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A Supreme Court bench of Justices J.K.Maheshwari and Hima Kohli today stayed the order of Bombay High Court directing Bajaj Allianz to compensate 3.5 lakh farmers from the Osmanabad district of Maharashtra for Soybean crop loss due to heavy rainfall in the Kharif season of 2020.

The stay is however subject to the insurance company depositing a sum of Rs.200 crores with the Registry of Supreme Court in a period of six weeks.

Court has also directed the registry to automatically vacate the stay without the reference of the bench if the amount is not deposited. The Aurangabad bench of Bombay High Court had in May 2022 directed Bajaj Allianz to compensate the farmers noting that should the insurance company fail to compensate the farmers, the state should compensate.

In March 2021, the State government had asked the insurance company and other authorities to grant the claims of farmers on the basis of reports of losses prepared by the competent authorities.

The order of the High Court was passed in a batch of writ petitions filed by farmers challenging the insurance company’s denial of coverage to compensate for their post-harvesting losses. According to Free Press Journal, the pleas contended that they had paid premiums for insurance coverage of their crops. Even the government had contributed part of the insurance premium on behalf of the agriculturists. Reportedly, around 4,57,216 agriculturists were affected in all eight talukas of Osmanabad.

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

According to sources, the insurance company had compensated 72,325 agriculturists by paying an aggregate amount of Rs 87.87 crores. However, it refused to pay claims of a large number of farmers, including the petitioners before the High Court, on the ground that the farmers had failed to intimate the insurance company within 72 hours from the date of alleged loss suffered by them. This disentitled them from such benefit under the said scheme.

The High Court rejected the contention of the insurance company that the farmers have claimed relief beyond the ambit and scope of PMFBY.

When the matter came up before the Supreme Court today, Vivek Tanka, Sr. Adv, appeared for Bajaj Allianz and submitted that the farmers did not intimate the losses to the company on time. He argued that since the losses were not properly intimated, it will become very difficult for the company to ascertain the actual losses. Tanka argued that this would make the company pay a sum of Rs.400 crores putting a severe strain on it financially.

Court upon hearing the submissions asked the company to deposit the entire amount stressing that it is liable to pay the same for the court to grant stay. However, upon being persuaded by Tanka that Rs.400 crores would put a strain on the company, Court agreed to accept a deposit of Rs.200 crores.

It has thus been directed that the insurance company will pay Rs.200 crores in six weeks. Court has further directed the registry to automatically revoke the order of the stay if the amount is not deposited within the stipulated time.

Case title: Bajaj Allianz Vs Dnyanraj & Ors