UP amends law: Group companies of defaulting sugar mills may have to cough up dues

Explaining the purpose and reasons for introducing the clause, the minister said it is often seen that sugar mills delay payments to farmers, who then face severe financial difficulties and are forced to delay rabi sowing, which in turn, causes them great financial loss.

The Bill, once passed by both the houses of the state assembly and ratified by the governor, would amend the said Act, which was enacted to ensure timely payment to 65 lakh sugarcane farmers in the state of Uttar Pradesh.
The Bill, once passed by both the houses of the state assembly and ratified by the governor, would amend the said Act, which was enacted to ensure timely payment to 65 lakh sugarcane farmers in the state of Uttar Pradesh.

The Uttar Pradesh legislative assembly on Friday passed a Bill that empowers the state government to recover sugarcane dues from the group companies of defaulting sugar mills. The amendment will come into force with the gazette notification to be issued soon.

The Bill amends the Uttar Pradesh Sugarcane (Regulation of Supply and Purchase) Act 1953, by adding a sub-clause. It is aimed at streamlining the legal obstacles in initiating recovery from errant sugar mills which do not clear their cane dues to the farmers on time despite the cane commissioner issuing recovery certificates (RCs) against them. The new provision will be invoked only after exhausting the existing provisions of recovery.

The Bill, introduced by sugarcane minister Suresh Rana, was passed by the legislative assembly on Thursday and was cleared by the legislative council on Friday. It states that in case any sugar company defaults on its payments to farmers, the cane commissioner will try to recover the dues first by issuing RCs against that particular company, as is already being done.

But if the company still does not clear the dues, the cane commissioner will then have the right to recover the dues from the subsidiary and associate companies of that particular sugar mill or company. The cane commissioner will also have the right to seize all the receivables that these subsidiary and associate companies will get from any state department or corporation, or by way of return of investment made by these companies.

The Bill, once passed by both the houses of the state assembly and ratified by the governor, would amend the said Act, which was enacted to ensure timely payment to 65 lakh sugarcane farmers in the state of Uttar Pradesh.

Explaining the purpose and reasons for introducing the clause, the minister said it is often seen that sugar mills delay payments to farmers, who then face severe financial difficulties and are forced to delay rabi sowing, which in turn, causes them great financial loss.

“To make the earlier clauses of the Act more effective and to ensure that farmers get their cane dues on time, this clause is being added and will be invoked only after exhausting the earlier provisions of recovering farmers’ dues. Under this clause, the receivables of the defaulter mill, unit or company or any of its subsidiary or associate companies in the state, can be seized by the state government to clear the farmers’ cane dues,” the Bill said, adding that the definition of company, subsidiary company and associate company will be the same as defined in the Company Act, 2013.

The UP Sugarcane (Regulation of Supply and Purchase) Act, 1953, already has a provision to initiate recovery by issuing RCs in case of default in cane payments. The new provisions are aimed at tightening the reins on errant mills, which have been habitual defaulters.

At present, 14 mills of the Bajaj group, two mills of Modi group, three of Simbhaoli group, one each of Rana and Yadu group and six individual sugar mills owe Rs 2,700 crore to cane farmers for the 2020-21 season.

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