In a setback to Mukesh Ambani-owned Reliance Industries Limited (RIL), the Delhi High Court on Friday quashed an arbitral award which had rejected the Central government’s claims against (RIL) in the Krishna Godavari (KG) basin migrated gas dispute..A division bench of Justices Rekha Palli and Saurabh Banerjee said,"In view of the above, we are setting aside the Impugned Order dated May 9, 2023 passed by the learned single judge, and the arbitral award passed by the learned arbitral tribunal dated 2018 being contrary to the settled position of law along the pending applications, if any, leaving the parties to bear their own costs."A detailed copy of the order is awaited. .In April 2000, a consortium led by Reliance Industries Limited (RIL) entered into a production sharing contract (PSC) with the Central government for the exploration and extraction of natural gas from the Krishna-Godavari (KG) Basin, off the coast of Andhra Pradesh. The PSC outlined the rights, obligations, and revenue-sharing terms between the parties.A dispute arose in 2013 when government-owned Oil and Natural Gas Corporation (ONGC) addressed a letter to the Directorate General of Hydrocarbons (DGH) reporting evidence of lateral continuity of gas reservoirs between the Reliance-operated block and the adjacent blocks allocated to ONGC. The findings suggested that the gas pools in the Reliance and ONGC blocks appeared connected, indicating possible migration of natural gas from ONGC’s fields into Reliance’s production area.Following these findings, the Ministry of Petroleum and Natural Gas (MoPNG) sought disgorgement from Reliance and its partners, demanding approximately $1.5 billion, along with an additional $174 million in interest. The demand was based on the assertion that Reliance had unfairly benefited from extracting gas that may have migrated from ONGC’s adjoining blocks..In November 2016, the government’s claim was reinforced following an expert report submitted by Justice AP Shah, former Chief Justice of the Delhi High Court. The report supported the view that gas migration had likely occurred, leading the Ministry to maintain and raise its total claim to over $1.5 billion, including interest.In response, Reliance Industries invoked the arbitration clause under the terms of the PSC, seeking resolution through an international arbitration tribunal.The arbitral tribunal issued its final award in July 2018, largely ruling in favor of Reliance Industries. The tribunal rejected most of the government’s claims, marking a significant legal victory for Reliance in the long-standing dispute..In May 2023, a single judge of the Delhi High Court upheld an arbitral award rejecting the Central government’s claims against RIL in the dispute.In a detailed order, Justice Anup Bhambhani held that the tribunal’s award is not in conflict with the ‘public policy of India’ and that the public trust doctrine was not contravened by Reliance. The bench said that the inferences drawn by the tribunal are factual conclusions which cannot be second-guessed by the Court in exercise of its powers under Section 34 of the Arbitration and Conciliation Act.The factual conclusions by the tribunal are perfectly rational, coherent and logical, the Court underscored.This prompted the Union government to file a plea under Section 37 of the Arbitration Act. .The Central government was represented by Attorney General for India (AGI) R Venkatramani and Senior Advocates KK Venugopal and Gopal Jain..RIL was represented by Senior Advocate Harish Salve.
In a setback to Mukesh Ambani-owned Reliance Industries Limited (RIL), the Delhi High Court on Friday quashed an arbitral award which had rejected the Central government’s claims against (RIL) in the Krishna Godavari (KG) basin migrated gas dispute..A division bench of Justices Rekha Palli and Saurabh Banerjee said,"In view of the above, we are setting aside the Impugned Order dated May 9, 2023 passed by the learned single judge, and the arbitral award passed by the learned arbitral tribunal dated 2018 being contrary to the settled position of law along the pending applications, if any, leaving the parties to bear their own costs."A detailed copy of the order is awaited. .In April 2000, a consortium led by Reliance Industries Limited (RIL) entered into a production sharing contract (PSC) with the Central government for the exploration and extraction of natural gas from the Krishna-Godavari (KG) Basin, off the coast of Andhra Pradesh. The PSC outlined the rights, obligations, and revenue-sharing terms between the parties.A dispute arose in 2013 when government-owned Oil and Natural Gas Corporation (ONGC) addressed a letter to the Directorate General of Hydrocarbons (DGH) reporting evidence of lateral continuity of gas reservoirs between the Reliance-operated block and the adjacent blocks allocated to ONGC. The findings suggested that the gas pools in the Reliance and ONGC blocks appeared connected, indicating possible migration of natural gas from ONGC’s fields into Reliance’s production area.Following these findings, the Ministry of Petroleum and Natural Gas (MoPNG) sought disgorgement from Reliance and its partners, demanding approximately $1.5 billion, along with an additional $174 million in interest. The demand was based on the assertion that Reliance had unfairly benefited from extracting gas that may have migrated from ONGC’s adjoining blocks..In November 2016, the government’s claim was reinforced following an expert report submitted by Justice AP Shah, former Chief Justice of the Delhi High Court. The report supported the view that gas migration had likely occurred, leading the Ministry to maintain and raise its total claim to over $1.5 billion, including interest.In response, Reliance Industries invoked the arbitration clause under the terms of the PSC, seeking resolution through an international arbitration tribunal.The arbitral tribunal issued its final award in July 2018, largely ruling in favor of Reliance Industries. The tribunal rejected most of the government’s claims, marking a significant legal victory for Reliance in the long-standing dispute..In May 2023, a single judge of the Delhi High Court upheld an arbitral award rejecting the Central government’s claims against RIL in the dispute.In a detailed order, Justice Anup Bhambhani held that the tribunal’s award is not in conflict with the ‘public policy of India’ and that the public trust doctrine was not contravened by Reliance. The bench said that the inferences drawn by the tribunal are factual conclusions which cannot be second-guessed by the Court in exercise of its powers under Section 34 of the Arbitration and Conciliation Act.The factual conclusions by the tribunal are perfectly rational, coherent and logical, the Court underscored.This prompted the Union government to file a plea under Section 37 of the Arbitration Act. .The Central government was represented by Attorney General for India (AGI) R Venkatramani and Senior Advocates KK Venugopal and Gopal Jain..RIL was represented by Senior Advocate Harish Salve.
