The Supreme Court on Monday directed Uttar Pradesh sugar mills to pay farmers Rs 110 per quintal for sugarcane purchased in the October 2007-September 2008
Sugar mills save Rs 850 cr arrears MUMBAI: The Supreme Court on Monday directed Uttar Pradesh sugar mills to pay farmers Rs 110 per quintal for sugarcane purchased in the October 2007-September 2008 season. It also gave the mills four weeks to clear the arrears.
For the season, the UP government had set a state advised price (SAP) of Rs 125 per quintal, higher than the statutory minimum price of Rs 81.18 per quintal fixed by the central government.
Objecting to the high SAP, sugar mills moved the Allahabad HC for relief. In October 2007, the Lucknow bench of the HC allowed them to pay Rs 110 per quintal but withdrew the interim order on July 7, upholding the SAP. It set a September 6 deadline for the mills to clear the dues.
On August 25, in a separate case, the Allahabad bench of the state HC quashed the SAP and allowed the appellants - Bajaj Hindusthan, Basi Sugar Mills and others - to clear cane dues for the period at Rs 81.18 per quintal.
The Allahabad bench held that the SAP was set arbitrarily and did not follow a fixed formula. The state government challenged the Allahabad bench’s order in the SC on August 18. Last week, the SC refused to stay the Lucknow bench’s order but upheld the Allahabad bench’s order on Monday.
Holding that the Lucknow bench had no jurisdiction over the matter after the Allahabad bench passed its order, the SC has demanded an explanation for the former’s actions.
Hailing the judgment, S L Jain, director general of the Indian Sugar Mills Association, said that Rs 110 per quintal means “good times” for the industry. “The price fixed by the Uttar Pradesh government was totally against the mills,” he said.
An official from Ghaziabad-based sugar mill Simbhaoli Sugars Ltd said that the order is good for the company and would be reflected in its numbers. “We will save money and are hoping to post robust numbers in the coming quarters,” the official added.
An analyst with a leading research firm was positive that the final judgment would stick to the price of Rs 110 per quintal. The analyst added that if cane arrears were fixed at the SAP, mills would have had to shell out Rs 1,400 crore. “This will fall significantly after the ruling and save crores for the mills.”
Another analyst said that the final judgment is expected in eight weeks. “Logically, this should be the final decision but we will still have to wait and watch what the SC finally says,” the analyst added.
shubhashish@dnaindia.net 
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