SC lets Delhi HC continue hearing govt's $2.31 bn claim against Reliance in offshore oilfields dispute

The Supreme Court on Friday declined to interfere with the Delhi High Court's hearing in the Union government's appeal seeking to recover about $2.31 billion from Reliance Industries Ltd (RIL) and its partners in the nearly three-decade-old Panna-Mukta and Tapti offshore oilfields dispute.

A bench led by Chief Justice Surya Kant was hearing Reliance's challenge to the Delhi High Court's February order, which held that the Centre's appeal to enforce a foreign arbitral award was maintainable. The Supreme Court allowed the high court to continue hearing the appeal on the merits.

The court also kept Reliance's objection to the maintainability of the Centre's appeal open. This means the company can raise the issue again, if required, after the high court delivers its final verdict.

Appearing for the Centre, Attorney General R. Venkataramani told the court that after deciding the maintainability issue, the high court had already heard the appeal on merits and the matter was in the "last leg" of the proceedings.

Senior advocate Harish Salve, appearing for Reliance, said the company had no objection to the high court deciding the case on merits. However, he urged the Supreme Court not to close the issue of maintainability.

"I have challenged the maintainability of the appeal... We are arguing the merits. I don't want this issue to be foreclosed," Salve submitted.

Queries emailed to Reliance remained unanswered till press time.

What happened earlier

The dispute has its roots in production-sharing contracts signed in 1994 between the Union government and a consortium comprising Reliance, British Gas, and ONGC to develop the Panna-Mukta and Tapti offshore oilfields.

The Centre claims Reliance recovered costs beyond the contractual limit, allowing it to retain more revenue than it was entitled to. Reliance, on the other hand, says the government's interpretation of the contracts is incorrect.

In 2019, the Centre moved the Delhi High Court seeking to recover about $2.31 billion on the basis of a 2016 partial arbitral award. In June 2023, a single judge dismissed the enforcement petition, holding that the arbitration was still underway and that no final amount payable by either side had been determined.

The Centre appealed that decision. On 2 February this year, a Division Bench of the Delhi High Court rejected Reliance's preliminary objection that the appeal itself was not maintainable and went on to hear the matter on merits.

Reliance then approached the Supreme Court, challenging only the Division Bench's finding on maintainability. With the apex court refusing to intervene, the Delhi High Court will now decide whether the Centre can enforce the partial arbitral award before the arbitration proceedings are finally concluded.