Supreme Court Upholds Owner’s Preferential Right in Mumbai Slum Redevelopment Case

The Supreme Court delivered a significant judgment on 2 December 2025, refusing to issue a mandamus directing the State Government to acquire a piece of land under Section 14 of the Maharashtra Slum Areas (Improvement, Clearance and Redevelopment) Act, 1971 (Slum Act). The Court emphasized that the power to acquire land cannot be used to ignore the legal rights of the actual landowner.

The Bench, comprising Justice J.B. Pardiwala and Justice K.V. Viswanathan, reiterated the legal position that “Any process to acquire the land shall have to be kept in abeyance till such time as the owner’s preferential right to develop it stands extinguished.” This decision stems from a 2005 sq. m. land parcel at Malad, Mumbai, originally declared a slum in 1987 and later reserved as a Recreational Ground (RG) in the 1991 Development Plan.

Over the years, different developers attempted to implement slum rehabilitation on the larger project area, including this land. Jyoti Builders entered the project after receiving rights from Vikas Housing. The Slum Rehabilitation Authority (SRA) treated the 34 slum dwellers on the land as eligible and permitted them to be shifted. On this basis, Jyoti Builders received Floor Space Index (FSI) benefits and constructed several rehabilitation buildings between 2005 and 2011, obtaining an Occupation Certificate (OC) in 2022 for one of them.

In 2015, the CEO-SRA passed an order stating that the scheme of Jyoti Builders had been substantially implemented and recommended that the land be acquired to complete the project and compensate the earlier owner, Phuldai Yadav. However, the State Government could not take action under Section 14 due to a Bombay High Court order in Citispace v. State of Maharashtra, which had halted sanctions for slum schemes on RG plots. This ban remained in place until March 2022.

Soon after the ban was lifted, the original owner sold the property to Alchemi Developers, who submitted a fresh slum redevelopment proposal as the new lawful owner. Jyoti Builders then approached the High Court to enforce the 2015 CEO-SRA order, but the High Court refused. The Supreme Court has now upheld that decision.

The Supreme Court highlighted that an owner, under Section 3D(c)(i) and the scheme of Chapter I-A of the Slum Act, has the first right to redevelop once the land is declared a slum. This right cannot be bypassed or taken away unless it is extinguished according to law. To support this, the Bench relied on two recent decisions. In Tarabai Nagar Co-op. Housing Society v. State of Maharashtra, 2025 SCC OnLine SC 1795, the Court had already held: “Any process to acquire the land shall have to be kept in abeyance till such time as the owner’s preferential right to develop it stands extinguished.” Similarly, in Saldanha Real Estate Pvt. Ltd. v. Bishop John Rodrigues, the Court made it clear that “The State or the SRA cannot move to acquire the land before the preferential right of the owner is extinguished.”

Applying these principles, the Court stated that it cannot compel acquisition when the land has already been lawfully purchased by Alchemi Developers, who now enjoy the statutory preferential right to develop the property. The Court also criticized Jyoti Builders for the significant delay in enforcing the 2015 CEO-SRA order, noting that seeking acquisition now appears to be an attempt at a backdoor entry.

The Bench pointed out that Jyoti Builders never acquired ownership or proper title and cannot claim rights simply because they shifted slum dwellers. The Court remarked, “If someone decides to relocate and clear the slum dwellers from someone else’s plot, can they subsequently claim beneficial rights of the plot? In our view, the answer is in the negative.”

Jyoti Builders argued that they should receive more benefits or FSI, but the Court rejected these claims, noting that all FSI benefits were already granted earlier by treating the 34 slum dwellers as Project Affected Persons (PAPs). According to the Bench, “The appellant has been fully compensated by granting adequate area/FSI for sale.”

The Court also reiterated that the State’s power under Section 14 cannot be used to help a developer who has already received full benefits at an earlier stage. It clearly stated, “The power of the State Government under Section 14 read with Section 3D(c)(i) of the Slum Act is subject to preferential right, if any, of the owner.”

On the issue of the Occupation Certificate for the final sale building, the Court ruled that Jyoti Builders will receive it only after they hand over another 2700 sq. m. RG plot (Dark Green Portion), which is part of their original obligation. The Bench stated, “The appellant is entitled to the Occupation Certificate for the final Sale Building in the slum scheme on the appellant handing over the Dark Green Portion admeasuring 2700 sq. mts. reserved for Recreational Ground (RG).”

The Court also stressed that the disputed plot of 2005 sq. m. is not required to be handed over by Jyoti Builders and is not part of their scheme in the final assessment. Finally, the Court directed that the disputed land must remain an RG area and cannot be used for construction by any party, including the new owner. The Bench declared, “We make it abundantly clear that no construction shall be made on the subject property of any nature and the same shall be utilized only as a Recreational Ground (RG).”

It also ordered, “We direct the Respondent No. 4 (Alchemi Developers) their successors and assigns that they shall not put up any type of construction on the subject property and the same shall be utilized only as a recreational Ground (RG).” The State authorities confirmed before the Court that they will not permit construction on the land.

In the final outcome, the Supreme Court dismissed Jyoti Builders’ appeal, holding that it is too late for the Court to direct acquisition after so many years, especially when the appellant had already received all benefits, the original owner had sold the land, and the law clearly protects the new owner’s preferential redevelopment right. The Court said that it would be “too late in the day” to direct acquisition based on the 2015 CEO-SRA order.

Senior Advocate Shyam Divan argued for the appellant, while Senior Advocates Vikas Singh and K. Parameshwar, along with Advocates Siddharth Dharmadhikari and Pallavi Sharma, represented the respondents. The judgment reinforces the importance of respecting ownership rights in slum redevelopment, preventing misuse of acquisition powers, and protecting open spaces in crowded urban areas.