Tenancy Laws in Gujarat

Government amends Tenancy Laws to boost industrial use of land in Gujarat:

Confusion prevailing in regard to the agricultural lands reduced owing to recent amendments

In the State of Gujarat, strict law regarding agricultural land prevails for protection of farmers and the tenants, who cultivate the land. The law states that agricultural land cannot be sold to a non-agriculturist unless special permission has been obtained from the authorities. Says Richa Mehta, advocate at K. Nanavati & Gandhi Associates, “Any entrepreneur who proposes to establish an industry in Gujarat, searches for a piece of land for establishing his industry and generally contacts a land-broker for the same.  Thereafter, upon negotiation, he purchases the land after paying a price and then approaches the authority for permission; a lot of compliances need to be sought for such transactions.” Adds Pratik Gajjar, CEO of Space Management Ltd., a real estate brokerage firm, “The document under which an entrepreneur has purchased the land is not a legal transaction in view of the law if transferred for non-agricultural use without obtaining permission and if the proceedings under such law has been initiated, the result will be vesting the land in government and the person, who has purchased the land loses his land and money.” 

The Gujarat Government amended Tenancy Law in 1976, permitting non-agriculturist to purchase agricultural land for bonafide industrial use.  The entrepreneur who purchases the land for his own bonafide industrial use has to purchase it with certain conditions provided in the law and then he has to obtain necessary permissions for such use.  Pranit Nanavati, Partner at Nanavati Associates observes, “Confusion prevails in land transactions in the sense that when such land is converted for non-agricultural purpose, whether the purchaser can further sell the land.  The view prevailed that he cannot sell such land to any other party even for bonafide industrial use. Even the Supreme Court recently confirmed that such transfer i.e. to say when the land is purchased for bonafide industrial use subsequent transfer is not a legal transfer.” Adds Uttam Gandhi, Senior Solicitor at K. Nanavati Gandhi Associates, “The Government, in order to find a way out of this confusion further amended the law in December 2015, permitting the transfer of such land, which has been purchased for bonafide industrial use upon permission of the Collector and upon payment of premium price as provided by such amendment.”

Nirav Kothary, Head of Operations - Gujarat, JLL states, “The Government has allowed transfer of land to establish industrial park and a provision has been inserted to protect the interests of an agriculturist who has acquired land despite earlier transactions in respect of said land being considered void. Additionally, the penalty payable on transfer of land to non agriculturist has been increased.” Satyajeet Desai, Mulla's Hindu Law Author observes, “The new amendments focus on the changes that rapid industrialization has brought to make procedural parts simple and mitigate undue hardships on purchasers. The most important amendment is that the time limit for commencing production after land is bought has increased.”

Hence, the amendment in the tenancy act aims to achieve the aforesaid objects.