The KARNATAKA OIL PALM (REGULATION OF CULTIVATION, PRODUCTION AND PROCESSING) ACT, 2013

KARNATAKA ACT NO.56 OF 2013 
THE KARNATAKA OIL PALM (REGULATION OF CULTIVATION, PRODUCTION AND 
PROCESSING) ACT, 2013 
Arrangement of Sections 
STATEMENT OF OBJECTS AND REASONS 
Sections: 
1. Short title and commencement 
2. Definitions 
3. Constitution of Project Management Committee 
4. Functions of the Project Management Committee 
5. Constitution of Price Fixation Committee 
6. Functions of the Price Fixation Committee 
7. Appointment of Oil Palm Commissioner and Oil Palm Inspectors 
8. Power of the Oil Palm Commissioner 
9. Power of the Oil Palm Inspector 
10. Meetings of the Project Management Committee and the Price Fixation Committee 
11. Registration  of Oil Palm Growers 
12. Declaration of factory zone 
13. Failure to buy Fresh fruit bunches (FFB) by the Entrepreneur/Occupier of a factory 
14. Failure to achieve the objectives envisaged/targets assigned 
15. Power to cancel area allotment / reallotment of area to Entrepreneurs 
16. Payment of price for oil palm fresh fruit bunches 
17. Report 
18. Penalties 
19. Power to recover subsidy or assistance granted 
20. Compounding of offences 
21. Protection of Acts done in good faith 
22. Offences by firm, company or Association of individuals 
23. Power of the Government to give directions 
24. Delegation of Powers 
25. Power to make rules 
 
STATEMENT OF OBJECTS AND REASONS 
Act 56 of 2013.-  In order to meet the growing demand for edible oils, oil palm was identified  
as a suitable crop for cultivation in the country in view of its high oil yielding capacity.  Karnataka is 
one of the States wherein the Oil Palm Project has been taken up with the Government of India 
assistance.  Since, fresh fruit bunches of oil palm have to be processed within 24 hours of plucking to 
extract oil, a  close coordination between the grower and processor is necessary.  Therefore, it is 
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considered necessary to have a legislation for regulation of cultivation, production and processing of 
oil palm and for matters connected therewith.  The Bill among other things provides for;- 
(i) Assuring the grower sale of his produce and payment for sale of such produce; 
(ii) Constitution of a Project Management Committee to take measures regarding 
development of oil palm cultivation through implenentation of programme of Oil Palm 
Development in the State; 
(iii) Constitution of a Price Fixation Committee to ensure the grower reasonable price for 
oil palm fresh fruit bunches; 
(iv) Appointment of Oil Palm Commissioner to Co- ordinate activities of oil palm growers 
and the industries engaged in processing oil palm and for exercising such powers as 
are indicated by this Act; 
(v)  Declaration of factory zone for the purpose of ensuring regular supply of fresh oil 
palm fruit bunches to the factory situated in the zone; 
(vi) Registration of oil palm growers; 
(vii) Payment of compensation to the oil palm growers by Entrepreneur on account of the 
failure to buy oil palm fresh fruit bunches by the Entrepreneur or Occupier of factory; 
(viii) Proper implementation of Oil palm programme in the State.   
The Bill also provides for certain other incidental matters.    
Hence, the Bill. 
[L.A. Bill No. 5 of  2013, File No. Samvyashae 4 Shasana 2013.] 
[Entry 33 (b) of List  III of the Seventh Schedule to the Constitution of India.] 
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KARNATAKA ACT NO.56 OF 2013 
(First Published in the Karnataka Gazette Extra-ordinary on the twentieth day of August, 2013) 
THE KARNATAKA OIL PALM (REGULATION OF CULTIVATION, PRODUCTION AND 
PROCESSING) ACT, 2013 
(Received the assent of the Governor on the Nineteenth day of August, 2013) 
 
 An Act to provide for the regulation of cultivation, production and processing of oil palm and 
for matters connected therewith. 
 Whereas it is expedient to provide for the regulation of cultivation, production and processing 
of oil palm and for matters connected therewith; 
 Be it enacted by the Karnataka State Legislature in the Sixty fourth year of the Republic of 
India as follows:- 
 1. Short title and commencement. -  (1) This Act may be called the Karnataka Oil Palm 
(Regulation of Cultivation, Production and Processing) Act, 2013. 
 (2) It shall come into force on such date as the State Government may, by notification, 
appoint. 
2. Definitions.- In this Act, unless the context otherwise requires,- 
(a) “Factory” means and includes any premises as defined in the Factories A ct, 1948 
(Central Act 63 of 1948) with the precincts thereof, in any part of which a 
manufacturing process connected with processing of oil palm fruits and products;  
(b) “Factory Zone” means an area declared as a factory zone under section 12; 
(c) “Government” means the State Government; 
(d) “Occupier of the Factory” means any person who has the ultimate control over the 
affairs of the factory and is entitled to be treated as an Occupier and such person 
need not necessarily be a Director of the Board of the Management of the  factory; 
(e) “Oil Palm Entrepreneur” means an entrepreneur  whom the Government has 
recognized for oil palm development in a particular zone and who fulfils all the 
conditions prescribed by the Government in the allotment order issued from time to 
time; 
(f) “Oil Palm” means the Palm of the genus Elaeis and includes the Species  Elaeis 
guinensis and Elaeis oleifera,, malanococoa or corozo and hybrids of these species; 
(g) “Oil Palm Commissioner” means the Oil Palm Commissioner appointed under  sub-
section  (1) of  section 7; 
(h) “Oil Palm FFB” means the unprocessed Oil Palm Fresh Fruit Bunch and includes its 
loose fruit also; 
(i) “Oil Palm Grower” means a person who cultivates Oil Palm whether by himself or by 
his own servants or by hired labour or by members of his family or by his tenants;  
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(j)  “Oil Palm Inspector” means the Oil Palm Inspector appointed under    sub- section(2) 
of  section 7; 
(k) “Oil Palm Product” means any product obtained directly from Oil Palm fruit, includes 
processed  products like  Palm Oil, Palmolein, Palm Stearin, Palm Kernel, Palm Kernel 
Oil, Palm Kernel cake, Palm Fatty Acids oil, Palm seeds and any other  
by-products notified by the Government from time to time; 
(l) Price Fixation Committee means Price Fixation Committee constituted under  
section 5; 
(m) Project Management Committee means Project Management  Committee constituted 
under Section 3. 
3. Constitution of Project Management Committee. -  (1) As soon as may be after the 
commencement of this Act, the Government shall, by notification c onstitute a Project Management 
Committee consisting of the following, namely: - 
(i) The Principal Secretary/Secretary to 
Government, (Horticulture) as the case may be     - Chairman        
(ii) The Secretary to Government (Expenditure) 
  Finance Department or his nominee                    - Member 
(iii) The Director, Project Formulation Division, 
  Planning Department      - Member  
(iv) The Director of Horticulture     - Member 
(v) The Director,  
 Directorate of Oil Palm Research, 
  Pedavegi, Andhra Pradesh or his nominee     - Member 
(vi) A representative of the Government 
 of India, Ministry of Agriculture and  
 Co-operation, Technology Mission on  
 Oil Seeds, oil palm and maize                      - Member   
(vii) The Oil Palm Commissioner            - Member Secretary 
 
 (2) No act or proceeding of the Project Management Committee shall be invalid by reason 
only of the existence of any vacancy or defect in the constitution of the committee, if such act or 
proceeding is otherwise in accordance with the provisions of this Act. 
4 Functions of the  Project Management Committee .- The Project Management 
Committee (PMC) shall perform the following functions, namely:- 
(a) to advise or recommend or approve areas for development  of oil palm cultivation,  
also identify or select suitable entrepreneurs for such areas from time to time and allot 
areas to the identified entrepreneurs. Such entrepreneurs shall enter into a 
Memorandum of Agreement  (MOA) with the Government. 
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(b) to review and monitor the progress of implementat ion of the programme of Oil Palm 
development in the State by the Project staff and take appropriate decisions for the 
development of oil palm in each of the zones; 
(c) to review the functioning of each of the entrepreneurs, from time to time, with respect 
to the objectives envisaged or targets assigned and take appropriate decisions in the 
interest of efficient functioning of the project as envisaged in Memorandum of 
Agreement  ; 
(d) to accord all financial and administrative sanctions for the implementation of  the  
project; and 
(e)  to perform such other functions as may be prescribed. 
5. Constitution of Price Fixation Committee. - (1) As soon as may be after the 
commencement of this Act, the Government shall, by notification, constitute a Price Fixation 
Committee consisting of the following, namely:- 
(i) The Principal Secretary/Secretary to  
 Government,  (Horticulture) as the 
case may be        - Chairman    
(ii) The Director of Horticulture, Bangalore   - Member 
(iii) One Representative nominated by the  
Government  from each of the  
 Entrepreneurs.               - Member 
(iv) Deputy Secretary, nominated by 
 Finance Department      - Member  
(v)  One farmer representative 
nominated by the Government,  
from each of  the  factory zones.    - Member   
(vi) Oil Palm Commissioner           - Member Secretary 
 (2)  Subject to the pleasure of the Government a  non- official member shall hold office for a 
period of three years, from the date of nomination.  A member nominated once to the Price Fixation 
Committee, is not eligible for renomination, for the second time.  
 (3)  A  non- official member may resign his office by writing under his hand addressed to the 
Government, but he shall continue in office until his resignation is accepted. 
 (4) The non–official members of the P rice Fixation Committee shall receive such allowances 
as may be prescribed. 
  (5) The Government may remove a  non-official member from his office if he,- 
(a) becomes an undischarged insolvent; or 
(b) is convicted and sentenced to imprisonment for an offence which in the opinion of 
the Government involves moral turpitude, or 
(c) becomes of unsound mind, stands so declared by a competent court,  or 
(d) refuses to act or becomes incapable of acting, or 
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(e) has been removed or dismissed from service of the Central Government or the State 
Government or a Local Authority or a Body or Corporation owned or controlled by 
the Central Government or the State Government, or 
(f) in the opinion of the Government has so abused the position of the member as to 
render that person’s continuance in office detrimental to the public interest: 
 Provided that no person shall be removed under this clause unless he has been given a 
reasonable opportunity of being heard in the matter. 
 (6) The vacancy caused under sub-section (5) or otherwise shall be filled by fresh nomination. 
 (7) No act or proceedings of the Price Fixation Committee shall be invalid by reason only of 
the existence of any vacancy or defect in the constitution of the Price Fixation Committee, if such act 
or proceeding is otherwise in accordance with the provisions of this Act. 
           (8) Power to propose MSP for Fresh Fruit bunch  based on the technical committee report to 
the Government from time to time.  
6. Functions of the Price Fixation Committee. -(1) The Pr ice Fixation Committee (PFC) 
shall perform the following functions,  to recommend or approve the price for purchase of oil palm 
Fresh Fruit Bunches having regard to,- 
(a) the prices at which Crude palm oil produced from Oil Palm Fresh Fruit Bunch is 
sold by  a factory; 
(b) the recovery of oil from Fresh Fruit Bunch; 
(c) the prices of crude palm oil in international market, and in other states in the 
country; 
(2) To convene a meeting once in four  months to fix the price of Fresh Fruit Bunch and to 
discuss related issues.  
(3) To perform such other functions as may be prescribed. 
(4) No person shall sell or agree to sell oil palm Fresh Fruit Bunch to the 
Entrepreneur/Occupier of a factory and no such Entrepreneur/ Occupier shall purchase or agree to 
purchase Fresh Fruit Bunch, at a price lower/higher than the price specified under sub-section (1). 
 7. Appointment of Oil Palm Commissioner and Oil Palm Inspectors. - (1) The 
Government shall appoint an officer of the Department of Horticulture not below the rank of Additional 
Director of Horticulture as the Oil Palm Commissioner  to exercise the powers and perform the 
functions of the oil palm commissioner under this Act. 
 (2) The  Senior Assistant Director of  Horticulture  or Assistant Directors of Horticulture or  
Assistant Horticulture Officers , as the case may be, be appointed by the Government to be the oil 
palm inspectors within the areas of  their respective jurisdictions to exercise the powers and perform 
the functions of the oil palm inspectors under this Act. 
8. Power of the Oil Palm Commissioner . - (1) The Oil Palm Commissioner shall exercise 
the following powers, namely:- 
(i) to co -ordinate the activities of the oil palm growers and industries/ entrepreneurs 
engaged in the production and processing of Palm Oil; 
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(ii) to act as a  nodal officer/ monitoring officer for development of Oil Palm in the State; 
(iii) to monitor the progress achieved by each of the entrepreneurs in the development of 
oil palm and make suitable recommendations to Project Management Committee for 
decisions. 
(iv) to exercise such other powers as may be prescribed. 
 9. Power of the Oil Palm Inspector .- The Oil Palm Inspector  shall exercise the following 
powers, namely:- 
(i) to assist the Oil Palm Commissioner in the exercise of his powers and discharge of his 
duties;  
(ii)  to exercise such powers as are delegated to him by the Project Management 
Committee and Oil Palm Commissioner; and 
(iii) to exercise such other powers as may be prescribed. 
  10. Meetings of the Project Management Committee and the Price Fixation Committee. - 
(1) The meetings of the Project Management Committee or the Price Fixation Committee may be 
convened by  the Chairman of the respective Committee. 
 (2) The Chairman of the Project Management Committee or the Price Fixation Committee 
may if he/she feels it necessary convene a special meeting . 
 (3) The quorum at the meeting and the procedure of the meeting  of the Project Management 
Committee or the Price Fixation Committee shall be such as may be prescribed. 
 (4) Every meeting of the Project Management Comm ittee or Price Fixation Committee shall 
be presided over by its Chairman and if for any reason the Chairman is unable to attend the meeting, 
any other member nominated by the Chairman or any other member chosen by the members present 
at the meeting shall preside over the meeting. 
 11. Registration  of  Oil  Palm   Growers.- (1) Every Entrepreneur/ Occupier of a factory in a 
factory zone shall maintain in such form and in such manner as may be prescribed a Register of Oil 
Palm Growers in the zone attached to the factory.  The register shall be updated every year and shall 
always be available in the office of the factory for inspection by the Oil Palm Commissioner  or Oil 
Palm Inspectors.   
 (2) The Oil Palm Inspector may  at any time inspect an Entrepreneur's office/factory and verify 
such records, reports, statements and registers as may be required to be maintained and may also 
direct the Entrepreneur/Occupier of the factory to produce them for his verification.  
 12. Declaration of factory zone. - (1) The Pro ject Management Committee may notify any 
area as factory zone for the purpose of supply of Fresh fruit bunches, to the factory specified for the 
purpose or for purchase of oil palm Fresh fruit bunches and any other oil palm product by the factory. 
 (2) Where any particular area is notified as factory zone under sub section (1), the Oil Palm 
Growers in that area shall supply oil palm Fresh fruit bunches from the oil palm plantations grown in 
that area only to the factory to which the factory zone is attached.  
(3) Where a particular factory zone is notified under sub- section (1) the oil palm 
Entrepreneur/Occupier of the factory in the concerned factory zone shall buy all the oil palm fresh 
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fruit bunches produced by the Oil Palm Growers in that factory zone as are offered for sale by them, 
at a price fixed by the Price Fixation Committee under this Act. 
(4) The entrepreneur shall establish their oil palm processing unit within three years of 
allotment of the area and shall keep the Oil Palm Commissioner informed about the action taken in 
setting up of the mill.  In case the entrepreneur does not commence the processing of oil extraction 
unit, within the time limit, the entrepreneur shall supposed to purchase Fresh Fruit Bunches in their 
allotted area as per the rates fi xed by the Price Fixation Committee and arrange for processing 
without loss in weight of Fresh Fruit Bunches and the entrepreneur shall be subjected to actions as 
per the terms and conditions stipulated by the Memorandum of Agreement. 
 13. Failure to buy Fresh fruit bunches (FFB) by the Entrepreneur/Occupier of a factory.- 
(1) Where the Entrepreneur / Occupier of a factory fails to buy all the oil palm fresh fruit bunches from 
the oil palm growers in the factory zone notified in relation to the factory, wit hout any valid reasons, 
such oil palm Entrepreneur/Occupier of factory shall, in addition to the penalty specified in section 18 
be liable to compensate the loss that may have been caused to the Oil Palm Grower as may be 
determined by the Oil Palm Commissioner: 
Provided that the Entrepreneur/Occupier of a factory shall assign reasons for such refusal to 
buy a particular consignment of oil palm Fresh Fruit Bunch from an Oil Palm Grower, before the 
compensation is determined by the Oil Palm Commissioner. 
 Provided further  that reasons such as damage, inefficient running, break down of 
plant/machinery, failure to use capacities and any other operational problems shall not be valid 
reasons for refusal to buy the consignment of oil palm Fresh fruit bunches and s hall be treated as 
failure. 
 Provided also that if there is any dispute whether there are valid reasons for the oil palm 
Entrepreneur/Occupier of factory for the failure to buy oil palm Fresh fruit bunches, the Oil Palm 
Commissioner shall be competent to decide such dispute. 
(2) Any person aggrieved by the Order of Oil Palm Commissioner under sub- section (1) shall 
prefer an appeal to the Government within a period of thirty days from the date of such order.  
14. Failure to achieve the objectives envisaged/t argets assigned. -Where the 
Entrepreneur fails to achieve the objectives envisaged or targets assigned from time to time by the 
Oil Palm Commissioner, the Project Management Committee reserves the right to review this failure 
in its meeting, and if satisfied, cancel the right of area allotment of such  
non-performing entrepreneurs, after giving a reasonable opportunity to the Entrepreneur to explain 
his poor performance, in achieving the objectives envisaged or targets assigned. 
15. Power to cancel area allotment / reallotment of area to Entrepreneurs.- The Project 
Management Committee after examination of the explanation under section 14 submitted by the 
entrepreneurs and if satisfied that the explanation given by the entrepreneur for poor performance is 
not satisfactory, take a decision to order penalty under section 18 or may withdraw the area allotment 
of such entrepreneur.  The decision of the Project Management Committee in area allotment/ 
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performance assessment/cancellation of allotted area/reallotment of new area to another 
entrepreneur shall be final. 
 16. Payment of price for oil palm fresh fruit bunches. - (1) Upon the delivery of oil palm 
Fresh Fruit Bunches, the Entrepreneur/Occupier of a factory shall pay the price of the oil palm Fresh 
Fruit Bunches so supplied as per the price fixed by the Price Fixation Committee  before 10
th of every 
month. 
 (2) The price of the Oil Palm fresh fruit bunches remaining unpaid on the expiration of the 
period specified in sub -section (1) shall carry interest at fift een percent per annum from the date of 
delivery of oil palm fresh fruit bunches and it shall be recovered from the oil palm 
Entrepreneur/Occupier of factory as if it were an arrears of land revenue. 
(3) The company shall submit the statement of accounts co ntaining details of payment made 
to the farmers in the prescribed format to the Price Fixation Committee or Oil Palm Commissioner 
before 5
th  of every month. 
17. Report.-  The Project Management Committee and Price Fixation Committee shall before 
such date, in such form and at such period as may be prescribed, submit a report to the Government 
about the progress of oil palm  development Project in the State. 
 18. Penalties. - Every oil palm Entrepreneur/Occupier of a factory who contravenes any 
provisions of this Act or of any rule or order made there under where no penalty has been provided 
for such contraventions shall be punishable with fine which may extend to one lakh rupees. 
 19. Power to recover subsidy or assistance granted.- (1) If any Oil Palm Plantation or part 
thereof in respect of which subsidy or any other assistance has been granted under Oil Palm 
Development Scheme is  willfully  uprooted by the Oil Palm Grower with or without the knowledge of 
the Government or the factory,  the Government  shall have the right to recover from such Oil Palm 
Growers, the entire amount already paid  by way of subsidy or assistance with interest on the total 
amount from the date on which it shall become due. The dues shall be recovered from the farmers as 
if it were an arrears of land revenue. 
 (2) If any oil palm Entrepreneur, after receiving advance planting material subsidy does not 
successfully raise the oil palm seedlings in the nursery, or transfers oil palm seedlings outside the 
state, or sells oil palm seedl ing to another oil palm entrepreneur, without approval of the Oil Palm 
Commissioner, the Government shall have the right to recover from such oil palm Entrepreneur the 
entire amount released as planting material subsidy, with interest on the total amount f rom the date 
on which it shall become due. 
 (3) If any oil palm Entrepreneur, after receiving advance on- farm-investment subsidy, utilizes 
such subsidy for ineligible items, which are not permissible under the guidelines or which have not 
been permitted by  the Project Management Committee, the Government shall reserve the right to 
recover from such oil palm oil palm Entrepreneur such amount as utilized on ineligible items, with 
interest thereon from the date it shall become due. 
 20. Compounding of offences .-  A summary enquiry may be conducted by the Oil Palm 
Commissioner into an offence committed which is punishable under this Act and order may be 
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passed imposing penalty by way of compounding of offence a sum not exceeding Rupees Fifty 
thousand.  The Oil Palm Commissioner may authorize a subordinate official to collect the amount of 
penalty.  The Penalty so collected shall be remitted in the PD account under Oil Palm Project. 
 21. Protection of Acts done in good faith. - No suit, prosecution or other legal proceedings 
shall lie against Government or any Officer or Official for any thing which is done in good faith or 
intended to be done in pursuance to any provisions of the Act or any rule or order made thereunder. 
 22. Offences by firm, company or Association of individuals. - (1) Where the oil palm 
Entrepreneur/Occupier of the factory is a firm or an Association of individuals, any one or more of the 
partners or members thereof may be prosecuted and punished under this Act for any offence for 
which the oil palm Entrepreneur or Occupier of the factory thereof is punishable; 
 Provided that the firm or association may inform the Oil Palm Commissioner  in writing that 
they have nominated one of their partners or members as the Occupier of the factory for the purpos e 
of this Act and such partner or member shall be deemed to be the oil palm Entrepreneur or Occupier 
of the factory for the purpose of this Act, until further information  cancelling his nomination is 
received by the Oil Palm Commissioner  or until he cease s to be a partner or member of the firm or 
association, as the case may be. 
 (2) Where the oil palm Entrepreneur or Occupier of the factory is a Company or a Co-
operative Society, any one or more of its Directors, or as the case may be, members of the 
Committee may be prosecuted and punished under this Act for any offence for which the oil palm 
Entrepreneur or Occupier of the factory is punishable: 
 Provided that the Company or Co- operative Society may inform in writing the Oil Palm 
Commissioner that they have nominated a Director or a share holder of such company or a member 
of such Co -operative Society or its committee to be the oil palm Entrepreneur or Occupier of the 
factory for the purpose of this Act and such Director, share holder or member shall be deemed to be 
the oil palm Entrepreneur or Occupier of the factory for the purposes of this Act, until further notice 
cancelling his nomination is received by the Oil Palm Commissioner or until he ceases to be a 
Director, share holder or member as the case may be. 
 23. Power of the Government to give directions. - The Government may give such 
directions to the Project Management Committee, Price Fixation Committee or to the Oil Palm 
Commissioner, as in its opinion are necessary or expedient for carrying out the purposes of this Act 
and it shall be the duty of the Project Management Committee or Price Fixation Committee or the Oil 
Palm Commissioner to comply with such directions.  
 24. Delegation of Powers.- The Government may, by notification, delegate all or any of its 
power under this Act, except the power to make rule under section 25, to any person or authority 
subordinate to it subject to such restrictions and conditions as may be specified in such notification. 
25. Power to make rules. - (1) The Government may, by notification and after previous 
publication, make rules for carrying out all or any of the purposes of this Act. 
 (2) Every rule made under this Act shall be laid as soon as may be after it is made, before 
each House of the State Legislature while it is in Session for a total period of thirty days which may 
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be comprised in one session or in two or more successive sessions, as the case may be, and if 
before the expiry of the session in which it is so laid or the session immediately following, both the 
Houses agree in making modification in the rule or both the Houses agree that rule should not be 
made the rule thereafter, shall have effect only in such modified form or be of no effect, as the case 
may be, so, however, that any such modification or annulment shall be without prejudice to the 
validity of anything previously done under that rule. 
The above translation of 
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C¢ü¤AiÀĪÀÄ, 2013 (2013gÀ PÀ£ÁðlPÀ C¢ü¤AiÀĪÀÄ ¸ÀASÉå:56) be published in the official Gazette under clause 
(3) of Article 348 of the Constitution of India. 
 
H.R.BHARDWAJ 
GOVERNOR OF KARNATAKA 
 
By Order and in the name of the Governor of Karnataka 
 
K.S. MUDAGAL 
Secretary to Government (I/c) 
Department of Parliamentary Affairs and Legislation 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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