Delhi High Court refuses immediate relief to Vedanta against ONGC takeover of Gujarat oil block

The Delhi High Court on Thursday refused to grant any immediate relief to Vedanta Limited against the takeover of the CB-OS/2 offshore oil and gas block by the Oil and Natural Gas Corporation Limited (ONGC) [Vedanta Vs Union of India].

A Division Bench of Justices Dinesh Mehta and Rajneesh Kumar Gupta declined Vedanta’s request to continue the status quo that had earlier protected its operations, until a single judge dismissed its petition yesterday.

The Court clarified that it could restore possession to Vedanta if the company made out a case for interim relief next week.

“If needed, we’ll put the clock back. We’ll restore your position, but after hearing you,” the Court said.

The Bench added that it would not pass an ambiguous status quo order. It said that if relief was granted, the order would clearly direct that Vedanta be put back in possession of the block and allowed to operate it.

The appeal challenges the July 22 judgment passed by Justice Purushaindra Kumar Kaurav, upholding the Ministry of Petroleum and Natural Gas’ refusal to extend Vedanta’s production sharing contract (PSC) for ten years.

The block at the centre of the dispute 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.

The original contract expired on June 29, 2023. Vedanta and the other consortium members applied in June 2021 for an extension until June 2033. The government granted five interim extensions or working permits while the application remained pending.

The Ministry rejected the extension request on September 19, 2025 and directed ONGC to take over the block.

The single judge upheld the decision after finding that Vedanta had unilaterally deducted USD 9.33 million, approximately ₹88 crore, from the government’s share of profit petroleum to offset its special additional excise duty liability (SAED).

In 2022, after SAED was imposed on petroleum crude, Vedanta had 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 production sharing contract.

Despite this, Vedanta deducted USD 9.33 million 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 single judge Bench of the High 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 Centre, represented by Attorney General R Venkataramani and Additional Solicitor General Chetan Sharma, today told the Court that, following the single judge's order, ONGC had taken over the oil block operations. An affidavit and documents concerning the takeover were handed over to the Court.

However, this claim - that ONGC had taken over the block within 24 hours of the single judge's ruling - was disputed by Senior Advocate Mukul Rohatgi, appearing for Vedanta.

Rohatgi said Vedanta had operated the block continuously from 1998 until July 22, 2026. He argued that an offshore oil and gas facility could not be compared to a house or a car whose possession or driver could be changed overnight.

According to Vedanta, it continued to be the designated operator even though ONGC was a member of the contractor consortium.

The Bench today said it was accepting the Centre’s position for now.

“So, today, we believe, we accept that you have taken over,” it said.

The Bench also noted that ONGC was not a third party but held a 50 per cent participating interest in the consortium. Vedanta holds 40 per cent, while Invenire Petrodyne holds the remaining 10 per cent.

The Division Bench will take up the appeal as one of its first matters on Monday, July 27.

Senior Advocate Jayant Mehta also represented Vedanta.

Additional Solicitor General Chetan Sharma appeared for ONGC.