Some sugar mills in Uttar Pradesh to pay 12% interest on delayed payment to farmers

Complying with an Allahabad High Court order, the Yogi Adityanath government has asked 10 sugar mills in the state to pay 12% simple interest to the farmers for the late payment of their sugarcane dues for three financial years: 2012-13, 2013-14, and 2014-15. These 10 mills will have to pay the interest for the years when they were making profits.

In separate notices to these sugar mills, UP Cane Commissioner, Sanjay Bhoosreddy has said that as per the provisions of Section 17 (3) of the Uttar Pradesh Sugarcane (Regulation of Supply and Purchase) Act, 1953, these mills must ensure to pay 12% annual interest to the farmers through their respective cane societies. In case they fail to do so, the department would be forced to issue recovery notices on them under Section 17 (4) of the same Act.

Under the Act, sugar mill owners are bound to pay interest if they fail to make the payment to farmers within 14 days of purchase.

Although the commissioner had fixed 12% interest rate to be payable by profit-making mill owners and 7% for the other mills which are not so profitable in March 2019 itself, the state government had been procrastinating on giving its approval, thereby delaying the actual payout to the 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 under the Act, it is the state government that is to take the final call with regard to payment of interest. Accordingly, he has forwarded his March 2019 instructions to the state government for its nod. The farmers have been waiting for their interest payment since January 2014, when the Allahabad HC had fixed 15 per cent as late payment interest. However, mill owners at that time, had approached the then Akhilesh Yadav government, with a request to waive the interest part of the payment as the industry was going through a precarious condition.

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