Chapter XII LAND DEVELOPMENT BANKS

The Chapter shall apply to -

1. (a) co-operative banks advancing 74[long term loans], for the purposes herein enumerated, (hereinafter referred to as Land Development Banks) that is to say :-
   • (i) land improvement and productive purposes;
   • (ii) the erection, rebuilding or repairing of houses for agricultural purposes;
   • (iii) the purchase or acquisition of agricultural lands by tenants or agriculturists by way of allotment or otherwise under the Rajasthan Tenancy Act, 1955 (Act No. 3 of 1955), the Rajasthan Land Revenue Act, 1956 (Act No. 15 of 1956) or the Rajasthan Colonisation Act, 1954 (Act No. 24 of 1954) and rules made thereunder;
   • (iv) the liquidation of debts under the Rajasthan Relief of Agricultural Indebtedness Act, 1957(Act No. 28 of 1957) or any corresponding law for the time being in force in any part of the State;
   • (v) for the development of animal husbandry; 75[(b) Land Development Banks advancing short term and medium term loans under the special schemes approved by the National Bank or for purposes specially approved by the State Government for this purpose on such terms and conditions, as the State Government may decide;] 75[(c) any other co-operative bank permitted by the Registrar to function as a Land Development Bank.] Explanation :- For the purposes of this section, the expressions - (i) "short term loan" means a loan for the duration of less than eighteen months;
   • (ii) "medium term loan" means a loan granted for a period ranging from eighteen months to five; years 76[X X X] 77[ (ii-A)long term loan means a loan which is neither a short term nor a medium term loan; and]
   • (iii) "land improvement and productive purposes" means any work, construction or activity which adds to the productivity of the land and, in particular, includes the following, that is to say:-
2. (a) construction and repairs of wells (including tubewells), tanks and other works for the storage, supply or distribution of water for the purpose of agriculture, or for the use of men and cattle employed in agriculture;
3. (b) renewal or reconstruction of any of the foregoing works, or alterations therein, or additions thereto;
4. (c) preparation of land for irrigation;
5. (d) drainage, reclamation from rivers or other water, or protection from floods or from erosion or other damage by water, of land used for agricultural purposes or waste land which is culturable;
6. (e) bunding and similar improvements;
7. (f) reclamation, clearance and enclosure or permanent improvement of land for agricultural purposes;
8. (g) horticulture;
9. (h) purchase of oil engines, pumping sets and electrical motors for any of the purposes mentioned therein;
   • (i) purchase of tractors or other agricultural machinery;
10. (j) increase of the productive capacity of land by addition to it of special variety of soil;
11. (k) construction of permanent farm-houses, cattle-sheds, and sheds for processing of agricultural produce at any stage;
12. (l) purchase of machinery for crushing sugarcane, manufacturing Gur or Khandsari or Sugar;
13. (m) purchase of land for consolidation of holdings under the Rajasthan Holdings (Consolidation and Prevention of Fragmentation) Act, 1954 (Act No. 24 of 1954); and
14. (n) such other purposes as the State Government may from time to time, by notification in the Official Gazette, declare to be improvement or productive purposes for the purpose of this Chapter.

1. (1) There shall be a State Land Development Bank for the State of Rajasthan and as many Land Development Banks as may be deemed necessary.
2. (2) A reference to Land Mortgage Bank in any law, or instrument, for the time being in force in the State, shall, with effect from the commencement of this Act, be construed as a reference to a Land Development Bank within the meaning of this Chapter

1. (1) The Registrar, or any other person appointed by the State Government in this behalf, shall be Trustee for the purpose of securing the fulfilment of the obligations of the State Land Development Banks to the holders of debentures issued by it.
2. (2) The Trustee shall be a corporation sole by the name of the Trustee for the debentures in respect of which he is appointed, and shall have perpetual succession and a common seal, and in his corporate name may sue and be sued.
3. (3) The powers and functions of the Trustee shall be governed by the provisions of this Act and the instrument of trust executed between the State Land Development Bank and the Trustee as modified from time to time by mutual agreement between them.

1. (1) With the previous sanction of the State Government and the Trustee and subject to such terms and conditions as the State Government may impose, the State Land Development Bank in the discharge of its function as a Land Development Bank may issue debentures of such denominations, for such period not exceeding thirty years, and at such rates of interest, as it may deem expedient, on the security of mortgages, or mortgages to be acquired or partly on mortgages held and partly to be acquired and properties and other assets of the Land Development Banks.
2. (2) Every debenture may contain a term fixing a period not exceeding thirty years from the date of issue during which it shall be redeemable.
3. (3) The total amount due on debentures issued by the State Land Development Bank, and outstanding at any time, shall not exceed -
   • (a) where debentures are issued against mortgages held, the aggregate of -
     • (i) the amounts due on the mortgages;
     • (ii) the value of the properties and other assets transferred or deemed to have been transferred under section 77 by the Land Development Banks to the State Land Development Banks and subsisting at such time; and
     • (iii) the amounts paid under the mortgages aforesaid and the unsecured amounts remaining in the hands of the State Land Development Bank or the Trustee at the time:
   • (b) Where debentures are issued otherwise than on mortgages held, the total amount as calculated under clause (a) increased by such portion of the amount obtained on the debentures as is not covered by a mortgage.

The principal of, and interest on the debentures issued under the preceding section, or any specified portion thereof, may carry the guarantee of the State Government, subject to such maximum amount as may be fixed by the State Government, and to such conditions as the State Government may think fit to impose.

Upon the issue of debentures under the provisions of section 70, the mortgaged properties and other assets referred to in sub-section (3) of that section held by the State Land Development Bank, shall vest in the Trustee, and the holders of debentures shall have a floating charge on all such mortgages and assets, and on the amount paid under such mortgages, and remaining in the hands of the State Land Development Bank or of the Trustee.

Subject to the provisions of this Act and the rules made thereunder, it shall be competent for a Land Development Bank to advance loans for the purposes referred to in section 67 and to hold lands the possession of which is transferred to it under the provisions of this Chapter.

78[ When an application for a loan is made for any of the purposes mentioned in section 67, the Land Development Bank shall consider such application after the due inquiry and in such manner as may be prescribed. ]

A written order by the Land Development Bank, or any person or committees authorised under the bye-laws of the Bank to make loans for all or any of the purposes specified in section 67, granting, either before or after the commencement of this Act, a loan to or with the consent of a person mentioned therein for the purpose of carrying out the work specified therein, shall, for the purposes of this Act, be conclusive of the following matters, that is to say :-

1. (a) that the work described or the purpose for which the loan is granted is an improvement or productive purpose, as the case may be, within the meaning of section 67;
2. (b) that the person had, on the date of the order, a right to make such an improvement, or incur expenditure for productive purpose, as the case may be; and
3. (c) that the improvement is one benefiting the land specified and productive purpose concerns the land offered in security, or any part thereof as may be relevant.

1. (1) A mortgage executed in favour of a Land Development Bank shall have priority over any claim of the Government arising from a loan granted after the execution of the mortgage under the Rajasthan Agricultural Loans Act, 1957 (Act No. 1 of 1957).
2. (2) Notwithstanding anything contained in the Rajasthan Tenancy Act, 1955 (Act No. 3 of 1955), or any other corresponding law for the time being in force, where a mortgage in favour of a Land Development Bank is in respect of land in which a tenant has an interest, the mortgage may be against the security of such interest, and the rights of the mortgagee shall not be affected by the failure of the tenant to comply with the requirements of such law, and the sale of the land and his interest therein under such law shall be subject to the prior charge of the Land Development Bank.

The mortgages executed in favour of, and all other assets transferred to, a Land Development Bank, by the members thereof, before or after the commencement of this Act, shall with effect from the date of such execution of transfer, be deemed to have been transferred by such Land Development Bank to the State Land Development Bank, and shall vest in the State Land Development Bank.

Notwithstanding anything contained in the Registration Act, 1908 (Central Act 16 of 1908), it shall not be necessary to register mortgages or leases executed in favour of the Land Development Banks, provided that the Land Development Bank concerned sends within such time and in such manner as may be prescribed, a copy of the instrument whereby immovable property is mortgaged or let out for the purpose of securing repayment of the loan to the Registering officer within the local limits of whose jurisdiction the whole or any part of the property mortgaged or let out is situate, and such Registering Officer shall file a copy or copies, as the case may be, in his Book No. 1 prescribed under section 51 of the Registration Act, 1908 (Central Act 16 of 1908)

Notwithstanding anything contained in any law relating to insolvency and for the time being in force, a mortgage executed in favour of a Land Development Bank shall not be called in question in any insolvency proceedings on the ground that it was not executed in good faith for valuable consideration, or on the ground that it was executed in order to give the Bank a preference over other creditors of the mortgager.

1. (1) Where a mortgage is executed in favour of a Land Development Bank for payments of prior debts of the mortgager, such bank shall, notwithstanding anything contained in the Transfer of Property Act, 1882 (Central Act 4 of 1882), by notice in writing, require any person to whom any such debt is due, to receive payment of such debt or part thereof from the bank at its registered office, within such period as may be specified in the notice.
2. (2) Where any such person fails to accept such notice, or to receive such payments, such debts or part thereof, as the case may be, shall cease to carry interest from the expiry of the period specified in the notice: Provided that where there is a dispute as regards the amount of any such debt, the person to whom such debt is due shall be bound to receive payment of the amount offered by the Land Development Bank towards the debt, but such receipt shall not prejudice the right, if any, of such person to recover the balance claimed by him

1. (1) Mortgages in respect of loans by a Land Development Bank or the State Land Development Bank either before or after the commencement of this Act, executed by the manager of a Hindu joint family for the improvement of agricultural land or of the methods of cultivation, or for financing any other means to raise the productivity of the land, or for the purchase of land, shall be binding on every member of such joint Hindu family, notwithstanding any law to the contrary.
2. (2) In other cases, where a mortgage executed in favour of a Land Development Bank or State Land Development Bank either before or after the commencement of this Act, is called in question on the ground that it was executed by the manager of a Hindu Joint family for a purpose not binding on the members (whether such members have attained majority or not) thereof, the burden of proving the same shall, notwithstanding any law to the contrary, lie on the party alleging it.

Section 8 of the Hindu Minority and Guardianship Act, 1956 shall apply to mortgages in favour of a Land Development Bank, subject to the modification that reference to the court therein shall be construed as reference to the Collector or his nominee, and the appeal against the order of the Collector or his nominee shall lie to the Revenue Appellate Authority

Notwithstanding anything contained in the Transfer of Property Act, 1882 (Central Act 4 of 1882), or any other law for the time being in force, no mortgager of property mortgaged to a Land Development Bank, shall, except with the prior information in writing to the Bank, lease or create any tenancy rights on any such property: Provided that the rights of the Land Development Bank shall be enforceable against the tenant or the lessee as the case may be, as if he himself were a mortgager.

Notwithstanding anything contained in section 77, all moneys due under the mortgage, shall, unless otherwise directed by the State Land Development Bank or the Trustee, and communicated to the mortgager, be payable by the mortgager to the Land Development Bank, and such payments shall be as valid as if the mortgage had not been so transferred and the Land Development Bank shall, in the absence of specific direction to the contrary issued by the State Land Development Bank or Trustee, and communicated to the Land Development Bank, be entitled to sue on the mortgage or take any other proceeding for the recovery of the moneys due under the mortgage.

Where any property mortgaged to a Land Development Bank is wholly or partly destroyed, or for any reason the security is rendered insufficient and the mortgager, having been given a reasonable opportunity by the Bank to provide further security enough to render the whole security sufficient, or to repay such portion of the loan as may be determined by the Bank, has failed to provide such security or to repay such portion of the loan, the remainder of the loan shall be deemed to fall due at once, and the Bank shall be entitled to take action against the mortgager under section 88 or section 89 for the recovery thereof. Explanation :- Security shall be deemed insufficient within the meaning of this section, unless the value of the mortgaged property (including improvements made thereon) exceeds the amount for the time being due on the mortgage by such proportion as may be specified in the rules, regulations or the bye-laws of the Land Development Bank.

1. (1) Property purchased under sub-section (3) of section 89 by, and the property transferred under section 103 to, the Land Development Banks may be disposed of by such banks by sale within such period as may be fixed by the Trustee, subject to the condition that such sales shall be in favour only of agriculturists eligible to hold land under the Rajasthan Tenancy Act, 1955 (Act No. 3 of 1955) or any corresponding law for the time being in force, or may be leased out by them on such terms and conditions as may be laid down by the Government from time to time.
2. (2) Nothing contained in any law for the time being in force fixing the maximum limit of agricultural holdings shall apply to the acquisition or holding of land by the Land Development Banks under this section.

All loans granted by the Land Development Banks, all interest, if any, chargeable thereon, and costs, if any, incurred in making the same, shall, when they become due, be recoverable by the Land Development Bank concerned

1. (1) If any instalment payable under a mortgage executed in favour of a Land Development Bank, or any part of such instalment, has remained unpaid for more than three months from the date on which it fell due, the committee of such Bank may, in addition to any other remedy available to the Bank, apply to the Registrar or the Collector for the recovery of such instalments or part thereof, by distraint and sale of the produce of the mortgaged land, including the standing crops thereon.
2. (2) On receipt of such application, the Registrar or the Collector, as the case may be, may, notwithstanding anything contained in the Transfer of Property Act, 1882 (Central Act 4 of 1882), take action in the prescribed manner for the purpose of distraining and selling such produce: Provided that no distraint shall be made after the expiry of twelve months from the date on which the instalment fell due.
3. (3) The value of the property distrained shall, as nearly as possible, be equal to the amount due, the expenses of the distraint and the cost of the sale.

1. (1) Notwithstanding anything contained in the Transfer of Property Act, 1882 (Central Act 4 of 1882), the Land Development Bank or any person authorised by it in this behalf shall, in case of default of payment of the mortgage money, or any part thereof, have power, in addition to any other remedy available to the Bank, to bring the mortgaged property to sale by public auction in the village in which the mortgaged property is situated or at the nearest place of public resort without the intervention of the court: Provided that no action shall be taken under this sub-section and no such power shall be exercised, unless and until -
   • (a) the Land Development Bank has been previously authorised by the Collector or the Registrar, to exercise the power conferred under this sub-section, after hearing the objections, if any, of the mortgager or mortgagers;
   • (b) notice in writing requiring payment of such mortgage money or part thereof has been served upon -
     • (i) the mortgager or each of the mortgagers;
     • (ii) any person who has any interest in or charge upon the property mortgaged, or in or upon the right to redeem the same so far as is known to the bank;
     • (iii) any surety for the payment of the mortgaged debt or any part thereof; and
     • (iv) any creditor of the mortgager who has, in a suit for administration of his estate, obtained a decree for sale of mortgaged property; and
   • (c) default has been made in payment of such mortgage money or part thereof for three months after the service of notice.
2. (2) If the Land Development Bank fails to take action against a defaulter under section 85 or section 88 or under this section, the State Land Development Bank may direct the Land Development Bank to take appropriate action, and where no action is taken either by the State Land Development Bank or the Land Development Bank, the Trustee may take such action. If such action is taken by the Trustee, the provisions of this Chapter and of any rules shall apply in respect thereto, as if all references to the Land Development Bank in the said provision were references to the trustees.
3. (3) Notwithstanding anything contained in any law for the time being in force, it shall be lawful for a Land Development Bank or the State Land Development Bank to purchase any mortgaged property sold under this Chapter.

1. (1) On effecting the sale by a Land Development Bank under section 89, the said Bank shall, in the prescribed manner submit to the State Land Development Bank and the Registrar, a report setting forth the manner in which the sale has been effected and the result of the sale, and the State Land Development Bank may, with the approval of the Registrar, confirm the sale or cancel it.
2. (2) Where the sale is effected by the State Land Development Bank or the Trustee under section 89, the State Land Development Bank or the Trustee, as the case may be, shall in the prescribed manner, submit to the Registrar, a report setting forth the manner in which the sale has been effected and the result of the sale and the Registrar may confirm or cancel the sale: Provided that where the Registrar is the Trustee, he shall submit such report to the Government and the Government may confirm the sale or cancel it.

1. (1) The proceeds of every sale effected under section 89 and confirmed under section 90, shall be applied first in payment of all costs, charges and expenses incurred in connection with the sale or attempted sales, secondly in payment of any or all interest due on account of the mortgage in consequence whereof the mortgaged property was sold, and thirdly in payment of the principal due on account of the mortgage including costs and charges incidental to the recovery.
2. (2) If there be any residue from the proceeds of sale, the same shall be paid to the persons proving himself interested in the property sold, or if there are more such persons than one, then to such persons upon their joint receipt or according to their respective interest therein, as may be determined by Land Development Bank: Provided that before any such payments are made, the unsecured dues owing -
   • (a) from the mortgager to the Land Development Bank may be adjusted; and
   • (b) from any member or past member to whom the mortgager is indebted, may also be adjusted under the written authority given by such member and past member, and after holding such inquiry as may be deemed necessary

1. (1) Where a sale of mortgaged property has become absolute under section 90 and the sale proceeds have been received in full by the Land Development Bank, the bank shall grant a certificate to the purchaser in the prescribed form certifying the property sold, the sale price, the date of its sale, the name of the person who at the time of the sale is declared to be the purchaser, and the date on which the sale becomes absolute, and upon the production of such certificate, the SubRegistrar appointed under the Registration Act, 1908 (Central Act 16 of 1908), within the limits of whose jurisdiction the whole or any part of the property specified in the certificate is situated, shall enter the contents of such certificate in his register relating to the immovable property.
2. (2) (a) Where the mortgaged property sold is in the occupancy of the mortgager, or of some persons on his behalf, or some person claiming under a title created by the mortgager, subsequent to the mortgage, in favour of the State Land Development Bank or Land Development Bank and a certificate in respect thereof has been granted under sub-section (1), the Collector shall, on the application of the purchaser, order delivery to be made by putting such purchaser or any persons appointed by such purchaser to receive delivery on his behalf, in possession of the property.
   • (b) Where the property sold is in the occupancy of a tenant or other person entitled to occupy the same, and a certificate in respect thereof has been granted under sub-section (1), the Collector shall, on the application of the purchaser and after notice to such tenants or other persons, order the delivery to be made by affixing copy of the certificate of sale in a conspicuous place on the property and proclaiming to the occupant by beat of drum or other customary mode at some convenient place, that the right, title and interest of the mortgager have been transferred to the purchaser.
3. (3) Where any property is sold in the exercise or purported exercise of a power of sale under section 89, the title of the purchaser shall not be questioned on the ground that the circumstances required for authorising the sale had not arisen, or due notice of the sale was not given, or the power of sale was otherwise improperly or irregularly exercised: Provided that any person who suffers damage on account of unauthorised, improper or irregular exercise of such power shall have a remedy in damages against the Land Development Bank.

1. (1) Notwithstanding anything contained in section 58 and 100, on an application made by a Land Development Bank for the recovery of arrears of any sum advanced by it to any of its members and on its furnishing a statement of account in respect of the arrears, the Registrar may, after making such inquiries as he deems fit, grant a certificate for the recovery of the amount stated therein to be due as arrears.
2. (2) A certificate by the Registrar under sub-section (1) shall be final and conclusive as to the arrears due. The arrears stated to be due therein shall be recoverable according to the law for the time being in force for the recovery of arrears of land revenue.
3. (3) It shall be competent for Registrar or a person authorised by him to direct conditional attachment of the property of the mortgager until the arrears due to the Land Development Bank together with interest and any incidental charges incurred in recovery of such arrears, are paid or security for payment of such arrears is furnished to the satisfaction of the Registrar and the provisions of section 101 shall apply mutatis mutandis to conditional attachment of any property made or to be made under this section

1. (1) During such period as the State Government may, by general or special order notify in the Official Gazette, it shall be competent for the Collector, on application being made to him in this behalf by a Land Development Bank, to recover all sums due to the Land Development Bank (including the cost of such recovery).
2. (2) Any amount due to a Land Development Bank shall be recoverable by the Collector, or any officer specially authorised by the Collector in this behalf, in all or any of the following modes, namely :-
   • (a) from the borrower, as if they were arrears of land revenue due by him;
   • (b) out of the land for the benefit of which the loan has been granted as if they were arrears of land revenue due in respect of that land;
   • (c) from a surety, if any, as if they were arrears of land revenue due by him; and
   • (d) out of the property comprised in the collateral security, if any, according to the procedure for the realisation of land revenue by the sale of land on which the revenue is due

At any sale of movable or immovable property, held under the provisions of this Chapter, no officer or employee or an of the family members of the officer or the employee of the Land Development Bank or the State Land Development Bank, except on behalf of the bank of which he is an officer or an employee, and no person having any duty to perform in connection with such sale, shall either directly or indirectly bid for or acquire or attempt to acquire any interest is such property

1. (1) It shall be competent for the State Government to constitute one or more Guarantee Funds on such terms and conditions as it may deem fit, for the purpose of meeting losses that might arise as a result of loans being made by the Land Development Banks on titles to immovable property subsequently found to be defective or for any other purpose under this Chapter, for which in the opinion of the Government, it is necessary to provide for or create a separate Guarantee Fund.
2. (2) The State Land Development Bank and the Land Development Banks shall contribute to such funds at such rate as may be prescribed and the constitution, maintenance and utilisation of such Funds shall be governed by such rules as may be made by the State Government in this behalf.

The provisions of section 102 and 103 of the Transfer of Property Act, 1882 (Central Act 4 of 1882), and of any rules made under section 104 thereof, shall apply, so far as may be, in respect of all notices to be served under this Chapter.

The committee of the State Land Development Bank shall have a general power of supervision over Land Development Banks and may, with the previous sanction of the Government, make regulations, not inconsistent with this Act or the rules made thereunder, for all or any of the following matters, namely :-

1. (a) for the inspection of the account books and proceedings of Land Development Banks;
2. (b) for the submission of returns and reports by such banks in respect of their transactions;
3. (c) for the periodical settlement of accounts between such banks and the State Land Development Bank, being accounts relating to the payment of the amounts recovered by such banks on mortgages transferred to the State Land Development Bank;
4. (d) for the form in which application to such banks for loans shall be made and for the valuation of properties offered as security for such loans;
5. (e) for the investment of moneys realized from the mortgagers;
6. (f) for the conditions of service of employees of such banks;
7. (g) for the programme and policy to be followed by such banks for making loans;
8. (h) for the types and extent of security to be obtained by such banks for advancing loans; and
   • (i) generally, for the purpose of safeguarding the interest of the parties, furtherance of activities of such banks, and carrying out the purposes of this chapter.