Farmers Who Sell Grains To Govt Can't Be Shown As Borrowers In Paddy Receipt Sheets, Their Credit Rating Can't Be Affected : Kerala High Court

Justice Devan Ramachandran clarified that farmers cannot be shown as borrowers in the paddy receipt sheet under the paddy procurement scheme and their credit rating should not be affected.

“The judgement of this Court is explicitly clear. The farmer under the PRS scheme cannot be construed as borrower in any manner, whatsoever, whether it has been done prior to this issue or after." 

The Court passed the above order while considering a batch of writ petitions filed by aggrieved farmers who sold their paddy to the State Government through Supplyco but have not received any payment in return. The Court had directed payments to be disbursed to the farmers without delay. The matter was posted yesterday to ensure that the order was complied with. The Court was informed that the farmers are being treated as borrowers by the banks under the paddy procurement scheme and their credit ratings are also affected. The Court was informed that the paddy receipt sheet shows farmers as borrowers.

The Court took note of the fact that the farmers are now apprehensive about the paddy receipt sheet loans and their credit ratings as a hapless paddy farmer died by suicide in Alappuzha a few days back. The farmer was denied loan by the banks because of a pending paddy receipt sheet loan.

The Court stated that the paddy receipt sheet only shows that the government has accepted the paddy from the farmers. It noted that once the farmers sell their paddy, they have to be paid by the Supplyco and on the paddy receipt sheet, only the Supplyco should be shown as borrowers. It is absurd that the farmers are being treated as if they were borrowers when it is the duty of the State and Supplyco to pay the farmers.

The Court thus enquired with Standing Counsel appearing for Suplyco as to why the consortium of banks was not informed through appropriate proceedings that farmers are not borrowers in the paddy procurement scheme. The court permitted two days time to obtain instruction in this regard and it observed thus:

“Though I accede to the above request of the Counsel, I reiterate that by no stretch the farmer who effectively sell their grains to the government under the paddy procurement scheme can be construed as borrowers by any bank because it is only since the government requires time to make payment against it, the farmers are forced to avail such facility.”

The Court thus held that farmers cannot be made to execute any documents as security as they are not the borrowers. It also stated farmers cannot be imposed with any conditions akin to a borrower.

The matter is posted for tomorrow. 

The petitioners were represented by Advocates Millu Dandapani, Legith T Kottakkal, P.R.Banerji, Binoy Vasudevan, Sreejith Sreenath, S.Ranjit, Gokul Das V.V.H., T.K.Sandeep, Veena Harikumar and Swetha R.

Case title: K Sivanandhan V State of Kerala and other matters

Case number: WP(C) NO. 23267 OF 2023, WP(C) NO. 24835 OF 2023, WP(C) NO. 25152 OF 2023, WP(C) NO. 25410 OF 2023, WP(C) NO. 25575 OF 2023