action under sarfaesi

an industrial plant was started after permission of change of land use of agricultural land from the concerned authority.

there was a fees of Rs 30 lacs towards conversion charges, which the company has not paid till date.

now the company is facing repayment issues and as per sarfaesi act, rule 31(i) it is not eligible to take over agricultural land. 

now, can it be challenged that since CLU fees was not paid, hence CLU is not applicable.. thus it remains an agricultural land.. therefore rules of SARFAESI do not apply. 






Yes, it can be so claimed. File a SARFAESI Application before DRT u/s17(1) of SARFAESI Act, 2002 within 45 days of possession notice issued u/s13(4) of the Act claiming, inter alia, that the mortgaged property, being an agricultural land, does not come under the perview of SARFAESI Act,2002. You do not have to state your application for conversion. Just submit the certificate of the present character of tha land.


Please note that, DRT may ask whethet the land in question is presently being used for the purpose of agriculture or not.


practising Advocate

1)      Under your quieries opening words you say “ An industial unit / Plot was started , after necessary permission”.

2)      Once the industrial unit is established, change of land use has already occurred ,you have paid the CLU charges or not.

3)      Although the land mortgaged to the Bank is notified as Agricultural Land in the Revenue Records,But the actual use of land is for Residential /Commercial /Industrial /Educational purpose, Bank can proceed Under Sarfaesi  ActTo enforce security interest on such properties ,Provided Evidence to this effect is available / created by obtaining photographs , video films ,intrerviews with trade association ete.

Change of land use and enforcement of security interest




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