New Delhi: The Allahabad High Court has found that the Uttar Pradesh government has wilfully disobeyed its four-year-old order that directed the state to fix interest for sugar mills to pay to farmers for late payment of sugarcane dues.
Passed in March 2017, the order required the cane commissioner — a senior bureaucrat in the state — to take a final call pertaining to the grant of interest for late payment of cane purchased from farmers for three financial years: 2012-13, 2013-14, and 2014-15.
Although the commissioner fixed the interest rate to be payable by mill owners in March 2019, the state government is yet to approve it, delaying the actual payout to the farmers.
A single-judge bench of Justice Abdul Moin said in its 9 December order, accessed by ThePrint, that it cannot be expected that farmers wait for an approval for “years on end,” merely because the government has proceeded not to pass an order.
“It is apparent the Cane Commissioner has willingly sat over the matter despite having passed an order for payment of interest at the specified rate under the Act, under the pretext of taking the approval of the state government,” the court said, directing the cane commissioner to file a compliance affidavit or else appear before the court on 17 January 2022.
Several rounds of litigation, ‘wilful disobedience and defiance’
Justice Moin’s bench was hearing a contempt petition filed against the state for its failure to implement the 2017 direction, which was given on a batch of petitions by various farmers’ organisations.
Advocate V.M. Singh, who filed the contempt petition, told ThePrint that the farmers have been waiting for the interest payments since 2014, when the issue was first taken to the high court. “In January 2014, the HC had fixed 15 per cent as late payment interest,” Singh said.
This was under the Uttar Pradesh Sugarcane (Regulation of Supply and Purchase) Act, 1953, which binds sugar mill owners to pay interest if they fail to make the payment to farmers within 14 days of a purchase.
However, the mill owners made a representation to the then Akhilesh Yadav government, with a request to either waive or reduce the interest settled by the high court. By two cabinet decisions in 2015 and 2016, the state waived the interest part of the payment.
This led to another round of litigation in the high court, which then in March 2017 gave liberty to the cane commissioner to fix the interest rate.
On 9 March 2019, the commissioner bracketed the sugar mills into profit-making and loss-making categories. For the mills in profit, the commissioner fixed 12 per cent as the annual interest rate, while for the rest it was 7 per cent.
In his submission to the high court, Singh said a period of more than four-and-half years had lapsed and the state, having subsequently passed an order in March 2019, has not yet transferred the benefits to the farmers. This, in his view, is wilful disobedience and defiance of the 2017 order.
On his part, the cane commissioner denied that there had been any non-compliance. He took a stand that under the Uttar Pradesh Sugarcane (Regulation of Supply and Purchase) Act, 1953, it is the state government that is to take the final call with regard to payment of interest. Accordingly, he submitted through an affidavit, he had forwarded his March 2019 instructions to the state government for its approval.
As and when the approval is received, the payments would be made to the farmers, the commissioner’s lawyer told the bench. It was also contended that efforts were on to follow up with the state government for its approval.
However, the bench ruled that the 1953 law warranted the state’s nod if there was a proposal to reduce the interest rate indicated in the Act, which is 12 per cent per annum.
On the cane commissioner’s defence, the court observed, “though attractive on the fact, it merits to be rejected outrightly.” This, it added, is because the commissioner is required to take follow-up action under the law, which he has failed to do vis-à-vis those mills that are in profit. The follow-up action requires him to issue a certificate to the collector to make sure the mills make the payment in accordance with the commissioner’s order.
“However, the respondent (cane commissioner) has proceeded not to take any further action after passing of the said order and thus prima facie there is wilful disobedience and defiance of the order of the writ Court on this score,” the court said.
(Edited by Rohan Manoj)