KERALA STATE CONSUMER DISPUTES REDRESSAL COMMISSION

VAZHUTHACAUD, THIRUVANANTHAPURAM

APPEAL No.304/2015

JUDGEMENT DATED : 29.10.2024

(Against the Order in C.C.No.330/2011 of CDRF, Alappuzha)

PRESENT:

APPELLANT:

(by Adv. Sreevaraham G. Satheesh)

Vs.

RESPONDENTS:

(by Adv. P. Balakrishnan for 3^rd & 5^th respondents)

(by Adv. Smitha Bijukumar for 2^nd & 4^th respondents)

JUDGEMENT

SRI. K.R. RADHAKRISHNAN  :  MEMBER

          This appeal is filed under Section 15 of the Consumer Protection Act, 1986 by the first opposite party in C.C.No.330/2011 on the files of the Consumer Disputes Redressal Commission, Alappuzha (the ‘District Commission’ for short). As per the order dated 28.02.2015 the District Commission allowed the complaint and directed as under:

1. The 1^st opposite party is directed to give all policy benefits to the complainant for the loans availed by the complainant from the opposite parties 2 and 3 covered under the National Agricultural Insurance Scheme of the 1^st opposite party.
2. The opposite parties 2 to 5 are directed not to initiate any steps for the realisation of the arrears of loan in the name of the complainant, which is covered under the National Agricultural Scheme of the first opposite party.
3. The first opposite party is directed to pay an amount of Rs.5,000/- (Rupees Five Thousand only) towards compensation to the complainant.
4. The first opposite party is further directed to pay an amount of Rs.1,000/-(Rupees One Thousand only) towards costs of this proceedings.

 The 1^st opposite party challenges the said order.

2.  The first respondent is the complainant before the District Commission. The appellant is the first opposite party before the District Commission and respondents 2 to 5 are opposite parties 2 to 5. The appellant and respondents will be referred as per their original status in the complaint.

          3.       The brief details of the complaint are as follows:

          The complainant is a farmer and has taken agricultural loans from the 2^nd and 3^rd opposite party Banks (State bank of Travancore & Canara Bank)  for Rs.36,000/-(Rupees Thirty Six Thousand only) and Rs.18,000/-(Rupees Eighteen Thousand only) respectively during the crop year 2010-2011 for paddy cultivation.  The banks had taken the insurance for the crop on sanctioning the loan and the required premium was debited in the account of the complainant.  The crop was insured with the first opposite party, Agricultural Insurance Company of India Ltd (AICIL for short) as per the National Agricultural Insurance Scheme formulated by the Central Government.  The entire crop in his paddy field with an area of four acres was lost in heavy floods on 25.04.2011.  The complainant preferred the claim with the 1^st opposite party, insurance company through the Banks.  They rejected the claim on the ground that the scheme was implemented under the ‘area approach’ in which the benefits are available only if there is reduction in the yield in a particular area from that of the threshold yield.  Aggrieved by the rejection of the claim, the complaint was filed claiming Rs.1,00,000/- (Rupees One Lakh only) towards the loss from the insurance company and also for direction to stop the recovery proceedings of the banks.

          4.       Notice was issued to the respondents who entered appearance before the District Commission and filed their versions.  The 1^st opposite party insurance company submitted that as per the provisions of the Agricultural Insurance Scheme,    claims on crop damage are settled  on the basis of yield data furnished by the State Government, based on required number of crop cutting experiments (CCEs) conducted under general crop estimation survey. As per the data furnished by the Directorate of Economics and Statistics, Government of Kerala, there was no shortfall in the actual yield of paddy crop in the notified zone (Pulinkunnu) for the Rabi 2010-2011 and Kharif 2010 seasons.  Hence, the claim is not payable under the policy.  There was no deficiency in service on their part and hence they prayed for dismissal of the complaint.

          5.       The 2^nd and 3^rd opposite parties filed identical version stating that they had given agricultural loan to the complainant and his crop was insured with the 1^st opposite party AICIL and that no injury or damage was caused to the property of the complainant due to the act of the bank.  The additional 4^th and 5^th opposite parties, which are the controlling offices of the banks, also adopted the same contentions. If at all any claim is payable to the complainant it is to be paid by the first opposite party. They all submitted that there was no deficiency in their service and hence prayed for dismissal of the complaint as against them.

          6.       The evidence in the complaint consists of oral evidence of the complainant as PW1 and Exhibits A1 to A5 were marked on his side.  Officer of the 1^st opposite party was examined as RW1 and Exhibits B3 to B6 were marked on their side.  No oral evidence was adduced by other opposite parties.  Exhibits B1 and B6 were marked on the side of the 2^nd opposite party and Exhibits B7 to B13 were marked on the side of the 3^rd opposite party.  On the basis of the evidence adduced, the District Commission passed the impugned order. Aggrieved by the said order the 1^st opposite party has filed this appeal.  Other opposite parties have not challenged the order.

          7.       Heard both sides.  The learned counsel for the appellant submitted that the National Agricultural Insurance Scheme is a country wide crop Insurance scheme of the Government of India.  The appellant/1^st opposite party  is only an agent for implementing that scheme as per Government notifications.  No claim can be disbursed without authority from Government of India or State Government. The Government notifications dated  11.06.2010 and 30.10.2010 were issued for implementing settlement of claims on the basis of yield data provided by the State Government as per General Crop Estimation surveys.   The claim in respect of the loss of paddy cultivation of the complainant was decided on the basis of ‘area approach’ under the National Agricultural Insurance Scheme.  As per this method the actual yield (AY) of the notified zone was more than the threshold yield (TY) and hence his claim is not admissible. The District Commission has not considered the fact that ‘individual basis’ is not notified by the Government and they erred in taking the ‘individual basis’ approach for deciding the complaint. There is no deficiency in service on the part of the appellant. Hence, the learned counsel prayed for allowing the appeal and dismissing the complaint.

          8.       The learned counsel for the respondent Banks/opposite parties 2 & 4 and 3 & 5 submitted that they have given agricultural loan to the complainant and taken the insurance from AICIL for covering the crop cultivation of the 1^st respondent/complainant.  They are in no way connected with the assessment and payment of the claim in respect of the damage caused due to flood as the scheme is implemented by the AICIL and claims are processed by them.  Hence, they prayed to absolve them from the liability. There was no representation for the complainant/first respondent.

9.       We have considered submissions made by the learned counsel and perused the records.  The complaint pertains to rejection of a claim in respect of loss of paddy crop due to heavy flood on 25.04.2011.  The said cultivation was done by the complainant by taking agricultural loans from the 2^nd and 3^rd opposite party banks  who have taken insurance under the National Agricultural Insurance Scheme and paid the requisite premium to the appellant/1^st opposite party.  The appellant rejected the claim by taking the stand that the claim is to be decided on the ‘area approach’ in which case no claim is payable as the ‘actual yield’ of the notified zone is more than the ‘threshold yield’. The crucial issue in this complaint is regarding the method of assessment of loss in case of a calamity covered under the policy – whether it is ‘area approach’ or ‘on individual basis’. Besides we need to examine as to whether the decision of the insurer as per ‘area approach’ was taken after properly following the procedure under this method.

10.     The Central Government has introduced the Agricultural insurance scheme across the country in coordination with State Governments and Banks. Under this scheme the farmers who take agricultural loan from the financial institutions are compulsorily covered under the insurance. The complainant was a member of ‘Mangalam Manickamangalam Kayal Nellulpadaka Samithi’.  He has obtained the loan from State Bank of Travancore  and Canara Bank for agriculture purpose. The banks remitted the required premium to the insurance company for covering the crop of the complainant.

11.     It is an admitted fact that complainant is a farmer and he has received agricultural loan from the 2^nd and 3^rd opposite parties.   As per the Agricultural insurance scheme the amount of premium was deducted by the bank at the time of disbursement of the loan.  There is no dispute that the cause of loss is ‘flood’ which is covered under the policy and also about the sum insured and the amount of premium paid by the complainant. The crop of the complainant was failed due to heavy rain and flood on 25.04.2011. The claim was submitted to insurance company which was rejected vide their letter dated 20.07.2011 (Ext B2/B10) stating that as per the ‘Area approach’ adopted by them as provided in the scheme, there was no shortfall in the yield as the actual yield for the season in the notified area covering the paddy field of the complainant was more than the threshold yield and hence no claim was payable. According to them as per the scheme the state government declare the Yield data i.e. Actual Yield (AY) for a defined area on the basis of requisite number of crop cutting experiments. They also specify Threshold Yield (TY). If the “Actual Yield‟ (AY) per hectare of the insured crop for the defined area [on the basis of requisite number of Crop Cutting Experiments (CCEs)] in the insured season, falls short of the specified Threshold Yield (TY), all the insured farmers growing that crop in the defined area, whether they actually suffered the loss or not, are deemed to have suffered shortfall in their yield.  According to the appellant it was found that the actual yield was higher than the threshold yield in this case and hence the complainant is not entitled for any claim.

          12.     The complainant’s crop was completely failed due to flood and he produced various documents in support of his claim.  He has produced newspaper cuttings regarding the news in respect of the flood (Exhibits A1 and A2) and the letter dated 02.10.2011 (Ext A3) of the Secretary, Mangalam Manikya Managalam Nellupadaka Samithi confirming the calamity on 25.4.2011 and the loss to the farmers.   Exhibit A4 is the certificate of the concerned Agricultural Officer certifying the loss.  Ext 5 and Ext 6 are the information obtained by the complainant as per the Right to Information Act, 2005.  Exhibit A5 is the reply of the Agricultural Officer, Krishi Bhavan to an RTI query which also confirmed calamity and loss. Exhibit A6 is the reply of the Taluk Statistical Officer, Kuttanad to an RTI query which clearly states that crop in the 1090 acre which includes Mangalam Manicka mangalam pada sekhram also was completely destroyed in the flood and report was submitted to the Deputy Director, Economics and Statistics Dept, Alappuzha. This proves that the crop in the areas was completely destroyed due to flood. The insured was kept in dark about the details which necessitated him to get the information by way of RTI query. The documents produced by the complainant prove that there was total loss of the crop in the area including his paddy field.

13.     The figures given in the rejection letter dated 20.07.2011 of AICIL (Ext B2/B10) for actual yield in PulinKunnu panchayath notified area for Rabi II 2009-’10 is 4058 Kg and for Kharif 2010 it is 4247 Kg. Corresponding threshold yield is 3139 kg and 4049 Kg. These figures are not supported by any evidence. As per the letter, the yield data is submitted by the Directorate of Economics and Statistics (DES) as per specific cut off dates as prescribed in the scheme. It was admitted by the appellant/first opposite party that “Since the yield in respect of the Rabi 2010-’11 was not based on minimum required eight Crop cutting experiences (CCEs) the data applicable for higher unit i.e. Block (Veliyanadu) were considered.”.  As per the report  dated 04.07.2011 of the Director, Department of Economics and Statistics, regarding yield data of paddy for the Rabi season,  which is relevant for period of loss, there was no Crop Cutting  experiments for the Pulinkunnu notified area and the mean yield is stated as Nil. The flood and consequent losses to the paddy cultivation of the complainant occurred on 25.04.2011 which comes under Rabi season. The notified area was ‘panchayath’ whereas the yield data was taken for the ‘block’ which is a larger area, detrimental to the farmers. There is no transparency in the area taken and the calculations made for arriving at the yield data. When the yield data is not available for notified area of Pulinkunnu Panchayath, due to lapses on the part of the officials in not conducting required number of crop cutting experiments, interpretation of the provisions should have been taken in favour of the insured farmer. The insured cannot be penalised for the lapses on the part of the officials in not conducting the prescribed number of CCEs in the notified area. The data used for arriving at the decision under ‘area approach’ is arbitrary and unjustified. We are of the view that the decision to reject the claim of the complainant as per ‘area approach’ taken by the appellant is not correct, as the unit of notified area was unilaterally changed from Pulinkunnu Panchayath to Veliyanadu Block which is a higher unit, consisting of six Panchayath units.  Considering the records in evidence we find that the loss of paddy cultivation of the insured is proved and the claim is admissible.

14. Another point raised by the learned counsel for the appellant is that, the finding of the District Commission that ‘individual based approach’ should be taken in the assessment in this case is not correct. A circular dated 16.07.1999 was issued by the Ministry of Agriculture, Government of India regarding implementation of National Agricultural Insurance Scheme (Rashtriya Krishi Bima Yojana – RKBY). Para 5 of the said circular deals with basis of operation of the scheme. It is also incorporated in Clause 9 of the Agricultural Insurance Scheme which reads as under:

“Clause 9:- Area of approach and Unit of Insurance:-  The scheme would operate on the basis of ‘area approach’ i.e. defined areas for each notified crop for widespread calamities and on an ‘individual basis’ for localised calamities such as hailstorm, landslide, cyclone and flood.  The Defined Area (i.e. Unit area of insurance) may be a Gram Panchayat, Mandal, Hobli, Circle, Phirka, Block, Taluka etc to be decided by the State/UT Government.  However, each participating State/UT Government will be required to reach the level of Gram Panchayat as the unit in a maximum period of three years.  Individual based assessment in case of localised calamities, to begin with, would be implemented in limited areas on experimental basis, initially and shall be extended in the light of operational experience gained.  The District Revenue Administration will assist the implementing agency in assessing the extent of loss”.

From the above clause, it is evident that the ‘area approach’ is meant for widespread calamities.  ‘Individual based assessment’ is meant for localised calamities such as hailstorm, landslide, cyclone and flood.  The cause of loss of the paddy cultivation of the complainant is flood which is a localised calamity and so the method for assessing the loss is on ‘individual basis’ and the insurer should not have taken  the ‘area approach’ in this case.  Premium is paid by the complainant in his individual capacity and so there is no justification for not treating his loss on individual basis. The flood has occurred after more than a decade of  issuing the circular and it is unfortunate that the poor farmers are denied the benefits of the scheme under lame excuses. We are of the view that there is no error in the finding of the District Commission that ‘individual based approach’ should have been taken in this case.

15.     The policy covering the crop is a significant document in this case. There is no evidence to show that the details of the insurance was made known to the insured. The policy was taken by the banks for a group of farmers as is evident from the premium payment details. The policy was not given to the complainant/insured. The banks failed to produce the policy which is in their custody. The appellant insurer also failed to produce a copy of the policy to substantiate their contentions.

16.     Appellant produced various circulars which are only for internal circulation and not made known to the insured. Letter dated 11.06.2010 of the Government of Kerala relate to Kharif 2010 season and letter dated 30.10.2010 pertains to Rabi 2010-11 season. It was advised in the circulars that the implementing agency AICIL should inform the details to the nodal banks and agencies. Apparently, there was no communication to the insureds who have paid the premium. The opposite party banks also have not confirmed that the details of the scheme, especially the method of assessment of loss, were communicated to the loanee farmers. Exhibit B5 is a blank declaration form to be given by the farmers. The opposite parties failed to produce the declaration form submitted by the complainant. All these factors point to the deficiency of service on the part of the opposite parties.

17.     On the basis of the foregoing discussion, we do not find any error in the finding of the District Commission that there was deficiency in service on the part of the opposite parties.   There is no reason to interfere with the order of the District Commission and hence their is liable to be confirmed.

          18.     In the result, the appeal is dismissed and the order dated 04.10.2011 in C.C.No.330/2011 of the District Commission is confirmed.  There shall be no order as to costs.

          The appellant has deposited an amount of Rs.25,000/- (Rupees Twenty Five Thousand only) towards statutory deposit at the time of filing the appeal.  This amount shall be released to the complainant to the extent he is entitled as per the order of the District Commission on proper acknowledgement.

SL