byMahalakshmi PavaniOctober 5, 2020

The newly enacted Farm Laws, that have faced stiff opposition, have largely been criticised for lack of protective mechanisms like MSP and usurpation of state power to legislate on the matter. However, crucial component also being overlooked is the concilation process. MAHALAKSHMI PAVANI writes on the usurpation of judicial power and the vesting of final adjudication with the state.

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“Our Farmers deserve Praise, not condemnation, and their
Efficiency should be cause for Gratitude,
Not something for which they are penalized”

John F Kennedy

Last month, amidst intense drama and furore on September 20, the Upper House of the Indian Parliament passed three new Bills regulating the agriculture sector in India. They were passed by way of a voice vote, despite several for a division by members of the Opposition. They received assent on September 27.

These Bills subsequently received the assent of the and now features in the Official Gazette as

(i) The Farmers’ Produce Trade and Commerce (Promotion & Facilitation) Act 2020 (“Produce Trade and Commerce Act”);
(ii) The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Act 2020 (“Agreement on Price Assurance Act”); and
(iii) The Essential Commodities (Amendment) Act, 2020.

The new legislation provides for farmers to enter into farming agreements with any person, thereby paving the way for a free market economy to penetrate the Indian agricultural sector. Unlike the earlier regime that typically saw the farmer sell his produce to licensed middlemen authorised by state Agricultural Produce Market Committees (“APMCs”), the farmer is now ‘empowered’ to get out of the clutches of such middlemen and deal in their produce with whoever they wish to do business with.

Peculiar features on conciliation

A rather peculiar feature in the Produce Trade and Commerce Act are the Chapters that deal with disputes.

In the event of any dispute, the farmer and trader can approach the Sub-Divisional Magistrate (SDM) to arrive at a solution through conciliation proceedings.

The Chairperson of such a Conciliation Board shall be a person who is under the direct control and supervision of the SDM. The other members shall be appointed based on the recommendation of the parties to the dispute. However, the SDM has the power to appoint these other members if either party fails to recommend its representative within 70 days.

If the parties are unable to resolve their differences within thirty days, then they may approach the SDM to settle such disputes in a summary manner, within thirty days, by following principles of natural justice.

An appeal against the order of the ‘Sub-Divisional Authority’ may be filed within thirty days of the passing of the said order and would lie before the Collector or the Additional Collector. They must dispose of the appeal within thirty days of such filing.

Both, the Produce Trade and Commerce Act and the Agreement on Price Assurance Act expressly bar the jurisdiction of civil courts in entertaining disputes arising under the operation of these legislations.

The Agreement on Price Assurance Act envisages that every farming agreement shall provide for a conciliation process through a conciliation board with representatives from both parties. Just like the Produce Trade and Commerce Act, if there is a dispute and the agreement does not contain a clause for conciliation, then the matter will be referred to the ‘Sub-Divisional Authority’ i.e the SDM. The said disputes shall be disposed of in a summary manner.

An appeal against the order of the ‘Sub-Divisional Authority’ will lie with the Appellate Authority who shall be the Collector or the Additional Collector nominated by the Collector. The orders passed by either the Sub-Divisional Authority or the Appellate Authority are enforceable as decrees by civil courts under the Code of Civil Procedure, 1908. Furthermore, such ‘Sub-Divisional Authority’ or the Appellate Authority shall have the power of a civil court such as recording evidence, calling on witnesses and compelling the discovery and production of documents.

Do the new Farm Acts violate the Separation of Powers?

Both, the Produce Trade and Commerce Act and the Agreement on Price Assurance Act expressly bar the jurisdiction of civil courts in entertaining disputes arising under the operation of these legislations.

The question that arises is whether the ouster of civil court jurisdiction of civil courts violates the constitutional tradition of Separation of Powers, which is part of the basic structure doctrine.

It may be argued that the Parliament is empowered to provide an express bar on the jurisdiction of civil courts.

A number of laws, such as the Income Tax Act, 1961, the Recovery of Debts Due to Banks Act, 1993, the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, the Companies Act 2013 et al, expressly oust the jurisdiction of civil courts. However, in doing so, these statutes provide for quasi-judicial bodies or tribunals, comprising judicial and technical members, to entertain any dispute arising under them.

Moreover, they are conferred with powers of a civil court in exercising judicial capacity and are clearly a case of executive overreach, encroaching upon the domain of the judiciary. Why should the farmers be deprived of proper judicial acumen?

Indeed, an aggrieved party may approach such quasi-judicial forums that come under the executive’s domain. For example, under the Companies Act, 2013 a minority shareholder may file an oppression and mismanagement petition before the National Company Law Tribunal against the majority shareholders of a company. Similarly, an assessee may file an appeal against the order of a Commissioner of Income Tax before the Income Tax Appellate Tribunal under the Income Tax Act, 1961.

Why is it that executive officers can adjudicate disputes arising out of a farming agreement?

The Produce Trade and Commerce Act and the Agreement on Price Assurance Act exclusively vest judicial powers with the Sub-Divisional Authority and the Appellate Authority who are, in essence, officers of the executive. Moreover, they are conferred with powers of a civil court in exercising judicial capacity and are clearly a case of executive overreach, encroaching upon the domain of the judiciary. Why should the farmers be deprived of proper judicial acumen?

A farming agreement is ultimately a contract between private consenting parties and is governed by the principles of contract law.

Such disputes would typically involve complex questions of fact that would require evidence to be led by both sides. Only a civil court exercising competent jurisdiction is solely entitled to entertain any dispute arising between the parties out of the terms of such an agreement.

One must draw the distinction between the two scenarios. In one instance, an aggrieved party claims his right under a statute by approaching a tribunal. However, in the case of a farming agreement, the party is claiming his right under a contract. Thus, it is the terms of the contract that shall govern the relationship between the parties, provided such terms do not violate any laws in force.

The executive plays all the roles from enforcer to adjudicator and interpreter of the law.

Furthermore, given that these summary proceedings lie before the executive, naturally any party aggrieved by an order passed by such an officer would seek to file a writ petition before the High Court. However, the High Court cannot, in the exercise of its writ jurisdiction, sit in appeal to examine a dispute that has culminated from a contract between private parties.

A Division Bench of the Supreme Court in West Bengal Central School Service Commission & Ors. v.Abdul Halim & Others had held that

“the High Court in exercise of its power to issue writs, directions or orders to any person or authority to correct quasi-judicial or even administrative decisions for enforcement of a fundamental or legal right is obliged to prevent abuse of power and neglect of duty by public authorities.”

This basically means that orders by the Sub-Divisional Authority or the Appellate Authority can be subjected to judicial review only if they contain infirmities that affect the fundamental rights or legal rights of the aggrieved party.

Upholding the Constitutional Demarcation of Separation of Powers

The principle of Separation of Powers is deeply rooted in constitutional jurisprudence in democracies across the world. The Constitution Bench of the Supreme Court in State of Tamil Nadu v. State of Kerala & Anr, pointed out that even without an express provision, the doctrine of separation of powers is an entrenched principle in the Constitution of India.

So the Constitution has made a clear demarcation without drawing formal lines between the three organs – legislature, executive, and the judiciary.

It appears that the Produce Trade and Commerce Act and the Agreement on Price Assurance Act do not seem to follow this spirit of separation of powers.

The executive plays all the roles from enforcer to adjudicator and interpreter of the law. This is particularly crucial in matters concerning private agreements that usually involve complex questions of facts, a jurisdiction ordinarily enjoyed by civil courts.

The Parliament should consider amending these provisions so as to bring such disputes within the ambit and jurisdiction of the civil courts. In order to expedite such matters, it would be prudent to allow Commercial Divisions of civil courts to entertain such matters.

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(Mahalakshmi Pavani is a Senior Advocate practicing at the Supreme Court. She acknowledges the inputs of Advocate Partha Mansukhani in writing this article. Views expressed are personal.)

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