Supreme Court allows UP government to proceed with sale of 11 sugar mills

The Supreme Court has allowed the Mayawati government in Uttar Pradesh to proceed with a planned divestment in 11 sugar mills owned by state-run Sugar Corporation. The divestment would, however, be subject to the final judgement in the case, the court has said.

The 11 sugar mills are reported to have accumulated losses to the tune of Rs350 crore and the state government said it would proceed with divestments in other sugar mills once the SC gives its final nod for divestment.

A vacation bench comprising justices G S Singhvi and C K Prasad gave the ruling on a petition filed by journalist Rajiv Kumar Mishra challenging the UP Sugar Undertakings (Acquisition) (Amendment) Act, 2009 that empowered the state government and the Uttar Pradesh Sugar Corporation to disinvest their stakes in the sugar mills.

The state government had effected three more amendments empowering it to change land use of the land belonging to the sugar mills.

The Allahabad High Court, had, in its judgment on 1 April 2010, upheld the state government's power to disinvest its stake in the UP Sugar Corporation. However, it held that the state legislature couldn't add provisions to the Act that would result in the automatic closure of the sugar mills and change land usage.

Now that the SC has given its nod to go ahead with the divestment plans, state government officials expect the bidding process to be completed by 4 June and a final decision taken at the core committee meeting on 6 June.

These 11 sugar mills, located in prime locations across various districts of the state, have obsolete machinery but huge landed properties. The divestment plan was intended to cut losses by unlocking their value and bringing in operational efficiency in the sugar sector.

The UP government plans to put on the block a total of 34 sugar units, including 11 UP Sugar Corporation and 23 federation mills.