Supreme Court Allows Centre To Withdraw SLP Against Vedanta In Rajasthan Oil Block Dispute
The Supreme Court on Wednesday permitted the Union of India to withdraw its special leave petition challenging a Delhi High Court judgment involving Vedanta's Rajasthan oil block after observing that the appeal had become infructuous in view of the subsequent final arbitral award.
The dispute concerns the preparation of quarterly profit petroleum accounts under the Production Sharing Contract (PSC) governing the Rajasthan RJ-ON-90/1 oil block.
The Delhi High Court on July 11, 2025 had upheld the arbitral tribunal's order dated April 29, 2024 and rejected the Union's appeal. It held that although the Final Partial Award delivered on August 22, 2023 was declaratory and the final quantification of monetary liability remained pending, the interpretations contained in the award became immediately binding upon the parties and governed their continuing contractual relationship unless stayed.
A bench of Justices Manoj Misra and Vijay Bishnoi permitted the withdrawal after counsel for the Union on instructions, sought leave to withdraw the petition while reserving all rights, liberties and remedies available in law. The Court accordingly dismissed the special leave petition as withdrawn.
"The final partial award is already under challenge before the Delhi High Court and in the meantime a final award has also been passed. In such circumstances, the petition is rendered infructuous.", the Court said.
When the matter was first taken up on July 29, Union had informed the Court that the petition challenged a Delhi High Court order arising from a Final Partial Award, which was itself already under challenge before the High Court and that in the meantime, a final arbitral award had also been passed.
The Union of India had then sought a week's time to obtain instructions, following which the matter was adjourned to August 5.
Background
The dispute arose out of a Production Sharing Contract (PSC) executed in 1995 between the Union of India, ONGC and Shell India Production Development whose interests were subsequently acquired by Vedanta Ltd for exploration and production of petroleum from the Rajasthan RJ-ON-90/1 Block. Following audit objections raised by the Government regarding Vedanta's recovery of exploration, development and production costs, the parties entered arbitration.
On 22 August 2023, the Arbitral Tribunal delivered a Final Partial Award issuing declaratory findings on the interpretation of the PSC while leaving the quantification of monetary liability to be determined later if the parties failed to reach a consensus. After the award, Vedanta adjusted quarterly profit petroleum accounts based on its interpretation of the FPA, prompting the Union of India to seek interim relief restraining such adjustments until the quantum was finally determined. The Arbitral Tribunal rejected the plea, leading to the present appeal under Section 37 of the Arbitration and Conciliation Act.
Dismissing Union's appeal, the Delhi High Court held that although the FPA was declaratory and the final quantification remained pending, its interpretations became immediately binding upon its issuance and had to govern the parties' ongoing contractual relationship unless stayed.
The Court ruled that Vedanta's preparation of quarterly accounts in accordance with the FPA did not amount to impermissible unilateral enforcement of the award but was in discharge of its contractual obligations under the PSC.