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Informist, Wednesday, Jan. 7, 2026

 

--HC notice to govt on Vedanta plea vs no extension to CB-OS/2 block contract 

--CONTEXT:Govt denied Vedanta CB-OS/2 block contract extension, gave to ONGC 

--HC rejects govt argument that Vedanta's plea not 'maintainable' 

--HC to govt, ONGC: Keep status quo on CB-OS/2 block; next hearing Feb 27 

 

NEW DELHI – Refusing to accept the government's argument to not entertain Vedanta Ltd.'s plea on grounds of maintainability, the Delhi High Court has agreed to look into the Ministry of Petroleum and Natural Gas' refusal to extend the production sharing contract for the CB-OS/2 Block on western coast to Vedanta. Observing that the case required detailed consideration, the high court issued notices to Centre, Oil and Natural Gas Corp. Ltd. and others on Vedanta's plea against the refusal to extend the contract.

 

The court asked the parties to maintain a status quo with respect to the block and listed the case for hearing on Feb. 27.

 

In September, the oil ministry had denied extension of the production sharing contract for the CB-OS/2 Block to contractor parties Vedanta Ltd., Tata Petrodyne Ltd., and ONGC. The ministry asked Vedanta to cease and desist from carrying out any further petroleum operations on the block and immediately hand over its custody and possession to ONGC. The Centre had said it was purely an interim measure to maintain continuity of petroleum operations in public interest and safeguard petroleum reserves until the block is awarded to another party.

 

The court said that if a third party in public interest points out to certain anomalies or terms which would not be in national interest, then the same could be examined by the Constitutional court in exercise of its power of judicial review. In these circumstances, it cannot be argued that the power of judicial review of the Constitutional court, in examining such a decision, is completely excluded, said Justice Amit Sharma. Fairness in all executive decisions is the essence of the Right to Equality as provided for under Article 14 of the Constitution of India, Justice Sharma said, adding that if any dispute is raised with respect to fairness of such an action, then the same can be examined for limited purposes by the Constitutional court especially when there is no other alternative remedy.

 

"In the present case, the petitioner has raised certain issues, as noted hereinabove leading up to the impugned rejection letter/order, which require consideration and the same cannot be properly adjudicated without an appropriate response/counter affidavit on behalf of concerned respondents," said Justice Sharma. 

 

The CB-OS/2 Block is an offshore oil and gas block on western coast of India. It was awarded to the contractors in 1998 under a Pre-New Exploration Licensing Policy production sharing contract. The block, consisting of Lakhsmi and Gauri fields, is currently producing 3,400 barrels of oil and 340,000 standard cubic metres of gas per day.

 

In 1998, a production sharing contract was entered into between the Centre, ONGC, Tata Petrodyne and Cairn Energy India Pty. Ltd., a division of Vedanta, with respect to the block with an objective to exploit the petroleum resources in accordance with good international petroleum industry practices. Initially, the term of the contract was for 25 years which got extended from time to time. However, the government refused to extend the contract to the petitioner on the ground of outstanding statutory or other dues to be payable by Vedanta.

 

Vedanta said that the argument of pending dues has been arbitrarily considered as ground of rejection by the government as the same were neither raised while the contract was subsisting nor during the period while the interim extensions were granted to the petitioner. The government had not raised any claim with respect to any of the dues as mentioned in the rejection letter and the same cannot be a ground of rejection, said the petitioner. The government has not taken into account that respondent ONGC had not paid INR 4.55 billion in 2021 and was itself in default of payment of royalty, said Vedanta.

 

Vedanta said that the order of the government to hand over custody and possession of the block to ONGC and cease and desist from carrying out any further petroleum operations was not possible as the petroleum operations were continuing and the same cannot be turned off immediately. The subject site is in the middle of the ocean and the iron pillars have been rigged into the ocean bed and the same cannot be removed instantly as has been directed by the government, said the petitioner. 

 

The government argued that Vedanta does not have any vested legal right or Constitutional right for further extension of contract. Vedanta's petition cannot be maintainable in cases which are strictly contractual in nature and wherein, no statutory obligation is cast on the government for extension of a contract especially in favour of a particular person or entity, said the Centre.

 

At 1502 IST, shares of Vedanta Ltd. were up flat at INR 621.70 on the National Stock Exchange. ONGC was down 1.2% at INR 239.03.  End

 

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Reported by Surya Tripathi

Edited by Vandana Hingorani

 

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