A two-judge bench of Justices NB Suryawamshi and Indrajit Mahanty of the Bombay High Court has instructed the Solapur Collector to clear pending dues of sugarcane farmers before clearing the dues of the lender bank, Bank of Baroda. The order was given during the hearing of a property attachment order issued by the sugar commissioner against Siddheshwar Cooperative Sugar Mill in Solapur.
The mill in question had failed to pay farmers the government-declared fair and remunerative price (FRP) for the cane it procured. Sugar Commissioner Shekhar Gaikwad had issued a property attachment order under the Revenue Recovery Code to recover pending dues. The Solapur Collector had then started auctioning the mill’s sugar stock.
The Bank of Baroda had moved the High Court, seeking a stop to the auction of the mill’s stock as it had been pledged to the bank. Sugar mills in Maharashtra pledge their sugar stock to raise working capital from the banks. This money is used to pay the FRP as well as other operational expenses such as salaries and gunny bags. The banks recover the amount from sugar sales. In case the mills fail to pay farmers, the sugar commissioner orders the attachment of the sugar stock, which is auctioned off by the district collector to recover costs.
Such orders have been challenged in courts by banks, who point out that as secured creditors, they have the first right to the property.
During the hearing in the case, the judges injuncted the collector from carrying out further auction of the sugar.
“On rough ascertainment, the Collector is likely to receive the sum of Rs 43 crore and the certificate value is Rs 39.40 crore for the crush year 2018-2019 that is the dues of the farmers. It is stated by the learned counsel for the Cooperative Society that the total value of sugar available in the godowns is approximately Rs 200 crore. Apart from this, it is brought to our notice by the Petitioner-Bank that the dues to Bank of Baroda are Rs 2 crore (approx). Therefore, we further direct that the Collector after remitting the sum of Rs 49.04 crore regards satisfaction of the proceeding in favour of the farmers and sugarcane, further sum of Rs 2 crore be immediately credited to Bank,” the order read.
While passing this interim order, the court has asked for other members to be made parties to the case, and for attempts to be made to resolve the matter through talks.
With just a month or so left for the start of the new crushing season, only about 1.71 per cent of FRP dues remain to be paid by sugar mills to farmers. The total payable FRP was Rs 23,293.82 crore, of which factories have paid Rs 22,915.62 (98.38 per cent). About 56 factories have FRP dues and 139 factories have made 100 per cent FRP payments, 45 factories made 80-99 per cent dues, 8 factories made 60-79 per cent payments and 3 factories made payments below 59 per cent. During the season, 82 Revenue Recovery Code ( RRC) orders were issued to 63 factories.