Supreme Court Orders Status Quo On HC Direction To OMCs To Consider Dedicated Ethanol Plant's Higher Allocation Plea

The Supreme Court on Monday ordered that status quo be maintained while issuing notice on Bharat Petroleum Corporation Limited's (BPCL) special leave petition challenging a Karnataka High Court judgment concerning ethanol allocation for the Ethanol Supply Year (ESY) 2025-26.

The High Court had directed the Oil Marketing Companies (OMCs) to decide VINP Distilleries' representation seeking additional ethanol allocation before finalising the tender.

The status quo order effectively keeps in abeyance the High Court's direction requiring the OMCs to decide VINP Distilleries' October 27, 2025 representation seeking enhancement of its ethanol allocation.

The High Court had directed the OMCs to pass appropriate orders on the representation within four weeks of receiving its judgment.

A vacation bench of Justices M.M. Sundresh and Sheel Nagu observed:

"Issue notice. Status quo as on today shall be maintained till the next date of hearing. The representation made shall not be decided till the next date of hearing."

Appearing for BPCL, Attorney General R. Venkataramani submitted that around 75 similarly placed ethanol suppliers had approached different high courts seeking identical relief. He argued that allowing interim orders in such cases to continue would disrupt the nationwide ethanol allocation process.

"There are about 75 others similarly placed, we have to undo the allocation for all of them," he told the Court. He added that the Union was in the process of filing transfer petitions to have all such matters heard together by the Supreme Court.

Referring to the earlier round of litigation, the Attorney General submitted that BPCL had first challenged the Single Judge's interim order before the Karnataka High Court's Division Bench.

The Supreme Court later set aside the interim orders and directed the Single Judge to decide the writ petition on merits. The High Court subsequently directed the OMCs to consider and decide VINP Distilleries' representation before finalising the tender, prompting BPCL to move the Supreme Court.

The Attorney General submitted that the dispute turned on the interpretation of Clauses 6.2, 6.7 and 6.8 of the long-term ethanol procurement agreement. He said these provisions contemplate annual variations in procurement requirements based on ethanol blending demand.

He argued that the High Court's direction amounted to a mandatory interim injunction.

"How can you pass a mandatory injunction like this?" he submitted.

According to him, the agreement merely required the OMCs to consider procurement on a best-efforts basis. It did not confer an enforceable legal right on any supplier to insist on a particular allocation.

Appearing for one of the ethanol suppliers, counsel submitted that the company was the first entity to enter into the agreement with BPCL. It had established its manufacturing plant exclusively to supply ethanol under the contract.

Counsel submitted that nearly ₹200 crore remained payable through ethanol lifting under the existing arrangement. He further argued that the agreement was an exclusivity contract, preventing the company from supplying ethanol to any buyer other than BPCL.

He contended that after making substantial investments pursuant to the agreement, the company could not suddenly be denied allocation during the procurement period running from November to October.

At the conclusion of the hearing, the bench observed that two courses were open. The parties could either pursue the appellate remedy before the Karnataka High Court's Division Bench or await the Supreme Court's consideration of the proposed transfer petitions involving similar disputes pending before various high courts.

While noting the Union's concern over conflicting interim orders across the country, the bench observed that the ethanol suppliers could not be left without protection in the meantime.

The court ultimately issued notice and directed that the status quo be maintained until the next date of hearing.