Compensating farmers: Supreme Court stays HC order against Bajaj Allianz, but asks it to deposit Rs 200 crore

In a relief to the Bajaj Allianz General Insurance Company, the Supreme Court on Thursday stayed the Bombay High Court’s decision that directed it to compensate over 0.35 million farmers from Osmanabad district of Maharashtra, subject to the private insurer depositing Rs 200 crore with its registry within six weeks. It also said that if insurance company failed to deposit the amount, the stay order will stand vacated automatically.

A vacation Bench comprising justices JK Maheshwari and Hima Kohli, while seeking a response from the Union Agricultural ministry, the Maharashtra government and others, said that it will take the decision to release the amount so deposited by the insurance company on the next date of hearing in August.

The HC had on May 6 directed Bajaj Allianz, one of the stakeholders of the Pradhan Mantri Fasal Bima Yojana (PMFBY Scheme), to sanction and grant compensation/claim to as many as 357,287 agriculturists in the Osmanabad district for post-harvest damage caused to the soyabean crop due to heavy rainfall in Kharif season 2020. The HC had also held that if the amount was not paid by the insurance company within six weeks, then the Maharashtra government should pay such claim within six weeks.

While Bajaj was represented by senior counsel Vivek Tankha, counsel Atul Babasaheb Dakhi, Sandeep Sudhakar Deshmukh and others appeared for farmers.

The HC order had come on a PIL seeking to compensate or disburse the crop insurance claims to all the insured agriculturists of Osmanabad district for their insured crops of Kharif Season 2020.

While the Osmanabad district authorities had informed Bajaj about the 33% estimated loss and a total of 457,216 agriculturists being affected, the insurance company had declined to grant benefit to some on the flimsy ground that the complaints should have been raised within 72 hours from the date of alleged loss suffered by them.

The state government had also taken a stand before the HC that Bajaj had received Rs 639.94 crore as premium, but had sanctioned only Rs 87.83 crore towards insurance claims made by some of the agriculturists.

Stating that the HC had virtually rewritten the executive/policy decisions taken by the Central and state governments, and thereby acted to the extreme prejudice of the private insurer, Bajaj told the apex court that the impugned judgment was “over-broad” and imposed and foisted new obligations and liabilities upon Bajaj when its specific role, responsibilities and obligations were clearly delineated and defined under the June 29, 2020 government resolution and the underlying operational guidelines issued by the Maharashtra government for the implementation of the PMFBY Scheme, the appeal stated.

According to the insurance firm, lodging of loss intimation within 72 hours of the occurrence of the incident by the farmer/designated agencies was essential as the loss/damage for localised calamities and post harvest losses were to be assessed at the level of the individual insured farm. Around 65,307 farmers, who had submitted loss intimations in terms of the PMFBY Scheme, in a proper and timely manner, were granted relief to the tune of Rs 87.87 crore, Bajaj said.

It further said that that while determining the compensation under the PMFBY Scheme, the figures declared by any government department/institution cannot be taken into account.

“In fact, Clause 21.6.5 of the operational guidelines issued by the Central government from Kharif 2020 clearly state that pursuant to submission of a duly filled loss intimation form, alongwith all relevant documents, by the affected farmer, the insurance company would appoint loss assessors for assessment of post-harvest losses and ensure strict adherence to the provisions thereof,” the appeal stated, adding that no credible or relevant data or figures were produced in support of such loss to farmers.