“Competent jurisdiction for defect in Seeds”

Introduction- Whenever a question arise regarding defect in Seeds, at that time there’s a  settled law on the point of jurisdiction as to where does that remedy lie, Seeds Act, 1966 (for short ‘The Seeds Act’) which is a special legislation enacted for regulating the quality of  Seeds and if any person have any grievance about quality of seeds then the remedy available to them is to either file an application under Section 10 of Seeds Act (To approach the concerned Seed Inspectors for taking action under Section 19 read with Section 21 of that Act) or under Section 12 of  Consumer protection Act,1986 whose main objective to provide better protection of the interest of the consumer and for that purpose to provide for better redressal, mechanism through which cheaper, easier, expeditious and effective redressal is made available to consumers. Now let us discussed Judiciary view in this regards. M/S National Seeds Corpn. Ltd. Vs M.Madhusudhan Reddy & Anr. Is a well settled law where Judiciary completely observe and settled that which is the competent jurisdiction for detect in Seeds. Detailed case analysis given below:

Factual Matrix- Appellant - M/s. National Seeds Corporation Ltd. (NSCL) is a Government of India company. Its main functions are to arrange for production of quality seeds of different varieties in the farms of registered growers and supply the same to the farmers. The respondents own lands in different districts of Andhra Pradesh and are engaged in agriculture/seed production. They filed complaints with the allegation that they had suffered loss due to failure of the crops/less yield because the seeds sold/supplied by the appellant were defective. District Consumer Disputes Redressal Forums, Kurnool, Mehboob Nagar, Guntur, Khamman and Kakinada allowed the complaints and awarded compensation to the respondents. The appeals and the revisions filed by the appellant were dismissed by the Andhra Pradesh State Consumer Disputes Redressal Commission (for short, `the State Commission') and the National Consumer Disputes Redressal Commission respectively.

Grounds for challenging the order of National commission, State commission, District Forum under M/S National Seeds Corpn. Ltd. Vs M.Madhusudhan Reddy & Anr. Case-

Order of the National Commission, which also implies its challenge to the orders of the State Commission and the District Forums mainly on the following grounds:

1.      The District Forums did not have the jurisdiction to entertain complaints filed by the respondents because the issues relating to the quality of seeds are governed by the provisions contained in the Seeds Act, 1966 (for short, ‘the Seeds Act) and any complaint about the sale or supply of defective seeds can be filed only under the Seeds Act and not under the Consumer Protection Act, 1986 (for short, `the Consumer Act ').

2.    Another issue raised in this case was about the arbitration clause in the agreement and it was contested by the defending party that matter can be heard by the arbitration only.

3.    The District Forums could not have adjudicated upon the complaints filed by the respondents and awarded compensation to them without following the procedure prescribed under Section 13(1)(c) of the Consumer Act.

4.      The growers of seeds, who had entered into agreements with it, are not covered by the definition of `consumer' under Section 2(d) of the Consumer Act because they had purchased the seeds for commercial purpose.

Relevant Provisions- 

Ø We shall first consider the question whether the Seeds Act is a special legislation vis-`-vis the Consumer Act and the District Forums could not have entertained and decided the complaints filed by the respondents because they could seeks redressal of their grievance regarding the quality of seeds sold by the appellant by lodging complaint with the concerned Seed Inspectors with a request for taking action under Section 19 read with Section 21 of the Seeds Act.

“The Seeds Act is a special legislation enacted for regulating the quality of Seeds and if any person had any grievance about quality of seeds then the remedy available to them is to either file an application under Section 10 of Seeds Act or to approach the concerned Seed Inspectors for taking action under Section 19 read with Section 21 of that Act.”

According to Section 10 of the Seeds Act, 1966- Certification agency may also revoked license granted to certificate holder on following two grounds when-

(a)  The certificate granted by it under section 9 has been obtained by misrepresentation as to an essential fact; or 

(b) The holder of the certificate has, without reasonable cause, failed to comply with the conditions subject to which the certificate has been granted.

According to Section 19 of the Seeds Act, 1966- If any person contravenes any provision of this Act or any rule made thereunder; or prevents a Seed Inspector from taking sample or prevents a Seed Inspector from exercising any other power conferred on him by or under this Act, then he shall be liable for punishment with fine which may extend to five hundred rupees, and in the event of such person having been previously convicted of an offence under this section, with imprisonment for a term which may extend to six months, or with fine which may extend to one thousand rupees, or with both.

According to Section 21 of the Seeds Act, 1966- Where an offence under this Act has been committed by a company, every person who at the time the offence was committed was in charge of, and was responsible to, the company for the conduct of the business of the company, as well as the company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly: Provided that nothing contained in this sub-section shall render any such person liable to any punishment under this Act if he proves that the offence was committed without his knowledge and that he exercised all due diligence to prevent the commission of such offence.

According to Section 12 of the Consumer Protection Act, 1986- A person who is consumer within the definition and meaning under section 2(d) of the Consumer Protection, Act can file the complaint to Consumer Forums as per the manner prescribed under Section 12 of Consumer Protection Act, 1986.

Supreme Court held on the point:

Supreme Court while dealing with both the above objections referred to number of judgements by the apex court including Fair Air Engineers Pvt. Ltd. And Anr. V. N.K Modi reported in (1996) 6 SCC 385, State of Karnataka V. Vishwabharthi House Building Coop. Society and Others reported in (2003) 2 SCC 412 and Indochem Electronic and Another V. Additional Collector of Customs, A.P reported in (2006) 3 SCC 721. It has been observed by the Supreme Court in all these cases that the Courts have to consider that the Consumer Protection Act, 1986 confers additional jurisdiction upon Consumer Forums and not their exclusion.

 

Further, Seeds Act is totally silent on the issue of payment of compensation for the loss of crop on account of use of defective Seeds supplied by the appellant and others who may obtain certificate under Section 9 of Seeds Act. A farmer who may suffer loss of crop due to defective seeds can approach the Seed Inspector and make a request for prosecution of the person from whom he purchased the seeds.

Further, the salient features of the Consumer Protection Bill were to promote and protect the rights of consumers.From the Statement of Objects and Reasons and the scheme of the 1986 Act is to provide for the better protection of the interest of the consumers and for the purpose to provide for better redressal, mechanism through which cheaper, easier, expeditious and effective redressal is made available to consumers.

Ø The next question which needs consideration is whether the growers of seeds were not entitled to file complaint under the Consumer Act and the only remedy available to them for the alleged breach of the terms of agreement was to apply for arbitration.

“In view of the arbitration clause contained in the agreement under Section 8 of the Arbitration and Conciliation Act, 1996 entered between the appellant and the growers, the latter could have applied for arbitration and Consumer Forums should have non-suited in the view of Section 8 of the Arbitration and Conciliation Act, 1996.”

According to Section 8 of the Arbitration and Conciliation Act, 1996- Court has a power to refer parties to arbitration where there is an arbitration agreement.

     Supreme Court held on the point: 

 

Supreme Court rejected the argument extended by the respondent and relied upon the views expressed by the apex court in its earlier orders in the matter of Secretary, Thirumurugan Cooperative Agricultural Credit Society v. M. Lalitha (2004) 1 SCC 305, wherein it was held that the existence of Arbitration Clause in agreement is no bar to the entertainment of the complaint by the Consumer Forum, which is an additional remedy under the Consumer Protection Act, 1986. The remedy provided under Consumer Protection Act, 1986 is in addition to the provisions of any other law unless there is a clear bar.   

Ø We shall now deal with the question whether the District Forum committed a jurisdictional error by awarding compensation to the respondents without complying with the procedure prescribed under Section 13(1)(C).

According to Section 13(1)(c) in the Consumer Protection Act, 1986- where the complaint alleges a defect in the goods which cannot be determined without proper analysis or test of the goods, the District Forum shall obtain a sample of the goods from the complainant, seal it and authenticate it in the manner prescribed and refer the sample so sealed to the appropriate laboratory along with a direction that such laboratory make an analysis or test, whichever may be necessary, with a view to finding out whether such goods suffer from any defect alleged in the complaint or from any other defect and to report its findings thereon to the District Forum within a period of forty-five days of the receipt of the reference or within such extended period as may be granted by the District Forum.

Supreme Court held on the point:

While checking with the facts of the case, the reports of the agricultural experts produced before the District Forum unmistakably revealed that the crops had failed because of defective seeds/foundation seeds. After examining the reports the District Forum felt satisfied that the seeds were defective and this is the reason why the complainants were not called upon to provide samples of the seeds for getting the same analysed/ tested in an appropriate laboratory. In our view, the procedure adopted by the District Forum was in no way contrary to Section 13(1)(C) of the Consumer Act and the appellant cannot seek annulment of well-reasoned orders passed by three Consumer Forum on the specious ground that the procedure prescribed under Section 13(1)(c) of the Consumer Act had not been followed. Hence it is observed by the court that farmer is not expected to keep some samples with the presumption that they may need the same for legal battle. The necessary things to be considered are the inspection about the quality of the soil and method adopted by the farmer while sowing the seeds which were found satisfactory.    

Ø The growers of seeds, who had entered into agreements with it, are not covered by the definition of `consumer' under Section 2(d) of the Consumer Act because they had purchased the seeds for commercial purpose.

According to Section 2(d) of the Consumer Protection Act, 1986- “Consumer” means any person who buys any goods or any services for a consideration which has been paid or promised or partly paid and partly promised, or under any system of deferred payment and includes any user of such goods other than the person who buys such goods for consideration paid or promised or partly paid or partly promised, or under any system of deferred payment, when such use is made with the approval of such person, but does not include a person who obtains such goods for resale or for any commercial purpose; or

Explanation-`commercial purpose' does not include use by a consumer, who buys the goods exclusively for the purpose of earning his livelihood, by means of self-employment.

Supreme Court held on the point:

Respondents have raised the question of commercial purpose of the farmers stating that crops were meant re-sale. The actual facts found are that the appellant had selected a set of farmers in the area for growing seeds on their behalf. After entering into agreements with the selected farmers, the appellant supplied foundation seeds to them for a price, with an assurance that within few months they will be able to earn profit. The seeds sown under the supervision of the expert deputed by the appellant. The entire crop was to be purchased by the appellant. The agreements entered into between the appellant and the growers clearly postulated supply of the foundation seeds by the appellant with an assurance that the crop will be purchased by it. It is neither the pleaded case of the appellant nor any evidence was produced before any of the Consumer Forums that the growers had the freedom to sell the seeds in the open market or to any person other than the appellant. Therefore, it is not possible to take the view that the growers had purchased the seeds for resale or for any commercial purpose and they are excluded from the definition of the term `consumer'. Hence on this very point also, court rejected the argument of respondents.

Conclusion- Since, in the absence of any clear provision in Seeds Act for compensating the farmer/consumer for his loss, it can be concluded that consumer can move in Consumer Court in addition to what protection is provided under Seeds Act. The scheme of the 1986 Act is to provide for the better protection of the interest of the consumers and for the purpose to provide for better redressal, mechanism through which cheaper, easier, expeditious and effective redressal is made available to consumers. 

DISCLAIMER- This article is based on the understanding and interpretation of the author and should not be construed as legal advice. 

Regards,

PRIYANKA JOSHI

(Advocate)

Legal Consultant

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