The Hindu Business Line : HC gives 3 months to UP to fix new State advised cane price

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HC gives 3 months to UP to fix new State advised cane price

Mills that have piled up arrears may breathe easy

Mills & arrears
The court has alternatively suggested constitution of a committee of experts to fix the new SAP
Asks the State Government not to take any coercive action against mills that have accumulated arrears

Our Bureau

New Delhi, Dec 20 The Allahabad High Court’s order quashing the Uttar Pradesh Government’s State advised price (SAP) of Rs 125-130 a quintal on sugarcane crushed during the 2006-07 season (October-September) has created an iniquitous situation between mills that have paid up and those that have not.

A two-member Bench of the court, comprising Mr Justice Amitava Lala and Mr Justice V.C. Mishra, in its order on Wednesday, has directed the State Government to reassess its cane price, while ruling against any coercive action on mills that have not paid the notified (now quashed) rate of Rs 125-130 a quintal.

3 months time

Further, it has set a three-month period for fixing a new SAP, with this exercise to be undertaken after consultations with the representatives of sugar factories, cane growers, Commission for Agricultural Costs & Prices (CACP), cost accounting branches of the State and Union Governments and the National Sugar Institute, Kanpur.

It has alternatively suggested constitution of a committee of experts for this purpose, to be headed by a retired High Court or Supreme Court judge. In either case, the fixation of SAP “should be backed by reasons giving adequate outlines of norms, criteria or guidelines to incorporate in the Act/ Rules/Order/ Circular so that dispute in seriatim can be resolved for all time and delay in payments in the scheduled price of sugarcane can be avoided”, the Bench has said.

Directive to State

While the Bench has asked the State Government not to take any coercive action against mills that have accumulated arrears, it has simultaneously ruled that factories that have paid the SAP would not be refunded the extra amount already disbursed (over the Centre’s statutory minimum price of Rs 85).

In other words, the mills that have piled up arrears can breathe easy for the time being, while there would be no benefit to the factories that have discharged the entire SAP payments due to growers in the recent season.

As on December 18, UP mills owe growers Rs 1,106.25 crore out of the Rs 11,010.82 crore worth of cane bought during the 2006-07 season. Private mills owe Rs 901.60 crore, with cooperatives and State Government-owned factories accounting for Rs 130.03 crore and Rs 74.62 crore, respectively.

Private mills

The major groups that make up the Rs 901.60 crore private mill arrears list are Bajaj Hindusthan (around Rs 300 crore), Balrampur Chini (Rs 100 crore), K.K. Birla (Rs 75 crore), Dhampur Sugar Mills and Triveni Engineering (Rs 60-65 crore).

On the other hand, the companies that have made full payments include Dwarikesh Sugar Industries Ltd (Bundki and Bahadarpur mills), Sir Shadi Lal Enterprises (Shamli and Unn factories), DCM Shriram Industries (Daurala unit), the Todarpur unit of Shakumbari Sugar and Allied Industries (recently taken over by India Glycols from the Jagran Group), Parle Biscuits (Parsendi mill), Kesar Enterprises (Baheri) and L.H. Sugar Factories (Pilibhit).

Besides, there are companies such as DCM Shriram Consolidated and the Dalmia Cement Group, which have discharged nearly 100 per cent of their SAP obligations.

Meanwhile, all eyes are now on what stance the Allahabad High Court takes on the SAP for the 2007-08 season.

A Lucknow Bench of the Court, consisting of Mr Justice Udai Krishna Dhaon and Mr Satyendra Singh Chauhan, had on November 15, directed mills to pay growers an interim price of Rs 110 a quintal, against the Rs 125-130 a quintal SAP fixed by the UP Government for the current season. The matter is scheduled for hearing again on January 7.