Law laid down – CNT Act does not restrict mortgage of land belonging to Scheduled Tribes, Scheduled Caste, and/or Backward Class members, with the bank for securing a loan for the purpose of education and construction of houses for the period not exceeding fifteen years;
It was notified vide letter No. 7/Bhumi/Bandhak-Ranchi-08/07/2623Ra dated 30-07-2007, issued by Secretary, Revenue and Land Reforms Department, Govt. of Jharkhand, Ranchi, that Scheduled Tribes member cannot take a loan for education and/or construction of a house by mortgaging his Raiyati land and /or by transferring his such land in favour of any Bank, Co-operative society. 
Notification/Circular (vide letter No. 7/Bhumi/Bandhak-Ranchi-08/07/2623Ra dated 30-07-2007), was issued on the basis of the opinion of learned Advocate General, Jharkhand and in the light of the decision of Single Bench of High Court, Ranchi in case of Mandu Prakhand Sahkari Grih Nirman Sahyog Samiti Ltd. & others vs. State of Bihar, (2004) 1 JCR 402 (jhr). In regard to the said judgment, learned Advocate General Jharkhand observed that “various provisions of C. N. T. Act have been taken into consideration including Section 46, 47 and 49 of the Act and after considering various aspects of the matter, it has been held that a member of the scheduled tribes can not take loan either for education and/or construction of house either by mortgaging his Raiyati land and/or by transferring his such land in favour of any Bank, Co-operative society.”
This impugned Circular was challenged in W. P. (PIL) No. 2313 of 2008 and the same was decided on 25th October 2008 by Division Bench of Hon’ble Justice M. Y. Eqbal and D. K. Sinha. (Landmark Judgment – Felix Tamba vs. The State of Jharkhand and others)
The question was raised before Hon’ble High Court that the Government is acting totally against the interest of the Scheduled Tribes community by issuing such notification restraining the banks from sanctioning loan to the members of the Scheduled Tribes community against the mortgage of their land for the purpose of construction of house and/or for the purpose of education.
The fact of the case was that the Petitioner Society purchased land from recorded raiyats belonging to Scheduled Caste members, after getting permission from Deputy Commissioner, Hazaribag under Sec. 46(1)(c), the society, in turn, sold and the land to its members who constructed residential house over the land. Subsequently, Deputy Commissioner recalled the order granting permission. The Petitioner Society challenged the said recall order in the High Court. The High Court disposed of the Writ Petition by directing the Deputy Commissioner to take an appropriate step in accordance with the law for setting aside the order of recalling the previous order of granting permission. The matter again came to High Court. High Court held that Sec. 46(1)(c) and Sec. 47 (bb), do not restrict the transfer of land, if it is transferred for the purpose of providing land for residential purposes. Further, the court has not held to restrict the mortgage of land in favour of banks, by Scheduled Caste or Scheduled Tribes or Backward Class members for the purpose of financial assistance for the construction of House and/or for the purpose of education.
It is provided in Sec. 46 of CNT Act that – “raiyat may enter into ‘Bhugat Bandh’ Mortgage for the period no exceeding seven years or if the mortgagee is a society registered or deemed to be registered under the Bihar and Orissa Co-operative Society Act, 1935, and/or with the nationalized bank. for a period not exceeding fifteen years. It will be relevant to describe here that under BHUGAT BUNDH MORTGAGE, the raiyat is allowed to cultivate the land himself as the agent of the mortgagee and to appropriate the surplus produce, after payment of annual installment.
It is further held that if the raiyat mortgages his Rayati interest in the manner provided under the proviso of sub-section (1) of Section 46, i.e. mortgage for the period not exceeding fifteen years, where the mortgagee is a bank, then it will not violate the provisions of Section 46(1) of the Act.
Further, it is provided under Sec. 47 (bb) of the act that – holding or potion of holding, belonging to any occupancy raiyat may be sold for recovery of loan granted by Society or bank with the restriction that if the mortgaged land belongs to scheduled tribes member, it shall be sold to other scheduled tribes member only, similarly if the mortgaged land belongs to scheduled caste member, it shall not be sold to the member other than the scheduled caste member, following the rules of CNT Act.
Backward class member has not been discussed specially. But following the provisions of Act, if the mortgaged land belongs to a backward class member, it shall be sold only to another backward class member.
Restriction of sale has been relaxed in case where a right of occupancy raiyat in his holding is sold for the recovery of loan granted by the Society or Bank, subject to the restriction that such sale shall be made to the members of Scheduled tribes, Scheduled Caste or Backward Class, as the case may be.
Hence mortgage of property belonging to Scheduled Tribes, Scheduled Case and/or Backward Class members with the bank for securing loans for the purpose of education and construction of houses is not barred under the Law.
Adv. Manoj Kumar
Welegal Services
