NEW DELHI: The Supreme Court on Monday came to the rescue of farmers and rejected the plea of State Bank of India (SBI) and Punjab National Bank (PNB) to first pay sugarcane farmers and then recover charges on loan.
The court was hearing a case related 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.
The court noted that the farmers are recovering their dues from mills and they are in the state of financial distress.
The two banks have moved the apex court against the Allahabad High Court order, saying that the sugarcane farmers have the first right over the proceeds of selling sugar by the mills for the recovery of their dues.
The banks also said that the High Court order is likely to discourage loans to the sector. The Allahbad High Court had earlier directed mills to pay dues to farmers on priority by Oct 31.
Appearing for the two 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.
Under the provisions of the Uttar Pradesh 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.
Now, the farmers would get their dues with the auction of the sugar stocks with the sugar mills.