Andhra Pradesh High Court - Amravati
M.Ravi Kumar Reddy vs Prl.Secy., Agriculture Coop., Hyd., 3 ... on 2 November, 2019
Author: M. Satyanarayana Murthy
Bench: C.Praveen Kumar, M.Satyanarayana Murthy
* THE HON'BLE SRI JUSTICE C. PRAVEEN KUMAR
AND
THE HON'BLE SRI JUSTICE M. SATYANARAYANA MURTHY
+ WRIT PETITION (PIL) No.62 OF 2016
% Dated 02.11.2019
#
Machireddy Ravi Kumar Reddy
s/o Ramchandra Reddy
President, Mandal Praja Parishad
YSR Kadapa District
..... Petitioner
Vs.
$
The State of Andhra Pradesh,
Rep. by its Principal Secretary,
Agriculture and Cooperative Department
Secretariat, Hyderabad ..Respondents
! Counsel for the petitioner : Sri J. Janaki Rami Reddy
^ Counsel for the respondent :
Learned Government Pleader for Agriculture
<GIST:
> HEAD NOTE:
? Cases referred
1. AIR 2002 Rajasthan 272
2. (2001) 2 SCC 160
3. AIR 1997 SC 408
4. 2002 (2) ALD 486 (DB)
5. CWJC No.12227 of 1999 dated 10.07.2003
6. WP (PIL) No.136 of 2016 dated 21.02.2018
7. WP No.1668 of 2005 dated 15.01.2015
8. Civil Appeal No.3330 of 2018 arising out of SLP (Civil) No.11967 of 2016 dated
27.03.2018
9. (2012) 8 SCC 216
10. PIL No.9 of 2003 dated 10.06.2003
11. 2004 (2) GLT 403
12. (1992) 4 SCC 305
13. (1991) 1 SCC 598
CPKJ & MSM,J
2 WP (PIL) No.62 of 2016
THE HON'BLE SRI JUSTICE C.PRAVEEN KUMAR
AND
THE HON'BLE SRI JUSTICE M.SATYANARAYANA MURTHY
WRIT PETITION (PIL) No.62 of 2016
ORDER:(Per Hon'ble Sri Justice M. Satyanarayana Murthy) One Machireddy Ravi Kumar Reddy filed this writ petition under Article 226 of the Constitution of India, invoking pro bono public for issue of writ of mandamus declaring the action of the respondents in not settling the claims pertaining to the Crop Insurance for Rabi Season 2012-2013 of poor farmers, inspite of the written representations dated 08.08.2014, 09.11.2014, 12.02.2015 and 09.01.2016 as illegal, arbitrary, unjust, unconstitutional and consequently direct respondent Nos. 3 and 4 to settle the claims pertaining to the farmers relating to Crop Insurance for the Rabi Season 2012-2013, pay along with interest at the rate of 24% per annum.
Initially, the writ petition was filed against Respondent Nos. 1 to 4 and subsequently, Respondent No.5 - Union of India was impleaded vide order in WPMP (PIL) No.11 of 2017 dated 21.02.2017.
The writ petitioner claiming to be a person interested to protect the interests of farmers, whose crop insurance claims were not settled, filed this writ petition for the reliefs stated supra, alleging that the Government issued Notification vide G.O.Rt No.1148 dated 13.10.2012 for implementation of National Agriculture Insurance Scheme (NAIS) for Rabi 2012-2013. As per the said notification, the indemnity claims under National Agriculture Insurance Scheme would solely be settled on the basis of yield data furnished by State Government based on the requisite number of Crop Cutting Experiments (CCEs) conducted under CPKJ & MSM,J 3 WP (PIL) No.62 of 2016 General Crop Estimation Survey (GCES) and not on any other basis like Annavari/Paisawari Certificate/Declaration of drought/flood, gazette notification etc., by any other department/authority. In pursuance of the said notification, more than 2,318 farmers in and around Vempalli Mandal of YSR Kadapa District have paid the premium amount to a tune of Rs.23,18,345/- to Respondent No.4 during the Rabi Season 2012- 2013 for the Bengalgram crop in an extent of 7748 Acres of land by way of Demand Drafts in favour of the 3rd respondent within the stipulated time, duly complying all the mandatory requirements. The respondent Nos. 3 and 4 having received the said premium amount by way of Demand draft and the said Demand Draft was revalidated and withdrawn the amount. The specific contention of the petitioner is that, the poor farmers who have raised Bengalgram crop by investing huge amounts for purchase of Fertilizers, Pesticides, seeds and labour charges etc., and taken all precautionary measures, due to severe drought and failure of crops apart from the diseases, the entire crop was damaged and sustained 100% loss and it is known fact including the respondent authorities about the loss sustained by various farmers in the entire Vempalli Mandal of YSR Kadapa District.
The farmers who sustained huge loss during the Rabi Season 2012-2013 have represented the matter before the respondents along with the Statistical department/experts who conducted physical inspection and Crop Cutting Experiments and submitted report to the 3rd respondent for settlement of their claims. The respondent Nos. 3 and 4 herein though received the premium amount way back in the year 2012 and receipt of the report from the Statistical, Revenue and Agriculture Department, did not settle the claims even after lapse of more than three CPKJ & MSM,J 4 WP (PIL) No.62 of 2016 years. Inspite of report and several written representations there was no response from respondent Nos. 3 & 4 as a such a written representations were made to the Respondent No.3 and 4 on 8-8-2014, 9-11-2014, 12-2- 2015, 20-5-2015, 20-8-2015 and 9-1-2016 bringing it to their notice about the loss of entire crop and requested to settle their claims, but not purpose was served.
It is specifically contended that, the Insurance Company is bound to settle the claims within two months, in the event of delay, the Insurance Company is liable to pay the claim amount along with interest. In the instance case, though the respondent Nos. 3 and 4 have received the premium amount in the year 2012, they neither paid the amount as claimed by the farmers, nor settled the claim based on any material, thus, caused substantial loss to the farmers of Vempally Mandal. It is also contended that the petition is silent as to the apprehended injury caused, except alleging that, on account of failure to settle the amounts, farmers are facing severe mental agony. The petitioner relied on only seven documents i.e list of farmers of Vempally Mandal who paid premium and representations made to the authorities/respondent Nos. 3 & 4 and claimed the relief stated supra.
Respondent Nos. 1 & 2 filed common counter affidavit, denying the material allegations, inter alia contending that the petition is not maintainable either under law or facts. It is contended in the counter affidavit that the claims under NAIS during Rabi, 2012-2013 pertaining to Kadapa District are pending at Agricultural Insurance Company since long time. The Agricultural Insurance Company stated that the settlement of claims were delayed due to scrutiny of large number of proposal forms, non-submission of crop sown in the certificate and not CPKJ & MSM,J 5 WP (PIL) No.62 of 2016 mentioning the date of sowing in the proposal forms. The then Commissioner & Director of Agricultural Insurance Company, Hyderabad addressed a letter to D.G.M, Agricultural Insurance Company, New Delhi on 27.08.2014 and also addressed a letter to C.M.D. Agricultural Insurance Company, New Delhi on 01.09.2014 to take necessary action to release the pending claims pertaining to Rabi 2012-2013. The D.G.M., Agricultural Insurance Company addressed a letter to the then Commissioner & Director of Agriculture, AP explaining the claims of Non- Loanee farmers of Kadapa District under verification. Several meetings with Deputy General Manager, Agricultural Insurance Company were convened and advised to speed up the verification of the documents and pursue the matter with Government of India to get the central share of claims to avoid further delay in settlement of claims. It is admitted that out of total 2320 of farmers who paid premium of Rs.23,18,345/- during Rabi 2012-2013, only 155 farmers of Vempalli Mandal were found eligible for claims by Agricultural Insurance Company based on the verification of proposal forms. Therefore, a letter was addressed to the Agricultural Insurance Company on 10.03.2016 vide Lr.No.Crop Ins (1) 26/2014 to consider the claims of 16889 farmers (2165 farmers belonging to Vempalli Mandal) in Kadapa District, where the date of sowing is not mentioned in the crop sown certificate due to ignorance and illiteracy of the farmers.
It is specifically contended that, on the basis of Yield Data furnished by the Director, Bureau of Economics and Statistics, Hyderabad, basing on the report of the Chief Planning Officer of the concerned District, claims under NAIS are to be settled. It is also contended that, non-loanee farmers have remitted premium amount to CPKJ & MSM,J 6 WP (PIL) No.62 of 2016 the fourth respondent for Bengalgram, Sunflower and other crops during Rabi Season 2012-2013 under National Agricultural Insurance Scheme and whoever suffered crop loss basing on the Yield Data, claim amount have to be adjusted to the farmers through account transfer by the fourth respondent, but till date, claims were not settled by the fourth respondent.
While the matter stood thus, the fourth respondent issued clarification vide letter dated 22.01.2016 that for non-insisting of PAN number and for submission of anyone of the documents for identification of address proof for release of claims. As such, the same documents were already submitted to the fourth respondent vide Roc No.D.S.O/NAIS- Rabi 2012-2013 dated 18.02.2016 of the Joint director of Agriculture, Kadapa, to settle the claim amount at the earliest. Fourth respondent completed verification of all the non-loanee proposals submitted through Joint Director of Agriculture, Kadapa, processed the claims which were complying the terms of scheme to the tune of Rs.114.00 crores benefiting around 22,000 non-loanee farmers out of 53,571 eligible claims of Bengalgram crop of Kadapa District, an amount of Rs.63 crores was released to AIC towards the State share as per their requisition. Further, the claims of 11,000 non-loanee farmers were approved by the Agricultural Insurance Company to be settled as second installment with Rs.55 crores as claim amount for Bengalgram. The Agricultural Insurance Company was advised to settle the second installment claims pertaining to the farmers by utilizing the amount of Rs.21.73 crores which was released to the Agricultural Insurance Company by the Department of Agriculture, Government of Andhra Pradesh towards State share. However, the relief sought in this writ petition has been served to CPKJ & MSM,J 7 WP (PIL) No.62 of 2016 some farmers who complied with the scheme provisions and the relief for the remaining farmers will be completed soon after the approval of the claims which are pending with the Government of India. A letter was addressed to the D.G.M, AIC to consider to release the claims pertaining to 16,889 farmers who omitted to fill the column meant for date of sown in the proposal form out of ignorance and illiteracy and finally requested to close the writ petition against Respondent Nos.1 & 2, and that copies of the letters correspondence are annexed to the counter.
Respondent Nos. 3 & 4 filed a separate common counter affidavit raising contention that, unlike other general insurance business, the crop insurance is not at all a commercial proposition, since, the Indian agriculture is very susceptible to natural calamities and the losses are not only recurrent in nature but also once it occur it affects large numbers. For this reason the insurance companies by and large did not come forward to underwrite crop insurance business on large scale and on commercial basis, Therefore, Government of India stepped in and with the participation of the State Governments had implemented Various Crop Insurance Schemes since 1985 in the entire country with subsidy contributions of the participating State and Central Governments, both in premiums and claims, although the scheme is termed as an insurance scheme, the very principle imbibed is welfare of the farmers. The petitioner also narrated details of various schemes from 1985 onwards.
It is contended that, the National Agricultural Insurance Scheme (NAIS), is a Scheme formulated by the Ministry of Agriculture, Government of India vide letter No. 13011/15/99-Credit-II dated 16-7-99 and launched w.e.f Rabi 1999-2000 seasons. It is submitted that under CPKJ & MSM,J 8 WP (PIL) No.62 of 2016 NAIS following are the important conditions for coverage of risk, criteria for claim assessment, payout etc. Area approch: The Scheme operates on the principle of "Area Approach"
as opposed to 'Individual Approach' ie, the assessment of compensation is made on basis of yield estimation based on 'Area Approach', Notified Area basis (area defined in notification issued by the State Government, at the time commencement of season as defined area') and not on the basis of every individual insured who might have suffered a loss. It is respectfully submitted that area approach basis for claims settlement under Crop Insurance Scheme (NAIS) has been upheld by this Court in Division Bench of High Court of Andhra Pradesh in Andhra Pradesh Rythu Sangham v. Union of India and others1. This order clearly illustrated the difficulties in implementation of Crop Insurance Scheme with individual approach and appreciated the provisions of Area Approach.
Farmers Covered: All farmers growing notified crops and availing Seasonal Agricultural Operations (SAO) loans from Financial Institutions, known as Loanee Farmers, are compulsorily covered by the Scheme whereas for other farmers, the Scheme is optional.
Assessment of compensation: If the Actual Yield (AY) per hectare of the insured crop for the defined area falls short of Threshold Yield (TY) for that defined area, all the insured farmers growing that crop in the defined area will be deemed to have suffered shortfall in their yield, irrespective of the fact whether the individual farmer has suffered the loss or not. Threshold Yield (TY) or Guaranteed Yield for a notified insurance unit for any notified crop is calculated by multiplying level of 1 2002 (2) ALD 486 (DB) CPKJ & MSM,J 9 WP (PIL) No.62 of 2016 indemnity with past three years moving average yield in case of Rice and Wheat and five years moving average in case of other crops in a defined area. The data of TY is computed on the basis of data (three year or five year as the case may be) provided by Directorate of Economics and Statistics of the respective State Government/Union Territory. In order to assess 'Actual Yield' (AY) for any season in a defined area, the respective State Government/Union Territory, Government will conduct requisite number of Crop Cutting Experiments (CCEs) for all notified crops in that notified insurance unit. It is categorically specified in the scheme that "Claims under the scheme will be settled only on the basis of data furnished by Directorate of Economics and Statistics arrived at through Crop Cutting Experiments and not on any other basis such as Annavari, declaration of draught, declaration of floods, Gazzette Notification etc. by any department/authority."
It is submitted that under the NAIS for a particular notified crop and notified area, "THRESHOLD YIELD" (Guaranteed yield) is fixed on the basis of past three/five years average yield data compiled by the through Crop Cutting Experiments multiplied by Applicable Level of Indemnity for the crop. The "ACTUAL YIELD" of a particular notified crop for the insured season is assessed through Crop Cutting Experiments by the Directorate of Economics and Statistics, Government of Andhra Pradesh. If the ACTUAL YIELD of a notified crop in a notified area is less than the THRESHOLD YIELD fixed for the area, all the concerned farmers whose crop loans have been insured will become eligible for compensation. The compensation will be calculated as under:-
Claims payable = shortfall in yield
______________ x Sum Insured
Threshold yield
(where the shortfall in yield = Threshold yield and Sum Insured is the amount of the loan covered under the Scheme) CPKJ & MSM,J 10 WP (PIL) No.62 of 2016 Claim payout: The payouts are finalized based on the yield data received from Directorate of Economics and Statistics. Once Yield data is received from State government/Union Territory as per the prescribed cut off dates, claims are worked out by this opposite party as per the proposals/declarations received from financial institutions in respect of loanee farmers whereas for non-loanee farmers it can be either through agriculture department/financial institution or through individual non- loanee farmer for each notified area. The respondents sent the claims through cheques/RTGS/NEFT to respective nodal banks which in turn disburses the amount to respective branches under it. The respective branches then credit the accounts of the individual farmers or to the individual bank accounts, in case of non-loanee farmers.
The preliminary objections raised by Respondent Nos. 3 & 4 are as follows:
1. This Public interest litigation (PIL) is not maintainable as petitioner has no locus standi to file this petition. Insurance is a contract between the two parties which cannot be made a subject matter of PIL. The Hon'ble High court of judicature at Patna has also endorsed the point in CWJC No.12227 of 1999.
2. This PIL is not maintainable both on question of facts and question of law and the same is liable to be dismissed in limini.
3. It is submitted that as per the Scheme provisions the farmers availing Seasonal Agricultural Operations loans for notified crops and areas have to be compulsorily insured. The Loan disbursing bank branches have to debit the insurance premium and consolidate the particulars and remit to Agriculture Insurance Company through the Nodal Banks. Similarly the Non Loanee farmers who wish to avail crop insurance coverage voluntarily need to submit the proposal form with relevant documentary requirements and approach Bank for availing the insurance. However the majority of the Non Loanee farmers were out of the ambit of Crop Insurance and as per Central Government mandate to increase the penetration of Non Loanee farmers Government of AP has utilized its district level machinery O/o of Joint Director of Agriculture for enrolling Non Loanee farmers w.e.f Kharif 2008 season by collecting crop insurance proposal cum premium following the stipulated requirement as per scheme provisions.
4. It is submitted that the farmers of Vempally mandal of YSR Kadapa District had grown the Bengal Gram crop during Rabi - 2012-13 season and got their crop insured. These farmers are Non-Loance farmers who had voluntarily enrolled themselves for the crop insurance Scheme during Rabi 2012-13 through the 0/0 Joint Director of Agriculture, YSR CPKJ & MSM,J 11 WP (PIL) No.62 of 2016 Kadapa District of Respondent no.2. During Rabi 2012-13 season, the 0/0 Joint Director of Agriculture, YSR Kadapa District have collected the proposal forms pertaining to Non Loanee farmers of various mandals ( including Vempally mandal) along with documents and premium and remitted to this answering respondent after the prescribed out-off date and hence acceptance was declined by this respondent However, based on the directions of the Commissioner of Agriculture, A.P, Hyderabad vide his letter dated 6.2. 2013 in order to safeguard the interest of the farming community has honored to accept the premium subject to 0/0 Joint Director of Agriculture, YSR Kadapa District to verify the mistakes in the proposals and resubmit the correct ones. One of the main criteria for acceptance is that age of the crop should not be more than one month at the time of availing insurance . The MEMO issued by Commissioner of Agriculture dated 25.02.2013 in this | regard to 0/0 Joint Director of Agriculture YSR Kadapa District is marked as Exhibit 7.
It is the duty of 0/0 Joint Director of Agriculture Kadapa of Respondent no.2 to verify all the documents submitted by the non loanee farmers. Subsequently all data such as viz , proposal form, land ownership and crop sown certificate should be submitted to the answering respondents.
5. It is further submitted that Commissioner of Agriculture vide his letter dated 17.05.2013 requested AIC to accept the revalidated premium demand drafts and arrange to process the claims. The copy of letter is marked as Exhibit No. 8. Upon the request, the proposal forms along with premiums were agreed for processing subject to verification based on technical parameters /provisions and terms and conditions of Scheme. The 0/0 JDA YSR Kadapa District has then vide his letter dated 1.7.2013 (Exhibit No.9) submitted the revalidated premium DD's.
6. This respondent has completed the verification of all the non loanee proposals submitted through 0/0 Joint Director of Agriculture, YSR Kadapa District and accordingly processed the claims in respect of all those crop insurance proposals submitted through the 0/0 Joint Director of Agriculture which were complying the scheme provisions and claims to the tune of Rs. 114 crores benefiting around 22000 Non Loanee farmers of the YSR district as 1st installment and Rs. 55 crores benefiting around 11000 Non Loanee farmers as second installment were approved by the Competent Authority. Claims of 1st Installment have been disbursed to the beneficiary farmers and claims of 2nd installment are yet to be disbursed after receipt of State and Central Share of claims amount.
7. It is further submitted that as regards the Non Loance proposals submitted through the 0/0 Joint Director of Agriculture, YSR Kadapa district which did not comply the NAIS scheme provisions i.e. No Crop sown certificate submitted/ Crop sown certificate submitted with no mention of date of sowing issued by the VRO/MAO(which makes the certificate invalid) is not processed and the matter was informed to the Commissioner of Agriculture.
8. It is further submitted that Government of AP vide their letter dated 10th March 2016 have requested AIC to consider the cases where date of sowing has not been mentioned. As Government of India also has to share equally the claims and these claims does not fall within the purview of the scheme provisions, this respondent has referred the matter to Government of India.
9. It is submitted that 2320 farmers are enrolled from Vempally Mandal for Bengal Gram crop and premium were submitted to this respondent by way of Demand Draft. Out of which 155 farmers were found eligible for claims based on the proposal verification and the remaining proposals the date of sowing was not mentioned in the Crop Sown certificate issued by MAO/VRO.
CPKJ & MSM,J 12 WP (PIL) No.62 of 2016 The respondent denied its liability to pay claims put forth by various farmers of Vempally Mandal and the proposal did not cover the 100% risk and the claims will be settled only on the basis of yield data submitted by the Director of Economics and Statistics, Andhra Pradesh, and as per the yield data, the threshold yield of bengalgram crop for Vempalli Mandal is 618 kg per hectare and actual yield is 69 kg per hectare. The claims therefore are payable @ 88% as per the formula laid down under NAIS for the yield data of Bengal gram crop in Rabi 2012- 2013 and finally requested to dismiss the petition on various grounds mentioned above.
During hearing, learned counsel for the petitioner Sri Janaki Rami Reddy contended that, when thousands of farmers insured their crop for Rabi season by paying requisite premium along with the proposal and when they lost their crop, they are entitled to claim the insurance amount and failure to settle the claim by Respondent Nos. 3 & 4 is illegal. Apart from that, each individual farmer is not in a position to approach the Court by filing various petitions independently and on behalf of the farmers, this petitioner filed this public interest litigation having no personal interest in the claims, consequently, writ petition as public interest litigation is maintainable. It is also specifically contended that, by this failure to settle the claim of this petitioner, on the simple ground, of failure to mentioning date of sowing of seed in Vempally Mandal, cannot be a ground when once the proposals are accepted. But, the failure is only due to illiteracy or innocence, but not otherwise. Therefore, this can never be a ground to reject the claim of the petitioner disowning its liability to respondent Nos. 3 & 4 to pay the claim amount to the petitioner. That too, 100% risk is covered by the scheme.
CPKJ & MSM,J 13 WP (PIL) No.62 of 2016 Therefore, payment of proportionate amount of damage/loss of the crop is not permissible under law.
Sri Janaki Rami Reddy, learned counsel for the petitioner, in support of his various contentions, placed reliance on the judgment of Rajasthan High Court in Nand Construction Company v. Regional Manager, The Oriental Insurance Company and another2, Life Insurance Corporation v. Smt. Asha Goel and another3 and United India Insurance Company Limited v. M.K.J. Corporation4 and on the strength of the principles laid down in the above judgment, learned counsel for the petitioner would contend that, writ petition invoking pro bono publico is maintainable though insurance is a special contract, since each and every farmer of Vempally Mandal cannot approach this Court by filing separate writ petitions as the cause of all the farmers is common or one and the same and requested to grant relief as claimed in the writ petition.
Learned counsel for Respondent Nos.1 & 2 almost supported the contention of the petitioners, whereas, learned counsel for Respondent Nos. 4 & 5 vehemently contended that the proposal of non-loanee farmers was not accepted by respondent Nos. 3 & 4 and that there was no contractual relationship between the petitioner and respondents initially. Even otherwise, public interest litigation is not maintainable as insurance is a special contract between the insured and insurer. Apart from that, when the petitioners failed to comply with the requirements, writ petition by way of public interest litigation is not maintainable in contractual matters and requested to dismiss the writ petition. 2 AIR 2002 Rajasthan 272 3 (2001) 2 SCC 160 4 AIR 1997 SC 408 CPKJ & MSM,J 14 WP (PIL) No.62 of 2016 Considering rival contentions, perusing the material available on record, the points that arise for consideration are as follows:
1) Whether the crop insurance is a special contract between the farmer and insurance company. If so, whether the writ petition by way of public interest litigation is maintainable?
2) Whether any of the farmers whose claims were not settled, complied with the mandatory requirement of mentioning date of sowing of seed in the land of respective non-loanee farmers of Vempally Mandal of YSR Kadapa District and without mentioning such details, whether the proposal of farmers was accepted by Respondent Nos. 3 & 4. If not, whether Respondent Nos. 3 & 4 are liable to settle the claim of various farmers of Vempally Mandal of YSR Kadapa District?
P O I N T No.1:
It is an undisputed fact that non-loanee farmers of Vempally Mandal have submitted their proposals along with certificate issued by Village Revenue Officer/Mandal Agricultural Officer. But, the certificate is silent as to the date of seeds sown, which is mandatory requirement under the scheme. In any view of the matter, if, for any reason, Respondent Nos.3 & 4 accepted the proposals along with the proposals made by various farmers of Vempally Mandal, assuming that the allegations made in the writ petition are true, without conceding, the relationship between the company and the farmer is only contractual in nature and the proposal made by the farmers, if accepted, it would create contractual relationship between the farmers and insurance company.
Hence, a special contract of insurance is governed by the terms and conditions of the contract.
The insurance company being the promisor is liable to indemnify the loss, if any sustained by the promisee and therefore, the liability to CPKJ & MSM,J 15 WP (PIL) No.62 of 2016 pay insurance amount by way of indemnity is between two individuals i.e. farmer and insurance company, and third party has nothing to do with such contractual obligations. The petitioner herein Machireddy Ravi Kumar Reddy is a third party to the contract of insurance i.e. contract of crop insurance and he has no remotest interest in the claim.
Filing of a writ petition by way of public interest litigation by this petitioner itself is questioned in the counter filed by Respondent Nos. 3 & 4 specifically in paragraph No.1 of preliminary objections of page No.5 of the counter, while placing reliance on the judgment of High Court of Andhra Pradesh in Andhra Pradesh Rythu Sangham v. Union of India and others (referred supra) and another judgment of Patna High Court in Primary Cooperative Society v. The State of Bihar and others5 in support of contention of Respondent Nos. 3 & 4.
Whereas, learned counsel for the petitioner Sri Janaki Rami Reddy contended that, thousands of farmers put forth their claims before Respondent Nos. 3 & 4 by way of representations, calling upon respondent Nos. 3 & 4 to indemnify the loss sustained by them. But, no purpose was served. However, it is a herculean task to file number of petitions before this Court, thereby the petitioner filed this petition under Article 226 of the Constitution of India invoking pro bono public for settlement of the claims of farmers of Vempally Mandal, YSR Kadapa District.
In support of the claim, learned counsel for the respondent Nos. 3 & 4 placed reliance on the judgment of Patna High Court Primary Cooperative Society v. The State of Bihar and others (referred supra), which is identical to the present facts of the case. In the facts of the 5 CWJC No.12227 of 1999 dated 10.07.2003 CPKJ & MSM,J 16 WP (PIL) No.62 of 2016 above judgment, public interest litigation was filed raising a contention that crop in certain villages was damaged due to floods in the year 1996. But, the claims have not been settled and no compensation was paid. Therefore, the primary cooperative society filed public interest litigation before High Court of Patna and the Division Bench of Patna High Court held that, insurance is a contract between two parties and this cannot be made subject matter of public interest litigation. If the contract is breached, then there is a civil remedy, which the law provides, thereby, the petition is misconceived and dismissed the petition. Though the principle laid down by the Patna High Court is not binding precedent, but it has got persuasive value.
Apart from that, an identical question came up for consideration before High Court of Gujarat at Ahmedabad in Pravinbhai Vallabhbhai Nariyana v. State of Gujarat6, wherein, the question was, as to maintainability of public interest litigation questioning the inaction for not settling the claims of farmers whose crop was insured. The Division Bench held that writ petitions by public interest litigation are not maintainable. Similarly, High Court of Judicature at Bombay, Bench at Aurangabad in Libaraj Tulshiram Tikle v. State of Maharashtra7 decided an identical issue and held that, writ petition is not maintainable, but based on the facts of the case.
The Division Bench of High Court of Andhra Pradesh in Andhra Pradesh Rythu Sangham v. Union of India and others (referred supra), considered the similar issue and held that the scheme benefits the farmer indemnifying them against the crop loss. The amount of loan will be recovered from the insurance amount thereby a double purpose is 6 W.P.(PIL) No.136 of 2016 dated 21.02.2018 7 W.P.No.1668 of 2005 dated15.01.2015 CPKJ & MSM,J 17 WP (PIL) No.62 of 2016 served. The poor cultivator is indemnified against loss and the financial institutions which are Co-operative Banks are indemnified against loss by the General Insurance Corporation. This is a social security measure meant for the benefit of rural population and benefits only those who take loans from the financial institutions. In other words, it is limited to the class of people who are getting subsidised loans from such institutions who themselves have got to be saved against run by general calamities affecting the area in question. Such a scheme cannot be said to be in any manner, unreasonable or arbitrary. But, this principle has no application to the present issue, as to the maintainability of the writ petition by way of public interest litigation.
Normally, the Court shall not interfere with contract disputes under Article 226 of the Constitution of India and the Apex Court in Municipal Corporation, Ujjain & ANR. Vs. BVG India Ltd. and Ors8 held that, public interest litigation is not maintainable in contract matters. Moreover, only when a decision making process is so arbitrary or irrational that no responsible authority proceeding reasonably or lawfully could have arrived at such decisions, power of judicial review can be exercised. However, if it is bona fide and in public interest, the Court will not interfere in the exercise of power of judicial review even if there is a procedural lacuna. The principles of equity and natural justice do not operate in the field of commercial transactions. Wherever a decision has been taken appropriately in public interest, the Court ordinarily should exercise judicial restraint." 8 Civil Appeal No. 3330 of 2018 arising out of SLP (Civil) No. 11967 of 2016] dated 27.03.2018 CPKJ & MSM,J 18 WP (PIL) No.62 of 2016 In Michigan Rubber (India) Limited v. State of Karnataka and others9, the Apex Court observed that the scope of interference of Court in contractual matters is very limited and that the tender issuing authority/ Airport Authority of India has fully justified its policy decision and no bias or malafide on the part of any authority or person connected thereto has been established by the Petitioners and concluded that the preliminary objection to the maintainability of this petition is justified and the Petitioner, through this public interest litigation, cannot seek to assail the terms, on which the Respondent/authority should award its tender or what conditions should be prescribed, when he is not a participating party in the tender.
In view of the law declared by the Courts in various judgments referred supra, public interest litigation in contractual matters is not maintainable. Though some of the judgments are with reference to tender process, the law is well settled that, in contractual disputes, public interest litigation is not maintainable.
In Miss Tana Hewali v. The State of Arunachal Pradesh10, High Court of Arunachal outrightly rejected such action observing as follows:
"No case is made out for entertaining the present Public Interest Litigation. This is a contractual matter. It is for the State to consider what rates are feasible for the commodities to be paid taking into consideration various aspects and no fixed rates for the commodities can be applied simply because the same commodity has been supplied at different places at different rates. The challenge can be made by the aggrieved parties, whose tenders have not been accepted and not by any member of the public. In these circumstances, we do not find any substance in the writ petition and accordingly the petition stands dismissed."
Similar issue came up for consideration before High Court of Gauhati in Wallamphang Roy vs. State of Meghalaya and Ors11, 9 (2012) 8 SCC 216 10 PIL No. 9 of 2003 dated 10.06.2003 CPKJ & MSM,J 19 WP (PIL) No.62 of 2016 wherein, public interest litigation was filed against execution of agreements by State respondents with respondent No.5 as distributor for 'Meghalaya State Computerized Online Lotteries' for organizing, distribution, marketing and sale of ticket of online lotteries, throughout State involving transaction of great financial magnitude without Cabinet approval. The High Court held that, "P.I.L could not be used as a weapon to dislodge economic or financial decisions which were taken by Government in exercise of their administrative power. Agreements in question were executed and Respondent No. 5 had already started its functioning On-line Lotteries by investing its substantial amount of money and man power and in case of a Government project wherein a detailed consideration of need, viability, financing and cost-effectiveness of such project are required, objection, if any, as regards apprehension of breach of law against such project, must be raised before appropriate authorities including court for taking any legal action at very initial stage, Court should be moved at earliest opportunity and belated petition should not be entertained in this regard. There was nothing to show that there was any public interest involved in preferring this PIL. PIL was not maintainable and deserved outright rejection".
In view of law laid down in Municipal Corporation, Ujjain & ANR. Vs. BVG India Ltd. and Ors (referred supra), Miss Tana Hewali v. The State of Arunachal Pradesh (referred supra) and Wallamphang Roy vs. State of Meghalaya and Ors (referred supra), the present writ petition is liabel to be rejected at the threshold.
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2004 (2) GLT 403 CPKJ & MSM,J 20 WP (PIL) No.62 of 2016 Issue of locus-standi was again considered by the Supreme Court in Janata Dal v. H.S. Chowdhary and others12 wherein the Supreme Court relying on the observation expressed in Subhash Kumar v. State of Bihar13 held that, only a person acting bona fide and having sufficient interest in the proceeding of PIL will alone have a locus standi and can approach the court to wipe out the tears of the poor and needy, suffering from violation of their fundamental rights, but not a person for personal gain or private profit or political motive or any oblique consideration. Similarly, a vexatious petition under the colour of PIL brought before the court for vindicating any personal grievance, deserves rejection at the threshold.
In the present facts of the case, viewed from any angle, it is abundantly clear that, public interest litigation is not maintainable in contractual matters and if, any farmer is aggrieved by inaction of Respondent Nos. 3 & 4 with whom they entered into contract individually by sending their proposals, they can redress their claim before appropriate forum, but not by filing writ petition by way of Public Interest Litigation did not highlight the injury suffered or apprehended injury to the public at large. Therefore, the writ petition by way of public interest litigation is not maintainable.
Learned counsel for the petitioner contended that, public interest litigation is maintainable, since the scheme of various farmers is identical and placed reliance on the judgment of Rajasthan High Court in Nand Construction Company v. Regional Manager (referred supra), wherein, in paragraph 5 of the judgment, the Rajasthan High Court held as follows:
12
(1992) 4 SCC 305 13 (1991) 1 SCC 598 CPKJ & MSM,J 21 WP (PIL) No.62 of 2016 "Having considered the pros and cons of the matter in the context of the fact situation in the instant case, I am of the considered opinion that the act of the respondents in repudiating the claim of the petitioner after coming to know the fact that the writ petition was filed against them for the settlement of the claim by the petitioner, appears to be afterthought and malafide. Once the claim of the peititoner was processed by the surveyors appointed by the respondents, they are estopped from taking 'U-turn' by repudiating the claim. If the petitioner was guilty of suppressing some facts or the respondents were not liable to make good of the claim, why did they keep mum till the notices of the writ petition were received by them. This conduct of the respondents is highly dubious. In such a situation, I am inclined to invoke the provision of Article 226 of the Constitution of India, I am satisfied that this is not a case for enforcement of purely contractual rights which involve disputed questions of facts."
The facts of the above judgment are totally distinct and in the above judgment, the question was not as to maintainability of public interest litigation in contractual matters. Hence, the judgment referred above has no application to the present facts of the case, more particularly, to decide maintainability of the public interest litigation.
Learned counsel for the petitioner also relied on another judgment of Supreme Court in United India Insurance Company Limited v. M.K.J. Corporation (referred supra). The facts in the above judgment are almost identical to the facts in Nand Construction Company v. Regional Manager (referred supra). The Supreme Court held as follows:
"It is a fundamental principle of Insurance Law that utmost good faith must be observed by the contracting parties. Good faith forbids either party from concealing (non-disclosure) what he privately knows, to draw the other into a bargain, from his ignorance of that fact and his believing the contrary. Just as the insured has a duty to disclose, "similarly, it is the duty of the insurers and their agents to disclose all material facts within their Knowledge, since obligation of good faith applies to them equally with the assured.
The duty of good faith is of a continuing nature. After the completion of the contract, no material alteration can be made in its terms except by mutual consent. The materiality of a fact is judge by the circumstances existing at the time when the contract is concluded. In the present case, the introduction of the Tariff Advisory Committee document materially affects the terms of the policy, resulting in the denial of the very indemnity of claim. And CPKJ & MSM,J 22 WP (PIL) No.62 of 2016 this was what the appellant sought to do, at the stage of Clearing of the complaint. The Commission rightly rejected the appellant's plea. Notwithstanding this, on behalf' of the appellant, it was insisted that the instructions of the Tariff Advisory Committee form part of the contract. Admittedly, the appellant-Insurer had not incorporated the above quoted clause as part of the policy undertaken with the insured. Consequently, the insured is not bound by this exclusionary clause of liability since the appellant- insurer, admittedly, had undertaken liability for the riot or strike, damage due to riot or strike.
Similarly, in The Oriental Insurance Company and another, Life Insurance Corporation v. Smt. Asha Goel and another (referred supra), the Supreme Court considered about maintainability of the writ petition for enforcement of claim under the contract of insurance. But, is none of the judgments, the Apex Court did discuss anything about maintainability of the public interest litigation in contractual matters.
In the facts of the present case, every non-loanee farmer submitted a separate proposal. But, the proposal was not accepted due to blanks left in the certificate issued by the Mandal Revenue Officer and the same was communicated to the concerned authorities by respondent Nos. 3 & 4 and thereby, there was no concluded contract between the parties. Even if the contention of the learned Government Pleader for respondent Nos. 3 & 4 was not accepted, assuming that there was concluded contract between non-loanee farmers and respondent Nos. 3 & 4, still the writ petition as public interest litigation is not maintainable and the judgments relied on by the learned counsel for the petitioner are of no assistance to the petitioner, with regard to maintainability of writ petition by way of public interest litigation, in contractual matters.
Thus, in view of the law declared by the Apex Court and High Courts of Gujarat and Bombay in the above referred judgments, we are of the confirmed view that public interest litigation is not maintainable in contractual matters and that the Courts must be slow to interfere with CPKJ & MSM,J 23 WP (PIL) No.62 of 2016 such contractual matters. On this ground alone, writ petition by way of public interest litigation is liable to be dismissed, as not maintainable. P O I N T No.2 In view of the finding recorded in Point No.1, there is no need to record any finding in Point No.2, as to the subsisting contractual relationship between the farmers of Vempally Mandal, Kadapa District and respondent Nos. 3 & 4.
In the result, writ petition is dismissed, leaving it open to the farmers of Vempally Mandal, Kadapa District to approach appropriate or competent authority to redress their claims.
Consequently, miscellaneous applications, pending if any, shall also stand dismissed.
_______________________________ JUSTICE C. PRAVEEN KUMAR _________________________________________ JUSTICE M. SATYANARAYANA MURTHY Date: 02.11.2019 Note: LR copy to be marked b/o sp