Kerala High Court pulls up Supplyco for delay in payment to farmers

The Kerala High Court recently pulled up the Kerala Civil Supplies Corporation, also known as Supplyco, for delays in following through with its contractual obligations to pay farmers in full for paddy procurement. [K Sivanandhan v. State of Kerala].The Court remarked that it indicated a very sorry state of affairs. "Surely, this is a very sorry state of affairs because, it is also admitted by the learned Standing Counsel for the ‘Supplyco’ – to a pointed question from this Court – that, as per the Procurement Scheme, the balance amounts ought to have reached the accounts of the petitioners and other farmers within 60 days of procurement," the Court said. .Justice Devan Ramachandran also criticised Supplyco for trying to justify the delay in payments by referring to administrative difficulties faced by a bank with whom Supplyco and the Kerala government had entered into an agreement with to finance the payments. “The shifting of any such responsibility onto the shoulders of the farmers is uncharitable and, in any case, wholly impermissible,” the judge said. .The High Court opined that the farmers should not have been put to any further prejudice only because Supplyco was not able to garner resources to comply with their contractual commitments.Justice Ramachandran also underscored that Supplyco was liable to ensure that every farmer was paid in full at the earliest, especially when the agreed time frame for payments was over..The High Court was considering a batch of petitions filed by farmers from whom the Supplyco had procured paddy on certain specified conditions as per a procurement scheme.The conditions between Supplyco and the farmers were that on receiving paddy from the farmers, Suppleco would pay ₹ 50,000 immediately. Any amount due beyond ₹50,000 was to be paid in two tranches. Of such amounts, 28% was promised to be credited to the framers’ bank accounts, and the balance was to be paid after Supplyco secures a loan from a designated bank under a tripartite agreement.The farmers were aggrieved by the fact that even though Supplyco was handed over the paddy, the farmers were not paid the amount promised. Instead, the farmers were told to go to various banks to sign loan applications and security documents without honoring their claims, the Court was told. .Standing Counsel for Supplyco, advocate Santosh Peter countered that 28% of the amount has already been disbursed to each of the petitioners' (farmers) account directly, while the balance would be disbursed through the bank.He said that the delay in payments was only due to administrative difficulties faced by the bank, which is funding the scheme under a tripartite agreement between them, Supplyco, and the government.However, he added that farmers can now approach the bank so that the amounts would be credited into their accounts directly. He asserted that this requirement was being misinterpreted by the farmers..Justice Ramachandran observed that these submissions cleared the air to some extent. Nevertheless, he observed that the amounts due ought to have reached the farmers' accounts within 60 days of procurement. .He proceeded to direct Supplyco to ensure that all amounts due to the farmers are paid within one month from the judgment. Justice Ramachandran added that Supplyco can request the farmers to go to the bank for receiving the money, if that is more convenient. However, the judge made it clear said that if any of farmers finds it difficult to do so, Supplyco should make sure that the payment is made to their accounts without making them approach the bank. .[Read Judgment]