That will yield billions of dollars for mill owners, but has angered environmentalists and activists who fear little of the prime land will be accessible to the millions in need of more parks and low-cost housing in the congested metropolis.

Mumbai has only 0.03 acres of open land per 1,000 people, arguably the lowest ratio in the world. More than half the city's 17 million people live in slums or on pavements, and high housing costs have pushed even middle-income families to distant suburbs.

"We are dismayed with the court ruling," said Shyam Chainani of the non-profit Bombay Environmental Action Group, which had filed a petition against the sale of mill lands last year.

"The court obviously felt it should keep a handful of industrialists and mill owners happy rather than the millions who are being denied open spaces and low-cost homes," he said.

But mill owners claim they need the money from the sale of land to upgrade facilities and pay tens of thousands of workers who were laid off more than 20 years ago when the mills closed.

State-owned National Textile Corp. (NTC), which owns 25 of the 58 mills in central Mumbai, had sold five mills for 2.2 billion rupees ($50 million) before the October ruling at record prices of up to 14,800 rupees ($333) per sq. ft., and it expects a further sale of 100 acres to net more than $1 billion.

"It is a strategic location, in the heart of the city," said Kekoo Colah, executive director at real estate consultancy Knight Frank, which estimates there would be an addition of close to 12.5 million sq.ft. (1.2 million sq metres) of real estate in central Mumbai.

MILLS TO MALLS

Mumbai's cotton textile mills were India's first modern industry, built more than a century ago. Until the 1970s they thrived, but cheaper powerlooms soon made them unviable. Then, an 18-month mill workers strike in 1982 forced several to shut down.

In 1991, the city allowed the sale of a portion of the mill lands. If the mills were redeveloped, one-third of the land was to be used for commercial development, with one-third going to the city for open spaces and the rest for low-cost homes.

But only a few mill owners responded, so in 2001, the government diluted the rule saying only open land, on which there was no construction, had to be distributed in this manner.

Several mill owners jumped at the opportunity, then consumer activists filed a public interest litigation last year, arguing the city was entitled to a greater share of the land.

Now, analysts expect the new supply will help stabilise real estate prices, which are the highest in the country.

But even as interest from foreign firms and funds in real estate has risen since India eased rules on foreign investment last year, there is little evidence that social and environmental issues are also being addressed.

At the erstwhile Phoenix Mills in central Mumbai, a multi-storey parking lot is being built for the crowds of shoppers at the mall, while on the opposite side of the road, hundreds huddle in ramshackle huts on the pavement.

"It is the paucity of land in Mumbai that makes the fate of the mill lands such a highly charged debate," Colah said.

"Certainly, environmental and social concerns have to be addressed - not by developers, but by the city," he said.