Kolkata/Singur: The Calcutta high court upheld the Singur Land Rehabilitation and Development Act on Wednesday, saying that it was within the powers of West Bengal’s legislators to impose such a law, rejecting the challenge by Tata Motors Ltd over the seizure of land that was meant for its Nano factory.

Justice I.P. Mukerji said in the judgement, however, that the Hooghly “district officials have exceeded their powers in taking possession of the land without any notice to the Tatas", but maintained that the Act was “constitutional and valid" and “so is any action taken by the state" in exercise of the law.

The verdict was a victory for West Bengal chief minister Mamata Banerjee’s government. Having successfully used the protests against the Tata project in Singur as a campaign plank in the run-up to state elections this year, she described it as a triumph for “three Ms—maa-mati-manush (literally, mother, land and people)."

Tata group chairman Ratan Tata had in 2008 described the relocation of the Nano factory from Singur to Sanand in Gujarat as a journey from “bad M to good M", referring to the chief minister of Gujarat, Narendra Modi.

The judge also took into consideration the company’s position on adequate recompense for the land.

File photo of abandoned site of Tata motor’s Singur Factory.

The decision comes as the central government has introduced legislation in Parliament on land acquisition, one of the most significant causes of recent conflict in India, with violent clashes across the country. Forcible land acquisition and inadequate compensation were central to the defeat of the Left Front in West Bengal at the hands of Banerjee’s Trinamool Congress in 2011 after 34 years of unbroken rule.

Land is needed to set up industry, infrastructure and housing, critical for speeding up economic growth to 9% levels as India seeks to create jobs and meet its avowed target of inclusive growth.

In Singur, farmers celebrated, but a victory rally was put off after they heard that the order had been put on hold till 2 November by Mukerji himself. The judge did so to give Tata Motors time to appeal his order.

Five years ago, farmers of Singur’s Beraberi village had stopped observing Durga Puja after land was seized from them for Tata Motors’ small car factory. They had thought of restarting the puja this year if they could reclaim the land as promised by the Act.

“But where is the land?" asked Tarun Bag, a farmer who expects to reclaim close to an acre. “So no Durga Puja (in Beraberi village) this year too."

Tata Motors moved the Calcutta high court after the state government forcibly took possession of its abandoned Singur factory on 18 June, challenging the legal validity of the Act. Tata Motors’ lawyer Samaraditya Pal said it was untenable because it couldn’t be reconciled with the Land Acquisition Act, a central law, and that there wasn’t adequate “public purpose" in seizing Tata Motors’ property as is essential for any acquisition.

Mukerji quashed both arguments. He said the socio-economic development envisaged by the Singur Act was “similar to the one for which land was initially acquired" for Tata Motors. Returning land to the original owners, too, could also be seen as a public purpose.

The Act says the state government will return land to some 2,200-odd farmers who protested against the acquisition of their properties by not accepting payments, and that it will put to industrial use at least 600 acres of the 997-acre plot.

Banerjee had another reason to celebrate on Wednesday, winning a by-election to the state assembly. She said the verdict vindicated her political stand on land acquisition. “Those who criticized us for doing things in haste have been proved wrong," she said.

Tata Motors said it was studying the judgement to decide its next step.

Upholding Tata Motors’ right to compensation, justice Mukerji said it should be determined in keeping with the provisions of sections 23 and 24 of the Land Acquisition Act of 1894. Section 23 of the Act describes the factors to be considered, and section 24, those that are to be ignored, when determining compensation for acquisition of private property.

Though the Singur Act says the state would compensate Tata Motors, “the intention…is vague and uncertain", Mukerji said in his judgement.

He asked the district judge of Hooghly to determine the compensation within six months of receiving an application from Tata Motors.

Mukerji said, however, that the “pith and substance" of the Singur Act was to terminate the West Bengal Industrial Development Corporation’s (WBIDC) lease agreement with Tata Motors and that the state hadn’t acquired private property by ousting the car maker from Singur.

“This property belonged to the state," said the judgement. “It could not take its own property."

The judgement cites Tata Motors’ 28 September 2010 letter to WBIDC in which the firm says it could consider “the option of moving out" of Singur if it and its component suppliers were compensated for the cost of developing the infrastructure and the factory sheds. Tata Motors said in that letter it spent 440 crore and its suppliers, 171 crore in Singur.

The judgement also cited WBIDC’s lease agreement with Tata Motors. Besides the usual covenant that the lease couldn’t be transferred, the agreement said WBIDC could seek cancellation of Tata Motors’ tenancy if it couldn’t “utilize the land for three years or more" and that only an automobile factory could be built at Singur.

Based on these restrictive covenants, advocate general Anindya Mitra had argued that Tata Motors didn’t have any “saleable interest" in its “leasehold right" to the Singur plot, undermining the car maker’s demand for compensation.