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Supreme Court upholds termination of Vedanta's land lease in Ratnagiri

PNT Reporter | Last Updated : 29th Mar, 2024
Synopsis

The Supreme Court has upheld MIDC's decision to terminate the land lease granted to Vedanta in 1992 for a proposed copper smelter plant in Ratnagiri district, Maharashtra. Vedanta argued that the termination was arbitrary as it could not begin construction because of a state stay order and protests. It said that it had already invested INR 80-100 crore with all approvals in place. While MIDC said that it has issued termination notices in 2014, over 20 years after the project deadline. The judgment highlights the need for transparent mechanisms balancing development, corporate rights and responsibilities, especially in Maharashtra, which is seeking to attract more investments and industrialization.

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The Supreme Court has upheld the Maharashtra Industrial Development Corporation's (MIDC) decision to terminate the land lease granted to Vedanta Limited in 1992 for its proposed copper smelter plant in Ratnagiri district, Maharashtra.

Vedanta (formerly Sesa Sterlite) had appealed against the Bombay High Court order rejecting its petition challenging the termination. The company argued that the High Court made a mistake in rejecting the petition on the grounds that the commercial wisdom of MIDC could not be interfered with.

Vedanta was allotted two plots in 1992 totaling over 20 lakh square meters to set up the smelter. The company had performed its obligations and obtained all necessary statutory permissions and approvals and also initially invested around INR 80 to 100 crore, besides employing around 5000 skilled and unskilled workers for the project. While work began in 1993, the district collector stayed it owing to protests.

MIDC issued termination notices in 2014, over 20 years after the initial three-year deadline for setting up the plant lapsed. However, Vedanta claimed it could not construct due to a state government prohibition and local protests, both beyond its control. Vedanta also said MIDC took no steps to resolve the protests, and terminated the lease on an arbitrary ground.

Appearing for Vedanta, senior counsel Mukul Rohatgi and Ankur Saigal argued that the Maharashtra government acted in bad faith. It prevented construction while also rejecting alternate proposals to set up a technology park, solar power plant by its subsidiary Hindustan Zinc or an industrial park.

Vedanta further alleged that MIDC arbitrarily terminated the agreements and demanded plot possession without following due procedure, which is contrary to public policy.

On similar lines, recently, the MIDC directed Indiabulls Real Estate and its subsidiary Indiabulls Industrial Infrastructure (IIIL) to vacate 512.068 hectares of land in processing zone of Special Economic Zone (SEZ) at Sinnar, Nashik district, within a one-month period. The land was to be developed as industrial plots within the SEZ framework. The MIDC issued notices based on an alleged lapse by the company in completing development and rehabilitating PAPs within the given timelines.

These incidents highlight the need for clear, transparent, and fair mechanisms that balance developmental goals with corporate rights and responsibilities. With Maharashtra posing itself as a critical hub for industrial activities in India, the resolution of these conflicts hold significance for the region's economic trajectory.

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