Under an ancient arrangement, the peasants of Champaran were sharecroppers. The landlords forced the Indian tenants to plant 15% of their holding with indigo and surrender the entire indigo harvest as rent. After Germany developed synthetic indigo, the landlords wanted to dissolve the agreement, as synthetic indigo would be cheaper. They asked the peasants for compensation to release them from this arrangement. Most of them signed it willingly but felt cheated after they learned about synthetic indigo.

Gandhiji fought their case and the evidence that he collected was so overwhelming that the landlords were asked to repay. When Gandhiji asked for 50% repayment, the landlords offered to pay only 25%, as they wanted to create a deadlock, and thus prolong the dispute. To everybody surprise, Gandhiji agreed to a refund of only 25%. Gandhiji explained that the amount of refund was not important. What mattered was that the landlords were obliged to surrender a part of their money and with it, part of their prestige.