Case: M/S NANDAN BIOMATRIX LTD Vs. S. AMBIKA DEVI &amp; ORS.

2. The brief facts leading to this appeal are as follows:2.1 The complainant (the Respondent herein) is a small landholder who responded to the advertisements issued by the Appellant, a seed company, in 2003, regarding buyback of safed musli, a medicinal crop, at attractive prices. She entered into a tripartite agreement dated 15.01.2004 with the Appellant and its franchisee M/s Herbz India. As per the agreement, the Respondent purchased 750 kgs of wet musli for sowing from the Appellant, at the rate of Rs. 400/- per kg, and cultivated the same in her land. The Appellant was to buy back the produce at a minimum price of Rs. 1,000/- per kg from the Respondent. The Respondent lodged a consumer complaint alleging negligence and breach of contract on the part of the Appellant on the ground that the Appellant failed to buy back her produce, leading to the destruction of the greater part of the crop2.2 The District Forum dismissed the complaint, and held that the same was not maintainable since the Respondent was not a consumer within the meaning of the Consumer Protection Act, 1986 ( the 1986 Act). On appeal by the Respondent, the State Commission set aside the order passed by the District Forum, holding that the Respondent was a consumer under the 1986 Act, and remanded the matter to the District Forum for disposal on merits. It is this order which was impugned before the National Commission by way of a revision petition filed by the Appellant2.3 The National Commission upheld the finding of the State Commission, holding that the covenants entered into between the parties were in the nature of both sale of product and rendering of service, since the Appellant had agreed to provide wet musli for growing to the Respondent, supplemented by technical support and guidance from its franchisee, and had further agreed to insure the crop at additional cost. Additionally, noting that the Respondent was a small landholder owning about 1-1.5 acres of land, who had started cultivation of musli for eking out a livelihood for herself, the National Commission held that it could not be said that the agreement was entered into for the commercial purpose of the Respondent. The Revision Petition was dismissed with a cost of Rs. 2,500/- imposed on the Appellant, payable to the Respondent2.4 The instant appeal has been filed against the above order of the National Commission.

Reasoning:
9. In the matter on hand, though the Appellant has sought to project that the Respondent were cultivating musli on a large scale and with a profit motive, we find ourselves unable to conclude that the cultivation being undertaken was for a purpose other than for eking out a livelihood through self- employment9.1 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- employment9.2 Contrary to what the Appellant has sought to impress upon us, we find that cases such as these cannot be compared to activities undertaken by industrial concerns, for example, where the employment of raw materials to produce finished goods for sale has also been held by this Court to amount to resale or being for a commercial purpose [see Rajeev Metal Works v. Mineral & Metal Trading Corporation of India Ltd., (1996) 9 SCC 422 ]9.3 Indeed, in the matter on hand, the Respondent is a housewife who has undertaken agricultural activity on land of 1-1.5 acres for the purpose of increasing her household income, and would perhaps not have undertaken the growing of musli if the Appellant had not assured a profitable price for buyback of the crop. Of course, we cannot base our conclusion on any surmise or conjecture in this regard. At the same time, in our opinion, the fact that such profitable price was guaranteed by the Appellant cannot now be relied upon to argue that the activity was undertaken by the Respondent for a commercial purpose, so as to exclude the same from the purview of the 1986 Act10. We particularly find the argument untenable that the tripartite agreement would amount to resale by virtue of containing a buyback clause, and would hence exclude the Respondent from the ambit of the definition of consumer10.1 It is amply evident from the above that 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. Thus, even in the instant case, the fact that there was a buyback agreement for the musli crop would not bring the Respondent outside the purview of the definition of consumer by rendering the buyback arrangement a resale transaction or being for a commercial purpose. We hasten to emphasise that the fact situation herein diverges from Madhusudan to the extent that in the instant case, the Respondent had the freedom to sell her produce on the open market if she was able to obtain a better price. However, as we have already mentioned, in our opinion, this aspect would not take away from the conclusion that the Respondent had entered into an agreement for growing the musli crop for the purpose of earning a livelihood, since an agriculturist would always have to sell his produce in order to earn his livelihood11. It is pertinent to note at this juncture that the Appellant has sought to rely on several decisions rendered by the National Commission in order to argue that the Respondent cannot be regarded as a consumer under the 1986 Act, and we find it necessary to advert to the same below12. The Appellant has referred to Synco Textiles (supra), a case decided before the 1993 amendment, where the National Commission opined that large scale commercial activities would be excluded from the purview of the definition ofIt was held that a person purchasing a generator used for generating electricity, to be used in an industrial concern producing oil on a large scale, would not amount to a consumer, since the generator was being used for an activity directly intended to generate profit. This view was upheld in Laxmi Engineering (supra) by this Court, and we see no reason to depart from the same. At the same time, the said decision cannot come to the rescue of the Appellant as the facts in Synco clearly indicated that the generator purchased was employed for production that was geared for a commercial purpose, and had nothing to do with the agricultural sector and the status of a farmer as a consumer13. However, the same cannot be said with regard to the decision in Sakthi Sugars Ltd., Orissa v. Sridhar Sahoo, II (1999) CPJ 4 (NC). In this case, the respondent farmer had entered into an agreement with the appellant corporation for financial assistance, agreeing to sell the sugarcane crop grown by him to it. The corporation, in turn, had agreed to help the farmer get a loan from specified sources for a diesel pump set and dug-well. In 1991-92, the farmer obtained inadequate output in his crop. In his complaint, he alleged that this was because he was unable to irrigate his field properly because of the lack of a dug-well and pump set, and that he had been unable to procure a loan in this regard because of the failure of the appellant to deposit margin money for the sameThe Appellant in the instant case has referred to this reasoning adopted by the National Commission to substantiate its case. However, for reasons discussed below, we are of the considered view that the proposition of law expressed in Sakthi Sugars is incorrect13.2 To begin with, a perusal of the decision in Sankar Reddy, which was relied upon in Sakthi Sugars, shows that in that case, the National Commission had held that a farmer who was selling his produce through an intermediary was not a consumer vis-à-vis such intermediary. The complainant therein was a horticulturist who was selling his produce to an intermediary for further sale. One of the consignments had been rejected by the intermediary for non-adherence with standards pertaining to quality and packaging, but in view of the perishable nature of the goods, the complainant requested the intermediary for help in disposal, who arranged for the sale of the consignment through an authorized commission agent for a specified price. The complaint was filed alleging that the intermediary had failed to pay the complainant the entire amount promised. On these facts, the National Commission had held that while obliging with the request of the complainant, the intermediary was acting only as an agent, and that too only in order to minimize the loss that the complainant would have suffered if the consignment remained unsold, without receiving any consideration. Thus, it could not be said that the intermediary had undertaken to render a service for consideration13.3 It is relevant to note that from the order of the National Commission, no material is forthcoming to the effect that the parties had entered into an agreement whereby the intermediary agreed to render a service to the farmers regarding the further sale of their produce. Additionally, the National Commission found that even if it was presumed that the intermediary had purchased goods in terms of an agreement between the parties, the fact remained that in such transaction, it was the farmer who was a seller, and could not be deemed to be a consumer under the 1986 Act13.4 It is evident that in Sakthi Sugars, there was a clear agreement between the farmer and the corporation for the latter to render financial assistance by way of help in procuring a loan, which amounted to the rendering of a service, a deficiency in which would give rise to a cause of action under the 1986 Act. Thus, the farmer was not purely a seller and was also availing of services from the corporation. In this respect, reliance on Sankar Reddy may not have been proper13.5 We also find that the view that a consumer dispute may not arise out of a contractual arrangement is erroneous since it falls foul of the clear stipulation under Section 2(f) of the 1986 Act that a deficiency in service may arise out of any fault, imperfection, shortcoming or inadequacy in the quality, nature and manner of performance which is required to be maintained by or under any law for the time being in force or has been undertaken to be performed by a person in pursuance of a contract or otherwise in relation to any serviceWe find that this decision is clearly distinguishable since it is evident from the facts therein that the trees were being grown for a commercial purpose, which is not the case here15.2 As we have already noticed, we find ourselves unable to agree with the view taken in Sakthi Sugars. Moreover, for reasons expressed already, and particularly in view of the decision of this Court in Madhusudan (supra), we find that the National Commission in Prithviraj erred in holding that entering into a buyback transaction would preclude a farmer from taking benefit as a consumer under the 1986 Act16.3 The summary redressal available to the farmer under the 1986 Act may go a small but crucial way to provide instant relief in a sector which is already facing stress on several counts. Undoubtedly, farmers faced with grievances against seed companies, may, in suitable cases, opt for other remedies such as a civil suit, relief under the Seeds Act, 1966 (the reform of which has been under process for some time), and so on. But excluding such farmers from the purview of the 1986 Act would be a complete mockery of the object and purpose of the statute16.4 We are alarmed by the growing trend amongst seed companies of engaging in frivolous litigation with farmers, virtually defeating the purpose of speedy redressal envisaged under 1986 Act. In the instant case, the Appellant contested the farmers claims before consumer fora on the preliminary point of maintainability right up to this Court, compelling small agriculturists such as the Respondents to spend unnecessarily on litigation in order to secure relief for themselves, amounting to a sum which probably exceeds even the quantum of relief claimed. This tendency to resist even the smallest of claims on any ground possible, by exploiting the relatively greater capacity of seed companies to litigate for long periods of time, amounts to little more than harassment of agriculturists. To discourage such conduct in the future by the Appellant as well as other seed corporations, we deem it fit to impose costs on the Appellant