Acquiring Lands In Odisha For Industrial Use – Key Considerations Under Local Land Legislations

Odisha is a preferred investment destination, particularly in real estate-intensive sectors, such as manufacturing, renewables and heavy industrials. Manufacturing in Odisha saw an average growth rate of 10.3%¹ and the state ranked 3^rd amongst all Indian states in investments in the organized manufacturing sector.²

Land acquisition and transfer is a critical aspect of the investment process and industrial infrastructure development. While industrial land may be allotted by the Odisha Industrial Infrastructure Development Corporation ("IDCO") on lease, businesses also acquire land through private purchase, direct lease from state government, etc.

Unlike IDCO-allotted lands which are governed under IDCO's regulations (which we have covered here), other modes of acquisition invariably involve local land legislations, such as the Odisha Land Reforms Act, Odisha Government Land Settlement Act, Odisha Hindu Religious Endowment Act, etc. In this article, we cover certain key considerations that acquirers must account while acquiring land in Odisha, in addition to the standard diligence items in a real estate acquisition.

1. Odisha Land Reforms Act and certain considerations

All private lands used or capable of being used for agricultural purpose, are subject to the Odisha Land Reforms Act, 1960 ("OLR, 1960"), irrespective of location in municipal areas or in villages³. While assessing a private land purchase, acquirers must consider the restrictions under OLR, 1960 which includes (i) land ceiling limits, (ii) prohibition on transfer of land belonging to scheduled castes and scheduled tribes, (iii) restriction on utilization without change in permitted land-use, etc.

That said, the state government can reserve specific areas for industrial development and exempt application of OLR, 1960.⁴This negates the transfer restrictions and other restrictions set out above. Acquirers may be well advised to explore obtaining exemption under Section 73(c) of the OLR, 1960, from the state revenue and disaster management department along with approvals from state instrumentalities such as the State Level Single Window Clearance Authority ("SLSWCA") and the concerned state departments, etc., at the project proposal stage. Businesses exempted under Section 73(c) are entitled to other benefits, such as exemption from land conversion premium charges.

2. Requirement for conversion of land-use purpose

OLR, 1960 restricts land use for non-agricultural purposes without change of permitted land-use purpose. A 'raiyat' (land holder) may be evicted for, use of land in a manner which renders it unfit for agriculture or, use for any purpose other than agriculture.⁵ Agricultural land must, therefore, be 'converted' for non-agricultural or industrial use, prior to any development / construction activity. We have seen instances where the state government has directed for resumption of land for utilization without conversion, and in violation of permitted land-use.⁶

Land can be converted for non-agricultural use by paying applicable conversion premium charges and with prior approval from the authorised officer.⁷ Land user must apply with the appropriate revenue officer and follow the prescribed procedures⁸ for conversion of the land-use purpose. The process involves verification by revenue authorities, to ensure that the proposed conversion does not obstruct natural streams, affect agricultural operations, etc.⁹ In our experience, the conversion process requires on-ground coordination with local revenue officials for timely completion of the process.

During the land diligence, acquirers must verify the permitted land-use purpose from the record of rights (RoR) document ('khatiyan' or 'patta') and assess the requirement for conversion. Acquirers are also advised to explore exemptions from payment of conversion premium which is allowed for certain priority and thrust sectors. Industrial units in priority and thrust sectors which have received exemption under Section 73(c) of OLR, 1960, are exempted from conversion premium payments.¹⁰

3. Restriction on transfer of land from Scheduled Caste and Schedule Tribe

OLR, 1960 restricts alienation of land by Scheduled Tribes (ST) and Scheduled Castes (SC).¹¹ These restrictions are mandatory and any transaction in contravention is void ab initio.¹² Acquirers may be subject to eviction, and the property may revert to the transferor. Penalty amounts may also be imposed depending upon the transferee's possession.¹³ Similar restrictions exist under the Odisha Scheduled Areas Transfer of Immovable Property (By Scheduled Tribes) Regulations, 1956, for land transfers by individuals belonging to Scheduled Tribes in areas notified under Fifth Schedule of Indian Constitution. That said, lands belonging to ST and SC individuals may be transferred with prior written permission from the jurisdictional revenue officer.¹⁵

Prior to acquiring any private land, acquirers must verify if any land parcel belongs to a ST or SC individual or it has been acquired by the present owner from an individual belonging to SC / ST. ROR documents can be helpful for such assessment.

If the acquisition involves any SC / ST land, acquirers must verify that prior written permission allowing such transfer has been obtained from the jurisdictional revenue officer.

4. Land Ceiling Limits

OLR, 1960 prescribes ceiling limit of 10 acres on per-person landholding in Odisha.¹⁶ That said, the ceiling limits are not applicable to lands held by industrial or commercial undertakings, provided that such lands are necessary for non-agricultural use.¹⁷

However, acquirers must be aware of the risk that industrial land may be subject to land ceiling limits if they remain unused for more than 5 years. The Collector may, after giving prior notice to the user, direct that provisions around land ceiling will be applicable to such lands which are not utilized for non-agricultural purposes for more than 5 years.¹⁸

5. Restriction on transfer of endowment lands

The Odisha Hindu Religious Endowment Act, 1951 ("OHRE, 1951") restricts transfer of the immovable property of 'any religious institution' except with prior approval of the Commissioner of Endowments. The restrictions are mandatory and courts have held that any alienation in contravention is void.¹⁹

Acquirers must be cautious while dealing with private religious land as well. Courts have held that restrictions under the OHRE, 1951 apply similarly to private religious institutions, and prior approval of the Commissioner is necessary prior to such alienation.²⁰ Transferees may be subject to summary proceedings and subsequent eviction if the Commissioner is satisfied that any immovable property belonging to a deity or endowment has been alienated in contravention of the restriction under Section 19 of OHRE, 1951.

In our experience, acquirers must confirm the nature of the lands from the revenue records. For endowment or deity lands, the revenue documents record the deity / religious institution as the owner and nature of land (locally termed as "kissam") as "debottar". In such cases, acquirers are advised to require the transferor to obtain prior approval of the jurisdictional Commissioner in the prescribed form.²¹

Similarly, acquirers must also be informed that large tracts of land in coastal Odisha belong to the Shri Jagannath temple management and Lord Lingaraj. Alienation of such land parcels would require prior sanction of the temple committee and jurisdictional endowment commissioner.²² In our experience, land parcels in costal Odisha, particularly in districts of Khordha (which includes regions around capital city, Bhubaneswar) and Puri may face such concerns.

6. Pending litigations in relation to the land parcels

There may be existing litigations and judicial proceedings in relation to the land parcels intended to be acquired. Any transfer during the pendency of a suit is not unlawful and void ab initio, unless the property is subject to transfer restrictions through court-ordered injunction. That said, any such transfer will be subject to rights of the contesting parties as may be subsequently determined by the courts.²³ The transferee would be bound by the decree / order in the pending litigation as if he was a party to the suit. This may prejudice the acquirers' rights in the acquired lands.

Acquirers must, therefore, require the transferor to provide complete information around the pending litigations related to the land parcels, to carry out necessary diligence. Independent enquiries should also be made at the office of the jurisdictional revenue officer (Tahasildar), district civil courts, and appropriate land acquisition and rehabilitation authorities. While such public searches may be carried out, it may not be exhaustive and conclusive due to the lack of digitization in lower courts.

In this background, it is difficult to verify if the data provided by the transferor / obtained by acquirer is complete. As a remedial measure, acquirers may be well advised to include robust warranties (i) that no litigation (except those disclosed during the diligence) exists in relation to the land, and (ii) on transferor's absolute right, title and interest to the land. Acquirers may also obtain specific indemnities for proceedings which are likely to impact the title to the land.

7. Land under permissive and advance possession – limited rights of landholders

In addition to industrial lands that may be allotted by IDCO, the state government may directly grant land under the Odisha Government Land Settlement Act, 1962 ("OGLS Act, 1962") and Odisha Government Land Settlement Rules, 1983 ("OGLS, 1983"). Such grant of land may through (i) permissive possession²⁴, (ii) advance possession²⁵, or (iii) direct lease by the government²⁶.

Acquirers must be aware that such grant is a limited right by its very nature and specific to the previous allottee. It does not create any ownership or substantial possessory rights in favour of such allottee / landholder. Acquirers must also account for the conditionalities, and restrictions attached to such lands. The existing grant would typically be subject to usage conditionalities and transfer restrictions such as: (i) specific end-use purpose, (ii) restriction on transfer, lease or subletting in any manner, (iii) restriction on change of land classification on the revenue records, etc.

There are certain statutory restrictions as well. If government-leased land remains unutilized for a period exceeding 3 years, revenue authorities may resume the land and impose monetary penalties.²⁷ Also, any land granted by the government on short-term lease may also be resumed without compensation, if the government requires it for any other purpose.²⁸

In essence, the transferor has limited rights over the land parcels, i.e., limited usage rights. The transferor cannot create any superior right in acquirers' favour through the transfer, exceeding those previously granted to the transferor. Further, acquirers will have to apply afresh to the authorities to grant such lands. In our experience, this process may require active pre-consultation and coordination with the jurisdictional land and revenue authorities. Conceptually, any grant of land will also be subject to public trust doctrine.

8. Land exchange for use of communal lands

Typically, land acquisition for industrial projects involves large number of land parcels which may include lands reserved for communal use. These may be village pastures and grazing lands, village roads, tanks, canals and drainage areas, etc. Use of such lands without prior permission from the concerned departments and compensatory land exchange, falls foul of the Supreme Court's directions in Jagpal Singh and Ors v. State of Punjab²⁹ which restricts illegal / unauthorized use of village commons. In such event, acquirers may be subject to eviction.

If the proposed acquisition involves any village commons / communal land, acquirers are required under statutory guidelines³⁰, to exchange privately owned land which be used as alternate to the village commons being transferred. Acquirers are suggested to make provisions for alternate private lands to be exchanged in lieu of the village commons being acquired. This may require liaison with state departments to assess the suitability of the lands being exchanged, for the specific purposes.

9. Restriction on use of forest lands

Lands classified as forests cannot be diverted by state governments for non-forest purposes and without prior approval of the Central Government.³¹ Approval for diversion of forest lands for non-f³²orest use is granted by the Central Government in a two-stage process, "in-principle" approval followed by a 'final approval'.

Typically, such approvals are user-specific and restrict transfer of the diverted forest lands to any other agency or person without prior approval of the Central Government. The approval is also tied to other conditionalities such as (i) land use only for the purpose for which the permission is granted, (ii) payment of net present value (NPV) and obligation on the land user to undertake compensatory afforestation. Apart from private purchase of land for compensatory afforestation, acquirers may explore acquiring non-forest government lands available in government land bank for the specified purposes, by paying the land premium.³³

An acquirer of such forest lands will be required to obtain written approval from the Central Government's Ministry of Environment and Forests ("MoEF") prior to any transfer involving diverted forest lands. Acquirers may also consider engaging a technical expert / environment consultant to make prior assessment of the acquirer's approval request.

Footnotes

1. The growth rate data is for the period 2018 – 2025. All-India average of growth rate in manufacturing was recorded at 4.5% during this period
2. Directorate of Economics and Statistics Planning and Convergence Department, Government of Odisha, 'Odisha Economic Survey 2024 – 2025', https://pc.odisha.gov.in/publication/economic-survey-report accessed on 07 November 2025
3. Om Prakash Agrawal v Batara Behera, 1999 (II) OLR 182 (SC); Hemanta Nayak v. State of Odisha, 2024 SCC OnLine Ori 2082
4. Section 73 (c), Odisha Land Reforms Act, 1960
5. Section 8(a) and 8(c), Odisha Land Reforms Act, 1960
6. id="0a93fdb6-6bae-40cb-8309-f3b419d7e03b">Letter No LR-B-RE-I-148/2011 – 24350/R & DM, dated 3 June 2011 issued by Shri RK Sharma, Commissioner-cum-Secretary to Government, Revenue and Disaster Management Department (Government of Odisha). The letter mentions that: "Government has directed that wherever such instances of builders selling agriculture lands to customers in plotted housing schemes are noticed, steps should be taken to initiate proceedings for eviction u/s 8 of the OLR Act. In any other cases of violation of S.8 of the OLR Act also similar action should be taken for resumption of land."
7. Section 8-A, Odisha Land Reforms Act, 1960
8. Rule 12-A of the Odisha Land Reforms (General) Rules, 1965
9. Letter No LR-B-RE-I-43/2006 – 38971/R & DM, dated 11 October 2006 issued by GV Venugopala Sarma, Commissioner-cum-Secretary to Government, Revenue and Disaster Management Department (Government of Odisha)
10. Paragraph 4.5.1(d), Industrial Policy Resolution of 2022. Operational Guidelines on Guidelines on exemption from Payment of Premium Leviable for Conversion of Land for Industrial Use' further details the mechanics around exemption under the Industrial Policy Resolution 2022. The units are eligible for exemption on production of eligibility certificate from the Director of Industries, Odisha for Large Industries and Medium Enterprises
11. Section 22, Odisha Land Reforms Act, 1960
12. Upendra Naik v Sub-Collector, Panchpir; 2004 (Supp.) OLR 862
13. Section 23, Odisha Land Reforms Act, 1960
14. Through the Scheduled Areas (states of Bihar, Gujarat, Madhya Pradesh & Odisha) Order, 1977
15. Section 22(1)(b), Odisha Land Reforms Act, 1960
16. Section 37-A, Odisha Land Reforms Act, 1960
17. Section 38(b), Odisha Land Reforms Act, 1960
18. Proviso to Section 38(b), Odisha Land Reforms Act, 1960
19. Gopal Chandra Ramanuj Das v State of Odisha; 2021 (II) OLR 947; Niranjan Mekap and Others vs State of Orissa And Others AIR 2015 (NOC) 755 (ORI.); Basanti Kumari Sahoo vs. State of Orissa, 81 (1996) CLT 571 (Full Bench)
20. Amaresh Das v State of Orissa & Others (WP (C) Nos. 15022 & 15020 of 2022)
21. Rule 4, Orissa Hindu Religious Endowment Rules, 1959
22. Section 16, Shri Jagannath Temple Act, 1955
23. Madhukar Nivrutti Jagtap v Pramilabai Chandulal Parandekar, AIR 2019 SC 4252
24. Rule 9-A, Odisha Government Land Settlement Rules, 1983
25. Rule 11-A, Odisha Government Land Settlement Rules, 1983
26. Rule 5, Odisha Government Land Settlement Rules, 1983
27. Circular no. GE(GL)-S-13/2017-13826/R&DM dated 28 April 2017 issued by the Revenue and Disaster Management Department, Government of Odisha
28. Circular No. GE(GL)-S-56/2013-33505/R&DM dated 31 August 2013, issued by the Revenue and Disaster Management Department, Government of Odisha
29. Jagpal Singh and Ors. v. State of Punjab, (2011) 11 SCC 396
30. Letter no. 25616/R&DM, Bhubaneswar dated 27 August 2014, issued by Revenue and Disaster Management Department, Government of Odisha
31. Section 2, Van (Sanrakshan Evam Samvardhan) Adhiniyam, 1980
32. Rule 9, 10 and 1, Van (Sanrakshan Evam Samvardhan) Adhiniyam Rules, 1980
33. Circular no. GE(GL)-S-31/2014-29089/R&DM dated 29 September 2014, issued by issued by the Revenue and Disaster Management Department, Government of Odisha

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.