BEFORE THE A.P.STATE CONSUMER DISPUTES REDRESSAL COMMISSION: HYDERABAD.

F.A.No.421/2013 against C.C.No.51/2012, District Forum, Nalgonda.

Between:

The Divisional Manager

Agriculture Insurance Company of

India Ltd., (Weather Based Crop

Insurance Scheme), United India

Towers, Basheerbagh,

Hyderabad.                                                                ..Appellant/

                                                                                 O.P.No.2

                        AND

Sri N.Seetharama Reddy

S/o.Sri Venkat Ram Reddy

Aged 66 years, Occ:Agriculture

R/o.Irugantipally Village of

Kanagal Mandal,

Nalgonda District 508 001.                            Respondent/

                                                                        Complainant

The Asst.Director, Horticulture,

Nalgonda, Collectorate complex, MLG Road,

Nalgonda Town-508 001.                              Respondent/

Counsel for the  Appellant : M/s.A.Jayanthi.

Counsel for the Respondents:M/s P.Rajasekhar Reddy-R1

                                        R2-G.P.for state.

QUORUM: HON’BLE SRI JUSTICE GOPALA KRISHNA TAMADA, PRESIDENT.

AND

SRI R.LAKSHMI NARASHIMHA RAO, HON’BLE MEMBER.

WEDNESDAY, THE TWENTY THIRD DAY OF APRIL,

TWO THOUSAND FOURTEEN

Order (As per Sri R.LakshmiNarasimha Rao, Hon’ble Member).

***

The opposite party no.2 is the appellant. The appeal is challenge to the order dated 30-3-2013 passed by  the District Forum in C.C.No.51/2012 whereby the appellant was directed to deposit an amount of Rs.80,000/- towards the sum assured and an amount of Rs.5,000/- towards compensation with interest at 9% p.a. on account of deficiency in service on the part of the appellant as also a sum of Rs.2,000/- towards costs.

The facts leading to filing of the appeal are that the first respondent raised Orchid (sweet orange) crop in his Ac.5-00 gts of land comprised in survey numbers. 27 28 and 39 at Irugantipalli village of Kanagal Mandal in Nalgonda district.  The first respondent paid an amount of Rs.4,370/- towards the crop insurance premium and he paid the insurance premium to the appellant through the second respondent.

As per the terms and conditions of the crop insurance scheme, the appellant has to pay the sum assured of Rs.2,00,000/- in case of loss or damage to the crop due to natural calamities during July, 2010 to March,2011. On account of drought, the first respondent’s insured crop was affected and he claimed the sum assured from the respondent no.2 who advised him to approach the appellant and as the appellant had not paid the amount, the first respondent filed the complaint.

The second respondent did not choose to contest the case.

The appellant resisted the claim on the premise that it had no knowledge of the first respondent’s ownership of the land in survey numbers 27,28 and 39.  The appellant submitted that the Government of Andhra Pradesh issued G.O.No.973 dated 20.07.2010 to the effect the sweet lime crop raised during the khareef season in Nalgonda was notified for insurance coverage. The appellant implemented the scheme which is weather based and meant to mitigate the hardship of farmers by rendering assistance to meet out the damage caused to the crop on account of less rain fall or excess temperature.

The appellant submitted that the assured sum is payable in case of adverse weather conditions or deficit rain fall and the individual farmer is not entitled to claim the assured sum which is payable to the group of farmers as a whole in a Mandal subject to the condition that such Mandal is notified by the State Government as affected by either less rain fall or excess heat. Kanagal Mandal was not declared to be qualified to be notified and the first respondent being an individual farmer has no locus standi to maintain the complaint.

The first respondent filed his affidavit and the documents, ExA1 to A9 while the second respondent as also the appellant filed their affidavits and the documents, ExB1 to B4.

The District Forum allowed the complaint on the premise that the appellant accepted the premium from the first respondent and not from the farmers as a whole from the Mandal and as such the appellant is estopped from raising objection that the first respondent is eligible to claim the assured sum only when the Government declared the Mandal to be affected by less rain fall. The District Forum held that the sweet orange raised over Ac.5-00 gts. of the first respondent was affected by less rain fall and therefore, the first respondent is entitled to an amount of Rs.80,000/- towards the sum assured in terms of the scheme along with other reliefs mentioned above.

Aggrieved by the order of the District Forum, the opposite party no.2 has filed appeal contending that the first respondent is not eligible for the claim as per the guidelines of the scheme. The appellant has contended that the scheme does not cover crop loss suffered by an individual farmer and the scheme is operated on area approach whereby assessment of compensation is made on reference unit area.

The appellant further  contended that in case there are weather aberrations as per the term sheet in any of the notified Mandal, all the insured farmers of the Mandal would receive the compensation irrespective of the crop damage of the individual farmer and according to the notification, the scheme has been defined and the triggers of weather perils had been indicated for rain fall, temperature and relative humidity for each Mandal based on weather data provided online by APSDMS and the claims of the insured farmers would be settled and that Kanagal Mandal was not qualified to be notified for Kharif season,2010.

The learned counsels for the appellant and the first respondent have filed written arguments.

The point for consideration is weather the order of the District Forum suffers from mis-appreciation of facts or law?

The central government had introduced weather based crop insurance scheme to mitigate the hardship of the farmers against the likelihood of financial loss on account of conditions of weather parameters like Temperature, Rainfall, Humidity etc.. The scheme is operated on Area Approach and the Government of Andhra Pradesh had notified two crops, Oil Palm in West Godavari district and Sweet Lime in Nalgonda district in addition to cotton crop in Adilabad and Red Chilly crop in Warangal and Guntur districts. The scheme was implemented by the State Government with effect from 3rd March ,2010 for the year 2010-2011.

The Draft Notification Proposal would show that all the cultivators growing the notified crops in any of the Reference Unit Area are eligible for the insurance coverage. The Joint Secretary to Government of India in his letter dated 3rd March,2010 addressed to the appellant and eight others, made it clear the Government of India had decided to continue with implementing of Pilot WBCIS which was introduced during Rabi 2009-10, for the  Kharif 2010 season on existing pattern. The main features of WBCIS for Kharif 2010 season as mentioned in the letter read as under:

Among various weather parameters like rain, temperature, wind, sunshine etc. rainfall is the most important parameter in context of Indian agriculture particularly for Kharif season.  Therefore, the scheme shall compensate anticipated loss in crop yield resulting from adverse rainfall incidence such as deficit rainfall or  excess rainfall.
The pilot will be applicable to major cereals, millets, pulses, oilseeds and commercial/horticultural crops grown during Kharif season.
All farmers  both loanee and non-loanee, are eligible for coverage under the pilot.  However, insurance will be compulsory for loanee, and optional for non-loanee farmers.
The pilot will be implemented  by Agriculture Insurance Company of India Ltd., (AIC) and Private Insurance Companies i.e. ICICI-Lombard General Insurance Company, IFFCO-TOKIO General Insurance Company & Cholamandalam MS General Insurance company.
All Insurance Companies (Public and Private) participating in pilot will be allowed to implement the same for loanee and non-loanee farmers.
Areas, where WBCIS will be implemented, will be notified by the State Governments concerned.
Pilot scheme will be compulsory for loanee famers for the crop(s)

notified by the State Government in selected area(s).  However, both NAIS and Pilot WBCIS will continue for implementation for non-loanee farmers and non loanee farmers can choose between NAIS and WBCIS, and also insurance company for Pilot WBCIS.

Concerned States will earmark areas of implementation of the pilot to each implementing agency, for loanee farmers, keeping in view farmers choice/preference, M/s Cholamandalam MS General Insurance Company may be considered only in States of Tamil Nadu and Jharkhand, besides other implementing agencies.
Insurance companies will work out their products/schemes particularly in respect of charging premium rates, risk coverage, sum insured, payment of claims and premium subsidy and such other parameters, that Government of India may specify in accordance with guidelines to be issued from time to time, by Government of India and subject to the approval of IRDA.
Maintaining maximum limit of sum insured broadly equivalent to cost of cultivation, non-loanee farmers will have flexibility to insure smaller amounts within maximum limit, but not less than 50% of maximum limit of sum insured.
Actuarial rates of premium would be worked out by insurance companies including AIC using Standard Premium Rating Methodology and rates are capped at 10% for food crops & Oilseeds.  Farmers will actually pay premium for food and oilseeds crops at par with existing rates of NAIS in Kharif season.  Difference between actuarial rates and flat rates in respect of food and oilseed crops shall be shared by Central and State Government on 50::50 basis.
In case of annual commercial/horticultural crops, maximum cap of 6% on premium payable by farmers has been provided as given below:

Premium Slab

Subsidy by Central and State Government on 50::50 basis and premium payable by farmer

Upto 2%

No subsidy

25% subsidy subject to minimum net premium of 2% payable by farmer.

40% subsidy subject to minimum net premium of 3.75% payable by farmer

50% subsidy subject to minimum net premium of 4.8% and maximum net premium of 6% payable by farmer

In case of annual commercial/horticultural crops, cap of 12% on actuarial rates of premium will be applicable.
To make risk coverage acceptable as per IRDA Regulations, Private Insurance Companies (ICICI-Lombard, IFFCO-Tokio and Chola MS) my draw funds (i.e. subsidy part of the premium) periodically from AIC as per guidelines issued by this Department vide letter No.13011/02/2007-Credit II (Pt) dated 9th October, 2009.
All payable claims shall be the responsibility of insurance company concerned.
Private Insurance Companies will be entitled for same level of subsidy as applicable to AIC which would be routed through AIC.

The Operational Modalities prescribed in the G.O.Ms.No.973 define Reference Unit  Area, Reference Weather Station, eligibility criterion of the cultivators for the crop insurance coverage, Perils covered, Risk Period etc., Reference Weather Stations and Area Approach upon which the learned counsel for the appellant has laid stress read as follows:

        “2.Reference Weather Stations

        The lists of Reference Unit Areas (RUAs) in the respective districts  notified along with a list of corresponding Reference Weather Stations (RWS) and Back up Weather Stations (BWS) is annexed (annexure III.1 to III.2).  In cases of non availability of weather data from the mentioned Reference Weather Stations or from Back up Weather Stations, as alternative, State Govt. Mandal level Rainguage Stations/IMD Weather Stations will be considered for weather data updation”.

        “3.AREA APPROACH

        Reference unit areas are linked to specific reference weather

Stations and the reference unit areas are the Geographical areas situated around the reference weather stations, which is deemed to be reflective of the reference Weather Stations’ for weather data.  To the extent feasible, such Reference  Unit Area shall be restricted to mandal for notified weather parameters”.

The learned counsel for the appellant has contended that the first respondent as an individual farmer is not entitled to claim since the scheme is implemented on area approach basis and Kanagal Mandal is not qualified to be notified for the relevant period. She has further contended that the first respondent signed declaration to the effect that he is bound by the provisions of the Weather Based Crop Insurance Scheme and the product structure therein and the District Forum cannot go beyond the provisions of the scheme to say that the scheme is not based on sound reasoning.  She has relied upon the following decisions:

Andhra Pradesh Rythu Sangham vs Union of India and others’ 2002(2) ALD 486(DB).
Ajithsinh Malunbhai Guhmmad vs. General Insurance Corporation of India & Ors. in R.P.No. 1519 of 2008 decided on 28.11.2007.
Payyavula Purnachandra Rao vs.  The Manger, Agriculture Insurance Company of India and another  in C.C.No. 118 of 2011, C.C.No. 119 of 2011 and C.C.No. 120 of 2011.of  District Forum, Khammam

The learned counsel for the first respondent has contended that ExB4 discloses that the rainfall was much below the specified rainfall in Kanagal Mandal during the relevant period and the appellant for the first time came up with the plea that individual farmer is not entitled to the claim and that the appellant had received premium from the first respondent which would estop the appellant from raising such plea. He has relied on the decisions of the National Commission in “Agricultural Insurance Company of India vs BhanwarLal and others” reported in (2011) 2 CPR (NC) 200.

The Draft Notification Proposal, ExB3 (herein after referred to as Notification) provides for operational modalities and it forms basis to determine whether the first respondent’s claim is sustainable. Clause 1 of the main features of the draft notification proposal would show the crops notified areas  1. Oil Palm in West Godavari and 2. Sweet Lime in Nalgonda districts. Clause 2 deals with Reference Weather Stations in regard to which there is no dispute between the parties. Clause 3 of the Notification would describe how Area Approach has to be adopted and it would restrict the Reference Unit-Area to Mandal for the purpose of considering notified weather parameters.

Clause 4 of the Notification prescribes the cultivators who are eligible to be covered by the terms of the scheme and it takes all the cultivators growing the Notified Crops in any of the Reference Unit Areas making it compulsory for the loanee applicant cultivators and voluntary for non-loanee cultivators to subscribe the scheme. The first respondent is not a loanee applicant and he subscribed to the scheme voluntarily by paying an amount of Rs.34,370/- towards the premium to the appellant.

Clause 5 of the Notification contains the particulars of the perils covered which are deemed to cause ‘Adverse Weather Incidence’ affecting crop health, leading to crop loss and they are:

Deficiency in Daily water Vapour Pressure
Deficit Rainfall 1) Rainfall Volume b) Rainfall distribution
Excess Rain fall           for Oilpalm in West Godavari Dist.
Deficit Rainfall A) Rainfall volume b) Rainfall Distribution
Excess Rainfall
High RH along with High Temperature
Low Minimum Temperature-For Sweet lime in Nalgonda District”.

The weather perils mentioned in Clause 5 of the Notification are covered subject  to operation of Clause 6 providing for Risk Period which commence from 28th July,2010 for Sweet Lime crop in Nalgonda and the coverage details are extracted herein below in the following tabular form:

S.No.

Name of the cover

Phase

Period      from         to            

1.

Rainfall Volume (mm) Deficit

20th July,2010 to

31st August, 2010

2.

Rainfall Distribution (mm) District

26th July,2010 to

15th September, 2010

3.

Excess Rainfall(mm)

Phase-1

1st October,2010 to

31st December, 2010

Phase-2

1st January, 2010 to

31st March, 2010

4.

High RH along with High

Temperature

Phase-1

16th August,2010 to

30th September, 2010

Phase-2

1st September,2010 to

31st October, 2010

5.

Low Minimum Temperature

Phase-1

1st December, 2010 to

31st December, 2010.

Phase-2

1st January, 2011 to

31st January, 2011

Clause 12 of the Notification provides for notified weather parameters and triggers shown specified in ‘Term Sheet’ as the basis for  determination of compensation pay-out and it has restricted the maximum amount payable to the farmer to the extent of  sum insured. Trigger weather is defined by Clause 12 as under:

“Trigger Weather: Trigger Weather is pre-defined and being   

notified as per annexure with reference to the weather parameters and Reference Unit area as detailed above and has been fixed so, keeping in mind the broad weather parameter requirement of Oilpalm crop in different mandals of West Godavari District and of Sweet Orange crop in different mandals of Nalongda District.  The relevant term sheets applicable for the selected mandals of the said districts are annexed herewith.

Deficit Rainfall (Rainfall volume and Rainfall Distribution), Excess  rainfall, High Relative Humidity and Temperature  are the parameters which can be culled from the Term sheet and Weather Date Recorded at Weather Station at Kanagal mentioned in ExB4 would form platform for determination of compensation and the amount quantified thereof. The four parameters are discussed herein below:

I. Deficit Rainfall comprises Rainfall Volume and Rainfall Distribution.

Rainfall Volume: The risk period is covered from 26th July 2010 to 31st August, 2010. In this, 2 triggers are specified. In the first trigger if the cumulative rainfall volume is less than 150 mm and in the second trigger if the cumulative rainfall volume is less than 75 mm during the above risk period. Then in the first trigger for each mm fell short, an amount of Rs.15/- per mm will be paid likewise in the second trigger for each mm fell short, an amount of Rs.91.67 per mm will be paid.  The Maximum payout will be paid is Rs.8000-00.  As per the weather data provided by Andhra Pradesh State Disaster Mitigation Society, Planning Department of Government of Andhra Pradesh during the risk period from 26th July, 2010 to 31st August 2010 the cumulative rainfall volume is 125.2 mm in the present case. Therefore there is a deficit rainfall of 25mm from the first trigger i.e. 150 mm and as per the term sheet the rate for trigger-1 is Rs.15.00 per mm.  The claim amount comes to Rs.15.00x 25- Rs.375/-. 
Rainfall Distribution: The risk period  covered from 26th July, 2010 to 15th September, 2010, in  this coverage if there are

Consecutive dry spell days for more than 20 days, the payout would be Rs.3000.00, in the same way for more than 25 days, the payout would be Rs.5000-00 and lastly if it is more than 30 days then the payout would be Rs.9000-00.  The total payout is limited to Rs.9000-00.  As per the weather data furnished by the Andhra Pradesh Disaster Mitigation Society, Planning Department of Government of Andhra Pradesh there are no dry spell days for more than 20 days during the risk  coverage period.

II. Excess Rainfall:

The risk period covered from 1st October, 2010 to 31st March, 2011.  The risk period is further divided into 2 phases 1st phase from 01st October, 2010 to 31st December, 2010 and 2nd Phase is  from -1st January, 2011 to 31st march 2011.  In 1st Phase the claims are payable when the rainfall is more than 50 mm for 2 consecutive days, the payout is Rs.60.00/mm of excess rainfall, the exit trigger is 100 mm and in 2nd phase if the rainfall is more than 40 mm for 2 consecutive days the payout is Rs.80.00/mm of excess rainfall, the exit trigger is 90 mm and the maximum payout is Rs.3000.00 and Rs.4000.00 respectively.  In this coverage the exception is “in a continuous spell of more than two days (with indexed Rain fall over trigger) the sum of two consecutive days with highest rainfall would be considered. Next event would be counted only if there is a break (indexed RF less than the trigger)”.  The total payout is limited to Rs.7,000/-“.

III. High Relative Humidity :

The specified cover period is from 16th August 2010 to 31st October, 2010.  The risk period is further divided into 2 phases 1st phase is from 16th August 2010 to 30th September, 2010 and 2nd phase is from 01st September, 2010 to 31st October, 2011.  In this cover in 1st phase if both Maximum Temperature and Average Relative Humidity are more than the trigger parameters mentioned in the term sheet Annexure i.e. 11.5 (Exhibit No.B3) for more than 3 consecutive days during the risk covered period, then from the 4th day to 8th day @ of Rs.1000-00 per day to the maximum payout Rs.5000, in the same manner for 2nd Phase if both Maximum Temperature and Average Relative Humidity are more than the trigger parameters mentioned in the term sheet for more than 3 consecutive days during the risk covered period, then from the 4th day to 8th day @ of Rs.1000-00 per day to the maximum payout of Rs.5000.  The total payout is limited to Rs.10,000/-.

IV. Low Minimum Temperature:

The risk period is further divided into 2 phases.  The 1st phase is from 01st December, 2010 to 31st December, 2010 and 2nd phase is from 01st January, 2011 to 31st January, 2011.  In the 1st phase the conditions laid is when the temperature is below 13.5 degree C, for 10 continuous days then the payout will be Rs.150-00 for each day from the 11th day onwards till 30th day, the maximum payout paid is Rs.3000/-.  Likewise in the 2nd phase the conditions laid is when the temperature is below 13.0 degree C for 10 continuous days then the payout will be Rs.150-00 for each day from the 11th day onwards till 30th day the maximum payout paid is Rs.3000, thereafter if the temperature remains below 13.5 degree C for each day Rs.150-00 and the exit day is on the 30th day to the maximum of Rs.4.000.00.  The total payout is limited to Rs.6,000/-“.

The learned counsel for the appellant has submitted that in terms of Franchise Clause of ExB3, the total claims in case fell less than Rs,2,000/-, the claims is not payable. Clause 14 in Ex B3, styled as ‘Franchise Clause ‘ provides for deduction of 5% of the claim and in case the amount after being deducted fell less than Rs.2,000/-, the claim is not payable. Clause 14 reads as under:

5.00% of the sum insured shall be applicable i.e. total claims of less than Rs.2,500/- in case of Oilpalm crop in West Godavari and Rs.2,000/- in case of Sweet Orange crop in Nalgonda District shall not be paid.

However, in the matter of Rainfall Distribution, the appellant failed to show that there were no dry spells for more than 20days during risk coverage period and as such the  payout for 20 days becomes payable is Rs.3,000/-.In regard to Excess Rainfall, the learned counsel submitted that no deviations were noted in the weather data and that the excess rainfall should be for two consecutive days. The commencing point for  excess rainfall during the 2nd phase is 40 mm and on two occasions as seen from ExB4, the rain fall was noted more than 40 mm, on 18th August,2010 the rain fall was noted as 42mm while it was 40.2 mm on 14th September,2010.

In so far as Relative Humidity with high temperature is concerned , the trigger parameters show the average RH as 70% while the weather data recorded it had shown for several times in excess of 70%. Low minimum temperature as per trigger parameter is 13.5(degree) and the weather data would show the low minimum temperature in terms of the trigger. Thus, the payout is payable under the Cover No.2 , 3and 4. The contention of the learned counsel for the appellant that Kanagal Mandal does not qualify for payout during Kharif season, 2010 is unsustainable.

In Andhra Pradesh Rythu Sangham(supra), the High Court considered the scope of National Agricultural Insurance Scheme and it held that the scheme was framed for the welfare of farmers for indemnifying them against crop loss and the High Court observed that the scheme is limited to people obtaining subsidized loans from financial institutions. The scheme in the present case covers the farmers who obtained loans from financial institutions and those farmers who did not avail any loan or financial assistance from any bank or financial institutes. As the scheme was modified over the period of time and before the high court the validity of scheme only was challenged, the decision has no application to the facts of the case on hand as there is no any challenge to the validity of the scheme.

Ajithsinh Malubhai Ghummad is a case where the question that fell to the consideration of the National Commission was whether the claim for difference in the actual yield and threshold yield in terms of the National Agricultural Insurance Scheme is sustainable.  The District Forum dismissed the complaint on the premise that the paddy yield obtained in the Taluk in which the complainant’s field was located was higher than the threshold yield. The State Commission dismissed the appeal on the same ground and the National Commission also dismissed the Revision holding that the Taluk threshold yield levels were 111 kg whereas after carrying out the crop giving experiments by the authority concerned the average yield for the Taluk was 1507kg. This decision is also is not applicable to the case of the appellant as the provisions of the scheme are held to have binding effect upon the claim of the first respondent.

Payyavula Purnachandra Rao (supra) was decided by the District Forum, Khammam.  The District Forum held that the highest rain fall in Wyra Mandal during Karif season 2010 was 65 mm which was stated to be less than trigger value of 70 mm. The District Forum has not considered the other three ingredients before coming to the conclusion that the complainant has not proved his case.  It is not known whether the complainants therein preferred appeals against the order of the District Forum. Be that as it may, the facts of the two sets of the cases are being different, the appellant could not have relied upon the decision of the District Forum.

The District Forum having found the appellant deficient in not making payout to the first respondent, awarded the sum of Rs.80,000/- @ Rs.16,000/- allowable as the maximum amount towards the sum assured. We have discussed the four ingredients and accepted the contention of the learned counsel for the appellant that the first ingredient, viz., as to Rainfall volume is not satisfied in view of “Franchise Clause’  allowing the claim in case it exceeds Rs.2,000/- after 5% is deducted under franchise clause. As the payout fell short of Rs.2,000/- after deduction of 5% of the amount, the claim in terms of cover No.1 is not payable.

The claim in terms of the last three parameters, viz., excess rainfall, High Relative Humidity along with high temperature and Low minimum temperature is payable to the extent shown therein and not the maximum amount as awarded by the District Forum. It is to be considered that the first respondent is not the only claimant and as it is the group insurance policy, the appellant has to consider the claim of the other farmers. In such circumstances, the minimum amount permissible in terms of the excess rainfall, High Relative Humidity along with high temperature and Low minimum temperature can be granted in favour of the first respondent.

The amount that can be awarded in terms of cover no.2 is Rs.7000/-  a sum of Rs.10,000/- under cover number 3 and an amount of Rs.6000/- under cover no.4 thus a total amount of Rs.23,000/- is found  to be liable to be paid by the appellant to the first respondent and as such the order of the District forum is liable to be modified reducing the amount of Rs.80,000/- to a sum of Rs.23,000/-.  The other reliefs granted by the District Forum does not  warrant any interference and are left undisturbed.

        In the result the appeal is allowed modifying the order of the District Forum by reducing the compensation of Rs. 80,000/- to Rs.23,000/.  The other reliefs granted by the District Forum are confirmed.  The parties shall bear their own costs. 

                                                        Sd/-PRESIDENT.

                                                        Sd/-MEMBER.

JM                                                     Dt.23-4-2014.