Sugar mills to pay interest for delayed payment to growers

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Published: September 27, 2019 12:41:56 AM

Ingole had moved a petition before the Aurangabad bench of the Bombay High Court to ask mills to clear their cane dues as well as pay farmers the 15% interest due to them as per the Cane Control Order of 1966.

The order mandates compulsory payment of cane dues within 14 days of cane being procured from the farmer.The order mandates compulsory payment of cane dues within 14 days of cane being procured from the farmer.

Sugar mills will have to pay interest for delayed FRP payment to growers. Sugar commissioner, Shekhar Gaikwad, on Thursday has ruled that 20 sugar mills in Marathwada will have to pay 15% interest to cane growers for their failure to clear cane payment on time for the season of 2014-15.

The petitioner in the case was farmer leader Pralhad Ingole. The case dates back to the cane crushing season for 2014-15 when sugar prices fell drastically and mills failed to clear the minimal Fair and Remunerative Price (FRP) to growers for the cane procured from them. Mills said the fall in sugar prices had made it impossible for them to pay the FRP.

Ingole had moved a petition before the Aurangabad bench of the Bombay High Court to ask mills to clear their cane dues as well as pay farmers the 15% interest due to them as per the Cane Control Order of 1966.

The order mandates compulsory payment of cane dues within 14 days of cane being procured from the farmer.

Failure by the mills to do so can attract an interest of 15% — something which very few mills in Maharashtra has ever done.

The High Court had asked the then Sugar Commissioner to take a decision about the matter.

While the commissioner ensured that cane dues were cleared he did not take a decision about interest payment. Ingole then moved the High Court again which asked the Sugar Commissioner to take a decision.

Mills pointed out that they had cleared the cane dues despite financial duress. In some cases, the mills had paid more than the FRP.

Gaikwad rejected the financial distress argument as the state government had extended soft loans for the mills.

In his order Gaikwad has asked the mills to submit their calculation of individual farmer’s dues within 30 days with the regional joint directors of sugar and mills will be asked to pay the interest within three months from the order.

Ingole said the order could result in payment of around Rs 700 crore by way of interest to farmers.

The sugar millers federation are planning further legal recourse to challenge the order.

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