In Champaran, most of the arable land had been divided into large estates. Englishmen owned the large estates and Indian tenants were hired to work on these lands. The sharecropping system required the tenants to grow indigo, a major commercial crop, on 15 percent of their landholdings. Every year, the grown indigo harvest was given as rent to the landlord.
However, on hearing about the German synthetic indigo, the British decided to draw a new agreement with peasants. According to this new agreement, the Indian tenants had to pay a certain amount as compensation for being freed from the 15 percent share-crop arrangement. As some peasants found this share-cropping system a hassle they were happy to get rid of it and willingly signed the new agreement, and those who opposed were bullied by landlords into doing so.
When they heard about the synthetic indigo, the farmers who had signed, realized that they had been tricked by landlords and wanted back the money paid as compensation.