A division bench of the Delhi high court on Monday agreed to hear the Centre’s plea seeking to recover around $2.31 billion from Reliance Industries Ltd and its partners in the nearly three-decade-old Panna-Mukta and Tapti offshore oilfields dispute.
The bench comprising Justice Navin Chawla and Justice Madhu Jain rejected RIL’s objection that the Centre’s appeal was not maintainable. A detailed written order is awaited.
The matter is expected to be placed before the roster bench of the Chief Justice of the Delhi high court before 17 February to decide the further course of hearing.
The appeal arises from a June 2023 single-judge ruling that rejected the Centre’s attempt to recover money based on a 2016 partial arbitration decision. The ruling held that arbitration proceedings between the parties were still ongoing and that no final amount payable by either side had been fixed.
This is the second major arbitration-related dispute involving RIL and the Union government in recent times. A separate high-value case involving RIL—arises from the Krishna-Godavari basin gas migration dispute with state-run Oil and Natural Gas Corp. Ltd—is currently pending before the Supreme Court, after the Delhi high court set aside a $1.7-billion arbitral award in RIL’s favour in February 2025.
The dispute
The dispute began with production sharing contracts signed in December 1994 between the Union government and a consortium led by RIL, along with British Gas and ONGC. These contracts allowed the companies to extract oil and gas from the Panna-Mukta and Tapti offshore fields.
Under the contracts, the companies were allowed to first recover the money they spent on the project. However, there was a cap on how much development cost they could recover, known as the cost recovery limit. After costs were recovered, the remaining profits were to be shared with the government.
Later, disagreements arose over how costs and profits were calculated. The government alleged that RIL had crossed the cost recovery limit and taken more money than allowed. The conglomerate argued that the government’s method of calculation unfairly reduced its share of profits.
In 2010, RIL and British Gas took the dispute to international arbitration, leading to the setting up of a tribunal in London. Over the years, the tribunal issued several partial decisions.
None of these decisions fixed a final amount payable by either side. Instead, they explained how costs and profits should be calculated and clarified which costs fell within the recovery limit.
The most important decision came in October 2016, when the tribunal clarified how development costs should be treated for profit sharing, how tax should be calculated, and whether government approval was needed for temporary cost and profit adjustments. It did not order either side to pay a fixed sum.
Parts of this decision were later challenged in UK courts. While the courts largely upheld the tribunal’s findings, some issues were sent back for reconsideration. This led to further partial decisions in 2018 and 2021, while some issues, including requests to raise the cost recovery limit, remain pending.
Even though the arbitration was not over, the Union government approached the Delhi high court in 2019 seeking to recover $2.31 billion, arguing that RIL had retained more money than it was entitled to.
RIL opposed the move, saying the arbitration was still continuing and that the government was trying to recover an amount it had calculated on its own, without any final decision by the tribunal.
In June 2022, the UK high court rejected the Union government’s plea to enforce the arbitral award against RIL and its partners.
In June 2023, a single judge of the Delhi high court also agreed with RIL and dismissed the government’s recovery plea, holding that partial arbitration decisions explaining accounting rules could not be enforced unless a final, clearly quantified amount was fixed.
Following that ruling, the government filed the present appeal. With the division bench now clearing the maintainability issue, the case will move to a full hearing to decide whether the Centre can pursue its $2.31-billion recovery claim now or must wait until the arbitration process is fully completed.