Bombay HC Stops Transfer of Tata Power’s Hydro Project Land to Private Developer

Aadrikaa Legal Services (ALS)- Law I Litigation I Arbitration

Date: 11.11.2026

Bombay HC Stops Transfer of Tata Power’s Hydro Project Land to Private Developer

The Bombay High Court has set aside Maharashtra’s attempt to acquire 84 hectares of Tata Power land near the Thokarwadi Dam for a private ultra-mega project, holding that the process was a colourable exercise of power and did not satisfy the legal requirements for acquisition.

Court rejects proposed transfer of hydro-project land

In The Tata Power Company Ltd. & Anr. v. State of Maharashtra & Ors., the Bombay High Court invalidated a March 2025 notification, government resolution and show-cause notices that sought to bring Tata Power’s land within the acquisition framework of the Maharashtra Industrial Development Act, 1961 (MID Act).

The land forms part of the Thokarwadi Dam and reservoir area in Pune district and is connected with Tata Power’s existing 75 MW Bhivpuri Hydro Station and its proposed 1,000 MW Bhivpuri Pumped Storage Project. The State had proposed acquiring the land and transferring it through MIDC for the benefit of Maharishi Vedoddharak Foundation (MVF), a private company developing an Ayurveda, wellness, research and tourism-oriented project.

The Court allowed Tata Power’s writ petition and quashed the entire proposed acquisition process.

Background: A dispute over 84 hectares near a dam reservoir

The disputed land, approximately 84 hectares or 208 acres, includes two outcrops within the Thokarwadi reservoir and adjoining land in the villages of Kiwale, Inglun and Vahangaon.

Tata Power’s predecessor received the broader landholding between 1911 and 1940 for construction of dams, reservoirs and hydroelectric facilities. The original agreements allowed the Government to take back land only where it was not actually used or intended to be used for the hydroelectric works, and where the Government required it for specified public purposes.

MVF already held about 126 hectares adjoining the reservoir for its proposed “Centre for Perfect Health,” an ultra-mega project. Its proposed activities included Ayurvedic product manufacturing, wellness centres, an Ayurvedic college, hospital and research facilities, organic farming, tourism, educational infrastructure and ancillary commercial facilities. MVF claimed the project would involve substantial investment and create more than 1,000 jobs.

Why Tata Power challenged the acquisition

Tata Power argued that the land remained necessary for public-purpose hydroelectric operations, particularly its planned 1,000 MW pumped storage project. It contended that:

• the land was never established to be surplus or unused;
• the State had bypassed the safeguards that apply when land is acquired for a private company;
• the MID Act could not be used as a “pass through” mechanism to acquire Tata Power’s land solely for MVF;
• the proposed transfer would compromise the hydro project, catchment area, security and environmental integrity of the reservoir; and
• the authorities had ignored earlier recommendations that an NOC from Tata Power was necessary.

The State, MIDC and MVF countered that the proposal was valid under the MID Act because it would advance industrial development, employment and public interest. They also argued that the relevant land had no hydroelectric installations and was not being specifically used by Tata Power.

Key finding: The land could not be treated as unutilised

The Court held that the historical agreements and conveyances made the status of the land central to the case. The Government could seek to take back portions only if they were not utilised or intended to be utilised for Tata Power’s hydroelectric works.

The Court found substance in Tata Power’s position that the 84 hectares could not be categorised as unutilised. The land continued to form part of the hydroelectric project area and had added importance because of the proposed 1,000 MW Bhivpuri Pumped Storage Project, for which the State itself had entered into an MoU with Tata Power in August 2023.

Crucially, the Court noted that neither the March 3 notification, the March 4 government resolution nor the March 7 notices stated that the land was unutilised. The State and MIDC raised that justification only later in affidavits before the Court.

The judges held that authorities cannot supplement a statutory notification with reasons that do not appear in the notification itself. They also found that no enquiry had been conducted to establish that the land was unused for Tata Power’s hydroelectric projects.

MID Act could not be used to acquire land exclusively for a private company

A central issue was whether the MID Act permitted the State to acquire Tata Power’s land for MVF’s private project.

The Court relied on the Supreme Court’s interpretation of the MID Act in Shri Ramtanu Co-operative Housing Society Ltd. v. State of Maharashtra. That decision explains that the MID Act is designed for planned development of industrial areas and estates, rather than direct acquisition of land for an individual company.

The Bombay High Court concluded that the proposed acquisition was exclusively for MVF, with MVF expected to bear the compensation cost. In substance, therefore, the process was an acquisition for a private company.

The Court held that the State had improperly used the MID Act to avoid the protections and procedures applicable under the general land-acquisition law, including the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013.

“Pass through” method found legally unsustainable

MIDC relied on Section 39 of the MID Act to justify the proposed “pass through” arrangement: land would be acquired by the State, transferred to MIDC and then disposed of to MVF.

The Court rejected this reasoning. It observed that Section 39 concerns MIDC’s disposal of land transferred to it, but it cannot convert an acquisition made exclusively for a private entity into a valid acquisition under the MID Act. The statutory conditions governing disposal were also not properly addressed.

The Court distinguished an earlier case involving a pass-through acquisition for a 1,600 MW power project, noting that the earlier acquisition was tied to an obvious public purpose. Here, the disputed land was already being used for a public-purpose hydroelectric project and was proposed to be transferred to a private project proponent.

Public purpose must be primary, not incidental

The State relied on its power of eminent domain and argued that industrial investment, infrastructure and employment justified the acquisition.

The Court accepted that the State has sovereign power to acquire private property, but stressed that the power is not unlimited. It must be exercised according to law and only for a genuine public purpose.

In assessing MVF’s project, the Court held that the primary object appeared to be private interest, with public benefit being incidental. The potential creation of jobs, by itself, was not enough to displace the existing public-purpose use of land for hydroelectric generation.

The Court also found no material showing why the additional 84 hectares were indispensable to MVF’s project, especially when MVF already had 126 hectares of adjoining land. Correspondence suggested that the reservoir land and islands were sought substantially for aesthetic uses, meditation, cultivation, beautification and related activities.

Decision-making process showed predetermination

The judgment also examined the sequence of government decisions. In November 2023, a High Power Committee had rejected MVF’s request for acquisition of Tata Power land, noting that the Government had no policy to purchase land from one private company for another project.

Later, a Cabinet Sub-Committee supported acquisition through the MID Act. A MIDC Land Selection Committee initially said Tata Power’s NOC was necessary. Within months, MIDC changed its position and stated that no NOC was required.

The Court found that this chronology supported Tata Power’s allegation that the authorities were determined to secure the land for MVF. It held that the subsequent hearing before the Sub-Divisional Officer could not cure the defect because the objections included constitutional and jurisdictional issues beyond that officer’s authority.

Dam-safety concern reinforced the ruling

The Court also considered a 2018 State circular governing development around dams and catchment areas. It found that the relevant provision prohibited development activity within 500 metres of the dam’s high-flood line.

Because the disputed area includes reservoir outcrops and land adjoining the water body, the Court concluded that proposed development on the land could not proceed as contemplated. It also accepted that construction of bridges to the reservoir islands could create security risks for the hydroelectric project.

Final outcome

The Bombay High Court quashed:

• the March 3, 2025 notification applying Chapter VI of the MID Act to the disputed land;
• the March 4, 2025 government resolution initiating acquisition for MVF; and
• the March 7, 2025 show-cause notices issued to Tata Power.

The Court also disposed of the acquisition proceedings pending before the Sub-Divisional Officer.

Broader significance

The ruling reinforces that the State’s power to acquire land cannot be used to transfer property from one private party to another merely by routing the transaction through an industrial-development authority.

Where land is already serving a public purpose, authorities must show a lawful basis, a genuine and primary public purpose, and compliance with the applicable acquisition procedure.

For industrial and infrastructure projects, the decision underscores that labels such as “ultra mega project,” promised investment or anticipated employment do not, by themselves, validate compulsory acquisition—particularly when the land sought is already tied to an operational or planned public-energy project.

Aadrikaa Legal Services is a trusted legal and regulatory support partner providing end-to-end legal solutions to law firms, corporate organizations, and businesses across India. We specialize in paralegal services, litigation support, tax and regulatory matters, delivering reliable, efficient, and result-oriented legal assistance.

Our services include comprehensive paralegal support, drafting and documentation, legal research, case management, litigation handling, and representation support across various judicial and quasi-judicial forums. We also assist in direct and indirect tax matters, customs, GST, corporate regulatory compliance, and legal advisory.

Source: Bombay High Court

Disclaimer

Handy Download:

Write to us at office@aadrikaalaw.com

Tel: +91-11-4999 2707

www.aadrikaalaw.com