Karnataka HC Orders Oil Companies to Consider Vinp Distilleries' Ethanol Supply Plea

The High Court of Karnataka in Bengaluru on June 20, 2026, directed state-owned Oil Marketing Companies (OMCs) to consider a representation by Vinp Distilleries and Sugars Limited for the enhancement of ethanol procurement.

The petitioner, Vinp Distilleries and Sugars Limited, operated a dedicated ethanol plant in Shiggaon, Haveri district. The company was engaged in the supply of denatured anhydrous ethanol and allied products.

According to the petitioner, the Shiggaon unit was established exclusively to supply ethanol to state-owned OMCs, including HPCL, BPCL, and IOCL. The dispute arose after the OMCs issued a tender notification on September 23, 2025, to procure 1,050 crore liters of denatured anhydrous ethanol for the 2025–2026 supply year.

While Vinp Distilleries bid to supply 9.26 crore liters, it was only allotted a quantity of 3.92 crore liters. The company contended that restricting its supply capacity was arbitrary and inflicted heavy financial losses, especially considering the massive investments made to set up the dedicated plant.

Vinp Distilleries further submitted that since 2021, whenever the OMCs floated expressions of interest and entered into long-term agreements, the plant was permitted to supply its complete capacity.

In response, the OMCs argued that the dispute was purely a contractual matter and asserted that a writ petition was not maintainable in court.

Justice M Nagaprasanna, however, noted that the petitioner-company held a legitimate expectation that the prevailing policy would continue. He pointed out that this expectation arose directly from the agreement and the consistent past conduct of the OMCs.

The court also highlighted that ethanol was actively required, noting that the current notification sought the procurement of 1,500 crore liters of ethanol.

Justice Nagaprasanna stated that dedicated ethanol plants, which had previously supplied exclusively to OMCs and were contractually barred from manufacturing other products or supplying to third parties, could not be relegated to the short end of the stick and subjected to grave prejudice.