Hearing the case last week, the HC had ordered the Centre to file its response by Tuesday, which the government did. According to sources, the food ministry justified its stance by saying the stock limit levy was necessary to put a curb on rising sugar prices despite adequate supply.
The food ministry had on September 8 directed sugar mills to reduce its stock to 37 per cent of the stock available with them during 2015-16 before September 30, and 24 per cent by October 31. Of the nearly 200 mills that started crushing during 2015-16 in Maharashtra, 46 mills failed to adhere to the Centre’s guidelines.
Mills argued that they were required to offload around 1.2 million tonnes into the market during a short period of 22 days as the government order came on September 8. “It was difficult to find buyers for such a large quantity of sugar. Hence, sugar mills sought an extension,” said Sanjiv Babar, managing director, Maharashtra State Federation of Co-operative Sugar Factories.
The quantity required to be released constitutes double the average monthly consumption of sugar in Maharashtra.
Sources, however, said sugar mills in the state approached the food ministry for an extension before filing a case in the Bombay HC. The ministry had denied this claim. “The major objective of the ministry’s order was to cool down prices, which the government achieved as sugar price fell sharply in the last few weeks. Sugar mills require some relief to protect their interest in terms of realisation,” said a senior industry official. Sugar mills posted huge losses due to a sharp decline in prices last year.