Exercising the rights conferred by clause (1) of Article 213 of the Constitution of India, Governor Vajubhai Vala promulgated the Karnataka Land Reforms (Amendment) Ordinance, 2020 on July 13, 2020.

This is a landmark legislation resulting in change of the entire dynamics of acquiring and holding agricultural lands in the state of Karnataka by non-agriculturists as provided under the Karnataka Land Reforms Act, 1961.

Prior to the Ordinance, any person/family with an annual income of over Rs. 25 lakh from sources other than agricultural lands; an educational, religious or charitable institution or society or trust; an association
or other body of individuals not being a joint family, whether incorporated or not; and a co-operative society other than a co-operative farm, were not entitled to acquire and hold agricultural lands in Karnataka.

The said provisions also required the aforesaid persons/entities, who acquired agricultural lands in contravention to Sections 79A and 79B of the Act (including by way of inheritance and bequest), to make a declaration before the jurisdictional Tahsildar. Based on such declaration, the Tahsildar was required to submit a statement to the concerned Deputy Commissioner, who thereafter would issue a notification declaring that such lands stand vested with the state government.

However, in some cases (as provided under these sections), an amount was payable to such persons/entities while the lands vested with the state government. Section 79C of the Act provided for penalties for failure to file declaration or for filing false declarations. By virtue of the Ordinance, Sections 79A, 79B and 79C of the Act have been omitted and all persons/entities, earlier disentitled from acquiring and holding agricultural lands, are now entitled to acquire and hold agricultural lands in Karnataka.

Also, prior to the Ordinance, Section 80 of the Act barred transfer of agricultural lands to non-agriculturists (persons not personally cultivating the land) i.e., transfers by way of sale (including sale in execution of a
decree of a civil court), gift, exchange, lease or mortgage (with possession) of agricultural lands in favour of non-agriculturists; or agriculturists holding lands in excess of ceiling area prescribed under the Act; or non-agricultural labourer; or person/entities disentitled under Sections 79A and 79B of the Act, were prohibited, unless permission was granted by the jurisdictional Deputy Commissioner for the same. The amended Section 80 of the Act now only prescribes restrictions for transfer of certain lands as opposed to
a total bar.

The Ordinance also inserted a new Section 80A, as per which, the conditions laid down in the Act shall not be relaxed in respect of lands granted to persons belonging to Scheduled Castes and Scheduled Tribes,
during the period of prohibition under the Karnataka Scheduled Castes and Scheduled Tribes (Prohibition of Transfer of Certain Lands) Act, 1978.

Section 63 of the Act provides for a limit on the extent of agricultural land that can be held by a person (whether in his individual capacity or otherwise) i.e., the ceiling area. Prior to the Ordinance, for an
individual who has no family or for a family of not more than 5 members, the ceiling area was 10 units. In case the family comprised more than 5 members, the ceiling area was 10 units plus an additional extent
of 2 units for every member more than 5, subject to a maximum of 20 units on aggregate.

Similarly, the ceiling area for a tenant of any agricultural land leased in the districts of Uttara Kannada and Dakshina Kannada, as provided under clause (b) of sub-section (2) of Section 5 of the Act, was 40 units. Post the Ordinance, for an individual who has no family or for a family of not more than 10 members, the ceiling area is revised to 20 units. In case the family comprises more than 10 members, the ceiling area is revised
to 20 units plus an additional extent of 4 units for every member exceeding 10, subject to a maximum of 40 units on aggregate. Also, the ceiling area for a tenant of any agricultural land leased under clause (b) of
sub-section (2) of Section 5 of the Act, is revised to 80 Units.

For this purpose, the term "family" includes spouse/spouses, minor sons and unmarried daughters.

However, the term "unit" varies depending on the classification of land i.e., A/B/C/D Classes (based on the source of irrigation) and the type of soil, as provided in Schedule I of the Act.

Section 81 of the Act has been suitably amended having regard to the fact of omission of Sections 79A and 79B of the Act.

The Ordinance makes it abundantly clear that though the omission of Sections 79A, 79B and 79C of the Act is effective from March 1, 1974, the cases already disposed of before the publication of the Ordinance i.e., July 13, 2020, shall in no manner be affected. Furthermore, the Ordinance specifically lays down that all pending cases as on July 13, pertaining to Sections 79A, 79B and 79C and consequential matters, shall stand abated effective immediately.

In our considered view, the Ordinance is a welcome change for Karnataka, for more than one reason. With the lift of the ban/prohibition for transfer of agricultural lands to certain persons/entities under the Ordinance, the natural corollary which follows is the appreciation of the price of the land, thereby giving better negotiating powers to the land owners to raise higher loans from financial institutions and give the true ‘asset’ facet to agricultural lands.

Also, previously, the income of a person from sources other than agriculture determined his entitlement to hold agricultural lands. This has also been done away with under the Ordinance, which is but fair and reasonable since income should not have been be a criterion to entitle or rather dis-entitle a person from holding agricultural lands.

The omitted Sections 79A, 79B and 79C had the effect of dissuading a genuine agriculturist from purchasing agricultural land and engaging himself in agricultural activities out of fear of losing the land on account of a frivolous case being slapped against him.

As on the date of the Ordinance, as many as 13,000 cases alleging violation of the provisions of Sections 79A and 79B are said to be pending relating to agricultural lands of a value expected to be to the tune of Rs. 45,000 to Rs. 50,000 crore. It is also on record that in the last 45 years, 83,171 cases of alleged violations under Sections 79A, 79B, 79C and Section 80 have been filed, but the Government of Karnataka was not able to recover even 1% of the said lands.

Followed in its true spirit, the Ordinance will enable investments in agriculture by persons intending to pursue agriculture as a calling and who are capable of bringing innovative technologies into farming, but who were otherwise disentitled from purchasing agricultural land under the now omitted Sections 79A and 79B.

However, with the benefits that the Ordinance is expected to bring in, the fear of agricultural lands being deviated to non–agricultural purposes is redundant, since the procedure for conversion of agricultural land as per the provisions of Karnataka Land Revenue Act, 1964, and change of land use under the Karnataka Town and Country Planning Act, 1961 still being in force, a person/entity who is desirous of converting the agricultural land for non-agricultural purposes is still bound to comply with the said procedure.

The Government of Karnataka has, no sooner than later, come at par with our neighboring states in diversifying agrarian economy, while safeguarding the agriculturists and their lands.

Anandita Srinivasan is an Advocate practicing at the High Court of Karnataka. Anirudh Shenoy is a Senior Associate at CrestLaw Partners, Bengaluru.

Disclaimers: This article is not to be considered as legal advice and is intended only for informational purposes. The views expressed herein are personal to the authors.