Bombay HC Quashes State of Maharashtra’s Attempt to Recover Crop Insurance Claims as ‘Land Revenue’

The Bombay High Court quashed Maharashtra’s attempt to recover additional crop insurance sums as “land revenue” from Bajaj Allianz, dismissing a supporting PIL by farmers and holding the insurer’s obligations fully satisfied.

The dispute stemmed from a writ petition by Bajaj Allianz General Insurance Co. Ltd. and a public interest litigation by two Osmanabad farmers. After unseasonal rains affected Osmanabad’s Kharif 2021 soyabean harvest, Bajaj Allianz paid Rs. 374.61 crores under the Pradhan Mantri Fasal Bima Yojna (PMFBY) based on joint sample surveys and Crop Cutting Experiments (CCEs), as required by Clause 21.5.10 of the Revised Operational Guidelines (ROG).

Despite these payments, the State of Maharashtra claimed that only 50% of claims had been settled, arguing that the insurer owed another Rs. 374.34 crores (calculated solely via sample survey data). The State used the Maharashtra Land Revenue Code (MLR Code) provisions—issuing attachment and freezing notices against the company’s accounts and equating the balance to land revenue. Farmers supported the State through a PIL, demanding immediate payment.

The insurer argued that “normal harvest” in the PMFBY scheme refers to the real, observed start of harvest (as reflected by CCEs from 17.09.2021), not only the government’s notified calendar window. Thus, compensation calculation required a 50:50 basis between sample survey and CCE data. As actual CCE data showed no further post-rain damage, no additional claims were due. The insurer also argued the MOU never authorized recovery under land revenue laws.

The State insisted that “normal harvest” meant the calendar-notified dates only, supporting 100% compensation via sample surveys, and maintained that insurance payouts constituted “benefits arising out of land,” hence recoverable as land revenue under the MLR Code.

The Bench comprising Justice Manish Pitale and Justice Y.G. Khobragade rejected the State’s broad construction, carefully interpreting “land revenue” under Section 2(19) of the MLR Code, and held that insurance payments under PMFBY/MOU are not recoverable as land revenue; instead, they are contractual sums for crop indemnity, with farmers as beneficiaries, not the State. The distinction in PMFBY guidelines between “harvest date” in calendars and “normal harvest” as actual harvest was upheld, favouring the insurer’s interpretation.

The Court held that sample survey plus CCE approach was correct, and undisputed CCE data showed crop yields actually exceeded thresholds, so no further liability arose. The court cited past Bombay High Court and Supreme Court precedents confirming the non-applicability of land revenue statutes to such contractual recoveries.

In result, the court quashed the Collector’s orders freezing the insurer’s bank accounts under MLR Code, holding such action without jurisdiction. The PIL was dismissed, with the court holding that no further claims were justified.

All notices and orders compelling additional payment and treating unpaid claims as “land revenue” were quashed and set aside. No directions for further payment or punitive interest were issued. The insurer’s writ petition was allowed, the farmers’ PIL dismissed, and pending applications disposed.

Cases relied on:

1. Hamdard (Wakf) Laboratories Vs. Dy. Labour Commissioner and Ors., (2007) 5 SCC 281
2. Shabina Abraham and others Vs. Collector of Central Excise and Customs, (2015) 10 SCC 770
3. Kasilingam and others Vs. P.S.G. College, 1995 Supp (2) SCC 348
4. IDBI Trusteeship Services Ltd. Vs. District Collector and others, 2021 SCC OnLine Bom 929
5. Maharashtra Rajya Macchimar Sahakari Sangh Ltd. Vs. State of Maharashtra and Ors., 2005 (2) Mh.L.J. 1142
6. Paras Nath Singh Vs. State of Uttar Pradesh and Ors., 2020 SCC OnLine All 190
7. P. Electrical Equipment Corporation Vs. Tahsildar and Ors., 2025 SCC OnLine SC 447
8. State of Orissa Vs. Dr. (Miss) Binapani Dei, AIR 1967 SC 1269
9. Gunwant Kaur Vs. Bhatinda Municipality, AIR 1970 SC 602
10. Ter Large Size Multipurpose Co-opeartive Society Ltd. Vs. Union of India, WP 973/2004, order dated 02.12.2010
11. Libaraj Vs. State of Maharashtra, 2015 SCC OnLine Bom 3349
12. The Osmanabad District Central Co-op. Bank Ltd. and Anr. Vs. The State of Maharashtra and Ors., 2005 SCC OnLine Bom 409
13. Ajitsinh Malubhai Ghummad etc. Vs. Union of India and Ors., CA 6040-6041/2011, order dated 11.08.2021)

For Bajaj Allianz General Insurance Co. Ltd.: Mr. Sharan Jagtiani, Senior Advocate a/w Mr. Bomi Patel, Advocate, Mr. Naval Sharma, Advocate, Mr. Saket Satapathy, Advocate, Ms. Shraddha Achaliya, Advocate, Mr. Sarthak Bahira, Advocate, Ms. Mansi Tyagi, Advocate i/b. Tuli & comp. i/b. Mohit R. Deshmukh, Advocate

For the State of Maharashtra: Mr. R.N. Dhorde, Senior Advocate a/w Mr. V.M. Kagne, AGP (WP/11973/2022)

For the Union of India: Mr. A.G. Talhar, DSGI (WP/11973/2022); Mr. Ravi R. Bangar, Standing Counsel (PIL / 38 / 2023)

For the Petitioner Farmers: Mr. V.D. Salunke, Advocate h/f. Mr. Yogesh K. Bobade, Advocate (PIL / 38 / 2023)