News Published : Maharashtra’s Sugar Commissionerate cracks the whip to make mills pay up dues

On July 31, a judgment by India’s apex court jolted the Maharashtra government, especially the officials in the state’s Sugar Commissionerate. The Supreme Court ruled in favour of the Maharashtra State Cooperative (MSC) Bank that stated that the state government does not have a legal claim on the Rs 2,000 crore that it had given to 34 cooperative sugar mills. These 34 mills had gone defunct and when the MSC Bank sought to auction them and get back its dues, the state government wanted its dues as well. But the apex court ruled that the state government did not have its papers in order.

The background to this issue is that, in Maharashtra, governments have, since the start of the cooperative movement, invested three-times the money that promoters of a sugar cooperative mill have raised from their shareholders. But as Maharashtra’s Sugar Commissioner Shekhar Gaikwad realised in July, the paperwork for this investment was inadequate. A big reason for this lacunae is the heavy political interference in the way sugar mills and indeed the whole sugar economy runs. Because many politicians also own the mills, the government has historically been lax in asserting its rights as an investor. This inefficiency eventually cost the government in the MSC Bank case.

What Gaikwad also realised was that among the 102 cooperative mills that were still in operation, another Rs 3,000 was owed to the government. And he set about to get this matter sorted.

Technically, the government’s investment was in the form of a loan which was supposed to be paid back after a definite period of time. But not only was the money never repaid, but it also was not even secured.

In an order Gaikwad gave in September, he laid out a timeline to get the matter sorted. By November, officials were to ascertain the government’s dues. Between April and May every year, the government auditors will check the status of the repayment and update the same on the land records. Mills would be intimated of their yearly repayment amount by July every year. “Failure of the mill to adhere to the repayment schedule will see action under Land revenue codes, which will allow government to take possession and auction off the properties to recover dues,” explained Gaikwad.

https://indianexpress.com/article/india/maharashtras-sugar-commissionerate-cracks-the-whip-to-make-mills-pay-up-dues-6090709/