By S&S Co. Advocates & Solicitors · Published 16 October 2026 · Informational content, not legal advice: see our disclaimer
A sugar mill that takes delivery of cane and then delays payment for months is one of the most common and least litigated grievances in Indian agriculture, largely because individual farmers rarely have the resources to chase a mill through a civil suit for what might be a relatively modest sum per farmer, even where the aggregate arrears across a mill's catchment run into hundreds of crores. The law actually gives farmers a faster, cheaper route than an ordinary money suit, built around the Sugarcane (Control) Order, 1966, and a 2025 Bombay High Court ruling has reinforced exactly how little room a state government has to dilute that protection.
This guide sets out the statutory payment timeline, the interest that accrues on delay, the revenue recovery certificate mechanism that lets the state collect on a farmer's behalf, and what a farmer or a cane growers' association should actually be doing when a mill falls behind.
The statutory payment deadline and interest under the Control Order
Clause 3(3) of the Sugarcane (Control) Order, 1966, issued under the Essential Commodities Act, requires a sugar producer to pay for cane supplied within fourteen days of delivery, unless a different payment schedule has been agreed in writing between the producer and the grower. Clause 3(3A) backs this with a specific interest consequence: where a producer or its agent fails to pay within that fourteen day window, interest at fifteen per cent per annum becomes payable on the amount due, running for the period of the delay beyond the fourteen days.
The Fair and Remunerative Price itself is fixed by the central government for each sugar season, and this is the figure the fourteen day clock and the fifteen per cent interest attach to. A mill that has entered into a written agreement with growers for a different payment schedule is not automatically in breach simply because payment runs past fourteen days, which is why the existence and terms of any such written agreement matter as a threshold question in any arrears dispute, not an afterthought.
The written agreement loophole and why it gets contested
Clause 3(3)'s exception for a written agreement has become a recurring point of friction. In practice, a significant share of mills entering a crushing season sign agreements with growers that push out the payment schedule beyond fourteen days, and grower representatives in several cane growing regions have argued publicly that such agreements, often presented to farmers as a condition of being allowed to supply cane at all, should not be treated as a genuine, freely negotiated alternative schedule under the Control Order. Whether a particular agreement actually satisfies clause 3(3) as a valid alternative, as opposed to a one-sided document growers had little real choice but to sign, is a fact-specific question that can be raised before the cane commissioner or in court if an individual mill's practice looks coercive rather than negotiated.
A farmer or a growers' association facing this situation should keep copies of whatever agreement was signed, since the terms of that document, not just the fact that one exists, determine whether the fourteen day default rule has actually been validly displaced.
The Bombay High Court's 2025 ruling on state interference
In Raju alias Devappa Anna Shetti v State of Maharashtra, decided in 2025, a Division Bench of the Bombay High Court held that the state government has no authority or jurisdiction to deny farmers payment of the FRP determined by the central government within fourteen days of supply, describing farmers' FRP rights under clause 3 as paramount and intended to be safeguarded by law. The ruling is a clear signal that a state cannot use its own administrative power, whether through a scheme, a circular, or an informal arrangement with mills, to effectively dilute the central FRP payment timeline that the Control Order fixes.
This matters because state governments, including Maharashtra's, have periodically tried to manage mill liquidity problems through measures that in effect ask farmers to accept delayed payment as a matter of state policy, framed as temporary relief for mills facing cash flow pressure. The ruling draws a line: whatever accommodation a state wants to offer struggling mills, it cannot come at the cost of a farmer's statutory right to the fourteen day payment timeline and the interest that attaches to its breach.
The revenue recovery certificate route
Where a mill defaults, the Control Order mechanism, read with state revenue recovery law, allows the state government to issue a revenue recovery certificate against the defaulting mill for the unpaid FRP amount, which is then recovered as arrears of land revenue, including by attachment of the mill's own property if necessary. This route exists precisely so that individual farmers do not have to each file separate civil suits against the mill; the state steps into the collection role on behalf of the growers collectively, through its own revenue machinery.
In practice this mechanism has not always moved quickly. Public interest litigation in Uttar Pradesh led to a High Court direction to district magistrates to actually execute recovery under outstanding certificates, after reports that very substantial arrears, running into thousands of crores across multiple recovery certificates, remained uncollected despite the certificates having already been issued. A farmer or growers' association facing a mill that keeps missing payment should treat the issuance of a recovery certificate as a step toward recovery, not the end of the process, and should be prepared to push the district administration to actually execute it if collection stalls.
What a farmer or growers' association should actually do
The first step is documentation: delivery receipts (often called cane supply tickets or weighment slips) showing the date of delivery, since the fourteen day clock and the interest calculation both run from that date, not from the date an invoice is raised or a payment is eventually offered. Without clear delivery dates, calculating the exact interest due becomes needlessly difficult later.
The second step is a representation to the cane commissioner or the relevant state sugar directorate, since this is usually the quickest route to triggering a revenue recovery certificate against a specifically named defaulting mill, faster in most cases than a civil suit for the same amount given how slowly an ordinary money suit tends to move relative to the administrative recovery machinery built specifically for this problem. Associations representing multiple growers against the same mill are generally in a stronger position than an individual farmer pursuing a lone claim, both in getting the commissioner's attention and in sustaining pressure through to actual recovery if the certificate route stalls at the district level.
Frequently Asked Questions
How much interest can I claim if the mill paid me three months late?
Under clause 3(3A) of the Sugarcane (Control) Order, 1966, interest runs at fifteen per cent per annum on the unpaid amount, calculated for the period of delay beyond the fourteen day payment window from the date of delivery, provided no valid alternative payment schedule was agreed in writing.
The mill says I signed an agreement allowing delayed payment. Does that end my claim?
Not necessarily. Clause 3(3) does allow a written agreement to displace the fourteen day default rule, but whether a particular agreement genuinely qualifies, rather than being a one-sided document growers had little real choice but to sign, can itself be contested before the cane commissioner or in court, especially where such agreements were presented as a condition of being allowed to supply cane.
Can the state government tell farmers to accept delayed FRP payment as a relief measure for struggling mills?
The Bombay High Court has held that the state government has no authority to deny farmers payment of the FRP within the statutory window, describing the right as paramount under the Control Order. A state measure that effectively asks farmers to accept delay as policy runs against this ruling and can be challenged on that basis.
Do I need to file a civil suit to recover unpaid FRP from a mill?
Not as the first step. The more practical route is a representation to the cane commissioner seeking a revenue recovery certificate against the mill, which lets the state collect the dues as arrears of land revenue. A civil suit remains available but is generally slower and more expensive for an individual farmer than this administrative route.
References & Further Reading
The provisions and rulings below were relied on for this guide. The position can change with amendments and later decisions, so check the current text and the latest case law before acting on any of it.
- Sugarcane (Control) Order, 1966, Clause 3(3) (fourteen day payment deadline) and Clause 3(3A) (fifteen per cent per annum interest on delayed payment), issued under the Essential Commodities Act, 1955
- Raju alias Devappa Anna Shetti v State of Maharashtra, Bombay High Court Division Bench, 2025 (BHC-AS-12379)
- State revenue recovery law applicable to recovery of FRP arrears as arrears of land revenue through a revenue recovery certificate