Sugarcane arrears: SC seeks response from UP Government, cane commissioner on plea seeking dues clearance

By: | Published: January 8, 2019 1:50 AM

The Supreme Court on Monday sought response from the Uttar Pradesh government and the state cane commissioner on a plea by a farmers’ body seeking sugarcane dues of around Rs 8,000 crore including interest for 2011-15.

Sugarcane arrears: SC seeks response from UP Government, cane commissioner on plea seeking dues clearance (Reuters)

The Supreme Court on Monday sought response from the Uttar Pradesh government and the state cane commissioner on a plea by a farmers’ body seeking sugarcane dues of around Rs 8,000 crore including interest for 2011-15.

A Bench, led by Justice AK Sikri, issued notice to the state government and the cane commissioner on a petition filed by Rashtriya Kisan Mazdoor Sangathan (RKMS) challenging the Allahabad High Court’s March 2017 order that asked the latter to resolve the issue of waiving of interest on pending cane dues within four months. A contempt of court proceedings is also pending against him for disobeying HC orders.

RKMS has sought the apex court’s view on whether the power of the cane commissioner to waive the interest in terms of Section 17(3) of the UP Sugarcane (Regulation of Supply & Purchase) Act,1953, came to an end after the amendment of the Sugarcane Control Order, 1966, (a central legislation) since sugarcane falls in the concurrent list. Seeking the higher rate of interest under the 1966 order, the farmers’ body stated that more than 50 lakh cane-growers in the state never get their cane dues on time, despite Section 17(2) of the state Act providing for immediate payment of the cane dues and Section 17(3) further providing for interest @ 12% per annum from the date of delivery if payment is not made within 15 days. “Section 17(3) is subservient and conjoint to Section 17(2).”

“Once the Sugarcane Control Order,1966 (Central Legislation), was amended and Clause 3(3A) was introduced in 1978, the cane dues that were earlier paid under the UP Act, were now paid under the 1966 order. Clause 3(3A) of the 1966 order provides for payment within 14 days and after 14 days interest is to be paid @ 15% per annum,” the appeal filed through counsel Arjun Harkauli stated, adding that interest is to be calculated under the Central legislation (the 1966 Sugarcane Control Order) and not the state Act.

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The HC erred sugarcane falls in the concurrent list and once there is a conflict within the state and the Central Legislation, the Central legislation would prevail, senior counsel Rajeev Dhawan argued on behalf of RKMS.

The HC had on March 9, 2017, set aside the state government’s decision to waive the interest, citing mills’ inability to pay in view of low sugar prices. “But by that logic, shouldn’t the interest being paid by farmers on loans from state-owned and cooperative banks also have been waived? In this case, farmers were basically supplying cane to mill at zero interest, even while borrowing at 10-15% or more themselves,” the HC had stated, while upholding the power of the cane commissioner/state to waive the interest under the state Act.

The HC had quashed the Cabinet decisions whereby the interest amount to be paid by the mills to the cane growers was waived, saying the waiver was arbitrary as cane growers’ interest was not protected.

During the 2012-2015 period, sugar mills in UP defaulted on payments and owed farmers Rs 2,000 crore as interest, in addition to the principal. In April 2015, they approached the then Akhilesh Yadav government with the proposition that the interest dues be waived off as the ‘mills were making losses and could not afford to pay the interest’. Yadav agreed and in October 2016 decided to waive off the interest amounts that were owed by sugar mills to farmers.

This waiver was challenged by the RKMS before the HC. The farmers organisation asked the state government to ensure that all 119 mills in the state pay the balance cane dues of Rs 1,112 crore with 15% interest for 2013-2014 immediately or their units be auctioned in terms of the Statute, etc.

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