A view of the Delhi High Court. File

In a setback for Reliance Industries Limited (RIL), the Delhi High Court on Friday (February 15, 2025) overturned a 2018 international arbitral award which favoured the Mukesh Ambani-led company and its foreign partners in a dispute over gas migration from fields operated by State-owned Oil and Natural Gas Corporation (ONGC) in the Krishna Godavari (KG) basin.

Also Read | The new KG scam

Acting on an appeal filed by the Central government, Justice Rekha Palli and Justice Saurabh Banerjee said, “We have found ‘patent illegality’ on the face of the Arbitral Award worthy of interference by us “.

The long-running legal dispute stems from the allegation by ONGC that the gas reservoirs of the Reliance Block and the ONGC Block were interconnected, and it resulted in the migration of natural gas. ONGC alleged that RIL had been ‘unjustly enriched’ by producing and selling the migrated gas from the ONGC Block.

In July 2018, an international arbitration tribunal rejected the Indian government’s claim of USD 1.55 billion against RIL and its partners for allegedly siphoning gas from deposits they had no right to exploit.

Central government has challenging a May 9, 2023 judgment of a single-judge of the high court which had upheld the arbitral award in favour of Reliance Industries.

In the 79-page judgment, the bench said, “We have no alternative but to set aside the impugned order passed by the learned Single Judge along with the Arbitral Award rendered by the learned AT (arbitral tribunal)”.

It said, “as such, the actions of the RIL qua the extraction of ‘Migrated Gas’ were against NELP (New Exploration License Policy) and the fundamental laws of India”.

“Relevantly, RIL in the light of the said breach not only did it succeed in extraction of huge amounts of ‘Migrated Gas’ belonging to the ONGC Block, but also, was enriched from the profits thereof at the cost of causing losses to the public exchequer, moreover, since the commodity at hand was/ is a vital natural resource belonging to the UOI as a trustee, in the public interest of the people of this Country,” the court said.

“Any private entity like RIL cannot be allowed to subsume it for its own benefit at the cost of taking the UOI for a ride by remaining silent, and that when it is against the letter and spirit of the PSC (Production Sharing Contract),” the court added.