The Supreme Court has permitted the Union Government to withdraw its special leave petition challenging a Delhi High Court ruling in a dispute involving Vedanta Ltd over the Rajasthan RJ-ON-90/1 oil and gas block.
A Bench comprising Justices Manoj Misra and Vijay Bishnoi allowed the withdrawal after the Centre submitted that the proceedings had lost their relevance following the subsequent issuance of a final arbitral award.
The Court consequently dismissed the SLP as withdrawn, while permitting the Union to reserve its rights and remedies available in law.
The dispute pertains to the interpretation and implementation of a Production Sharing Contract (PSC) governing exploration and production activities in the Rajasthan oil block. The PSC was executed in 1995 between the Union of India, ONGC and Shell India Production Development Company. Vedanta subsequently acquired the interests of Shell in the project.
The litigation arose following objections raised by the government concerning Vedanta’s recovery of exploration, development and production costs under the PSC. The disagreements eventually proceeded to arbitration.
On August 22, 2023, the arbitral tribunal rendered a Final Partial Award (FPA), determining questions concerning the interpretation of the contractual framework while leaving the actual quantification of monetary liability for a subsequent stage, in the event the parties failed to arrive at an agreement.
Following the FPA, Vedanta proceeded to prepare its quarterly profit petroleum accounts in accordance with its interpretation of the tribunal’s findings.
The Centre objected to this course of action and sought interim protection restraining Vedanta from making such adjustments until the financial implications of the arbitral award had been finally quantified.
The arbitral tribunal declined to grant the relief sought by the Union. The Centre thereafter approached the Delhi High Court under Section 37 of the Arbitration and Conciliation Act, 1996.
The Delhi High Court, however, rejected the Union’s challenge on July 11, 2025, and upheld the tribunal’s decision.
The High Court held that although the Final Partial Award was declaratory in character and did not itself determine the ultimate monetary liability, the contractual interpretations contained therein became binding on the parties from the date of the award. Those findings, the Court held, were required to govern the parties’ continuing contractual relationship unless their operation was stayed by a competent court.
The High Court further rejected the contention that Vedanta’s preparation of quarterly profit petroleum accounts in accordance with the FPA amounted to unilateral enforcement of an arbitral award.
According to the High Court, Vedanta was acting in accordance with its contractual obligations under the PSC and the interpretation of the agreement adopted by the arbitral tribunal.
The Union subsequently approached the Supreme Court by filing the present SLP against the Delhi High Court judgment.
When the matter came up before the Supreme Court on July 29, the Centre informed the Court that the Final Partial Award forming the basis of the Delhi High Court proceedings was itself under challenge before the High Court. More significantly, a final arbitral award had subsequently been rendered in the dispute.
The Union therefore sought time to obtain instructions on whether it wished to pursue the SLP.
On the subsequent hearing, counsel appearing for the Centre, on instructions, sought permission to withdraw the petition while expressly reserving all rights, liberties and remedies available to the Union in law.
The Supreme Court accepted the request, observing that the SLP had become infructuous in view of the subsequent developments.
The Bench noted that the Final Partial Award was already under challenge before the Delhi High Court and that a final award had since been passed. In these circumstances, the Court held that continuation of the SLP would serve no purpose.
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