Rs 5,500 cr mill land sale spiked

High court sets aside sale of NTC land in Mumbai.

In a landmark judgment, the Bombay High Court today set aside the sale of 600 acres of surplus textile mill land in Mumbai at Rs 5,500 crore by National Textile Corporation (NTC) in prime city locations. NTC has sold five of its defunct mills in Mumbai "" Jupiter, Mumbai, Apollo, Elphistone and Kohinoor "" for Rs 2020.75 crore over the last six months.

The judgment, delivered by Justices S Radhakrishnan and SD Dharmadhikari, said the sale was illegal as it was not in conformity with a Supreme Court directive in the matter.

The Bombay Environment Action Group had challenged the sale on the ground that development control rules had been violated in the process.

The court also held that whenever mill land was sold, one-third of it had to be reserved for open space, one-third for low-cost housing by the Maharashtra Housing and Area Development Authority (MHADA) and one-third for mill-owners' benefits.

NTC Chairman K Ramachandran Pillai, however, said in a statement that the company went ahead with the sale in step with the apex court's directives.

"We had proceeded with the sale of the mills with the permission of the Supreme Court. The Supreme Court judgment has stipulated that even if the PIL succeeds, the sale of five mills can proceed without any delay and the regulations given in the judgment can be incorporated in the sale of other NTC mills," he said.

Pillai's statement added that NTC was seeking legal opinion but did not comment on whether the company would appeal to the Supreme Court.

Apart from the five mills it has already sold, the company is planning to bring another 10 mills under the hammer, once it receives clearance from the Municipal Corporation of Greater Mumbai (MCGM). There are 58 textile mills in Mumbai, of which 20 are owned by NTC and two by Maharashtra State Textile Corporation. The rest are private mills.

The judgment is also comes as a setback to private mill owners in the city as it sets aside the 2001 amendment to the municipal corporation's Development Control Rule (DCR) 58, under which mills whose original structures have not been pulled down can be redeveloped completely without two-third of the land being set aside for low-cost housing and open spaces.

Several properties in central Mumbai, such as the popular Phoenix Mills shopping mall and Ashoka Towers, being developed by the Piramals, have been redeveloped under the amended DCR 58.

The judgment said private developments were illegal since private mill owners had not sought environment clearance from the ministry of environment and forests. According to rules, all development on land over 50 acres and worth more than Rs 50 crore has to get the ministry's clearance.

Industry watchers said the judgment would have a negative impact on the city's realty prices. Said Anuj Puri of Trammel Trow Meghraj, "It will result in land prices coming down while the price of the final product will go up as the demand and supply gap will widen further."

The planned developments would have brought into the city's space-starved market a total of 27.5 lakh square feet of top grade commercial property, malls and hotels.

Reacting to the judgment, a spokesperson for DLF, which bought the 16.55-acre Mumbai Mills for Rs 702 crore, said, "We have not yet gone through the judgment so we cannot comment on it. However, we are the legal owners of the property." DLF paid a last tranche of Rs 161 crore three weeks ago for the mill.