The farm legislation: Boon or bane?

“Agriculture is our wisest pursuit, because it will in the End

Contribute most to real wealth, good morals and happiness”

-Thomas Jefferson

The recently concluded Monsoon Session of Parliament saw two critical and contentious Bills being passed on a Sunday, amidst a lot of controversy in the Rajya Sabha. These are the Farmers Produce Trade and Commerce (Promotion & Facilitation) Bill, 2020 and the Farmers (Empowerment & Protection) Agreement on Price Assurance and Farm Services Bill, 2020.

The said Bills eventually received Presidential assent and now enjoy legal sanction as the Promotion & Facilitation Act and the Empowerment & Protection Act.

Parliament may justify the passage of the recent legislation by stating that they were passed in exercise of its powers to legislate under Entry 33 in List III as contained in the Seventh Schedule of the Constitution.

It may be noted how the draftsmen have cleverly worded the title of these statutes in a manner that would seem to appear as though the same were well within the domain of Parliament to pass such laws. However, it remains to be seen whether the scope of these legislation actually falls within the ambit of List – III.

The founding fathers of the Indian Constitution envisaged to adopt the practice of federalism. The Seventh Schedule of the Constitution is a classic feature of the spirit of federalism, with the Union List (List-I), the State List (List – II) and the Concurrent List (List – III) each assigning subjects on which the Centre and the state can frame laws. The Centre and states are both competent to legislate on subject matters in List – III. However, in the event of any inconsistency in a law passed by both the Centre and the states, the former would prevail.

The states, under Entry 14 in List-II, have the sole prerogative to legislate on the subject of agriculture. Furthermore, the power to make laws with respect to markets and fairs also falls in the exclusive domain of states, under Entry 28 in List –II. Entry 33 in List– III empowers a law-making body (i.e. either the Parliament or state legislatures) to inter alia legislate on matters with respect to the ‘trade and commerce in, and the production, supply and distribution of’ foodstuffs, including oilcakes and concentrates; raw cotton, whether ginned or unginned, and cotton seed; and raw jute.

Most states in India have enacted legislation formally constituting agricultural marketing boards known as Agricultural Produce Marketing Committees (APMCs).

The Promotion & Facilitation Act inter alia provides for a ‘trade area’ that facilitates transactions involving a farmer’s produce. However, premises that are controlled by marketing committees established under the State APMCs or that are managed by persons who enjoy a license issued by the State APMCs do not fall within the definition of such a ‘trade area’.

The facility of an electronic trading and transaction platform is also permitted under the provisions of the Promotion & Facilitation Act. It is extremely relevant to note that the Promotion & Facilitation Act does not permit the states, either through their APMC legislation or through any other law, to impose any kind of market fee on the trade area as well as on the electronic trading platform. It appears that Parliament, by imposing such a condition in the letter of the statute, seeks to oust the authority of the states with respect to dealings in a farmer’s produce.

Furthermore, a freeze on imposing any kind of cess or levy on such a trade area would definitely hurt the revenues of the states. Naturally, any farmer or trader would prefer to deal in a ‘trade area’ that has been designated under the Promotion & Facilitation Act, given that such an area would probably offer an economically more competitive place of doing business, given that it is not subject to the imposition of any levy or cess by the states, as compared to the State APMCs.

Despite the fact that markets fall exclusively within the legislative competence of the states, Parliament has gone ahead and passed this law that seeks to alter the dynamics of trading in a farmer’s produce in market areas, which could have an adverse impact on states. This move of Parliament, stepping on the legislative mandate of the states, goes against the very essence of Indian federalism and violates the basic structure of the Constitution.

The Empowerment & Protection Act, on the other hand, seeks to ‘empower’ the farmer by giving him the liberty to engage into a farming agreement with any person (which also includes an artificial person) known as a ‘sponsor’. A plain reading of this law would seem to suggest that the farmer shall no longer be at the mercy of middlemen licensed by State APMCs and that they can transact with any person they wish to deal with.

However, it remains to be seen as to how this legislation shall play out in practice. It appears that this statute permits to give a free hand to large corporations to enter into such farming agreements with the farmers. Naturally, a situation may arise wherein a farmer may be coerced to enter into such terms with large corporations that shall only reap monetary benefit to the latter. Onerous terms may be imposed by the corporations in such agreements that might prove to be detrimental to the interests of farmers.

Dispute Resolution

The dispute resolution mechanism contemplated under these statutes is through a conciliatory process. In the event a party is not satisfied with the outcome of such a conciliatory process, the matter would be referred to members of the executive, i.e. first at the level of a Sub-Divisional Magistrate and then the Collector or the Additional Collector.

It is pertinent to note that both, the Promotion & Facilitation Act as well as the Empowerment & Protection Act expressly bar and oust the jurisdiction of civil courts. The parties contracting under these laws do not have the privilege of approaching the judiciary under the provisions of these statutes, even under a farming agreement, which ought to be governed by the principles of contract law. A judicial review may only lie against the order passed by the Sub-Divisional Magistrate or the Collector, provided the said order violates the fundamental rights of a party.

However, neither the Supreme Court under Article 32 nor the High Courts under Articles 226 and 227 can exercise judicial review in a matter of a private contract between the parties. A pertinent question to ask is how many farmers will actually get justice knowing it is a long drawn battle and that they are pitched against powerful corporate giants?

The most repeatedly voiced problem with this law is that it has been brought into force de hors necessary and proper parliamentary processes and more gravely, without any consultation or deliberation with the primary stakeholders of the agricultural diaspora. If the law is really a beneficial legislation made for the agricultural masses, why not give it a quietus through debate? Is there something to conceal in the augmented decibel rhetoric of ensuring independence of farmers?

Conclusion

The Indian farmer is instrumental in not only feeding the world’s largest democracy, but also plays an active role in earning foreign exchange by way of exports of its produce. The Empowerment & Protection Act must be checked so as to ensure that corporations are not given a free hand to exploit the farmers.

History is witness to the way corporations have treated agriculturalists. We saw the East India Company forcing the Indian farmer to produce indigo instead of food crops, in a bid to satisfy its own corporate greed that eventually led to havoc in the lives of such farmers. The features of the Facilitation & Promotion Act do not seem to echo with the idea of Indian federalism, given that it appears that Parliament has transgressed its legislative competence.

One must also not forget the manner in which these laws were passed, in utter disregard of the rules of parliamentary procedure. Petitions have been filed before the Supreme Court of India challenging these laws; it remains to be seen whether they will pass the test of constitutionality.

The author is a Senior Advocate practicing in the Supreme Court of India. She acknowledges Advocate Neeleshwar Pavani for his research inputs. Views expressed are personal.