Constitutionality of the Farm Acts: Testing the soil beneath

The Farmers Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020, and the Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Bill, 2020 (Farm Acts) received Presidential assent on September 24, paving the way for an alternative market place for the farmers to sell their agricultural produce, without any State imposed fetters. The constitutional validity of the Farm Acts has already been assailed before the Supreme Court. The authors argue in support of the constitutionality of the Act. .In India, the available parameters for mounting a legislative challenge are – (i) legislative competence, (ii) violation of Part III of the Constitution, and/or (iii) violation of any other constitutional provision. The validity of the Farmers Acts has, therefore, to be tested on the aforesaid anvils..Legislative Competence.The Farm Acts, in essence, permit trading of agricultural produce in a trade area, defined as a region or a place of production, collection and aggregation excluding market yards notified by the states under their respective Agricultural Produce Market Committee Acts (APMC Acts). Earlier, under the APMC Acts, the transaction of sale could take place only within the market area, more specifically within the demarcated market/sub-market yards set-up within the market area. The states levied market cess on such transactions of sale, which formed a major source of revenue for them. The Farm Acts seek to lift these geographical and economical compulsions (see Sections 3, 6 of Farmers Produce Act)..The stated object of the APMC Acts is regulation of sale and purchase of agricultural produce and establishment, superintendence and control of markets. Contrary to the popular perception that APMC Acts have been framed under Entry 14 of List II dealing with “agriculture”, the Supreme Court in Belsund Sugar Co. Ltd traced the source of State’s legislative powers behind APMC Acts to Entries 26, 27 and 28 of List II of the Seventh Schedule. Entry 28 of the State List, relating to Markets and Fairs, enables the states to determine the location of markets, and to provide for its management and maintenance simpliciter. Entry 28, however, by itself does not confer power on the states to regulate sale and purchase of agricultural produce. The power to regulate sale and purchase is relatable to Entries 26 and 27 of the State List. Pertinently, both these legislative entries deal with trade and commerce within the State (Entry 26), as well as supply, production and distribution of goods (Entry 27), and are subject to the provisions of Entry 33 of List III, which deals with trade and commerce in, and the production, supply and distribution of foodstuffs and other essential commodities..The Farm Acts trace their genesis to Entry 33 of List III. The said legislation do not, per se, deal with “agriculture” or cultivation of farm produce, but regulate trade and commerce of “food stuff” and other essential commodities in a fair and transparent manner, so as to enable farmers to draw maximum remuneration for their produce. The wider meaning ascribed to “foodstuff” in K Janardan Pillai will cover famers’ produce. It is settled law that if a legislation pertains to Entry 33 of list III and incidentally regulates subjects in List II, the legislation will be upheld so long as in pith and substance it falls within Entry 33. Thus, the power to legislate is traceable to Article 246(2) read with Entry 33 of List III, which once exercised by the Parliament, overrides the power of the State under List II. Any incidental overlap with entries in List II will not have the effect of invalidating the Acts..Violation of Part III.The second aspect which must be addressed is whether the Acts are in conformity with Part III of the Constitution of India.For the Farm Acts to pass muster under this head, it must meet the test of the holy trinity of Articles 14, 19 and 21. The mandate of Article 14 broadly requires a legislation to have a legitimate object or goal, and a structural framework that has a reasonable nexus with the object sought to be achieved. The object of Farm Acts is to establish an ecosystem where farmers and traders enjoy freedom of choice relating to sale and purchase of farmers' produce through competitive alternative trading channels. The underlying idea behind the enactment is to secure economic justice for farmers by ensuring remunerative prices for their labour and produce. Section 3 of FPA removes the geographical prohibition of APMC Acts by conferring freedom on the farmer to carry out inter/intra-state trade of farmers’ produce. The freedom to sell farm produce in open markets, independent of the exploitative cartel of commission agents and buyers, has a reasonable nexus with the object of securing maximum remuneration for the farmers. The test of manifest arbitrariness requires the Farm Acts to be tested on the anvil of caprice, arbitrariness and oppression. It has been argued that the unequal bargaining power coupled with the absence of protective umbrella of market area regulation would lead to exploitation of small and marginal farmers at the hands of powerful corporates/buyers, resulting in oppression. The prohibition of trade outside the market area imposed by APMC Acts was in the nature of protective discrimination wherein the State assumed a paternalistic role of protecting the farmer. The apprehension that Farm Acts would lead to oppression of farmers at the hands of corporates is in the realm of hypothesis. It presumes gullibility of farmers, and statutes are not invalidated on the basis of (archaic) presumptions. We can therefore safely say that Farms Acts do not offend Article 14..Article 19(1)(g) provides freedom to carry on trade. The right of a farmer to trade with his agricultural produce is subject only to restrictions placed in accordance with Article 19(6). The Farm Acts enliven the right available to a farmer under Article 19(1)(g) by granting him freedom of trade and removing the restrictions placed by APMC Acts. Thus, the Farm Acts pass constitutional muster on this score also..Article 21 is founded on an individual’s right to life and personal liberty. The scope and ambit of the right to life has been expanded beyond just animal existence, and a large number of unenumerated rights have been read into it. Likewise, personal liberty connotes an individual’s autonomy over intrinsic choices that form the core of his/her right to self-determination. It represents an innate space so inviolable that it must be protected from external influence. Here, it is important to refer to the Puttaswamy judgment, which has recognized the “right to choose” as a valuable facet of Article 21, and the exercise of this right is to the exclusion of State interference. The arguments against the Farm Acts on this score revolve around the failure to promise a Minimum Support Price (MSP) to the farmers, triggering fears of price rigging affecting a farmers’ right to livelihood. MSP represents a price at which the government purchases food grains for supply under the Public Distribution System. Interestingly, It does not have any legislative support and is part of the administrative decision-making. Besides, the Farm Acts do not prohibit a farmer from selling in the State-specified market area. They open up trade avenues for the farmer to negotiate the best price for his crops, independent of the APMC mechanism, with an option to fall back on MSP-oriented State markets, should the prices outside be subdued or inadequate. A legislative guarantee of MSP, besides conflicting with the underlying notion of freedom of choice, may actually drive APMC Acts into irrelevance, for no farmer would trade within the market area if assured of MSP even outside. The availability of freedom to negotiate better trade deals subserves the right to livelihood under Article 21. The Act recognizes the right of the farmer to choose between a market-driven economy and a market-area economy. It acknowledges that a farmer has a right to choose his/her own way of life – a facet of individual autonomy and right to self-determination..Federalism and violation of basic structure.There are claims that the Farm Acts violate the concept of federalism recognized as part of the basic structure of the Constitution. This argument has a fundamental flaw. The intrinsic nature of federalism in India is unitary – with a heavy tilt towards the Union. Within their exclusive spheres, the powers of Parliament and state legislatures are plenary. In the event of an overlap resulting in an irreconcilable conflict, the State has to yield to the Central law, provided Parliament has competence to legislate on the topic. The presence of a residual Entry 97 in List I further reinforces the notion of Parliamentary supremacy. Thus, a conclusion cannot be drawn that even in legitimate cases, where the field is open for Parliament to exercise its plenary legislative powers, it ought to refrain from such legislative actions lest States’ powers are incidentally diluted. As stated above, the Farm Acts, in pith and substance, fall under under Entry 33 of List III. Parliament cannot be faulted for asserting its sovereignty under the Concurrent List. There is no merit, therefore, in the argument that Farm Acts violates the spirit of federalism..Presumption of validity.It is trite that there is a heavy presumption in favour of constitutional validity of plenary legislation. This presumption is heavier when the legislation concerns itself with economic policies. Legislative bodies have broad scope to experiment with economic problems, and the Courts do not sit in judgement, donning the robes of a “super-legislature”, over the wisdom of Parliament. Laws relating to economic activities are viewed with greater latitude than laws touching civil rights. Thus, when the Parliament in its wisdom has designed a policy for empowerment and protection of farmers, it must be allowed to work itself out. The guillotine cannot (sic must not) fall at the very outset. Economic legislation always have a certain degree of risk and experiment involved, and cannot be interfered with merely because certain states have impugned its legitimacy. If any inequities or possibilities of abuse come to light, the legislature can always step in and enact suitable amendatory legislation. It must be remembered that the system of checks and balances has to be utilised in a balanced manner with the primary objective of accelerating economic growth rather than suspending its growth by doubting its constitutional efficacy at the threshold itself..What also needs to be asked is – was the farmer actually better off in the erstwhile regime with power concentrated in faulty/inadequate market structures and in middlemen who would inevitably exploit them? The answer is a clear and emphatic NO. The Agricultural Report submitted by the Ministry of Agriculture for the year 2018-19 has made some pertinent observations in this regard. It was observed that the existing system of marketing through network of APMC markets attributed towards high post-harvest losses, long intermediation in supply chain and low return to the farmers. Further an efficient, competitive, transparent and barrier-free market with adequate post-harvest and marketing infrastructure and real time market information, was found to be the need of the hour qua reform measures. Furthermore, it was suggested that there is a need to enhance private sector investment in development of marketing infrastructure. Pertinently, only 6% of farmers were deriving benefits of MSP under the State APMC regimes, while the rest were selling their farm produce in unregulated sectors, which opened them up to exploitative tactics of traders and other agents. It is with this knowledge that Parliament has brought these Acts into effect..Concluding Remarks.Most of the arguments assailing the validity of the Farm Acts are purely speculative and underpinned by a presumption that the Parliament has maliciously enacted these legislations with an intention to further the interests of corporates and industries. The essence of the freshly assented Farm Acts is to provide complete freedom to the cultivators and livestock rearers to sell their produce, livestock and its product to the buyers and through the marketing channel of their choice offering a better bid..In view of the aforesaid, it is submitted that Farm Acts pass the test of constitutionality and are likely to be upheld by the Supreme Court. The possibility of adverse impact on the farmers or misuse of power by sponsors with an exploitative mindset is not a ground to strike down a legislation, particularly in the area of economic law, where the legislature enjoys a far greater play in the joints..The authors are Advocates practicing in the Supreme Court, High Courts and other Tribunals. They have been ably assisted by Tanishk Goel, a third-year student at NUJS, Kolkata. Views are personal.