The Delhi High Court has dismissed Vedanta Limited’s writ petition challenging the Ministry of Petroleum and Natural Gas’s (MoPNG) decision rejecting the company’s application for a 10-year extension of its Production Sharing Contract (PSC) for the CB/OS-2 offshore oil and gas block in Gujarat.
Justice Purushaindra Kumar Kaurav upheld the Centre’s decision, holding that contracts involving exploitation of natural resources must be interpreted in light of the Public Trust Doctrine, under which the Union holds natural resources in trust for the people of India. The Court ruled that the Ministry was justified in refusing the extension after finding that Vedanta had unilaterally deducted the Government’s share of Profit Petroleum to offset its liability towards Special Additional Excise Duty, despite express directions from the Union.
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Vedanta had challenged the Ministry’s order dated September 19, 2025, by which its application seeking extension of the PSC beyond June 29, 2023 was rejected, and ONGC was directed to take over the assets and operations of the contract area. The company argued that it had fulfilled the conditions under the 2017 Extension Policy and that the Ministry had acted arbitrarily by relying on considerations outside the policy.
Rejecting these submissions, the Court clarified that although an applicant does not possess an indefeasible right to extension of a PSC, it does have a right to have its application considered in accordance with law. The Court held that judicial review is available to examine whether the State has acted arbitrarily, even in contractual matters involving extensions of government contracts.
The Court further held that expiry of the timelines prescribed under Clause 1 of the Extension Policy does not result in automatic extension of a Production Sharing Contract. It also ruled that the Ministry is entitled to consider events occurring after the filing of the extension application while deciding whether to grant an extension.
Interpreting the Extension Policy, the Court observed that Clause 5 is not the sole source of the Government’s power to reject an extension request, and the grounds mentioned therein are not exhaustive. The Ministry could therefore rely on other relevant considerations, including conduct inconsistent with the public interest and the contractual framework governing exploitation of natural resources.
Concluding that Vedanta’s unilateral deduction of the Government’s profit petroleum constituted a valid and legally sustainable ground to deny extension, the Court held that the Ministry’s decision did not warrant interference under Article 226. Accordingly, the writ petition and all pending applications were dismissed.
