Bombay HC Quashes Tata Power Land Acquisition, Finds State Exercise Tainted By Mala Fides.

Court holds that Maharashtra cannot use industrial development powers to transfer 84 hectares of hydro-electric project land to a private wellness venture.

Mumbai, November 6: The Bombay High Court has quashed Maharashtra’s proposed acquisition of about 84 hectares of Tata Power’s Thokarwadi land for a private wellness project, holding that the State and the Maharashtra Industrial Development Corporation had engaged in a colourable exercise of power.

A Division Bench of Justices Manish Pitale and Shreeram V. Shirsat, in its November 5 judgment, allowed the company’s petition challenging the acquisition for Maharishi Vedoddharak Foundation’s proposed Centre for Perfect Health.

The disputed land includes two islands within the Thokarwadi reservoir and a strip adjoining it. It forms part of Tata Power’s existing 75 MW Bhivpuri Hydro Station and proposed 1,000 MW Bhivpuri pumped storage project.

The Court set aside the impugned notifications dated March 3 and 4, 2025, and show-cause notices dated March 7, 2025. It consequently quashed the proposed acquisition proceedings and disposed of the proceedings pending before the Sub-Divisional Officer.

Land Already Serving A Public Purpose

The land had originally been acquired between 1911 and 1940 and transferred to Tata Power’s predecessor for hydro-electric generation. The agreements governing that transfer permitted the Government to resume portions that had become unutilised and were required for public purposes.

The Bench found that the State had not established that the disputed land had become unutilised. Instead, it continued to form part of the company’s hydro-electric infrastructure and proposed pumped storage development.

Neither the industrial area notification, the Government Resolution nor the acquisition notices stated that the land was unutilised. The State could not subsequently supply that justification through affidavits filed in Court, the Bench held.

The Court also considered the State’s own August 2023 memorandum of understanding with Tata Power for the pumped storage project.

Industrial Development Law Used As A Transfer Route

A central question was whether the Maharashtra Industrial Development Act, 1961, could be used to acquire the land exclusively for the Foundation.

Relying on the Constitution Bench ruling in Shri Ramtanu Cooperative Housing Society Limited v. State of Maharashtra, the Court reiterated that the statutory framework serves the development of industrial areas and industrial estates.

On the facts before it, the Bench found that the acquisition machinery was being used to transfer Tata Power’s land to a particular private entity while bypassing safeguards applicable to acquisition for private companies under the 2013 land acquisition law.

The Foundation was to fund the compensation. In the circumstances of this case, that arrangement further undermined the respondents’ claim that the acquisition served a public purpose.

The State, MIDC and the Foundation had defended the proposal by citing allegedly unutilised land, investment, employment generation and the project’s wellness-related activities. The Court nevertheless found that the project’s primary purpose was private, with public benefits incidental to it.

Predetermined Decision, Court Finds

The chronology attracted particularly strong criticism. The High Power Committee had initially declined the proposal to acquire Tata Power’s land. The proposal subsequently advanced through higher authorities, while recommendations requiring the company’s consent were abandoned.

The Court found that the authorities had reached a predetermined conclusion to hand over the land. The consent requirement was discarded, and the challenged instruments were issued hurriedly. Taken together, the Bench held, the actions amounted to a colourable exercise of power and smacked of mala fide.

The Foundation already held about 126 hectares adjoining the reservoir. Addressing its stated requirement for additional land for aesthetic purposes, the Court questioned whether this could come at the expense of Tata Power’s hydro-electric projects and catchment area.

The Bench also rejected reliance on the State’s power of eminent domain, holding that it must be exercised for a genuine public purpose and could not justify an arbitrary takeover.

Dam Safety Concerns

The Court found substance in Tata Power’s concerns that proposed bridges connecting the mainland to the reservoir islands could create security risks. It also referred to State norms restricting development within 500 metres of a dam’s high-flood line.

Rejecting the objection that Tata Power should first pursue proceedings before the Sub-Divisional Officer, the Bench held that the authorities’ predetermined approach made the outcome before that officer a foregone conclusion.

Senior Advocates Darius Khambata and Prateek Seksaria appeared for Tata Power with a team including Bhushan Deshmukh and Shri Venkatesh, instructed by Mulla and Mulla and Craigie Blunt & Caroe. Shrihari G. Aney represented the State, Chetan Kapadia appeared for MIDC, and Anil Anturkar represented the Foundation.