The Supreme Court yesterday reserved judgment on the appeal filed by Maharashtra sugar factories challenging the state order allowing canegrowers to sell their produce to factories outside their allotted zones. The Bombay High Court had earlier upheld the order passed last year.
The factories argued before the bench consisting of Justice G N Ray and Justice M Srinivasan that it was the Centre, under the Essential Commodities Order, which had the power to pass such orders and that the state government could not go against the Central policy and the Supreme Courts 1995 judgment.
The counsel for the factories, F S Nariman, said zonal restrictions had been upheld by the apex court in 1984 and 1995 after the canegrowers had challenged it. Removal of the system will destroy the cooperative movement in the sugar industry, he said. He argued that farmers chose to be outside the cooperatives so that they would be free from liabilities while availing of the advantages enjoyed by member-farmers.
The Centre and the Maharashtra government defended the policy and said if the state could enforce zonal restrictions, it could also undo it. The Centre has delegated its powers in this field to the state and therefore there was no violation of the Essential Commodities Act or arbitrariness, the government counsel argued.
The state counsel said because of the strict zonal code, excess sugar was being burnt by farmers, obliging the government to pay compensation.
The price structure was also uneven as factories fix their own price, sometimes varying by Rs 300 a tonne. The government had a stake in the industry as it was subsidising 90 per cent of the co-operatives.
The state also alleged that the cooperatives were not giving membership to many farmers for their own reasons. Factories neglected non-members. All this resulted in a sharp drop in sugar production and farmers diverting land to other crops.
Supporting the government, noted activist Sharad Joshi said there were many inequities in the sugar industry since 1984. When the farmers began to receive competitive prices, zonal restrictions were imposed for political reasons curbing competition. He charged sugar barons of being interested only in getting factory licences and the accompanying political bonanza rather than running their units efficiently.
Joshi said this had resulted in Maharashtra losing its premier position in sugar production. Farmers in the state were getting a lower price than their counterparts in Punjab and Haryana and were shifting to other crops like onion. At this rate, the state would not be able to achieve its target of 80 lakh tonne by the year 2000. Joshi asserted that the new policy will not break up the cooperative movement; it would only break up sugar monopolies.
