Farmers vs Farm Laws: MSP already a legal right

Even if govt does not make MSP law, the Constitution, contract law require courts to intervene to protect the weaker party in a contract

The ongoing farmers’ protests have been around a demand for enacting a stringent special law mandating Minimum Support Prices (MSP) for every crop in addition to the repeal of the three controversial farm laws passed by Parliament last year. The farmers have alleged that these farm laws would sound the death knell for 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 existing Indian laws against the abuse and unfair practices of corporates. We argue that even if no law mandating MSP is enacted, the courts would not be deprived of the power to protect farmers against any unfair trade practices by corporates and the Constitution indeed obliges them to do so.

A legal right under Indian Contract Act

The drafters of the Indian Contract Act had presciently anticipated that there might be numerous situations in which the big corporates would have disproportionate bargaining power and would endeavour to obtain unfair bargains from the weaker sections of the public. Thus, the Indian Contract Act, 1872, by virtue of Section 19A gives an option to the weaker party in the contract to set aside the contract at his will if his consent was induced by ‘undue influence’ at the time of making that contract. 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 other”.

The Supreme Court of India has held that disparity in the economic strength of the contracting parties results in unequal bargaining power and thus leads to the abuse of the weaker party by the stronger party. In Delhi Transport Corporation vs DTC Mazdoor Congress, the SC observed that the disparity in the economic strength of the contracting parties results in 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’s obvious that the position of corporates, many headed by billionaires, and the position of farmers, facing distress and a suicide crisis, 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 situations where a stronger party buys a crop from a weaker party at a price below the Minimum Support Price (MSP). Selling his crop below the MSP per se shows that the farmer had no alternative available at the time of making the contract. Thus, the consent of the farmer would be considered as consent induced under ‘undue influence’. The farmer would be then given the option to rescind the contract and simultaneously take compensation for the losses incurred due to that contract. However, here, the MSP would not be a price fixed by the government on that particular crop. Rather, it would be a rate independently determined by the court above which the farmer would have reaped a profit.

Is it only a matter of public policy?

The question now arises is whether it’s a matter of public policy and thus, a matter not to be decided by the courts. Public policy is not a policy of any particular government. 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 has expressly held that “in any case which is not covered by authority, courts should be guided by the Preamble to the Constitution and the principles underlying the Fundamental Rights and the Directive Principles.” Thus, the courts as parens patriae cannot leave this as a matter to be decided only by government even if there is no specific law on MSP. The courts are duty-bound to decide upon the transactions between corporates and farmers that are against public policy.

A constitutional right under Article 21

It has been held several times that the ‘right to life’ guaranteed under Article 21 of the Constitution includes the ‘right to livelihood’. The right to life takes within itself the bare necessities of life such as clothing, shelter, adequate nutrition, etc. It needs no proof that it has become extremely difficult for farmers to earn their livelihood. Thus, forcing the farmer to sell below MSP leads to denial of their ‘right to livelihood’ guaranteed under Article 21 of the Constitution. Further, Article 23 of the Constitution protects citizens against exploitation by both State and private citizens. The Supreme Court has held that ‘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”.

Further, Article 38 and Article 39(c), collectively known as principles of social security and social justice, direct the State to minimise social, economic and justice inequalities amongst its citizens. Article 43 of the Constitution directs the State to secure a “living wage” to the farmers. These provisions, when read collectively, compel the courts to protect the right of the farmers to sell at a favourable price.

Obligation upon courts to intervene

If the constitutional courts intervene to issue guidelines to protect the weaker section of society in the matter of farmers and corporates, it won’t be the first time that it does so. The Supreme Court has held in the case of Vishaka vs State of Rajasthan that when the conduct of one section of society results in the violation of the fundamental rights of another section of 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.” If any guidelines are issued by the constitutional courts in the matter of the farmers’ demand for MSP, they would act as the binding law on future transactions between corporates and farmers.

Thus, the absence of a law mandating MSP does not mean that corporates would be able to take advantage of distressed farmers. The courts are not deprived of the powers granted to them under the Indian Contract Act, 1872, and the Constitution, and they are in fact duty-bound to protect the farmers’ right to sell their crops at favourable prices.

(Mohit Rana is an advocate in the Delhi High Court; Ravi Singh Chhikara is a law student at Delhi University)