Delhi High Court orders status quo on Centre’s move to hand over Vedanta’s Suvali offshore oil block to ONGC

The Delhi High Court on Tuesday ordered status quo on the Union government’s decision to deny extension of a production sharing contract (PSC) held by Vedanta Limited and to hand over the offshore oil block to Oil and Natural Gas Corporation (ONGC). [Vedanta Limited v. Union of India].Justice Amit Sharma passed the direction while hearing Vedanta’s writ petition challenging the Union Ministry of Petroleum and Natural Gas’ September 19, 2025 decision rejecting the company’s request to extend the PSC for the offshore block in Gujarat and directing an immediate takeover of operations by ONGC. The Court directed that the existing state of affairs be maintained, effectively restraining any transfer of possession or operational control pending adjudication of the dispute..The PSC in question was entered into by the government, Vedanta and Invenire Petrodyne in June 1998.Vedanta, the designated operator of the Suvali offshore block since 1998, moved the High Court after the government denied its request for a 10-year contract extension. The company was directed to "cease and desist from carrying out any further petroleum operations" and to immediately hand over over custody and possession of the block (including all government assets) to ONGC.The government’s rejection was based on alleged financial defaults, including short payments of profit petroleum, disputed special additional excise duty (SAED) adjustments and shortfalls in the site restoration fund..Represented by Senior Advocate Mukul Rohatgi, Vedanta argued that the rejection was arbitrary and disregarded its 25-year performance record. The company highlighted that it had been granted five interim extensions after the original contract expired in June 2023, during which time these defaults were not raised as grounds for termination.During the proceedings, Vedanta informed the Court that it had paid approximately ₹695.49 crore (including its share of the disputed dues) under protest to demonstrate its commitment to resolving the financial deadlock..The Union government and ONGC opposed the petition, arguing that the PSC had expired and was determinable in nature, making it unsuitable for enforcement through a writ petition. They relied on alleged audit objections, short-payment of profit petroleum and other outstanding dues to justify the refusal of extension and the direction to transfer operations to ONGC..A central focus of the proceedings was the government's preliminary objection that the petition was not maintainable. The government, through Directorate General of Hydrocarbons (DGH), argued that the matter was strictly contractual in nature and that Vedanta had no vested legal or constitutional right to a contract extension. They maintained that natural resources are held in public trust and judicial review of such commercial decisions is necessarily circumscribed..Justice Amit Sharma dismissed the government’s objections to maintainability, ruling that the Court has a duty to examine the fairness of the decision-making process. The Court said,"The dispute here is with respect to denial of request of extension on the grounds mentioned hereinbefore, and, for such redressal there is no alternate mechanism provided for in the PSC or in the Extension Policy. Thus, in the considered opinion of this Court the petitioner has no alternate efficacious remedy available qua the impugned rejection letter/order dated 19.09.2025.".Regarding the constitutional requirement for executive fairness, the Court held:"Fairness in all executive decisions is the essence of the Right to Equality as provided for under Article 14 of the Constitution of India. If any dispute is raised with respect to fairness of such an action, then, the same can be examined, albeit, for limited purposes by the Constitutional Court especially when there is no other alternative remedy.".On the scope of judicial review in commercial matters, the Court observed:"This Court in exercise of Article 226 of the Constitution will be circumspect in interfering with the commercial wisdom of the Government with regard to extension and non-extension of the contract or for that matter whether the contract ought to be extended or not but it can surely for a limited purpose examine the process by which such a decision has been arrived at in case where there is an allegation of unfairness"..To prevent an immediate handover while the legal issues are properly adjudicated, the Court issued a directive to preserve the existing situation.It granted the government and ONGC four weeks to file their counter-affidavits, with the next hearing scheduled for February 27, 2026..Advocates Anuradha Dutt, Anish Kapur, Nikhita K Suri, Suman Yadav, Gurudas Khurana, Raghav Dutt and Keshav Sehgal briefed Rohatgi for Vedanta..The Union of India was represented by Advocates Ashish K Dixit (Central Government Standing Counsel) , Umar Hashmi, Shivam Tiwari, Iqra Sheikh and Urmila Sharma..Attorney General R Venkataramani with Advocates Nakul Sachdeva, Sagar Arora, Shreyansh Rathi, Shrinkhla Tiwari and Abhinandan S represented the Directorate General of Hydrocarbons. .Invenire Petrodyne was represented by Advocates Ajoy Roy, Avlokita Rajni, Lakshya Khanna and Shradha Sriram..ONGC was represented by Additional Solicitor General Chetan Sharma with Advocates Abhishek Gupta, Shaswat Kumar Pandey, Dhananjay Singh, Amit Sharma and Kumar Kartikeya..[Read Judgment].Follow Bar and Bench channel on WhatsAppDownload the Bar and Bench Mobile app for instant access to the latest legal news.