Seed Producers Not Completely Liable For Deficiency In Service In Low-Yield Cases: Supreme Court

The Supreme Court recently partly allowed an appeal filed by a producer and distributor of groundnut seeds, setting aside the order of the National Consumer Disputes Redressal Commission (NCDRC), which had held them liable for deficiency of service based on farmers’ complaints of low crop yield.

A Bench of Justices B V Nagarathna and Ujjal Bhuyan found that both the District Forum and the NCDRC were not correct in calculating compensation on a per bigha basis.

The Court referred to the inspection report prepared after a physical verification of the fields by scientists and investigators. The report noted that about 50% of the pods in a single plant were fully developed, while the remaining pods were only partially developed, even though this variety of seed typically matures within 100 to 110 days.

The Bench pointed out that the inspection was conducted after 110 days, which falls within the normal maturity period of the crop. The report also concluded that because many pods were only partially developed, the market price of the produce would be affected and farmers might not get a fair price. From this, Court observed that while 50% of the pods were fully developed, the other 50% were not.

In this context, Court held that the District Forum and the NCDRC were not justified in awarding compensation per bigha.

Court also noted that the report mentioned excess rainfall, which could have caused a 40–50% reduction in yield for the TAG37A variety of seeds. The producers argued that the shortfall in yield was due to natural causes, describing it as a case of vis major (an unavoidable natural event), and therefore they should not be held liable for any deficiency in service.

On the other hand, the farmers argued that the NCDRC had already given a clear finding of deficiency in service and that the appeals should be dismissed.

The Supreme Court, however, held that this was not a case of complete deficiency in service. It said that the ends of justice would be met by directing that 50% of the compensation amount deposited by the appellants before the District Forum be released to the farmers.

The remaining 50% of the deposited amount, along with any accrued interest, is to be refunded to the appellants.

The appeals were filed by M/s Shyam Beej Bhandar and Shree Ram Agro Bio-Tech against the NCDRC’s order dated March 19, 2021, which had set aside an earlier order of the Rajasthan State Consumer Disputes Redressal Commission passed in favour of the appellants.

The dispute dates back to June 15, 2013, when the farmers purchased groundnut seeds from the appellants. About four months later, in October 2013, the farmers complained to the Deputy Director (Agriculture), District Council, Alwar, alleging that the seeds were of poor quality and led to crop failure.

A committee was formed to investigate the issue and submitted its report on October 9, 2013. Based on this, the farmers filed complaints under Section 12 of the Consumer Protection Act, 1986 before the District Forum.

In 2018, the District Forum allowed the complaints and directed the appellants to pay compensation to the farmers, including Rs 20,000 each and litigation costs of Rs 5,000 each.  

Case Title: M/s Shyam Beej Bhandar & Anr Etc Vs Suresh Etc

Bench: Justices B V Nagarathna and Ujjal Bhuyan 

Date of Judgment: February 5, 2026