The Hindu Business Line : SC stays HC order on sugarcane pricing

What it means
Sugar factories will have to discharge their outstanding SAP cane arrears
Revival of recovery certificates means seizure of sugar stocks, plant & machinery, and land of the defaulting factory.

Our Bureau

New Delhi, Jan. 18 In a setback for the sugar industry, the Supreme Court has stayed the December 19 order of the Allahabad High Court quashing the Uttar Pradesh (UP) Government’s State Advised Price (SAP) of Rs 125-130 per quintal, payable by mills for cane bought during the 2006-07 season (October-September).

HC findings

A three-judge bench of the apex court — comprising the Chief Justice, Mr K.G. Balakrishnan, Mr Justice G.P. Mathur, and Mr Justice R.V. Raveendran — on Friday, stayed the operation of the December 19 order. The latter had declared the SAP fixed for 2006-07 as “arbitrary” and “unreasonable”. It had also directed the State Government to reassess the SAP “backed by reasons giving adequate outlines of norms, criteria or guidelines”, with this price to be decided only after consulting all stakeholders and not unilaterally.

Consequences of the stay

The High Court bench of Mr Justice Amitava Lala and Mr Justice V.C. Mishra had further ruled that until such time that the new SAP was fixed, mills were obliged to pay only the Centre’s statutory minimum price (SMP), ranging between Rs 85-90 per quintal for the 2006-07 season.

However, with the Supreme Court now staying this order, it would mean that the factories will have to discharge their outstanding SAP cane arrears, which amounts to around Rs 900 crore for private mills alone. Also, the recovery certificates (RCs) that were issued by the State Government against mills that had not paid the SAP would stand revived. The RCs empower the district magistrate concerned to seize the sugar stocks, plant and machinery, and land of the defaulting factory and put them up for auction in order to pay the growers.

Next hearing

The apex Court, while staying the order of the Allahabad High Court, has fixed the next date of hearing of the case on February 12, with the respondents seeking two weeks time to file counter-affidavits. The Supreme Court’s ruling was in response to a petition against the December 19 order filed by Mr V.M. Singh of the Kisan Mazdoor Sangathan and the cane unions of Paliakalan and Basti. Separate petitions were also filed by the UP Government and the UP Cooperative Sugarcane Federation.

On Thursday, the Allahabad High Court had also exempted mills from paying the interim cane price of Rs 110 per quintal (fixed by a separate Lucknow bench) for the current 2007-08 season.

The Court had interpreted that since the UP Government had not yet complied with the December 19 order — requiring fixation of norms, criteria and guidelines for arriving at the SAP — there was no need for the mills to pay anything more than the Centre’s SMP. But with the Supreme Court staying the December 19 order, mills may for now have no option but to pay the SAP of Rs 125-130 per quintal fixed for the 2007-08 season as well.

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