The Allahabad High Court on Tuesday issued a notice to the Centre over arrears to the tune of Rs 7,000 crore owed by sugar mills to cane farmers in Uttar Pradesh.  

An HC division bench sought a reply from the Centre over crisis in the sugar sector, especially in backdrop of relief measures announced by the Narendra Modi-led government to help mills clear payment backlog. Hearing a petition filed by Rashtriya Kisan Mazdoor Sangathan (RKMS), the court posted the case for next hearing on July 24.

Meanwhile, the court has directed the state government to ensure farmers are paid and take steps to recover dues from sugar mills.

“The court has asked for strict compliance of the provisions relating to the recovery of arrears,” Sangathan convener V M Singh told Business Standard. The state government was mandated to treat cane arrears as land revenue dues. HC asked the  state government to arrest mill owners if they did not clear dues after issue of recovery certificates. “However, the state government is yet to act tough against the sugar mill owners,” he alleged.

UP Sugar Mills Association Secretary Deeptak Guptara said the mills had apprised the court that they were taking all steps to clear arrears. “We stand committed to making payments to farmers.” Last month, private mills had told the state government that they could not operate in the 2014-15 crushing season, if UP failed to provide financial support.

They lamented UP was yet to fulfill promises held out at the start of crushing season last year, which included financial assistance to mills akin to cooperate units, devising a 'transparent' sugarcane pricing formula and paying Rs 9/quintal directly to farmers.

The UP private mills, numbering 95, have been claiming running losses in the successive crushing seasons owing to higher cane price vis-à-vis sugar prices.

So far, the government had registered at least 57 First Information Reports (FIR) against 47 mills and issued recovery certificates (RCs) against 36 units.