Owner’s Preferential Right To Redevelop Slum Land Limits State’s Acquisition Power: Supreme Court Dismisses Plea For Compulsory Acquisition Of Malad Recreational Ground Plot
Kiran Raj
The Supreme Court of India Division Bench of Justice J.B. Pardiwala and Justice K.V. Viswanathan on 2 December 2025 declined to direct compulsory acquisition of a 2,005-square-metre parcel in Malad, Mumbai, reserved in the development plan as a recreational ground. Deciding a dispute between a developer executing a slum rehabilitation scheme, the Slum Rehabilitation Authority, and the subsequent purchaser-landowner, the Court held that the State’s power to acquire land under the Maharashtra Slum Areas (Improvement, Clearance and Redevelopment) Act, 1971 cannot be used in a manner that displaces the landowner’s statutory priority to redevelop notified slum property. The Court further directed that the plot be used only as a recreational ground, while the developer may obtain an occupation certificate after handing over a separate designated recreational area to the municipal corporation.
The appeal arises from a judgment of the Bombay High Court dated 18 December 2024 dismissing a writ petition filed by Jyoti Builders challenging orders of the Chief Executive Officer, Slum Rehabilitation Authority (SRA), dated 3 October 2022 and of the Additional Grievance Redressal Committee dated 7 October 2024. The dispute concerns a 2,005 sq. m. parcel in Malad, Mumbai, originally owned by F.E. Dinshaw Trust, declared a slum under Section 4 of the Maharashtra Slum Areas (Improvement, Clearance and Redevelopment) Act, 1971 and reserved as Recreational Ground in the 1991 Development Plan. Ownership passed to Phuldai R. Yadav in 1991; in 1992 she executed an MoU with Harishree Enterprises (appellant’s predecessor) while a survey recorded 34 slum dwellers on the subject land and Annexure II (1997) and subsequent Letters of Intent included the land in a larger slum scheme.
Between 2005 and 2011 rehabilitation buildings were constructed and in 2015 the CEO-SRA ordered acquisition of the subject land under Section 14 of the Slum Act, holding it liable to acquisition with compensation to the owner. Later surveys, demarcation, CTS maps, legal opinions and correspondence were placed on record. In March 2022 Phuldai sold the land to Alchemi Developers, who proposed a fresh scheme under DCPR 2034, also relying on a list of 34 occupants. Jyoti Builders contends the land remains part of its scheme and SRA changed its stand; respondents rely on subsequent LOIs, letters excluding the plot, treatment of the 34 as PAPs with FSI benefit, and the owner’s preferential redevelopment right under the Slum Act, MRTP Act and DCR 1991/DCPR 2034.
The Court first explained the statutory framework, observing that "The scheme of the Slum Act indicates that it is a beneficial legislation and emphasizes on the protection of the occupiers (slum dwellers) by making a provision for redevelopment and rehabilitation." It noted that "Section 3B contemplates a Slum Rehabilitation Authority (“SRA”) to prepare a Slum Rehabilitation Scheme, which shall be deemed to be the Development Control Regulations made under the MRTP Act," and that "Regulation 33(10) of DCR 1991 has been framed to deal with SRA Schemes."
Referring to earlier precedent, the Court recorded that "This Court in Tarabai (supra) has unequivocally established that: (i) the private owner of an SR Area has a preferential right to develop it; (ii) the SRA must invite the landowner to come forward with a redevelopment proposal and give them reasonable time to do so before the said preferential right extinguishes; and (iii) the State or the SRA cannot move to acquire the land before the preferential right of the owner is extinguished." It further quoted that "the owner has a preferential right over other stakeholders to develop an SR Area" and that "any process to acquire the land shall have to be kept in abeyance till such time as the owner's preferential right to develop it stands extinguished."
On the effect of the development plan and the Citispace order, the Court noted that "the High Court had passed an order of injunction… on use of lands reserved inter alia for Recreation Ground meant for the implementation of Slum Rehabilitation Scheme," quoting the direction that "until further orders, no new rehabilitation scheme be sanctioned without the permission of this Court in respect of open spaces which are reserved for gardens, parks, playgrounds, recreational spaces, maidans, no-development zones, pavements, roads and carriageways." It recorded that "Such injunction continued till 01.03.2022."
Assessing the facts, the Court stated that "In such circumstances, there was no occasion for the respondent No. 1 SRA to acquire the subject property," adding that "it is clear that till 01.03.2022 nothing could have been done." It noted that the owner later transferred title to the new developer, whose proposal "was accepted in accordance with law as there was no slum scheme proposal on the subject property," and that the appellant sought mandamus for acquisition only thereafter.
The Court then concluded: "We are of the view that it is too late in the day, or to put it in other words, it will be too much if we at this point of time direct the authority concerned to acquire the land under Section 14 of the Slum Act on the basis of the CEO-SRA’s order dated 26.02.2015." It therefore held that "we decline to grant any relief to the appellant insofar as the prayer for acquisition of the subject property is concerned."
Finally, the Court reiterated the controlling principle that "It is well settled that the power of the State Government to acquire land under Section 14 read with Section 3D(c)(i) of the Slum Act is subject to preferential right, if any, of the owner" and, quoting Tarabai, that "it is writ large on the text of Section 14 that the State can invoke its power to acquire the land, if it is necessitated, as per the SRA, for the implementation of a Scheme," but "when the landowner is implementing an SR Scheme on its own, a necessity to acquire the land could [not] arise."
The Court’s final directions are as follows: “We make it abundantly clear that no construction shall be made on the subject property of any nature and the same shall be utilized only as a Recreational Ground (RG). In this regard, a clear statement was made by the learned counsel appearing for the respondent Nos. 1 and 2 respectively that no construction of any nature would be permitted on the subject property. We direct the Respondent No. 4 (Alchemi Developers) their successors and assigns that they shall not put up any type of construction on the subject property and the same shall be utilized only as a recreational Ground (RG).”
“(1) The power of the State Government under Section 14 read with Section 3D(c)(i) of the Slum Act is subject to preferential right, if any, of the owner. This being the position of law, no case is made out by the appellant for a writ of mandamus to be issued to the State Government to acquire the subject property under Section 14 of the Slum Act.”
“(2) The appellant is entitled to the Occupation Certificate for the Final Sale Building in the slum scheme on the appellant handing over the Dark Green Portion admeasuring 2700 sq. mts. reserved for Recreational Ground (RG).”
“(3) The appellant has been fully compensated by granting adequate area/FSI for sale.”
“(4) We direct the Respondent No. 4 (Alchemi Developers) their successors and assigns that they shall not put up any type of construction on the subject property and the same shall be utilized only as a recreational Ground (RG).”
The appeal is disposed of accordingly.
Advocates Representing the Parties
For the Petitioners: Mr. Shyam Divan, Sr. Adv. Mr. Kavin Gulati, Sr. Adv. Mr. Anish Agarwal, AOR Mr. Yogesh Adhia, Adv. Mr. Pratik Chakma, Adv. Ms. Natasha Bagga, Adv. Mr. Abhinav Maurya, Adv. Ms. Pooja Kane, Adv. Mr. Jitendra Jain, Adv. Mr. Yashvardhan Singh, Adv.
For the Respondents: Ms. Pallavi Sharma, AOR Mr. Vikas Singh, Sr. Adv. Mr. Vinay Navare, Sr. Adv. Mr. Shubhranshu Padhi, Adv. Mr. Bharat Jain, Adv. Mr. Purvesh Buttan, Adv. Mr. Karan Batura, AOR Mr. Prateek Narwar, Adv. Mr. Nikhil Vijay Adkine, Adv. Ms. Tuhina Kakkar, Adv. Mr. Himanshu Buttan, Adv. Ms. Prachi Bhutani, Adv. Mr. Abhikalp Pratap Singh, AOR Mr. Amol Nirmalkumar Suryawanshi, AOR Mr. B. Dhananjay, Adv. Ms. Srishty Pandey, Adv. Mr. K. Parameshwar, Sr. Adv. Mr. Palash Singhai, AOR Mr. Harshal Sareen, Adv. Mr. Pragya Prakash Upadhyaya, Adv.
Case Title: Jyoti Builders v. Chief Executive Officer & Ors.
Neutral Citation: 2025 INSC 1372
Case Number: Civil Appeal No. 14512 of 2025 (arising out of S.L.P. (Civil) No. 3405 of 2025)
Bench: Justice J.B. Pardiwala, Justice K.V. Viswanathan
