Delhi High Court paves way for Centre to take back Vedanta-operated oil and gas block in Gujarat

The Delhi High Court has paves way for Oil and Natural Gas Corporation Limited (ONGC) to take over the assets and operations of a Vedanta-operated oil and gas block off the Gujarat coast [Vedanta Limited v. Union of India and Others].

Justice Purushaindra Kumar Kaurav dismissed Vedanta Limited’s petition challenging a September 19, 2025 decision of the Ministry of Petroleum and Natural Gas (MoPNG).

Through that decision, the Ministry had rejected Vedanta’s application for a ten-year extension of its production sharing contract (PSC). It had also directed ONGC to immediately take over the assets and operations of the block located offshore in Gujarat's Suvali.

The Court had earlier ordered the parties to maintain status quo. With the dismissal of Vedanta’s petition, the government’s takeover direction remains intact.

The Court held that Vedanta was ineligible for an extension since it had unilaterally deducted about ₹88 crore from the government’s share of profit petroleum to offset its liability towards special additional excise duty (SAED).

“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.” the Court said.

The block contains the Lakshmi and Gauri gas fields. It was awarded in 1998 to a consortium comprising Cairn Energy, Tata Petrodyne and ONGC. Vedanta subsequently became the operator of the block.

Vedanta presently holds a 40 per cent participating interest in the project, while ONGC holds 50 per cent and Invenire Petrodyne holds the remaining 10 per cent.

The original contract expired on June 29, 2023. Vedanta and the other contractor parties applied in June 2021 for an extension until June 2033. While the application remained pending, the government granted five interim extensions or working permits to continue petroleum operations.

In 2022, after SAED was imposed on petroleum crude, Vedanta proposed adjusting the tax against the government’s share of profit petroleum. The Ministry rejected the proposal and warned that such an adjustment would breach the PSC.

Despite this, Vedanta deducted USD 9.33 million, approximately ₹88 crore, between the second quarter of financial year 2022-23 and the second quarter of 2024-25.

The Directorate General of Hydrocarbons (DGH) subsequently demanded USD 10.13 million along with applicable interest. Vedanta returned the principal amount on September 12, 2025, seven days before its extension application was rejected. The payment was made under protest and subject to arbitration.

The Court held that the belated payment did not erase the misconduct or prevent the government from considering it while deciding whether Vedanta should continue handling the country’s natural resources.

“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 judgment said.

The Court added that Vedanta had used India’s natural resources for its own benefit instead of the country’s interest and had breached its obligations under the public trust doctrine.

"The petitioner, while unilaterally deducting the Government of India‘s share of Profit Petroleum, unfortunately, has utilised India‘s natural resources for its own benefits, rather than for the interest of the Country. In doing so it has breached the obligations under the Public Trust Doctrine, which in turn flow from the Constitution of India," the Court said.

It also rejected Vedanta’s contention that its extension application should be deemed approved because the government failed to decide it within the timelines prescribed by the 2017 Extension Policy.

The Court held that no automatic extension takes place upon the expiry of the prescribed timelines. The Ministry can also consider events occurring after an extension application is filed.

Therefore, the Court rejected Vedanta's plea.

Vedanta was represented by Senior Advocate Jayant K Mehta along with advocates Anuradha Dutt, Anish Kapur, Nikhita K Suri, Suman Yadav, Gurudas Khurana and Raghav Dutt.

The Ministry of Petroleum and Natural Gas and the Directorate General of Hydrocarbons were represented by Attorney General R Venkataramani along with advocates Nakul Sachdeva, Shreyansh Rathi, Sagar Arora, Shrinkhla Tiwari, Abhinandan Sharma, Kartikay Aggarwal, Yamika Khanna and Karan Sharma.

The Union of India was also represented by Central Government Standing Counsel Ashish K Dixit along with advocates Umar Hashmi and Iqra Shiekh.

Invenire Petrodyne Limited was represented by advocates Ajoy Roy, Avlokita Rajvi, Lakshya Khanna and Bakhshind Singh.

ONGC was represented by Additional Solicitor General Chetan Sharma and advocates Abhishek Gupta, Kumar Kartikeya, Amit Gupta, R V Prabhat, Shubham Sharma, Yash Wardhan Sharma, Naman, Dhananjay Singh and Chanakya Kene.

[Read Judgment]