Summary: This blog discusses the recent amendments to Maharashtra Prevention of Fragmentation and Consolidation of Holdings Act, 1947, aimed at easing restrictions on land transfers and supporting urban development. It also highlights the Ordinance promulgated in November, 2025 which marks a turning point by introducing automatic regularisation, removing long‑standing hurdles and enabling faster, planned growth across designated areas.
Introduction
The Maharashtra Prevention of Fragmentation and Consolidation of Holdings Act, 1947 (“the Act”) aims to curb excessive division of agricultural land into uneconomical fragments and consolidate agricultural holdings in order to boost agricultural profitability. Over time, as cities expanded, peripheral agricultural lands, falling in residential, commercial, or industrial zones, could not be used for non‑agricultural purposes or obtain planning approvals due to historical violations of the Act, thereby impeding orderly urban development. Through recent amendments to the Act, the Government of Maharashtra (“GoM”) has introduced significant and progressive changes, paving the way for smoother regularisation and facilitating planned urban development.
Statutory Framework
Declaration of ‘Fragments’
Under the Act, the GoM is empowered to declare a village or a taluka or any part thereof as a ‘local area’ and to determine and revise the ‘standard area’ in respect of such ‘local areas’. Once the ‘standard area’ is notified in the official Gazette, the details of all ‘fragments’, i.e., a land that has area lesser than the ‘standard area’, are required to be recorded in the record of rights (i.e., the 7/12 extract). In 2023, the GoM standardised the ‘standard area’ across all local areas (except those situated in the limits of Municipal Corporations or Municipal Councils), fixing it at approximately 0.25 acres for bagayat (irrigated) lands and 0.5 acres for jirayat or warkas (dry crop) lands[1].
Restriction on transfer under Sections 7, 8, and 8AA of the Act
Section 7 of the Act prohibits the transfer or lease of ‘fragments’, except in favour of the owner of a contiguous land and Section 8 of the Act prohibits transfers or partitions that may result in the formation of a new ‘fragment’. Also, under Section 8AA, if two or more persons acquire rights in an undivided land — whether by transfer, decree, succession, or otherwise — the partition of such lands is required to be effected in such a manner that no ‘fragments’ are created, and if partition without fragmentation is not possible, the land is required to be allotted to one or more co‑sharers as per the prescribed procedure, while the other co‑sharers receive monetary compensation to be determined as per the procedure laid down under the Act.
Section 8 of the Act provides that transfers of land that are contrary to the provisions of the Act, are declared as void and the jurisdictional Collector is empowered to levy monetary penalties (up to INR 250) and evict erring landowners.
Amendments to the Act – Exceptions to the Restrictions
2016 Amendment
In 2016, the Act was amended[2], whereby Section 8B was introduced, which made Sections 7, 8, and 8AA of the Act inapplicable to the following types of lands: (i) lands situated within the limits of a Municipal Corporation or a Municipal Council, (ii) lands situated within the jurisdiction of a Special Planning Authority or a New Town Development Authority, and (iii) lands allocated to residential, commercial, industrial or any other non-agricultural use in a draft or final regional plan (together, the “Designated Areas”).
However, the proviso to Section 8B provided that the restrictions on transfer continued to apply to fragmented lands within the Designated Areas, unless such fragments were created due to sub-division or layout approved under the Maharashtra Regional and Town Planning Act, 1966 (“MRTP Act”).
The 2016 amendment did not provide a mechanism for regularisation of past transfers, which continued to remain void under the Act.
2017 and 2024 Amendment
In 2017, the Act was further amended[3], whereby a proviso was introduced in Section 9(3), which provided that transfers or partitions that were contrary to the provisions of the Act, and which were made on or after November 15, 1965, and before September 7, 2017, could be regularised by making an application to the jurisdictional Collector and paying regularisation premium at such rate not exceeding 25% of the market value of the land, as prescribed under the Annual Statement of Rates. This benefit was available in respect of two categories of lands: (i) lands that were allocated to residential, commercial, industrial, public or semi-public or any non-agricultural use in the prevailing draft or final Regional Plan or (ii) lands that were intended to be used for any bona fide non-agricultural use.
In 2024, the Act was further amended[4] to extend the time period for regularisation up to October 15, 2024, and the regularisation premium was reduced from up to 25% to up to 5% of the prevailing market value.
Despite the amendments to the Act in 2016, 2017, and 2024, restrictions on transfer continued to apply to fragmented lands within the Designated Areas and regularisation of past transfers of fragmented lands remained a protracted and cumbersome exercise, involving payment of regularisation premium and bureaucratic hurdles.
2025 Ordinance – Removing Bottlenecks
To overcome these hurdles, on November 3, 2025, the Governor of Maharashtra promulgated the Maharashtra Prevention of Fragmentation and Consolidation of Holdings (Amendment) Ordinance, 2025 (“2025 Ordinance”), which brought in the following amendments to the Act:
- The proviso to Section 8B was deleted, which earlier restricted transfer of fragmented lands within Designated Areas, unless such fragment was created as a result of sub-division or layout. Accordingly, by the virtue of this deletion, the provisions of Section 7 (restriction on transfer of fragments), Section 8 (restriction on creation of fragments) and Section 8AA (restriction on partition which will create a fragment) were no longer applicable to lands situated within Designated Areas, without any conditionalities; and
- The proviso and explanation to Section 9(3) were deleted and a new Section 9(4) was added, which provided that past transfers or partition of lands made on or after November 15, 1965, and before October 15, 2024, which were contrary to the provisions of the Act, would be deemed to have been regularised, without charging any regularisation premium, if the lands were used or intended to be used for any bona fide non-agricultural use, and if the lands were situated in the following areas:
- in areas that are within the limits of Municipal Corporations, Municipal Councils and Nagar Panchayats;
- in areas designated for residential, commercial, industrial or any other non-agricultural use under the jurisdiction of the Mumbai Metropolitan Region Development Authority, established under the Mumbai Metropolitan Region Development Authority Act, 1974, the Metropolitan Region Development Authorities, established under the Maharashtra Metropolitan Region Development Authority Act, 2016, and Special Planning Authorities notified under the MRTP Act;
- in Cantonment areas, constituted under the Cantonment Act, 2006;
- in areas designated for residential, commercial, industrial or any other non-agricultural use and areas included in Growth Centres specified in a draft or final Regional Plan prepared under the MRTP Act, or any other law for the time being in force; and
- in the ‘Peripheral Area’ of boundaries of any village, city, or town, designated for residential, commercial, industrial or any other non-agricultural use in the draft or final Regional Plan and to which the Unified Development Control and Promotion Regulations apply.
Automatic Regularisation: Unlocking Urban Growth
While the Act was enacted to prevent uneconomical fragmentation of agricultural holdings, the continued application of restrictions under the Act to lands within municipal boundaries and earmarked for residential, commercial, and industrial use, was inadvertently stifling development. Successive amendments to the Act in 2016, 2017, and 2024, sought to ease these restrictions, but the process of regularisation remained slow and burdened with procedural hurdles. The 2025 Ordinance has now paved the way for automatic regularisation, removing these bottlenecks, with the aim to enable faster, legally compliant urban development.
For further information, please contact:
Jinal Mehta, Partner, Cyril Amarchand Mangaldas
jinal.mehta@cyrilshroff.com
[1] Vide a notification dated August 8, 2023, bearing No. Ektri-2021/C.R.74/L-1.
[2] Vide the Maharashtra Prevention of Fragmentation and Consolidation of Holdings (Amendment) Act, 2015 which received the assent of the governor of Maharashtra on January 1, 2016.
[3] Vide the Maharashtra Prevention of Fragmentation and Consolidation of Holdings (Amendment) Act, 2017, which received the assent of the governor of Maharashtra on September 7, 2017.
[4] Vide the Maharashtra Prevention of Fragmentation and Consolidation of Holdings (Amendment) Act, 2024, which received the assent of the governor of Maharashtra on January 1, 2025, and which is deemed to have come into force on October 15, 2024.
