Supreme Court Stays Bombay HC Direction To Bajaj Allianz To Compensate 3.5 lakh Farmers Who Suffered Losses In Rains
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The Supreme Court has stayed a Bombay High Court order directing Bajaj Allianz General Insurance to compensate, under the Pradhan Mantri Fasal Bima Yojana, 3,57,287 agriculturists in the Osmanabad District of Maharashtra for post harvesting losses caused to Soyabean Crop in the Kharif Season 2020 on account of heavy rainfall.The Apex Court added that the stay of operation of the impugned...
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The Supreme Court has stayed a Bombay High Court order directing Bajaj Allianz General Insurance to compensate, under the Pradhan Mantri Fasal Bima Yojana, 3,57,287 agriculturists in the Osmanabad District of Maharashtra for post harvesting losses caused to Soyabean Crop in the Kharif Season 2020 on account of heavy rainfall.
The Apex Court added that the stay of operation of the impugned judgment will be subject to the insurance company depositing an amount of Rs.200 crores with the Registry of the Court within a period of six weeks.
The bench of Justices J. K. Maheshwari and Hima Kohli was hearing the SLP against the May decision of the Bombay High Court on a string of PILs praying for direction to the insurance company or the government authorities to compensate or to pay the sum insured to all the insured agriculturists of Osmanabad District for their all the insured crops of Kharif Season 2020 and for other reliefs. Directing the insurance company to sanction and grant compensation/claim for post harvest loss caused to the soyabean crop in Kharip season 2020 to the remaining 357287 agriculturists in Osmanabad district, the High Court had added that if the said amount is not paid by the insurance company within a period of six weeks, the state government is directed to pay such claim for compensation for post harvest loss within a period of six weeks thereafter.
After hearing Senior Advocate Vivek Tankha for the SLP petitioner- insurance company, the bench of Justices Maheshwari and Kohli issued notice on the SLP. The bench proceeded to pass the following order- "In the meantime, there will be a stay of operation of the impugned judgment subject to the petitioner depositing an amount of Rs.200 crores with the Registry of this Court within a period of six weeks from today, as requested. The amount so deposited shall be invested in an interest bearing fixed deposit in a nationalised bank until further orders."
However, the bench added, "In the event the amount is not deposited within six weeks from today, the order of stay shall stand automatically vacated, without further reference to the Court."
The bench granted 6 weeks' time for filing the counter-affidavit.
Mr. Tankha argued, "As per the scheme, in order to be eligible, the claims are to be intimated within 72 hours. Here, the intimations were not received in time...So much time has passed by now, how should we make an ascertainment of the actual losses now?...Moreover, the High Court order refers to the National Disaster Response Fund mechanism and not the Pradhan Mantri Fasal Bima Yojana. With a burden of over 400 crores, I will be shut down".
The bench of Justices Maheshwari and Kohli asked, "There was the March 5, 2021 order of the state (As recorded in the impugned decision of the High Court, it was the case of the Maharashtra government that though agriculturists who had suffered loss due to localised disaster, due to unawareness of the provisions of the scheme, lack of communication and telecommunication equipment during the season, could not give crop loss intimations to the insurance company and were thus deprived from the benefit of the said insurance policy, the state government, through the Commissioner of Agriculture, issued letter of March 5, 2021 to the concerned insurance companies directing to take necessary steps to pay claims based on survey of crop damage prepared as per National Disaster Relief Fund norms, and followed up the matter rigorously with insurance companies in subsequent meetings and notices)...You kept quiet after you got it, you did not challenge it"
Proceedings before the High Court
In the impugned order, the High Court noted that it is not in dispute that the Union of India had floated a scheme namely Pradhan Mantri Fasal Bima Yojana 2020 which was applicable for three years; that the state of Maharashtra was implementing the said scheme and had issued Government Resolution dated 29th June, 2020 through the department of Agriculture. It noted that Clause 7 of the said scheme provided for the protected object of the said scheme; that Clause 7.5 provided for post harvest losses; that the said scheme was applicable to large number of agriculturists in the district; that the state government had executed memorandum of understanding with the insurance company for implementation of the insurance scheme; and that the state government was a nodal agency between the agriculturists and the insurance company.
"The petitioners/agriculturists had paid the insurance premium for such insurance coverage. The state government had also contributed part of the insurance premium on behalf of the agriculturists. During the month of October 2020 there was heavy rain fall in Osmanabad district at the time of harvesting of the crops. The crops were badly damaged. The harvested small hips in the field decayed and decomposed. It is the case of petitioners that, there were germination on the spot. Even after harvesting of the crops stored hips of the crops were putrefied and there was fungus and hips were flown away due to heavy rains and there was huge loss to the Soyabean crop after post harvesting. A perusal of the record indicates that the government had collected total data through Collector and prepared data of different crops and submitted to the Divisional Commissioner. The said report submitted by the Collector would indicate that there was more than 33% loss caused. A perusal of the record further indicates that the Commissioner of Agriculture, Maharashtra vide various letters had informed the different insurance companies and requested to consider post harvesting loss of Soyabean crop and to pay loss suffered by the petitioners. The state government had also conducted the panchanama and had submitted the report to the Commissioner of Agriculture and District Collector. There were about 457216 affected agriculturists and the affected area was 208756.5 in all eight talukas of Osmanabad district causing loss of more than 33%", recorded the High Court.
The High Court further observed that the insurance company did not dispute that there was a post harvesting loss for Soyabean crop in Kharip season 2020 due to heavy rain during the month of October 2020; that the insurance company however, has though cleared claims of large number of agriculturists, though made after 72 hours of the incident, did not pay the claims of large number of agriculturists including these petitioners on the ground that there was no intimation or complaint made by the agriculturists within 72 hours and thus they were not entitled for such benefit under the said scheme; that the insurance company also has not disputed that due to such heavy rainfall during the relevant period, the phone lines of the agriculturists were affected and it was not feasible to intimate the insurance company within a period of 72 hours, and that the said heavy rain fall continued for number of days.
The High Court went on to assert, "Be that as it may, the insurance company has not disputed that loss was suffered by more than 33% and accordingly state government directed the insurance company to pay the claims of the agriculturists. The agriculturists had approached the state government collectively in view of the fact that the state government was nodal agency between the agriculturists and insurance company. All the agriculturists in the Osmanabad district were severely affected and thus there was no question of any individual claim. There was wide-spread calamity in the Osmanabad district due to such heavy rain fall and thus no intimation within the period of 72 hours was thus required to be issued by individual agriculturists, nor it was feasible. The agriculturists could not go to their respective farms. We are inclined to accept the statement made by the learned counsel for the petitioners in writ petition and also in the public interest litigation that server of phone company was down".
The High Court further took note that considering these facts, the state government had issued Government Resolution dated 09th November, 2020 and 07th January, 2021 for providing assistance to the agriculturists; that in the additional affidavit filed on behalf of the insurance company, the insurance company has admitted that the insurance company has considered all the claims towards post harvesting losses/localised calamities which were belatedly intimated to the insurance company, that out of the total intimated claims 72235 claims were approved as per merit, and that according to the insurance company, there was average delay upto 9 days in such intimation; that in the additional affidavit in reply, it is admitted that, for the purpose of settlement of belated claims, the survey was carried out through the authorised surveyors and the data/material which was made available through the government agencies or collected during the survey at adjoining lands were considered along with weather reports, and that this exercise was undertaken in view of special instructions from the government to entertain all the intimations of losses irrespective of breach of timeline under the scheme. The High Court noted that in the additional affidavit it is contended that the latitude given to the insured agriculturists who could not intimate losses within timeline as per guidelines could not be extended to the insured agriculturists who failed to intimate the loss during the insured season.The High Court noted that it is an admitted position that, though in large number of cases intimation was not given by the agriculturists individually within 72 hours of the losses, the insurance company has paid those large number of agriculturists and waived their rights under the said scheme. "On one hand, it is the case of the insurance company that the payments were made by the insurance company on the basis of data/material made available through the government agencies or collected during the survey at adjoining lands were considered along with weather report and payment of compensation was made in view of the special instructions from the government to entertain all the intimations of losses irrespective of breach of timeline under the scheme. On the other hand in respect of these agriculturists who are the petitioners in the writ petition and large number of other agriculturists are denied payment on the ground of these agriculturists not having individually intimated the loss within 72 hours from the date of incident. In our view, the action on the part of the insurance company not to release the payment of compensation is discriminatory, arbitrary and without any reasonable basis. The impugned action on the part of the insurance company is in violation of Article 14 of the Constitution of India", held the High Court.
"The insurance company has not denied the submissions made by the petitioners in Writ Petition and in the Public Interest Litigation that the insurance premium collected by the insurance company from the state government for insuring claims of the agriculturists was much more than premium amount of Rs. 32.49 crores paid by the agriculturists, the state government at Rs. 276.17 crores and the central government at Rs. 227.43 crores to insure the losses if any suffered by these agriculturists due to various eventualities covered under the insurance policies issued by the insurance companies. The insurance company has not disputed that, though the insurance company has received total premium of Rs. 436.10 crores, has distributed very meager amount of Rs. 84.68 crores to the selected agriculturists...The learned counsel for the insurance company could not dispute that under the said scheme provision had been made for the assessment of loss of individual farm level to crop losses due to occurrence of localised perils/calamities, hailstorm, landslide, inundation, cloud burst and natural fire due to lightening affecting part of a notified unit or a plots. There was agitation and protest by large number of agriculturists against the insurance company and the state government for not paying their legitimate demand to these petitioners and large number of other agriculturists, though the insurance company has paid selected agriculturists for having made such claim beyond 72 hours from the date of such loss suffered by each of the agriculturists", said the High Court.
"We are inclined to accept the submissions made by the learned counsel for petitioners that, the insurance company is liable to grant claims of eligible agriculturists as per clause11.2E-6 of the G. R. dated 29.06.2020, as the loss caused was more than 25% of the notified area. The individual agriculturist was not required to intimate the insurance company of his loss within 72 hours from the date of such loss suffered by the agriculturist. There is no substance in the submissions made by the learned counsel for the insurance company that the petitioners have claimed relief beyond the ambit and scope of Pradhan Mantri Fasal Bima Yojana effective from Kharip season 2020 as well as G. R. dated 29th June, 2020 issued by the state of Maharashtra. It is not case of the insurance company that the claims for losses made by the agriculturists were not covered by any events covered under the insurance policy issued by the insurance company. The provisions of the claim pressed in service by the insurance company for denying the claims of these agriculturists providing for intimation of individual loss within a period of 72 hours and consequences thereof would not apply to the facts of these cases on various grounds referred to aforesaid", stated the High Court.
The High Court continued to observe that the said Pradhan Mantri Fasal Bima Yojana was being implemented in the state with an object to provide financial support to agriculturists suffering crop loss/damage arising out of unforeseen events, stabilising the income of agriculturists to ensure their continuance in farming, ensuring flow of credit to the agricultural sector. The state government has acknowledged the payment of premium paid by the agriculturists and that total 520175 Hector area had been covered under the said scheme. It is admitted by the state government that agriculturists who intimated their loss through agriculture department and even after 72 hours of natural calamity were also honoured and compensated. The insurance company was also instructed to determine the compensation based on the loss intimation received in offline mode through Agriculture Department after 72 hours of the calamity. A total of 72325 agriculturists were compensated by the insurance company by paying aggregate amount of Rs. 87.87 crores.
"It is case of the state government that though agriculturists who had suffered loss due to localised disaster due to unawareness of the provisions of the scheme, lack of communication and telecommunication equipment during the season, could not give crop loss intimations to the insurance company and were thus deprived from the benefit of the said insurance policy. The state government, however, after considering these difficulties faced by the agriculturists, through the Commissioner of Agriculture issued letter dated 05th March, 2021 to the concerned insurance companies directed to take necessary steps to pay claims based on survey of crop damage prepared as per National Disaster Relief Fund norms and followed up the matter rigorously with insurance companies in subsequent meetings and notices.
In para No. 9 of the said affidavit it is clearly stated that considering huge amount saved at the insurance companys end, it is the stand of Department of Agriculture, government of Maharashtra that agriculturists should be compensated by insurance companies based on crop damage survey report prepared as per NDRF norms. The procedure for survey of damage under NDRF survey to decide claims under said scheme is one and the same. The state government decided that the agriculturists who had participated in the crop insurance scheme and were deprived of benefited of said scheme were treated as special case and shall be benefited of the said scheme on the basis of panchanama conducted by the Department of Revenue, Agriculture and Zilla Parishad for the area affected more than 33%. It is the stand of the state government that agriculturists should be compensated by the insurance companies based on crop damage survey report prepared as per NDRF norms", recorded the High Court.
"We are inclined to accept the stand taken by the state government in the affidavit in reply. The state government has already issued specific directions in this regard vide letters dated 29th September, 2020, 14th October, 2020 and 04th March, 2021 to determine compensation for the localized calamity and post harvest loss and to take steps expeditiously to pay the compensation to who had not given crop loss intimation as per the scheme guidelines. The additional affidavit in reply filed by the insurance company clearly indicates that they have implemented the directions issued by the state government partly and in respect of large number of selective claims and have taken unreasonable stand in respect of balance agriculturists. The insurance company cannot be allowed to discriminate two sets of agriculturists similarly situated. In so far as submission of the learned counsel for the insurance company that these petitions are not maintainable on the ground of alternate remedy not having been availed of by the petitioners is concerned, in our view there is no merit in the submissions of the learned counsel for the insurance company. The insurance company has acted illegally and arbitrarily. The Insurance company has already paid large number of similarly situated agriculturists without those agriculturists availing any alternate remedy pursuant to the directions issued by the state government or otherwise. Two of the petitioners have filed public interest litigation considering he huge loss and trauma suffered by large number of agriculturists of Osmanabad district. The alternate remedy in this situation would not be an efficatious alternate remedy. In our view, the petitioners have thus made out case for reliefs claimed", the High Court had held.
Case Title: M/S BAJAJ ALLIANZ GENERAL INSURANCE CO. LTD. v. DNYANRAJ & ORS.