Delhi HC seeks govt’s stand on rejection of Vedanta Gujarat field contract extension
New Delhi: The Delhi High Court on Monday asked the Center to clarify whether broader policy considerations formed the basis for rejecting Vedanta Ltd’s proposal for 10-year extension of production sharing agreement for offshore oil and gas block in Gujarat’s Cambay Basin.
Hearing Vedanta’s plea against a single judge’s order upholding the rejection, a division bench comprising Justices Dinesh Mehta and Rajneesh Kumar Gupta observed that if the Union government’s decision was affected by a broader policy change, it should explain its position before the court.
“We want the response of the Union of India. If there is any other reason, the government can satisfy the court. This should either come from the mouth of the Attorney General or come through an affidavit,” the bench said.
While the bench stated that an affidavit from the Center would help the court in understanding its view, it stopped short of directing the government to file an affidavit after Solicitor General R. Venkataramani sought time to seek instructions. The issue has been listed for discussion again on Wednesday.
The court’s observations came after senior advocate Jayant Mehta, appearing for Vedanta, argued that the Center could not justify its decision beyond the reasons given in the September 2025 rejection order. He maintained that there was no indication that the government was abandoning its 2017 policy on extending production sharing contracts.
“There is no whisper that we have canceled the 2017 policy. Even in the impugned communication, there is not even a whisper that we have canceled the 2017 policy. The policy continues as on date and under the policy, they have already extended up to three PSCs in respect of other contracts in March 2026,” Mehta said. he said.
The hearing focused on whether the government’s rejection was limited to the reasons recorded in September 2025 or whether it reflected a broader policy change from the production sharing contract regime to the revenue sharing model.
During the hearing, the panel observed that the government was free to change its policy after more than two decades if it believed that a different contractual framework would better serve the public interest.
The bench also observed that the government’s policy should be implemented uniformly and not selectively. He questioned how the Center could reject Vedanta’s application while granting extensions to other production sharing contracts under the same 2017 policy. The court said that if the rejection was based on a broader policy change, the government should have clearly presented that position to the court.
Attorney General R. Venkataramani stated that the government has the right to take a broader policy view when deciding whether to extend production sharing contracts. “The government said, ‘If we have to continue this kind of dialogue with the contractor that I’m not satisfied with…why don’t I now try to get a better return in the public interest, under the Public Trust Doctrine?'” Venkataramani said. “If he thinks,” he said.
The case stems from the Centre’s decision in September 2025 to reject Vedanta’s application for a 10-year extension of the production-sharing agreement for the CB-OS/2 offshore oil and gas block in the Cambay Basin, on the grounds that the government had unilaterally reduced its share of profit oil to offset the company’s Special Additional Excise Duty (Saed) liability and was therefore not eligible for extension under the 2017 policy.
On July 22, a single judge of the Delhi High Court upheld the decision, prompting Vedanta to appeal before the division bench.
Questions sent via e-mail to Vedanta and the General Directorate of Hydrocarbons remained unanswered until publication time.
