MUMBAI (Reuters) - Supreme Court in an interim order on Monday has asked sugar mills in Uttar Pradesh to pay farmers 110 rupees per 100 kg of cane in the year to Sept'08, a senior official of U.P. Sugar Mills Association said.

The decision pushed up stock prices of sugar companies like Triveni Industries, Balarampur Chini Mills and Bajaj Hindustan by 3-8 percent.

"The court has asked both the government mills and the private mills in the state to pay all arrears within four weeks," Shyam Lal Gupta, secretary of U.P. Sugar Mills Association, told Reuters on Monday.

The order automatically stays a lower court order passed in August where the mills were asked to pay 125 rupees per 100 kg, which was the price fixed by the state government, he added.

It also stays a separate High Court order where mills were asked to pay only 86 rupees per 100 kg, Gupta said.

Last month mills and state government had filed separate appeals before the Supreme Court challenging the two High Court orders on cane price. Both the appeals were heard by the apex court on Monday.

"We went to the Supreme Court on economic grounds that 125 rupees is not a viable price for the sugar industry," said Kishor Shah, chief financial officer of Balrampur Chini Mills.

But the company won't be affected by the order as "we had drawn our accounts based on 110 rupees only," he added.

Private mills in the state have paid 68.5 billion rupees or about 98 percent of the total cane purchased in the year ending Sept 2008, Gupta said.

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The Supreme Court decision "is a step in the right direction and will help in determining cane pricing by the state," said Sanjay Tapriya, director (finance), Simbhaoli Sugar Mills Ltd.

Government-owned mills and co-operative factories have paid only 38 percent and 59 percent of cane arrears respectively, Gupta said.

The court has now given the parties time of about four weeks to file counter affidavits and another two weeks for rejoinder affidavits after and only after that the case would come up for hearing again, Gupta said.

The court has also asked millers to pay farmers up to 123 rupees per 100 kg of cane purchased in the 2006/07 season ended September 2007, Gupta said.

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