The Supreme Court has stayed the Telangana government’s decision to re-allot land originally given to Patanjali Foods for an oil palm factory zone in Suryapet district. The apex court ordered status quo while hearing Patanjali Foods’ challenge against cancellation of its factory zone under the NMEO–Oil Palm scheme.
The Supreme Court of India on Monday ordered status quo on the re-allotment of land in a dispute between Patanjali Foods Limited and the Telangana government over an oil palm factory zone located in Suryapet district of Telangana.
A Bench of Justices J B Pardiwala and K V Viswanathan passed the order today.
The dispute relates to land that was earmarked for setting up an oil palm processing unit in Telangana. This land had originally been allotted to Patanjali Foods, earlier known as Ruchi Soya Industries Limited, as part of its factory zone for oil palm cultivation and processing under the NMEO–OP framework.
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In March 2025, the Telangana government cancelled Patanjali Foods’ factory zone in Suryapet district. The cancellation was based on allegations that the company failed to meet cultivation targets and delayed the establishment of the oil palm processing unit. After cancelling the allotment, the State government re-allotted the land to another entity.
Challenging this decision, Patanjali Foods approached the Telangana High Court, arguing that the State government had misunderstood the scheme and the memorandum of agreement governing the NMEO–Oil Palm framework. The company claimed that under the agreement, failure to establish a processing unit did not automatically lead to cancellation of the factory zone.
A single judge of the High Court, in an order dated January 8, 2026, held that the dispute arose out of a contractual arrangement between Patanjali Foods and the State government under the NMEO–Oil Palm framework.
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The Court observed that since the issue was contractual in nature, the scope of judicial review under Article 226 of the Constitution was limited. It stated that court interference would be justified only if the State’s action was shown to be
“arbitrary, mala fide or in violation of constitutional guarantees.”
After reviewing the sequence of show-cause notices issued to the company, the replies submitted by Patanjali Foods, and the personal hearing granted by the authorities, the High Court found that adequate opportunity had been provided to the company to comply with its obligations under the scheme.
The High Court also rejected Patanjali Foods’ argument that non-establishment of the processing unit could never result in cancellation of the factory zone. It held that the State government was entitled to take an administrative decision based on
“overall performance and implementation of the scheme.”
The Court further ruled that Patanjali Foods had failed to prove any discriminatory treatment or violation of Article 14 of the Constitution.
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Aggrieved by this decision, Patanjali Foods filed an appeal. However, a Division Bench of the Telangana High Court, on January 27, declined to grant any interim relief in the matter.
Following this refusal, the company moved the Supreme Court seeking relief. The apex court has now ordered maintenance of status quo on the land re-allotment until further orders.
Before the Supreme Court, Patanjali Foods was represented by Senior Advocates Neeraj Kishan Kaul and Naveen Pahwa, along with a legal team from Agarwal Law Associates.
Case Title:
Patanjali Foods v. Department of Horticulture
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