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Sugar factory funds under HC scanner

mumbai Updated: Dec 14, 2010 01:24 IST
HT Correspondent
HT Correspondent
Hindustan Times
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Politicians heading co-operative sugar factories may have some explaining to do. The Bombay High Court on Monday hinted at scrutinising how thousands of crores of rupees distributed to these factories through packages were being utilised.

A division bench of justice BH Marlapalle and justice UD Salvi was hearing a public interest litigation (PIL) filed by Pune-based Ashok Kulkarni, a project consultant for sugar factories. “We will have to scrutinise how the money distributed through yearly packages are utilised by these sugar factories,” the judges said.

Most of the co-operative sugar factories in the state are controlled or heade by politicians.

Referring to the fact that more than 50% of co-operative sugar factories in the state were financially sick, the bench further said it would have to consider reviving or closing down the sick units.

“We will have to examine whether to allow the private sector take over the sick sugar factories, and if yes on what conditions,” the judges said. They said it would not be proper to close down factories wherever sugar cane production was adequate. “But, wherever necessary sick units will have to be closed down immediately,” the judges said.

Kulkarni said that out of 138 co-operative sugar factories in Maharashtra, only nine were in net worth. He urged that a message needed to be sent that you couldn’t escape the clutches of law, if you have done something wrong. The judges asked Kulkarni to submit data on sugar factories, which have either set up second units or have carried out expansion despite a restraining order from the court in July 2006.

The court has also sought the Comptroller and Auditor General of India’s performance audits of co-operative sugar factories in Maharashtra from April 2007 onwards within six weeks.

In June 2005, Kulkarni had written a letter to the high court questioning utilisation of more than Rs 50,000 crore distributed to the factories.

The letter has been converted into a suo-motu public interest litigation.

Besides, Just Society, a non-governmental organisation, has also moved the court raising concern about unpaid provident fund (PF) dues of co-operative sugar factories.

The court on Monday directed the PF commissioner to initiate criminal action against factories consistently in default of payment.

The court has also directed him to complete inquiry initiated against 53 defaulting factories before March 31 next year.