The reduction of the sum assured by the G.I.C. was unjustified and not in line with the scheme or guidelines framed for the Comprehensive Crop Insurance Scheme. The court emphasized that the insured farmer is the basis for the insurance coverage, and the sufferer is the farmer because of the drought. Therefore, the reduction of the sum assured cannot be justified even though it is based on inquiry reports or investigations carried out without considering the relevant provisions of the scheme.

Mr. Justice M.B. Shah, President—In these complaints the question involved for decision is limited, whereas the record is made bulky.

2. The decision in the matter has its bearing on a large number of poor farmers, i.e., more than a lakh who were the victims of a natural calamity-drought, in a drought-prone area. Despite the admitted fact that because of drought there was crop failure, the sum assured was not paid, the Primary Agricultural Credit Cooperative Societies and the nodal agencies accepted whatever the reduced assured sum paid by the G.I.C. Helpless poor indebted agriculturists could not raise their voice and approach the adjudicating authorities individually by filing separate complaints or suits for redressal of their grievances and for recovering small amounts varying from Rs. 1,000/- to Rs. 3,000/-. Their cause is taken up by the complainant, the Gujarat State Consumers’ Protection Centre (hereinafter called the ‘Protection Centre’). Unfortunately, taking up the cause by the ‘Protection Centre’ is objected by the respondents who are required to implement the benevolent provisions of the Consumer Protection Act, 1986.

3. The matter is about implementation of ‘Comprehensive Crop Insurance Scheme’ launched countrywide by the Central Government. The main object of the scheme was for providing financial support to farmers in the event of crop failure as a result of drought, flood, etc. and to support and stimulate production of cereals, pulses and oil seeds. The scheme was to be operated by the General Insurance Corporation of India (hereinafter referred to as “GIC”), the respondent No. 1 herein, with the active involvement of the State Governments.

4. The geographical area for the purpose of scheme was a District/Tehsil/Taluk/Block or other small contiguous area, which was referred to in the scheme as “defined area”.

5. The said scheme was extended with certain modifications from 1984 upto year 1999 vide various notifications issued by the Central Government.

6. In these complaints, on the basis of the scheme framed by the Central Government, we have to decide:

(1) Whether the drought insurance coverage is to take into its fold each and every loanee who has taken loan for cultivation of groundnut;

or

(2) whether the coverage is provided on the basis of total cultivation of ground nut in the village or Taluka; and

(3) in case where one or some of the loanees commit default in not cultivating groundnut whether all the agriculturists of the area or village should be penalised by not paying them the sum assured, namely Rs. 10,000/-.

7. At the outset, we would say that at the time of hearing on 31.8.2004 we passed an interim order directing the respondent to pay at least 50% of the remaining amount. Pursuant to the said order, the State of Gujarat has agreed to pay its one-third share of the remaining sum assured. However, this was objected by the G.I.C.

Submissions:

8. Learned Senior Counsel, Mr. Vakharia, appearing on behalf of the ‘Protection Centre; submitted that the direction given by the G.I.C. to pay deduced assured sum is wholly arbitrary, unjustified and against the latter and spirit of the scheme.

9. Per contra, learned Counsel Mr. Parekh appearing on behalf of the G.I.C. vehemently submitted that the decision to pay reduced amount on the basis of groundnut cultivation was taken after considering the report submitted by the committee appointed by the Central Government. According to him the Committee has pointed out that in some villages groudnut was not cultivated by a number of agriculturists who have taken loan from the Primary Ag. Co-op. Society. He, therefore, submitted that the G.I.C. took a decision to reimburse at a reduced rate which on an average works out approximately 70% of the sum assured. However, this varies from village to village on the basis of the cultivation figures shown in the revenue record as submitted by the Taluka Development Officer (TDO).

10. Admittedly, in these cases, loans were given fo