SC notices to Balrampur Chini, other sugar cos in UP

The Supreme Court today issued notices to UP sugar firms like Bajaj Hindustan and Balrampur Chini, after the state petitioned against the Allahabad High Court order setting aside its regulations on consumption and supply of molasses under the UP Molasses Amendment Act.

The high court in its order had said that the state did not have the power to impose levy on captive consumption, supply or transfer of molasses.

Hearing the state's plea, a bench of Justice DK Jain and Justice AK Ganguly today issued notices to Bajaj Hindustan, Balrampur Chini Mills, Dhampur Sugar Mills and Triveni Industries, directing them to file their reply within three weeks.

Molasses is used for various purposes, from making rum to ethanol after fermentation.  Ethanol is widely used as bio fuel and is blended with petrol.

The high court in its order had said that the provisions of the UP Molasses Amendment Act of 2009 were invalid and that actions taken by the government under the amended provisions against the sugar companies were illegal.

It also held that the state government cannot put a rider on sugar producers to reserve 30 per cent of their molasses to distilleries for manufacturing country liquor.

Also, it said the act did not empower the state to reserve molasses, and objected to the government policy to direct distillers to use the left over molasses for making high-end India Made Foreign Liquor (IMFL).

Opposing the high court order, the state government submitted before the Supreme Court that such measures were done in public interest for the proper control of storage, gradation and regulation of transfer, supply and distribution of molasses.

"The observations and directions by the high court in the judgement are unwarranted, unreasonable and unacceptable in law, which have in effect severely handicapped and curtailed the regulatory functions and powers of the authorities, in regard to the supply and distribution of molasses in Uttar Pradesh," it said in its petition before the apex court.