Court finds discriminatory allocation led to insufficient sugarcane supply, forcing closure of petitioner’s mill; mandates Cane Commissioner to allocate sugarcane commensurate with crushing capacity and pilferage losses for 2026-27 season.
In a significant judgment dated September 7, 2026, the Allahabad High Court (Division Bench comprising Justices J.J. Munir and Siddharth Nandan) has issued a mandamus directing the Cane Commissioner of Uttar Pradesh to allocate sugarcane to Yadu Sugar Limited's mill at Sujanpur-Bisauli in accordance with its installed crushing capacity and factoring in pilferage losses. The case arose out of the petitioner’s grievances about discriminatory sugarcane allotment that severely hampered its operations, ultimately pushing the mill to the brink of closure.
Yadu Sugar Limited, registered under the Companies Act and operating a sugar mill with a 7000 tons crushing per day (TCD) capacity, moved the court against the State of UP and others, asserting that despite the statutory estimated cane requirement of 100.80 lakh quintals (LQ) for the 2025-2030 period, it was allotted only 50.89% of this quantity over several crushing seasons. Contrarily, other sugar mills in the vicinity received allocations exceeding 100%, some even close to 200% of their estimated requirements.
The petitioner contended that such inadequate allocation led to significant operational disruptions, with the mill receiving sugarcane sufficient for barely 102.6 days of the 180-day crushing season. This shortage was corroborated by a staggering 786.19 hours lost due to cane scarcity, which exceeded the actual crushing hours of 784.44 during the 2025-26 season. The continuous supply of sugarcane is crucial for mill viability, and the irregular supply caused mounting losses and eventual closure.
The petitioner also highlighted the official policy acknowledging a 40% pilferage during transit, implying that allocations should be adjusted upward to maintain a minimum 60% drawl (actual crushing) rate. Despite this, the Cane Commissioner allocated cane far below this threshold to the petitioner, undermining its sustainability.
On the other hand, the State defended its allocation, citing the petitioner’s poor track record in cane procurement and delayed payments to farmers, which allegedly justified reduced cane allotment. It argued that the petitioner’s low drawl percentage (17.88%) and actual purchase of sugarcane (9.17 LQ against 51.30 LQ allotted) indicated operational inefficiency and lack of farmer confidence, and thus no discrimination existed.
The Cooperative Cane Development Union Ltd. Badaun also supported the State’s stand, emphasizing the statutory criteria under Rule 22 of the U.P. Sugarcane (Regulation of Supply and Purchase) Rules, 1954, which include factors like previous year’s supply, payment history, transport facilities, and factory efforts to develop reserved areas—all allegedly not satisfactorily met by the petitioner.
However, the Court, after scrutinizing the data, found that the petitioner was indeed subjected to discriminatory allocation. It noted that while other mills were allotted more than their estimated requirement, the petitioner received barely half, a discrepancy not justified by the petitioner’s payment delays or drawl percentages. The Court recognized that the insufficient allotment directly resulted in loss of operational days and unsustainable functioning, leading to the mill’s closure. It also underscored the importance of uninterrupted sugarcane supply for at least 180 days, considering the pilferage factor acknowledged by the Cane Commissioner himself.
Concluding that the State failed to ensure equitable distribution and sustainability of the petitioner’s mill, the Court ordered the Cane Commissioner to allot sugarcane for the 2026-27 crushing season in line with the petitioner’s crushing capacity and estimated requirement of 100.80 LQ plus an additional 40% to account for pilferage. The cane supply calendar must ensure continuous availability of sugarcane throughout the season to enable uninterrupted operations. The petitioner was reminded to fully utilize the allotted cane and ensure timely payment to cane growers to restore confidence.
The judgment also served as a reminder to the Government about its duty towards sustainable development and protection of farmers' interests by supporting existing mills and facilitating new setups.
The petition was allowed, with no order as to costs, and the Registrar Compliance was directed to communicate the order to the Cane Commissioner, UP.
Bottom Line:
Allocation of sugarcane to sugar mills must be commensurate with their crushing capacity and estimated requirements, factoring in pilferage, to ensure uninterrupted operations and sustainability of the mill.
Statutory provision(s): U.P. Sugarcane (Regulation of Supply and Purchase) Act, 1953 Sections 12(2), 15; U.P. Sugarcane (Regulation of Supply and Purchase) Rules, 1954 Rule 22
Yadu Sugar Limited v. State of UP, (Allahabad)(DB) : Law Finder Doc Id # 2973470
