18 February 2017

AMENDMENTS TO MAHARASHTRA TENANCY AND AGRICULTURAL LANDS ACT

Under Section 63 of the Maharashtra Tenancy and Agricultural Lands Act, 1948, (“Tenancy Act”), no agricultural land could be transferred to non agriculturists without permission of the Collector or an officer authorized by the State Government on the conditions prescribed under the Tenancy Act. Under the Tenancy Act,  an agriculturist shall include any person and his heirs whose land has been acquired for a public purpose and who as a result of such acquisition has been rendered landless from the date of such acquisition.

Now the Tenancy Act has been amended to remove the bar on transfer of agricultural land to non agriculturists with respect to land situated within the limits of a Municipal Corporation or a Municipal Council, or within the jurisdiction of a Special Planning Authority or a New Town Development Authority appointed or constituted under the provisions of the Maharashtra Regional and Town Planning Act, 1966 and also to any land allocated to residential, commercial, industrial or any other non-agricultural use in the draft or final Regional plan or Town Planning Scheme. However, the amendment contains certain conditions for transfer of agricultural land.

Further Section 63-1A of the Tenancy Act provides for transfer of agricultural land to non agriculturists for bona fide industrial use. A brief comparison on the pre-amendment and post-amendment position of law under this Section is contained in the table below:

S N	Pre-amendment	Post- amendment
1.	Earlier, purchase of agricultural land by agriculturists or non-agriculturists intending to convert the same to a bona fide industrial use exceeding 10 acres would require permission from the Development Commissioner (Industries) or any officer authorized by the State Government.	After the amendment, no such permission shall be required where such purchase of agricultural land is for bona fide industrial use, or for Integrated Township Project and it shall be subject to the condition that such land shall be put to bona fide industrial use within a period of 5 years from the date of purchase. If the agricultural land is not put to bona fide industrial use within the aforesaid period of 5 years, the Collector may grant an extension of further 5 years on payment of non-utilization charges at the rate of 2% of the market value of such land per annum, calculated as per the Annual Statement of Rates published under the Bombay Stamp (Determination of True Market Value of Property) Rules, 1995.
2.	Earlier, the agricultural land was to be put to industrial use within a period of 15 years from the date of purchase and the original seller would be entitled to repurchase it from the defaulting purchaser at the original price.	After the amendment, the agricultural land shall be put to industrial use within 10 years from the date of purchase. If the agricultural land is not put to bona fide industrial use within the period of 10 years, inclusive of the extension period, then the Collector will resume possession of the land after giving a month’s notice to the defaulting purchaser, and the land shall be vested in the Government, free from encumbrances and shall first be offered to the original seller at the same price at which the land had been sold by him.
3.	Earlier, if the agricultural land purchased was held by Occupant Class-II, the purchaser would in lieu of any Nazarana or other charges, be liable to pay to the Collector 2% of purchase price in case of land purchased for bona fide industrial use and 50% of the purchase price if land is purchased for Special Township Project within one month of execution of the Sale Deed and there was no penalty for delay of payment.	After the amendment, if such purchaser fails to deposit such amount within 1 month, then such purchaser shall pay to the Government 75% of the purchase price or the market value of the land as per the Annual Statement of Rates of that year, whichever is higher.
4.	No such provision in the Tenancy Act prior to the amendment.	A new provision is added which stipulates that when the purchaser fails to convert the agricultural land to bona fide industrial use and wishes to sell the same within the specified period of 10 years, the purchaser may do so by paying a non-utilization charge subject to the following conditions: Such sale/transfer will require prior permission of the Collector; The period of 10-years from the date of original purchase will also apply to the second transferee; The application must be accompanied with the prescribed documents including the statement of accounts and indemnity bond by the directors and shall be submitted to ROC; If the land is to be sold for bona fide industrial use, the transferor will deposit with the Collector, transfer charges @ 25% of the land market value; If the land is to be sold for any non-agricultural purpose other than the bona fide industrial use (consistent with extant development plans), the transferor will deposit with the Collector, conversion charges equal to 50% of the land market value. If such land is Occupant Class – II, a further amount equal to 48% of the original purchase price will also be deposited in lieu of nazarana.

MHCO COMMENT: The new provisions in the Tenancy Act will boost development for legitimate purchaser and bar the others from purchasing agricultural land without having intentions to use the same for bona fide industrial use as the new amendment imposes heavy penalties. Further, the amendment will also prevent frivolous trading in agricultural land and a new provision is added, giving an option to the purchaser of the agricultural land to sell his land in case he has failed to convert the same to bona fide industrial use within the specified period of 10 years.

The views expressed in this update are personal and should not be construed as any legal advice. Please contact us directly on +91 22 40565252 or legalupdates@mhcolaw.com for any assistance.