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SC stays order directing Bajaj Allianz to clear farmers’ compensation claims
The Bombay high court on May 6 directed Bajaj Allianz to compensate the farmers from Maharashtra’s Osmanabad district within six weeks
The Supreme Court on Thursday stayed a Bombay high court order directing insurance firm Bajaj Allianz to clear compensation claims of over 350,000 farmers in Maharashtra, who suffered crop losses due to excessive rain in October 2020.
“...there will be a stay of operation of the impugned judgment subject to the petitioner depositing an amount of ₹200 crores with the Registry of this Court within a period of six weeks,” a bench of justices J K Maheshwari and Hima Kohli said. It added if the firm fails to deposit the money, the stay shall stand automatically vacated.
The bench issued notices to the Centre, the Maharashtra government, the state agriculture commissioner, Osmanabad collector, and the farmer petitioner on the firm’s plea.
The high court on May 6 directed Bajaj Allianz to compensate the farmers from Maharashtra’s Osmanabad district within six weeks. The firm said the total financial liability would roughly work to over ₹400 crore.
On May 18, Bajaj Allianz moved the top court saying the farmers insured under the Pradhan Mantri Fasal Bima Yojana (PMFBY) were denied compensation as they did not comply with the rule of reporting their losses within 72 hours.
Senior advocate Vivek Tankha, who appeared for the firm, claimed the high court overlooked the fact that only farmers who abided with the 72-hour deadline were eligible for the insurance claims. “This [high court order] will virtually shut us down,” Tankha said. He added the HC applied the guidelines of the National Disaster Response Fund and not PMFBY while passing an omnibus direction to settle the claims. “More than 20 months have elapsed since the crop losses; how do we quantify the damage.”
The bench pointed out the Maharashtra government wrote to the company approving the farmers’ claims on March 5 last year .“What did you do after receiving the order? You did not choose to challenge this order and simply accepted it.”
Advocate Sudhanshu Chaudhary, who represented the lawyers who filed a plea on behalf of the farmers in the high court, claimed the compensation amount would exceed ₹450 crore. He added the firm received a premium of over ₹500 crore under PMFBY. Chaudhary said when it came to disbursal of claims, it rejected them on technical grounds by paying only ₹87.83 crore to 72,325 farmers.
Soybean growers told the high court it was impossible for them to inform the insurance firm about their losses within 72 hours as telephone facilities in the region were badly hit due to the cyclonic storm and rain.
The state government assessed the damage and the firm refused to implement the March 2021 order. The high court accepted the arguments of the farmers and noted they were not compelled to inform the insurance firm within 72 hours. It added it was impossible for the farmers to visit their fields and assess the damage immediately after the disaster.
