"Private Sugar Firms Earn By 'Drowning Cane Growers in Debt,' while cooperatives Prevent Exploitation": Madras HC

Such observation was made by Justice C.V. Karthikeyan while imposing a fine of one lakh rupees on East India Distilleries-Parry (India) Limited for being hostile instead of reaching an amicable solution to the re-allocation of 18 villages at Kammapuram Firka in Cuddalore district from it to MRK Cooperative Sugar Mills in Sethiathope.

The judge ordered that the money be paid to the Tamil Nadu State Legal Services Authority, which was then directed to hold a legal aid camp at Kammapuram Firka to address the concerns of farmers who were concerned about supplying their produce to the cooperative sugar mill.

In a 165-page decision, he dismissed two writ petitions, one filed by a group of 25 cane growers and the other by EID Parry, both of which challenged an order issued by the Director of Sugar (Cane Commissioner) on October 28, 2022, which allotted the 18 villages at Kammapuram Firka to M.R. Krishnamurthi Cooperative Sugar Mills.

Advocate General R. Shunmugasundaram informed the court that the relationship between cane growers and sugar factories was governed by the Sugar (Control) Order 1966, which was issued by the Centre under Section 3 of the Essential Commodities Act of 1955. Because sugar was a critical commodity, the 1966 order empowered the Cane Commissioner to assign land where sugarcanes were grown to a specific sugar mill.

The 18 villages in question were originally assigned to Shree Ambika Sugar Mills Limited, a private company that went bankrupt. They were then temporarily reassigned to EID Parry before being transferred to MRK Cooperative Sugar Mills on the grounds that the latter required more cane for better utilisation of its crushing capacity, the cooperative mill was closer to the 18 villages, and there was a threat of Neyveli Lignite Corporation acquiring 5,000 acres.

Seeing no reason to overturn the Cane Commissioner's order, the judge commended the officer for allocating the lands to the cooperative sugar mill in order to offset the potential acquisition. He also stated that it would be preferable to supply the canes to a mill 15 to 20 kilometres away rather than transport them 50 to 60 kilometres.

Though EID Parry argued it had lot of funds at its disposal to support the farmers whereas the cooperative mill was a struggling unit, the judge said: "A cooperative society may be down, but they are never out. This is because the government injects funds to keep the cooperative movement alive."

On the other hand, EID Parry had lent money, which was "euphemistically and sophisticatedly called investment," by monetarily supporting the farmers for growing canes, and turned their relationship into "a money lender-borrower status," the judge lamented, and said the farmers had filed the current writ petition to get out of such a distressing situation.

"At the heart of every farmer in this country is a core code of conduct, and that core code of conduct also includes a promise to repay a debt, and I am sure that the entire litigation could have been avoided and a more peaceful relationship could have been built," he wrote.

Instead of filing the case challenging the Cane Commissioner's order, the judge stated that EID Parry could have talked to MRK Cooperative Sugar Mills and the farmers about reclaiming the "investments" it had already made. According to him, such a step could have been taken under the auspices of Corporate Social Responsibility as well.