Supreme Court | Landowner’s Preferential Right To Redevelop Recognised Under Maharashtra Slum Areas Act | Acquisition Proceedings Set Aside
Kiran Raj
The Supreme Court of India Division Bench of Justice Surya Kant and Justice Nongmeikapam Kotiswar Singh dismissed the appeals and affirmed the Bombay High Court’s decision that set aside the land acquisition initiated under Section 14 of the Maharashtra Slum Areas (Improvement, Clearance and Redevelopment) Act, 1971. The Court vacated the interim status quo, granted liberty to the landowner to submit a fresh Slum Rehabilitation (SR) Scheme within 120 days, and directed the Slum Rehabilitation Authority and the State to process the proposal within 60 days of submission, in accordance with the prevailing law and regulations. The matter was ordered to stand disposed in these terms.
The dispute concerns the validity of the acquisition of land bearing CTS Nos. 119 I and 119 I/1-83 at Village Tungwa, Taluka Kurla, Mumbai, admeasuring 9,054 sq. m., under the Slums Act. The Bombay High Court had allowed a writ petition filed by the landowner, held the acquisition void, and directed the State and the Slum Rehabilitation Authority (SRA) to invite and consider the landowner’s redevelopment proposal; the present appeals were filed by the proposed housing society of slum dwellers, the State, and the SRA.
The statutory architecture captured by the Court records the original 1971 framework for declaration, clearance, redevelopment, and acquisition (Chapters II–V), including the owner’s right to redevelop after a clearance order under Section 12(10) and the Competent Authority’s redevelopment power under Section 13. The Slums Act was later supplemented by Chapter I-A (from 1995) introducing the SRA, a General Slum Rehabilitation Scheme (Section 3B), and the process for declaring an area as a Slum Rehabilitation Area (SR Area) (Section 3C), with modifications applying certain Chapters to SR Areas (Section 3D). Under Section 3D, the owner’s right under Section 12(10) remains with modifications, and the SRA may take up redevelopment under a substituted Section 13 if landholders or occupants do not come forward within a reasonable time. Acquisition under Section 14 continues to be available, with modifications tethering it to implementation of the Slum Rehabilitation Scheme in an SR Area.
Subordinate instruments noted by the Court include the Development Control Regulations for Greater Mumbai, 1991 (notably Regulation 33(10)); the SRA’s 1997 Guidelines for implementation; and SRA Circular Nos. 144 (31.08.2013) and 144-A (09.11.2015), the latter recognising that landowners have the first right to file SR Schemes and relaxing the 70% consent requirement where the owner files the scheme.
On facts, Indian Cork Mills Private Limited (ICM) has owned the subject land since 1970. A portion (3,045.03 sq. m.) was declared a “Slum Area” on 18.09.1979. Over time, the Tarabai Nagar Co-operative Housing Society (Proposed) (Tarabai Society) was formed on 28.02.2002. In 2006–2008, Tarabai Society made applications seeking survey, further declaration, and acquisition for redevelopment. Following surveys, on 11.03.2011 the SRA declared the entire property an SR Area under Section 3C(1).
Tarabai Society thereafter requested acquisition under Section 14 through letters of 28.02.2012, 15.03.2012, and 05.05.2012. On 17.05.2012, the Additional Collector issued a public notice under the first proviso to Section 14(1) calling upon the owner and interested parties to show cause regarding Tarabai Society’s proposal; ICM asserts this notice was not served. Proceedings were initiated without ICM; third-party objections were rejected as relating to adjoining land, and a report recommending acquisition was sent on 04.08.2012 to the Housing Department.
The Ward Officer sought the CEO-SRA’s remarks. By letter dated 29.11.2012, the CEO informed the State that no SR Scheme had been received and raised no objection to acquisition; the State sought clarification whether landowners had been heard. A fresh notice issued to ICM on 08.08.2013 elicited its response on 23.08.2013 asserting willingness to develop under an SR Scheme without third-party involvement; this was reiterated in hearings on 26.08.2013 and 16.09.2013. ICM wrote to the SRA on 12.09.2013 conveying its intention to redevelop without third-party builders, and on 08.10.2013 wrote to Tarabai Society confirming willingness to implement an SR Scheme; no response was received.
On 21.12.2013, the CEO recommended acquisition, noting ICM’s willingness but the absence of a filed SR Scheme, and formally requested acquisition on 09.01.2014. Inspections followed; rehabilitation was found feasible and, if acquired, SRA could approve an SR Scheme. On 09.01.2015 the Housing Department moved the matter to the Minister for Housing. ICM reiterated intent on 25.02.2015, and on 06.05.2015 sought directions to survey/demarcate for submission of a proposal under Regulation 33(10).
On 15.05.2015 the CEO recommended that, consistent with the notion that the landlord be afforded the first right, ICM be given an opportunity to submit an SR Scheme; on 12.10.2015, the State recorded that the matter should be reconsidered at the SRA level or, if necessary, by the High-Powered Committee. The CEO later forwarded a report dated 12.09.2016 recommending initiation of acquisition, and on 22.12.2016 the State issued a notification under Section 14(1). The SRA on 07.01.2017 sought land details and informed ICM of a hearing on 19.01.2017.
ICM filed Writ Petition No. 658 of 2017 challenging the acquisition notification and the SRA notice; on 27.01.2017 the High Court directed status quo. On 13.06.2018, the High Court allowed the petition, holding that (i) a landowner has a preferential right to develop the land under Sections 3B(4) and 13(1); (ii) the SRA must issue a notice inviting the owner to submit an SR Scheme once private land is declared an SR Area; and (iii) the State’s acquisition power under Section 14 read with Section 3D(c)(i) is subject to the owner’s right. The acquisition was set aside and the SRA directed to consider the owner’s proposal; a typographical correction followed on 09.07.2018.
Before the Supreme Court, Mr. Shyam Divan, Senior Counsel for Tarabai Society, contended that neither the legislative scheme nor judgments created a preferential right for owners over slum dwellers, and argued that publication of the Section 3C(1) declaration sufficed as notice, with prolonged inaction indicating closure of any preferential right. For the State, Mr. Shyam Mehta, Senior Counsel, and for the SRA, Mr. Sudhanshu S. Choudhari, Senior Counsel, principally assailed the statutory interpretation adopted by the High Court. Dr. Abhishek Manu Singhvi and Mr. Amar Dave, Senior Counsel for ICM, supported the High Court’s construction and pointed to statutory and procedural lapses.
In analysing the statutory framework, the Bench began by recording that “the Statute contemplates that once the land is declared as an SR Area, it must ordinarily be redeveloped under an SR Scheme.” This observation placed the focus on the legislative preference for redevelopment through structured schemes, rather than through immediate acquisition.
The Court noted that the architecture of Chapter I-A of the Maharashtra Slum Areas Act expressly recognises landowners as stakeholders. Referring to Section 3B(4), the judgment recorded that “the landowner is also included within the framework of SR Schemes… Clause (e) of Section 3B(4), rather expressly conceptualises that there can be an SR Scheme propounded by the ‘landholders’ and occupants themselves or through a developer, with an option to the SRA for taking up such development in the event of non-participation of the ‘landholders’ or occupants.”
On this basis, the Bench stated that the right of the landowner was not merely incidental but substantive: “Since the owner of an SR Area has been granted an unambiguous right to redevelop, we now proceed to analyse whether such owner holds any precedence over the SRA’s power to develop the SR Area.” The Court then answered that question by observing that “the SRA has been assigned the responsibility to redevelop an SR Area only when the landholder or occupants do not come forward with a proposal for redevelopment.”
The reasoning was carried further: “A logical reading of Sections 3B(4)(e) and 13(1) makes it clear that the SRA’s power to undertake redevelopment can only be invoked if the owner extinguishes its right to redevelop. The owner’s right to develop an SR Area, thus, holds preference over that of the SRA within Chapter I-A of the Slums Act.”
The judgment underscored that the preferential right is grounded not only in statute but also in the inherent incidents of ownership. As the Court recorded, “a landowner of an SR Area is not only entitled to the rights granted by the Slums Act but also enjoys some inherent rights attached to an immovable property… Ownership rights are also constitutionally protected and can only be interfered with as a result of the operation of law.”
At the same time, the Bench acknowledged the State’s welfare obligations: “India being a welfare state, the Government has an unquestionable duty to confer these sections of our society with actionable rights for shelter and enable them to lead a dignified life.” The reconciliation of these duties with property rights required the Court to stress safeguards against misuse of statutory powers.
The judges expressed concern about the potential consequences of discretion without boundaries: “If the SRA is allowed to exercise any discretion in giving priority to a particular proposal, it may lead to discriminatory and arbitrary results motivated by extraneous considerations… [and] create scope for an unholy nexus between the SRA and private developers.” To guard against such outcomes, they explained, “the Legislature, in its wisdom, has thought it appropriate to confer preferential rights on the landowner, though conditional for the redevelopment of the SR Area.”
Turning to the conflict between landowners and occupants, the Court was categorical: “There is no tenable reason, in law or in equity, to allow the occupants to exercise primacy over and steamroll the landowner’s proposal, especially when the latter is willing to implement the SR Scheme by itself.”
The High Court’s approach of reading a notice requirement into the statute was expressly approved. The Supreme Court remarked: “The High Court… read into the provisions of the Statute a requirement for a specific notice to be issued to the owner, inviting it to participate in the redevelopment of the land.” This was necessary because, as the Court reasoned, “it cannot be overlooked that in the absence of a prior notice, the owner may not even become aware that the Subject Land has been declared an SR Area… Unaware that it is required to submit an SR Scheme… the owner could lose a substantial part of its rights over the land.”
The judgment distinguished between two distinct statutory steps: declaration and invitation. As it stated, “mere declaration of an area as an SR Area does not amount to inviting the landowner to redevelop the land, and the publication of the former cannot attract the consequences attributable to the latter.”
Moreover, the Court observed that practical hurdles prevent an owner from filing a scheme without State assistance: “An owner would be unable to prepare any SR Scheme, given the technical and otherwise inaccessible requirements for its preparation… the SRA cannot be allowed to shy away from its duty to invite the owner to conduct surveys, map the area, and conduct the necessary tests before finalising the SR Scheme.”
The Bench dismissed concerns that notice would delay rehabilitation. On the contrary, it found: “The issuance of the specific notice would undoubtedly involve some expenditure of time and effort… By ensuring that the owner is able to come forward sooner, the SRA would reduce delays.”
Applying these principles to the record, the Court highlighted the conduct of the parties. It noted that Indian Cork Mills had repeatedly expressed willingness: “ICM consistently demonstrated its willingness to redevelop the land and submit an SR Scheme… The SRA, however, for reasons best known to it, failed to act on the owner’s express willingness to proceed.”
Against that backdrop, the Bench concluded that the State’s decision could not be sustained: “The acquisition of land, in such circumstances, being a colourable exercise of power, cannot be sustained.” It added that “to permit the acquisition to stand, despite the dubious motives of Tarabai Society and its developer and the deeply suspect conduct of the SRA, would catalyse a travesty of justice.”
After examining the statutory scheme, the Court turned to the reliefs. The Bench began with a categorical dismissal of the challenges: “For the reasons set out above, the instant appeals are dismissed.” This meant that the findings of the Bombay High Court were left intact.
The Court then expressly confirmed the validity of the High Court’s conclusions, stating: “The Impugned Judgement of the High Court stands upheld.” By doing so, the Supreme Court reinforced the interpretation that landowners possess a preferential right in redevelopment and must be invited before acquisition steps are taken.
As a consequence of this outcome, the interim arrangement imposed during pendency of the proceedings also came to an end. The judgment recorded: “The status quo directed vide order dated 27.01.2017 is, consequently, vacated.” This cleared the way for further action in accordance with law.
Recognising that the regulatory framework had changed while the appeals were pending, the Bench granted liberty to the landowner. It directed: “Keeping in mind the amendment in the applicable regulations during the pendency of these Civil Appeals, liberty is granted to ICM to submit, within a period of 120 days, a fresh SR Scheme for redevelopment of the Subject Land, strictly in accordance with laws and regulations in force.”
The Court also imposed a corresponding duty on the authorities to act swiftly on such a proposal. It ordered that “the SRA and the State shall process ICM’s proposal as expeditiously as possible under the prescribed procedure, within a period of not more than 60 days from the date of ICM’s submission.”
Finally, the Bench drew the proceedings to a close with a direction: “All the matters and pending interlocutory applications, if any, stand disposed of in the aforementioned terms. Ordered accordingly.”
Case Title: Tarabai Nagar Co-Op. Hog. Society (Proposed) v. State of Maharashtra & Ors.; State of Maharashtra & Anr. v. Indian Cork Mills Pvt. Ltd. & Ors.; Slum Rehabilitation Authority v. State of Maharashtra & Ors.
Neutral Citation: 2025 INSC 1015.
Case Numbers: SLP (C) Nos. 19774/2018, 25494/2018, 27497/2018
Bench: Justice Surya Kant; Justice Nongmeikapam Kotiswar Singh.
