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BW Businessworld

Mamata 1, Tata 1

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Mamata Banerjee's dream run seems to be sputtering. After the Congress party nominated Pranab Mukherjee for President against her wishes, it is now the turn of the Calcutta High Court to give her a lesson in law.

Before Banerjee came to power in 2011, the Left Front had acquired and leased 997 acres of land to Tata Motors for the Nano project. However, some farmers had opposed the acquisition. Banerjee enacted the Singur Land Acquisition & Development Act, 2011, to reclaim 400 acres for the farmers. Tata Motors, though it had moved its Nano project to Gujarat by then, challenged this, but a single judge of the Calcutta High Court last September upheld the government's position. The Tatas then filed an appeal before a division bench, which has now held the Singur Land Acquisition Act to be unconstitutional and deemed the return of the Tata Motors' land to the farmers, therefore, illegal.

400 of the 997 acres of land leased to the Tata Nano project have been reclaimed

Though the constitutional battle over the Singur Land Act will now continue before the Supreme Court, the High Court judgment is a lesson in how state governments should not act on land acquisition disputes. Populist demands and election-eve promises cannot be overnight translated into legislative fiats without considering their legal implications. And if they are, they will fall foul of the law.

On the other hand, Mamata Banerjee's opposition to the Tata Motors project contributed significantly to her election blitz; she may have lost the legal battle, but she has already reaped the fruits of her anti-corporate position. For Ratan Tata, it is a pyrrhic victory. Tata Motors cannot and does not want to return to Singur. At best, the judgment may help the company reclaim some of its exit losses.

(This story was published in Businessworld Issue Dated 02-07-2012)