Bombay HC Quashes Plan To Acquire 84 Hectares From Tata Power For Private Wellness Project, Citing Ongoing Hydro Use

Between 1911 and 1940, land including the disputed 84 hectares was acquired and conveyed to Tata Power’s predecessor for a hydro-electric project, subject to contractual provisions concerning land not used or intended for that project.

Tata Power maintained that the land remained part of its existing hydro-electric operations and was required for a proposed 1,000 MW pumped-storage project.

The State issued notifications under the Maharashtra Industrial Development Act, 1961 (MID Act), declaring the land an industrial area and initiating acquisition proceedings for the benefit of respondent No. 6, a private company already holding approximately 126 hectares for its proposed project.

Tata Power challenged the notifications and show-cause notices under Article 226; the statutory hearing before the Sub-Divisional Officer had concluded, but no decision had been made.

Section 1(3) of the MID Act permits Chapter VI to operate in an area, while Sections 32 and 39 concern acquisition and disposal of land for the Act’s purposes; the Act is directed to developing industrial areas or estates, not to acquisition solely for a private company.

The Constitution Bench in Shri Ramtanu Co-operative Housing Society Ltd. v. State of Maharashtra held that the MID Act contains no procedure for acquisition for a company, unlike the general land-acquisition law.

Section 39(2)(a) also requires MIDC, before disposing by sale of undeveloped acquired land, to offer it first to the persons from whom it was acquired.

Under the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013, acquisition for a private company must meet the statutory public-purpose requirements; the Court found that the Maharashtra exemption in Section 10A did not apply to this project.

The power of eminent domain is subject to the requirement of public purpose and lawful procedure; under K. T. Plantation Pvt. Ltd. v. State of Karnataka, the purpose must be primarily public, not primarily private with only incidental public benefit.

Article 300-A, as discussed in Kolkata Municipal Corporation v. Bimal Kumar Shah, includes the State’s duty to acquire property only for public purpose.

A show-cause notice issued with a predetermined outcome may be challenged by writ under Siemens Ltd. v. State of Maharashtra.

The Court found that the land had been acquired for the hydro-electric project and that Tata Power had shown it remained relevant to that use, including the proposed pumped-storage project. The State had neither identified the land as unutilized in the impugned instruments nor conducted an inquiry into non-utilisation; it could not supply that justification later through affidavits.

The acquisition was intended exclusively to benefit respondent No. 6, with compensation to be paid by that company, and the MID Act could not be used as a substitute for the statutory route governing acquisition for a private company.

The project’s stated employment and other benefits did not establish that its primary purpose was public: the record showed that the additional land was sought principally for the project’s location and aesthetic features, despite the company already holding about 126 hectares.

The sequence of decisions, including the overruling of earlier committee recommendations and the decision to proceed without the landowner’s NOC, supported the finding of colourable exercise of power.

The petition was maintainable because the SDO could not determine the constitutional challenges and, in the circumstances, the statutory hearing was found to be a foregone conclusion.

It allowed the petition, quashed the impugned notifications dated 3 and 4 March 2025 and the show-cause notices dated 7 March 2025, and disposed of the proceedings pending before the SDO.