The Delhi High Court has declined to interfere with the Union government’s decision refusing to extend Vedanta Limited’s offshore oil contract in Gujarat, bringing an end to a long-running dispute over the CB-OS/2 oil block. The court upheld the government’s rejection of Vedanta’s extension request and cleared the way for ONGC to take over the block and its operations.
The judgment was delivered by Justice Amit Sharma, who reserved the matter after extensive hearings involving senior law officers and counsel for all stakeholders
Background of the Case
The dispute traces its roots to a Production Sharing Contract (PSC) signed in 1998 between the Vedanta Limited, the Union of India, and other partners, including Oil and Natural Gas Corporation (ONGC).
The PSC covered the offshore CB-OS/2 block near the Gujarat coast and was valid for 25 years, expiring in June 2023. Vedanta applied for a 10-year extension in 2021 under the government’s 2017 policy for pre-NELP oil blocks. While the government granted a series of interim extensions to allow operations to continue, it eventually rejected the extension request in September 2025.
The rejection letter directed Vedanta to stop petroleum operations and hand over all assets and control of the block to ONGC, prompting the company to move the High Court.
Arguments by Vedanta
Vedanta argued that the rejection was arbitrary and violated principles of fairness. Senior counsel submitted that the company had operated the block for over 27 years without major complaints and had been granted multiple interim extensions after the PSC expired.
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The company claimed a “legitimate expectation” that its extension request would be approved, especially since the government’s own policy laid down timelines for deciding such applications. Vedanta also alleged that it was never given a proper opportunity to respond to claims of outstanding dues, which were cited as one of the reasons for rejection.
“The manner in which the extension was denied, after years of continued operations, is manifestly unfair,” Vedanta’s counsel told the court during the hearings.
Government’s Stand
Opposing the petition, the Union government argued that Vedanta had no vested right to seek an extension of the PSC. The Attorney General stressed that natural resources belong to the people of India and that the government acts only as a trustee.
The government maintained that the 2017 extension policy did not guarantee renewal and that Vedanta’s proposal failed to meet key financial and operational criteria. It also submitted that outstanding dues and unresolved issues justified the rejection and the direction for ONGC to take over.
Court’s Observations
The High Court agreed with the government’s position that extension of a PSC is a matter of policy and discretion, not an automatic right. The bench noted that judicial review in contractual matters involving natural resources must be limited, especially where public interest is involved.
“The extension policy does not create an enforceable right in favour of the contractor,” the court observed, adding that interim extensions could not be treated as a promise of renewal.
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On the issue of natural justice, the court held that Vedanta had sufficient engagement with authorities over the years and could not claim surprise at the grounds cited for rejection.
Decision
The Delhi High Court dismissed Vedanta’s writ petition and upheld the government’s rejection letter dated September 19, 2025. The court also allowed the directions for ONGC to take over the CB-OS/2 block and continue petroleum operations.
With this ruling, Vedanta’s long association with the offshore block comes to a close, and ONGC will now assume full control of the assets and operations as directed by the government.
Case Title: Vedanta Limited v. Union of India & Others
Case Number: W.P.(C) 14738/2025
