According to the Bombay High Court, a state-owned company has the same preemptive right to reconstruct an area designated as a slum as any other private property. Following that, the court emphasised the corporation’s preemptive rights by nullifying a letter of intent issued on a private developer’s behalf.
However, the court clarified that the private developer’s rights would be restored if Maharashtra State Textile Corporation Ltd. (MSTCL) chose not to use its redevelopment rights.
The MSTCL filed a writ case challenging orders that the Slum Rehabilitation Authority (SRA) had made in favour of a private developer, Hariyali Estate Pvt. Ltd., and the court’s ruling was in response.
The corporation’s attorney contended in court that the corporation still has the preferred and preemptive right to redevelop the slum area even in light of the modified Maharashtra Slum Areas Act. He emphasised the unquestionable nature of this statutory entitlement. He emphasised the financial advantages of the project for the public corporation, with proceeds going to the public exchequer, and claimed that it makes little difference if the redevelopment is fully funded by the corporation or by partnerships. Additionally, he argued that the SRA had no right to automatically choose a private developer over a state-owned enterprise since the latter is legally the land owner and has the same capacity to carry out the reconstruction as any private organisation.
In agreement with his position, a bench of Justices GS Patel and Kamal Khata emphasised that “if a state-owned corporation that also owns the land is granted a preemptive right, then there is no reason why that same right should not be granted to a private owner of the land.” The court emphasised how unusual the case was—another state agency denied a state-owned company its property rights.
The court emphasised the significance of administrative clarity, stating that the SRA must provide the MSTCL with particular notice to enable an appropriate decision-making process. The observation was made that MSTCL was not afforded an equitable chance to pursue redevelopment.
As a result, the court declared the developer’s rights void, and the CEO of SRA was given notice to notify MSTCL by April 1, 2024, giving MSTCL a deadline to present a redevelopment proposal. If this isn’t done, private developers’ rights will be reinstated.
