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Uttarakhand HC directs DM Haridwar to disburse 50 pc of amount in escrow account to farmers

The Uttarakhand High Court has recently directed that 50 percent of the amount of rightful dues deposited by a private limited should be disbursed by the District Magistrate, Haridwar to farmers while holding that the HC has to balance the interests of the farmers and of the financial institutions.  

The Division Bench of Chief Justice Raghavendra Singh Chauhan and Justice Alok Kumar Verma heard a PIL, filed by one Nitin, on the ground that sugarcane farmers of villages Iqbalpur, Jwalapur, and adjoining areas were supplying their sugarcane to  a private limited company. They have not been paid their rightful dues for the crushing seasons of 2017-2018 and 2018-2019.

Consequent to the various orders passed by the High Court, C. Ravishankar, the District Magistrate, Haridwar, has filed a compliance report on 20.04.2021. According to the compliance report, so far a private limited company has deposited Rs 28,05,09,467 in the escrow account.

The counsel for the petitioner submitted that, according to the undertaking given by the Managing Director of a Private Limited, the entire amount owed to the farmers was to be cleared by 31.03.2021. But, despite the said undertaking given before the High Court, a substantial amount of money is still due to the farmers as only Rs 28 crore have been deposited in the escrow account.

Siddhartha Jain, the counsel for Punjab National Bank, submitted that the private company is equally liable to pay an amount of Rs 67,57,89,268 as on March 2021. The said amount is due for the years 2016-2017, 2017-2018 and 2018-2019.

Meanwhile, according to Seema Sah, the counsel for the Uttarakhand State Co-operative Bank, the private company similarly owes about Rs 36 crore to the Co-operative Bank.

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C.S. Rawat, the Chief Standing Counsel for the State, submitted that in total there are 19,903 farmers whose dues continue to exist against the company. Therefore, he prayed that the Rs 28 crore in the escrow account be disbursed to these farmers.

On the other hand, Siddhartha Jain and Seema Sah contended that the first lien is of the banks. Therefore, the entire amount deposited in the escrow account should not be disbursed to farmers.

After hearing the submission from the parties, the Court said, “Needless to say, this Court has to balance the interest of the farmers on the one hand, and the interest of the Financial Institutions, on the other hand. Therefore, this Court directs that 50 percent of the amount of Rs 28,05,09,467 should be disbursed by respondent No. 4, the District Magistrate, Haridwar, to the farmers.”

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In order to decipher the amount due to each individual farmer, the Court directed that District Magistrate to seek the relevant information from the Iqbalpur Society and Jwalapur Society, who are said to represent the interests of the farmers.

The Bench clarified that once the relevant information is supplied by the said Societies, the District Magistrate shall look into the accounts of the individual farmers, and decide as to how much amount can be paid to the individual farmers in order to clear the debt owed by the company to the farmers.

“A complete account shall be maintained by both the Societies and by the District Magistrate so that in future it would be abundantly clear as to how much money is owed by Private Limited to the individual farmers. The said exercise shall be carried out within a period of one month. The exercise so carried out, a report concerning the same shall be filed before this Court on or before 08.11.2021,” the court ordered. The Court has posted the matter on November 10.

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