G.O. (Ms) No. 425, Mortgage of Lands under Section 37-A, 2020
The Revenue and Disaster Management Department, Land Reforms Wing, issued G.O. (Ms) No. 425 on 18 August 2020, directing that applications by industrial or commercial undertakings to hold or acquire land above the ceiling may be considered even when the land is mortgaged during the application process for legitimate business activity. The undertaking must provide an undertaking from the company or a No Objection Certificate from the concerned bank.
What the government order does
G.O. (Ms) No. 425 of the Revenue and Disaster Management Department, Land Reforms Wing, addresses applications under section 37-A of the Tamil Nadu Land Reforms (Fixation of Ceiling on Land) Act, 1961. It allows the Government to consider an industrial or commercial undertaking's application to hold or acquire land above the ceiling even if the land is mortgaged while the application is pending for legitimate business activity.
The mortgage alone cannot be the reason for rejecting or recommending rejection of an application. Consideration is subject to obtaining either an undertaking from the company or a No Objection Certificate from the concerned bank.
Why the direction was issued
The Revenue and Disaster Management Department recorded that several proposals had remained undecided because applicants had mortgaged all or part of the land covered by an application or permission. Some applications had not been recommended by the Industrial Exemption Committee because the land was mortgaged to obtain a loan.
The Industrial Exemption Committee considered mortgage of land to raise business finance to be standard industrial practice. The Advocate General of Tamil Nadu advised that an application could not be rejected, or recommended for rejection, solely because the land was mortgaged during the application period for legitimate business activity.
Who is affected
The direction applies to industrial or commercial undertakings seeking Government permission under section 37-A of the Tamil Nadu Land Reforms (Fixation of Ceiling on Land) Act, 1961 to hold or acquire land exceeding the ceiling area. It is also relevant to banks financing such undertakings and professionals reviewing the land, mortgage and permission records.
Key points for land checks
- An industrial or commercial organisation is permitted to hold 15.000 standard acres for industrial or commercial purposes.
- Government permission is required when an industrial or commercial undertaking wants to hold or acquire land above the ceiling.
- A mortgage created while the application is pending does not automatically prevent the application from being considered.
- The mortgage must relate to legitimate business activity.
- The company must provide an undertaking, or obtain a No Objection Certificate from the concerned bank.
- The direction does not state that permission is automatic. The application remains subject to consideration under section 37-A.
This summary is generated from the source document to help you find what is relevant. The PDF above is authoritative. For advice on your own property, use LandLens One or speak to a qualified professional.
Common questions
Will a mortgage automatically disqualify a section 37-A land ceiling application?
No. An application may be considered even if the land was mortgaged while the application was pending for legitimate business activity.
What document is required when the land has been mortgaged?
The Government must obtain either an undertaking from the company or a No Objection Certificate from the concerned bank.
Does G.O. (Ms) No. 425 automatically approve mortgaged land above the ceiling?
No. It directs that the application may be considered despite the mortgage. It does not grant automatic permission.
What ceiling is stated for an industrial or commercial organisation?
The order states that an industrial or commercial organisation may hold 15.000 standard acres for industrial or commercial purposes. Permission is required to hold or acquire land above the ceiling.
