“Law is the protector of the weak.”
–Frederick Schiller[1]
The ongoing months long farmers’ protests in several parts of Northern India have raised a demand of enacting a stringent special law mandating the Minimum Support Prices (MSP) for every crop in addition to the repeal of three farms Acts, namely, the Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act, 2020[2], the Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Act, 2020[3] and the Essential Commodities (Amendment) Act, 2020[4]. The farmers have alleged that these farm laws would act as the death knell for the small and marginal farmers. The issue that arises now is whether, if the Government maintains the status quo, the farmers would be protected under the ambit of the existing Indian laws against the abuse and unfair practices of the big corporates. The article analyses that how even if no law mandating the MSPs is enacted, the courts would not be deprived of the power to protect the farmers against the unfair trade practices by the corporates. The article analyses the provisions of existing Indian laws which can be used by the courts to impose the minimum prices to be paid by the corporates to the farmers for purchasing their crops.
The Contract Act, 1872[5] gives liberty to every person to come into a contract with the free consent of both the parties. However, the drafters of the Act had very aptly anticipated that there might be numerous situations where the big corporates having disproportionate and unequal bargaining power would endeavour to come into unfair bargains with the weaker section of the public. The Contract Act takes care of these situations by virtue of Section 19-A[6] read with the Section 16[7] of the Act. Section 19-A of the Act gives the option to the weaker party in the contract to set aside the contract at his will if his consent was induced by “undue influence”. A consent is considered to be induced by “undue influence” if one of the parties to the contract is “in a position to dominate the will of the other and uses that position to obtain an unfair advantage over the other”[8]. The Supreme Court of India has observed in DTC v. DTC Mazdoor Congress[9] that the disparity in the economic strength of the contracting parties results in the unequal bargaining power and thus, leads to the abuse of weaker party by the stronger party. Sometimes, the weaker party is in a position in which it could obtain the means of livelihood only upon the terms imposed by the stronger party. It is obvious that the position of corporates, headed by billionaires and position of farmers, facing suicide crisis in India, cannot be compared. The corporates are per se the stronger parties and the farmers are per se the weaker parties. Thus, this clause perfectly applies to the situations where a stronger party buys a crop from a weaker party at a price below the Minimum Support Price (MSP). Here the MSP should be considered as that threshold rate above which farmer would reap the profits. So, if the Court faces any dispute involving a transaction between a farmer and a buyer which per se indicates the unfair terms between the parties, such as buying a crop below its MSP rate, the consent of the farmer should be considered as consent induced under “undue influence”. The farmer should be then given the option to rescind the contract and simultaneously take compensation due to the loss incurred by that contract. However, here, the MSP would not be a price fixed by the Government on that particular crop. Rather, it would be that rate independently determined by the Court above which the farmer would reap the profits.
The question now arises is whether it is a matter of public policy and thus, a matter not to be decided by the courts. The public policy, as held by the Supreme Court of India[10], is not a policy of any particular Government. It is simply a matter which concerns the public good and the public interest. The principles governing public policy must be and are capable on proper occasion, of expansion or modification. If the conduct is against the public conscience, public good and public interest, then such conduct must be regulated by the courts. The Supreme Court of India has expressly held that “In any case which is not covered by authority, courts should be guided by Preamble to the Constitution[11] and the principles underlying the Fundamental Rights and the Directive Principles.” Thus, the courts as parens patriae cannot leave this matter as a matter to be decided only by Government even when there is no specific law on MSP. Thus, the courts are duty-bound to decide upon the transactions between corporates and farmers that are against the public policy.
Now, which constitutional principles compel the Court to secure the MSPs? It has been held several times that the “right to life” guaranteed under Article 21 of the Constitution[12] includes the “right to livelihood”[13]. It needs no proof that it has become extremely difficult for the farmers to earn their livelihood. Right to life means more than just physical existence. It takes within itself the bare necessities of life such as clothing, shelter, adequate nutrition, etc. Thus, forcing the farmer to sell below the MSPs leads to denial of their “right to livelihood” guaranteed under Article 21 of the Constitution. Further, Article 23 of the Constitution[14] protects the citizens against the exploitation from both State and private citizens.
In People’s Union for Democratic Rights v. Union of India[15], the Court held that the “force” means “not only the physical or legal force but also force arising from the compulsion of economic circumstances which leaves no choice of alternatives to a person in want and compels him to provide labour or service even though the remuneration received for it is less than the minimum wage”. Then Articles 38[16] and 39(c)[17], collectively known as principles of social security and social justice, direct the State to minimise the inequalities of justice, social and economic amongst its citizens. Article 43 of the Constitution[18] directs the State to secure the “living wage” to the farmers. These provisions when read collectively compel the Court to protect the right of the farmers to sell at a favourable price.
It is believed that it would be a perfect opportunity for the courts to determine the threshold rate and other guidelines after in-depth analysis and study of the risks and losses involved in the agriculture sector. If decided by constitutional courts, they would act as the binding guidelines on the future transactions between corporates and farmers. It is pertinent to note here that it would not be the first time when the constitutional courts would intervene to issue guidelines to protect the weaker section of the society.
The Supreme Court has held in Vishaka v. State of Rajasthan[19] that when conduct of one section of society results in the violation of fundamental rights of other section of the society and there is a legislative vacuum against that conduct then “an effective redressal requires that some guidelines should be laid down for the protection of these rights to fill the legislative vacuum”. It was held that the obligation of the courts for the enforcement of the fundamental rights in the absence of legislation must be viewed along with the role of judiciary envisaged in the Beijing Statement of Principles of the Independence of the Judiciary. It was held that it is the function of judiciary to ensure the observance and attainment of human rights. Further, it was held that the guidelines would be treated as the law declared by this Court under Article 141 of the Constitution[20].
Thus, the absence of a law mandating the MSPs for contracts between farmers and corporates does not mean that the corporates would be able to take advantage of distressed farmers. The courts are still not deprived of the powers granted to them under the Contract Act, 1872 and the Constitution to protect the farmers of their right to sell crops at their favourable prices.
*Advocate, Delhi High Court.
**Final year law student (LLB), Campus Law Centre, Faculty of Law, University of Delhi.
[1] Gene Ligotti, Accomplice: … a Novel (2013), p. 202.
[2] http://www.scconline.com/DocumentLink/wdP4LxVM.
[3] http://www.scconline.com/DocumentLink/s4WyG5Ra.
[4] http://www.scconline.com/DocumentLink/8F35O644.
[5] http://www.scconline.com/DocumentLink/xAi185p6.
[6] http://www.scconline.com/DocumentLink/K5XuGL0N.
[7] http://www.scconline.com/DocumentLink/37B4H2v8.
[8] See S. 16 of the Contract Act, 1872.
[10] Ibid.
[11] http://www.scconline.com/DocumentLink/8bvjrn3W.
[12] http://www.scconline.com/DocumentLink/VN1u87S9.
[13] Olga Tellis v. Bombay Municipal Corpn.,(1985) 3 SCC 545.
[14] http://www.scconline.com/DocumentLink/1RoWjnWY.
[16] http://www.scconline.com/DocumentLink/pd9EUWHe.
[17] http://www.scconline.com/DocumentLink/HgecD61Z.
