Supreme Court warns UP cane commissioner over non-payment of dues to Bajaj Hindusthan

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Published: April 19, 2019 12:47:45 AM

A Bench led by Justice RF Nariman sought explanation from Bhoosreddy, who is the principal secretary (sugar) as well as the cane commissioner of UP on a contempt petition filed by Bajaj Hindusthan.

Supreme Court warns UP cane commissioner over non-payment of dues to Bajaj HindusthanSupreme Court warns UP cane commissioner over non-payment of dues to Bajaj Hindusthan

The Supreme Court has sought response from Uttar Pradesh cane commissioner Sanjay Bhoosreddy as to why contempt proceedings should not be initiated against him for “intentional and deliberate violation and wilful disobedience” of its earlier order that asked him to clear dues of
over Rs 1,471 crore to Bajaj Hindusthan Sugar.

A Bench led by Justice RF Nariman sought explanation from Bhoosreddy, who is the principal secretary (sugar) as well as the cane commissioner of UP on a contempt petition filed by Bajaj Hindusthan.

The cane commissioner is the nodal officer responsible for implementation of the sugar policy.

The apex court had on March 7 last year upheld the Allahabad High Court’s order that had termed the state’s abrupt suspension of incentives under a policy in 2004 to attract investments in the sugar sector “arbitrary” and done “without the application of mind”. The SC had also quashed the demand notices for payment of sugarcane purchase tax and held that sugar companies, including Bajaj were entitled for the incentive/ remission/exemption etc as per the sugar policy.

“By virtue of its participation and making the requisite investments in terms of the 2004 Policy, Bajaj as on December 31, 2018, is entitled to receive `1,471.21 crore (`900.99 crore towards principal amount and `570.22 crore towards interest) for all its units from the UP government,” the company said in its contempt plea filed through its counsel Siddhartha Chowdhury.

Though Bajaj Hindusthan — the largest investor which had made investment of `2,640 crore and set up eight units across the state in 2005 on the basis of the 2004 sugar policy — was the biggest beneficiary, the 2018 verdict had ramifications on even other odd sugar mills which were affected by the abrupt policy withdrawal.

The top court had rejected the UP government’s stand that “rescinding the benefits under the Sugar Policy of 2004 was valid in law” and its July 7, 2007 order was a policy decision and hence was not amiable to the HC’s jurisdiction. Besides, the state exchequer was facing a “heavy financial burden of about `3,500 crore,” which forced it to revoke the sugar policy in “overwhelming public interest”, the state government had argued.

To lure investors, the Mulayam Singh Yadav-led UP government had firmed up the policy in 2004 under which eligible mills were entitled to incentives, including exemption from entry tax on sugar, trade tax on molasses, stamp duty and registration charges on purchase of land, purchase tax on cane and reimbursement on transport of sugar, and a capital subsidy of 10% on the investment made.

However, just within a week of Mayawati coming to power in 2007, the policy was “scrapped” through an executive order, leaving the mills that had taken huge loans to fund the expansion strapped for funds. While some mills that had made early investments under the policy, including Bajaj, had been granted incentives for some time, many others couldn’t reap the benefits.

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