Bank failed to pay for Crop Insurance resulting in loss to farmers : Liable to pay compensation

Madras High Court Dismisses Review Plea, Holds Central Co-operative Bank Liable for Farmers' Losses Court affirms Bank's responsibility in delayed crop insurance remittance, dismissing claims of being a mere nodal agency

In a significant ruling, the Madurai Bench of the Madras High Court dismissed a review application filed by the Special Officer of Ramanathapuram District Central Co-operative Bank, reinforcing the Bank's liability in the non-disbursement of crop insurance funds to farmers. The judgment, delivered by Justices C.V. Karthikeyan and R. Vijayakumar, concluded that the Bank failed to perform its public duty, resulting in substantial losses to the farming community.

The case stemmed from a writ petition filed by Uthayanan and others, seeking timely disbursement of their Crop Insurance Policy amounts. The writ court, in its January 2023 order, directed the District Collector to investigate the losses incurred by the farmers and instructed the Central Co-operative Bank, along with the Aanaiyur Primary Agricultural Co-operative Society, to compensate the affected farmers.

The Bank appealed this decision, arguing that it was merely a nodal agency and the delay was attributable to the Primary Agricultural Co-operative Society. However, the Court found this defense insufficient, noting that the Bank had admitted to lapses in its processes and had even initiated disciplinary proceedings against its officials for the delay.

The Court reviewed the sequence of events, highlighting that the premium for the Crop Insurance Policy was paid to the Bank in December 2007 but was only remitted to the Agricultural Insurance Company of India in November 2008, well past the cut-off date. This delay led the Insurance Company to return the premium, leaving the farmers without coverage despite their losses.

In its judgment, the Court emphasized the Bank's failure to meet its obligations and dismissed the review application, citing a lack of valid grounds. The ruling underscores the accountability of financial institutions in safeguarding the interests of the agricultural community and fulfilling their roles with diligence.

Bottom Line:

Central Co-operative Bank held responsible for failure to perform its public duty resulting in loss to farmers due to non-disbursement of Crop Insurance Policy amount.

Statutory provision(s): Crop Insurance Policy, Review Petition, Grounds for review.

Special Officer Ramanathapuram District Central Co-operative Bank v. Uthayanan, (Madras)(DB)(Madurai Bench) : Law Finder Doc Id # 2809952