UP Cane Price Issue: HC Order Likely Next Week

Chennai: The Allahabad High Court has listed for next week its order on a petition filed against the State advised price (SAP) for sugarcane fixed for by the Uttar Pradesh Government for the 2007-08 season beginning October.

The court also did not stay its interim order, asking sugar mills in the State to pay the statutory minimum price (SMP) fixed by the Centre for procurement of sugarcane from farmers.

“The court did not stay the interim order of January 17 and, therefore, the order of mills having to pay the SMP of Rs 80 a quintal remains in force,” said Ravindra Singh, the counsel for the UP Co-operati Cane Unions Federation. The federation is seeking vacation of the interim order and payment of SAP as announced by the Mayawati Government on October 30 for the current season.

On October 30, the Uttar Pradesh Government said SAP for 2007-08 would be the same as during 2006-07. While sugar mills will have to pay Rs 125 a quintal for common variety sugarcane, Rs 130 for early variety and Rs 122.50 per quintal for rejected variety to the growers.

“The January 17 order of the High Court was reiterated on February 20,” Singh said. The Allahabad High Court had on March 4 reserved its order on the petition filed by Bajaj Hindusthan Ltd and Basti Sugar Mills against the SAP.

Pending PILS

The case is attracting attention of all those concerned with the sugar industry, especially after the Supreme Court passed an interim order on February 27 asking the mills to pay growers Rs 118 a quintal for normal sugarcane variety. However, this order pertains to the 2006-07 season.

For the 2006-07 season, the Lucknow Bench of the Allahabad High Court on November 15 asked the mills to pay farmers Rs 110 a quintal for the sugarcane they deliver. At least half a dozen public interest litigations have been filed against this order and these pleas are pending before the Supreme Court. The apex court has listed these petitions for hearing during the last week of March.

But it has refused to pass any interim order, wanting the High Court pass the final order.

The Supreme Court interim order on February 27 came following an appeal against the December 19 Allabahad High Court order, quashing the SAP for 2006-07 and asking the Uttar Pradesh Government to revise it.

This implied that it would be enough for the sugar mills to pay the statutory minimum price fixed by the Centre at Rs 80 a quintal. Earlier on January 17, the Supreme Court had stayed the High Court order.

The Allahabad High Court on Thursday also listed for March 26 a hearing on a petition challenging the privatisation of the Majola Cooperative Sugar Mill in Philbhit district of Uttar Pradesh.

SC Stays HC Order On Sugarcane Pricing

New Delhi: 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, K.G. Balakrishnan, Justice G.P. Mathur, and 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 Justice Amitava Lala and 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.

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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 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.