Exemption to land mortgaged by Bank from Ceiling Law.

Simple mortgage of land executed by the land owner.

Bank filing suit for recovery which was permitted by the Tribunal.

Under Section 23 of the Andhra Pradesh Land Reforms (Ceiling on Agricultural Holdings) Act, 1973 certain categories of land are exempted from the provisions of the Ceiling Act . The relevant portion of Section 23 is as under :

“23. Exemption:- Nothing in this Act shall apply to the following lands, namely:-



(c) ..



(f) lands held by a bank;



The first and second Provisos to Section 23 read thus:

“Provided that where any of the lands specified in clause (a), (b),

(c), (d), (e), (f), or (g), are held by any person other than the authority, institution, body corporate or society specified in such clause, whether as a tenant or usufructuary mortgagee or otherwise, the provisions of this Act shall apply to such person in respect of such land;

Provided further that the exemptions under item (ii) of clause (e) and clause (f) shall be available only in respect of the lands acquired by such co-operative societies or banks in pursuance of the recovery of their dues.”

Section 23(f) would apply only in respect of lands acquired by co-operative societies or banks. In the instant case, State Bank of India had not acquired title over the lands in question pursuant to the recovery of the mortgage money due to them. The Bank was not holding the land on behalf of the declarants/mortgagees. There was only a simple mortgage in favour of the Bank and the Bank never held or possessed the land either as a mortgagee or otherwise. Moreover, when the Ceiling Act came into force, the Bank had not even filed the suit for recovery of the amount due under the mortgage nor obtained a decree against the mortgagor. The preliminary decree in the suit (No. 27 of 1973) filed by the Bank was passed on 29.8.1975. The Bank did not acquire any title in respect of the mortgaged land when the Ceiling Act came into force. By no stretch of imagination, it could be held that for the surplus lands the declarants were entitled to get exemption under Section 23(f) of the Ceiling Act.

It is unnecessary for us to refer to the definition of “holding” contained in Section 3(i) of the Ceiling Act, as the State Bank of India had no case that it was either a limited owner or usufructuary mortgagee or in possession of the land by virtue of a mortgage by conditional sale. The legal status of the Bank being a simple mortgagee, the surplus land will not come under any of the categories mentioned in the definition of “holding” under Section 3(1) of the Ceiling Act.

[Source: V. Swarajyalaxmi vs. Authorised Officer, Land Reforms, Medak decided by SC on 16 April 2003].