Supreme Court Orders Status Quo On Ethanol Allocation For ESY 2025–26

New Delhi, Jul 1 (KNN) The Supreme Court on Tuesday directed maintenance of status quo on ethanol supply allocation for the Ethanol Supply Year (ESY) 2025–26 while hearing a challenge to a Karnataka High Court (HC) order concerning enhanced ethanol allocation to a distillery.

Supreme Court Orders Status Quo on Ethanol Allocation 

A partial court working days bench of Justices M M Sundresh and Sheel Nagu issued notice after hearing Attorney General R Venkataramani for Bharat Petroleum Corporation Ltd and Senior Advocate Siddharth Dave for the respondent. 

The Attorney General challenged the Karnataka High Court's order directing OMCs to consider Vinp Distilleries' plea for enhanced ethanol allocation for ESY 2025–26, arguing it could disrupt the Centre's 20 percent ethanol blending policy. 

Centre Seeks Transfer of Similar Cases 

Responding to the bench's query, the Attorney General said ethanol supply contracts had already been finalised in October 2025 and similar petitions were pending before multiple High Courts. 

He sought time to file transfer petitions before the Supreme Court. The apex court then issued notice and ordered status quo on ethanol allocation. 

Distillery Challenges Reduced Supply Allocation 

The dispute concerns a petition by Vinp Distilleries and Sugar Pvt Ltd, a dedicated ethanol producer, challenging OMC allocations for ESY 2025–26. 

The company said it was allocated only 3.92 crore litres despite a production capacity of 9.90 crore litres and a bid to supply 9.26 crore litres. 

Before the High Court, the Attorney General argued that preferential allocation under the policy did not give the company an enforceable right to seek enhanced procurement, as doing so would effectively alter the government's ethanol procurement policy. 

High Court Cites Legitimate Expectation Principle 

Allowing the petition, the Karnataka High Court held that the company had a legitimate expectation of continued ethanol allocations under its contractual arrangements and directed OMCs to comply with Clause 6.8 of the supply agreement, restoring procurement from 1.44 crore litres to 3.92 crore litres.

Impact on MSMEs

The Supreme Court’s status quo order creates temporary uncertainty for MSMEs engaged in ethanol production and allied supply chains. 

The final outcome will be significant for dedicated ethanol manufacturers, as it could influence procurement certainty, capacity utilisation, and investment decisions under the Centre’s ethanol blending programme.

(KNN Bureau)