Supreme Court refers Bangalore Palace Grounds land acquisition dispute to 3-judge bench

The Supreme Court on Thursday referred the dispute concerning ₹3,000 crore worth of transferable development rights (TDRs) in connection with Bangalore Palace land to a three-judge bench for final adjudication in August [Sri Srikanta DN Wadiyar (D) by LR v. State of Karnataka & Ors]..A Bench of Justices Surya Kant, Dipankar Datta and N Kotiswar Singh restrained the parties from using or transferring the certificates already issued..The Court passed the directions while hearing an application by the State of Karnataka challenging earlier orders of the Court that directed issuance of TDRs to the legal heirs of the erstwhile royal family of Mysore for the acquisition of 15.36 acres of Palace Grounds land for a road-widening project.The Bench clarified that the directions were subject to the outcome of the review petition filed by the State against the May 22 judgment. That petition is scheduled to be heard in the week commencing July 21.“If the review petition is declined, the interim directions shall continue for a period of four weeks from the date of such order or till the matter is heard by the three-judge bench, whichever is later,” the Court added.To prevent further complications, the Court also kept the operation of its earlier orders in abeyance.“The consequential effect of orders dated 10 December 2024, 22 May 2025, 17 May 2022, 19 March 2024, and 22 May 2025 shall be kept in abeyance. This interim arrangement is without prejudice to the rights of the parties.".Senior Advocate Kapil Sibal, appearing for the State of Karnataka, argued that TDRs could not have been granted in the first place since Section 14B of the Karnataka Town and Country Planning Act, 1961, which permits such compensation, came into force only in 2004. He also contended that the State's review petition against the May 22 judgment permitting the transfer was yet to be listed. .Addressing concerns over a 2014 Supreme Court order that had allowed the issuance of TDRs to the royal family, the Bench observed that the order may have been affected by a bona fide error."It appears there was some bonafide error in 2014 order due to lack of assistance...when there is likelihood of an order resulting in an irreversible adverse impact on public interest, sometimes you have to invoke extraordinary jurisdiction...Nobody could assist the Bench at that time,” the Court observed.The Bench referred to the role of Justice Vikramjit Sen, who had passed the 2014 order."Justice Vikramjit Sen has been in Karnataka, his lordship probably knew it that TDRs are issued...nobody from State side could probably assist properly at that time...that TDR is issued under a different statute," the Court saidIt also clarified that a status quo order cannot override the effect of a legislative enactment..The dispute concerns the 1996 Bangalore Palace (Acquisition and Transfer) Act, under which the Karnataka government sought to acquire approximately 472 acres of Palace Grounds land. The High Court upheld the validity of the Act in March 1997, and the royal family approached the Supreme Court, where the appeals have remained pending since.In 2014, the government sought to acquire 15.36 acres of Palace Grounds for widening Jayamahal and Palace Roads in Bengaluru. The parties had agreed before the Supreme Court that compensation would be paid in the form of TDRs, and the Court had directed the State to issue the same based on prevailing market values.However, following a change in government, the State sought to back out of the agreement citing financial implications. It passed an ordinance in January 2025 to nullify the compensation and argued that releasing TDRs worth over ₹3,000 crore would severely impact the exchequer and urban planning..The royal family then initiated contempt proceedings, and on 10 December 2024, the Court directed the State to release the TDRs. When the State failed to comply, further directions were issued on May 22, 2025. In response, the State filed an interlocutory application in the pending civil appeals seeking to block the release of the TDRs until the main appeals were finally decided..Today's hearing was the first before a special bench constituted to examine the matter in depth, following the unusual situation of a coordinate bench having earlier passed directions in contempt while the connected appeals against the statute remained pending. The matter will now be heard afresh by a three-judge bench..[Read Live Coverage]