SC stays Bombay HC order asking insurance firm to compensate farmers for crop loss under PMFBY

The Supreme Court has stayed a Bombay High Court order which had asked Bajaj Allianz General Insurance Company Ltd. to compensate over 3.5 lakh farmers under the Pradhan Mantri Fasal Bima Yojana (PMFBY) for loss of soya bean crop due to heavy rainfall in 2020. A Supreme Court vacation bench comprising justices J K Maheshwari and Hima Kohli, however, asked the insurance company to deposit Rs 200 crore with its registry within a period of six weeks from June 16.

In a major relief to soya bean farmers of Osmanabad district of Maharashtra who had suffered crop loss due to heavy rainfall in the Kharif season of 2020, the Bombay High Court circuit bench in Aurangabad recently directed the insurance company to compensate them.

The insurance firm was represented in the Supreme Court by senior advocate Vivek Tankha and other lawyers including Tanvi Dubey.

While issuing notice on the appeal of the insurance firm, the SC bench, on June 16, said, “In the meantime, there will be a stay of operation of the impugned judgment subject to the petitioner depositing an amount of Rs 200 crore with the Registry of this Court within a period of six weeks from today, as requested. The amount deposited shall be invested in an interest bearing fixed deposit in a nationalised bank until further orders.”

In the event the amount is not deposited within six weeks, the order of stay shall stand automatically vacated without further reference to the court, it ordered.

The bench directed the petitioner farmers and the state government to file their replies within six weeks.

The high court, while directing the insurance firm to compensate the farmers, had said that if the company failed to pay then the state government should compensate the farmers for the crop loss.

“If the amount is not paid by the insurance company…the state government is directed to pay such claim for compensation for post-harvest loss caused to the soybean crop in Kharif season 2020 to remaining 3,57,287 agriculturists of Osmanabad district within a period of six weeks thereafter,” the high court had said.

The high court order had come on a batch of petitions of the farmers challenging the refusal of their insurance coverage for their post-harvesting losses.

The farmers had submitted that they had paid premiums for insurance coverage of their crops.

The high court was also informed that the insurance company received over Rs 500 crore as premium under the Pradhan Mantri Fasal Bima Yojana from farmers in Osmanabad.