The Punjab government on Tuesday passed a resolution rejecting the Centre’s three agricultural laws, and presented its own bills to negate them.
The state legislature has resorted to Article 254 (2) to circumvent the central legislation, which have triggered strong protests in some farming states, including Punjab and Haryana.
A scrutiny of Article 254 (2) and its judicial history demonstrates that states have little scope of sidestepping the central law or outwitting the legislative competence of Parliament to frame legislation, subject to certain critical exceptions. Add to this, a law passed by a state under Article 254 (2) must also receive assent from the President for its validation.
Notwithstanding this, states still have a chance to fight in a constitutional court. For, the scheme of the Constitution has put ‘agriculture’ and its related subjects within the legislative domain of a state assembly, thereby making the central government answerable on its source of power to regulate agricultural activities and markets.
The seventh schedule of the Constitution distributes the power between the Centre and states by way of earmarking three lists – the union list, state list and concurrent list. While the union and state lists itemise the subjects on which the Centre and states can pass laws exclusively, the concurrent list has subjects on which both can make laws, with precedence to the legislation enacted by Parliament.
Article 254 in the Constitution deals with inconsistency between laws made by Parliament and those made by state legislatures on subjects on which both the Centre and states are entitled to enact laws.
In its first part, Article 254 (1) lays down that if a state government enacts a law inconsistent or repugnant to the central law which Parliament is competent to enact, or even if an existing law is contrary to a law that Parliament passes at a later stage on matters enumerated in the concurrent list, the central law will prevail.
Then, the text of Article 254 (2) reads: "Where a law made by the Legislature of a State with respect to one of the matters enumerated in the concurrent List contains any provision repugnant to the provisions of an earlier law made by Parliament or an existing law with respect to that matter, then, the law so made by the Legislature of such State shall, if it has been reserved for the consideration of the President and has received his assent, prevail in that State."
In simple terms, Article 254 (2) states that if the central government opts to frame a law on a subject which is within the competence of a state legislature, the state law can prevail in that state provided it gets an approval of the President of India.
Article 254 (2) does not stop here. The proviso to this Article says that even an approval from the President shall not prevent Parliament from enacting a new law on the same subject at any time so as to add, amend, vary or even repeal the law so made by the legislature of the state.
‘Agriculture’, as a subject, has eight entries under the state list, authorising a state to enact laws on subjects such as agricultural indebtedness, taxes on agricultural income markets and fairs, rights in or over land, land tenures, rents, transfer agricultural land and agricultural loans.
Under the union list, ‘agriculture’ is used four times but only in an exclusionary sense. Four entries in the union list relate to taxes and duties on income and assets, “specifically excluding those in respect of agriculture”.
In the concurrent list, ‘agriculture’ is mentioned three times out of which two entries again leave the agricultural land out of the common pool of lawmaking and only one subject that deals with the evacuee property gives right to the Centre to make a law even if it includes the agricultural land.
Therefore, the order of the Constitution is such that matters relating to agriculture, apparently, have been outside Parliament’s jurisdiction.
Notably, the Statement of Objects and Reasons of the three central laws also does not mention the constitutional provisions or the entry in the union list under which Parliament has legislated on the subjects covered.
Therefore, the first area of contention shall be the source of power that the central government has used in enacting the three controversial laws. Is ‘agriculture’ a subject on which the central government can legislate at all?
Entry 27 of the state list talks about "production, supply and distribution of goods" and subject it to the provisions of entry 33 of the concurrent list. This empowers the central government to control "trade and commerce" with respect to production, supply and distribution of such "industry" in the public interest that may include foodstuff, raw cotton and jute, etc.
The question arises whether the central government utilised this entry to pass the new laws on contract farming, trading of agricultural produce and imposition of cess on inter-state movement etc.
This leads to another inquiry on whether agriculture can be brought under the ambit of 'trade and commerce' because as has been traditionally understood and used, agriculture is an occupation. If agriculture is an occupation, clearly, the concurrent list does not give an upper hand to Parliament.
Besides, if foodstuff or other produce are considered one and the same as agriculture, despite all the entries under the state list on agriculture and its related activities, the central government could frame laws citing foodstuff and public interest.
The constitutional court will also be called upon to examine if 'agriculture', ‘taxes on agricultural income’ and ‘markets and fairs’ are under the state list and within the legislative assembly’s competence, can Parliament pass a law directly on these subjects, especially when either the union list or the concurrent list has no entry relatable to agricultural market?
Legally, there is always a presumption in favour of a law validly passed by Parliament. A constitutional court, therefore, does not stay the operation of the law even as it admits the challenge to their validity.
The Supreme Court has recently admitted a bunch of petitions filed by several MPs and farmers’ groups, and sought a response from the central government. These pleas have challenged the new parliamentary laws on grounds such as they violate fundamental rights; they impinge on states’ power to enact laws; lack of legislative power with Parliament and violation of federal structure. The reply affidavit of the central government may clarify its source of authority and the exercise of power under the Constitution.
The final word, however, will be of the Supreme Court.