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2015 Supreme(Online)(All) 61

ALLAHABAD HIGH COURT
D. Y. Chandrachud, C. J., Dilip Gupta, J.
Rashtriya Kisan Mazdoor Sangathan (Regd.) thru Convenor v. State of U. P. and Others
Writ Petition (Public Interest Litigation) No. 785 of 2014



The statutory obligations under the U.P. Sugarcane Act protect cane growers' rights by establishing a first charge on dues, mandating compliance by sugar mills and prioritizing timely payments.

Headnote:(A) U.P. Sugarcane (Regulation of Supply and Purchase) Act, 1953 - Sections 17, 17(3), 17(4), and 17(5) - Public interest petition regarding cane dues - State Government's failure to ensure payment of dues by sugar mills highlighted - Interim directions for monitoring compliance and due payments issued by the Court - Court noted substantial unpaid dues and instituted measures for recovery and compliance based on statutory provisions. (Paras 2, 3, 27, 31)

(B) Legal obligations of sugar mills - Statutory duty to pay cane price constitutes a first charge on stock - Court emphasized that payment of dues to farmers is prioritised - Court directed that financial arrangements by sugar mills must comply with statutory safeguards to protect growers' rights. (Paras 20, 30, 44)

Facts of the case:
Petition filed regarding failure of sugar mills to pay nearly Rs. 8754.52 crores to cane growers for 2013-14, invoking Art.21 for farmers' rights to dignity. Court intervention in light of rising farmer suicides due to unpaid dues. (Paras 1, 2, 20)

Findings of Court:
Court confirmed ongoing non-payment and urged State to comply with statutory obligations, while issuing directives for timely payments and sales of stocks to cover dues. Monitoring mechanisms were established. (Paras 4, 46, 50)

Issues: Key issues include the interpretation of statutory obligations under S.17 regarding payment disputes, the prioritization of cane growers’ rights, and the effectiveness of financial agreements concerning pledged sugar stock. (Paras 17, 39)

Ratio Decidendi: Court affirmed that the provisions under S.17(5) safeguard cane growers' interests, imposing a statutory charge to ensure payment prioritization. Financial arrangements must respect these statutory mandates to prevent exploitation. (Paras 44, 30)

Result: The writ petition was disposed of with directives to ensure compliance with payment obligations by sugar mills, and the management of sugar sales to meet dues by 31 October 2014.

Table of Content
1. court's intervention for cane dues is necessary. (Para 1 , 2)
2. outstanding dues to farmers addressed. (Para 3 , 4 , 6)
3. sugar mills' financial burden raised. (Para 5 , 19)
4. financial arrangements must comply with statutory provisions. (Para 7 , 24 , 30)
5. banks' rights and obligations discussed. (Para 20 , 22 , 23)
6. statutory charge created for cane dues payment. (Para 26 , 28 , 31)
7. court's final orders regarding sale of sugar. (Para 44 , 49 , 50)

1. These proceedings in the public interest seeking a direction to the State Government for ensuring the realisation of cane dues payable by sugar mills in the State of Uttar Pradesh to cane growers, comprising of the cane price and interest for crushing season 2013-14, were entertained by this Court on 30 May 2014 when interim directions were issued for the first time.

2. The legal basis of the petition was an alleged : (i) breach by the sugar mills of the statutory obligation under the U.P. Sugarcane (Regulation of Supply and Purchase) Act, 1953 (the Act) of paying over sugarcane dues to the cane growers; and (ii) failure of the State Government to initiate steps for recovery of the dues in accordance with law. The petition is founded on a breach of a legal duty cast upon the State by the state legislation to ensure the payment of the cane price and interest to farmers and upon the corresponding obligation which is cast upon the sugar mills which entered into statutory agreements under the U.P. Sugarcane Supply and Purchase Order, 1954 (the 1954 Order) for the purchase of sugarcane from assigned areas. This legal basis in the proceedings is compounded by the human misery of the sugarcane growers who, on the one hand have statutorily an obligation to sell sugarcane only to sugar mills as stipulated by the Cane Commissioner, while on the other hand being at the mercy of the sugar mills for the re - payment of their dues. This Court has noted the incidents of suicides by farmers in the State and invoked Art.21 of the Constitution which assures, as an intrinsic part of the right to life, the right to live with dignity. At the outset, therefore, it is necessary for the Court to set out the parameters for intervention, confined as it must be to the application of statutory and constitutional norms.

3. The Court was informed by the State, on affidavit, that for the crushing season 2013-14, a total amount of Rs. 8754.52 crores was due to be paid as on 29 May 2014. At that stage, the Court was apprised of the fact that 21 First Information Reports had been lodged against the sugar mills. This Court held that the mere filing of FIRs was a statement of platitudes since this did not reflect any serious attempt on the part of the State to ensure compliance of law. This Court emphasised that a situation where nearly 40% of the sugarcane dues of the farmers had not been paid even though the crushing season was virtually at an end, was a serious issue which required urgent remedial action. The attention of the State was drawn to a recent judgment of the Supreme Court rendered on 24 January 2014 in Anand Agro Chem India Ltd. v. Suresh Chandra & Others, Civil Appeal No. 897 of 2014 which refers to the enforcement power of the State under S.17 of the Act. S.17(4) empowers the Cane Commissioner to forward to the Collector a certificate specifying the amount of arrears on account of the price of cane plus interest, which the Collector has to proceed to recover from the occupier of the factory as if it were an arrear of land revenue. Taking due note of what appeared, prima facie, to be a breach of legal obligation by the sugar mills, a breach of legal duty by the State and a violation of the fundamental and statutory rights of the cane growers, this Court directed the State to have a serious re - look in the matter, having due regard to the fact that a large segment of the agricultural population had been subjected to great hardship.

4. Following the first interim order which was pa


























































































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