The Delhi High Court on Monday dismissed a preliminary objection raised by Reliance Industries Limited (RIL) against the maintainability of the Union of India's appeal in relation to the Tapti–Panna Mukta production sharing contracts [Union of India Vs Reliance Industries Limited].
The Union government had challenged a single-judge's refusal to enforce an arbitral award arising from the dispute.
RIL challenged the maintainability of the government's appeal but a Bench of Justices Navin Chawla and Madhu Jain dismissed RIL's objection,
"It is the cardinal principle of statutory interpretation that the words of the legislature must be constructed in their natural meaning, without adding or subtracting therefrom. Applying the above test, the words of Section 50(1)(b) of the A&C Act provide for an appeal against the order of a court refusing to enforce a Foreign Award under Section 48 of the A&C Act, which is the case in hand. Therefore, the present appeal is maintainable," the Court held.
The dispute arose from production sharing contracts executed in 1994 between the Union of India, acting through ONGC, and a consortium led by Reliance for the development of the Tapti and Panna Mukta oil and gas fields. Differences between the parties led to international arbitration governed by English law.
In October 2016, the arbitral tribunal issued a final partial award containing declaratory findings on cost recovery and profit-sharing issues, while deferring determination of key elements such as the applicable cost recovery limit (CRL) to later stages of the arbitration.
Relying on the 2016 award, the Union of India initiated enforcement proceedings before the Delhi High Court, claiming that amounts in excess of ₹3.8 billion were recoverable from Reliance and its partners.
In July 2023, a single-judge of the High Court dismissed the enforcement petition as premature, holding that the 2016 award did not quantify any payable amount and that essential issues, including CRL determination, were still pending before the arbitral tribunal. The single-judge further held that enforcing such a declaratory and incomplete award would be contrary to the principles governing enforcement of foreign awards.
The government then filed the present appeal before Division Bench.
Reliance challenged the maintainability of the plea, arguing that the single- judge’s July 2023 order merely held the execution petition to be premature and non-maintainable, and therefore did not constitute a refusal to enforce a foreign award under Section 48.
On this basis, it contended that no statutory appeal lay under Section 50 of the Arbitration Act.
However, the Division Bench rejected this contention. It held that the substance of the single-judge’s reasoning clearly showed a refusal to enforce the award on grounds recognised under Section 48, including public policy considerations. The Court observed that once enforcement is declined under Section 48, an appeal under Section 50(1)(b) is expressly maintainable.
While deciding only the question of maintainability, the Division Bench emphasised that the Arbitration Act is a self-contained code and that appeals are available only where expressly provided by statute. However, it held that the single-judge had expressly invoked Section 48, particularly public policy considerations, to decline enforcement, bringing the case squarely within the scope of Section 50.
Therefore, the Court dismissed Reliance’s objection and held that the Union of India’s appeal against the refusal to enforce the arbitral award must be heard on merits.
With Reliance’s maintainability challenge rejected, the Delhi High Court will now proceed to examine the Union of India’s appeal against the single- judge’s refusal to enforce the 2016 final partial award.
The Union of India was represented by Attorney General R Venkataramani along with Senior Advocate Sanjay Jain and advocates Shravan Yammanur, Mangesh Krishna, Prachi Kaushik and Harshita Sukhija.
Reliance Industries Limited and the other respondents were represented by Senior Advocates Harish Salve and Shyel Trehan and advocates Sameer Parekh, Sonali Basu Parekh, Ishan Nagar, Abhishek Thakral and Ruchi Krishna Chauhan.
[Read Judgment]