Finding ‘pass-through’ acquisition a colourable exercise of power, the Bombay High Court has clarified that Maharashtra Industrial Development Act, 1961 (MID Act) cannot be used to acquire land already dedicated to Tata Power’s hydro-electric projects solely to benefit a private company. The High Court held that the disputed 84 hectares form part of The Tata Power Company Ltd.’s hydro-electric infrastructure, including its existing Bhivpuri Hydro Station and proposed 1000 MW pumped storage project.
Since the land was not shown to be unutilized, the State could not seek its takeover under the original acquisition arrangements. The Court noted that neither the industrial area notification, the Government Resolution nor the acquisition notices stated that the land was unutilized. The State attempted to justify acquisition on that ground only through affidavits filed before the Court, which was held impermissible.
Relying on the Constitution Bench ruling in Shri Ramtanu Cooperative Housing Society Limited and another vs. State of Maharashtra [(1970) 3 SCC 323], the Court reiterated that the Maharashtra Industrial Development Corporation framework is intended for development of industrial areas and estates, and not for acquiring land exclusively for the benefit of a private company.
The Bench found that the State and Maharashtra Industrial Development Corporation attempted to use the MID Act as a route to transfer Tata Power’s land to Maharishi Vedoddharak Foundation (MVF), while avoiding the safeguards that ordinarily apply when land is acquired for a private entity. This amounted to a colourable exercise of power.
While MVF projected employment generation and wellness-related activities, the Court held that the primary purpose of the project remained private in nature and that any public benefit was merely incidental. In contrast, the Tata hydro-electric and pumped-storage projects were already serving a direct and continuing public purpose.
Briefly, the dispute arose after the Tata Power Company Ltd. (TPCL) challenged notifications issued by the State of Maharashtra under the Maharashtra Industrial Development Act, 1961 (MID Act), seeking to acquire about 84 hectares of land forming part of the Thokarwadi Dam reservoir area and the Bhivpuri Hydro Power Project.
The proposed acquisition was intended to benefit Maharishi Vedoddharak Foundation (MVF), a private entity developing an ‘Ultra Mega Project’ known as the Centre for Perfect Health. The land included portions of the reservoir catchment area and two land outcrops (islands) associated with Tata Power’s existing 75 MW hydro project and proposed 1000 MW pumped storage project.
The land in question had originally been acquired between 1911 and 1940 under the Land Acquisition Act, 1894 and transferred to Tata’s predecessor specifically for hydro-electric generation. Tata Power argued that the land continued to be used for public-purpose electricity projects and could not be acquired merely to facilitate a private wellness and ayurveda venture.
The Division Bench Justice Manish Pitale and Shreeram V. Shirsat found that the original agreements governing the land permitted the Government to take back portions of the land only if they had become unutilized for the hydro-electric project and were required for public purposes. The Court held that the State never established that the disputed 84 hectares had become unutilized. On the contrary, the land continued to form part of Tata Power’s hydro-electric operations and the upcoming 1000 MW pumped storage project.
The Court noted that neither the impugned notification, Government Resolution, nor the acquisition notices alleged that the land was unutilized. The State attempted to introduce that justification only through affidavits before the Court, which was impermissible in law. The Bench further observed that acquisition under the MID Act is intended for the development of industrial areas and industrial estates.
The Court found that the entire acquisition exercise was directed solely towards benefiting MVF, a private company, with compensation also to be paid by MVF and not from public funds. This indicated an attempt to bypass the procedural safeguards applicable to acquisition for private entities under the land acquisition regime.
The Bench held that the State’s power of eminent domain is not absolute. Even where such power exists, acquisition must genuinely satisfy the requirement of public purpose. The Court found that the primary purpose of MVF’s project was private in nature, while any public benefit such as employment generation was only incidental.
The Court was also influenced by the chronology of events, noting that the High Power Committee had initially declined the proposal for acquiring Tata Power’s land, yet higher authorities subsequently pushed the project forward. Recommendations requiring Tata Power’s consent were later abandoned, reinforcing the impression that State machinery was being used to favour a particular private entity.
The Court additionally observed that the proposed development near the reservoir and the contemplated construction of bridges to the islands could raise security concerns and may violate State norms prohibiting certain development activities within 500 metres of a dam’s high flood line.
