(1) Notwithstanding anything to the contrary contained in any law for the time being in force,-
(a) any charge created or mortgage given by an agriculturist in favour of or to a bank, as security for financial assistance given to him by the bank, shall, after the commencement of this Act, if prior in time, have priority over any subsequent charge or mortgage in favour of Government or a co-operative Society; and
(b) any charge created or mortgage given on any land (or interest therein), in favour of a bank, in respect of financial assistance given to an agriculturist by that bank, shall have priority over any other charge or mortgage in or over such land (or interest therein) in favour of any person other than Government or co-operative society or any other bank, notwithstanding that such charge or mortgage is prior in time to the charge or mortgage created in favour of the bank.
(2) Where different charges or mortgages on the same land (or interest therein), are created by an agriculturist in favour of Government, one or more co-operative societies or one or more banks, any such charges created or mortgages given as security for financial assistance given by Government, cooperative society or bank by way of term loan for development purposes, shall have priority over any other charges or mortgages created or given in favour of Government, co-operative societies or banks; provided a notice of such financial assistance by way of term loans for development purposes has been given to such Government, co-operative society or bank, and that Government, co-operative society or bank has consented to the financial assistance being given; and where more than one such charge or mortgage is created or given as security for financial assistance by way of term loan, the charges or mortgages by way of security for the term loan for development purposes shall rank in priority inter se in accordance with the dates of their creation.
Explanation.— For the purposes of this section, "term loan for development purposes" means financial assistance which will generally result in improvement of agriculture or the building up of tangible assets in agriculture; but does not include financial assistance for working capital expenses, seasonal agricultural operations or marketing crops.
(3) Nothing in this section shall apply-
(i) to borrowings only from one or more co-operative societies, and
(ii) to the recovery of sums due to Government as arrears of land revenue.