JA Legal has been engaged by a Client, a renowned grower/landlord/farmer, who is aggrieved by the illegal actions and omissions of United Bank Limited (‘UBL‘), as UBL is continuously charging a mark-up on the utilized Agricultural Finance Facility (‘Crop Loan’), despite being aware that the Client’s crops of cotton and sugar cane, acquired through the Crop Loan, were completely (100%) damaged/destroyed by floods and excessive rain from 17.08.2020 to 31.08.2020. UBL’s associate company, UBL Insurers Limited (‘Insurance Company’), in which UBL holds around 30% shareholding, has also failed to fairly compensate and settle the Client with the insured amount.
It is important to highlight that a Crop Insurance Policy provides financial protection against natural disasters such as floods, excessive rain, fire & lightning, and insect/pest attacks on standing crops. The Insurance Company agrees to indemnify (i.e., protect) the insured (farmer, rancher, or grower) against losses occurring during the crop year.
However, from 17.08.2020 to 31.08.2020, the Client’s crops, including cotton and sugar cane, were “completely destroyed (100%)” before reaching the harvesting stage due to excessive floods and rainfall. According to the Government of Pakistan, Meteorological Department Report of August 2020, it was the “wettest month in Pakistan since 1961.” The provinces of Sindh and Baluchistan experienced rainfall 363% and 271% above average respectively, marking the highest rainfall in the last sixty years.
The damage is further substantiated by the Government of Sindh, office of the Mukhtiarkar (Revenue) Umerkot, dated 28.08.2020, which confirmed that due to Monsoon 2020, 100% of the crops were damaged in Umerkot. On 29.08.2020, the Government of Sindh, Relief Department, issued a notification declaring various areas of Sindh as “Calamity Affected Areas,” including the Division Mirpurkhas and its Districts Mirpurkhas, Umerkot, and Tharparkar.
According to official statistics shared by the Government of Sindh (Rehabilitation Department), from 06.07.2020 to 18.10.2020, 137,753 households were affected, 88 relief camps were established, 91,757 people stayed in relief camps, and 101,500 acres of crop area were damaged. This demonstrates the gravity and intensity of the natural calamity, which not only destroyed crops but also disrupted human life and activities.
Despite this, the Insurance Company failed to compensate the Client’s insurance claim, and UBL continued to charge mark-up on the Crop Loan, despite being aware that the Client’s crops were completely destroyed by an Act of God. To date, the Insurance Company has not reimbursed a single penny to the Client. It must be noted that the Complainant is willing to repay the entire Crop Loan; however, it would be extremely unfair for UBL to continue charging mark-up while its associate company has failed to compensate the Client for the losses caused by Monsoon 2020.