INDIA BUSINESS WORLD - May 2005
THE MONTH THAT WAS

SC CLEARS AUCTION OF 7 NTC MILLS

Striking a balance between allowing the long-delayed auction of seven National Textile Mills (NTC) in Mumbai and environmental concerns, the Supreme Court gave a conditional nod to the first phase of the NTC mills' auction. However, the court said, development activity by private mills would be subject to the final orders on a petition filed before the Bombay High Court.

In respect of those Mills, whose layout plans for development of land have not yet been sanctioned, can apply for approval of schemes. However, the court said the mills "cannot start construction" on the basis of them. A bench comprising Justices N Santosh Hegde and SB Sinha said the development of residential complexes could proceed provided the mills had got the necessary approvals, including the commencement certificate. However, the development and the creation of third-party rights would be at their own risk, the court clarified.

Modifying a Bombay High Court interim order putting a stop on further construction in the mill land, the apex court asked the High Court to decide on the PIL filed by the Bombay Environmental Action Group if possible by July 31. The Bombay High Court resumes after the summer break on June 6.

In the case of NTC mills, the Supreme Court order said: "The interest of justice would be subserved if the NTC is permitted to complete the transactions in terms of the scheme framed by BIFR." However, Justice Sinha clarified, "This would be subject to the conditions that in the event the writ petition ultimately succeeds, the vacant land available from other mills of NTC, if necessary, would be offered by way of adjustment."

While the various contestants in the PIL are awaiting a copy of the order, they all expressed relief. BEAG activist Shyam Chainani told ET that under the terms of the order, the private mills cannot go ahead with development activity as they have not secured the necessary environmental clearances.

"All projects over Rs 50 crore require clearance from the ministry of environment & forests (MoEF). The process, which requires inviting objections and public hearing, has not been complied with by the mill owners," Mr Chainani said.

Mr. VK Tripathi, MD of NTC (South), termed the order as fair and said NTC will go ahead with the process of auctioning 4 more mills after scrutinising the apex court's orders. Last month, the first mill - Jupiter Mills - was put on the block, which was snapped up by India Bulls Property for Rs 276 crore.

"Nobody can have a grievance about the order. It also takes care of the concerns for the city. Let the Bombay High Court start a debate on the issue, and since the hearing is now a time-bound process, the matter can be settled without loss of time," Mr Tripathi said.

"We are happy with the order. However, it's just an interim relief and the Bombay High Court has to give a final order," said Ness Wadia, deputy managing director, Bombay Dyeing.

Many of the mills that have got IOD-CC (commencement certificates) till various stages, like the Piramal Mills at Worli being developed as a JV with the Marathon Group or the Morarjee Goculdas Spinning & Weaving Mills at Parel, have continued with their construction work even when the issue was being debated in several courts.

A representative of the mill owners, who preferred not to be identified, said a cabal of builders was behind the moves to stall the development of mill lands, to push up the already hot property prices. Once the mill properties came into the market, a downward correction would ensue, he predicted. "The NTC development is in terms of the BIFR order aimed at saving over 10,000 jobs in Mumbai. If the mill land sale is not allowed, these jobs too will be lost," he added.

While the mills, who have got permission for construction, can resume work, creation of third party rights, like selling flats constructed in the mill land to people, would not be construed as an equity in favour of the mill owners, Justice Sinha said.

The court has also laid down a procedure which has to be followed before entering into agreements that create third party rights on the mill land. The owners must advertise the existing position relating to the land in question in two widely circulated dailies - one in English and the other in Marathi, the court directed.

The 58 composite textile mills, most of them closed, are expected to yield nearly 600 acres for the island city. The planned development of these lands, that should include public and green places and public housing, was the last opportunity to create a better living environment in an overcrowded city choking from bad planning and greed, the BEAG petition points out.