Patanjali Foods Limited vs. Department Of Horticulture

Facts

Patanjali Foods Limited (formerly Ruchi Soya Industries Limited) filed a writ petition challenging the cancellation of its factory zone in Suryapet District and the subsequent re-allocation of this zone to Telangana Cooperative Oil Seeds Growers Federation Limited (TG Oilfed). The petitioner had been allotted areas for palm oil cultivation and processing under the National Mission of Edible Oils-Oil Palm (NMEO-OP) scheme. The petitioner argued that the cancellation, based on G.O. Ms. No. 13 dated March 15, 2025, and the re-allocation, based on G.O. Ms. No. 14 dated March 15, 2025, were illegal, arbitrary, and violative of natural justice. The petitioner also challenged consequential letters dated March 20, 2025. The core of the dispute revolves around the petitioner's alleged failure to establish a processing unit within the stipulated timeframes as per a Memorandum of Agreement (MoA) dated April 16, 2010, and subsequent agreements.

Held

The Court dismissed the writ petition. Regarding the first two issues, the Court found that the petitioner had not established the processing unit within the stipulated 24 months from entering the agreement, as required by Clauses 5 and 6 of the MoA dated March 15, 2017. Although the petitioner claimed to have acquired land and converted it, this was done after the show-cause notices and not intimated to the government prior to the issuance of the impugned G.Os. Therefore, the government was within its powers to cancel the allotment of the Suryapet land. The Court rejected the argument that the MoA did not provide for cancellation for non-setting up of a processing unit, finding that Clause 13, read with Clauses 5 and 6, clearly indicated that the setting up of the oil palm mill and refinery was a mandatory requirement, and failure to do so could lead to cancellation. The Court held that the petitioner was required to set up the processing unit within the stipulated time, and merely submitting documents was insufficient. The Court found no merit in the petitioner's arguments and dismissed the writ petition. No specific issue was left undecided.

Key Issues

1. Whether the cancellation of the factory zone in Suryapet District by the Department of Horticulture and Department of Agriculture and Cooperation, vide G.O. Ms. No. 13 dated March 15, 2025, was illegal, arbitrary, violative of natural justice, and without jurisdiction, thereby violating Articles 14, 19, 21, and 300-A of the Constitution of India. 2. Whether the re-allocation of the factory zone in Suryapet District to TG Oilfed, vide G.O. Ms. No. 14 dated March 15, 2025, was illegal, arbitrary, violative of natural justice, and without jurisdiction, thereby violating Articles 14, 19, 21, and 300-A of the Constitution of India. 3. Whether the impugned letters dated March 20, 2025, issued by the Department of Horticulture, were illegal and violative of the principles of natural justice. Petitioner's Arguments: The petitioner contended that the cancellation and re-allocation were illegal and arbitrary. They argued that they had taken steps to acquire land and convert it, although this was not intimated prior to the impugned G.Os. They also argued that the MoA did not explicitly provide for cancellation for non-setting up of a processing unit, and their obligation was primarily to purchase Fresh Fruit Bunches (FFBs). They relied on the fact that they were retaining the factory zone in Nalgonda District, suggesting the Suryapet cancellation was unjustified. Respondents' Arguments: The respondents, represented by the Government Pleader and Standing Counsel, argued that the petitioner failed to adhere to the timeframes stipulated in the MoA for establishing the processing unit. They pointed out that the petitioner had acquired land and executed a sale deed on March 12, 2025, and converted agricultural land on April 17, 2025, but this was not intimated to the government before the cancellation. They asserted that the government was within its powers to cancel the allotment. They also highlighted that Clause 13 of the MoA implied that setting up the oil palm mill and refinery was a condition, not just submission of documents.