The Karnataka High Court has allowed a writ petition filed by VINP Distilleries and Sugars Pvt. Ltd., holding that Oil Marketing Companies (OMCs) could not introduce tender conditions inconsistent with the Long-Term Offtake Agreement executed with Dedicated Ethanol Plants. The Court held that the petitioner had a legitimate expectation, arising from both the agreement and the consistent conduct of the respondents, that preferential allocation under Clause 6.8 would continue to be honoured.
Justice M. Nagaprasanna observed that while the State may alter policy, any departure from contractual assurances must satisfy the requirements of Article 14 and cannot be arbitrary. The Court noted that Dedicated Ethanol Plants had been established pursuant to Government policy and were contractually barred from manufacturing other products or supplying ethanol to third parties. In such circumstances, reducing their allocation while seeking procurement of 1,500 crore litres of ethanol was held to be unjustified.
Rejecting the respondents’ objections, the Court held that OMCs could not selectively rely on Clause 6.8 to enhance procurement from the assured quantity of 1.44 crore litres to 3.92 crore litres and simultaneously refuse to consider procurement up to the petitioner’s installed capacity of 9.90 crore litres.
Accordingly, the Court allowed the writ petition and issued a mandamus directing the OMCs to consider the petitioner’s representation dated October 27, 2025 seeking enhanced procurement, bearing in mind the observations made in the judgment, and to take a decision before finalising the new tender process.
