Reliance's $2.31-Bn Oilfield Dispute: SC Lets Delhi HC Continue Hearing

The Supreme Court on Friday declined to interfere with proceedings in the Delhi High Court over the Centre's attempt to recover about $2.31 billion from Reliance Industries Ltd (RIL) and its partners in the long-running Panna-Mukta and Tapti offshore oilfields dispute.

A bench led by Chief Justice Surya Kant allowed the Delhi High Court to continue hearing the Centre's appeal on merits. The Supreme Court, however, kept Reliance's objection over whether the appeal is maintainable open, allowing the company to raise the issue again if required after the High Court delivers its final judgment.

The Centre's appeal seeks to enforce a foreign arbitral award linked to the dispute.

Why Is Reliance Facing the $2.31-Bn Claim?

The dispute goes back to production-sharing contracts signed in 1994 between the government and a consortium comprising Reliance, British Gas and ONGC for developing the Panna-Mukta and Tapti offshore oilfields.

The Centre has alleged that Reliance recovered costs beyond the limit allowed under the contracts, allowing the consortium to retain more revenue than it was entitled to. Reliance has disputed the government's interpretation of the agreements.

The Centre approached the Delhi High Court in 2019 seeking to recover around $2.31 billion based on a 2016 partial arbitral award. In June 2023, a single judge rejected the Centre's enforcement petition, holding that the arbitration process was still continuing and that no final amount had been determined as payable.

What Happens Next in the Case?

The Centre challenged that decision before a Division Bench of the Delhi High Court. In February this year, the bench rejected Reliance's preliminary objection that the Centre's appeal was not maintainable and proceeded to hear the case on its merits.

Reliance then approached the Supreme Court, challenging the High Court's finding on maintainability. The company did not oppose the High Court continuing with the merits of the case but asked the Supreme Court to keep its objection alive.

Senior advocate Harish Salve, appearing for Reliance, told the Supreme Court that the company did not want its maintainability challenge to be closed. Attorney General R. Venkataramani, appearing for the Centre, said the High Court had already heard the matter on merits and the proceedings were in their final stage.

With the Supreme Court refusing to intervene, the Delhi High Court will continue deciding whether the Centre can enforce the partial arbitral award before the underlying arbitration proceedings are fully concluded. The outcome could determine the next step in the Centre's decades-old claim against Reliance and its partners.