The Uttar Pradesh sugar mills have challenged the Allahabad High Court’s recent ruling, which restored the Rs 125-130 state-advised price (SAP) of sugarcane for the 2007-08 season (October-September) in its final judgement.
The Uttar Pradesh Sugar Mills’ Association (UPSMA), on behalf of the sugar mills, on Wednesday filed a special leave petition (SLP) before the Supreme Court, said industry sources.
In a judgement on July 7, the Lucknow Bench of the Allahabad High Court had dismissed the UPSMA petition, challenging the 2007-08 SAP for sugarcane. The Bench restored the SAP of Rs 125-130 a quintal and struck down the interim price of Rs 110 a quintal that it declared in November last year. Mills were directed to pay the difference of Rs 15 a quintal within a period of two months.
While at a price of Rs 110 a quintal, sugar mills were required to pay Rs 8,211 crore to farmers for the sugarcane purchased, an SAP of Rs 125-130 would require mills to make an additional payment of about Rs 1,100 crore.
The industry is reluctant to make this additional payment. “We are making marginal profits at Rs 110 a quintal since sugar realisation is low. At Rs 125, our bottom lines will turn red and have long-term impact on the industry’s financial health,” said a UP miller.
All UP sugar companies had accounted for a sugarcane price of Rs 110 a quintal while declaring their results in the October-December and January-March quarterly results. Interestingly, most had declared a profit at this price.
In the 2007-08 season, mills had refused to crush at the SAP and began crushing after a month’s delay only after the court declared an interim price of Rs 110 on November 15. Due to the delay in mills’ crushing, farmers were forced to dump cane at the gur and khandsari units in a bid to vacate their fields for sowing wheat.
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The Allahabad court dismissed the writ after finding that there was no defect in the recovery proceedings along with the fact that the writ petition challenging SAP announced by UP had already been dismissed by the Lucknow Bench of the HC on July 7, 2008.
The counsel for the cane grower’s cooperative societies, Ravindra Singh, pointed out that the petitioner failed to comply with the court directives, including those of the Supreme Court.
Meanwhile, in another case filed by the SBEC Sugar Mill in Malakpur of the Baghpat district, the court has directed the mill to pay one-fourth of the collection charges. The mill is owned by the Modi Group.
The petitioner had challenged the collection charges of about Rs 8 crore (10 per cent of the recoverable amount of Rs 89 crore), pleading the same as excessive and arbitrary.
However, SBEC had already paid the sugarcane dues within the time fixed by the SC (June 30, 2008). The above orders were passed by a division bench comprising Justices Janardan Sahai and Sudhir Agrawala.