The Delhi High Court on Thursday decided against providing immediate relief to Vedanta Limited in its legal battle against the Oil and Natural Gas Corporation Limited (ONGC) over the CB-OS/2 offshore oil and gas block. In the case titled Vedanta Vs Union of India, a Division Bench consisting of Justices Dinesh Mehta and Rajneesh Kumar Gupta rejected Vedanta’s plea to maintain the existing status quo, which had previously allowed the company to operate the block. This decision follows a single judge’s dismissal of Vedanta’s petition earlier this week.
The High Court clarified that it is open to revisiting the matter next week to potentially restore possession to Vedanta, should the company successfully argue for interim relief. “If needed, we’ll put the clock back. We’ll restore your position, but after hearing you,” stated the Bench. They emphasized that any relief granted would not be ambiguous but would expressly order the restoration of Vedanta’s control over the block.
The appeal stems from a ruling on July 22 by Justice Purushaindra Kumar Kaurav, which upheld the Ministry of Petroleum and Natural Gas’s decision to deny an extension of Vedanta’s production sharing contract (PSC) by ten years. The oil block in question, containing the Lakshmi and Gauri gas fields, was originally awarded in 1998 to a consortium including Cairn Energy, Tata Petrodyne, and ONGC, with Vedanta later becoming the operator. The initial contract expired on June 29, 2023.
Vedanta and its consortium partners had applied in June 2021 for an extension to June 2033. While the application was under review, the government issued five interim extensions. However, on September 19, 2025, the Ministry rejected the extension and instructed ONGC to take over the operation of the block. The single judge’s decision was influenced by Vedanta’s unilateral deduction of USD 9.33 million (approximately ₹88 crore) from the government’s share of profit petroleum to cover its Special Additional Excise Duty (SAED) liability.
In 2022, following the imposition of SAED on petroleum crude, Vedanta proposed offsetting the tax against the government’s profit share, a proposal the Ministry declined, warning it would breach the production sharing contract. Vedanta nonetheless proceeded with the deductions over several financial quarters. Subsequently, the Directorate General of Hydrocarbons (DGH) demanded repayment of USD 10.13 million, including interest. Vedanta returned the principal sum on September 12, 2025, under protest and subject to arbitration.
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The single judge’s bench ruled that the late repayment did not mitigate the misconduct nor preclude the government from considering it in its decision-making process regarding who should manage the country’s natural resources. Represented by Attorney General R Venkataramani and Additional Solicitor General Chetan Sharma, the Centre informed the Court that ONGC had assumed control of the block’s operations following the single judge’s order. Relevant affidavits and documents were presented to the Court.
This swift takeover claim was contested by Senior Advocate Mukul Rohatgi, representing Vedanta, who stated that Vedanta had managed the block from 1998 until July 22, 2026. Rohatgi argued that an oil and gas facility’s operations cannot be transferred as easily as a house or vehicle. According to Vedanta, it remained the designated operator, despite ONGC’s involvement as part of the consortium.
The Bench stated it was accepting the Centre’s position for the time being, noting that ONGC, which holds a 50% interest in the consortium, is not an outsider. Vedanta holds a 40% stake, while Invenire Petrodyne owns the remaining 10%. The Division Bench is scheduled to address the appeal as one of its initial matters on Monday, July 27. Senior Advocate Jayant Mehta also represented Vedanta, while ASG Chetan Sharma appeared for ONGC.
