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CONSTITUTIONALITY OF THE 2020 FARM ACTS

Author: Naibedya A. Dash, III year of B.A.,LL.B. from West Bengal National University of Juridical Sciences (WBNUJS)


Abstract

This paper will be looking at the various arguments against the constitutionality of the statutes comprising the 2020 Farm Acts– the Farmers Produce Trade and Commerce (Promotion & Facilitation) Bill, 2020 and the Farmers (Empowerment & Protection) Agreement on Price Assurance and Farm Services Bill, 2020 – with regard to the Union’s legislative competence and analyse them against the pronouncements of the Court in this area of law. Within this section the historical context of Entry 33 of the Concurrent List, the supposed entry under which Parliament derives the authority to enact these laws, will be examined while attempting to discern the intent of the framers regarding its applicability and usage.Additionally, the paper will also be considering the constitutionality of the provisions exempting the civil jurisdiction of the courts while looking at judicial precedent on the subject, especially regarding the lack of a quasi-judicial body/tribunal being set up as an alternative institutional mechanism to replace the civil courts.


Introduction

In the 2020 Monsoon session of Parliament, the government pushed through two contentious bills –the Farmers Produce Trade and Commerce (Promotion & Facilitation) Bill, 2020 and the Farmers (Empowerment & Protection) Agreement on Price Assurance and Farm Services Bill, 2020. Post the passage of these bills, many grounds of contention have come up, ranging from violation of essential parliamentary procedure and lack of meaningful consultation with the main stakeholder – the agricultural community to the acts not mentioning an “MSP” and leaving farmers to whims and fancies of large corporates. Amidst all the problems with acts’ enactment and content lies the crucial question of whether the Parliamentpossesses the legislative competence under the Constitution to be able to enact these laws in the first place. An equally important consideration deals with the dispute resolutionprovisions in both the laws which expressly exempt the civil jurisdiction of courts and its possible implications.


The Constitutionality of the 2020 Farm Acts

The question of legislative competence

The Seventh Schedule of the Constitution distributes various legislative subjects into three lists, classified on the basis of which level of government holds the competence to enact laws on those subjects.The Seventh Schedule lists agriculture as a State list subject under entry 14 of List-II.[1]Along with this, entry 28 of List-II[2]puts markets and fairswithin the state’s legislative jurisdiction.On this basis, it has been observed that both the Farm Acts – Farmers Produce Trade and Commerce (Promotion & Facilitation) Bill, 2020 and the Farmers (Empowerment & Protection) Agreement on Price Assurance and Farm Services Bill, 2020 – appear to prima facie go against the Constitutional scheme of distribution of legislative subjects under the Seventh Schedule. Also, it is surprising to note that neither of the Statementof Objects and Reasons of the two Acts mentions the entries under List-I or List-III under which the Parliament has the power to legislate on these subjects.However, since the passage of the bills into lawarguments in favour of the Union government have pointed to Entry 33 of the Concurrent List[3], which states –

“Trade and commerce in, and the production, supply and distribution of —

(a) the products of any industry where the control of such industry

by the Union is declared by Parliament by law to be expedient in the

public interest, and imported goods of the same kind as such products;

(b) foodstuffs, including edible oilseeds and oils;

(c) cattle fodder, including oilcakes and other concentrates;

(d) raw cotton, whether ginned or unginned, and cotton seed; and

(e) raw jute”


To decide whether the legislative competence lay with the Union or with the state we must look at the other entries related to agriculture in the two lists, along with looking at the history of Entry 33 of List-III.


Under Entry 24 of List-II, industries are a state subject.[4] This however is subject to the rider, which says that Parliament at any time may assume control of an industry if it is “necessary for the purpose of defence or for the prosecution of war”, as under Entry 7 of List-I, or if Parliament feels that it is “expedient in public interest”, as under Entry 52 of List-I.[5]One of the exceptional circumstances envisioned by the framers in the rider to Entry-24 of the State List is covered by sub-entry (a) of Entry 33 in the Concurrent List, indicating the framers’ intent to not let Parliament have the sole power to legislate even in such a scenario. No such rider exists for Entries 14 and 28 of List-II, which points to the framers wanting these subjects to be entirely the states’ domain. This is further substantiated by the fact that agriculture is specifically excluded from the Central government’s jurisdiction in almost all the entries which mention it in the Union and Concurrent List. Entries 82, 86, 87 and 88 of the Union List talk about imposing taxes and duties on incomes and assets while excluding those of agriculture. In the Concurrent List, Entry 6 deals with transfer of property other than agricultural land, while Entry 7 deals with contracts not related to agricultural land. The only entry to not exclude agriculture is Entry 41 of the Concurrent List, which talks about “custody, management and disposal of property (including agricultural land) declared by law to be evacuee property.”[6]


Entry 33 reached its current state through the 3rd Amendment.[7] The Government of India Act, 1935 designated trade and commerce within the state and production, supply and distribution as matters under the provincial list.[8] However, during the emergency declared due to World War 2, the Centre acquired the power to enact laws on provincial list matters. Even though this emergency was lifted in April of 1946, the overreaching legislative powers of the Centre stayed on through the British parliament’s India (Central Government and Legislature) Act, 1946 to help the then Dominion governmentmanage during a time of scarcity of necessary commodities and social upheaval. In response to the circumstances, the Dominion government enacted the Essential Supplies (Temporary) Powers Act, 1946.[9] Both these laws and the powers they granted to the Union government were supposed to be functional for one year, however their duration was continually extended until the enactment of the Constitution. The framers had seen the merit in allowing Constitutional scope for the Central government to legislate on state list matters in exceptional circumstances during this period, and thereby inserted Article 369[10], which was supposed to exist for a period of five years till 26th January, 1955. The Essential Supplies (Temporary) Powers Act, 1946 was given the same deadline. However, due to the issues regarding the scarcity of foodstuffs and essential commodities subsisting post that timeframe, the first Parliament (who were in essence the framers themselves) thought it necessary to continue the powers given to the Centre and introduced the sub-entries to Entry 33 via the 3rd Amendment. Thus, we can discern that the framers designed the amended Entry 33 to fill in the gaps left by Article 369 along with the Essential Supplies (Temporary) Powers Act, 1946. It is intended to help the Centre assume legislative competence over these subjects in times of crises such as times of scarcity or of unreasonable price rise of essential commodities due to hoarding and black-marketing.[11] The intention to have Entry 33 function as a replacement for Article 369 is reflected in the Statement of Objects and Reasons of the bill which brought in the 3rd Amendment, which states –

“… It was not considered advisable that after article 369 lapsed to control the production, supply and distribution of some of these essential commodities. The bill seeks to amplify Entry 33 of the Concurrent List accordingly.”[12]


The interpretation of Entry 33 given by the Union government through the enactment of the 2020 Farm Acts looks at the entry in isolation, without considering the history and the socio-economical context in which it was employed and was intended to be employed in. This is an entirely unfounded interpretation using which the Central government has taken over what is wholly and exclusively a state matter. The act also attempts to escape the ambit of Entry 28 of List-II by referring to areas called “trade areas”. The acts however do not in any way define these “trade areas”, nor do they distinguish them from the markets and fairs mentioned under List-II, which are solely within the state government’s jurisdiction. These are obvious attempts to sidestep Constitutional provisions regarding the distribution of legislative powers.


The Supreme Court in ITC Ltd. v. Agricultural Produce Market[13], while striking down a central law establishing a Tobacco Board and upholdingvarious state laws, had interpreted the ‘markets and fairs’ in Entry 28 of the State List to hold that the states possess sole jurisdiction, and also held that despite the Union bringing the tobacco industry within its domain by way of Entry 52 of the Union List[14], activities involving only raw materials or activities not involving manufacture and production could not be covered under “industry”. The Court in Union of India v. Harbhajan Singh Dhillon[15] had also held that a law passed by Parliament can be declared unconstitutional only if it either violates fundamental rights, or if the subject matter of the law itself falls under the State List.Looking at the above discussion and judicial precedent, it is clear to see that the subject matter dealt with by the 2020 Farm Acts lie in the State List, and thus, the laws are wholly unconstitutional


Exemption of courts’ civil jurisdiction

The 2020 Farm Acts provide for a conciliatory method of dispute resolution, wherein if a dispute arises, the two parties can approach the Sub-Divisional Magistrate (‘SDM’) for conciliation proceedings.[16] The SDM then has to appoint a Conciliation Board, chaired by a person directly under their control and supervision. The rest of the board has to be comprised of members recommended by the two parties.[17] In case the parties are unable to reconcile their differences, the SDM may be approached to settle the dispute in a summary manner while following the principles of natural justice. An appeal to the SDM can be filed before the Collector or the Additional Collector within thirty days of the passing of the order, and the appeal itself must be dealt with within thirty days. The decrees of the SDM or the Collector in these scenarios shall have the force of decrees of a civil court.[18]


Both the Acts also explicitly bar the jurisdiction of civil courts regarding disputes arising from agreements governed by these legislations.[19] It is to be noted that the numerous acts of Parliament in the past have excluded the jurisdiction of civil courts, including the Income Tax Act, 1961, the Companies Act, 2013 etc. However, in each of these scenarios, the statutes have established quasi-judicial bodies/tribunals as a substitute, which through judicial pronouncements[20], are required to have judicial as well as technical members. The running theme through the Supreme Court’s judgements in cases such as L. Chandra Kumar v. Union of India[21] and R. Gandhi v. Union of India[22]is maintaining the separation of powers in alternative dispute resolution mechanisms that seek to replace a part of the courts’ jurisdiction, and ensuring that each party approaching such an institution gets a fair and principledtrial. Though these judgements were in reference to various tribunalisation statutes, the Constitutional sentiment expressed within them applies in the case of the mechanisms laid out by the Farm Acts as well, where disputes involving complex questions of fact and contract law are to be heard entirely by members of the executive, who may or may not be qualified to decide such matters.As held by the Court in West Bengal Central School Service Commission v. Abdul Halim[23], any decision by such a member of the executive would be open to appeal in the High Court only in case of a breach of fundamental or legal rights, but not in case of a wrongly decided matter regarding the contract or the merits of the case. Thus, this breach of separation of powers leaves the small farmers particularly vulnerable to exploitation at the hands of large private corporates without any form oversight over the contracts that is independent, qualified and judicial in nature. Thisviolates the essence of the Court’s decision in many cases, and cannot be held to be constitutional.


Conclusion

The enactment of the 2020 Farm Acts was as abrupt and controversial as the introduction of the ordinances that preceded them. It comes as no surprise then that the statutes are laden with issues on many fronts, with the potential to permanently damage farming communities across the country and spell out a future of corporate exploitation.When viewed through the lens of the Constitution, the Acts appear to manipulate a legislative entry for the current Union government’s benefit and convenience, while ignoring the history and Constitutional context that is necessary to view the entry for what it was intended by the framers to do. The enactments of these laws are blatantly outside the Union government’s legislative competence, and the adjoining concerns regarding exemption of judicial involvement in the dispute resolution mechanism without establishing a tribunal or a quasi-judicial body as an alternative institutional mechanism indicate clearly the unconstitutionality of these pieces of legislation. The currently pending challenges to the laws in the Supreme Court by various states such as Kerala[24] and Punjab[25] must therefore be decided in the favour of the states, in keeping with the sense of federalism envisioned by the framers when it comes to the subject of agriculture.

[1] The Constitution of India, 1950, Schedule VII, List II, State List, Item 14 (Agriculture). [2] The Constitution of India, 1950, Schedule VII, List II, State List, Item 28 (Markets and fairs). [3] The Constitution of India, 1950, Schedule VII, List III, Concurrent List, Item 33 (Trade and commerce). [4] The Constitution of India, 1950, Schedule VII, List II, State List, Item 24 (Industries). [5]Id. [6] The Constitution of India, 1950, Schedule VII, List III, Concurrent List, Item 41 (Evacuee Property). [7]The Constitution (Third Amendment) Act, 1954. [8] Government of India Act, 1935. [9] Essential Supplies (Temporary) Powers Act, 1946. [10]The Constitution of India, 1950, Art. 369. [11]The Wire, What Will the Legal Challenge to the Modi Government’s Farm Bills Look Like?,October 5, 2020, available at https://thewire.in/law/farm-bills-legal-challenge-constitution-seventh-schedule-supreme-court (Last visited on 10th November, 2020). [12]The Constitution (Third Amendment) Act, 1954, Statement of Objects and Reasons. [13] ITC Ltd. v. Agricultural Produce Market, Appeal (civil) 6453 of 2001. [14] The Constitution of India, 1950, Schedule VII, List I, Union List, Item 52 (Industries controlled by Parliament in public interest). [15] Union of India v. Harbhajan Singh Dhillon, 1972 AIR 1061. [16] S8, Farmers Produce Trade and Commerce (Promotion & Facilitation) Bill, 2020; S14, Farmers (Empowerment & Protection) Agreement on Price Assurance and Farm Services Bill, 2020. [17]Id. [18]Id. [19] S15, Farmers Produce Trade and Commerce (Promotion & Facilitation) Bill, 2020; S19, Farmers (Empowerment & Protection) Agreement on Price Assurance and Farm Services Bill, 2020. [20] Sampath Kumar v. Union of India, 1987 AIR 386. [21]L. Chandra Kumar v. Union of India, Appeal (Civil) 481 of 1980. [22]Union of India v. R. Gandhi,Civil Appeal No.3717 of 2005. [23] West Bengal Central School Service Commission v. Abdul Halim, Civil Appeal No.5824 of 2019. [24]LiveLaw, Kerala Govt Decides To Challenge Farm Bills In Supreme Court, September 23, 2020, available at https://ezproxy.nujs.ac.in:2123/news-updates/kerala-govt-decides-to-challenge-farm-bills-in-supreme-court-163393 (Last visited on 10th November, 2020). [25]Hindustan Times, ‘Will challenge farm bills in Supreme Court’: Punjab finance minister, September 25, 2020, available at https://www.hindustantimes.com/india-news/will-challenge-farm-bills-in-supreme-court-punjab-finance-minister/story-gOc8cITNq05QQuIdxRUo8M.html (Last visited on 10th November, 2020).