Mumbai, June 6
The Maharashtra government is caught in a legal bind over the proposed special economic zone by industrialist Mukesh Ambani and his friend Anand Jain.

According to sources, the state government has to decide between giving a fresh lease of life to the project or letting it lapse. The ruling Congress and Nationalist Congress Party leaders are wary of pushing for the project, knowing the strong opposition from the villages where the SEZ has been proposed.

Proposed to be set up by Mumbai SEZ Ltd (a company controlled by Ambani and Jain), the project has received a major setback after the Supreme Court stayed its plea to stay the land acquisition process initiated by the Maharashtra government.

The land acquisition process, which started in June 2005, had been extended twice and is to expire next week. As per norms, the land acquisition process would automatically lapse if the government does not extend it further. The company had approached the apex court for a stay as this would have stopped the land acquisition process from lapsing.

The SEZ, spread over 10,000 hectares, would have been the biggest such establishment in India. Along with adjacent Navi Mumbai SEZ, also being set up by Mukesh Ambani, it would have occupied land equivalent to two-thirds of Mumbai city and just across the sea from the Gateway of India in South Mumbai. Land for the Navi Mumbai SEZ has been secured since the City Industrial Development Corporation, which owns the land, is a partner in the project.

So far, only 2,153 hectares of land has been acquired by the company for the MahaMumbai project. However, the holdings are scattered across the proposed SEZ area, making it impossible to be developed.

Farmers who grow paddy and cash crops here have refused to allow their land to be acquired despite the company coming up with a comprehensive rehabilitation package. Apart from offering Rs 20 lakh per hectare, the company offered a job for one member of the family whose land is acquired.

Last year, then Maharashtra Chief Minister Vilasrao Deshmukh refused to acquire the land by issuing an executive order and asked the company to buy land directly from farmers.

Ambani's executives are said to have told the government that such a move would not be feasible because of the small holdings of land in the area and the farmers' opposition to giving up their properties.