National Commision: Farmer Entering Into Buyback Transaction Is A ‘Consumer’

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nc farmer entering into buyback

Facts: complainant (the Respondent herein) is a small landholder who responded to the advertisements issued by the Appellant, a seed company, in 2003, regarding buyback of safed musli, a medicinal crop, at attractive prices. She entered into a tripartite agreement dated 15.01.2004 with the Appellant and its franchisee M/s Herbz India. As per the agreement, the Respondent purchased 750 kgs of wet musli for sowing from the Appellant, at the rate of Rs. 400/- per kg, and cultivated the same in her land. The Appellant was to buy back the produce at a minimum price of Rs. 1,000/- per kg from the Respondent. The Respondent lodged a consumer complaint alleging negligence and breach of contract on the part of the Appellant on the ground that the Appellant failed to buy back her produce, leading to the destruction of the greater part of the crop.

Findings of The District Forum : Dismissed complaint, and held that the same was not maintainable since the Respondent was not a “consumer” within the meaning of the Consumer Protection Act, 1986 (“the 1986 Act”). 

Appeal – On appeal, State Commission set aside the order passed by the District Forum, holding that the Respondent was a “consumer” under the 1986 Act, and remanded the matter to the District Forum for disposal on merits. It is this order which was impugned before the National Commission by way of a revision petition filed by the Appellant. 

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National Commission: Upheld the finding of the State Commission. National Commission held that it could not be said that the agreement was entered into for the commercial purpose of the Respondent. The Revision Petition was dismissed with a cost on Appellant, payable to the Respondent

Held: “Most Indian farmers own only small landholdings, which require expensive inputs such as irrigation, electricity, seeds, fertilizer, and pesticide, but do not generate sufficient output to cover the costs of the same. Though the sway of seed companies over small farmers in India is, as of now, minimal, when agriculturists with such small landholdings do enter into agreements to grow crops on terms dictated by seed companies, it is in the hope of earning some profit that would offset the cost of their inputs and generate some income for the household. Often, the crops require the intensive usage of labour and mechanization. Therefore, agreements such as the one in the instant case often guarantee technical and financial assistance to the farmer in order to be able to discharge his end of the deal”. 

“Needless to say, the success or failure of the crop would make or break the income of the farmer for the entire season. This can result in situations where small and medium scale farmers find themselves trapped in contracts where they buy expensive seeds which turn out to be defective, resulting in a failed season and severe financial hardship. The problem of indebtedness further worsens the plight of the farmer, and, all too often, manifests in the tragedy of suicide. Farmer suicides are indeed a systemic issue that has persisted, and perhaps worsened, over the last few decades. The summary redressal available to the farmer under the 1986 Act may go a small but crucial way to provide instant relief in a sector which is already facing stress on several counts. Undoubtedly, farmers faced with grievances against seed companies, may, in suitable cases, opt for other remedies such as a civil suit, relief under the Seeds Act, 1966 (the reform of which has been under process for some time), and so on. But excluding such farmers from the purview of the 1986 Act would be a complete mockery of the object and purpose of the statute. We are alarmed by the growing trend amongst seed companies of engaging in frivolous litigation with farmers, virtually defeating the purpose of speedy redressal envisaged under 1986 Act”.“ In the instant case, the Appellant contested the farmers’ claims before consumer fora on the preliminary point of maintainability right up to this Court, compelling small agriculturists such as the Respondents to spend unnecessarily on litigation in order to secure relief for themselves, amounting to a sum which probably exceeds even the quantum of relief claimed. This tendency to resist even the smallest of claims on any ground possible, by exploiting the relatively greater capacity of seed companies to litigate for long periods of time, amounts to little more than harassment of agriculturists. To discourage such conduct in the future by the Appellant as well as other seed corporations, we deem it fit to impose costs on the Appellant  Thus, we find no reason to interfere with the order passed by the National Commission affirming that the Respondent is a “consumer” within the meaning of the 1986 Act, and dismiss Appeal.