India: Conversion Of Government Lands Into Occupancy Class I Lands

Last Updated: 13 March 2019
Article by Pranav Phadke

Reference may be made to our Article titled 'The Sixth Type of Transfer' published on 17th August, 2018, wherein we had explained the various transfers in India and type of rights under the Maharashtra Land Revenue Code, 1966 ("Code"). To have a better understanding of this Article, this Article should be read in conjunction with our previous Article.

In the year 2012, the Government had come up with a Policy to convert Leasehold Lands into Occupancy Class II lands along with the policy for renewal of lease with the calculation of lease premium. However, the Policy received a lukewarm response in respect of the conversion and several litigations were filed objecting to the lease renewal policy on account of being too expensive.

As such, the Government has been mulling for a while to resolve such issues and put an end to endless litigations as well as resolve the grievances faced by the Occupants. Accordingly, the draft of rules for conversion of Occupancy Class II and Leasehold lands into Occupancy Class I lands under Section 29A and 328 of the Code were published on 17th November, 2018 inviting objections.

As on 8th March, 2019, the Revenue and Forest Department, Government of Maharashtra, notified the Maharashtra Land Revenue (Conversion of Occupancy Class II and Leasehold lands into Occupancy Class I Lands) Rules, 2019 ("Rules"), which would apply to the lands granted or subsequently allowed to be used for agricultural or residential or commercial or industrial purpose.

Under the Rules, any holder of Occupancy Class II lands or Leasehold Lands would have to make an application to the concerned District Collector, who after due verification and after payment of conversion premium, shall convert the lands into Occupancy Class I. The Conversion premium payable for conversion of Occupancy Class II or Leasehold Lands granted or subsequently allowed by the Competent Authority to be used for residential or commercial or industrial purposes only, is as under:

Sr. No.

Type of occupancy of land.

Premium to be charged upto three years commencing from the date of publication of these rules in Official Gazette.


Land held on Occupancy Class-II or on lease hold basis for commercial or industrial purpose.

50% of value of such land calculated as per rate of such land specified in the current Annual Statement of Rates.


Land held on Occupancy Class-II for residential purpose.

15% of value of such land calculated as per rate of such land specified in the current Annual Statement of Rates.


Land held on lease hold rights for residential purpose.

25% of value of such land calculated as per rate of such land specified in the current Annual Statement of Rates.


Land granted on leasehold rights to a Co-operative Housing Society and currently held by that Co-operative Housing Society.

15% of value of such land calculated as per rate of such land specified in the current Annual Statement of Rates.


Land granted on Occupancy Class-II to a Co-operative Housing Society and currently held by that Co-operative Housing Society.

15% of value of such land calculated as per rate of such land specified in the current Annual Statement of Rates.

Certain other important points:

Increased Rates after 3 years.

The Government has provided increased premium rates for each category, which are to be charged after expiry of three years from the date of publication of the rules, thereby making it clear that all interested parties should at once proceed for conversion and avoid paying extra.

Can be Rejected.

Once the application has been made by the Occupant to the Collector, the Collector shall, before converting, verify the particulars of the concerned land and also ascertain whether there have been any violation of any terms and conditions of grant of such land which have not been regularized. If the Collector does come to such a conclusion, the Collector may reject the application by giving a reasoned order.

Premium amounts can further be reduced in the following circumstances:

  • In the event the land was earlier granted by the Government by recovering full market price without any concessions, then the premium payable shall be 10% of the value of such lands based on the Annual Statement of Rates.
  • In the event the Occupant had earlier converted the land from Leasehold to Occupancy Class II as per the prevailing policy, then in such an event, all amounts paid to the Government for such conversion shall be adjusted towards the amount payable for conversion into Occupancy Class I.

Whether these Rules shall result in grave loss to the exchequer is up for debate, however, what these Rules will surely do is, reduce the number of litigations, end the occupants grievances and put an end to uncertainty which was prevailing till now regarding such Government Lands.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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