The Delhi High Court has upheld the Union government's decision to reject Vedanta Limited's request for a 10-year extension of its Production Sharing Contract (PSC) for the CB/OS-2 offshore oil and gas block in Gujarat. Holding that the Ministry of Petroleum and Natural Gas (MoPNG) acted within the framework of the applicable Extension Policy, the Court dismissed Vedanta's writ petition challenging the rejection order.
Justice Purushaindra Kumar Kaurav observed that while decisions concerning contract extensions involving the State are open to judicial review, no party has an automatic right to receive such an extension.
Background of the Case
Vedanta Limited (through its Cairn Oil & Gas division) had approached the High Court after the MoPNG rejected its application dated June 28, 2021 seeking a 10-year extension of the Production Sharing Contract executed in 1998 for the CB/OS-2 offshore block. The rejection order, issued on September 19, 2025, also directed Oil and Natural Gas Corporation (ONGC) to take over the assets and operations relating to the contract area.
The PSC originally had a tenure of 25 years, with provisions permitting extension under specified circumstances. While Vedanta's application remained under consideration, the Centre granted several interim extensions allowing operations to continue until the final decision was taken.
Vedanta argued that the Ministry had failed to follow its own Extension Policy and that the rejection was arbitrary and contrary to Article 14 of the Constitution.
Court's Observations
The High Court clarified that although there is no vested or automatic right to renewal of a government contract, the State's decision-making process remains subject to constitutional scrutiny.
The bench observed:
“The petitioner has a right to be treated in accordance with the applicable law... the impugned decision rejecting the petitioner's application... is capable of being reviewed under Article 14 of the Constitution.”
However, after examining the facts and the applicable Extension Policy, the Court concluded that the Ministry had acted lawfully.
According to the judgment, the Court found that Vedanta had unilaterally deducted the Government's share of profit petroleum to adjust its liability towards Special Additional Excise Duty. The Court held that this conduct could legitimately be considered while deciding whether the PSC deserved an extension.
Justice Kaurav noted that contracts involving exploitation of natural resources must be interpreted in light of the Public Trust Doctrine, which requires the government to safeguard public resources while exercising its contractual powers.
The Court also rejected the argument that the Ministry could refuse an extension only on the grounds specifically listed in Clause 5 of the Extension Policy. It held that those conditions were not exhaustive and that other relevant considerations could also justify rejection.
As the bench observed, events occurring even after submission of an extension application may be taken into account while deciding such a request, and expiry of the contractual timeline does not automatically result in renewal.
Court's Decision
Dismissing the petition, the High Court held that the Ministry's decision did not warrant judicial interference.
Summarising its conclusions, the Court held that the Extension Policy must be interpreted in the light of the Public Trust Doctrine, that no automatic extension follows merely because an application has been filed, and that Vedanta's conduct in unilaterally deducting the Government's share of profit petroleum constituted a valid ground for rejecting its application.
“The decision of the MoPNG to reject the petitioner's Application seeking the extension of the Production Sharing Contract does not deserve to be interfered with,” the Court concluded before dismissing the writ petition along with all pending applications.
Case Details
Case Title: Vedanta Limited (Division: Cairn Oil & Gas) v. Union of India & Ors.
Case Number: W.P.(C) 14738/2025
Judge: Justice Purushaindra Kumar Kaurav
Decision Date: 22 July 2026
