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Can a company be an agriculturist?

An agriculturist is one who 'cultivates the land personally'. A company is an artificial person having a distinct personality. Being an artificial person it cannot cultivate land personally and even if it hires labour it cannot be said to cultivate on its own account

The mischief to bypass laws is never ending. Each one tends to interpret the law in a way beneficial to him. Since land is a scarce commodity (and they do not make it anymore), there is a greater scope for imposed and induced aberrations in property matters. One Google search on whether,  companies can buy agricultural property in Maharashtra, throws up myriad options. A concerted effort to veer public opinion towards believing “Yes, it is possible”, is also afoot. At a seminar that we   attended, the audience was informed that if all the directors were agriculturists, and the object of the company was to carry out agricultural activities, then such a company could indeed acquire agricultural land. Confounding the confusion are copies of record of rights from other states reflecting the name of a company and its directors as land holders, floating around here, in a different province. Such documents, even if their veracity is unimpeachable, would not go far; immovable property is a state subject. But, what does the statue book have to say?  

Our quest should, at the very least, begin with the Bombay Tenancy and Agricultural Act, 1948 (BTAL), if not end there. It does not impose a complete bar on the acquisition of agricultural land by a company. In fact it does not even speak in terms of ‘corporate’ or ‘non-corporate entities’, employing instead the terms ‘agriculturist’ and ‘non- agriculturist’. BTAL just goes so far as to say that the permission of the Collector shall be required for sale, exchange, gift, lease, mortgage with possession, from an agriculturist to a non-agriculturist. But then, who is an agriculturist? He who ‘cultivates land personally’. By contrast, he who does not or cannot cultivate land personally is a non-agriculturist. Here is where all the trouble begins. Hired labour, servants on wages can be employed without distributing the element of cultivate-land-personally provided it’s on one’s own account. And now, the headache turns into a migraine.

Legal ownership of property in a company vests in the company itself and not in the directors, employees, any hired labour, or servants. A company is an artificial person having a distinct personality. Being an artificial person it cannot cultivate land personally and if it hires labour it cannot be said to cultivate on its own account.

For various other purposes, under BTAL, the test of ‘cultivates land personally’ has been carried out on idols, deities as juristic persons, and on public trusts. The Bombay Public Trust Act defines a trustee as a person in whom the trust property vests. On these premises, the Supreme Court, way back in 1948, observed that a managing trustee in whom the legal ownership of the property vested could cultivate land personally. As a natural corollary, the courts have drawn a distinction between a trustee, in whom the property vests in law, and a manager or Shebait of properties, which vest in an idol, which is the legal owner. Such a manager or Shebait is no more than an administrator managing the property for and on behalf of the idol, and they all thus fail the test of ‘cultivate-land-personally’.

It may well be the intention of our zealots to override authority by spreading Gobbelian lies. Beware, beware, beware. The Mamlatdar, a government appointee at the local revenue level, has the power to decide on the question of who is an agriculturist. Moreover, an unauthorised occupant can be summarily evicted. 

The New Industrial Policy, in 1994, introduced many exemptions and waivers. However, for them to be applicable, the land would have to be acquired for bona fide industrial use or Special Township, and they all come with other strings attached.  

Caveat Emptor-buyer beware- in this land, is not just legalese expressed in Latin, but a way of life, and at every step of the way.

(Divya B Malcolm is a senior associate with Kochhar & Co. The views expressed are her own and not to be construed as legal advice)


Will Veerappa Moily get the job done at environment ministry?

Hope Veerappa Moily is able to clear all the pending environmental issues that Jayanti Natarajan has left as her legacy

Petroleum minister Veerappa Moily has taken over the additional responsibility of being the Minister of Environment & Forests (MoEF), a job from which Jayanti Natarajan simply walked away to serve the party!


It would appear that delayed environmental approvals may have really cost her the job, in as much as the Project Management Group, initiated by the Prime Minister's Office, holds MoEF as the primary cause for not having fuel supply agreements (FSAs) for over two years, and 22% of the power projects have been affected as a result! Full details are likely to come out in the next few weeks.


It may be recalled that, recently, in a press statement, Narasing Rao, CMD of Coal India (CIL) has lamented on the various problems faced by the company with some of the coalfields not being able to get on with the work as mining could not be started due to various clearances not being available!


In the meantime, the Cabinet Committee on Economic Affairs (CCEA) gave clearance for coal supply to nine more power projects, including GMR and Sterlite Industries, who had failed to develop mines allocated to them due to environmental and other clearance issues. Now, they will be able to get coal supplies for three years on tapering linkage policy! But the question is, whether Coal India will be able to take this additional responsibility to supply, when they are already failing to reach their target of 482 million tonnes (mt) this fiscal?


According to Narasing Rao, due to delays in forest and environmental clearances and hurdles in evacuation, they have had to hold back about 20 million tonnes of coal production this year. They have ambitious plans, all set to meet the FSAs that they have signed, from 482 mt to 530 mt (in 2014-15), 575 mt (in 2015-16) and 615 mt (in 2016-17).


In fact, the Coal India CMD has cited an example of regulatory clearance in case of one mine, where they had obtained Stage-I approval on 15th March this year; ideally, Stage-II clearance would have facilitated CIL to go ahead and have the mine in operation in 90 days from that date of the green signal. Yet, nine months after the Stage I clearance, CIL is yet to receive the final approval for mining operation to commence!


Perhaps, the new minister, Veerappa Moily, can take immediate notice of such cases and organise clearances on a war footing?


Signing of FSAs has truly no meaning if the goods cannot be delivered for reasons beyond the control of the mine operator!


Veerappa Moily had taken on a big responsibility in this additional assignment. We can wish him luck and hope he is able to clear all the pending environmental issues that Jayanti Natarajan has left as her legacy!


(AK Ramdas has worked with the Engineering Export Promotion Council of the ministry of commerce. He was also associated with various committees of the Council. His international career took him to places like Beirut, Kuwait and Dubai at a time when these were small trading outposts; and later to the US.)


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