SC gives precedence to sugarcane farmers over banks

The Supreme Court Monday said sugarcane farmers will have precedence over banks for the recovery of their dues from mills as they are in a state of financial distress and are prone to commit suicide.

A bench of Chief Justice H.L. Dattu, Justice Madan B. Lokur and Justice A.K. Sikri, while dismissing appeals by the State Bank of India and the Punjab National Bank, said if farmers are not paid, they will commit suicide.

"If money does not go to the farmers, they commit suicide," the court observed.

The two banks have moved the apex court against the Allahabad High Court order which had said that the sugarcane farmers have the first right over the proceeds of selling sugar by the mills for the recovery of their dues.

Appearing for the two PSU banks, Attorney General Mukul Rohatgi told the court that the banks' only security was the sugar stocks with the sugar mills against which the banks have advanced the loans for the payment of farmers dues.

Matter relates to the outstanding payments of Rs.3,007.07 crore to sugarcane growing farmers by the sugar mills owners in Uttar Pradesh as on Oct 7, said V.M. Singh who appeared as caveator in person for the Rashtriya Kisan Mazdoor Sangathan.

Singh said that Allahabad High Court has directed the sugar mills to clear the outstanding dues of the farmers growing sugarcane by Oct 31.

He contended that under the provisions of UP Sugarcane (Regulation of Purchase and Supply) Act, 1953 as amended in 1972, sugar mill owners could raise money against their stocks of sugar for exclusively making the payments of farmers dues but that amount was allegedly diverted and did not reach the farmers.

Singh said that now apex court had reaffirmed the Allahabad High Court order, the farmers would get their dues with the auction of the sugar stocks with the sugar mills.