Farmer Entering Into Buyback Transaction With Seed Company Is A 'Consumer IN THE SUPREME COURT OF INDIA , M/S NANDAN BIOMATRIX LTD. VERSUS S. AMBIKA DEVI & ORS.

10 Mar 2020

Farmer Entering Into Buyback Transaction With Seed Company Is A 'Consumer IN THE SUPREME COURT OF INDIA , M/S NANDAN BIOMATRIX LTD. VERSUS S. AMBIKA DEVI & ORS.

 

Facts of this case are as follows: A farmer, entered into an agreement with the seed company and purchased 750 kgs of wet musli for sowing from the company, at the rate of Rs. 400/- per kg, and cultivated the same in her land. As the company failed to buy back her produce, leading to the destruction of the greater part of the crop, the farmer lodged a consumer complaint. The District Consumer Forum dismissed the complaint on the ground that she was not a "consumer" within the meaning of the Consumer Protection Act, 1986. This order was set aside by the State Commission and remanded the matter to be decided on merits. The National Commission affirmed this order of the State Commission.


Before the Apex Court, on behalf of the company two contentions were raised. Firstly, that the tripartite agreement envisaged buyback of musli by the farmer from the company, which amounted to resale, which is excluded from the purview of Section 2(d). Secondly, the cultivation and sale of musli by the farmer was for a commercial purpose and not for the purpose of earning livelihood, and hence excluded from the purview of Section 2(d). Therefore the issue considered was whether the farmer was excluded from the purview of the definition of "consumer" under Section 2(d) of the 1986 Act on account of the subject transaction amounting to resale or for being for a commercial purpose.
The bench comprising Justices Mohan M. Shanthanagoudar and R. Subhash Reddy observed that the transaction cannot be termed as resale. It also rejected the contention that the tripartite agreement would amount to resale by virtue of containing a buyback clause, and would hence exclude the farmer from the ambit of the definition of "consumer". It explained:

In matters such as the one on hand, the agriculturist buys the foundation seeds from the seed company, or the company itself reaches out and requests the farmers to generate the seeds so that it may market the same. By accepting such an offer, and after purchasing the foundation seeds from the seed company, the agriculturist, with hard labour and sweat, produces seeds to be marketed by the seed company. Thus, the agriculturist is not reselling any product, but grows his own product by utilizing the foundation seeds. There cannot be any dispute that the agriculturist has to sell his product in the open market or to the seed company, as the case may be, in order to eke out his livelihood. In other words, the agriculturist sustains himself by selling his product. This cannot be termed as resale or activity in furtherance of a "commercial purpose" bringing him out of the purview of the definition of "consumer" under Section 2(d). Rather, it is purely for the purpose of earning his livelihood by means of self employment.
"an agreement for buyback by the seed company of the crop grown by a farmer cannot be regarded as a resale transaction, and he cannot be brought out of the scope of being a "consumer" under the 1986 Act only on such ground.
Where the farmer has purchased goods or availed of services in order to grow produce in order to eke out a livelihood, the fact that the said produce is being sold back to the seller or service provider or to a third party cannot stand in the way of the farmer amounting to a "consumer".

The bench, further said that, excluding such farmers from the purview of the Consumer Protection Act would be a complete mockery of the object and purpose of the statute. It also expressed concerns about the growing trend amongst seed companies of engaging in frivolous litigation with farmers, virtually defeating the purpose of speedy redressal envisaged under

 
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