In retrospect, the Mumbai surplus textile mill land development scheme seems to have had the devil's blessings, given the glee with which successive governments snatched away precious public land and allowed private parties to corner most of it. But on October 17, the Bombay High Court brought sanity by striking down the government's interpretation of its own rule that permitted such plunder, and stayed all mill land sale since March this year, worth Rs 2,000 crore.

In the 363-page final order on a PIL filed by the Bombay Environmental Action Group (BEAG), Justices S. Radhakrishnan and S.C. Dharmadhikari invoked Aldous Huxley's Brave New World to say that if Mumbai was deprived of open spaces, the city might just "get a generation of idiots and morons". What's more, the judges ruled that the government had modified and misinterpreted its own rule in an arbitrary and unconstitutional manner.

Section 58 of the Development Control Regulations of 1991 allowed mill land sale on a one-third formula basis—one-third of the plot each to the owner, civic corporation for developing infrastructure amenities and a housing agency to construct affordable housing. It was amended ten years later and modified again in 2003, kick-starting mill land sale in a haphazard manner that would have only eight per cent of the 600 acres to the city. Also, the modified version allowed the sale-development process to bypass the Board of Industrial Finance and Reconstruction (BIFR), the nodal agency to secure the one-third formula.

The immediate impact of the judgement was on the five National Textile Corporation (NTC) mills that had been sold off to a slew of real estate developers, including former Lok Sabha speaker Manohar Joshi and Shiv Sena leader Raj Thackeray, in the last six months. The NTC was richer by nearly Rs 2,000 crore—most of the money had been paid by the new owners, but the sale had not conformed to BIFR rules. NTC officials said they were studying the order. They claim the deals were in keeping with the Supreme Court order of May this year which permitted sale, subject to conditions, and that the HC interpretation was "not justified". Unsurprisingly, those negatively affected by the order term it confusing or, as HDFC chairman Deepak Parekh put it, "a disaster".

A leading lawyer opines that those who debate the HC order versus SC order are "missing the point altogether" as the high court has said that sellers and buyers have not observed the apex court order. The SC had permitted NTC to sell land in accordance to the BIFR provisions and within the ambit of the one-third formula. But it was not to be. Also, the court had observed that the sale should not create any third-party interests. That was also violated. Among the new owners are those who have booked shops or flats on the redeveloped plot, and bankers who have lent money to firms and individuals. All of them are now agitated. The real estate lobby as well as international property consultants predict doomsday in the property price rise. But urban planners say prices will rationalise.

"There are ways to make this whole thing work to everybody's benefit," says noted architect and urban planner Charles Correa, who authored a report on mill land redevelopment (see box). "This is the best second chance we have to re-develop Mumbai. The order is just the beginning." According to him, creation of affordable housing in central Mumbai would rationalise property prices across the city and create badly-needed infrastructure.

Even as the petitioners were joined by like-minded citizens to applaud the "second chance", the real estate lobby and bankers ranged with the NTC to suggest that the HC order would put brakes on mill land development itself. It's a misplaced notion because the order only requires developers, or new owners, to return to the old formula and rules.

As Debi Goenka of BEAG says, "The old one-third formula is back, construction on these plots cannot happen without environmental clearances, all sanctions not under the BIFR are nullified. We have the best opportunity in years to develop this entire area of 600 acres holistically as Charles Correa once suggested." His lawyer Iqbal Chagla is equally delighted.

The government won't go for an appeal, CM Vilasrao Deshmukh says, down-playing the implications of the HC order as "the court has only addressed a minor modification" (facilitating payment of mill workers' much-awaited dues), not the entire section. Union leader Datta Ishwalkar laughed this off: "Let the government not use us as a shield to carry out its own agenda." Significantly, the judgement was effected immediately, disallowing requests for a stay to appeal in the SC. On October 20, I-T authorities conducted a search on the Mumbai offices of Infrastructure Leasing & Financial Service ostensibly because it had lent money to Joshi and Thackeray for their Rs 421-crore bid on NTC's Kohinoor Mill.

The order, in all respects, is in favour of the city. However, the real challenge lies ahead: to develop the entire mill area to a holistic master-plan.