A farmer loads sugar cane near Modi Nagar in Uttar Pradesh. The state's sugar mills had taken loans totaling Rs 3,000 crore from SBI by hypothecating their sugar stock. (Getty Images file photo)

NEW DELHI: Right to life outweighed right to do business with the Supreme Court on Monday rejecting State Bank of India’s petition challenging an Allahabad high court order directing sugar mills in Uttar Pradesh to sell the sugar stock hypothecated to SBI against loans to pay sugarcane farmers’ dues.Sugar mills had taken loans totaling Rs 3,000 crore from SBI by hypothecating their sugar stock. Under law, the creditor bank has the first right on the hypothecated sugar to realize its dues if the mills default on repayment of loans.Acting on a PIL filed by Rashtriya Kisan Mazdoor , the HC had invoked Section 17(5) of UP Sugarcane (Regulation of Supply and Purchase) Act, 1953 and extinguished the right of secured creditors and directed collectors to grant permission to sugar mills to sell the sugar stock for payment of dues to cane growers.Appealing against the HC order through advocate Sanjay Kapur, SBI told the SC on Monday that the mills were now disposing of sugar stock, which was a security against loans. SBI apprehended that the Rs 3,000 crore loans it had advanced to mills would turn non-performing assets.SBI also said the HC order for disposal of sugar stock could potentially turn sugar mills sick as it would proceed under the coercive Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest (Sarfaesi) Act to sell the mills’ assets to recover its dues.It also said no bank would come forward to grant any advance/loan to these sugar mills in case it was held that first charge on sugar stock would be in favour of cane growers and not banks, as held by the HC.A bench headed by Chief Justice H L Dattu felt the cane growers’ right to life was more important than the bank’s right to carry on business, especially in the face of hardships faced by farmers leading to many suicides.“In view of the suicides among farmers, let us put a quietus to this,” the bench observed before dismissing SBI’s appeal.Similar considerations had weighed with the court in dismissing the appeals filed by four public sector insurance companies on settlement of claims filed by ​Jammu & Kashmir flood victims. The court had refused the insurance companies’ plea to conduct preliminary survey before settling claims.The SC asked them to implement the HC order, which had directed them to pay up 95% of the claim amount if the insurance cover was below Rs 25 lakh and 50% for those with insurance cover exceeding Rs 50 lakh.In the recent past, SBI has been at the receiving end also due to scams. Close on the heels of NPAs after cancellation of 2G spectrum licences by the apex court, it suffered a jolt when the SC cancelled all coal block allocations to private companies, which had taken huge loans from SBI.The Coal Producers Association had informed the court that loans worth Rs 2.5 lakh crore advanced by banks and financial institutions would become non-performing assets because of en masse cancellation of coal blocks. It had said that SBI might suffer the biggest jolt as it could suffer a hit of up to Rs 78,263 crore, which was almost 7.9% of its net worth for 2012-13.