Kerala High Court Terms Delay In Paddy Payment To Farmers A 'Sorry State Of Affairs,' Directs Swift Action

Justice Devan Ramachandran said that the farmers cannot be put to any further prejudice solely because the Supplyco has not been able to garner resources to comply with its contractual commitments.

The court also said that there was little doubt that it was the contractual obligation of the Supplyco to pay fully under the paddy procurement scheme.

".. and hence it is their liability to ensure that every petitioner, as also other farmers, are paid their full procurement consideration at the earliest, especially when the agreed time frame fixed for such purpose has concededly expired," it said.

The directions and observations of the court came on a batch of pleas moved by farmers claiming that even though the paddy was procured from them in April-May this year, the full amount under the procurement scheme has not yet been disbursed to them.

They also said that they were being asked to go to various banks to sign loan applications and security documents before their claims are honoured.

The lawyer for Supplyco, on the other hand, told the court that as per the agreed terms between the parties relating to the procurement of paddy, all amounts due to the farmers, up to the extent of Rs 50,000, were to be paid immediately.

The amounts exceeding the said figure would be paid in two tranches -- initially 28 per cent credited directly into their accounts and the balance, on the ‘Supplyco’ obtaining a loan, as per the instructions of the government, from a designated bank, under a tripartite agreement between them for such purpose, the lawyer said.

He also conceded that except the 28 per cent of the procurement price, qua those persons to whom more than Rs 50,000 was to be paid, the balance was yet to be disbursed.

The lawyer said the reason for the delay in payment of the balance amounts was due to certain administrative difficulties faced by the bank which was now financing the scheme, under a tripartite agreement entered into between the farmers, ‘Supplyco’ and the government.

The Supplyco's lawyer further said that sanction has already been obtained from the bank for disbursement of the eligible sums to the petitioners (farmers) and, therefore, if they were to approach them (banks) appropriately, the same would be credited into their accounts directly.

It is solely for this that the farmers have been requested to execute necessary receipts, he said and added that they will not be burdened by any obligation to repay to the bank the amounts paid to them for paddy procurement.

While the court said that the explanation given by Supplyco's lawyer "clears the air to some extent", it also pointed out that substantial amounts were still due to the farmers.

"Surely, this is a very sorry state of affairs because, it is also admitted by the standing counsel for the Supplyco – to a pointed question from this Court – that, as per the procurement scheme, the balance amounts ought to have reached the accounts of the petitioners and other farmers within 60 days of procurement," the court said.

It further said that the farmers cannot be put to trouble if the financing bank was delaying the grant of loan to the Supplyco under the tripartite agreement.

"The shifting of any such responsibility onto the shoulders of the farmers is uncharitable and, in any case, wholly impermissible," the court said.

"In the afore circumstances, I allow these writ petitions, by directing the Supplyco to ensure that all eligible amounts to the petitioners (farmers), after deducting the payments made to them earlier, are disbursed to them as expeditiously as is possible, but not later than one month from the date of receipt of a copy of this judgment," Justice Ramachandran said in his order dated September 20.

The court also said that it was up to the farmers to decide whether they want to go to the bank to get their balance payments.

"But if any of them (petitioners) finds it difficult or unable to do so – for any reason whatsoever – the Supplyco will make sure that the payment is effected to them in terms of the afore directions," the court said.

It listed the matter on October 31 to verify whether Supplyco had complied with the directions.

The court also directed Supplyco to file an action taken report by then.