Defaulting UP sugar mills get stay orders

Most defaulting sugar mills in Uttar Pradesh, against whom recovery certificates (RC) were issued recently, have managed to get stay orders from courts.

These include companies like Bajaj Hindusthan, Balrampur Chini, Triveni Engineering and Industries, Mawana Sugars, the K K Birla group and Simbhaoli Sugars.

These mills have been given a time frame of 5-6 weeks to clear 25 per cent of their arrears and the rest as they start getting the money against the excise payments made in two seasons (2006-07 and 2007-08). The excise relief has been provided by the government to help mills make cane price payments.

"Around 25-30 of the 45 mills against whom RCs were issued have got stay orders. As a consequence, no recovery proceedings can be initiated against them. By issuing stay orders against RCs, the court has taken cognizance of the fact that having incurred huge losses, mills are not in a position to make immediate payments," said industry sources.

On October 18, the state government had issued RCs against 45 sugar mills including those belonging to leading companies like Bajaj Hindusthan and Triveni Engineering. Prior to October 18, RCs were issued against 18 mills for nonpayment of cane prices. In total, RCs were issued against 63 private mills this year.

The RC empowers the district authorities to seize control of the sugar stocks, plant and machinery, land and bank accounts of a defaulting mill and recover cane dues through arrears in land revenues.

Most mills in the state have accumulated arrears in the last crushing season (October-September) as cane prices remained much higher than the realisation on sugar, resulting in losses and nonpayment to farmers.

The private mills in the state purchased cane worth Rs 9,091 crore last season. However, payments of only Rs 8,046 crore have been made so far, resulting into arrears of Rs 1,045 crore.