Case Note & Summary
The case involves a dispute under the Pradhan Mantri Fasal Bima Yojana (PMFBY) scheme. The first respondent, a non-loanee farmer, insured her crops through the second respondent, a cooperative society. Due to an error by the society's employees, the village name was incorrectly entered as 'Veppankadu' instead of 'Veppankadu Ukkadai'. Consequently, the crop loss assessment was based on the wrong village, resulting in a lower compensation of 14.48% instead of the actual loss of 55.55%. The farmer approached the Insurance Ombudsman, who directed the insurer (petitioner) to pay the balance amount. The insurer challenged this award by way of a writ petition. The High Court held that the Ombudsman's award was valid and the insurer cannot shift liability to the cooperative society for the data entry error. The court dismissed the writ petition, upholding the Ombudsman's award.
Headnote
A) Insurance Law - Pradhan Mantri Fasal Bima Yojana (PMFBY) - Liability of Insurer - Error in Data Entry by Cooperative Society - The insurer is liable to pay compensation based on the actual crop loss assessed in the correct village, even if the cooperative society erroneously entered the wrong village name in the portal. The insurer cannot shift liability to the cooperative society for the data entry mistake. (Paras 1-10)
B) Insurance Law - Insurance Ombudsman - Jurisdiction - The Insurance Ombudsman has jurisdiction to adjudicate disputes under the PMFBY scheme and pass awards directing insurers to pay compensation. Such awards are binding on insurers and can be challenged only on limited grounds of jurisdictional error or perversity. (Paras 1-10)
C) Constitutional Law - Article 226 - Writ Jurisdiction - A writ petition under Article 226 against an Insurance Ombudsman award is maintainable but the court will not re-appreciate evidence unless the award is perverse or without jurisdiction. The High Court upheld the Ombudsman's award as it was based on evidence and within jurisdiction. (Paras 1-10)
Issue of Consideration
Whether the Insurance Ombudsman's award directing the insurer to pay compensation based on correct village name, despite the cooperative society's error in data entry, is valid and whether the insurer can shift liability to the cooperative society.
Final Decision
The writ petition was dismissed. The award of the Insurance Ombudsman dated 31.08.2020 was upheld. The petitioner was directed to pay the balance amount to the first respondent.
Law Points
- Insurance Ombudsman has jurisdiction to adjudicate disputes under PMFBY scheme
- Error in data entry by cooperative society does not absolve insurer of liability under insurance contract
- Writ petition under Article 226 against Ombudsman award is maintainable but limited to jurisdictional errors
- PMFBY scheme is a contract of insurance and insurer is liable for crop loss assessed based on correct village data
Case Details
W.P.No.18695 of 2020 and W.M.P.No.23212 of 2020
Mr.S.R.Sundar, M/s.M.E.Raniselvam, Mr.L.P.Shanmugasundaram, M/s.M.B.Gopalan Associates
M/s The New India Assurance Company Ltd.
S.Sumathy, Nambivayal Primary Agricultural Cooperative Credit Society (PACCS), The Insurance Ombudsman
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Nature of Litigation
Writ Petition under Article 226 challenging an award of the Insurance Ombudsman directing payment of crop insurance claim.
Remedy Sought
Petitioner (Insurance Company) sought quashing of the Ombudsman's award and a declaration that the cooperative society is liable for the claim.
Filing Reason
The insurer disputed the Ombudsman's award which held it liable to pay compensation based on correct village name despite data entry error by the cooperative society.
Previous Decisions
The Insurance Ombudsman passed an award dated 31.08.2020 in Award No.10/CHN/A/G-1/0016/2020/2021 directing the petitioner to pay Rs.1,28,575/- to the first respondent.
Issues
Whether the Insurance Ombudsman's award is valid and within jurisdiction.
Whether the insurer can shift liability to the cooperative society for the data entry error.
Submissions/Arguments
Petitioner argued that the error in village name was caused by the cooperative society and hence the society should be liable.
First respondent argued that the insurer is liable under the insurance contract and the Ombudsman correctly awarded compensation based on actual loss.
Ratio Decidendi
Under the PMFBY scheme, the insurer is liable to pay compensation based on the actual crop loss assessed in the correct village. An error in data entry by the cooperative society does not absolve the insurer of its contractual liability. The Insurance Ombudsman has jurisdiction to adjudicate such disputes and its award is binding.
Judgment Excerpts
The Writ Petition is filed challenging the award passed by the 3rd respondent directing the petitioner to pay a sum of Rs.1,28,575/- to the 1st respondent herein towards crop damage suffered by her in respect of crops raised by her in Veppankadu Ukkadai Village during the Rabi season of the year 2018-2019, which was covered by petitioner's insurance scheme under Pradhan Mantri Fasal Bima Yojana.
Since the 1st respondent's Village name was wrongly entered by the 2nd respondent employees at the time of submission of the application as if, 1st respondent raised crops in Veppankadu, she was paid insurance compensation amount only at the rate of 14.48% instead of 55.55% which she is really entitled to.
Procedural History
The first respondent (farmer) insured her crops through the second respondent (cooperative society). Due to a data entry error, the village name was incorrect, leading to lower compensation. The farmer approached the insurer for balance payment, which was not attended to. She then filed a complaint with the Insurance Ombudsman, who passed an award on 31.08.2020 directing the insurer to pay the balance. The insurer challenged this award by filing a writ petition under Article 226 before the Madras High Court.
Acts & Sections
- Constitution of India: Article 226
