SC allows development of Mumbai mill lands

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`Plan does not violate BIFR requirements'; HC order set aside

PRIME REALTY: A view of the 17.5-acre NTC-owned Mumbai Textile Mills Property, which was sold for over Rs 700 crore to Jwala Real Estate Developers, a subsidiary of the Delhi-Based DLF Group. Shashi Ashiwal
PRIME REALTY: A view of the 17.5-acre NTC-owned Mumbai Textile Mills Property, which was sold for over Rs 700 crore to Jwala Real Estate Developers, a subsidiary of the Delhi-Based DLF Group. Shashi Ashiwal

J. Venkatesan

New Delhi, March 7

The Supreme Court on Tuesday set aside a Bombay High Court judgment scrapping the Rs 20,000-crore project to develop lands belonging to 58 sick textile mills, including the mills belonging to the National Textile Corporation in Mumbai.

A Bench of Justice S.B. Sinha and Justice P.P. Naolekar, allowing a batch of appeals filed by the Bombay Dyeing and Manufacturing Co Ltd, NTC and other mills against the High Court order, upheld its interim arrangement permitting the NTC to sell its five mills and allowing development activities.

The Bench held that the proposed development plan was in conformity with the BIFR scheme and the Supreme Court orders. By quashing the High Court judgment, the Bench gave its nod for further developmental activities in the properties concerned.

The High Court had held that the five NTC mills Apollo, Mumbai, Elphinstone Mill number 3, Jupiter and Kohinoor were sold without complying with the conditions laid down by the Board for Industrial and Financial Reconstruction (BIFR). For the other mills, the High Court, while interpreting the amended Development Control Rules 58 framed by the Maharashtra government, had held that the sale of the mill lands would come under the ambit of the earlier Development Control Rules which stipulated that one-third of the saleable mill lands would be earmarked for open space, one-third for the government to set up low-cost housing and the rest for the mill owners.

Ground for dismissal

In its 188-page judgment, the apex court Bench said that the changes made by the Maharashtra Government in the Development Control (DC) Rules for the development of the mill lands were constitutionally valid.

The Bench felt that the writ petition filed in the High Court by the Bombay Environmental Action Group, challenging the development scheme should have been dismissed on grounds of delay and laches.

The Bench rejected the contention that the development works on the mill lands violated the July 7, 2004, Government Notification as none had obtained clearance from the Union Ministry of Environment and Forest.

The Bench held that the environmental aspect and sustainable development must go together.

The Bombay Environmental Action Group had challenged in the High Court a modification made by the Maharashtra government in 2001 to Rule 58 of the Development Control Regulations that permitted mill owners to retain most of their land. The total area of the defunct mills is around 600 acres, located mostly in Central Mumbai, and carries a very high price tag. The High Court struck down the Rule.

The mills had contended that when the amendments were proposed to Rule 58 in 2000 and objections were called for, the petitioner before the High Court had not given any submissions.

Therefore, it would not be open to the petitioner to challenge the same Rule in 2004, four years after it was notified.

Funds crunch

The mills contended that ever since the strike by workers in early 1980s, the cotton textile industry had been under tremendous pressure on various fronts.

In order to survive, it was necessary to modernise the plant, equipment and services, which entailed huge capital expenditure. The amendment was proposed only to allow the mills to sell surplus lands.

Related Stories:
SC allows NTC mills, buyers to submit development plans
NTC case: Maharashtra not to appeal, says CM
Bombay HC sets aside sale of NTC land
Mill owners shaken by HC verdict Another legal battle likely
MPCB slaps `cease work' notice on mill property developers
NTC mills' sale triggers boom in firms with land
Real estate boom may help NTC fund revamp
SC allows Mumbai mills to go ahead with construction `NTC mill land can be developed as per BIFR plan'
Nod for construction activities Mumbai Mill owners welcome SC verdict

(This article was published in the Business Line print edition dated March 8, 2006)
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