Karnataka HC issues notice to KIADB in Bengaluru IT park land case

The Karnataka High Court has issued notice on a plea by Royal Fragrances Private Limited. The petition seeks action from the KIADB over alleged violations in the allotment and lease of ~10 acres of land meant for an IT park near Bengaluru.

The Karnataka High Court has issued notice on a petition filed by Royal Fragrances Private Limited seeking a direction to the Karnataka Industrial Areas Development Board (KIADB) to consider initiating resumption proceedings over land earmarked for an IT park near Bengaluru, citing alleged violations of the conditions governing its allotment and lease. Justice R Devdas, in an order dated October 9, directed issuance of notice to the remaining respondents after recording the appearance of counsel for the first two respondents. The court directed that the matter be listed after two weeks and permitted objections, if any, to be filed to the impleading applications.

Details of the Disputed Land

The petition concerns land measuring approximately 9 acres and 34½ guntas in Devarabeesanahalli and Kariyammana Agrahara villages in Bengaluru East taluk. According to Royal Fragrances, the land was acquired by the Karnataka government for its proposed software or IT park. The company has stated that it paid Rs 1.34 crore to the KIADB under an agreement dated October 18, 2001.

Allegations of Irregular Transactions

In its petition, Royal Fragrances has raised questions over certain commercial and financial transactions concerning the property involving the present lessee, Sai Srushti Infrastructure Innovation Projects India Private Limited, and its predecessor, RR Platina Infra. The company contends that the transactions warrant examination in light of the conditions governing the land allotment and the subsequent lease-cum-sale agreement.

The petition also refers to transactions involving Micro Labs Limited and OCM India Opportunities XB Alternate Investment Fund, managed by Oaktree Capital Management, in connection with the property. These references relate to an agreement concerning proposed built-up space on the land and financing arrangements involving security interests over leasehold rights.

According to the petition, an agreement to sell proposed built-up space on the property was executed before the formal allotment of the land. Royal Fragrances has questioned whether the transaction was consistent with the applicable allotment conditions and prescribed approval requirements.

Scrutiny over Financing and Security Interests

The plea also refers to financing arrangements documented through a debenture trust deed dated April 18, 2022, and a deed of hypothecation dated May 2, 2022. Royal Fragrances contends that the arrangements involving security over leasehold rights require examination against the terms of the lease-cum-sale agreement.

The company has argued that the agreement requires prior written consent from the KIADB for a mortgage and restricts its purpose to financing construction on the project land. It has questioned whether the transactions complied with these conditions.

The petition refers to debenture issuances aggregating Rs 625 crore by three group entities and identifies the Oaktree-managed fund as a debenture holder. It does not specify the fund’s individual holding or the amount of its investment.

The petition’s allegations of violations are directed principally against the present lessee and its predecessor. The references to Micro Labs and the Oaktree-managed fund arise in the context of the transactions described in the pleadings. The court’s order does not record any finding of wrongdoing against either entity.

Petitioner's Plea to KIADB and High Court

Royal Fragrances has submitted that it sent a representation to the KIADB on April 17, 2026, seeking action over the alleged violations, but the authority had not acted on its request.

The company has sought a direction to the board to consider the representation and take an appropriate decision under Section 34B of the Karnataka Industrial Areas Development Act, 1966, concerning the alleged breaches of allotment and lease conditions.

Current Status of the Case

The High Court’s October 9 order concerns issuance of notice and further listing of the matter. The allegations remain to be examined, and the court has not adjudicated the merits of the dispute. (ANI)

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