Model land leasing law prepared by Niti Aayog

A land lease--also called a ground lease--is a lease agreement that permits the tenant to use a piece of land owned by the landlord in exchange for rent.

A farmland lease is an arrangement where a farmer who does not own enough suitable land to raise crops leases farmable land from someone else. Landlords that own large plots of farmable land often lease their plots to tenants when they have no interest in farming the land themselves. 

Presently there are many restrictions in the land leasing system. For example: States such as Bihar, Karnataka, Madhya Pradesh, Chattisgarh, Uttar Pradesh, Uttarakhand, Himachal Pradesh, Tripura, Telengana and Odisha that allow leasing out only by certain categories of land owners, such as those suffering from physical or mental disability, widows, unmarried, separated or divorced women, members of armed forces etc.

In Punjab, law does not ban leasing out, but provides that a tenant of a big land owner above ceiling is entitled to purchase his tenanted land on continuous possession for six years. Similarly, in Assam, tenants who have held land for at least three years consecutively can acquire ownership right on payment of 50 times the rate of revenue.

Thus due to the above stated restrictions, agricultural efficiency get affected.

•  Legal ban or restrictions on land leasing have led to concealed tenancy in almost all parts of the country. Informal tenants are most insecure, as they either have short duration oral leases or get rotated from plot to plot each year. This de-motivates them to invest in agricultural land improvement.

•  Informal tenants do not have access to institutional credit, insurance and other support services, which affect productivity of land cultivated by them.

• Due to legal restrictions, many land owners prefer to keep their lands fallow due to the fear of losing land right if they lease out. Keeping the land fallow results in underutilization of land and loss of agricultural output.

Thus Nitit aayog came up with the Model Agricultural Land Leasing Act, 2016. The model Act seeks to permit and facilitate leasing of agricultural land to improve access to land by the landless and marginal farmers. It also provides for recognition of farmers cultivating on leased land to enable them to access loans through institutional credit.

The salient features of the Act are:

• The lease agreement between the land owner and cultivator will include information pertaining to: (i) the location and area of leased out land, (ii) the duration of lease, (iii) the lease amount and the due date by which it has to be paid, and (iv) terms and conditions for the renewal or extension of lease. The lease period and lease amount will be based on a mutual agreement between the land owner and cultivator.

• The Act talks about “automatic resumption of land after the agreed lease period without requiring any minimum area of land to be left with the tenant even after termination of tenancy.

• It has give recognition and legitimacy to all land tenants, including share croppers, hence they will be able to access insurance bank credit and bank credit against pledging of expected output”.

• The cultivator and the owner can settle disputes between them using third party mediation, or gram panchayat, or gram sabha. If the dispute cannot be settled by third party mediation, either the landowner or the cultivator can file a petition before the Tahsildar, or an equal rank revenue officer. He will have to adjudicate the dispute within four weeks. In such cases, an appeal can also be made to the collector or district magistrate.

• State governments will constitute a special Land Tribunal, which will be the final authority to adjudicate disputes under the model Act. It will be headed by a retired high court or district court judge. No civil courts will have jurisdiction over disputes under the model Act.

Thus the new Act provides an incentive to tenants to make investment in land improvement by giving them the entitlement to get back the unused value of investment at the time of termination of tenancy.