Ten UP sugar factories will pay 12% straightforward interest on late payments to farmers

By law, owners of sweets are required to pay interest if they fail to make payment to farmers within 14 days of purchase.

Complying with an order from the Allahabad High Court, Yogi Adityanath’s government asked 10 state-owned sugar factories to pay 12% simple interest to farmers for late payment of their sugar cane dues for three fiscal years: 2012-13, 2013-14, and 2014-15.

These 10 factories will have to pay the interest for the years in which they have made a profit. Thus, the three units of Simbhaoli Sugars – Simbhaoli, Brijanathpur and Chilwaria – will have to pay interest for the 2012-13 grinding season, while the JHV Sugars sugar plant in Gadaura, the Moradabad unit of Laxmiji Sugar and Kanoria Sugars’ Captanganj unit will have to pay interest for the 2012-13 and 2013-14 seasons. Sherwani Sugar’s Neoli unit, KM Sugar Mills’ Motinagar unit and the United Province’s Seohari sugar factory will have to pay interest for 2013-14. Apart from that, a unit of the UP Sugar Cooperatives Federation, Sneh Road, in Najibabad, will also have to pay 12% interest for 2012-13.

In separate notices to these sweets, UP Cane Commissioner Sanjay Bhoosreddy has stated that in accordance with the provisions of Section 17 (3) of the Uttar Pradesh Sugar Cane Act 1953 (regulation of supply and purchase), these factories must ensure to pay 12% annual interest to farmers through their respective cane companies. In the event that they fail to do so, the ministry would be forced to issue collection notices in respect of them under section 17 (4) of the same law.

By law, owners of sweets are required to pay interest if they fail to make payment to farmers within 14 days of purchase.

Although the commissioner set an interest rate of 12% to be paid by owners of for-profit factories and 7% for other factories that are not as profitable in March 2019 itself, the government of l The state had procrastinated to give its approval, thus delaying the payment to farmers.

In an affidavit submitted to the court, the cane commissioner denied that there had been any non-compliance on his behalf and said that by law it is the state government that must take the final decision on payment of interest. As a result, he passed his March 2019 instructions to the state government for his nod.

However, beating down heavily on the cane commissioner, the one-judge panel of Judge Abdul Moin, in his Dec. 9 order, a copy of which is in the possession of FE, stated that subsection (3) of the Article 17 of the law states that only when the cane commissioner orders the payment of interest at a reduced rate or no interest is ordered to be paid, then government approval is required.

“The natural corollary of section 17 (3) of the 1953 law is that when interest has been granted at the specified rate (12% per annum), no approval is required from the state government,” states the ordinance, adding that even though the interest rate was granted at a lower rate by the decree of March 2019, a period of two and a half years passed simply because the government decided not to pass a decree. “The applicants (farmers) cannot be expected for years to wait for approval and therefore prima facie a case of contempt is also established against the state government,” the order says.

“It is evident that the Cane Commissioner voluntarily dealt with the matter despite making an order for payment of interest at the rate specified under the law, under the pretext of obtaining the approval of the state government, “the court said, directing the cane. commissioner to file an affidavit of compliance on January 17, 2022, or to appear in court.

The judiciary heard a contempt petition filed by farmer leader VM Singh against the state for its failure to implement the 2017 guidance, which was given on a batch of petitions by various farmer organizations.

“Farmers have been waiting for their interest payments since January 2014, when Allahabad HC set 15% late interest,” Singh said. However, the factory owners at the time contacted Akhilesh Yadav’s government at the time to ask them to waive the interest portion of the payment as the industry was going through a precarious situation. As a result, in October 2016, the Akhilesh Yadav cabinet waived the approximately 2,000 crore interest owed by factories to farmers, which was later challenged by VM Singh, chairman of Rashtriya Kisan Mazdoor Sangathan (RKMS).

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Rachel J. Bradford