Chhattisgarh Land Diversion & Revenue Code: Legal Due Diligence for Bank Mortgage Loans

Setting up an industrial plant, warehouse, private hospital, or commercial hotel in Chhattisgarh requires converting agricultural land into non-agricultural use under the Chhattisgarh Land Revenue Code (CGLRC), 1959.

Commercial banks, financial institutions, and NBFCs enforce rigorous legal due diligence on land diversion before creating an equitable or registered mortgage for project loan disbursements.

1. Statutory Mechanism of Land Diversion under Section 172 CGLRC

Under Section 172 of the CG Land Revenue Code:

• Any person holding agricultural land (Bhumiswami) who intends to use it for industrial, commercial, residential, or public utility purposes must apply to the Sub-Divisional Officer (SDO Revenue) / Tahsildar.
• Environmental & Town Planning NOCs: Before diversion is approved, clearances from Town and Country Planning (TNCP), Municipal Corporation / Gram Panchayat, and the State Pollution Control Board (CECB) are examined.
• Assessment of Diversion Tax & Premium: The Revenue Department levies a one-time premium and annual diversion rent based on the circle rate of the sub-district.

2. Bank Legal Search & 30-Year Title Search Report (TSR)

For credit facilities exceeding ₹1 Crore (CC limits, Term Loans, Project Loans), bank empanelled advocates and CAs examine:

1. 30-Year Chain of Title Deeds: Tracing continuous unbroken ownership through registered sale deeds, partition deeds, or revenue inheritance entries (Namantaran).
2. Form B-1 (Khasra Khatauni) & P-II Khasra Panchsala: Verifying that the owner's name is updated in the digital revenue portal (Bhuiyan CG) without encumbrances.
3. Diversion Order & Map (Naksha Nokh): Verifying that the exact Khasra numbers sanctioned in the bank project report match the diversion order boundaries.
4. 13-Year Non-Encumbrance Certificate (NEC): Obtained from the Sub-Registrar’s office certifying no prior registered mortgages, court attachments, or lis pendens suits.

3. Common Bottlenecks in Industrial Land Mortgages in CG

• Ceiling & Tribal Land Restrictions (Section 170-B): Transfer of land belonging to members of Scheduled Tribes to non-tribals is strictly prohibited without prior Collector sanction. Banks will reject projects situated on disputed 170-B holdings.
• Nazul vs Revenue Land: Lands situated in urban municipal areas of Raipur (Pandri, Telibandha, Devendra Nagar) often carry 30-year renewable Nazul leases requiring Land Lease Rent renewal receipts and Collector NOCs before mortgage creation.

For bank project reports, CMA data formulation, and mortgage documentation in Raipur, consult our Project Finance Advisory team.