The Supreme Court has refused to stay payment of cane arrears in the UP sugar case. The last date for payment of cane arrears is September 6. Sugar mills will have to pay Rs 1,480 crore. The apex court will hear the case on Monday, September 8.

SP Tulsian of sptulsian.com said UP sugar mills are not in a position to pay. "They are passing through a liquidity crunch phase and are not in a position to pay. They have finalized their accounts till June 2008 based on the cane price of Rs 110 per quintal."

Vivek Saraogi, Managing Director, Balrampur Chini, said he would wait for the Supreme Court's final decision on September 8 before he makes payment.

Excerpts from CNBC-TV18's exclusive interview with SP Tulsian and Vivek Saraogi:

Q: The Supreme Court has refused to stay payment of cane arrears. The other two hearings are happening on September 8. But since there is just a days gap, which happens to be a Sunday, between the deadline for payment of arrears vis-à-vis the two hearings that are happening in the Supreme Court, do you think sugar mills in Uttar Pradesh will actually face an outgo of Rs 1,400 crore or do you think there is more to it?

Tulsian: Yes, if you confine to the dates as spelt out by the Supreme Court for payment of cane arrears. The payment of cane arrears scheduled for September 6 has not been extended by the Supreme Court. Today, one of the sugar mills enquired that since there is only a day's gap and with the issue of recovery certificate by the state government being there, the SC said there is no need to worry. September 6 falls on a Saturday, so the state government technically has to wait till September 6 evening to see whether mills have paid or not. Suppose they will not be in a position to pay that, I don't think it will be possible for the state to issue the recovery certificate on the evening of September 7.

Private sugar mills have a liability of close to Rs 1,100 crore, while co-operative and state sugar mills account for the balance of about Rs 400 crore. The problem or concern of the market is with respect to the Rs 1,100 crore liabilities of private sugar mills to farmers and not the entire amount.

Q: What is your view on stocks like Bajaj Hindusthan and Balrampur Chini?

Tulsian: One has to wait for the outcome of the hearing, which will now be held on September 8. In the interim period, this is definitely a negative because the mills are required to pay these arrears by September 6. I don't think that any of the sugar mills are in a position right now to pay. They are passing through a liquidity crunch phase and are not in a position to pay. They have finalized their accounts till June 2008 based on the cane price of Rs 110 per quintal. So, it is negative for the interim period of the next one week or so.

Saraogi: The Supreme Court was briefed that the deadline is from September 6-10. The final issue will be decided on September 8 and will not take a view before that.

Q: At this point sugar companies will not take any decision on payment till they hear finally on September 8?

Saraogi: That's right.

Q: If the arrears have to be paid, do you think sugar companies that registered profits previously might retrace into the red?

Saraogi: I would let September 8 decide as to what the future is.

Q: Where are things leaning towards?

Saraogi: There are two orders in favour of the committee that said the price taxation is ad hoc and there is one order which said the price the Lucknow order fixed is correct. So, these three orders will be adjudicated and decided by the Supreme Court on September 8 .