SUPREME COURT TELLS UP MILLS TO PAY RS 110/QTL TO CANE GROWERS

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THE Supreme Court has directed all mill owners of Uttar Pradesh to pay cane price at the rate of Rs 110 a quintal for the present crushing season of 2007-08. Such amount will be exclusive of the transportation charges to be paid for bringing cane to the factories, the apex court said in an interim order.

A bench comprising Justice Arijit Pasayat and Justice H S Bedi also expressed displeasure at two different orders of the Allahabad High Court on the issue of cane pricing.

“It’s a classic example of non-judicial discipline,” Justice Pasayat said, adding the concerned parties did not disclose the impending fact before the high court.

The apex court also said it would examine the pleas of both the state government and the mill owners. It sought replies from both the sides within four weeks.

The court also asked the mill owners to pay the due amount for the previous crushing season of 2006-07 when it was brought to the notice that there were some mills who failed to comply with its earlier order. The court had directed them to pay between Rs 115 to Rs 123 per quintal, depending upon the cane quality, for last season.

The Lucknow bench of the high court on July 7 had asked mill owners to pay Rs 125 a quintal, which is the state advised price (SAP) fixed by the state government, for cane crushed during 2007-08 sugar season (September-October). Against this decision, the mill owners had come to the apex court.

But on August 18, the Allahabad High Court gave a contrary judgement. It quashed state government’s SAP of Rs 125 per quintal and instead allowed the mill owners to pay Rs 81.18/quintal, which is the statutory minimum price (SMP) set by the central government. The government in the apex court has challenged it.

Advocate Viplav Sharma on behalf of the state government said the delay and uncertainty in payment of the remunerative price in the form of SAP was compelling the farmers to switch over to other crops. It will adversely affect the interest of mill owners in the long run, he said.

Further, the cost of cultivation of sugarcane has increased to Rs 114.09 per quintal as compared to Rs 102.28 per quintal for year 2006-07. Such estimation is based on the average yield of Seorahi, Shahjahanpur and Muzzafarnagar cane research farms, the government said in its petition.

It said the fixation of SAP was a policy decision approved by the Cabinet. The state government has been fixing such price for sugarcane since 1973-74 and interference by the high court in such decision was illegal, the government said.

However, the East Uttar Pradesh Sugar Mills Association and other mill owners asked: “Whether the fixation of Rs 125 is not arbitrary in view of the fact that the central government fixed the SMP at only Rs 81.18 per quintal?”

The mill owners further said the government had fixed SAP for cane for year 2006-07 at Rs 125 per quintal. At that point of time, the prevailing sugar price was about Rs 1,800 per quintal. The sugar prices dropped steeply by over Rs 400 per quintal during the course of this year and the industry suffered a huge loss of over Rs 3,000 crore. When the cane price for season 2007-08 was being fixed, the sugar price was prevailing at a very low level of Rs 1,300 per quintal. Despite this and a huge loss suffered by the industry, the government again fixed the price at Rs 125 per quintal. It has no relation to the relevant factors such as cost of cultivation, price of sugar in the market and paying capacity of the factories, the mill owners said.

Further, the major sugar producing states like Maharashtra, Gujarat and southern states agreed to the SMP fixed by the Centre or a price ranging between Rs 95-100 per quintal based on actual recovery and fair price to the growers, the mill owners said.

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