Pay 103 Crore to Farmers: Allahabad HC to Sugar Mills

In the latest Judgment of Allahabad High Court, a Division Bench of Justice S.P. Kesarwani and Justice Jayant Banerji has considered the plight of farmers of Uttar Pradesh and has granted them big relief by allowing their Writ Petition with the direction to release all payments.

The Facts of the case-Kanikram And 3 Others vs State Of U.P. And 4 Others (WRIT – C No. – 13313 of 2020) are:

The petitioners before the Allahabad High Court were cane growers. They were members of the respondent Cooperative Cane Society. They approached the Allahabad High Court seeking mandamus to the Cane Commissioner to direct the sugar mill to pay the entire cane price with interest for the crushing season 2019 — 2020.

Their sugar cane growing area was reserved for the supply of sugarcane to the respondent – Sugar Mill. They supplied sugarcane to the respondent – Sugar Mill for the crushing season 2019-20 (01.10.2019 to 31.03.2020).

According to the respondent – Sugar Mill, the crushing was carried on up to 23.03.2020. As per details submitted by the respondent no.2 (Cane Commissioner) before the High Court, 28086 farmers supplied sugarcane to the respondent Sugar Mill but the respondent Sugar Mill made payment whether in full or in part, only to 7,639 cane growers for the period of supply till 01.01.2020. 

Thus 20,447 cane growers were not been paid even a single penny by the respondent Sugar Mill. As per letter of the Cane Commissioner dated 13.07.2020 the sugarcane purchase payable amount by the respondent Sugar Mill was Rs.132.5194 crores against which it made payment of only Rs.18.6035 crores and thus there remained arrears of Rs.113.9159 crores. The respondents – Sugar Mill has made payment of only 14.04% percent out of the total sugarcane supply amount. 

The Allahabad High Court passed an order on 03.09.2020, thereafter the respondent no.2 Cane Commissioner issued a recovery certificate dated 07.09.2020 reflecting total arrears of Rs.103.1057 crores towards sugarcane price and interest payable by the respondent Sugar Mill to cane growers.

Submissions of Petitioners

  1. Despite various reminders and persuasion by the petitioners neither Cane Cooperative Society has taken any interest to ensure payment of sugarcane dues of the petitioners nor the respondent Cane Commissioner nor the State Government took any interest to ensure that the petitioners (poor farmers) may get sale consideration of their sugarcane supplied to the Sugar Mill.
  2. Respondents are acting in connivance with each other, with the result that the petitioners are not getting price of their sugarcane supplied to the Sugar Mill under the provisions of the Act 1953 and the Rules 1954.
  3. Conduct of the respondents is not only violative of provisions of Section 17 of the Act 1953 and the Rule 45 of the Rules 1954 but is also violative Fundamental Rights of Petitioners.

Submissions of State Government:

  1. Sugar Mill has committed serious lapses in making payment of sugarcane to cane growers and consequently, the Commissioner has issued a recovery certificate dated 07.09.2020.
  2. The recovery certificate issued by the Commissioner shall be enforced by the Collector and the entire dues shall be recovered from the Sugar Mill.

Submissions of Sugar Mill

  1. Writ petitions are not maintainable at the instance of individual cane growers who have no individual right to approach the Court for payment of sugarcane price/dues.
  2. Sugar Mill has submitted a plan for payment of cane dues of the farmers to the tune of 97 crores, till February 2021.
  3. Sugar Mill has made a payment on 08.9.2020 for sugarcane purchased till 02.01.2020 and part payment of sugarcane purchased on 03.01.2020. The Sugar Mill stopped crushing since 23.03.2020. Therefore, the Sugar Mill is making effort for payment.
  4. Since recovery certificate have already been issued by the Commissioner against the Sugar Mill, therefore, the writ petition has become infructuous.
  5. If the Sugar Mill makes the payment then it may face financial crisis and may be forced to close the Sugar Mill.

Questions for determination

Whether petitioners/cane growers have locus standi to maintain writ writ petition under Article 226 of the Constitution of India for payment of their cane dues in terms of the provisions of Section 17 of the Act 1953 read with Rule 45 of the Rules 1954 ?

Whether on issuance of Recovery Certificate dated 07.09. 2020 by the Commisioner against the Sugar Mill for recovery of cane price and interest, the writ petitions have become infructuous. ?

Whether the Sugar Mill even being bound by the provisions of Section 17 of the Act 1953 and Rules 44 and 45 of the Rules 1954, can withhold or delay the payment of sugarcane supplied by the petitioners/cane growers on the ground that it has submitted a schedule of payment to the Cane Commissioner to pay the sugarcane dues (except interest) by February 2021, and whether the Cane Commissioner and authorities have acted in due discharge of their duties?

Findings and Decision of Court:

  1. Right to receive payment of sugar cane price and interest, if any, is a statutory right of cane-growers/farmers under Section 17 of the Act who supplied sugarcane to the Sugar Mill as per reservation order issued by the competent authority under the Act 1953.
  2. In the case of Anand Agro Chemical India Ltd. Vs. Suresh Chandra & Ors. 2014 (3) SCC 631, Hon’ble Supreme Court clearly held that Section 17 of the Act 1953 mandantes that the occupier of the sugar – factory shall make speedy payment of cane price.
  3. Further in case of default, the Cane Commissioner, under sub, mentioning the amount of arrears of the cane price due from the occupier and there after the Collector shall proceed to recover the said amount from such occupier as if it were an arears of land revenue.
  4. Petitioners have a legal right under Section 17 of the Act 1953 to get payment of sugarcane supplied to the Sugar Mill immediately and in any case within 15 days without interest, therefore Writ Petition is maintainable under Article 226.
  5. Non payment of sugarcane price by the Mill and delay/laches by the Commissioner in issuing recovery certificate against the Mill, clearly indicates breach of provisions of Sub-Sections 1, 2 and 3 of Section 17 by the Mill and sub-Section 4 of Section 17 by the Commissioner. 
  6. Sugar Mill, who is giant manufacturer in the field of sugar and its by-products; has not taken even Cash Credit Limit (CCL) from any Bank.
  7. The provisions of Section 17 of the Act 1953 do not contemplate purchase of cane by the occupier even where the occupier is not in position to make payment of the price of cane. 
  8. The indulgence granted by the Cane Commissioner to the Sugar Mill in this regard is at the cost of the struggling farmers whose livelihood and lives are at stake. The aforesaid indulgence indicates a deleterious neglect by the authorities having the effect of compromising the fundamental rights of the distraught farmers.

For the Reasons above the Court allowed the writ petitions with the direction to the respondent Nos. 1 & 2 to ensure that the Collector concerned shall recover the amount of recovery certificate dated 07.09.2020, in accordance with law, within two months from today after adjusting the amount, if any paid by the Sugar Mill. 

Further the District Magistrate, Basti, has also been directed to take action against the Directors and occupiers of the Sugar Mill including their arrest to recover the dues, as was also directed by this Court and affirmed by Hon’ble Supreme Court in Anand Agro Chemical India Ltd. (supra).

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