Gujarat HC tells state govt to use 'common sense' and release crop insurance premium of Rs 216 crore

The Gujarat High Court has directed the Bhupendra Patel government to release over Rs 216 crore pending "subsidy premium" under the Pradhan Mantri Fasal Bima Yojna (PMFBY) to the insurance company. Pulling up the government, the court remarked that denying the payment was "an exercise of putting a cart before the horse" as it's "common sense" that unless premium is paid insurance can't be claimed.

The delay in payment is said to have deprived thousands of farmers from their claims whose crops were damage in the heavy rains in 2019. Despite repeated reminders by the central government to release funds, the government did not follow the instruction forcing the insurance firm to approach the court.

Insisting to first settle the claim of the farmers, the state government had stopped the large portion of premium subsidy to Universal Sompo General Insurance Company Limited for kharif crops of 2019. It had paid only Rs 180 crore out of Rs 396.93 crore premium and stalled the remaining Rs 216 crore on the grounds of late payment of claims, absence of employees, non functional of office at local level , non-adherence to the terms and conditions of the work order. The state had imposed a penalty as well.

Although the government opposed the petition, it didn't engage any of the senior lawyers. The government contended that the insurance company had rejected 53,115 applications of farmers under localised calamities and post harvest in Kharif 2019 season on the ground of 15 days delay in intimation from normal harvest time and other reasons.

The insurance firm defended itself by saying that despite not getting the payment, "it settled localized claim of farmers for an amount of Rs.40 crores." It further said that "the claim for an amount of Rs.118.79 crores are outstanding due to non receipt of subsidy."

The single bench of Gujarat high court judge A P Thaker held that the state couldn't have stalled the payment as it is a "common sense" to first pay the premium to get insured. The court noted, "The state government is insisting on making payment to the concerned farmers on the basis of scheme of insurance without payment of any prior premium. Such instance of the State Government is nothing but an exercise to put a cart before the horse."

The order was passed earlier this month. Allowing the company's petition, the order stated, "When the Central Government has consistently directed the State Government to release the “premium subsidy”, the State Government ought to have followed such directions. The entire stand taken by the State Government in not releasing the “premium subsidy” and at the same time, insisting the petitioner company to make payment to the farmers is not sustainable in the eyes of law".

The implementation of PMFBY in Gujarat has been a contentious issue, with the opposition Congress alleging large scale corruption during the previous Vijay Rupani led BJP government. As a matter of fact, there are nearly a dozen litigation still going on in the court involving the insurance firms.