Priority of charges and mortgages in favour of a bank, Government and co-operative society

(1) Notwithstanding anything to the contrary contained in any law for the time being in force— (a) any charge or mortgage created by an agriculturist on any land or interest therein, in favour of a bank, as security for financial assistance given to him by that bank, shall after the commencement of this Act, if prior in time have priority over any subsequent charge or mortgage in favour of Government or a co-operative society; and (b) any charge or mortgage created by an agriculturist on any land or interest therein in favour of a bank, as security for financial assistance given to him by that bank shall have priority over any other charge or mortgage in or over such land or interest therein in favour of any person other than Government or co-operative society or any other bank notwithstanding that such other charge or mortgage is prior in time to the charge or mortgage created in favour of the bank as security; for financial assistance given to such agriculturist. (2) Where different charges or mortgages on the same land or interest therein, are created by an agriculturist in favour of Government, one or more co-operative societies or one or more banks, any such charges or mortgages created as security for financial assistance given by Government, co-operative society or bank by way of term loan for development purposes, shall have priority over any other charges or mortgages created in favour of Government co-operative societies or banks, provided a notice of such financial assistance by way of term loan for development purposes has been given to such Government co-operative society or bank, and that Government co-operative society or bank has consented to such financial assistance being given; and where more than one such charge or mortgage is created as security for financial assistance by way of term loan for development purposes, the charges or mortgages by way of security for the term loan for development purposes shall rank in priority inter-se in accordance with the dates of their creation. Explanation.—For the purposes of this section, the expression "term loan for development purposes" means financial assistance which generally results in improvement of agriculture or building up of tangible assets in agriculture; but does not include financial assistance for working capital expenses, seasonal agricultural operations or marketing crops. (3) Nothing in this section shall apply- (i) to borrowings only from one or more co-operative societies, and (ii) to the recovery of sums due to Government as arrears of land revenue.