For the connoisseurs of a condiment made in California by an eccentric former farmer-turned major in the South Vietnamese Army, these are worrying times. On Friday, a judge is due to decide the fate of the factory where David Tran makes Sriracha hot sauce, pitting locals who claim its fumes have made them sick against a global community of foodies whose spice receptors go into spasms of delight at the very mention of its name.

Tran's recipe – ripe, red jalapeño chilli peppers and not much else – hasn't changed in the 33 years he has been making Sriracha (pronounced SIR-rotch-ah) in clear plastic bottles with distinctive green caps and a rooster logo. Neither has its wholesale price, which Tran keeps secret. His mission in 1980 was "to make a rich man's sauce at a poor man's price" but explosive recent demand has turned Sriracha into a cult hit – and Tran into a spice tycoon. He now makes 20 million bottles a year.

Sriracha has inspired whole cookbooks, memorabilia including T-shirts and iPhone covers and a documentary charting its rise that is nearing completion. David Chang, the trendsetting New York chef, fuelled its popularity by placing bottles on every table at his Momofuku Noodle Bar in 2004, while food magazines lined up to name Sriracha its "ingredient of the year". In Britain, too, cooks rave about Sriracha's simplicity and magical warming properties.

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Yotam Ottolenghi makes a syrup from Sriracha to add to his kimchi omelette, while Gizzi Erskine says her "Sriracha obsession is bordering on crazy". The TV cook and writer spent many of her teenage years in Thailand, where the sauce that inspired Tran originates in the town of Si Racha. "I've been eating it on everything for years," she says. "Now it's trendy I feel like, 'I told you so'!"

Erskine, who uses Sriracha as a spicy "Thai ketchup", is horrified to learn about the sauce's uncertain future. ("How awful!") But residents who live near Tran's factory, built in 2010 as demand soared, are less enthused.

Last month, they began reporting burning eyes, asthma and headaches, among other side effects. The fumes reportedly forced an entire birthday party to flee inside when a chilli cloud blew over a nearby garden.

City officials filed a lawsuit asking a judge to halt production until the smell could be controlled, The Los Angeles Times reported. The request was denied last month but a final decision is expected this Friday.

In the meantime, anxious restaurateurs and Sriracha obsessives who have followed the story have been stockpiling bottles. Tran has come out fighting, meanwhile, denying his factory is polluting Irwindale while considering offers from cities elsewhere in the US that would welcome his booming business.

When he arrived in LA as a refugee after the end of the Vietnam War in 1978, he couldn't find work or a hot sauce that remotely measured up to those he enjoyed back home. So he experimented with chillis and a bucket, bottling the results and delivering them to his first customers. He later named his company Huy Fong after the Taiwanese ship that carried his family and 3,000 other refugees out of Vietnam. "Huy means something like flowing together," Tran told LA Magazine in 2001, "like streams that flow into a river. And 'fong' just means big."

His invention, which remained a niche product during its early life, has since helped drive a broader trend for hot sauce, including many imitators that would serve almost as well should Sriracha's production be disrupted. But like most obsessives, Erskine is fiercely loyal to "rooster sauce" as some know the brand (in the US it is sometimes also called "cock sauce"). Her favourite spiced-up recipe? "The best breakfast known to man is two fried eggs with spring onion, Sriracha and oyster sauce," she says. "But you can literally add it to anything."