Centre cannot reject extension application on unstated rules, Vedanta tells Delhi HC

Mining major Vedanta Ltd told the Delhi High Court on Wednesday that if the Centre wants to maximize revenue from Gujarat’s offshore oil and gas field, it must amend its existing policy on contract extensions rather than arbitrarily reject the company’s application based on unstated criteria.

The company is appealing a single-judge order that upheld the Centre's September 2025 decision to deny a 10-year extension for its CB-OS/2 block in the Cambay Basin.

Senior advocates Mukul Rohatgi and Jayant Mehta, representing Vedanta, said the company was not asking the court to grant an extension, but was simply seeking a fair consideration of its application under the government’s 2017 Extension Policy.

“Once you have prescribed a policy, you can't at your will change course and adopt a new course unknown to everybody,” Mehta told the court. “I have a right under the statutory policy to be fairly considered. I am not saying you must give it to me. But the consideration in the rejection is completely unfair,” he added.

Rohatgi argued that if the Centre wants to abandon the current framework to pursue higher revenue, it must formally update its policy rather than reject the application based on unstated revenue-maximisation considerations. He pointed to Vedanta's nearly 28-year record of operations and around $10 billion of investment in India's oil and gas sector, arguing that its experience and investment should be considered while deciding on the extension request.

Rohatgi also challenged the Centre's argument that it could seek better returns by bringing in another operator. India imports around 90% of its oil, and only a handful of companies have the capability to undertake offshore drilling, he said. He questioned how production could be maximised by replacing an operator that had run the field for nearly three decades with a new player, which would require fresh investment and carry production risks.

Pointing to similar extensions recently granted to other blocks, Vedanta argued that the 2017 policy remains active and cannot be selectively ignored.

The company also argued that the policy already accounts for higher government revenue through a 10% markup during an extension. Therefore, revenue maximisation cannot be introduced as a separate, unstated ground for rejecting its application, it said. The case will be heard next on 18 August.

Case history

The dispute stems from the government’s September 2025 decision to deny an extension for the CB-OS/2 block. The Centre cited, among other reasons, Vedanta's unilateral deduction of the government’s share of profit petroleum to offset its special additional excise duty (SAED) liability.

Vedanta challenged the rejection before the Delhi High Court, but a single judge upheld the decision on 22 July, prompting Vedanta to appeal before the division bench. The company maintains it is not seeking an automatic direction granting the extension, but wants the court to examine whether the rejection was legally sustainable and whether its application should be reconsidered under the applicable policy.