Delhi High Court To Hear Vedanta's Appeal Against Refusal Of Gujarat Offshore Oil Block PSC Extension On Monday

The Delhi High Court on Thursday agreed to hear on Monday Vedanta Ltd.'s plea for interim relief in its appeal challenging the July 22 judgment upholding the Union Government's decision rejecting the company's application for a ten-year extension of the Production Sharing Contract (PSC) for an offshore oil and gas block in Gujarat.

After briefly hearing the parties, a division bench of Justices Dinesh Mehta and Rajneesh Kumar Gupta posted the matter for Monday, when it will consider Vedanta's request for interim protection.

Senior Advocates Mukul Rohatgi and Jayant Mehta, appearing for Vedanta, submitted that the company's 25-year PSC expired in 2023 and that it had sought a ten-year extension under the 2017 Extension Policy.

They argued that while the application remained pending, the Union Government granted five interim extensions before eventually rejecting the request.

Emphasising the urgency, Rohatgi submitted that ONGC had taken over operations of the offshore block following the Single Judge's judgment, resulting in confusion over who was operating the field.

"Yesterday itself... ONGC has taken over the operations... According to me, ONGC has not taken over the operation... I am operating according to me, according to them, ONGC is operating. That will create confusion.", he sumbitted.

He added that Vedanta had been operating the block continuously and sought continuation of the status quo that had existed during the pendency of the writ petition.

When the bench asked whether the extension could be claimed as a matter of right, Rohatgi responded,

"Yes. I am saying it's a matter of right. There is a policy... I have a statutory expectation... that somebody will apply his mind in accordance with the policy and take a non-arbitrary decision."

Attorney General R. Venkataramani, appearing for the Union Government, opposed the request and submitted that ONGC had already assumed control of the field.

When Rohatgi requested the court to continue the earlier status quo arrangement, the bench observed, "If needed, we'll put the clock back, we'll restore your possession. But after hearing you."

The court also remarked "Had ONGC not been part of the consortium, perhaps I would have protected."

Posting the matter for hearing on Monday, the bench said it would consider Vedanta's request for interim relief after hearing all parties. 

In the impugned judgment, Justice Purushaindra Kumar Kaurav held that Vedanta had rendered itself ineligible for an extension by unilaterally deducting the Government's share of Profit Petroleum towards its Special Additional Excise Duty liability. The Single Judge observed:

"Ex facie the said unilateral deduction was not bona fide. The petitioner is handling public resources of the people of India. The scheme of the PSC is such as would require the private company to give the share of the Government. This arrangement does, to a certain extent, put the private company in a dominant position as the reigns of the Government share lie in its hands. It must, however, be extra-cautious while treading this course. The Government cannot be held ransom to the whims of a private company, which as per its fancies, interpretations, wishful dreamy adjudications tramples upon the Union's share."

The Single Judge further held that Vedanta had no vested right to an extension under the 2017 Extension Policy and that Clause 9 vested discretion in the Government while considering extension requests. The Court also held that Vedanta had acted as "judge, jury, and executioner" by unilaterally appropriating the Government's share of Profit Petroleum instead of following the contractual dispute resolution mechanism.

Holding that such conduct violated the Public Trust Doctrine, the Court observed that Vedanta had utilised India's natural resources "for its own benefits, rather than for the interest of the Country," and concluded that its conduct was "serious and shocking," thereby justifying the refusal of the ten-year PSC extension.