Govt gets more teeth to recover cane dues from defaulting sugar mills

With the amendment in Uttar Pradesh Sugarcane (Regulation of Supply and Purchase) Act, 1953, the state government has empowered itself to recover sugarcane dues from the group companies of defaulting sugar mills.

The bill was passed by the UP assembly on Friday and it will come into force with the gazette notification to be issued soon.

The amendment to the Uttar Pradesh Sugarcane (Regulation of Supply and Purchase) Act, 1953 has added a sub-clause. It is aimed at streamlining the legal obstacles in initiating recovery from errant sugar mills which do not clear their cane dues of the farmers on time despite the coercive recovery certificates being issued against them by the cane commissioner.

The amended provision states that in case any sugar company defaults on its payments to farmers, the cane commissioner will recover the dues first by issuing RCs against that particular company, as is already being done. If the company fails to comply, the cane commissioner will then have the right to recover the dues from the subsidiary and associate companies of that particular sugar company. The cane commissioner will also have the right to seize all the receivables that these subsidiary and associate companies will get from any state department or corporation, or by way of return of investment made by these companies.

The amendment in the Act will ensure timely payment to 65 lakh sugarcane farmers of Uttar Pradesh.

Explaining the purpose and reasons for introducing the clause, Sugarcane Minister Suresh Rana said it was often seen that sugar mills delayed payments to farmers, who then faced severe financial difficulties and were forced to delay Rabi sowing, which in turn, caused great financial loss to the farmers.

“To make the earlier clauses of the Act more effective and to ensure that farmers get their cane dues on time, this clause has been added and will be invoked only after exhausting the earlier provisions of recovering farmers’ dues. Under this clause, the receivables of the defaulter mill, unit or company or any of its subsidiary or associate companies in the state, can be seized by the state government to clear the farmers’ cane dues,” the bill said, adding that the definition of company, subsidiary company and associate company would be the same as defined in the Company Act, 2013.

The UP Sugarcane (Regulation of Supply and Purchase) Act, 1953, already has a provision to initiate recovery by issuing RCs in case of default in cane payments. The new provisions are aimed at tightening the reins on errant mills, which have been habitual defaulters. At present, 27 private sugar mills owe Rs 2,700 crore to cane farmers for the 2020-21 season.