The Delhi High Court has ruled in favour of the government in a gas dispute case, ordering Reliance Industries (RIL) to pay $1.7bn (Rs147.63bn) over allegations of "unjust enrichment”.
The court found that RIL extracted gas from state-run Oil and Natural Gas Corporation’s (ONGC) adjacent blocks near its KG-D6 field off the coast of Andhra Pradesh state in India.
The division bench comprising Justices Rekha Palli and Saurabh Banerjee overturned an arbitration tribunal's ruling and quashed Justice Anup Jairam Bhambani's verdict, which upheld the arbitral award in favour of the RIL-led consortium.
The division bench said: “We are setting aside the impugned order dated 9 May 2023 passed by the learned single judge, and the arbitral award passed by the learned arbitral tribunal dated 2018, being contrary to the settled position of law along the pending applications, if any, leaving the parties to bear their own costs.”
The case dates back to 2013, when ONGC asserted that its IG and KG-DWN-98/2 blocks, located next to RIL's KG-D6 field, shared a common gas pool.
ONGC moved the court, alleging that RIL, which had already begun operations at KG-D6, was extracting gas that had migrated from its blocks.
The government claimed nearly $1.6bn in costs, including interest, and $175m in additional 'profit petroleum' for the "disgorgement of unjust enrichment" by RIL until 31 March 2016.
However, an arbitration panel, headed by Lawrence Woo, rejected these claims.
Despite the arbitration panel's rejection of the government's charges and ordering the Centre to compensate RIL's legal expenses, the ministry persisted with its claim and approached the Delhi High Court.
An independent study by US consultant DeGolyer & MacNaughton, ordered by the court, confirmed the continuity of the gas pool.
Following this, a committee headed by retired Delhi HC Chief Justice A P Shah recommended that RIL should pay for the "unfair" enrichment.
The tribunal had previously stated: "RIL extracted whatever gas became available in the course of petroleum operations within their contract area. Reliance deducted the 'cost petroleum', calculated the 'profit petroleum' and shared the requisite portion of the profit petroleum with the ministry.
"The Ministry has not alleged that Reliance did not pay them their share of profit petroleum for the entire quantity of gas extracted by Reliance, including migrated gas."
