Over the previous two weeks, we have
witnessed nationwide protests from farmers – against the three agriculture
reform Bills passed by Parliament. The Bill that has led to the maximum amount
of consternation is the Farmers’
Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020 (‘the Trade
and Commerce Bill’). This Bill aims to do away with the system where farmers
can sell their produce only at mandis – which are specified markets regulated
by the Agricultural Produce Marketing Committee (APMC) laws of each State. The
Bill removes this monopoly of the APMC-regulated mandis, and allows the
farmers to sell their produce directly to private players.
Farmers fear that this Bill will result
in further losses for them – as they will not receive the Minimum Support Price
(MSP) guaranteed by the Government if they are forced to sell their produce to
private players. In States such as Punjab and Haryana, small and marginal
farmers feel that they shall lose out on the support system provided to them by
the traders, who act as intermediaries. This, according to them, shall leave
them in a situation where they will have no assurance of a stable selling price
for their produce – and they will be forced to bargain with big corporates.
Opposition Parties demanded
the incorporation of specific provisions in the Trade and Commerce Bill to
address the farmers’ concerns. This request was not taken on board, as the Bill
was rushed through Both Houses of Parliament. Members of the Opposition also
hinted at how the Trade and Commerce Bill may go against India’s federal
structure – as making laws relating to agriculture falls within the legislative
power of the State Governments. We shall explore and discuss this claim below –
and examine whether the Central Government has the power to regulate agricultural
markets.
Legislative Powers of the Centre and the
States
Under Article 246 and the Seventh Schedule of the
Indian Constitution, law-making powers are divided between the Centre and the
States. The Union List (List 1) consists of 97 subject matters over which the
Centre has the exclusive power to frame laws. The State List (List 2) has 66
subject-matters which fall within the exclusive domain of the States. For entries
in the Concurrent List (List 3) – laws can be made by both the Centre and the
States. If there is a conflict between a Central and State law for subject
matters that fall within the ambit of the Concurrent List, Article 254 of the
Constitution steps in. Article 254(1) provides that in such a situation, the provisions
of the Central law shall prevail. Under Article 254(2), a State law can prevail
over a Central Law if the assent of the President (who represents the Central
Government) is received.
The legislative power to regulate
agricultural markets
Entry 14 of the State List deals with ‘agriculture’,
and Entry 28 deals with ‘markets and fairs’. Making laws relating to
agriculture and markets hence falls within the legislative powers of the State
Governments. The APMC legislation made by every State falls within the ambit of
these entries – as they regulate the functioning of agricultural markets, which
are commonly known as mandis.
This begs the question – how did the
Centre justify passing a law that also deals with the sale of agricultural
produce? The Centre made reference to Entry 33(b) of the Concurrent List, which
deals with – “Trade and commerce in the production, supply and
distribution of foodstuffs”. As Entry 33(b) deals with foodstuffs, it overlaps
and conflicts to a certain extent with Entries 14 and 28 of the State List,
which deals with agriculture and markets.
While the Centre has not referred to
this overlap and possible conflict of legislative powers, it has taken note of
the wording of Entry 33(b) - and has cleverly worded the Bill as the Trade and
Commerce (Promotion and Facilitation) Bill. However, the mere similarity between
the wording of Entry 33(b) and the name of the Bill is not sufficient to bring it
within the ambit of the Centre’s legislative powers. To resolve such situations
where there is an overlap and conflict between the legislative powers of the
Centre and the States, two principles have been laid down by the Supreme Court.
The first principle is the doctrine of
harmonious construction – which states that the overlapping entries should be harmoniously
construed. The second principle, which is directly applicable here, is the
doctrine of ‘pith and substance’. Under this doctrine, an overlap or conflict
in the legislative powers of the Centre and the States should be resolved by examining
the true nature and objective of the legislation. Once this is determined, any
incidental encroachment on other subject matters shall be permissible – and shall
not lead to the invalidation of the statute.
This doctrine of ‘pith and substance’
can be applied to argue that the Trade and Commerce Bill infringes on the power
of State Governments to regulate agricultural markets. Using this doctrine, the State Governments can
argue that the true nature of the Trade and Commerce Bill is to regulate the
functioning of agricultural markets - as the Bill nullifies the exclusive
powers granted to the State APMC markets. Although the Preamble of the Bill talks
about giving freedom to the farmers to sell their produce, it effectively infringes
on the powers of the State APMC markets. This is evident from provisions such
as Section 6, which forbids the State Governments from levying market fee, cess
or any other levy through their State APMC Acts.
On the other hand, if this Bill is challenged
in the Supreme Court, the Centre can contend that by virtue of Entry 33(b) [that
deals with trade and commerce in the production, supply and distribution of
foodstuffs] of the Concurrent List, it has the legislative power to give farmers
the freedom to sell their produce beyond the confines of the APMC market. The
Centre can argue that the true nature of the Bill is to give farmers the flexibility
in trading with their produce, and the encroachment of the State List is of an
incidental nature. There are hence equally persuasive arguments from both
sides, and a legal challenge before the Supreme Court can go either way.
But, the State Governments may have one
more option before them – through which they could overcome those provisions of
the Bill that they construe to be against the interests of the farmers. The
State Governments could amend their APMC laws in a manner that would nullify
the provisions of the Trade and Commerce Bill. This may be constitutionally permissible,
as Entry 14 and Entry 28 of the State List grants the State Governments with
the legislative power to regulate agricultural markets. The Punjab Government
is already considering
this option, which in its view, shall ensure that private players do not
exploit farmers.
If States were to amend their APMC laws
to nullify the implementation of the Trade and Commerce Bill, the Centre may
also not be able to take recourse to Article 254 of the Constitution. This is because
Article 254 is applicable only when the laws of both the Centre and the State
deal with a subject-matter present in the Concurrent List. Hence, as long as
the States are able to establish that their amendments fall within their
legislative power to regulate agricultural markets – their laws shall not be struck
down on the ground that they are repugnant to the Trade and Commerce Bill.
As the Constitution gives sufficient leeway to the State Governments in this situation – there is a definite possibility that State Governments may amend their APMC laws to nullify the contentious provisions of the Trade and Commerce Bill. Such a possibility could have been avoided at the outset – if the Centre had taken all stakeholders on board before framing a law that possibly infringes on the State’s legislative powers. Irrespective of which way a possible legal challenge may go, this situation highlights the perils of bypassing stakeholder consultations before law-making, through which possible conflicts may be resolved in Parliament itself, rather than leaving it to the judiciary.
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