The tremors of the world’s largest year-long farmers’ protest against three agricultural laws including Agricultural Produce Marketing Committee (APMC) law on the borders of Delhi has reached Bihar as well. Amid Bihar’s assembly election process, the political parties in the INDIA alliance and the grand alliance in Bihar have promised “Restoration of APMC Act’ and reactivation of the Agricultural Market Committees in their 32-page long joint manifesto. It assumes huge political significance in the aftermath of the enactment of the Farm Laws Repeal Act, 2021. It creates a compelling logic for the repeal of the the Bihar Agriculture Produce Market (Repeal) Act, 2006 as well.
Disregarding the constitutional provisions, the Bihar Agriculture Produce Market (Repeal) Act, was enacted in the year 2006. Under the influence of World Bank Group, all marketing committees and marketing boards in the state were dissolved and dismantled abruptly without any study. After the repeal of the Agriculture Produce Market Committee (APMC) law, no license is required nor could any fee be charged for marketing of agricultural produce in the state. In the absence of government regulation of the agricultural market has been adversely affected . In the aftermath of the repeal of the three farm laws by the parliament, the compelling need to revive the old regulatory marketing framework has emerged especially after the Karnataka Agricultural Produce Marketing (Regulation and Development) (Amendment) Act, 2023 received the assent of the Governor on March 6, 2024. It was published in the Karnataka Gazette Extra-ordinary on the March 7, 2024. It showed that Karnataka government responded to the year-long protest against the three controversial union agricultural laws. This Karnataka law paves the way for recall and re-introduction of the original Bihar Agriculture Produce Market Act, 1960.
Presenting a list of farmers who had died during the year-long protest against the three agricultural laws, during Zero Hour in the Lok Sabha on December 7, 2021, Rahul Gandhi had demanded that the families of the farmers be provided compensation. He said, “The country knows that during the farmers’ movement, 700 farmers were martyred. The PM (Prime Minister) apologised to the farmers and accepted his mistake. The Agriculture Minister was asked about the number of farmers who were martyred during the movement, and he had said he has no data”. Earlier, on July 11, 2019, he had raised the issue of farmers’ distress in the Lok Sabha saying, “The Prime Minister also made certain commitments five years ago to the farmers of this country on prices, farm loan and other issues. …So, there is a terrible situation of farmers in this country. The Prime Minister has made commitments to these farmers. So, I would request the Government of India to fulfill these commitments.”
Responding to some of these concerns, Karnataka government brought back the public institutions which can regulate the marketing of the agricultural produce to address the concerns of the farmers. The Karnataka Bill’s statement of reasons and objections stated that it is reverting to the old 1966 legislation. The amendment in 2020 by the previous government led to the exploitation of farmers by traders “since there is no regulatory mechanism for controlling the same”.
The introduction of Karnataka Agricultural Produce Marketing (Regulation and Development) (Amendment) Act, 2023 is related to the Bihar Agriculture Produce Market (Repealing) Act, 2006. The former was tabled in the Karnataka Legislative Assembly during the period of 14th session of the 15th Assembly held during 3-14 July 2023. The latter was introduced in the Bihar Legislative Assembly on August 10, 2006 during the tenure of Sri Krishna Sinha led Congress government. The repeal of the Bihar Agriculture Produce Market Act, 1960 which created the agricultural produce market committee (APMC) mandi system in the State negated the achievements of farmers movement during 1855-1928 under the leadership of freedom fighters like Swami Sahajanand Saraswati. The 1960 Act which received the assent of the Governor Zakir Husain on August 6, 1960 was originally introduced in 1939 in the Bihar legislature during the tenure of Sri Krishna Sinha, the first Chief Minister. After Governor’s assent, it was published in the Bihar Gazette Extra-ordinary on September 10, 1960.
The repeal of the Bihar APMC law ended up questioning the wisdom of the recommendations of the Royal Commission on Agriculture, the legislature and the judiciary which had recommended regulation of agricultural markets, paving the way for APMC laws across the country. The introduction of the Bihar APMC Repeal Bill had faced resistance from the opposition parties who agitated against the Repeal Bill in the State Assembly. A long protest procession on the streets of Patna to oppose this legislation was organised. But the Bill was passed by the legislature. The Bihar Agriculture Produce Market (Repeal) Act, 2006 was published in the Bihar Gazette Extra-ordinary on September 1, 2006. It came into force with immediate effect. By now it is clear that the repeal was a result of the influence of the World Bank Group.
The questionable Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act, 2020 pertained to bypassing of APMC Act like the Bihar APMC Repeal law. The Bypass APMC law of 2020 which aptly got stayed by the Supreme Court, created a new “trade area” outside the APMC market yards/sub-yards where any buyer with a Permanent Account Number (PAN) could buy directly from farmer sellers. The State governments were deprived of the power to impose any taxes on such a transaction.
The proponents of this central Bypass APMC Act had claimed that this law would lower buying costs for buyers and that would automatically mean higher prices for farmers. The fact is that buyers buying at lower cost does not necessarily imply that they would pass on the cost saved on procurement to selling farmers. The claim that it would have provided farmers a choice was misleading because majority of the farm producers across India-except the farmers of Punjab and Haryana- do not go through APMCs. Anyone with a PAN was allowed to buy agricultural produce paving way for hoarding of the produce. Harmful impact of hoarding has been a subject matter of numerous old Indian movies. Not only that when a license is given to a trader or commission agent, there is a counter party risk assurance. Under the APMC law if there is any dispute with regard to payment to farmers, the APMC takes cognisance of it and attempts to resolve it. With a view to maintain stability in the market, even the Model State Agricultural Produce Marketing (Development & Regulation) Act, 2003 empowered the Marketing Committee to take suitable measures to ensure that traders do not buy agricultural produce beyond their capacity and avoid risk to the sellers in disposing of the produce; and grant licences only after obtaining necessary security in cash as bank guarantee according to the capacity of the buyers. The central Bypass APMC law ignored valuable institutional memory in this regard.
The stay on this central Bypass APMC law by the Supreme Court and the subsequent repeal of the central Bypass APMC law by the Parliament vindicated the prayers made against the repeal of Bihar APMC law before the higher judiciary.
The Karnataka APMC law has repealed the amendments previously enacted by the BJP led government, which granted freedom to the market and reduced the control of the Agricultural Produce Market Committees (APMCs). At the time of the introduction of the Karnataka APMC bill, it was claimed that the previous BJP government’s amendments that allowed trade outside APMC yards, did not assist farmers in obtaining fair prices for their produce or improving their economic conditions.This initiative in Karnataka Legislative Assembly has created a compelling reason for Bihar Legislative Assembly to rescind the unconstitutional Bihar Agriculture Produce Market (Repeal) Act, 2006. The indefensible repeal was an outcome of the compulsions of coalition politics.
The Karnataka government is right in stating that the farmers who sell their produce outside the APMC yards are vulnerable to exploitation by traders due to lack of regulatory oversight. The absence of trading at APMC yards has negatively affected the government’s revenue from several tax sources. The Karnataka APMC law underlines that farmers benefit from obtaining competitive and fair prices for their produce when it is sold through the unified market platform in APMCs. Given the fact that there is no online system in place for trade taking place outside the market yards, farmers were unable to receive fair and competitive prices for their produce. It has recognised that unlike in the market yards, there is no mechanism for resolving disputes that arise when farmers engage in trade outside those yards. Bihar legislators ought to factor in these provisions of the Karnataka Bill.
It may be recalled that the Union Bypass APMC law was one of the three controversial farm legislations introduced by the Union government in 2020. It faced unprecedented opposition from the farmers. Prime Minister was compelled to apologise and withdraw the act within a year. But the Karnataka government, led by the BJP from 2019 to 2023, implemented the same amendment which was finally withdrawn by the Union government.
Prior to the abolition of the Bihar APMC Act, Bihar had 95 market yards. Out of which 54 yards had infrastructure such as covered yards, godowns and administrative buildings, weighbridges, processing and grading units. In 2004-2005, the State Agricultural Board earned Rs. 60 crores through taxes and spent Rs. 52 crores. Out of the money spent, 31% was on developing infrastructure. Subsequent to the repeal of the Bihar APMC law, APMCs became redundant, the consequent paucity of infrastructure ended up undermining farmers’ income. There were 129 Bazar Samitis, they became non-existent. Their abolition has adversely affected farmers’ income.
It is noteworthy that Union Government had extended the Bihar Agricultural Produce Markets Act, 1960 (Bihar Act 16 of 1960) to the Union territory of Manipur by a notification of Ministry of Home Affairs dated 26 March, 1963 in exercise of the powers conferred by section 2 of the Union Territory (Laws) Act, 1950 (30 of 1950). It reveals that the Bihar APMC law was worth emulation by others.
Relation between Union and State Bypass APMC Laws
The Bihar APMC law of 1960 was enacted for creation of market area and markets to ensure fair trade transactions in agricultural and allied commodities. The main object of the law was to appoint Marketing Committees which are fully representative of growers, traders, local authorities and the government to supervise the working of regulated markets. Its object included regulation of market charges and prohibition of realisation of excess charges, regulation of market practices, licensing of market functionaries and arrangement for display of reliable and up to date market information in the market yard besides sale by open auction.
The Bihar APMC law faced constitutional challenge before the Patna High Court in 1965. In its verdict, the Court recorded that in the interest of the primary producers, the importance of regulating markets and market practices needs more emphasis. “It has been observed that the States in which regulated markets have not been established to any extent, the cultivator is in a situation of much greater disadvantage than elsewhere.” The High Court rejected the challenge relying on the unanimous decisions of the Supreme Court in M.C.V.S. Arunachala Nadar vs. State of Madras (1959) case and Mohammad Hussam Gulam Mohammad vs. State of Bombay (1962) case. The Court observed that “It is also manifest that the impugned provisions of the Bihar Act are also similar in material respects to those of the Madras Act” and therefore the reasoning of the Supreme Court decision in Nadar case “also governs the present case, it follows, therefore, that the provisions of the Bihar Agricultural Produce Markets Act with regard to declaration of market area must be held to be Intra vires and constitutional.” The Court approved the Tamil Nadu Agricultural Produce Markets Act, 1959, which made provision “for the better regulation of buying and selling of agricultural produce and the establishment and proper administration of markets for agricultural produce in the State.” It endorsed better regulation of buying and selling of agricultural produce in Bihar.
The first Amendment was brought to the Bihar Agricultural Produce Markets Act, 1960, in 1972. It related to enhancement of market fee and addition of a new chapter IV-A in the law relating to the establishment of Bihar State Agricultural Marketing Board. This Ordinance continued till 1974. The Ordinance No. 41 of 1974, dated January 1, 1974, made exhaustive amendments in the law. The State undertook a series of amendments in the Bihar APMC Act in 1974 through promulgation of ordinances in 1974, 1975, 1976; 1977, 1978, 1979, 1980, 1981 and 1982. The amendments made through these ordinances remained in force till the ordinance of January 24, 1982.
The Bihar Agricultural Produce Markets, 1974 (Third Amendment) Ordinance, was referred to Joint Select Committee of the State Assembly on July 22, 1974 for its report and the amendment bill. The Committee submitted its report along with the amendment bill in the Legislative Council on April 5, 1982. The Council passed the bill on the same day. The State Assembly passed it on April 10, 1982. Subsequent to the assent of the President of India, the Bihar Agricultural Produce Markets (Amendment) Act, 1974, was published on April 30, 1982. This law was amended further by the Bihar Agricultural Produce Markets (Validation) Act, 1982, enacted on August 7, 1982. This validation law was enacted to validate acts of omission with regard to “the non-publication of the notification nos. 14841 dated the 27th October, 1967 in the Bihar Gazette and 2028, dated the 12th February, 1972, in the Bihar Gazette in time, the orders made for regulating the market with respect to such items, and market-fees levied, collected or to be levied and collected shall not be illegal and invalid merely on the ground, and notwithstanding anything contained to the contrary in any judgement, decree or order of any court the Schedule of notification nos. 14841, dated the 27th October 1967 and 2028, dated the 12th February 1972, shall always be deemed to be valid and effective and all levies made or market fees collected shall be deemed to have been validly realized, taken, done and issued as if the provisions of this Act were in force at all material times when such realization was made, action taken, things done and orders issued and no suit or proceeding shall be maintainable for refund of the levies made on fee collected or actions taken under those notifications.” Prior to the enactment of this validation law, these acts of omission were made valid through Bihar Agricultural Produce Markets (Validation) Second Ordinance, 1982.
This amended law replaced the ordinances and went beyond the ambit of the ordinances. The Statement of Objects and Reasons of the Amendment Act implied that Government of Bihar undertook these amendments pursuant to an agreement it had entered with the World Bank to develop 50 agricultural markets. In compliance with the terms of agreement with the Bank, the provision for the constitution of the Bihar State Agricultural Marketing Board was inserted in the 1960 law through the amendment of 1982. Not only that this amendment substituted a new Section 51 to empower the Government to delegate its power. It provided that “the State Government may delegate any of its powers or functions under this Act to the Board or any officer of the State Government …” Besides this, the amendment modified the term “agricultural produce” given in the APMC law. According to the modified definition, “agricultural produce” refers to “all produce whether processed or non-processed, manufactured or not, of agriculture, horticulture, plantation, animal husbandry, forest, sericulture, pisciculture, and includes livestock or poultry as specified in the Schedule.” There were over 60 Sections and four forms in the amended law and one schedule of “agricultural produce” which included cereals, pulses, oil seeds, oils, fruits, vegetables, fibres, animal husbandry products, condiments, spices, grass and fodder, narcotics and miscellaneous items in 12 lists. The amendment further provided that “with a view to implement the provisions of this Act, the State Government may issue, from time to time general or specific direction on policy matters to the Board, as it considers appropriate. The Board shall carry out such direction.” These provisions were challenged on the ground of excessive delegation but the High Court held that these provisions are valid. “There is no excessive delegation of power.” It is apparent that provisions of the original APMC law were constantly being amended by the State not only through legislations but also through subordinate legislations.
Prior to this, in order to streamline the institutional mechanism, the Bihar Agricultural Produce Market Rules, 1975, were framed under Section 52 of the Bihar APMC law of 1960 which empowered the State to make rules and bye-laws for its functioning. It had 134 Rules, three schedules and 23 Forms. The 1975 Rules repealed the Bihar Agricultural Produce Market Rules, 1962.
The Bihar Agricultural Produces Market (Amendment) Ordinance, 1987, was promulgated and the APMC Act was amended in 1988 through the ordinance which modified three sections -Sections 18, 27 and 30 of the law. Section 18 dealt with the powers and duties of the Marketing Committee to implement the provisions of the APMC law including establishment of market area, to act as a mediator, arbiter and surveyor in matter of all the disputes and issuer of license to traders, brokers, weighmen, measurers, surveyors, warehousemen and other persons. Section 27 dealt with the power of Marketing Committee to levy fee at the rate of 1 per cent on the sale-purchase of agricultural produce within its area, as a sort of consideration for services rendered by it. Section 30 dealt with application of Marketing Committee Fund for some thirteen purposes including for the acquisition of a site for the market.
In 1975, pronouncing its verdict in the matter of constitutionality of the Bihar APMC Act, the Patna High Court observed that “As such the State Legislature is competent to enact these provisions under Entry 28 of List II of the Seventh Schedule” of the Constitution of India which provides the list of items on which State can legislate. The core object of such legislation was to come to the aid of the producers of “agricultural produce” who are usually exploited in the bargaining between unequal parties.
It is significant that as many as 28 writ petitions challenged the provisions of the Bihar Agricultural Produce Markets Act, 1960. Relying on Supreme Court’s verdicts the High Court dismissed them. The Court ruled that the law and its provisions were constitutional and intra vires.
The Bihar Agricultural Produce Markets (Amendment) Act, 1992, amended the law by inserting a new provision for “Contribution in the State Fund by the Committee.” The provision reads: “”Every Market Committee shall out of its fund contribute to the State Government fund such percentage of its income derived from license fees and market fees as may be prescribed by Rules from time to time by the State Government.” The statement of objects and reasons of the amendment act stated that this provision is being added to overcome difficulties in state fund being faced as the state is passing through a difficult phase. After the State came out of its difficulties it did not consider it prudent to repeal this provision.
The High Court’s verdict in Matadin Agrawal vs. State of Bihar (1989) case reveals that the bye-laws made under Section 53 of the law by 18-member Marketing Committee with the approval of the Bihar Agricultural Marketing Board, was not published in the official gazette. Therefore, it did not come into force. The Board was constituted under Section 33A inserted into the law through amendment. This act of omission is quite glaring because it constitutes an abuse of power to make bye-laws under Section 53 of the APMC law.
The Bihar Agricultural Produce Markets (Amendment) Act, 1993, inserted some new provisions to empower the State government further. One of the new provisions reads: “Notwithstanding any judgement, decree or order of any Court to the contrary any market fee levied and collected shall be deemed to be valid as if such levy and collection was made under the provisions of this Act as amended by this Act and notification no. 730, dated 2nd May, 1977, shall be deemed never to have been issued and no suit or other legal proceedings shall be maintained or contained in any court for the refund of the fee collected under the provisions of this Act and no Court shall entertain any proceedings challenging the fee recovered or the continued levy and recovery of the fee merely on the ground that liability has ceased on the issuing of the notification no. 730, dated 2nd May, 1977.” This provision of the amendment in 1993 appears to be an exercise in presenting a fait accompli to the courts.
In the year 2000, when Nitish Kumar was agriculture minister, the Union Ministry of Agriculture constituted an Expert Committee followed by an Inter-Ministerial Task Force to review the existing system of agricultural marketing. The committee’s report, submitted in June 2001 and May 2002 respectively, recommended easing of control over agricultural markets by the State to facilitate “investments required for the development of marketing infrastructure and supporting services.” These recommendations were deliberated upon at the National Conference of State Ministers organized by the Ministry of Agriculture in 2002. Subsequent to that, a Standing Committee of State Ministers was constituted under the chairmanship of Union Minister of State for Agriculture, Hukumdeo Narayan Yadav, in 2003 which stressed the need to promote development of a competitive marketing infrastructure and professionalism in the management of existing market yards and market fee structure. This paved the way for formulation and finalization of a model legislation on agricultural marketing by K.M. Sahni committee. This draft model legislation titled the State Agricultural Produce Marketing (Development and Regulation) Act, 2003, provided for establishment of Private Markets/ yards, Direct Purchase Centres, Consumer/Farmers Markets for direct sale and promotion of Public Private Partnership in the management and development of agricultural markets.
Instead of amending its APMC law in line with the Model Act, Bihar became the only state to abolish the APMC law in 2006. This was done only to send a signal to private players unmindful of the fact that a World Bank study acknowledged that “the APMC Act is not considered the major impediment to private sector participation in Bihar (unlike in most other states)”. This study stated that “the market reform would enable an increase in the quantity and quality of the produce, better market management with private sector partners, higher market investment activity, and possibly higher employment generation across more developed supply chains.’’ It also claimed that repealing the Bihar APMC law would facilitate the development of backward linkages and incentives for service providers to establish their businesses to serve the value chains, thus transferring technology and knowledge to the farmers.
The Bihar Agriculture Produce Market (Repeal) Bill, 2006, was introduced in the State Assembly on August 10, 2006. It was followed by speeches by MLAs like Ram Deo Verma and Jagdanand Singh and Maheshwar Singh from the opposition parties agitated against the Repeal Bill in the State Assembly and termed the Bill as black law. The Speaker rejected the proposal of legislators like Ramdev Sai, Lalbabu Rai and Ramdas Rai to send the Bill to a legislative committee for examining it within a month, and chose to accept the proposal for the consideration of the Bill. Following which all the legislators from the opposition walked out of the assembly shouting slogans against the Bill. A long protest procession marched on the streets of Patna to oppose this legislation. But the Bill was passed by the legislature after the speech of Nitish Kumar, the Chier Minister. During his speech the chief minister informed that the repeal of the existing law is required for agricultural development and development of agricltural marketing. He claimed that the purpose for which APMC Act was enacted and the land of farmers was taken has not been fulfilled. He observed that the parties which are oppositing the Bill in the State, are supporting it as part of the Union Government which wants this work to be done. He referred to the discussion with P Chidambaram, the then Union Finance Minister at the State Level Bankers’ Meeting in this regard. He promised that the assets acquired and created under APMC Act will be used only for agricultural purposes. The Bihar Agriculture Produce Market (Repeal) Act, 2006, was published in the Bihar Gazette Extra-ordinary on September 1, 2006. It came into force with immediate effect. By this Repeal Act, the Bihar Agriculture Produce Market Act, 1960, and the Rules of 1975 framed thereunder stood repealed save and except certain decisions of the Patna High Court CWJC No.12655 of 2017 dated. June 24, 2019 rendered earlier, as well as the disciplinary proceedings initiated or pending against the employees of the Board. The validity of the Repeal Act was challenged. But it was held to be a good law by the High Court and has been held to be intra vires.
In the High Court, the petitioner’s senior counsel Vinod Kumar Kanth had urged that in the object for enacting the Repeal Act, it has been stated that regulation of Agricultural Produce Markets through the Act of 1960 has failed to achieve its objects. This justification is not founded on any existing material in as much as the Marketing Board at the time of repeal had accumulation of assets worth Rs 197 crores suggesting that the Bihar Agricultural Produce Market Board has been functioning well. He contended that the purpose of the Repeal Act is to acquire the property of the Market Board. He pointed out that no study had been carried out before enacting the Repeal Act of 2006. Its enactment belied the legitimate expectation of the agriculturists for no valid reason. In State of Jharkhand vs. Brahmaputra Metallics Ltd case (2020), the Supreme Court has recognized “legitimate expectation” as a substantive doctrine. It is a source of substantive and procedural rights in relation to reasonableness and fairness of State action. It is part of rule of law. It is one of the ways to guarantee non-arbitrariness under Article 14 of the Constitution of India. The legitimate expectation arises in cases when the decision-making body deviates from a set standard, thereby impinging upon the rights of those who are subjected to the decision. The requirement of legitimate expectation is not based on mere hope or wish or anticipation. In Union of India vs. Hindustan Development Corporation case (1993), the Supreme Court has held that “The legitimacy of an expectation can be inferred only if it is founded on the sanction of law or custom or an established procedure followed in regular and natural sequence … Such expectation should be justifiably legitimate and protectable.”
In Ram Pravesh Singh vs. State of Bihar case (2006), the Court has held that “a person can be said to have a ‘legitimate expectation’ of a particular treatment, if any representation or promise is made by an authority, either expressly or impliedly, or if the regular and consistent past practice of the authority gives room for such expectation in the normal course.” The Division Benches of the Patna High Court and the Supreme Court have not paid heed to these observations of the apex court.
The petitioner’s counsel informed the High Court that Bihar APMC Act of 1960 was amended in 1982 by obtaining previous assent of the President for imposing market fees in terms of the proviso to Article 304 (b) of the Constitution, therefore, repeal of the said Act of 1960 also required prior assent of the President. Article 304 of the Constitution of India deals with the restrictions on trade, commerce and intercourse among States. The proviso to Article 304 (b) read with Article 304 states that notwithstanding anything in Article 30119 or Article 30320, the Legislature of a State may by law impose such reasonable restrictions on the freedom of trade, commerce or intercourse with or within that State as may be required in the public interest: “Provided that no Bill or amendment for the purposes of clause shall be introduced or moved in the Legislature of a State without the previous sanction of the President21.” Given the fact that the required “previous sanction of the President” was not taken, it is evident that the constitutional mandate in enacting a valid law has not been followed in the case of the enactment of the Bihar APMC Repeal Act.
The petitioner argued before the High Court that in enacting the Repeal Act of 2006, the Rules of business which is required to be followed before legislating an Act has been in contravention of the procedures laid down for enacting a valid law. He also pointed out that the Repeal Act nullified an affirmative action by the State in furtherance of implementing the Directive Principles of State Policy. The Court’s order records the petitioner’s contention wherein he said, “The withdrawal of the said affirmative action in furtherance of implementing the Directive Principles of State Policy is not permissible under the Constitution. It was urged that though no mandamus can be issued to enforce the Directive Principles of State Policy, but once an affirmative action has been taken, the same cannot be allowed to be retraced by nullifying the action taken in furtherance of Article 46 of the Constitution.” Article 46 asks the State to promote the economic interests of the weaker sections of the people and protect them from all forms of exploitation. The petitioner drew the attention of the Court towards the mischief rule laid down in Heydon’s Case (1584) and submitted that since the Bihar APMC Act, 1960 “was enacted to suppress the mischief of unregulated market of agricultural produce prevalent in the markets, the repeal of it without any material to substantiate the same would revive the mischief for suppressing of which previous enactment was enacted.”
Drawing on the verdict in the Heydon’s Case and Lord Edward Coke’s process through which the Court must interpret legislation, four things are to be discerned and considered. One, what was the common law before the making of the Act. Second, what was the mischief and defect for which the law did not provide. Third, what remedy the legislature resolved and appointed to cure the mischief. And, fourthly, the true reason of the remedy; and then the office of all the judges is always to make such construction as shall suppress the mischief, and advance the remedy, and to suppress subtle inventions and evasions for continuance of the mischief, and pro privato commodo-for private or personal gain, and to add force and life to the cure and remedy, according to the true intent of the makers of the Act, pro bono publico-for the public good. One of the greatest jurists, as English Chief Justice Coke declared that the laws of legislature to be void if they are in violation of “common right and reason” and made even the King to be subject to the law. In Swantraj vs. State of Maharashtra case (1975), the Supreme Court has held that “Every legislation is a social document and judicial construction seeks to decipher the statutory mission, language permitting, taking the cue from the rule in Heydon’s Case of suppressing the evil and advancing the remedy.” In the light of these established rules of interpretation for legislations it is apparent that the law that repealed the Bihar APMC Act, 1960 is contrary to “common right and reason”. There is a constitutional and jurisprudential logic for High Court’s verdict to be appealed and reviewed at the earliest.
Dismantling of regulatory institutions and infrastructure for agricultural produce
The dismantling of pre-existing regulatory institutions and paucity of infrastructure for agricultural produce and allied commodities has contributed to inadequate price realisation in the face of volatility of prices that has adversely affected the farmers’ income. With the repeal of the Bihar Agriculture Produce Market Act, 1960, in 2006, it “was expected that this would enable private players to set up and run the markets. Unfortunately, this did not happen.” The agriculturists in the state have been struggling to get fair prices for their crops after the abolition of the agricultural produce market committee (APMC) mandi system in the state. Prior to the abolition of the Bihar APMC Act, Bihar had 95 market yards out of which 54 yards had infrastructure such as covered yards, godowns and administrative buildings, weighbridges, processing and grading units. In 2004-2005, the state agricultural board earned 60 crores through taxes and spent 52 crores. Out of the money spent, 31 per cent was on developing infrastructure. Subsequent to the repeal of the APMC law, the APMC became redundant, and paucity of infrastructure ended up undermining farmers’ income. As many as 129 Bazar Samitis became non-existent that adversely affected farmers’ income.
The reason farmers’ voice of opposition against the repeal of the APMC law was not sufficiently loud enough to attract attention was because a very large section of the farmers in Bihar are subsistence farmers. A September 2021 paper of the Bihar unit of All India Kisan Struggle Coordination Committee (AIKSCC) states that, in Bihar, 90 per cent of the farmers have less than 1 hectare (2.47 acre/3.95 bigha) of land. As per the data of Land and Livestock Holdings Survey (2012-13) conducted by the National Statistical Office (NSO), the average land holding size in rural Bihar is just 0.242 hectares, the fourth smallest among the 29 states in 2012-13. According to NABARD’s All India Rural Financial Inclusion Survey 2016-17 (NAFIS), the average land possessed per household is 0.5 hectare in Bihar. According to the Agriculture Census 2015-16, the value of output per hectare in Bihar is Rs 35,825 only as against Rs 78,652 only in Punjab. Clearly, the value of output per hectare in Punjab was more than double than that in Bihar. NABARD’s survey shows that an average farmer’s monthly income in Bihar is Rs 7,175 only, which is Rs 23,133 only in Punjab.
In the Eighth Meeting of Committee of State Agricultural Marketing Ministers (held on October 30, 2012), M.S. Jairath, Director, National Institute of Agricultural Marketing (NIAM), Jaipur, made a detailed presentation on the need for market reforms and market development in states without APMC Act. In his presentation, he emphasized “the need for a regulatory mechanism, more of developmental in nature be put in place in Bihar.” He pointed out that the present system in Bihar is not in the interest of farmers and needs orderly marketing. In the said meeting, the Agriculture Department Secretary, Bihar, observed that “despite no regulatory system, farmers are still getting remunerative prices.”27 However, in a subsequent letter (dated May 22, 2020) to Srabani Guha, Advisor, Union Ministry of Agriculture and Farmers Welfare, N. Saravana Kumar, Secretary, Department of Agriculture, Bihar, mentioned that in the absence of a regulatory system, farmers are not getting remunerative prices.
In the Ninth and Final Meeting of the Committee of State Ministers (held on January 22, 2013), the NIAM observed that there is a complete lack of required marketing infrastructure, organized information dissemination, general upkeep and orderliness in the agriculture markets in states like Bihar. As the markets are unregulated, high commission charges are levied on farmers in transaction of their produce. In absence of any professional management of these markets, farmers are also facing problems like high transaction charges, absence of market information on prices, arrivals, etc. The NIAM opined that complete deregulation of markets in the states like Bihar, rather than reducing the transaction cost, has actually increased it. It has not helped in attracting any investment from private sector into these markets. Thus, NIAM stressed the need for a legal and institutional structure which can undertake regulation of the agriculture markets in the state and also attract investment for infrastructure development.
The AIKSCC’s paper presented at the Bihar state convention on September 11, 2021, in Patna claimed that Bihar farmers suffered a loss of Rs 7 lakh crore during 2006-2021. The paper states that 35 per cent of the farmers in Bihar have a land-holding of less than 0.4 hectare. As they produce only for their sustenance, they do not get the opportunity to sell their agricultural produce at a remunerative minimum support price. While they support the farmers’ struggle for remunerative minimum support price (MSP), they know that although MSP is announced only for 23 crops, the government purchases are by and large confined to wheat and paddy. The farmers in Bihar have been deprived of remunerative prices for long. In both the pre- and post-APMC periods, the farmers have been under compulsion to sell their produce to the local aggregators and commission agents.
Even when the farmers in Bihar produce marketable surplus which can be brought to the APMC market yard, they face the handicap of transport facility. Had transport facility been provided, the farmers who produce surplus could have become a beneficiary of the APMC market yard. Government should have assured the farmers that their produce will be purchased. Instead of providing such facility to remove the intermediary and assurance for purchase, APMC Act itself was replaced. While farmers protested and challenged the repeal in the High Court and Supreme Court, “lack of resources and awareness among significant number of farmers in Bihar could not assume the form of the protest by the farmers of Punjab, Haryana and Western UP in recent past.”
The abolition APMC law in 2006 undermined government oversight over procurement of agricultural produce. Earlier, significant amount of procurement happened through the Agricultural Produce Market Committee controlled mandis (wholesale markets) where farmers could directly sell their produce to the Food Corporation of India or the State Farming Corporation at the established minimum support price (MSP) that protected them from market volatility. Subsequent to the abolition of APMC act, 8,463 Primary Agriculture Credit Societies (PACS) and some panchayat level societies have been created that act as intermediaries in the procurement of agricultural produce; they buy from farmers and sell to the FCI, SFCs and private entities. While the objective was to protect the farmers and raise their incomes, the farmers in actuality ended up getting far lesser prices due to private players, untimely payment of bills by the government agencies, and distress sales at throwaway prices.
In the pre-APMC abolition period, farmers used to apply for space at local mandis at a nominal fee which were run by a market committee comprising the elected and government nominated members. This market committee was under the superintendence and control of Bihar Agricultural Marketing Board that enabled strict enforcement of MSP. Further, the APMC had space for storage of the agricultural produce, which ensured that farmers could delay selling their produce at a remunerative price and their payments used to be cleared on the same day they sold their produce.
In the PACS system, however, complications and irregularities seem to be rampant beginning with registration in the PACS which requires document of the land on which farmers do cultivation. This excludes many farmers outside the digital PACS procurement system in an environment where internet density is low. This creates a new class of “haves” and “have nots” in terms of those having “sufficient access and effective usage of internet” and those deprived because of “insufficient access and ineffective usage of internet”.
A comparative analysis of price trends before and after the repeal of the APMC Act in Bihar reveals that the gap between farm harvest prices and MSP for paddy, wheat and maize has either increased or remained at the pre-APMC level of 2006. In the ten marketing seasons between 2007-08 and 2016-17, not a single season witnessed farm harvest prices in Bihar going beyond MSP. The prices of agricultural produce remained 90 per cent or more of MSP in four seasons. On the other hand, in Punjab, there were two seasons during this period when prices went beyond MSP, while only one season noticed fall in prices below 90 per cent of MSP. In the ten seasons between 2007-08 and 2016-17, after abolition of APMC Act, prices in Bihar were within 70-80 per cent of MSP in three seasons, and between 80-90 per cent of MSP in the remaining six seasons. It also needs mention that the number of procurement centres for agricultural produce run by the state government in Bihar has gone down from 9,000 in 2016, to 1,619 in 2020. In such a situation, the farmers’ growing concern over uncertainty of MSP and distrust of free market is understandable. As a consequence of the farmers getting lower price of agricultural produce, the agricultural wages got suppressed in Bihar. While In 2006-07, the average wage of an agricultural labourer in Bihar was about 79 per cent of the wages in Punjab, at present an agricultural labour in Bihar receives 61 per cent of what is received by an agricultural labourer in Punjab.
Instead of building infrastructure for storage of agricultural produce, the Bihar Agriculture Market Yard Land Transfer Ordinance, 2017, was promulgated for the construction of “the multipurpose Prakash Kendra and Garden on the occasion of 350th jubilee of the Tenth Sikh Guru Shree Guru Govind Singh Jee Maharaj based on his enlightened life and glorious historical event for the state”. The agriculture market yard land of Agriculture Department, Government of Bihar, which is vested in the State Government by the Bihar Agricultural Produce Market (Repeal) Act, 2006, has been permanently transferred to the Tourism Department, Government of Bihar. The schedule of the ordinance reveals that “10 acres plot of land acquired for market yard” in Patna City was transferred to the Tourism Department on September 20, 2017. Subsequently, the Bihar Agriculture Market Yard Land Transfer Act, 2017, was enacted in December 2017. The need for the enactment of Bihar Agriculture Market Yard Land Transfer Act, 2017, arose because of Section 4(vi) of the Bihar Agricultural Produce Market (Repeal) Act, 2006, which states that “All immovable assets of the Board or the Committee shall be utilized only for agriculture and farmer relating activities including establishment of agro-processing industries, horticulture, agro-service, agricultural marketing, storage of agricultural produce.” As per Section 4(i), on and from the date of coming into force of the said Act, whereby all assets, including moveable and immoveable owned, possessed or otherwise claimed to belong to the Board or the committee or samiti shall vest in the State Government. All liabilities including statutory and non-statutory, secured or unsecured, shall be the liability of the State Government.
The Bihar Agriculture Market Yard Land Transfer Act, 2017, allowed transfer of agriculture market yard land for non-agricultural purposes thereby paving the way for the transfer of over 2, 400 acres of remaining agriculture market yard land (after allocating 10 acres as mentioned above) and other properties for non-agricultural purposes. After the repeal of the APMC law, the ‘administrator’ or the special officer was given the custody of all such assets of the committees under APMC law. The charge of the market committees was assigned to the concerned sub-divisional officers in the area of the agricultural produce markets by the State government. It is apparent that the Bihar Agricultural Produce (Repeal) Act, 2006, is being used to transfer of agriculture market yard land for non-agricultural purposes. It is contrary to the original intent of the legislature. It displays apparent insensitivity towards the crying need for agriculture storage and marketing infrastructure.
It is apprehended that 2, 400 acres of remaining agriculture market yard land will go to entities like Adani Group. Bihar government has decided to lease 1,050 acres of land in Pirpainti, Bhagalpur district, to Adani Power Limited for a 2,400 MW coal-based thermal power project. The land, leased for 33 years at an annual rent of just ₹1 per acre. The opposition parties have claimed that this is likely to result in a loss of Rs 5, 000 crore annually to the government. Besides the loss of revenue, it is likely to lead to grave water crisis in the region. The state government had acquired the land from five Panchayats during 2010-212. The Bihar Agriculture Land (Conversion for Non-Agriculture Purposes) Act, 2010 was enacted during the same period. But the manifesto of INDIA and grand alliance remains oblivious of the adverse impact of the Bihar Agriculture Land (Conversion for Non-Agriculture Purposes) Act which has been amended in 2012, 2020 and 2025.
In the pre-APMC repeal era, out of the 95 regulated APMC markets, 54 markets had basic marketing infrastructures. These 54 markets were established in around 1595 acres of land. Around 813 acres of land was vacant. Now that the transfer of agriculture market yard land for non-agricultural purposes has begun, it is quite possible that even the basic infrastructure which existed prior to the repeal of the APMC law will get used for non-agricultural purposes. The market yard land is also facing encroachment in the post-APMC period. The existing agricultural infrastructure could have been improved further for providing better facilities to the farmers paving the way for increase in the number of farmers going to the markets.
The correspondence between Bihar’s agriculture department and the Union Ministry of Agriculture corroborates above concerns. The correspondence between them in May 2020 reveals that the purpose for which Bihar APMC law was repealed has not been achieved. It is observed that the repeal of APMC law led to lowered farm harvest prices especially for paddy. It needs to be admitted that even when APMC law existed, there was inadequacy of infrastructure in the regulated markets. However, public investments were being made for their improvement. Before the repeal of APMC law, as high transportation costs used to discourage farmers from going to the mandis, efforts were made to establish PMC yards and sub-yards in the vicinity of farmers and/or providing free transportation to them. The repeal of APMC law removed the entry barrier of the APMC Act by abolishing old mandis. The expectation was that the repeal will result in private investment for improving agricultural marketing and infrastructure. But the reality is that such expectations are misplaced.
In a news report from Begusarai and Khagaria, it has been recorded that the farmers sell grain to the small traders, who bags it and supplies to the bigger commission agents-cum-traders. Indian Express reported on November 2, 2020, the “Other side of APMC repeal: Bihar farmers want mandis, ‘like Punjab’” that the processors/millers, in turn, only deal with the big traders. They aren’t buying directly from farmers although Bihar’s Agricultural Produce Market (Repeal) Act permitted so. In the aftermath of the APMC repeal law, Bihar’s only functioning mandi run by private traders – with no oversight by public institutions – is at Gulab Bagh near Purnia. Around 2005-06, it used to handle 3-4 rail rakes daily during the peak maize season from mid-April to mid-July. These rakes, each of 2,600 tonnes, used to be loaded from the Purnia, Ranipatra and Jalalgarh railway stations. At present loading is down to one rake only. About 80 per cent of those selling there are farmers living within 20-25 km range and the remaining 20 per cent of them are local vyaparis. It is apparent that like Patna City market yard, Gulab Bagh too is all set to become history in due course. Instead of eliminating intermediaries, the commission agents, the post-APMC period has become a fertile ground for bigger and ungovernable agri-business tycoons who have emerged as the new intermediaries.
The correspondence between Department of Agriculture, Bihar and Union Ministry of Agriculture and Farmers Welfare makes it apparent that the abolition of APMC has not resulted in increase of farmers’ incomes. It is now up to the legislature to address this agrarian distress by recognizing that agriculture has the potential to rejuvenate the country’s economy. In such a backdrop, Prime Minister Narendra Modi’s apology to the farmers in his address to the nation and the letter from the Department of Agriculture, Bihar seems to vindicate the arguments advanced by the petitioners in the Patna High Court and legislators in the State Assembly while challenging the constitutionality of the repeal of Bihar APMC law in 2008.
With regard to the central laws including Bypass APMC Act, it is germane to recollect that the operation of these laws were suspended by the Supreme Court in January 2021 because of unprecdented farmers’ protest on the borders of the national capital. It emerges that had the constitutionality of the repeal of Bihar APMC law been taken to the Supreme Court, it would have met similar fate. The verdict of the Patna High Court by the Division Bench of Chief Justice Rajesh Balia and Justice Barin Ghosh can still be appealed in the Supreme Court, especially on the unaddressed ground that specific aspects of farmers’ prayer on the constitutionality of the repeal law is yet to be adjudicated.
Responding to the year long protest of the farmers in which more than 700 farmers lost their lives, the current Prime Minister said, “While apologizing to the countrymen….I want to tell you, the entire country, that we have decided to repeal all three agricultural laws….” In pursuance of this promise to the nation, the President of India who had promulgated an ordinance for it and later given assent to the three laws in 2020, gave assent to The Farm Laws Repeal Act, 2021 after its passage from the Parliament. With this the controversial farm laws were repealed.
Deafening Silince of Bihar Chief Minister
Reacting to the repeal of the central farm laws including the central Bypass APMC Act, Nitish Kumar, Chief Minister, Bihar observed, “The central government got the farm laws cleared in Parliament. It was the decision of the PM….The decision is his, there cannot be any reaction to this.” But a careful scrutiny of the letters sent in May 2020 by Bihar Government to the Union Government prior to the promulgation of the ordinances for the farm laws including Bypass APMC law dated June 5, 2020, indicates that before the promulgation of these laws, the Bihar State agriculture secretary wrote a letter dated May 22, 2020 to the advisor to the Union Ministry of Agriculture and Farmers’ Welfare saying, “Bihar is one of the important maize producing states and paddy is the main kharif crop of the state. But the farmers sell their produce at low price and do not get proper profit due to non-availability of marketing infrastructure, go-downs and procurement facilities.”42 This indicates that Bihar government informed the Union Government that their bypassing of APMC system through repeal of its APMC law to attract private investment for marketing infrastructure, go-downs and procurement facilities was not appropriate because farmers are under compulsion to sell their produce at throwaway prices. But it is apparent that the Union Government did not pay prompt attention to State Government’s message. The Prime Minister took almost one and a half year to decode this message and to repeal the Bypass APMC law, contract farming law and the amendment to the Essential Commodities Act which decriminalized hoarding by body corporates and others.
Re-birth of Bihar APMC law is on the horizon
A joint study of the Supreme Court’s order of January 2021 suspending the Bypass APMC law, Patna High Court’s order endorsing the unconstitutional repeal of the Bihar APMC law and the correspondence between Department of Agriculture, Bihar and Union Ministry of Agriculture and Farmers Welfare provides sufficient reason for bringing back the Bihar APMC law as has been demanded by the Bihar unit of All India Kisan Sangharsh Coordination Committee (AIKSCC) in their memorandum to the President of India on November 26, 2021. The NCAER study also makes a case for the intervention by the government “to undertake procurement operations to stabilise market conditions. It would be useful to set up a ‘price stabilisation fund’ to undertake such operations by the government”. In effect, it makes a compelling logic for bringing back the unamended Bihar Agriculture Produce Market Act. The experience of last 15 years after the repeal of APMC law indicates that World Bank’s diagnosis and prescriptions were inadequate. Responding to these inadequacies, the State Budget for the financial year 2022-23 addresses the need for agricultural marketing infrastructure by proposing programs for the development of all the 54 Bazaar Prangans (marketing yards). It is proposed to be executed using Rs 2,446 crores funded through loans from National Bank for Agriculture and Rural Development (NABARD).
Besides this State government is making investments for creating Common Facility Centres with the help of Bihar State Milk State Milk Cooperative Federation Limited (COMFED) and a few private enterprises. It is providing incentives to commercial entities to boost storage capacity. Bihar State Seed Corporation is also constructing a facility. State government acknowledges that storage facilities and warehouses are also important for agricultural marketing and farmers’ welfare. Bihar State Warehousing Corporation is the State Storage Agency. During 2020-21, the utilization capacity of government owned warehouses was 77.8 percent.
Governments are beginning to recognize that APMC is about government’s role in the agriculture sector. APMC is to agriculture what the government school is to the education sector. The government schools are flawed, they have many deficiencies. They do not have toilets, 80 per cent of schools don’t have proper toilets for girls. There is lack of proper infrastructure. But it does not imply that government schools should be abolished and bypassed. It does not create a rationale for lower budgetary allocations on education to pave the way for private education. It is a fact that while the government schools are underperforming but it does not imply that all of them are bad. They are the only hope for millions of children. They are the only hope for the mid-day meal, only one good meal a day. This lesson from the government schools is applicable to State government established marketing yards as well because it the presence of the government as a regulator alone that can ensure guaranteed remunerative price for the farmers.
In Bihar in the last 15 years, Agriculture sectors’ contribution to GSVA growth has reduced and that of services sector has increased. GSVA refers to Gross State Value Added, the sum of the value added by all sectors—agriculture, industry, and services—at current market prices with 2011-12 as the base year. But as of 2022-23, 49.6 per cent of the working population in Bihar remains predominantly concentrated in agriculture, forestry, and fishing, 28.9 per cent in services, 18.4 per cent in construction sectors and 5.7 per cent in the manufacturing sector.
There is no official information about the number of billionaires in Bihar, but Anil Agarwal, the founder of Vedanta Group, R.K. Sinha, the founder of Security and Intelligence Services (SIS) Limited and Mahendra Prasad, the founder of Aristo Pharmaceuticals Limited are the wealthiest persons from Bihar. Association for Democratic Reforms (ADR)’s analysis of Bihar Assembly Elections 2025 – Phase I shows that out of the 1303 candidates who have filed their nominations in the first phase of the assembly election, 519 (40%) are crorepatis. Among the major parties 81 (71%) out of 114 candidates analysed from Jan Suraaj Party, 68(97%) out of 70 candidates analysed from RJD, 52(91%) out of 57 candidates analysed from JD(U), 44(92%) out of 48 candidates analysed from BJP, 27(30%) out of 89 candidates analysed from BSP, 18(78%) out of 23 candidates analysed from INC, 13(30%) out of 44 candidates analysed from AAP, 10(77%) out of 13 candidates analysed from Lok Janshakti Party (Ram Vilas), 3(60%) out of 5 candidates analysed from CPI, 2(67%) out of 3 candidates analysed from CPI(M) and 2(14%) out of 14 candidates analysed from CPI(ML)(L) have declared assets valued more than Rs 1 crore.
The promises made in the manifesto of the opposition parties in Bihar assumes significance in the backdrop of the revelation by The Hurun Global Rich List 2025 published in March 2025 that the total wealth of Indian billionaires stands at Rs 98 lakh crore, which is nearly one-third of the country’s Gross Domestic Product (GDP), which almost ten times Bihar’s GDP.
APMC is like the government hospital of the health sector. The lessons from the pandemics in particular and the health care of almost all of the population in general underlines that there is no alternative to government hospitals for health care. Given the fact that “health is a social phenomenon and a public hospital is a social institution which cannot be studied in isolation from the societal conditions in which it operates”, while its infrastructural deficiencies are crying for attention, paucity of the health infrastructure does not create a logic for their abolition. In the way, schools and hospitals require refinement and public investment, APMCs too require enlightened refinement and public investment. The comparison of APMC with the government schools and hospitals provides lessons in economic justice, equity and equality.
The audit reports of the public institutions under the APMC law and the repeal of the three union agricultural laws have set the stage ready for re-introduction of a Bill in the Bihar Legislative Assembly to revive the original Bihar Agriculture Produce Market Act, 1960.
The papers titled “Journey of Agricultural Produce Market Committee Law in Bihar” in the LEAD Journal published by the School of Oriental and African Studies, University of London in March 2023 and “बिहार में कृषि मंडियों के खात्मे की एक पड़ताल” in the Subaltern journal published from Patna in July 2023 had made a robust case for the re-introduction of the original Bihar Agriculture Produce Market Act to safeguard the interest of the farmers amid growing income of India’s 284 billionaires in the face of unprecedented depletion in income of farmers and agricultural workers.
The author is a practising Advocate and a law and philosophy researcher. He is a member, Steering Committee, Nation For Farmers (NFF) and is part the member, Drafting Committee, Kisan Majdoor Commission, NFF. His current work is focused on the philosophy of digital totalitarianism and the monetisation of nature. He has appeared before the Supreme Court’s Committees, Parliamentary Committees of Europe, Germany and India and UN agencies on the subject of national and international legislation. He is also the editor of www.toxicswatch.org.
