UPDATE 1-India: HCC's township project not ready for clearance
* Clearance not given to $31 billion project
* Lavasa had not met conditions - ministry
* Land acquisition controversial issue in India (Adds HCC chairman's comments)
By Kaustubh Kulkarni
MUMBAI, Oct 14 (Reuters) - India's federal ministry of environment and forests (MoEF) on Friday declined to approve the first phase of a $31 billion township in the latest clash over land acquisition between big business and authorities in the rapidly-developing economy.
Lavasa, a sprawling hillside development in western India by a unit of Hindustan Construction Co (HCC) , has not complied with conditions specified by a ministerial panel probing the project's violation of green rules, a ministry statement said.
"The final decision on the environmental clearance cannot be taken till all the pre-conditions are met including credible action by the state government of Maharashtra," the order said.
"This is a completely discriminatory act," HCC chairman Ajit Gulabchand told reporters in comments broadcast on Indian TV channels.
"These pre-conditions have never been laid down before," he said in response to the order.
India's environment ministry asked state authorities to take action against Lavasa in January after writing to the developer in November asking why the construction should not be demolished.
"We are disappointed with the MoEF's order today. In fact, it is not even an order. After eleven months of continued delaying tactics, the MoEF has yet again evaded grant of environment clearance," a Lavasa spokesman said in statement.
"To suggest that the state government of Maharashtra has not yet taken action, is not a good enough reason for delaying environment clearance to such a large and important project, under development for last seven years."
Land acquisition for development has become a politically-charged issue in India, as big businesses comes up against angry landowners and a heavy-handed environment ministry that has been accused of stymying growth in Asia's third-largest economy.
Protests by local villagers and interventions from the government have delayed a $12 billion steel mill by South Korean firm POSCO , spooking investors and harming foreign interest in infrastructure projects.
The conditions set by the panel included a written commitment by Lavasa that says it will not repeating environmental violations, a revision of development areas to conform to town- planning norms and the creation of an environmental restoration fund.
Shares of Hindustan Construction Company, which have lost 58 percent in value over the last 12 months, ended at 28.3 rupees on Friday, up 0.53 percent in a firm Mumbai market. (Writing and additional reporting by Henry Foy; editing by Jui Chakravorty and Malini Menon)
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