Supreme Court Orders Status Quo On Cancellation Of Land Allotment To Patanjali Foods In Telangana

The Supreme Court today issued notice on a plea filed by Patanjali Foods against the refusal of the Telangana High Court's Division Bench to stay a Single Judge order upholding the cancellation of its factory zone in Suryapet district.

A bench of Justice JB Pardiwala and Justice KV Vishwanathan issued notice returnable in 4 weeks and directed the parties to maintain status quo in the meantime.

Patanjali Foods had been allotted areas in Nalgonda and Suryapet districts pursuant to the National Mission of Edible Oils – Oil Palm (NMEO-OP) scheme.

The dispute arises from the Government Order dated March 15, 2025, issued by the Agriculture and Cooperation (Horti.&Seri) Department of the State of Telangana, cancelling the allotment of the Suryapet factory zone. By the GO, the cancelled factory zone was re-allotted to another company.

Patanjali Foods challenged these government orders before the Telangana High Court. On January 08, 2026, Justice T. Madhavi Devi dismissed the writ petition.

Under the National Mission of Edible Oils–Oil Palm scheme, the Government of Telangana on December 16, 2020 allotted Patanjali 7,738 hectares in Nalgonda District and 11,300 hectares in Suryapet District. On June 10, 2021, four additional mandals were allocated to it.

On June 28, 2021, Patanjali submitted an affidavit agreeing to adhere to the Memorandum of Agreement dated March 15, 2017 and to cover 1,22,595 acres under oil palm cultivation within five years.

The State issued show-cause notices dated December 12, 2022, December 19, 2023 and October 05, 2024 alleging that Patanjali failed to procure required seed sprouts and establish the processing mill within the factory zone as required under the MoA.

After a personal hearing held on December 30, 2024, the State proceeded to cancel the Suryapet allotment on March 15, 2025.

The Single Judge held that the matter was contractual in nature and that the petitioner had not established arbitrariness or mala fides in the State's decision. The Court observed that judicial review in contractual matters is limited and interference is warranted only if the action is arbitrary, biased or mala fide.

The Court noted that while Patanjali achieved targets in Nalgonda, there was a shortfall in Suryapet. In such circumstances, the Court held that it was within the State's domain to assess performance and decide whether to continue the allotment.

On the issue of non-establishment of the processing unit, the Court rejected the petitioner's argument that time was not of the essence of the contract. The Court noted that repeated show-cause notices had been issued, and a Government-level review meeting had fixed timelines for land procurement. The Court held that sufficient opportunity had been granted to Patanjali to establish the processing unit and the decision to cancel the Suryapet allotment could not be termed arbitrary or in violation of Article 14.

Patanjali Foods filed an appeal before a Division Bench of the High Court. The Division Bench declined to grant interim stay of the Single Judge's order. Aggrieved by the refusal of interim relief, Patanjali filed the present SLP before the Supreme Court.

Case no. – SLP(C) No. 5434/2026 

Case Title – Patanjali Foods Limited v. Department of Horticulture