Be a Survivor

If you live in rural Punjab you probably know someone who has despaired of repaying his loans and was driven to end his life to escape from tension, humiliation and harassment. You will also be aware that this tragic act brought not only grief but more hardship to the family. In district Sangrur’s Lehra and Andana blocks (subdivision Moonak) 80 such suicides have taken place, of which 56 have been officially verified. In the rest of Punjab the position is also dismal. Three per cent of Punjab’s land is passing into hands of moneylenders each year.

In Punjab, 75 to 80 per cent of the population lives in villages. Their economic position has been reduced to a level where, for debts ranging from a few thousands to a few lakh rupees, villages take their lives. Contrast this with the situation of businessmen and industrialists. According to the Reserve Bank of India, 284 defaulting companies in Punjab (each owing Rs 1 crore or more) their total debt stands at Rs 2753 crore! Are these men taking their lives? NO! There is a clear nexus between the political system and the captains of industry, trade and commerce, with an obliging section of the bank managers. They are enjoying all the luxuries of life without harassment of fear of jail. Suicides are left for the poor villagers.

The purpose of this booklet is to explain how the laws protect debtors and enable farmers and farm labourers to take full advantage of this protection so that they can withstand the pressures of moneylenders and extricate themselves from illegal debts. This booklet sets out in brief all the laws applicable to rural debt. Read it carefully.

Under Rule 24 (11b) of Punjab Agricultural Produce Market (General) Rules, 1962, a commission agent is required by law to make payment from his own funds to the farmer as soon as his crop is weighed and a bill prepared. The bill must mention the quantity, rate and total amount payable to the producer. The purpose of such a bill is to document receipt of the crop and its value. With rare exceptions, commission agents do not prepare such a bills. When a commission agent does not present a bill or make immediate payment, he is able to continue charging the farmer interest on previous debt even after he has sold the crop. Failure to pay the farmer immediately on receipt of the crop should be made a penal offence and the license of the defaulting commission agent revoked. If your commission agent does not give a bill or make immediate payment for your crop, complain in writing against him to the district food and civil supplies department.

Section 3 of the Regulation of Accounts Act, 1930 requires the commission agent to give the farmer an account of each crop that he sells, including the amount advanced to him, the payment the commission has made and the balance to be paid. The account has to be given every six months in writing. This is provided in the Act. Failure to present this account results in disallowing of the whole or a portion of the interest found due, as the court may deem reasonable and costs shall be disallowed as per Section 4 of that Act.

The Usurious Loans Act outlaws interest exceeding 18% per annum. Loans advanced by commission agents to farmers generally range from 25% to 60%. These rates are illegal under the act and the commission agent cannot legally collect such a debt.

The provisions of the Interest Act (1978) do not apply since, under Section 2 (G) of the Act, debt means liability for an ascertained sum of money, but in the case of loans advanced by commission agents, the account is mutual, open and current account because the price of crops sold are credited to the account of the farmer and advanced are made to him from time to time. Therefore, there is no ascertained sum of money but even where some writing to reference to the rate of interest in the commission agent’s account books is signed by the farmer, even then, as per the Rules and Orders of the Punjab and Haryana High Court Volume 1, Chapter 2, Part D, if the court comes to the conclusion that interest stipulated in the writing is excessive, it is within the authority of the court to award interest at a lower rate.

The rule of dam-do-pat, as provided under section 30 of the Punjab Relief of Indebtedness Act (1934) still hold good and no court is competent to pass or execute a decree for a sum larger than twice the amount of the sum found by the court to have been actually advanced, less any amount already received by a creditor in excess of the amount due to him under the usurious loans act. but future interest is not to be considered for counting the double sum. The Punjab Relief of Indebtedness Act (1934) also contains penal provisions to safeguard debtor against harassment from creditors. if a creditor files a suit for recovery of a false loan or an amount exceeding the sum actually due, the creditor can be punished with imprisonment up to three months or a fine up to Rs 1000 can be imposed on him. The court can send a complaint to this effect to a magistrate for this purpose after preliminary inquiry.