The provisions in relation to purchase of agricultural land in Maharashtra for bonafide industrial use has been in force since the year 1994. The Government of Maharashtra subsequently brought significant reforms in the laws governing the sale of agricultural land in the year 2016. As per Section 63 of Maharashtra Tenancy and Agricultural Land Act (“MTAL Act”), an agricultural land cannot be transferred to a person who is not an agriculturist without the permission of Collector or an officer authorised by the State Government.
However, there are certain exemptions and one of the exemptions is that such permission is not required under Section 63-IA of MTAL Act where a person is selling agricultural land, to any person who is or is not an agriculturist and who intends to convert the same to a bonafide industrial use where such land is located within the areas as mentioned therein.
Here is the concept of “bonafide industrial use” under MTAL Act and (ii) the relevant provisions in relation to sale of agricultural land for bonafide industrial use under Section 63-IA of MTAL Act.
CONCEPT OF “BONAFIDE INDUSTRIAL USE”:
The term “bona fide industrial use” has been defined under the explanation to Section 63-IA of MTAL Act as “the activity of manufacture, preservation of processing of goods, or any handicraft, or industrial business or enterprise, or the activity of tourism within the areas notified by the State Government as the tourist place or hill station, and shall include construction of industrial buildings used for the manufacturing process or purpose, or power projects and ancillary industrial usage like research and development units pertaining to bona fide industrial use, godown, canteen, office building of the industry concerned, or providing housing accommodation to the workers of the industry concerned, or establishment of an industrial estate including a co-operative industrial estate, service industry, cottage industry gramodyog units or gramodyog vasahats.”
RELEVANT PROVISIONS UNDER MTAL ACT:
As per Section 63-IA of MTAL Act, a person can sell land without permission of the Collector, to any person who is or is not an agriculturist and who intends to convert the same to a bonafide industrial use where such land is located within the areas as mentioned therein.
Compliance pursuant to purchase of land under 63-IA of MTAL Act:
- Sale is subject to the condition that land shall be put to bonafide industrial use within a period of 5 years from the date of purchase.
- Purchaser must inform the Collector of the conversion of the land for bonafide industrial use within 30 days. This is in line with Section 44(2) of Maharashtra Land Revenue Code, 1966 which provides for giving an intimation of date of change of use of land within 30 days to Tehsildar and sending a copy to the Collector.
- Failure to inform the same within the specified period, may result in a penalty not exceeding 20 times the amount of non-agricultural assessment.
- Upon receiving an intimation from the purchaser, a sanad is granted to the purchaser within a period of 60 (sixty) days from the intimation.
Consequences of non-utilisation of land:
- If purchaser fails to put the land to bonafide industrial use within a period of 5 years, further extension of 5 years may be granted by Collector upon payment of non-utilization charges at the rate of 2% of market value of such land as per the then ready reckoner rates.
- If the purchaser fails to put the land to bonafide industrial use within a total period of 10 years then Collector shall resume land by giving notice of 1 month to the defaulting purchaser and land shall vest in the Government, free from all encumbrances.
- Collector shall first offer the land to the original land holder on the same tenure on which it was initially held by original holder for such bonafide industrial use and at the same price at which it had been sold by the original holder.
- In case of failure on part of original holder to buy the land, the land shall be auctioned for any use consistent with and permissible under the development plan or regional plan or town planning scheme.
- If person fails to utilize the land for bonafide industrial use, fully or partly and wants to sell before the expiry of specified period of 10 years, he may be permitted by the Collector to sell the land subject to payment of non-utilization charges and transfer charges at the rate of 25% of the market value of such land as per the then ready reckoner rates.
As is evident from the definition of “bonafide industrial use”, it does not specify what will constitute “bonafide industrial use” but it has used illustrations to indicate the activities that can be seen as “bonafide industrial use”. As such, the definition is not exclusive and hence open to interpretation.
We have come across cases wherein a given activity may not be covered under the illustrations mentioned in the definition, yet purchasers have taken a view that their activity is still deem to be bonafide industrial use and proceeded to purchase the land.
In such a scenario, it is advisable to seek clarity from the concerned authority prior to taking benefit of exemption under Section 63-IA of the MTAL Act. Considering if a view is taken by the authority later that the said activity does not fall within the definition of “bonafide industrial use”, the same may attract violation of Section 63 of MTAL Act which will have a variety of consequences.
Whilst there is no formal provision under MTAL Act for seeking clarification from the authority, we have seen that an application seeking clarification is responded to by the concerned authority. Further, as a purchaser it is prudent that the sale deed being entered into mentions that the land is being purchased for bonafide industrial use.
Another frequent occurrence that is observed is when land is purchased under Section 63-IA of the MTAL Act, but the previously indicated post-acquisition compliances are not carried out. The purchaser should ensure compliance with requirements to be followed post sale in order to avoid penalties and other consequences.
