

A The Contentions of the Appellants

Though there are a number of appellants before us, the contentions
raised before the High Court and us were principally as under: first, that no
notice was served on the landowners under Section 28( 1) of the KIAD Act;
secondly, that the notice of acquisition was vague and consequently prejudiced
B any effective objection being raised by the landowners whose lands were
sought to be acquired and finally, that the land acquisition was not for a
public purpose, or for a purpose as specified in the KIAD Act, and was also
in excess of the Project's requirement.

Although other contentions have also been raised, we will not deal with
C them here as they have already been dealt with in the first part of our judgment.

Non-Service of Notice

The argument that no notice was served on the landowners under Section
D 28(1) of the KIAD Act, appears to be factually incorrect. Even the learned
Single Judge who partially allowed the writ petition came to the conclusion
(vide Paragraph 22) in his judgment (dated 18.12.2003) that the '' .... petitioners
in all these cases have filed objections on several grounds." Even in the
appeal before the Division Bench, the High Court observed (vide Paragraph
30) that it was " .... not in dispute that the land owners were served with
E notices and the objections filed by them have been considered." Even before
us, when these appeals were argued, no attempt was made by any of the
learned counsel to satisfy us that the appellants had not actually been served
notice of the acquisition. Neither was the finding of the learned Single Judge
or the Division Bench impugned on this point. We are, therefore, unable to
F accept the contention that notices were not served on the appellants as required
under Section 28( 1) of the KIAD Act.

Vagueness of Notice of Acquisition

The next contention is that the notice of acquisition was vague and
G consequently prejudiced any effective objection being made by the landowners
whose lands were sought to be acquired. The vagueness of the notification,
it is contended, has vitiated the notice itself, according to the learned counsel
for some of the landowners.

The notification in the ins~ant case states that the lands were being
H acquired for the purposes of "industrial development" i.e. establishing and
STATE OF KARNATAKA v. ALL INDIA MANUFACTURERS ORGN. [SRIKRISHNA, J ] 121

developing industrial areas by the KIAD Board. In our opinion, the purpose A
indicated in the notifications is sufficiently precise and is not affected by the
vice of vagueness as alleged. Our attention was drawn to the judgment of this
Court in Aflatoon v. Lt. Governor of Delhi3 3 where this Court pointed out as
follows:

"The question whether the purpose specified in a notification under B
Section 4 is sufficient to enable an objection to be filed under Section
SA would depend upon the facts and circumstances of each case .....
In the case of an acquisition of a large area of land comprising several
plots belonging to different persons, the specification of the purpose
can only be with reference to the acquisition of the whole area. Unlike C
in the case of an acquisition of a small area, it might be practically
difficult to specify the particular public purpose for which each and
every item of land comprised in the area is needed. "34

It is difficult to accept that the landowners were not aware of the
purpose of the acquisition nor can it be accepted that they were unable to file D
their objections on this ground. As a matter of fact, as the High Court has
concurrently found, they did file their objections before the competent
authorities. We do not see any prejudice caused to them as a result of the
wordings of the notification of acquisition. The concerned authority also
heard them on the objections filed after affording them an opportunity to file
such objections under Section 28(2) of the KIAD Act. Thus, there is no E
substance in the contention of the appellants that the notification was vague
and hence that the State did not comply with the principles of natural justice.

Purpose of Acquisition

The next contention urged on behalf of the landowners is that the lands F
were not being acquired for a public purpose. The counsel who have argued
for the landowners have expatiated in their contention by urging that land in
excess of what was required under the FWA had been acquired; land far
away from the actual alignment of the road and periphery had been acquired,
consequently, it is urged that even if the implementation of the Highway G
Project is assumed to be for a public purpose, acquisition of land far away

33. [I975J 4 sec 285.

34. Ibid. at p. 290 (paragraphs 6 and 8), per Mathew, J.
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122 SUPREME COURT REPORTS (2006] SUPP. I S.C.R.

A therefrom would not amount to a public purpose nor would it be covered by
the provisions of the KIAD Act.

In our view, this was an entirely misconceived argument. As we have
pointed out in the earlier part of our judgment, the Project is an integrated
infrastructure development project and not merely a highway project. The
B Project as it has been styled, conceived and implemented was the Bangalore-
Mysore Infrastructure Corridor Project, which conceived of the development
of roads between Bangalore and Mysore, for which there were several
interchanges in and around the periphery of the city of Bangalore, together
with numerous developmental infrastructure activities along with the highway
C at several points. As an integrated project, it may require the acquisition and
transfer of lands even away from the main alignment of the road.

The various changes brought about to the KIAD Act, also reflect the
intention of the State's Legislature to provide for land acquisition for the
Project. The expressions "Industrial area" and "Industrial Infrastructural
D facilities" as defined under the KIAD Act, definitely include within their
ambit establishment of facilities that contribute to the development of
industries. We cannot forget that, as originally enacted, the KIAD Act had a
different, narrower definition of "Industrial area" in Section 2(6). In I997,
the definition was broadened to also include "industrial infrastructural facilities
and amenities". Further, Section 2(7-a) was added to define "Industrial
E Infrastructural facilities" in a manner broad enough to take into its sweep the
land acquisition for the Project.

The learned Single Judge erred in assuming that the lands acquired
from places away from the main alignment of the road were not a part of the
F Project and that is the reason he was persuaded to hold that only 60% of the
land acquisition was justified because it pertained to the land acquired for the
main alignment of the highway. This, in the view of the Division Bench, and
in our view, was entirely erroneous. The Division Bench was right in taking
the view that the Project was an integrated project intended for public purpose
and, irrespective of where the land was situated, so long as it arose from the
G terms of the FW A, there was no question of characterising it as unconnected
with a public purpose. We are, therefore, in agreement with the finding of the
High Court on this issue.

Civil Appeal No. 7024-25105

H As regards these appeals, the impugned judgment of the High Court
STATEOFKARNATAKA v.AL.LINDIAMANUF~CTURERSORGN.[SRIKRISHNA,J.] 123

(~ide Pai;a~ph 32) specific.ally records th~t tpe aRpellants did no.t ha:ve any A.
right or interest in the land in question on the date that they filf,d tpe writ
petitions before the High Court. The counsel too admitted the same before
the High Court. The High Court accordingly found that the' writ'.petitions
were not maintainable, Since the writ petition 'pt~ceeded on this· footing,· we
cannot permit the ·appellants,.to take a different stand before us,: contrary to
what had been stated before the High Court. Since we have not been convinced
B
otherwise, the writ petitions were not maintainable and the High Court was
justified in the view that it took.

In summary, having perused the well considered judgment of the
Divi>ion Bench which is under appeal in the light of the contentions advanced C
at the Bar, we are not satisfied that the acquisitions were, in any way, liable
to be interfered with by the High Court, even to the extent as held by the
learned Single Judge. We agree with the decision of the Division Bench that
the acquisition of the entire land for the Project was carried out in consonance
with the provisions of the KIAD Act for a public project of great importance
for the development of the State of Kamataka. We do not think that a Project D
of this magnitude and urgency can be held up by individuals raising frivolous
and untenable objections thereto. The powers under the KIAD Act represent
the powers of eminent domain vested in the State, which may need to be
exercised even to the detriment of individuals' property rights so long as it
achieves a larger public purpose. Looking at the. case as a whole, we are E
satisfied that the Project is intended to represent the larger public interest of
the State and that is why it was entered into and implemented all along.

The Final Orders

In the result, we find that the judgment of the High Court (dated F
3.5.2005) impugned before us in the Main Matter, is not liable to be interfered
with. There is no merit in the appeals and they are hereby dismissed.
Considering the frivolous arguments and the ma/a jides with which the State
of Karnataka and its instrumentalities have conducted this litigation before
the High Court and us, it shall pay N~ndi costs quantified at Rupees Five
Lakhs, within four weeks of this order. G
Appellants in C.A. No. 3497/2005 (J.C. Madhuswamy and others), in
addition to the costs already ordered by the High Court, shall pay to the
Supreme Court Legal Services Authority costs quantified at Rupees Fifty
Thousand within four weeks of this order. A copy of this order be sent to the
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124 SUPREME COURT REPORTS [2006] SUPP. I S.C.R.

A Member-Secretary of the Supreme Court Legal Services Authority for his/her
information.

In the Land Acquisition Matters, the appeals challenging the judgments
of the High Court dated 28.2.2005, 29.6.2005 and 18.11.2005 are dismissed
as without substance. However, in the circumstances, there shall be no order
B as to costs.
B.S. Appeals dismissed.