Landowners’ Rights Reaffirmed in SRA Redevelopment

The Bombay High Court’s decision in NESCO Limited v. State of Maharashtra, pronounced on 14th October 2025, significantly reaffirms the jurisprudence surrounding compulsory acquisition under the Maharashtra Slum Areas (Improvement, Clearance and Redevelopment) Act, 1971 (“Slum Act”). Justices G.S. Kulkarni and Aarti A. Sathe quashed the acquisition of NESCO's private land in Goregaon (East), initiated under Section 14(1) of the Slum Act, by reiterating the landowner's preferential right to undertake redevelopment.

The Court found the State's acquisition notification dated 21 April 2016 arbitrary and illegal due to non-compliance with mandatory statutory prerequisites. Crucially, the Slum Rehabilitation Authority (SRA) failed to issue a notice-cum-invitation under Section 13(1) of the Slum Act, which would have called upon the landowner to propose a redevelopment scheme within a prescribed period. This judgment underscores strict limitations on compulsory acquisition powers in SRA redevelopment.

Factual Background

NESCO Limited owns private land in Goregaon (East) with existing slum structures. The slum society (Respondent No. 6) sought acquisition under Section 14(1), alleging NESCO failed to provide facilities. A show cause notice issued in 2009 was allegedly never served on NESCO, and a subsequent notice from the CEO SRA in 2013 failed to provide NESCO with sufficient time to file objections. Despite these procedural flaws, the State issued an acquisition notification on 21 April 2016 and awarded NESCO a meagre INR.12 lakhs in compensation.

NESCO challenged this under Article 226, citing violations of its constitutional rights under Article 300A. Significantly, during the petition, the slum society admitted being misled by the developer (Respondent No. 5) and expressed support for NESCO to undertake the redevelopment.

Preferential Right of Landowners

The judgment firmly establishes the landowner’s preferential right to redevelop private land declared as a slum rehabilitation area. The High Court relied on its precedents in Indian Cork Mills vs. State of Maharashtra & Ors. (2018 SCC Online Bom 1214) and Bishop John Rodrigues Vs. State of Maharashtra (2004 SCC Online Bom 1632), both upheld by the Supreme Court in Tarabai Nagar Co-op.Hsg.Society (proposed) vs. State of Maharashtra & Ors. (2025 SCC OnLine 1795) and Saldanha Real Estate Pvt. Ltd. Vs. Bishop John Rodrigues & Ors. (2025 SCC OnLine SC 1794).

The Supreme Court in Tarabai Nagar clarified 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." This right extinguishes only if the owner, after receiving a Section 13(1) notice, fails to submit a redevelopment scheme within the prescribed 120 days. The SRA's failure to issue such a notice rendered the acquisition invalid.

Compulsory Acquisition: A "Draconian" Power

The Court critically viewed the misuse of Section 14 acquisition powers, describing the process as "quite draconian with minimal say to the owners of the land." It highlighted that such acquisition is not for a broad public purpose but for the "private rehabilitation of a limited number of slum dwellers," often benefiting developers with significant Floor Space Index (FSI) gains.

Echoing the Supreme Court in Saldanha Real Estate, the judgment condemned SRA actions potentially motivated by "collusion and connivance and motivated by extraneous profit interests of private builders." This necessitates heightened scrutiny and strict adherence to procedural safeguards.

Conduct of Authorities and Slum Society

The Court criticized the SRA's mechanical processing of the acquisition, noting NESCO was denied a proper opportunity to redevelop its land. It also stressed the State Government's independent duty to minutely examine acquisition proposals for fairness and non-arbitrariness, a duty not discharged in this case. The slum society's affidavit, admitting it was misled and now supporting NESCO, further reinforced the conclusion that the acquisition was procedurally flawed and substantively unwarranted.

Key Takeaways

The NESCO judgment decisively reaffirms the landowner’s preferential right under the Slum Act and imposes strict limits on the State’s power of compulsory acquisition. It serves as a crucial reminder to statutory authorities to uphold due process, fairness, and constitutional property rights under Article 300A, influencing future SRA redevelopment strategies for all stakeholders.