Consumer | No Complete Deficiency In Service — Excess Rainfall Also To Blame: Supreme Court Halves Compensation In Groundnut Seed Crop Failure Case

“50% Pods Fully Developed — Loss Not Entirely Attributable To Seed Quality”, In a significant ruling concerning agricultural seed liability and consumer protection, the Supreme Court of India partly allowed appeals filed by M/s Shyam Beej Bhandar and Shree Ram Agro Bio-Tech, holding that there was “no complete deficiency of service” attributable solely to the seed producer and distributor.

The Bench of Hon’ble Ms. Justice B.V. Nagarathna and Hon’ble Mr. Justice Ujjal Bhuyan modified the compensation awarded to farmers, directing that only 50% of the deposited compensation amount be released to the respondent-farmers, while the remaining 50% be refunded to the appellants. The findings of total deficiency in service recorded by the District Forum and affirmed by the National Commission were set aside.

The Court balanced expert findings of partial seed defects with natural causes such as excess rainfall, invoking principles of equitable apportionment.

Farmers Alleged Sub-Standard Seeds Led To Crop Failure

The respondent-farmers had purchased groundnut seeds (TAG 37A variety) in June 2013. Four months later, in October 2013, complaints were lodged alleging that the seeds were sub-standard and had resulted in crop failure over approximately 250 bighas of land.

A committee comprising agricultural scientists, officials, and company representatives conducted a physical inspection and submitted its Investigation/Inspection Report dated 09.10.2013.

The District Consumer Forum allowed the complaints and awarded compensation per bigha along with additional amounts for mental agony and costs. While the State Commission set aside the order, the National Consumer Disputes Redressal Commission restored the District Forum’s award, holding the appellants deficient in service under Section 12 of the Consumer Protection Act, 1986.

The seed producer and distributor approached the Supreme Court.

Expert Committee Findings: Mixed Species And Semi-Developed Pods

The Supreme Court closely examined the Inspection Report. The Committee found that “8–10 percent of the pods present in the fields are of different species” and that “on an average of 50 percent PODS were found completely developed in a single plant and the semi-development of the remaining PODS were seen.”

The report further noted that although germination remained normal and arboreal growth was satisfactory, there were possibilities of “40–50 percent shortfall” in yield for TAG37A seeds, partly due to frequent rains.

Significantly, the report recorded that due to “frequent rains in the months of July August the arboreal growth has been found in large,” and that excessive rainfall could itself lead to “20–25 percent” shortfall in production generally.

The Supreme Court observed that the inspection was carried out after 110 days, within the normal maturation timeline of 100–110 days, and yet half of the pods were fully developed.

“No Complete Deficiency Of Service”: Court Rejects Absolute Liability

The Court held that while there was evidence of semi-development and some mixed species, it could not be concluded that the crop loss was entirely attributable to defective seeds.

Justice Nagarathna, speaking for the Bench, observed that the report also took into consideration excess rainfall and natural conditions. Therefore, “there was no complete deficiency of service as has been observed by the District Forum as well as by the NCDRC.”

The Bench emphasised that natural factors — described as vis major by the appellants — could not be ignored in determining liability.

The Court thus found that the findings of full deficiency in service were unsustainable.

Equitable Apportionment: 50% To Farmers, 50% Refunded

While setting aside the findings of total deficiency, the Court also recognised that the report recorded semi-development of pods and possible yield deficit.

Balancing these factors, the Supreme Court held that “the interest of justice would be served” by directing release of 50% of the compensation amount (with accrued interest) to the farmers, and refund of the remaining 50% (with interest) to the appellants.

The compensation amount had been deposited by the appellants pursuant to an interim order of the Court.

The findings of deficiency in service recorded by the District Forum and sustained by the NCDRC were expressly set aside and modified accordingly.

Natural Causes Matter In Consumer Claims

The judgment clarifies that in agricultural seed cases under consumer law, liability cannot be imposed in isolation from environmental and climatic factors.

Where expert reports show partial defect but also record natural contributing causes such as excess rainfall, courts must assess liability proportionately rather than impose absolute compensation.

The decision reinforces that deficiency in service must be clearly attributable to the supplier and not presumed solely from crop shortfall.

Allowing the appeals in part, the Supreme Court modified the orders of the consumer fora and ordered equitable distribution of the deposited compensation.

The ruling strikes a careful balance between protecting farmers’ interests and preventing imposition of complete liability on seed suppliers where natural causes also contribute to loss.

Date of Decision: 05/02/2026