Allahabad High Court finds discriminatory sugarcane allocation pushed mill towards closure, orders supply for 180 days with 40% pilferage provision

Yadu Sugar Limited operates a sugar mill at Sujanpur-Bisauli, District Badaun, with an installed crushing capacity of 7,000 tonnes crushing per day (TCD).

Under Office Memorandums dated 15 October 2020 and 14 October 2025, the petitioner’s estimated cane requirement was fixed at 100.80 lakh quintals (LQ) for the relevant five-year periods under Section 12(2) of the Act.

For the 2025–26 crushing season, only 51.30 LQ of cane was allotted to the petitioner, although its estimated requirement was 100.80 LQ.

The petitioner ultimately purchased only 9.17 LQ and closed its mill on 26 January 2026.

The petitioner alleged discriminatory treatment because seven other sugar mills in the area received allocations exceeding 100% of their estimated requirements, whereas the petitioner received only 50.89%.

Whether the petitioner was subjected to discriminatory treatment in the allocation of sugarcane compared with the other sugar mills, and whether the reduced allocation caused its mill to be isolated and brought to the verge of closure?

Whether the petitioner’s delayed payment history and low drawl percentage justified allocation of sugarcane below its estimated requirement under Section 12(2) of the Act, 1953?

The Court applied the U.P. Sugarcane (Regulation of Supply and Purchase) Act, 1953, particularly Section 12(2), under which the estimated cane requirement of a sugar mill is determined, and Section 15, which empowers the Cane Commissioner to reserve and assign areas and determine the quantity of cane to be purchased by a factory.

Rule 22 of the U.P. Sugarcane (Regulation of Supply and Purchase) Rules, 1954 requires consideration of factors including the distance of the area, transport facilities, previous cane supply, prior reservation orders, the quantity to be crushed, the factory’s arrangements for payment of cane price and cess, the views of cane-growers’ societies, and the factory’s efforts in developing the reserved area.

The Court also considered the Cane Commissioner’s policy dated 2 September 2025, which contemplated a minimum 60% drawl and thereby recognised approximately 40% loss or pilferage in the procurement process.

The Court further considered the memorandum dated 2 November 2017, under which 85% of the proceeds could be tagged for cane payments while 15% could remain available for wages, maintenance and related operational expenses.

The Court found that the petitioner’s allocation of 51.30 LQ, or 50.89% of its estimated requirement, was materially lower than the allocations made to the other seven mills, each of which received more than 100% of its estimated requirement.

It rejected the State’s reliance on the petitioner’s low drawl as a justification for the reduced allocation because the low drawl was itself substantially attributable to the inadequate supply calendar and shortage of cane.

The record showed that the petitioner lost 786.19 hours because of cane shortage, exceeding its 784.44 hours of actual crushing.

On a 180-day crushing season, an allocation of approximately 51.30 LQ could sustain the mill for only about 102.6 days, leaving it unable to function for a substantial part of the season.

Applying the Cane Commissioner’s own policy of achieving 60% drawl after accounting for 40% loss, the Court reasoned that the petitioner’s estimated requirement of 100.80 LQ required allocation of approximately 140 LQ, whereas only about 50 LQ had been allotted.

The Court therefore concluded that the petitioner’s delayed payments and low drawl could not fairly be treated as independent grounds for reduced allocation, since the inadequate allocation had itself contributed to the low procurement, reduced crushing and consequent payment difficulties; all outstanding payments had nevertheless been made.

It issued a mandamus directing the Cane Commissioner to allocate sugarcane for the 2026–27 crushing season in accordance with the petitioner’s estimated requirement of 100.80 LQ, after accounting for the 40% loss or pilferage recognised in the policy dated 2 September 2025.

The Cane Commissioner was further directed to prepare the supply calendar so as to ensure an uninterrupted supply of cane to the petitioner for 180 days during the crushing season.

The petitioner was directed to purchase the allotted cane and ensure timely payment to cane growers.

There was no order as to costs, and the judgment was directed to be communicated to the Cane Commissioner, Uttar Pradesh.