Century Mill land dispute: SC sets aside 2022 Bombay HC verdict against BMC

New Delhi: In a significant judgment, the Supreme Court has overturned a verdict directing the Brihanmumbai Municipal Corporation (BMC) to transfer the title of five acres land in Worli, Mumbai, to Century Textiles and Industries Ltd, now known as Aditya Birla Real Estate Limited.

A bench comprising Justices Vikram Nath and Prasanna B Varale passed the judgment on January 7 while ruling in favour of the BMC and dismissing the plea of Century Textiles.

Setting aside the Bombay High Court’s verdict, the bench held the civic body was neither legally obligated to convey the land nor at fault for not executing the deed.

In response to the verdict, a company statement read, "Aditya Birla Real Estate Limited (formerly known as Century Textiles and Industries Limited) is seeking legal advice to take necessary next steps in the matter. Aditya Birla Real Estate wishes to clarify that the said Land bearing …is separate and distinct from and not impacting Birla Niyaara project at Worli." The judgement was critical of the private firm for allegedly attempting to convert the property, allocated under a welfare scheme, into a vehicle for commercial gain.

"When land allocated under a special scheme, particularly one centred on ‘poorer classes’ accommodation, is sought to be commercially exploited," the court said, "it represents a direct affront to the spirit of the enactment. Rather than addressing housing inadequacies and improving urban life for those in need, the resource would be diverted to profit-making ventures that do nothing to alleviate the conditions of the underserved. This conduct amounts to an abuse of beneficial legislation." The case relates to a plot of land measuring 23,000 square yards originally leased to Century Textiles under the provisions of the City of Bombay Improvement Act, 1898.

The lease agreement, part of a poorer classes accommodation scheme initiated in 1918, required the lessee firm to construct housing for workers.

Century Textiles fulfilled its obligations by building 476 dwellings and 10 shops by 1925.

However, following the lease's expiration in 1955, the company did not pursue conveyance of the land until 2006, when it issued a legal notice.

A petition filed in 2016 was allowed by the Bombay High Court, which directed the BMC to transfer the land title to Century Textiles.

The 81-page judgement authored by Justice Vikram Nath dealt with two core issues -- whether the civic body was legally bound to convey the leased land to Century Textiles after the lease expired and whether the petition filed after a delay of over six decades was maintainable.

"The first core question stands answered in favour of the appellants (civic body and its officials) that they were neither bound nor were under any legal obligations to convey the premises comprising Block-A to the respondent number 1 (private firm,” the bench said.

On the second issue, the top court said the petition suffered from "serious delay and laches" and was liable to be dismissed on that ground alone.

"Admittedly, the term of the lease came to an end on March 31, 1955. It is also uncontested that thereafter the respondent number 1 never claimed execution of conveyance at any point in time till 2006, when for the first time they issued a legal notice dated August 14, 2006 purported to be under Section 527 of the 1888 Act requiring the appellant to execute the conveyance deed," said the court.

Therefore, the court said, for a period of 51 years, the company did not raise any demand whatsoever for the execution of the conveyance deed.

The bench held the statutory framework under the 1925 Act, and the terms of the lease agreement, did not mandate the civic body to execute a conveyance deed in favor of Century Textiles.

The court said the original lease and statutory provisions aimed to serve broader social objectives, including providing housing for economically weaker sections.

The judgement said the 1925 Act, under which the land was given to the private firm, was clearly intended to secure broader societal goals — better sanitation, improved living standards, and well-planned urban growth that includes benefits for marginalised communities.

"Allowing respondent number 1 to disregard these obligations would open the door to hollowing out the protections and advantages established by the statute. It would set a precedent where statutory schemes designed to uplift vulnerable groups could be co-opted for purely commercial ends, undermining the trust and faith that must exist between public authorities, private actors, and the most vulnerable segments of the population," it said.