In a significant legal development, the Telangana High Court has dismissed an interlocutory application filed by Patanjali Foods Limited, formerly known as Ruchi Soya Industries Limited. The company had sought directions to set aside a single judge order that upheld the cancellation of permissions granted for establishing a factory zone in Nalgonda and Suryapet districts dedicated to oil palm cultivation and processing.
Background of the Case
The dispute traces back to the National Mission of Edible Oils-Oil Palm (NMEO-OP) scheme, a government initiative aimed at boosting domestic palm oil production. Under this scheme, Patanjali Foods was allocated factory zones in Nalgonda and Suryapet districts in 2012. The memorandum of agreement (MoA) included a critical condition requiring the company to establish a processing mill within 24 months to support the cultivation activities.
Government Action and Initial Court Ruling
On March 15, 2025, the government issued orders cancelling the Suryapet factory zone allotment. This decision was based on Patanjali's failure to meet planting targets and establish the mandated processing facility. Following the cancellation, the zone was reallocated to TG Oilfed, the Telangana Cooperative Oil Seeds Growers Federation Limited.
When Patanjali challenged this cancellation and reallotment in the high court, a single judge dismissed the writ petition on January 8. The judge held that the government acted within its powers, as the company had breached fundamental conditions of the MoA, justifying the cancellation.
Arguments Presented in Court
During the hearing of the appeal against the single judge order, counsels for Patanjali Foods argued vigorously that the cancellation order was illegal and violated the principles of natural justice. They contended that the cancellation lacked proper jurisdiction and infringed upon fundamental rights guaranteed under the Constitution of India. Additionally, they asserted that the orders reallocating the factory zone to TG Oilfed were unconstitutional and arbitrary.
Opposing the appeal, B Mohana Reddy, the government pleader for the agriculture department, along with counsels for Oilfed, defended the single judge order. They argued that the order was valid since Patanjali had clearly violated the agreement conditions, and they urged the court to dismiss the appeal to uphold the government's decision.
Court's Decision and Future Proceedings
After recording submissions from all sides, the division bench, comprising Chief Justice Aparesh Kumar Singh and Justice GM Mohiuddin, passed its directions. The bench stated, "Prima facie, no case for stay of the single judge order was made out," leading to the dismissal of the interlocutory application.
Furthermore, the bench posted the main appeal challenging the single judge order to be listed after six weeks, allowing for further legal proceedings. This ruling underscores the court's stance on enforcing contractual obligations under government schemes and highlights the importance of compliance with agreed terms in such initiatives.
The case sheds light on the challenges faced in implementing agricultural schemes like NMEO-OP, where timely execution and adherence to conditions are crucial for success. It also reflects the judicial scrutiny applied to government actions in reallocating resources based on performance failures.
