A bench of Justice Dalveer Bhandari and Deepak Verma said, "give it to the hungry poor instead of grains going down the drain."
The bench further also asked the government to ensure construction of a big godown in each of the states besides separate godowns in different districts and divisions within the states.
The apex court also asked the centre to ensure that fair price shops are kept open throughout the month.
The bench passed the direction while dealing with a PIL filed by the PUCL on the rampant corruption in public distribution system (PDS) besides rotting of food grains in FCI godowns even though thousands are going without food in the country.
At the last hearing, the court had asked the government to consider the suggestions for disbanding PDS supply to Above Poverty Line families and restrict the benefit only to BPL families and Antodya Anna Yojana Scheme beneficiaries.