The Supreme Court has ordered the Karnataka government against charging three sugar mills over and above the fair and remunerative price fixed by the Central government for purchasing sugar cane. 

A group of sugar mill owners approached the Supreme Court challenging the constitutional validity of the Karnataka Sugarcane (Regulation of Purchase and Supply) Act, 2013. Under the law, the Karnataka Sugarcane Control Board was formed. The board fixed the sugar cane price at Rs 2,500 per metric tonne at gate for factories in southern Karnataka and ex field for factories in northern Karnataka. 

The mill owners claimed the sugar cane price was over and above the fair and remunerative price of Rs 2,100 linked to 9.5 per cent fixed by the central government. This was announced just before the 2014 general elections. 

Hearing the petitions filed by Shree Renuka Sugars Ltd, Chamundeswari Sugars Ltd and Shamanur Sugars Ltd, a bench of M Y Eqbal and C Nagappan issued notices to the Karnataka government and others seeking their response within four weeks. 

The court also directed that “no coercive steps shall be taken against the petitioners.” It also said that if the special leave petitions filed by mill owners failed, the State government would be entitled to recover from them the amount together with interest at the rate of nine per cent per annum. 

The petition filed by advocate Balaji Srinivasan on behalf of the mill owners claimed the board had fixed the excessive price taking imaginary figure, particularly previous sugar cane data of 2012-13. 

The mill owners claimed that since sugar cane is in the concurrent list of the Constitution, the State legislature could enact law only after prior consent from the President. The Centre had since 2010-11 amended the provisions whereby manufacturers were required to pay only fair and remunerative price for sugar cane, they contended. Besides, the Dr C Rangarajan Committee had recommended that sugar manufacturers pay floor price on the commencement of the crushing season as per the FRP fixed by the central government, they said. 

HC order challenged

The petitioners have challenged a Karnataka High Court order of February 12 this year that dismissed their plea against the board’s action. 

“The petitioners could not pay the sugar cane price fixed by the Karnataka Sugarcane Control Board for the sugar season 2013-14. However, they have paid the FRP and even more than that,” the petition said. 

The petitioners also contended that the High Court ignored the top court order in Tika Ramji vs State of UP that stipulated that the state had no power to frame legislation in this regard and the same has now been referred to a larger bench in view of West UP Sugar Mills’ Association vs State of UP judgment 2012.