Guides · 1 Nov 2026

The 14-day cane payment rule: what factories must know

Under clause 3(3) of the Sugarcane (Control) Order, 1966, a mill must pay for cane within 14 days of delivery unless there is a written agreement to the contrary. If it pays late, clause 3(3A) adds interest at 15% a year for the delay beyond 14 days.

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What the Order says

Clause 3(3) covers cane bought from a grower or a growers' co-operative society. The producer must pay within fourteen days from the date of delivery. Payment can be at the factory gate, at the cane collection centre, or by bank transfer or deposit.

The price due is the agreed rate or the clause 3(1) price, as the case may be. Clause 3(4) makes both the mill and its agent liable where cane is bought through an agent.

Clause 3(3A) sets interest at 15% a year for the delay beyond 14 days. Where interest is paid to a society, the society must pass it on to growers after any administrative charge its rules permit.

How the clock works in practice

The clock runs from the date of delivery of each load. The fortnight close, the bill date and the payment run date do not change it.

This is the usual trap. If a mill bills fortnightly, the first day's cane is already 14 days old when the fortnight closes. A payment released a week after closing is late for the earliest loads, even if it looks on time for the batch. Interest then needs working out by delivery date.

The table shows simple interest at 15% on Rs 10,00,000, using a 365-day year. Ask your accountant to confirm the day count and how to treat the delivery day.

Days late beyond 14	Interest (Rs)
30	12,329
60	24,658
90	36,986

Written agreements

Clause 3(3) applies unless there is a written agreement to the contrary between the parties. The Bombay High Court confirmed in 2025 that a grower who does not want FRP in this way may reach such an agreement with the factory.

An agreement should be specific, signed by the grower and dated before it is relied on. Clause 3(8) also treats non-payment within an agreed time as default. Clause 3(3A) does not repeat the written agreement wording, so ask your counsel how interest applies to your agreements.

What happens on default

The Central or State Government, or an authorised officer, sends the Collector a certificate for the price and interest due (clause 3(8)).
The Collector recovers the amount as arrears of land revenue (clause 3(9)).
The Collector invites claims by public notice and distributes the money (clauses 3(10) to 3(12)).
The state may add its own steps. Maharashtra told the Bombay High Court it made full FRP payment a condition of the 2022-23 crushing licence.

Where states differ

Several state laws repeat the 14-day duty. Section 5(1) of the Maharashtra 2013 Act, section 9 of the Karnataka Act and section 15 of the Tamil Nadu Act all do so.

Maharashtra: in March 2025 the Bombay High Court quashed the February 2022 resolution on two-instalment FRP. It refused the state's request to stay that judgment. We could not confirm the later position in the Supreme Court.

Uttar Pradesh: section 17(3) of the 1953 Act has its own interest wording, including a 12% figure. The Allahabad High Court has said the period is 14 days and the rate is 15%. Its order of 16 July 2026 calls this undisputed and asks whether recovery certificates used 12% or 15%. PTI reported on 3 September 2026 that notices went to four former cane commissioners. The matter was still running at that date, and the earlier order notes a related issue before the Supreme Court.

Where the industry stands

Government data shows why this gets attention. As of 20 April 2026, about 88.6% of 2025-26 cane dues had been paid. By 20 August 2026 the figure was 97%. For 2024-25, about 99.5% had been cleared by 20 April 2026.

Reporting and unclaimed amounts

Clause 9(aa) lets the Centre direct a producer to report cane purchases, price due, price paid and arrears within seven days of each fortnight's close.

Under clause 3(7), cane price left unpaid because suppliers did not claim it goes to the district Collector within three months of the close of the sugar year.

Payment control checklist

This is general information. Confirm the current position with your accountant, your counsel and your cane commissioner's office. SugarOS keeps the due days and delay interest inside each dated price rule and tracks them against the payment run.

Store the delivery date on every weighment and bill line.
Report due dates by load, as well as by fortnight.
Run an ageing list daily during crushing.
Calculate interest automatically on late lines and show it on the bill.
Reconcile failed bank payments quickly, since the money has not reached the grower.
Keep signed agreements with their dates.
Reconcile the fortnightly return to the cane ledger.

Frequently asked questions

Does the 14 days start from the bill date?

No. Clause 3(3) counts from the date of delivery of the cane.

Can FRP be paid in instalments?

Only with care. The Bombay High Court quashed Maharashtra's instalment resolution in March 2025, while leaving room for a written agreement under clause 3(3). Take legal advice before relying on such an arrangement.

Is the interest rate 15% or 12% in Uttar Pradesh?

The Allahabad High Court has treated 15% as payable on delays beyond 14 days, while section 17(3) of the state Act contains a 12% figure. The matter was before the court in 2026. Confirm the current position before calculating.

Does paying a society end the mill's duty?

Clause 3(3) allows payment to the co-operative society's bank account. Interest paid to a society must be passed on to growers, less permitted administrative charges.

Is the 14-day rule changing?

The draft 2026 Order reportedly kept 14 days and 15%, but it was withdrawn in May 2026. The 1966 Order is the text to work from unless a later notification says otherwise.

Sources

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