India was ready to get a new hill station near Mumbai. But, it is now a ghost town

In a country where cities often grow haphazardly and urban planning struggles to keep up, this one stood out—an entirely private city built from the ground up. While most Indian cities are overcrowded and cluttered, sharing roads with stray animals and a mix of vehicles, this was a vision lifted from Europe: inspired by an Italian coastal town, with waterfronts, open promenades, vibrant hill-side homes circling a lake, and even an American town manager overseeing it all.

Lavasa, the city being built near Pune and a three-hour drive from Mumbai, looked back as well as ahead: it was touted as India’s first new hill station since the end of British colonial rule, as well as a modern city to live, play and work. It was to have the exclusivity of the hill stations the British built in India to escape the heat and dust, and it was also supposed to nod to all the modern urban ideas.

Lavasa, once a utopian dream, stalled by environmental hurdles and debt, is now seeing hope after entering bankruptcy.

Takeover bids
Lavasa has received six takeover bids-ranging from ₹500 crore to ₹850 crore-as creditors try to sell the debt-laden entity for a second time to recover their dues. The Welspun Group, through a subsidiary, placed the highest bid of ₹850 crore, including ₹150 crore of process costs, documents accessed by ET showed.

ALSO READ: Welspun bids the most for Lavasa Corporation; Lodha Developers, Jindal Steel and Power Group in fray, too

Other bidders include Pune-based developers Ashdan and Pride Purple, Macrotech Developers (now Lodha Developers), DB Corp subsidiary Valor, Jindal Steel and Power Group, and Mumbai-based Yogayatan Group. Details accessed by ET show that Ashdan and Pride Purple have placed a combined bid aggregating to ₹843 crore. The payment timelines for the bids are five to nine years.

To be sure, most of the bids are conditional to the project receiving environmental clearance from the Maharashtra government-the primary reason it slipped into distress.

Another person in the know said conditional bids are unacceptable under the National Company Law Tribunal's debt resolution process. "The committee of creditors (CoC) will have to meet and seek an alternative," the person said.

The NCLT had in July 2023 approved a resolution proposal from Darwin Platform Infrastructure (DPIL) submitted in December 2021, offering total payout of ₹1,814 crore to lenders over eight years and promising to deliver fully constructed houses to 837 homebuyers.

However, Mumbai bench of NCLT called off the resolution plan after a full year of hearing in September last year, noting that DPIL failed to make the ₹100-crore upfront payment without any justifiable reasons. Tribunal allowed revival of resolution process and let CoC to exclude the period from July 13, 2021, to January 3, 2022, from resolution process.

A dream project
Lavasa was the dream project of Ajit Gulabchand, the scion to one of India's leading business empires, the Walchand Group, and the chairman of Hindustan Construction Company (HCC) which has built heavy infrastructure projects such as dams, tunnels and bridges. Lavasa was to be built around Warasgaon lake in the Mulshi Valley near Pune in the Western Ghats. He had bought land in the hills from local developers who had planned to build tourist cottages. Lavasa was to cover 100 sq km when fully built with a population of three lakh and would have five towns built on seven hills.

Gulabchand envisioned a private hill city unlike anything India had seen, driven by a bold idea no one had attempted before.

The very name, 'Lavasa', meant nothing but was intended to evoke a feeling of luxury, warmth and peace. Deceptively vague, the name would sound like an Italian word to Europeans but a local language word to Indians. This feat was achieved by an American branding firm which invented the name. The city too was a pure invention — cut off from any Indian contexts, a city for the rich where they can feel as if they are in Europe, and yet located in India, not far from bustling and chaotic Pune and Mumbai, the very antithesis of what Lavasa was to be.

Lavasa was reportedly modelled after a picturesque Italian fishing village, Portofino. A street in Lavasa was also named Portofino. It had tie-ups with Sir Nick Faldo for a golf course, Manchester City Football Club for a football academy and Sir Steve Redgrave for a rowing academy. It has an Apollo hospital, a school, run by Christel House, a global nonprofit which runs schools around the world, and Ecole Hoteliere Lavasa, a hospitality management school with Swiss partnership. Lavasa was to have no water tanks atop houses, a typical Indian urban sight, because it has a centralised water supply, and you could drink water right off the tap. The city was envisioned on the principles of New Urbanism, a city of open and green spaces where everything is within walking distance.

A private city, Lavasa was to be run by The Lavasa Corporation without any state interference except for policing and taxes. It also got itself a top American city administrator, Scot Wrighton, to manage it. He had told Forbes in 2010 about his challenge of convincing local people living in the vicinity of Lavasa to not let their cattle roam the town.

The least expensive apartments in Lavasa sold for between $17,000 and $36,000, the Guardian had reported in 2015, which made it a city for the super rich. However, Gulabchand had promised to also build low-priced homes for young professionals as well as those with cheap rents which workers could afford. He had also said that Lavasa would eventually be run in public-private partnership with the government.

How Lavsa hit into roadblock
Lavasa, only one-fifth complete and preparing for an IPO, hit a major setback when then Environment Minister Jairam Ramesh declared it illegal for lacking proper environmental clearances. The government said HCC had bypassed regulations, while the company claimed the issues were exaggerated. The project also faced criticism over alleged land grabs from local tribals at undervalued prices.

In 2012, observing that the project nods were given without environmental and cabinet approvals, the Comptroller & Auditor General (CAG) had rapped the Maharashtra government for "total lack of transparency" in the selection of the Lavasa hill station project. "We have brought out total lack of transparency in selection of the project proponent. Granting of SPA (special planning authority) status to Lavasa Corporation Limited (LCL) without any control by the Government left scope for irregularities, perceived conflict of interest and violation of environmental laws," it said. Though the government was required to supervise the activities of LCL, they did not do so, CAG said in its report for the year ended March 31, 2011.

Lavasa project also ran into controversy for its alleged links to the family of NCP chief Sharad Pawar. In 2022, while declining to interfere with permissions given for development of Lavasa in 2002, the Bombay High Court referred to the "influence and clout" used by Sharad Pawar and his family in the project. It also said Ajit Pawar was found to be "remiss in his duty" as irrigation minister and ex-officio chairman of Maharashtra Krishna Valley Development Corporation. Though the court upheld the validity of an amendment to the Bombay Tenancy and Agricultural Land Act, 2005 after permissions were given for purchase of lands by Lavasa Corporation. Ajit Pawar chaired the meeting where an ex-post facto sanction was given to construct weirs on the backwaters of Varasgaon-Morse dam which would supply water to Lavasa. Pawar's daughter Supriya Sule was a shareholder in Lavasa, and she represented Baramati constituency in which 18 villages were included in 2009 in Lavasa City.

The government order halted all construction work at Lavasa for a year. Though later the government allowed it to go ahead by paying penalties and ensuring full compliance to regulations, the debt had started weighing on Lavasa as it struggled to pay interest on it.

Lavasa, which was to be an idyllic European escape from India's harsh urban reality, had turned into a ghost town. With just one-fifth built before stalling, Lavasa stands mostly abandoned—its decaying structures a reminder that borrowed visions often falter on local soil.