Owner Has First Right To Redevelop Slum Rehabilitation Area; State Cannot Acquire Before Inviting Landlord

A bench of Justice Surya Kant and Justice Nongmeikapam Kotiswar Singh heard appeals arising out of Special Leave Petitions challenging the Bombay High Court’s orders that set aside the State’s acquisition of a 9,054 sq. m. plot in Tungwa, Kurla (the Subject Land) and directed the Slum Rehabilitation Authority (SRA) to invite the landowner to submit a redevelopment proposal. The appeals were filed by the proposed Tarabai Nagar Co-operative Housing Society of slum dwellers, the State of Maharashtra and the SRA, while Indian Cork Mills Pvt. Ltd. (ICM) opposed the acquisition.

The Court held that Chapter I-A of the Maharashtra Slum Areas (Improvement, Clearance and Redevelopment) Act, 1971 conferred a preferential right on the landowner to redevelop an area declared a Slum Rehabilitation Area (SR Area), and that the SRA and the State were obliged to invite the owner to submit a Slum Rehabilitation (SR) Scheme before initiation of acquisition under Section 14. The Court observed that the statutory scheme preserved the owner’s primacy, subject to the owner coming forward within a “reasonable time,” and recorded that past practice and SRA circulars also recognised the owner’s first right. The Court, in its reasoning, observed: The Court also noted the SRA’s own circular that “the first right to file the Slum Rehabilitation scheme is of the owner of the land” and reproduced a sample SRA notice calling upon landlords to indicate whether they claimed a “first preferential right.”

Background

The dispute arose after a portion of ICM’s land was declared a Slum Area in 1979 and, following surveys, the entire Subject Land was declared an SR Area in March 2011. The proposed Tarabai Society repeatedly sought acquisition so that rehabilitation could proceed with an appointed developer. The Additional Collector and the SRA made various inquiries; ICM repeatedly said it was willing to redevelop the land itself but did not submit a full SR Scheme in the prescribed format without SRA assistance for surveys and mapping. The State issued a notification under Section 14 in December 2016 initiating acquisition; ICM challenged the action in the Bombay High Court.

The High Court allowed ICM’s writ petition in June 2018, held the acquisition void for lack of opportunity to the owner to submit an SR Scheme and directed the SRA to consider the owner’s proposal. The High Court treated the owner’s “preferential right” as integral to Chapter I-A and held that acquisition under Section 14 read with Section 3D(c)(i) could not proceed without first affording the owner an opportunity. The State and SRA contended before this Court that no specific invitation was required and relied on this Court’s earlier decision in Murlidhar Teckchand Gandhi; the bench distinguished that precedent on the basis that Chapter I-A expressly envisaged the owner’s primacy and limited the scope of acquisition to enabling implementation of an SR Scheme.

The Supreme Court dismissed the appeals and upheld the High Court. It found that the SRA had not issued the mandatory notice-cum-invitation to ICM and that acquisition in the absence of such an opportunity was a colourable exercise. The Court granted liberty to ICM to submit a fresh SR Scheme within 120 days and directed the SRA and the State to process that proposal within 60 days. The Court distinguished the earlier Murlidhar Teckchand Gandhi decision as inapplicable to the Chapter I-A regime.

Case Details: Case No.: 2025 INSC 1015 Case Title: Tarabai Nagar Co-Op. Hog. Society (Proposed) v. State of Maharashtra & Ors.; The State of Maharashtra & Anr. v. Indian Cork Mills Pvt. Ltd. & Ors.; Slum Rehabilitation Authority v. State of Maharashtra & Ors. Appearances: For the Petitioner(s): Mr. Shyam Divan, Senior Counsel (for Tarabai Society); (other petitioner advocates not listed) For the Respondent(s): Mr. Shyam Mehta, Senior Counsel and Mr. Sudhanshu S. Choudhari, Senior Counsel (for State and SRA); Dr. Abhishek Manu Singhvi, Senior Counsel and Mr. Amar Dave, Senior Counsel (for Indian Cork Mills Pvt. Ltd.)