State-owned corporations have pre-emptive redevelopment rights, like any other landowner: HC

Court clarifies private developer's rights will be reinstated if corp decides not to redevelop. Court wants fair opportunity for corp in redevelopment process

MUMBAI: The Bombay High Court ruled that a state-owned corporation, like any private landowner, has the pre-emptive right to redevelop an area under its ownership that has been declared a slum. Subsequently, the court invalidated a letter of intent issued in favour of a private developer, emphasising the corporation’s preemptive rights.

The Bombay high court said the primary focus of elected representatives is to discharge their duties effectively, regardless of their location. (HT File Photo)

The court, however, clarified that the rights of the private developer would be reinstated if the corporation - Maharashtra State Textile Corporation Ltd (MSTCL) decided not to exercise its redevelopment rights.

The court’s decision came in response to a writ petition filed by the MSTCL contesting orders favouring a private developer, Hariyali Estate Pvt. Ltd., issued by the Slum Rehabilitation Authority (SRA).

During the court proceedings, the counsel representing the corporation argued that even with the amended Maharashtra Slum Areas Act, the corporation retains a preferential and pre-emptive right to redevelop the slum area. He stressed that this statutory right is undisputed. He asserted that the funding of the redevelopment, whether solely by the corporation or through partnerships, is immaterial and highlighted the financial benefits of the project for the public corporation, with proceeds benefiting the public exchequer. He also contended that there is no valid reason for the SRA to automatically favour a private developer over a state-owned corporation, which holds legal ownership of the land and is fully capable of executing the redevelopment similar to any private entity.

A bench of Justice GS Patel and Justice Kamal Khata concurred with his argument, emphasising, “If a preemptive right is afforded to a private owner of the land, then there is no reason why that same right should not be given to a state-owned corporation that also owns the land.” The court highlighted the unique nature of the case, where a state-owned corporation faced deprivation of its property rights by another state instrumentality.

The court underscored the importance of administrative clarity, asserting that the SRA must provide specific notice to the MSTCL to facilitate a proper decision-making process. It was observed that MSTCL was not provided with a fair opportunity to pursue redevelopment.

Consequently, the court invalidated the developer’s rights and instructed the CEO of SRA to notify MSTCL by April 1, 2024, allowing a stipulated time frame for MSTCL to submit a redevelopment proposal. Failure to do so would revive the rights of private developers.