Contributed by: Samvad Partners
The erstwhile Karnataka Land Reforms Act of 1961 (Act) was enacted with the primary objective of abolition of tenancy by conferment of land ownership rights on tenants and re-distribution of surplus land to landless agricultural laborers. The next leap forward in land reforms came in 1974 when the Act was amended to include restrictions on non-agriculturists from owning agricultural lands and barring transfer of agricultural land to non-agriculturists. This amendment also prescribed ceiling limits on ownership of agricultural lands.
This year has seen two important developments to the Karnataka Land Reforms Act, 1961– the notification of the Karnataka Land Reforms (Amendment) Act, 2020; and the promulgation of the Karnataka Land Reforms (Amendment) Ordinance, 2020 and it’s re-promulgation as The Karnataka Land Reforms (Second Amendment) Ordinance, 2020.
Prior to the aforementioned amendment and ordinances, the Act (i) prohibited persons or a family with a minimum assured annual income of INR 25 Lakhs from holding agricultural lands and non-agriculturists from inheriting agricultural lands(Section 79A); (ii) barred educational/religious/charitable institutions, co-operative societies, companies/corporations, and joint families from owning agricultural lands (Section 79B); (iii) prescribed penalties for falsely claiming eligibility to hold agricultural lands (Section 79C); and (iv) prescribed the ceiling limit for ownership of agricultural lands (Section 63).
LRF Ordinance, 2020
In a landmark policy move, the Karnataka State Government on July 13, 2020, promulgated the Karnataka Land Reforms (Amendment) Ordinance, 2020. Though a bill seeking to replace it was passed in the Legislative Assembly during the September 2020 session of the Assembly, the ordinance was not approved by the Legislative Council and lapsed. However, the government, with some modifications, re-promulgated this ordinance on November 2, 2020 as the Karnataka Land Reforms (Second Amendment) Ordinance, 2020 (LRF Ordinance, 2020). The LRF Ordinance, 2020 repeals Sections 79A, 79B and 79C of the Act in toto, removing the restriction on non-agriculturists from own agricultural lands and enabling transfer of agricultural lands from agriculturalists to non-agriculturists. The amendment to Section 63 in the July ordinance, which had doubled the ceiling limit for ownership of agricultural lands, was withdrawn under the November ordinance.
Section 80 of the Act, which absolutely barred the transfer of agricultural lands to non -agriculturalists and also barred transfer of agricultural lands in excess of ceiling limit prescribed in Section 63 of the LRF Act to agriculturists has been narrowed by the ordinance to only restrict transfer of A-class irrigated land to persons who do not use such land for agricultural purpose and transfers in excess of ceiling limit prescribed under Sections 63.
It is important to note that though non-agriculturists can now own agricultural lands, the requirement to convert agricultural land to non-agricultural under Section 95 of the Karnataka Land Revenue Act, 1964 in order for these lands to be utilized for non-agricultural purposes, continues to apply.
The amendments removing restrictions on non-agriculturalists acquiring agricultural land have been implemented retrospectively from March 1, 1974. Since these provisions were first introduced in 1974, the net result of the retrospective repeal of these provisions is to remove the illegality attaching to acquisition of agricultural land by non-agriculturalists in contravention of the erstwhile Sections 79A, 79B, and 80. Consequentially, the LRF Ordinance, 2020 also provides that while all proceedings under Sections 79A and 79B of the LRF Act which had been finally disposed off prior to the promulgation of the July Ordinance shall not be affected, all proceedings pending as on 13 July 2020, are abated (dropped).
While the July ordinance had doubled the ceiling limits for landholding prescribed under Section 63 of the Act, the November ordinance reverses, by omitting any references to Section 63, this change, thereby reinstating the original ceiling limits under Section 63 of the Act. Unfortunately, the November ordinance remains silent on how land procured in excess of ceiling limits under the original Section 63 but within the limits prescribed by the July Ordinance will be treated.
LRF Amendment, 2020
Section 109 of the Act, as an exception to Sections 79A, 79B, and 80, prescribed conditions under which companies or organizations could acquire agricultural lands for industrial use. The Karnataka Land Reforms (Amendment) Act, 2020, passed in April 2020 (LRF Amendment, 2020), enables industries, through an amendment to Section 109, to acquire agricultural land, to the extent sanctioned by the State Government with the approval the committee(s) constituted under the Karnataka Industries (Facilitation) Act, 2002 (KIF Act), directly from farmers, by exempting such land from the purview of Sections 63, 79A and 79B (now deleted by the LRF Ordinance, 2020) and 80 of the LRF Act.
LRF Amendment, 2020 now permits industrial entrepreneurs, investors, and organizations to identify and purchase agricultural lands directly from the farmers to an extent up to 40 units. Further, the provisions of the amendment allow such industries to identify lands suitable for its requirements instead of choosing from amongst the lands which the State Government has notified for industrial purpose.
Additionally, addressing financial concerns of various industrial projects, this amendment has allowed companies acquiring land for a particular industrial purpose to sell land that they have held for at least 7 years to another company for the same purpose in the event they do not continue to use such land for the permitted purpose, due to reasons beyond their control.
While all industries where land is a crucial asset stand to gain from these land reforms, there also exist very valid concerns around the negative impact that the State’s decision to liberalize agricultural land holdings may have on the agricultural sector which largely comprises of small farmers. Given the lack of any framework for the acquisition of agricultural land by non-agriculturalists, increase in speculative trading in agricultural real estate is also a genuine concern. Adding to the overall chaos are concerns on whether the LRF Ordinance, 2020, which has been at the receiving end of strong opposition from various political and farmer groups, will eventually see the light of day. The strong opposition to the LRF Ordinance, 2020 and the lack of clarity on what happens to acquisitions of agricultural land by non-agriculturalists under the LRF Ordinance in the event that it does not receive the requisite approvals from the legislative council and legislative assembly are likely to make stakeholders extremely wary of relying on it.
Contributed by Samvad Partners
The above article has been authored by Ms. Juhi Mehta(Counsel), and Ms. Sindhu Sharma(Associate).