UP govt to confiscate Bajaj Hindusthan’s receivables to pay arrears to cane farmers


Acting on its newly-enacted legislation regarding the defaulting sugar mills, the Uttar Pradesh government has decided to confiscate power payments of Rs1,000 crore due to Bajaj Hindusthan’s Lalitpur Power plant from the Uttar Pradesh Power Corporation (UPPCL) to clear the outstanding sugarcane dues to farmers in the state. The UPPCL will pay the dues in two tranches of Rs 500 crore each, which would be transferred into the escrow account of the 14 Bajaj sugar mills, from where it would be directly transferred to the farmers accounts.

The Uttar Pradesh Cabinet has approved the proposal to confiscate Rs 1,000 crore from Bajaj Hindusthan’s power plant in the state to pay cane farmers.Uttar Pradesh government had, in December, amended Section 17 of the Uttar Pradesh Sugarcane (Regulation of Supply and Purchase) Act 1953, by way of introducing a sub-clause, which empowers the cane commissioner to recover the cane dues of errant mills by confiscating all the receivables that any subsidiary or associate company of these sugar mills would get from the any state government department or corporation.Speaking to FE, an official in the UP sugarcane department said that in order to make the earlier clauses of the Act more effective and to ensure that farmers get their cane dues on time, the new clause has been added and will be invoked only after exhausting the earlier provisions of recovering farmers’ dues. 

“The provision is that if a sugar company does not pay the price of sugarcane, it can be recovered from its subsidiaries. The legislation was clearly brought in with the express motive of clearing the cane dues of Bajaj Hindusthan, which is the largest defaulter among mills every year. The company still owes Rs1,500 crore to the farmers for cane purchased by its mills during the 2020-21 crushing season,” said the official, requesting amonymity.

“Under this clause, the receivables of the defaulter mill, unit or company or any of its subsidiary or associate companies in the state, can be seized by the state government to clear the farmers’ cane dues,” the amended clause reads, adding that the definition of company, subsidiary company and associate company will be the same as defined in the Company Act 2013.

Bajaj Hindusthan has two power companies in Uttar Pradesh. While the Lalitpur Power Generation Company is a 1980 MW thermal project based in Lalitpur, Bajaj Energy Limited operates 10 units of 45 MW each.UPPCL owes Rs2361.20 crore to Bajaj Hindusthan group for the electricity purchased from Bajaj Hindusthan’s Lalitpur thermal project. Out of this, it will release Rs 1,000 crore in two instalments, which will be used to pay the cane price outstanding on Bajaj’s sugar mills.