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23 Jul 2020

FAQs on Karnataka Land Reforms (Amendment) Ordinance, 2020

The Government of Karnataka has taken a bold and timely decision of promulgating the Karnataka Land Reforms (Amendment) Ordinance, 2020 (“Ordinance”) to liberalize agricultural land ownership in the state. The ordinance repeals Sections 79A, B & C (Restriction on Holding or Transfer of Agricultural Lands), amends Sections 63, 70, 72, 80, 81, 104, 109 of the Karnataka Land Reforms Act, 1961 (“Reforms Act”) and inserts new section 80(A) to the Reforms Act. This has been a long-pending demand and is expected to work as a catalyst towards increasing investment into the state of Karnataka, as well as to facilitate the wholesome development of the agricultural sector.

Here are a few queries based on the Ordinance that have been answered by our Real Estate Partner, Prashantha Kumar:

Who can acquire/purchase agriculture land in Karnataka without any restrictions/ prior permission?

Any person/s, being Indian citizen, can acquire/purchase agricultural land in Karnataka without any prior permission and without any conditions subject to the prescribed ceiling limit under the Ordinance. However, any restrictions imposed on the grant of an agricultural land will continue to prevail, and any purchase of the grant land shall be subjected to such terms and conditions stipulated under the respective Grant Certificate and the Reforms Act.

Can corporate entities, partnership firms, private/public trusts, corporations and association of persons acquire/purchase agriculture land in Karnataka?

Yes, entities not being a foreign entity can acquire/purchase agricultural land in Karnataka subject to prescribed ceiling limit; and without seeking a prior conversion of agricultural land under Section 95 of the Karnataka Land Revenue Act, 1964 for non-agriculture purpose or special permission under Section 109 of the Reforms Act.

What is the revised landholding ceiling limit as per the Ordinance?

Under the Ordinance, the landholding ceiling limit of a family of five members, non-family member and a tenant under Section 5 (b) of the Reforms have been revised and enhanced as under:

A separate formula for determining the equivalent extent of different classes of land mentioned above is prescribed in Part B of Schedule I to the Reforms Act for the purpose of calculation of the extent of the ceiling. The said formula has been simplified for a better understanding as provided in the table below:

Does the pre-requirement of special permission under Section 109 of the Reforms Act to acquire agricultural land for a specific purpose become infructuous upon passing of the Ordinance?

No, the enactment of the Ordinance does not take away the requirement, and only permits non-agriculturists including corporate entities, partnership firms, private/public trusts, corporations and association of persons to hold and enjoy an agricultural land for agricultural purposes. Accordingly, to use agricultural land for non-agricultural purposes, one needs to obtain prior special permission under Section 109 of the Reforms Act or alternatively one can get agricultural land converted under Section 95 of the Karnataka Land Revenue Act, 1964 for non-agriculture purpose post-acquisition of agricultural land.  

Will requirement of the conversion under Section 95 of the Karnataka Land Revenue Act to use agricultural land for a specific purpose become infructuous upon passing of the Ordinance?

No, the enactment of the Ordinance shall not take away the requirement. It only permits non-agriculturists including corporate entities, partnership firms, private/public trusts, corporations and association of persons to hold and enjoy an agricultural land for agricultural purposes. To use agricultural land for non-agricultural purposes, one needs to seek the conversion of agricultural land to non-agricultural purposes under Section 95 of the Karnataka Land Revenue Act, 1964.

However, one cannot claim conversion of agricultural land for non-agricultural purposes as a matter of right, and the same may be subjected to number of parameters and conditions. 

Whether the permission for non-agriculture use under Section 95 of Karnataka Land Revenue Act, 1964 can be obtained post-acquisition of agricultural land subject to payment of conversion fees, etc.?

Yes. Upon acquisition of agricultural land as well as upon mutating the company’s/individual name in the revenue records as the owner in possession thereof, one can get such agricultural land converted under Section 95 of the Karnataka Land Revenue Act, 1964. However, one has to be mindful that one cannot claim conversion of agricultural land to non-agricultural purposes as a matter of right, and the same may be subject to a number of parameters and conditions. 

Further, is there any plan to amend Section 95 to permit use of agricultural land for bonafide industrial purposes without obtaining prior conversion approval?

So far, there are no such plans by the Government of Karnataka. One must procure requisite permission under Section 95 of the Karnataka Land Revenue Act, 1964 to change the land usage from agricultural to non-agricultural purposes by following the procedure prescribed thereunder.

What is the fate of pending cases initiated under Section 79 A, B & C of the Reforms Act?

Cases initiated under Section 79 A, B & C of the Reforms Act that are pending, shall be abated from the date of publication of the Ordinance; and cases that are disposed before the publication of the Ordinance shall in no way be affected.

What is the legislative intention behind this Ordinance?

The Ordinance aims to encourage the agricultural sector as a career option and to motivate non-agricultural young or mid-age crowd to pursue agricultural activities. Further, the Ordinance once enacted shall open up the agricultural sector for everyone (Indian Citizens) without conditions, save for landholding ceiling limit as prescribed under Section 63 of the Reforms Act; and terms and conditions imposed for grant of agricultural land.

Post this, a surge of innovation and infusion of technology can be expected in the agricultural sector. It has also opened the gates for co-operative farming as well as corporatization of the agricultural sector and will lead to a strong agriculture-based economy. It may further catalyse synthesis of urban and rural skills and may lead to a new class of the population.         

Will the Ordinance boost investment as well as lead to industrial development?

To the extent possible, I would like to respond affirmatively. Ease of doing business has no meaning unless one has ease of acquisition of land. There is a plethora of industries that have preferred to move their activities to states neighbouring Karnataka due to the restrictions the Government had imposed on the acquisition of land. This Ordinance is a much-needed investment booster, wherein companies/corporate entities can acquire land parcels cost-effectively without opting for back door entry of land aggregation through aggregators for their industrial needs. Karnataka may experience a surge in investments.

Which sectors will be benefited through this Ordinance?

Sectors like renewable energy, logistics, manufacturing, infrastructure, horticulture and agro-based industries will be highly benefited through this Ordinance.    


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