PNB Held Liable for Crop Insurance Failure After Depositing Premiums Without Farmer Data Under Bangla Shasya Bima Scheme

Calcutta High Court recalls its earlier writ orders reviving an expired scheme, holds Punjab National Bank solely liable for insurance policies never materialising due to non-submission of mandatory farmer particulars.

A group of agriculturists from the Kotulpur area of District Bankura, West Bengal, paid crop-insurance premiums under the Bangla Shasya Bima (BSB) Yojana for the Rabi season 2019–2020. Their policies never came into existence. The Punjab National Bank (PNB), Kotulpur Branch, deposited portions of the premium with the National Insurance Company but never furnished the mandatory farmer-wise data, declarations, or proposals required under the scheme’s operational guidelines. Justice Sabyasachi Bhattacharyya, sitting singly on the Appellate Side of the Calcutta High Court, recalled the court’s earlier writ orders directing the scheme’s revival — holding those orders to be beyond jurisdiction — and passed fresh directions placing the entire liability for compensation and premium refund on PNB. Ten contempt applications filed against PNB and the insurance company were dismissed as a consequence.

The Writ Petitions and the Earlier Orders

The writ petitioners had applied for coverage under the BSB Yojana, a State Government scheme administered by the Department of Agriculture, West Bengal, under which loanee farmers received compulsory crop-insurance coverage. Small premium amounts were deducted from their loan accounts, to be matched by larger contributions from the bank and the State.

When claims arose from crop losses, the National Insurance Company declined to honour them. The petitioners filed writ petitions in 2021. By orders dated 18 December 2023 and 22 January 2024, the writ court directed the insurance company to extend the premium deposit deadline and PNB to pay all arrear and future premiums — effectively directing a revival of the BSB Scheme.

The writ petitioners then moved contempt applications alleging PNB had not complied. PNB, in turn, contended that it had attempted to deposit subsequent premiums but the insurance company had not acted. The court impleaded the National Insurance Company in the contempt proceedings. The insurance company then filed independent recall applications challenging the writ orders themselves. The court heard the recall applications and contempt petitions together.

Why the Earlier Writ Orders Were Recalled

The insurance company argued that the BSB Scheme had expired by February 2020 — before the writ petitions were even filed in 2021 — and that the court had no jurisdiction to direct the scheme’s revival, a matter falling within executive policy.

Justice Bhattacharyya accepted this squarely. The court held that the benefits of a scheme are not renewable by judicial fiat and fall entirely within the domain of executive policy decisions. Since the scheme was already spent on the date the writ petitions were filed, the directions to revive it were made de hors the court’s jurisdiction.

On the question of whether the recall applications were time-barred, the court held that as a court of records under Article 215 of the Constitution of India, the High Court has plenary power to correct its records and is not strictly governed by the Limitation Act or the Code of Civil Procedure. Even treating Article 137 of the Limitation Act’s three-year residuary period as a working guide, the applications were within time. The recall applications were accordingly entertained.

The court also rejected PNB’s submission that, following recall of the writ orders, the matters should be sent to the regular writ Bench for fresh hearing. The court held that when it recalls its own order, it exercises the jurisdiction it held on the date that order was passed, and it would be absurd to hold that such a court is powerless to decide the matter afresh on merits. Accepting that argument, the court observed, would allow parties to forum-shop at the fag end of prolonged hearings, to the detriment of marginalised agriculturists.

The Central Question: Who Bears Liability for the Policies Never Commencing?

The insurance company’s senior counsel contended that PNB deposited premiums without the mandatory farmer-wise particulars, consolidated declarations, and proposals required under Clauses X and XVII of the BSB Operational Guidelines and as reinforced by a State Notification dated 29 November 2019. Without that data, no policy could be drawn up in favour of any writ petitioner.

The court found the position clear. Clause XVII(2) of the BSB Scheme expressly provides that in case of substantial misreporting by the nodal bank or branch for compulsory farmers’ coverage, the concerned bank shall be liable. Clause X(3) required bank branches to prepare monthly statements of crop-wise, insurance unit-wise details with premium as per the Seasonality Discipline. Clause X(5) required bank branches to consolidate proposals and forward them to the insurance company along with remittance details within cut-off dates. Sub-clauses (5) and (7) of Clause XVII separately mandated consolidation and forwarding of proposals to the insurance company. None of this was done by the Kotulpur Branch of PNB.

A portion of the premium was deposited by PNB within the cut-off period; the remainder was deposited after. But no data accompanied either remittance. The court held that mere deposit of premiums without the required particulars imposed no liability on the insurance company to open policies.

The court also addressed the BSB Scheme’s structure: under it, the State Government undertook 100% coverage, with loanee farmers contributing a token amount and the bank and State contributing larger shares. For the insurance company’s liability to attach, the bank uploading the necessary particulars and declarations was, in the court’s words, a sine qua non. Without that act, policies could not materialise and no liability fell on either the State or the insurance company.

PNB’s Defences Examined and Rejected

PNB advanced several defences. First, it claimed that technical glitches in the Crop Insurance Portal prevented it from uploading farmer data. The court dismissed this, finding the exact period and nature of the alleged glitch completely unexplained in both oral arguments and written notes. It observed that Clause XXV of the Scheme, which envisaged use of the State Government’s Crop Insurance Portal, cast no exclusive obligation to use that portal alone. Other means — email, physical communication — were available. No explanation was offered for why PNB did not resort to them, particularly given the fixed timelines under the Scheme.

The court noted that even the NCDRC decision cited by PNB — Bank of Baroda v. Vishnu Prakash & Anr., 2024 (Supreme)(OnLine) NCDRC 960 — involved a case where proposals were received by the insurance company on the last date of the cut-off period, merely after office hours. There, the NCDRC held that a Government company could not raise such a technical objection. Here, by contrast, PNB furnished no particulars at all, during or after the stipulated period, for the entire tenure of the scheme.

Second, PNB invoked Clause X(14) of the BSB Guidelines to argue that the insurance company was also obliged to collect required information from channel partners. The court rejected this: that provision sits under the head “Non-loanee farmers (optional coverage)” and is inapplicable to loanee farmers. Moreover, the provision uses the word “may” rather than “shall”, making any such collection optional, not mandatory.

Third, PNB relied on Section 64VB of the Insurance Act, 1938, and on D. Srinivas v. SBI Life Insurance Co. Ltd., (2018) 3 SCC 653, for the proposition that acceptance of premium creates a strong presumption of an insurance contract. The court held that those principles apply to ordinary insurance contracts and not to a specific benefit scheme such as the BSB Yojana. The governing provisions were those of the scheme itself.

The court further noted that the Principal Secretary, Agriculture Department, West Bengal, had passed an order dated 9 November 2023 in a related matter, finding laches on the part of PNB, Kotulpur Branch, and holding that the concerned agriculturists were not covered under the BSB for Rabi 2019–2020. A Division Bench of the Calcutta High Court, in MAT No. 846 of 2022, had directed the Principal Secretary to consider other agriculturists’ representations in light of that decision. PNB was therefore estopped from re-agitating the same issue.

Delay by the Writ Petitioners

The court also addressed whether delay by the agriculturists in making claims or filing writ petitions defeated their right to relief. PNB had argued that claims under the BSB Scheme had to be made within 48 hours of loss.

The court held that the 48-hour timeline was entirely beside the point. Since the insurance policies of the writ petitioners were never born — having never materialised due to PNB’s failure to furnish the required data — there was no live policy against which to make a claim. The question of when a claim was made was irrelevant when the claimant had no policy in the first place. The writ petitions were filed in 2021, within a reasonable period, after the agriculturists had run from pillar to post to get their dues without success.

Outcome

Justice Bhattacharyya recalled the judgments dated 18 December 2023 passed in ten writ petitions — WPA Nos. 14180, 13397, 12836, 14182, 14184, 14190, 14194, 12855, 13388, and 13403 of 2021 — and disposed of them afresh with the following directions:

PNB is directed to refund to each writ petitioner the entire premium amount deposited by that petitioner, within 30 days, with interest at 12% per annum from the date of deposit to the date of payment. In default, interest at 6% per annum on the total of principal plus accrued 12% interest shall run from the 31st day following the judgment until actual payment.

The writ petitioners are to file composite written claims of compensation with PNB by 31 August 2026, quantifying the insurance coverage they were deprived of and detailing their financial losses, with supporting documents.

PNB is to assess those claims by 31 October 2026, appointing valuers and competent insurance personnel and obtaining reports from the Meteorological Department or other authorities as needed, at its own cost. It must then disburse the assessed compensation amounts with reasoned written orders explaining the basis of each assessment. If the compensation assessed exceeds the premium refund already paid, the refund amount may be adjusted against total compensation payable. Each writ petitioner must be given an opportunity of hearing and to produce relevant documents during this process.

Writ petitioners aggrieved by PNB’s compensation assessment may challenge it before the appropriate court or forum.

The ten contempt applications — CPAN Nos. 1991, 1992, 1993, 1995, 1996, 1997, 1998, 1999, 2010, and 2012 of 2024 — were dismissed in consequence of the parent orders having been recalled. No order as to costs was made.