Supreme Court dismisses Bajaj Hindusthan’s appeal for waiver of 15% interest on delayed dues to sugarcane farmers

In a setback to Bajaj Hindusthan Sugar, the Supreme Court on Monday dismissed its appeal seeking a stay on the Allahabad High Court’s decision that asked it to clear dues with 15% interest per annum on the delayed payment of sugarcane farmers of its five mill areas at Gola Gokaran Nath, Khambhar Khera, Palia Kalan, Barkhera and Maqsoodapur by March 31, 2022.

Bajaj Hindusthan Sugar, the largest defaulter among mills, runs 14 sugar mills in the state, but the case related to sugarcane growers who sold their cane to its five sugar mills only.

Senior counsel CA Sundaram, appearing for Bajaj, told a Bench led by Justice UU Lalit that the company has paid its outstanding dues of Rs 1,735 crore to farmers, but its application seeking waiver of interest on delayed payment of cane price for sugar season 2020-2021 relating to its Palia Kalan unit is yet to be heard by the Cane Commissioner. Sources told FE that the interest payment will be around Rs 400 crore.

However, the Bench refused to grant any relief and dismissed Bajaj’s appeal.

Challenging the Allahabad High Court’s judgement, the sugar company said that although the HC had considered its precarious financial conditions for reasons beyond its control and granted time till March 31 to clear dues, it imposed interest of 15% for the delayed payment under applying Clause 3 (A) of the Sugarcane (Control) Order 1966, issued under Section 3 of the Essential Commodities Act, 1955.

The HC judgment suffers from total non-application of mind in so far as it failed to appreciate that rather than paying a higher interest rate, its case was for a complete waiver of interest on the delayed payment since the delay in payment of sugarcane price was for reasons beyond its control, the company said.

Sundaram cited financial crisis including the closure of sugar mills due to the Covid pandemic, arbitrary and illegal withdrawal, with retrospective effect, of the Sugar Industry Promotion Policy 2004 based on which the sugar company had invested `3,840 crore to set up the sugar mills in the state.

Stating that its outstanding dues to the tune of Rs 1,471.21 crore are yet to be paid by the state, Bajaj told the SC that it had already gotten its debt restructured twice due to the financial crisis created by the state by acting arbitrarily and illegally and also.

On December 23, last year, the HC while directing the company to clear the dues by March 31 along with interest at 15% per annum on delayed payment had allowed the sugarcane commissioner to proceed to issue a recovery certificate to the collector for recovery of such dues by exercising all means permissible in law, including coercive action against the company and its directors. It also said that the sugarcane commissioner would be under an obligation to assess the financial capacity of the company before reserving or allotting cane areas for the company’s mills for the next crushing season.