Analyzing the Feasibility of Challenging the HC Order on FRP Payments
by Dilip Patil
The recent Bombay High Court order, passed on March 17, 2025, has sparked intense debate among sugar mill owners in Maharashtra. The order quashes the state’s February 21, 2022, GR, which allowed sugar mills to make Fair and Remunerative Price (FRP) payments in two installments instead of one lump sum. This article presents a balanced analysis of the situation, highlighting reasons for and against challenging the High Court’s order.
Reasons to Challenge the HC Order
- Financial Strain: The single FRP payment of ₹340/quintal strains the cash flow of sugar mills, which are already reeling under reduced production (259-264 LMT from 319 LMT) and increased costs (labor, fuel, fertilizers up 20-30% since 2021).
- Operational Reality: The 14-day rule of the Sugarcane Control Order (SCO) 1966 ignores the slow sugar sales cycle, and banks lend only 75% of the stock value, making it difficult for mills to manage their finances.
- State Flexibility: The central circular of 2016 allows state adjustments, and the Maharashtra Act 2013 supports state tweaks, providing a basis for challenging the HC order.
- Ethanol Pressures: With 4-4.5 million tons diverted to ethanol production, low prices (₹65.61 SCJ, ₹60.73 BHM) squeeze margins, and a single payment could derail the 20% blending goal.
Potential Legal Grounds
- Equity Issue: The order burdens mills, not just farmers, and Article 14 (equality) could be invoked.
- SCO Misread: The SCO allows farmer-mill installment deals, and the GR formalized a legal option.
- Economic Hardship: Low yields and high costs could be considered force majeure, and the Supreme Court could grant relief.
Reasons Not to Challenge
- Legal Clarity: The HC ruled the GR “illegal” under SCO 1966, and a single payment aligns with the law.
- Farmer Sentiment: Farmers won after a 3-year fight, and a challenge could spark protests.
- Weak Case: Liquidity woes predate the GR, and farmers can’t wait for dues (HC view).
- Low Success Odds: The HC’s 73-page ruling is thorough, and the SC favors farmers (e.g., Madras HC 2023).
Conclusion
Challenging the Bombay High Court’s order is a tough call for sugar mill owners in Maharashtra. While there are valid reasons to challenge the order, including financial strain, operational reality, and state flexibility, the legal odds are slim, and political blowback is likely. Compliance might be cheaper than fighting, and mills face a difficult decision.
The Author Dilip Patil is Managing Director of Karmyogi Ankushrao Tope Samarth Co-op Sugar Factory, Ambad -Jalna. (Maharashtra)
