The Supreme Court on Monday ordered status quo on land re-allotment in a dispute involving Patanjali Foods Limited and the Telangana government over an oil palm factory zone in Suryapet district. [Patanjali Foods v. Department of Horticulture]

A Bench of Justices JB Pardiwala and KV Viswanathan held passed the order today.

The dispute relates to land earmarked for an oil palm processing unit in Telangana, which had originally been allotted to Patanjali Foods (formerly Ruchi Soya Industries Limited) as part of its factory zone for oil palm cultivation and processing under the NMEO–OP framework.

In March 2025, the Telangana government cancelled Patanjali Foods’ factory zone in Suryapet district, citing alleged failure to meet cultivation targets and delays in establishing the processing unit. The land was re-allotted to another entity.

Patanjali Foods challenged the move before the Telangana High Court, arguing that the State had misunderstood the scheme and the governing memorandum of agreement, under which non-establishment of a processing unit did not automatically result in cancellation of the factory zone.

A single-judge of the High Court had on 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 and that the scope of judicial review under Article 226 was, therefore, limited. It observed that interference would be warranted only if the State’s action was shown to be arbitrary, mala fide or in violation of constitutional guarantees.

After examining the sequence of show-cause notices, replies submitted by the company and the personal hearing granted by the authorities, the High Court concluded that adequate opportunity had been afforded to Patanjali Foods to comply with its obligations.

The High Court also rejected the contention that non-establishment of the processing unit could never result in cancellation, noting that the State was entitled to take an administrative decision based on overall performance and implementation of the scheme. The Court held that Patanjali Foods had failed to demonstrate discriminatory treatment or violation of Article 14.

Patanjali Foods appealed against this order. However, a Division Bench of the Telangana High Court on January 27 refused to grant interim relief.

This prompted the company to file a plea in the Supreme Court.

Patanjali Foods was represented by Senior Advocates Neeraj Kishan Kaul and Naveen Pahwa with a team from Agarwal Law Associates.