Mahabubnagar farmer wins 14-yr crop compensation battle against Andhra Bank, insurance co

HYDERABAD: The Telangana State Consumer Disputes Redressal Commission (TSCDRC) has directed the Andhra Bank, Rajoli Branch of Mahbubnagar district and the Chief Manager, Agricultural Insurance Co. India Ltd., to pay Rs 61,757 and costs of Rs 5,000 to Boya Hanumaiah, a farmer.

The issue dates back to the year 2009-10 when Hanumaiah, a farmer and resident of Budamarsu Village of Waddepally Mandal in Mahabubnagar district in the undivided Andhra Pradesh took a loan of Rs 60,000 from Andhra Bank for cultivation of his land. He was told by the bank that the insurance premium amount would be deducted from his loan, once it was sanctioned and would be paid to the insurance company.

However, on October 2, 2009, heavy rains and unprecedented floods caused damage to the crop of Hanumaiah and other farmers in the village. When he urged the bank to pay him compensation, the bank refused his request.

On February 3, 2012, the farmer, along with others, issued legal notices to the bank and the insurance company. As the farmer felt that the replies given by them were false, he moved the district consumer court. He sought compensation of Rs 61,757 with an interest of 18 percent per annum, Rs 10,000 towards damages besides costs.

The bank argued that, as a banker and a facilitator between the loanee and the insurance company, they deducted the insurance premium amount, and the same was paid to the insurance company.

On the other hand, the insurance company said that they were not liable to pay any compensation as they entertained only consolidated declarations filed by the nodal banks concerned with details of the crop as per the National Agriculture Insurance Scheme.

In this case, the insurer argued that the nodal bank, i.e., Andhra Bank has submitted only three declarations about the irrigated cotton crop for Waddepally mandal. Following this, the district forum rejected the case.

However, the Telangana State Consumer Disputes Redressal Commission has felt that the district forum failed to take into account the factual situation and instead erred in holding that the farmer failed to prove the essential requirements. It observed that the insurer, who had received the premium from the farmer, could not refuse to pay on the pretext that the crop grown was not covered under the insurance scheme.

The state forum further observed that the bank and the insurance company had failed to streamline loss assessment procedures and failed to build an accurate statistical base for crop production, denying their primary liability and responsibility. The Telangana State Consumer Disputes Redressal Commission gave its verdict on January 5, 2023.