Delhi HC orders status quo on handover of Vedanta's Suvali block to ONGC

The Delhi High Court has ordered status quo on Vedanta's Suvali offshore oil block, halting the government's move to transfer operations to ONGC pending final adjudication

The Delhi High Court has ordered status quo on the Suvali offshore oil block in Gujarat, effectively staying the Centre’s decision to refuse Vedanta Limited an extension of its production sharing contract (PSC) and to hand over operations to Oil and Natural Gas Corporation (ONGC).

 

Justice Amit Sharma passed the interim order while hearing Vedanta’s challenge to the Ministry of Petroleum and Natural Gas’ decision dated September 19, 2025.

 

The court rejected the company’s request for a further 10-year extension and instructed an immediate handover of the block to ONGC.

 

The court’s direction effectively restrains any change in possession or operational control until the dispute is finally decided.

 

The PSC dates back to June 1998 and was executed among the Centre, Vedanta and Invenire Petrodyne (earlier known as Tata Petrodyne Limited), with Vedanta serving as the operator of the Suvali block since inception.

 

After the original contract term ended in June 2023, the company was granted five interim extensions.

 

However, Vedanta’s latest request for a long-term extension was declined, and it was asked to stop all petroleum activities and transfer custody of the block, including government assets, to ONGC.

 

The government cited alleged financial lapses to justify its decision, including short payment of profit petroleum, contested adjustments relating to special additional excise duty (SAED), and deficiencies in site restoration fund.

 

Vedanta, represented by senior advocate Mukul Rohatgi, argued that the rejection was arbitrary and overlooked its operational track record spanning over two decades. It also pointed out that these alleged defaults were not invoked during the period when interim extensions were granted.

 

During the hearing, Vedanta informed the court that it had deposited around ₹695.49 crore, including its share of the disputed amounts, under protest, to signal its willingness to resolve the financial issues without conceding liability.

 

The Centre, along with ONGC, opposed the petition on the ground that the PSC had expired and was determinable, making it unsuitable for enforcement through writ proceedings.

 

Through the Directorate General of Hydrocarbons (DGH), the Centre maintained that the dispute was purely contractual. And, Vedanta had no vested right to an extension. Also, decisions involving natural resources, held in public trust, attract only limited judicial scrutiny.

 

Rejecting the preliminary objection on maintainability, the court held that it was empowered to examine whether the decision-making process met constitutional standards of fairness.

 

Justice Sharma noted that neither the PSC nor the extension policy provided an effective alternative remedy against the rejection order. And, allegations of unfairness in the executive action could be tested under Article 226 of the Constitution, albeit within a narrow scope.

 

While emphasising restraint in interfering with governmental commercial decisions, the court clarified that it could assess the process leading to such decisions where procedural fairness was questioned.

  "Assuming, arguendo, if the decision in pursuance of the aforesaid Extension Policy was taken by the Government of India for awarding extension of PSC to a contractor, the same would be, undoubtedly, within the realms of commercial wisdom of the Government of India," the court said and added, "However, 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," the court said. 

 

"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. Fairness in all executive decisions is the essence of the Right to Equality as provided for under Article 14 of the Constitution of India. If any dispute is raised with respect to fairness of such an action, then, the same can be examined, albeit, for limited purposes by the Constitutional Court especially when there is no other alternative remedy," the judgment said.

 

To avoid irreversible consequences pending adjudication, the court ordered that the status quo be preserved. The Union government and ONGC have been given four weeks to file their counter-affidavits. The matter is listed for further hearing on February 27, 2026.