84 hectares of Tata Power dam land, sought for a foundation: Bombay HC quashes MID Act takeover
Justice Manish Pitale and Justice Shreeram V. Shirsat held that the State used the MID Act pass-through route to acquire land at Thokarwadi Dam for a private foundation, in a colourable exercise of power that avoided the 2013 land acquisition law.
The land was acquired in the early 1900s so that a hydro power company could store water and make electricity. On 5 November 2026 the Bombay High Court stopped Maharashtra from taking 84 hectares of it back under the Maharashtra Industrial Development Act, 1961 and handing it to a private foundation for a wellness and Ayurveda project.
A Division Bench of Justice Manish Pitale and Justice Shreeram V. Shirsat held that the MID Act has no provision for acquiring land for a company. It found the State had picked that route to avoid the 2013 land acquisition law.
The Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 was bypassed, the court said. It called the exercise colourable and said it smacked of mala fides.
Justice Pitale wrote the judgment. The court quashed the MID Act notification of 3 March 2025, the Government Resolution of 4 March 2025 and the show-cause notices of 7 March 2025.
A dam built for hydro power
The Tata Power Company Ltd runs the Bhivpuri Hydro Station of 75 MW at Thokarwadi Dam in Pune district. Its predecessor received the land through five principal agreements and several deeds of conveyance with the Secretary of State for India in Council, starting in 1911.
The acquisition followed an inquiry under Section 40 of the Land Acquisition Act, 1894, in its Part VII on acquisition for companies. The stated public purpose was reservoirs and dams to store water for hydro electric power.
Clause 5 of the agreements let the Government call for any part of the land not actually used, or intended to be used, for the works, if it was needed for revenue administration or for public health, safety or necessity. The Government was the sole judge of that need, and compensation was payable.
On 8 August 2023 the State signed an MoU with Tata Power for a 1000 MW Bhivpuri Pumped Storage Project, under its Pumped Storage Policy, 2023. Tata Power says the land at stake is part of the catchment and is needed for it.
A foundation's wish list
On 19 July 2017 Maharishi Vedoddharak Foundation, a private company, wrote to the then Chief Minister about a proposed Centre for Perfect Health. It would combine Ayurvedic manufacturing, a wellness centre, an Ayurveda college and hospital, research and organic farming, at a cost it put near Rs 1,000 crore.
On 15 March 2018 the State gave the project ultra mega project status, on a fixed investment of Rs 500 crore. The foundation already held about 126 hectares next to the reservoir.
On 2 April 2018 it asked Tata Power for boats on the lake, a lease of the islands in the reservoir for medicinal herbs and meditation, a lease of the foreshore land, the shifting of electric poles and a 2 MW power supply.
Tata Power replied on 24 July 2018 that the two land outcrops in the reservoir were ecologically fragile. In a letter of 25 June 2018 to the late Mr Ratan Tata, the Chief Minister said the outcrops could be ideal for vedic chanting by pandits.
The committee that said no
On 1 November 2023 the State High Power Committee considered the foundation’s request that the land be bought from Tata Power or acquired under the 2013 Act or by the MIDC pass-through method. It rejected the request, recording that the Government has no policy of buying land from a private company for use by another project.
On 14 February 2024 the Cabinet Sub-Committee, chaired by the Chief Minister, decided to acquire the land by the pass-through method under the MID Act, with the foundation bearing the cost.
On 24 July 2024 a Land Selection Committee of the MIDC wrote that a No Objection Certificate from Tata Power was necessary. On 13 September 2024 the High Power Committee gave in-principle approval, subject to that certificate.
Then, on 26 December 2024, the MIDC told the State that the MID Act needs no consent or certificate from landowners. On 3 March 2025 the State used Section 1(3) of the Act to declare an industrial area, with 4 March as the appointed date.
On 4 March 2025 came the Government Resolution covering 84 hectares in the villages of Kiwale, Inglun and Vahangaon. On 7 March the Sub-Divisional Officer and Special Land Acquisition Officer issued show-cause notices under Section 32(2), calling for objections by 28 March. The land is about 208 acres.
Tata Power filed its writ petition on 5 May 2025. The MIDC told the court on 7 May that no decision would follow the notices, and the Sub-Divisional Officer closed the hearing for orders on 17 June 2025.
Tata Power: a century-old public purpose
Senior Advocate D. J. Khambata, with Senior Advocate Prateek Seksaria, appeared for Tata Power. He said the land is still used for the hydro projects, so the clause 5 condition for taking back unused land was never met.
The MID Act, he argued, allows acquisition only to develop industrial areas. Relying on the Constitution Bench in Shri Ramtanu Co-operative Housing Society v. State of Maharashtra, he said it has no machinery for acquiring land for a company, unlike Part VII of the old 1894 Act and the 2013 Act.
Land already used for a public purpose, he added, cannot be acquired again under another statute. If the State said the land was unused, it should have followed Section 42A of the MID Act, which deals with unused surplus land in industrial areas.
He called the exercise colourable. The notices never said the land was unused, he said, and that claim appeared first in the State’s affidavits. He added that the State had overruled its own High Power Committee and the Land Selection Committee.
The SDO could not hear the constitutional objections, he said, and would act on a pre-determined mind. He cited Siemens Ltd. v. State of Maharashtra and Techno Prints v. Chattisgarh Textbook Corporation to say the writ was not premature.
The State: eminent domain and a special Act
Mr Shrihari G. Aney, Special Counsel, appeared for the State. He first objected that the petition was premature, since the SDO had finished the hearing and was to pass orders. Tata Power, he said, had rushed to the writ court.
On the merits he relied on the sovereign power of eminent domain and on the idea that all land ultimately vests in the State. Statutes such as the MID Act, he said, only regulate a power that exists independently.
The MID Act is a complete code, he argued, and Section 32 gives both the power and the procedure. Section 42A did not apply because this was not surplus land in an industrial area. An ultra mega project with jobs and investment was industry and so a public purpose.
He said the High Power Committee’s view was only recommendatory, and the Cabinet Sub-Committee, as the superior authority, had corrected it. He added that Tata Power had itself benefited from a pass-through acquisition, in Pravin Kashinath Bhagat v. Collector, Raigad.
The MIDC and the foundation
Senior Advocate Chetan Kapadia appeared for the MIDC. He said Tata Power had put no material on record showing that the land is used for the hydro project, and that no installation of Tata Power stands on it, including on the two outcrops.
He added that any protected-place or prohibited-place notification on the dam had expired or was irrelevant. The claim of an ecologically sensitive zone was vague, as no declaration had been shown.
Senior Advocate Anil Anturkar appeared for the foundation. He said the project, an investment his side put at about Rs 1,500 crore, would employ about 1,000 people, and that the land’s position beside the reservoir made it necessary.
The 2016 Government Resolution on integrated industrial areas, he argued, had worked itself out because the foundation already had that status. Courts, he added, do not weigh one public purpose against another, citing Gandhi Grah Nirman Sahkari Samiti v. State of Rajasthan.
Unutilised land, claimed only in affidavits
The court began with the century-old agreements. It held that the State could have taken any step to transfer the land only if the 84 hectares were unused for the hydro projects. It found substance in Tata Power’s case that they cannot be called unused, given the pumped storage project and the policy behind it.
None of the notification, the Government Resolution or the notices said the land was unutilised. That ground appeared only in the State and MIDC affidavits, and no inquiry had been held.
Under Mohinder Singh Gill v. Chief Election Commissioner, the court said, authorities cannot supply in affidavits reasons absent from their orders. It added that the State and MIDC could not claim an inquiry was unnecessary and also say the land was unused. Tata Power’s reference to Section 42A was a response to that claim.
The MID Act has no company route
The court read Sections 1(3), 32 and 39 of the MID Act together with the Constitution Bench in Ramtanu, which examined the validity of the Act.
That decision held the Act exists for the growth of industrial estates and areas, and that acquisition under it is by the State for public purposes, not for a company. The High Court called one passage a clinching one:
“there is no provision therein for acquisition of land for a company” (para 86)
The acquisition here was exclusively for the foundation, the court said, with compensation to come from the foundation and not from State or MIDC funds. That mattered for the State’s cases. They were decided under Part II or Part VII of the 1894 Act, which was then the general law, and not under a special Act.
It also looked at the 2013 Act. For a private company, land must be acquired for a public purpose as defined in Section 2(1), with the consent of 80 per cent of affected families under Section 2(2). Section 10A, added by Maharashtra, lets the State exempt listed projects from some chapters.
None of the Section 10A categories refers to a private company as the beneficiary, the court said. The foundation’s project is not an infrastructure or public-private partnership project in which ownership stays with the Government, and the State was not setting up an industrial estate.
Pass-through, and what it left out
The MIDC had pointed to Section 39(1)(a) as the statutory basis for the pass-through method. The court said that clause allows disposal of land acquired and transferred to the MIDC without development.
But Section 39(2)(a) says such land should first be offered to the persons from whom it was acquired, if they want to buy it. The MIDC had ignored that, the court said, and had read one clause without the rest of the provision.
It also rejected the point about Pravin Kashinath Bhagat. That case did not involve land already used for a public purpose. It concerned a 1600 MW power project, which was plainly a public purpose.
The court rejected the State’s reliance on Hindustan Petroleum v. Darius Shapur, where land went to a State-controlled corporation. It also found P. Narayanappa v. State of Karnataka misplaced, since there a State corporation held the land and leased it to one company for 11 years under strict conditions.
A chain of events read as a whole
The court then read the chronology as a whole. The foundation picked the site in 2017, approached the Chief Minister and got ultra mega status in March 2018. The State handed it 126 hectares, and it kept pressing for Tata Power’s land, which Tata Power would not part with.
The High Power Committee rejected the proposal in November 2023. The Land Selection Committee said a No Objection Certificate was needed in July 2024. Five months later the MIDC said it was not, and the notification followed within about ten weeks.
Even if the High Power Committee’s view was only recommendatory, the court said, its own committee was overruled and the certificate requirement was dropped. That showed a pre-determined decision to hand the land to a private entity.
The court held the exercise was colourable and the State acted to avoid acquiring for a private company under the 2013 Act. It found Girias Investment v. State of Karnataka, cited by the MIDC for malice, helped Tata Power, since the action was aimed at helping the foundation at its cost.
Jobs do not make a public purpose
The court still examined whether the foundation’s project was a public purpose. It noted that the foundation’s 2018 letter asked for boats, island leases and foreshore land. During the writ it gave up boating and said it would build bridges to the outcrops.
Employment alone is not enough, the court said, since any private activity creates jobs. Citing the Constitution Bench in K.T. Plantation v. State of Karnataka, it held the purpose must be primarily public. Here it found:
“the primary purpose to be private interest and only incidentally beneficial to the public” (para 115)
No material showed why the 84 hectares were crucial when the foundation already had 126 hectares overlooking the same lake. Its letters, the court said, showed the land was wanted for aesthetic purposes only.
It added that even if Section 10A applied, the State must ensure the bare minimum land is taken for a project. The respondents had failed on that score. The court asked whether vedic chanting and bridges could come at the expense of a hydro project and its catchment.
Why the writ was not premature
On the plea that the petition should wait for the SDO’s order, the court accepted Tata Power’s reliance on Siemens and Techno Prints. A show-cause notice issued with a made-up mind can be challenged in a writ.
The Cabinet Sub-Committee had overruled the High Power Committee, and the MIDC had proposed the MID Act route on that push. An officer of the SDO’s level, the court said, could not weigh Tata Power’s objections, and the SDO could not decide constitutional challenges either.
The foundation had argued that a Section 1(3) declaration is delegated legislation immune from a plea of malice. The court rejected that, saying a delegated power is open to a challenge of colourable exercise or malice.
Ecology, security and the 500-metre rule
The court did not rule on ecology. The area is not declared ecologically sensitive, it said, and if the project goes ahead it will need environmental clearances. It also left aside whether the dam is a protected or prohibited place, given its other findings.
It did find substance in the objection that bridges linking the outcrops to the mainland could pose a security risk. It also accepted that clause 2(1) of the State Circular of 8 March 2018 bars development within 500 metres of a dam’s high-flood line.
The 84 hectares, with the two outcrops and a strip next to the reservoir, therefore could not be used for development, the court said. That, it added, showed why the acquisition could not go ahead.
A Karnataka precedent and a Supreme Court remark
The State’s eminent domain cases did not help it. The court held:
“the inherent power of eminent domain is not unbridled” (para 130)
It must serve a public purpose and not a company, the court said, and found the cases on which the State relied inapplicable for that reason.
Tata Power relied on Mukesh Kumar v. State of Karnataka, a 2026 Karnataka High Court judgment on the Karnataka Industrial Area Development Act, 1966. It held such an acquisition for a company was not for a public purpose and was mala fide, illegal and colourable.
The Supreme Court dismissed the special leave petitions against that decision, remarking only that the Karnataka High Court’s observation of a fraud on statute would not operate as a precedent. The Bombay Bench said the remark did not take away the position of law in that judgment, which has persuasive value.
Order
The writ petition was allowed in terms of prayers (a) to (c). The Notification No. IDC 2025/(C.R.01)/Ind. 14 of 3 March 2025, the Government Resolution of 4 March 2025 and the show-cause notices of 7 March 2025 were quashed.
The court quashed the proposed acquisition proceedings for the 84 hectares. It said the proceedings pending before the Sub-Divisional Officer stand disposed of, and pending applications were also disposed of.