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SC unlocks Mumbai mill fortune

New Delhi, May 11: Real estate developers in Mumbai ' the country’s commercial capital ' have received a huge shot in the arm with the Supreme Court today permitting sick and closed textile mills to commercially exploit their land.

The apex court handed down the decision in a case relating to state-owned National Textile Corporation (NTC) ' but it will impinge on the fortunes of 58 other private mills which have been placed in a similar predicament after their businesses collapsed in the early 80s’ after a crippling mill-workers’ strike.

In its ruling, the Supreme Court allowed NTC to complete transactions on development of land at its sick textile mills in Mumbai under the plan approved by the Board for Industrial and Financial Reconstruction (BIFR).

A division bench of justices N. Santosh Hegde and S. B. Sinha said the land of sick mills could be used to develop office space or even residential complexes, provided requisite approvals were obtained.

While delivering the judgment, the apex court modified a Mumbai High Court interim order that stayed all types of construction on the plots of the sick mills on a public interest litigation (PIL) by the Bombay Environmental Action Group (BEAG). The apex court, however, remitted the main case back to the high court, directing it to complete the process by July 31.

“The NTC is permitted to complete the transactions in terms of the scheme framed by BIFR,” said Justice Sinha, who wrote the judgment for the bench.

The apex court, however, said this would be subject to the condition of the writ petition ultimately succeeding, after adjudication by Mumbai High Court and on appeal, if any, before the Supreme Court.

Real estate developers in Mumbai ' which a couple of years ago had the distinction of being the most expensive place in the world in terms of office space rents ' have been eagerly waiting for the order as it will benefit private mills, most of which occupy prime land in mid-town Mumbai.

Private mill-owners like Mafatlal, Hindoostan Spinning and Weaving, Ruby and Morarjee Mills will also be able to develop their property and construct residential complexes, office shopping plazas and malls provided they get the approvals from authorities.

The total area under the 58 mills, closed after prolonged workers’ strike in the 1980s, is estimated at 600 acres. The Bombay Environmental group contended that more space for greenery should be left by the mills to help the city breathe easily.

The Supreme Court allowed the mills with permission for construction, to resume work and said “any further construction and/or creation of third-party rights by the owners will be at their own risk” and would be subject to the final orders of the high court.

But it isn’t all hunky dory yet. The main case has been tossed back to Mumbai High Court. The parties that lose out there will almost certainly move the Supreme Court; this could start off another round of litigation.

The apex court also offered some caveats. The creation of third-party rights like selling flats constructed on the mill land to purchasers “would not be construed as an equity in favour of the mill owners”.

“Therefore, before entering into agreement and creating third-party interest in the mill land, the owners must advertise the actual position on the land in at least two widely circulated dailies ' one in English and the other in Marathi,” the apex the court directed.

The mill owners and the Maharashtra government had appealed against the high court’s interim stay order. Over Rs 10,000 crore has been pumped in for the development of the mill land and of that, Rs 2,000 crore has been paid to workers as wage dues.

In respect of mills whose layout plan for development has not been sanctioned, the apex court said they could still apply to the authorities for approval. The apex court also made it clear that only those textile mills that obtained “commencement certificates” for development of land could go ahead with construction.

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