Relief For Bajaj Allianz As Bombay High Court Quashes State Notice Demanding ₹374 Crore For Crop Insurance

The Bombay High Court recently quashed and set aside notices issued by the Maharashtra government to Bajaj Allianz General Insurance Corporation (BAGIC) demanding it to pay Rs 374 crores to the farmers in Osmanabad for the loss of their soybean crops due to 'unseasonal rains' categorised as 'localised calamity' under the Pradhan Mantri Fasal Bima Yojna (PM Yojna).

The State had signed an Memorandum of Understanding (MoU) with BAGIC for crop insurance of farmers in the State against all non-preventable natural risks or calamities from pre-sowing to post-harvesting stage, as contemplated as per the pan India policy of the Government of India under the PM Yojna.

The instant litigation stemmed from a dispute between the State and BAGIC over the insurance claims to be paid to the farmers. BAGIC contended that it has already paid Rs 374.61 crores to the farmers for loss of their crops due to the localised calamity that occurred in September and October 2021 as per the Revamped Operational Guidelines (ROG), in all the 42 circles in Osmanabad district. 

BAGIC pointed out that the localised calamity in the form of unseasonal rain occurred between September 23, 2021 and October 10, 2021 and that the harvesting of Soybean crop in Osmanabad commenced on September 17, 2021 and that it continued till November 11, 2021. It argued that because the calamity commenced on September 23, 2021 and the farmers already began harvesting from September 17, 2021, there was not a huge loss to the farmers and thus, as per the ROG issued under the PM Yojana by the Union Government, it rightly paid only the 50 per cent of the total claims. 

However, the State claimed that BAGIC only paid 50 per cent of the insurance claims and that it was supposed to pay the equivalent amount to the farmers in the district. It contended that the State had notified harvesting period from October 15, 2021 to November 15, 2021 as the 'normal harvesting' period. 

Therefore, the State authorities, purportedly exercising the powers under the provisions of the Maharashtra Land Revenue Code, 1966 (MLR Code), sought to recover the amount towards arrears of land revenue and in the process, issued directions for even freezing the bank account of BAGIC.

BAGIC argued that the State authorities particularly the Collector lacked jurisdiction in issuing the impugned communications and orders, on the basis that the alleged amount due cannot be recovered as arrears of the land revenue under the MLR Code.

A division bench of Justices Manish Pitale and Yanshivraj Khobragade noted that all payments under the MOU were made directly into the accounts of the individual farmers and that under the PM Yojna, the State and the Central governments together paid the majority share of the premium towards the MoU i.e. the insurance contract, the beneficiaries were the farmers and not the State Government.

"Therefore, the said amount of money sought to be recovered by the State authorities, is not legally claimable by or on behalf of the State. On this score itself, the State, cannot claim that the alleged amount due from the petitioner - insurance company, can be said to be towards recovery of land revenue. The State can refer only to the MoU (the insurance contract). But, the said MOU also does not concern land. It concerns insurance of crops under the PM Yojna. In any case, the MoU does not contain any clause that amount recoverable under the same, shall be treated as arrears of land revenue," the bench said in the order passed on September 12. 

The bench referred to the figures pertaining to average or the actual yield of Soybean crop for Osmanabad for Kharif season - 2021 in each of the 42 circles, was much higher than the threshold yield.

"The data provided by the State itself shows that in case of all the 42 circles of Osmanabad concerning the notified crop Soybean, there was no actual loss suffered. This was because the actual yield in all the 42 circles of the Osmanabad was found to be more than threshold yield. Therefore, this Court is unable to agree with the State that the petitioner – insurance company was being rapacious while denying the claims raised by the State on behalf of the farmers," the judges observed. 

With these observations, the judges disposed of the petition. 

Appearance:

Senior Advocate Sharan Jagtiani along with Advocates Bomi Patel, Naval Sharma, Saket Satapathy, Shraddha Achaliya, Sarthak Bahira, Mansi Tyagi and Mohit Deshmukh instructed by Tuli & Company Petitioner. 

Advocates VD Salunke and Yogesh Bobade appeared for Farmers.

Senior Advocate RN Dhorde along with Assistant Government Pleader VM Kagne represented the State. 

Deputy Solicitor General AG Talhar along with Standing Counsel Ravi Bangar represented Union of India. 

Case Title: Bajaj Allianz General Insurance Co. Ltd. vs State of Maharashtra (Writ Petition 11973 of 2022)

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