Owing to its colonial heritage and the political affinity towards the agricultural sector in India, most states in India, especially Maharashtra had agricultural land laws designed to promote and protect the agricultural sector and agriculturists.
However, with India’s focus on globalization and the need to promote the industrial sector, the Maharashtra Government continued to liberalize laws in order to ensure ease of doing business in the State.
This article by Economic Laws Practice, which is a leading legal advisor for Real Estate in India, discusses one such change which had a major impact were the introduction of and subsequent amendments made to Section 63 (1A) of the Maharashtra Tenancy and Agricultural Lands Act, 1948 (MTAL) which was an exception to the rule where non-agriculturists were barred from acquiring any agricultural property in the State.
The aforesaid provision was introduced under MTAL in 1994, allowing non-agriculturists to acquire agricultural lands for bonafide industrial use. The provision tried to strike a balance by laying down certain conditions and restrictions so that parties are not able to hoard large parcels of land in the garb of bonafide industrial use. In time, the government realized that the provisions were not supporting optimal growth for the State and was restricted to industry alone. With this though the State introduced certain amendments to Section 63 (1A) of MTAL (discussed below) which came into force from January 01, 2016 with an aim for an overall growth in multiple sectors.
The noted amendments included: - (i) the expansion of scope for acquisition of the lands for integrated township projects in addition to bonafide industrial use, (ii) removal of requirement to take approval from the Development Commissioner (Industries) for purchase of large portions of land, (iii) Change in period to put the land to use for the intended purpose reduced from overall 15 (fifteen) years to 10 (ten) years with a provision of annualised penalty for the period the land is unutilised, after expiry of 5 (five) years from the date of acquisition, (iv) on default in putting the land to use for the proposed permitted purpose within the specified time, the collector now has the power to suo-moto resume the land, and offer the same to the original agricultural sellers (as against the mere right of sellers to repurchase the lands), and upon rejection by them to auction the land, and (v) option for the acquirer to sell the property to a third party (subject to charges payable to authorities) who is willing to put the subject land to the intended use within the balance period as permitted under Section 63 (1A) of MTAL.
These amendments were welcomed by various stakeholders for various reasons such as:
(i) with the change in definition of industry and expansion of scope, the changes gave an impetus to various sectors including renewable energy projects, logistics sector, information technology sectors etc. and also the housing for all and affordable housing schemes of Government,
(ii) removal of approval requirement ensured that the transactions could be completed within good time and the practical concerns of the renegotiation of prices due to delay in transaction is checked. It may be pertinent to note that the State Government has also proposed an amendment to the Maharashtra Agricultural Lands (Ceiling on Holding) Act, 1961 thereby removing the ceiling limit for acquisition of the agricultural lands under Section 63 (1A) of MTAL which is presently a maximum of 54 acres. Presently, a state government approval is required for acquisition of land over ceiling limits, which once removed shall further expedite the acquisitions and completion of projects,
(iii) expedited usage of land simultaneously with a better policy to ensure project completion by appropriate checks through government offices, on the entities which were hording land by having a separate informal understanding with farmers that they would not repurchase the same at the expiry of 15 years, and
(iv) the amendment provided an exit option to investors who are not able to complete the project within specified timelines provided they are able to identify a party who may do the same.
While the amendments to Section 63 (1A) of MTAL have been welcomed as a boost to overall growth in the State, there remains certain checks (such as location of land, restriction on development of eco-sensitive zones, forest areas etc.) and compliances which are required to be taken care of while acquiring such lands to ensure better protection of the buyers/acquirers and it is pertinent that the acquirers seek professional advice on the same.
Economic Laws Practice is a leading legal advisor for Real Estate in India.
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