That Article 371-A of the Constitution says that Land and its natural resources shall be decided according to the Naga Customs. This provisions was inserted to protect the rights of the Naga People over land and its natural resources, and this very provisions dwarf the economic growth in the state despite the fertile virgin soil in Nagaland, as No financial institutions is willing to accept any mortgage of land in availing loan for the development of land. Because of this provisions the Transfer of Property Act is also not applicable in the State and land can not be transfer to Non Nagas.
Now the question is how can the Financial institutions grant loan by accepting mortgage of land without offending that Article 371-A. There are some Financial instituions which has felt the necessity to develop the fertile soil in Nagaland through various schemes by working out such modalities .
1. The barrowers will mortgage their land to the Village council not to the Creditors. 2. The Village Council shall be the gurantors and in the event of default of payment by the barrowers the V illage council shall dispose off the land by way of sale etc and repay the loan to the creditors. Do you think that this is legal and proper? Some difficulties in this modalities. Registration of mortgage deeds will create great financial difficulties to the barrowers as the rate of fiscal duties is very high. secondly m ortgage deed should be in favor of the creditor not the guarantors. Please comment.
Second Option. Since the land can not be transfer to non nagas: the barrowers shall give power of attorney to the village council empowering it to dispose off the land in the event of default to make repayment and the Village Council shall file an affidavit to the Fianancial instritutions to act in accordance to the power of attorney in case of default by the barrowers. In this way there will be no registrations and no fiscal duties. Please comment.
