The Supreme Court has stepped in to maintain the current status on ethanol supply allocation for the Ethanol Supply Year (ESY) 2025–26. This decision came from a partial bench of Justice MM Sundresh and Justice Sheel Nagu after hearing arguments from Attorney General R Venkataramani, representing Bharat Petroleum Corporation Ltd, and Senior Advocate Siddharth Dave, representing the respondents.
The Attorney General challenged a recent Karnataka High Court ruling that ordered Oil Marketing Companies (OMCs) to reconsider a request from a distillery seeking a larger ethanol allocation for the upcoming year. He argued that changing ethanol allocations now could disrupt the national policy aimed at blending 20% ethanol with petrol.
When asked why the High Court’s Division Bench was not approached first, the AG explained that ethanol supply contracts had already been finalized in October 2025, and multiple petitions were pending in various High Courts. He requested time to file transfer petitions. In response, the Supreme Court issued a notice and ordered that the current allocation remain unchanged for the time being.
The original dispute began when M/S Vinp Distilleries and Sugar Private Limited, a dedicated ethanol manufacturer, challenged its reduced ethanol allocation. Despite having a plant capable of producing nearly 9.90 crore litres annually, the distillery was allotted only 3.92 crore litres for ESY 2025–26, while it had bid for 9.26 crore litres.
The High Court had ruled in favor of the distillery, stating it had a legitimate expectation based on the agreements with the OMCs and past practices. The court emphasized that dedicated ethanol plants, which supply ethanol exclusively to OMCs and cannot divert production, should not be unfairly disadvantaged. It ordered the OMCs to follow the terms of the agreement, particularly Clause 6.8, which had already been used to increase procurement from 1.44 crore litres to 3.92 crore litres.
However, the Attorney General opposed this, insisting that preferential allocation should not be treated as a guaranteed right and that altering the allocations could amount to unlawful changes to government policy.
For now, the Supreme Court’s status quo order means the ethanol supply allocations for 2025–26 will remain as they are while the legal questions continue to be resolved.
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